State ex rel. Burk v. City of Oklahoma City

• Decision Date: 24 July 1979
• Docket Number: No. 50794,50794
• Citation: 1979 OK 115,598 P.2d 659
• Parties: The STATE of Oklahoma, ex rel. Gil BURK and C. B. Ray, Myrta Rorem, Hali Jean Wells, Admx. of the Estate of Mildred Wells, and William Byron Hayes and Rhoda P. Hayes, husband and wife, Plaintiffs-Appellees, v. The CITY OF OKLAHOMA CITY, a municipal corporation, Defendant-Appellant, The Two Thousand Classen Building Corporation, American Fidelity Assurance Company, C. W. Cameron, et al., Defendants.
• Court: Oklahoma Supreme Court

Page 659

598 P.2d 659

The STATE of Oklahoma, ex rel. Gil BURK and C. B. Ray, Myrta

Rorem, Hali Jean Wells, Admx. of the Estate of Mildred

Wells, and William Byron Hayes and Rhoda P. Hayes, husband and wife, Plaintiffs-Appellees, v. The CITY OF OKLAHOMA CITY, a municipal corporation,

Defendant-Appellant,

The Two Thousand Classen Building Corporation, American

Fidelity Assurance Company, C. W. Cameron, et al.,

Defendants.

No. 50794.

Supreme Court of Oklahoma.

July 24, 1979.

An appeal from the District Court of Oklahoma County; Harold C. Theus, judge.

Municipality appeals from award of attorneys' fees granted from equitable fund.

JUDGMENT OF TRIAL COURT AFFIRMED, AS MODIFIED.

John Connolly, Jr. and Tom J. Lee, Oklahoma City, for plaintiffs-appellees.

Walter M. Powell, Municipal Counselor, Mark E. Monfort, Asst. Municipal Counselor, Oklahoma City, for defendant-appellant.

SIMMS, Justice:

This appeal by the City of Oklahoma City arises from an order fixing the amount of attorney's fees to be paid from a common, equitable fund created for the City through the efforts of attorneys for named appellees. A history of this litigation and authority of the trial court to award attorney fees from the equitable fund is found in State ex rel. Burk et al. v. City of Oklahoma City et al., Okl., 522 P.2d 612 (1974). See, also State ex rel. Burk et al. v. City of Oklahoma City, Okl., 556 P.2d 591 (1976).

The sole issue to be decided in the instant appeal is whether or not the attorneys' fees of $225,000.00 awarded by the trial court are excessive.

Appellants concede that in this case attorney fees are recoverable under the "equitable fund doctrine," sometimes referred to as the "trust fund doctrine", as adopted from the English Common Law in Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939). This doctrine declares that when an individual, through his efforts, succeeds in creating or preserving a fund, then such individual is entitled to invoke the equitable powers of the Court and have his fees paid from the fund. See: State ex rel. Board of County Commissioners of Harmon County v. Oklahoma Tax Commission, 194 Okl. 359, 151 P.2d 797 (1944).

In ascertaining whether or not an award of attorney fees under the " equitable fund doctrine" is either inadequate or excessive, we must first determine the proper standards to be used by the trial court in fixing the amount of the fee. Oklahoma apparently has not addressed this narrow issue, for neither party cites authority from this jurisdiction in their briefs, nor has independent research led to an Oklahoma case dispositive of the question. We therefore turn to other jurisdictions to aid us in establishing the criteria to be used by trial courts in awarding attorneys' fees, especially when the fees are chargeable against an "equitable fund" or "trust fund".

Three recent federal cases are highly persuasive on the issue of establishing the basis for the amount of attorneys' fees in this case and related cases. We discuss these federal decisions in the chronology of their promulgation.

Lindy Bros. Builders, Inc. of Phila. et al. v. American R&S. San. Corp., 487 F.2d 161 (3rd Cir. 1973) held that the equitable fund doctrine may be employed to compensate attorneys for commencing, pursuing, or settling litigation for the benefit of a class of persons when the suit confers a benefit on all the class, although certain members of the class did not participate in the litigation. The Lindy court observed that the award of attorneys' fees in analogous to an action in Quantum meruit because the attorney seeking a fee award has, by his actions, benefited another and should receive payment for the value of the service performed. These fees, the court held, may be awarded on the attorney's petition.

In detailing the standards that should guide trial courts in awarding fees, Lindy held that first, the court must determine the number of hours spent by the attorney and in what manner those hours were spent; second, the trial court must attempt to place a value upon those services recognizing that different activities demand different compensation. The Third Circuit went on to say that while the hourly rate times the number of hours spent cannot properly be the sole criteria in awarding fees, this approach should nevertheless be the "lodestar" of the court's fee determination. Two additional factors are to be taken into account in determining the award of reasonable compensation for attorneys. One, that attorneys' fees should be increased in proportion to the unlikelihood of success. And, second, the extent, if any, to which the quality of an attorney's work mandates increasing or decreasing the amount to which the attorney is reasonably entitled. In evaluating quality of work, the court should consider the complexity and novelty of the issues presented, the quality of the work that the judge has been able to observe, and the amount of recovery obtained.

In Evans v. Sheraton Park Hotel et al., 164 U.S.App.D.C. 86, 96, 503 F.2d 177, 187 (1974), the Court adopted specific guidelines set forth by the Fifth Circuit in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (1974), to enable trial courts to arrive at just compensation for lawyers:

"1. Time and labor required.

2. The novelty and difficulty of the questions.

3. The skill requisite to perform the legal service properly.

4. The preclusion of other employment by the attorney due to acceptance of the case.

5. The customary fee.

6. Whether the fee is fixed or contingent.

7. Time limitations imposed by the client or the circumstances.

8. The amount involved and the results obtained.

9. The experience, reputation and ability of the attorneys.

10. The 'undesirability' of the case.

11. The nature and length of the professional relationship with the client.

12. Awards in similar cases."

In National Ass'n of Reg. Med. Prog., Inc. v. Weinberger, 396 F.Supp. 842 (1975), Judge Flannery of the U.S. District Court of the District of Columbia addressed the issue of attorney fee awards and reviewed a number of federal decisions on the subject, placing particular emphasis on Lindy, supra, and Evans, supra. Embracing both previous decisions, Weinberger established attorney fees as follows:

"The court will analyze first the type of work involved in the case and the number of hours expended by (the attorney) on various efforts. The court then will consider the proper hourly fee to be charged for this work. After arriving at a strictly hourly figure, the court then will consider what amount, if any, should be added to the petitioner's compensation, based particularly on the contingent nature of this litigation, the benefits conferred on plaintiff class, the service rendered to the public, the difficulty of the issues involved and petitioner's skill in dealing with them, and the other factors set forth by the Court of Appeals in Evans v. Sheraton Park Hotel, supra." at 848, 849.

The strictly hourly figure arrived at by the Court was called the "time compensation factor." All other factors were classified as an "incentive fee or bonus." We conclude from Weinberger that the proper procedure to be followed by trial courts in establishing a reasonable attorney fee in this type of case is to first determine hourly compensation on an hours times rate basis, and to that factor add an amount determined from the applicable factors set forth in Evans, supra.

We find no conflict existing between the federal decisions hereinabove discussed and our Code of Professional Responsibility, 5 O.S.1971, Ch. 1, App. 3. DR. 2-106. FEES FOR LEGAL SERVICES, reads:

"(A) A lawyer shall not enter into an agreement for, Charge, or collect an illegal or Clearly excessive fee.

(B) A fee is Clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm...