Schweiger v. China Doll Restaurant, Inc.

• Decision Date: 12 February 1969
• Citation: 138 Ariz. 183,673 P.2d 927
• Parties: Seymour SCHWEIGER and Jimmie Komatsu, Co-Trustees of the Komatsu-Okamoto Trust, Dated
• Court: Arizona Court of Appeals

Page 927

673 P.2d 927

138 Ariz. 183

Seymour SCHWEIGER and Jimmie Komatsu, Co-Trustees of the Komatsu-Okamoto Trust, Dated February 12, 1969, Plaintiffs-Appellees and Cross-Appellants, v. CHINA DOLL RESTAURANT, INC., an Arizona corporation; and Roy Ong and May Ong, Defendants-Appellants and Cross-Appellees.

No. 1 CA-CIV 5318.

Court of Appeals of Arizona Division 1, Department D.

July 28, 1983.

Rehearing Denied Sept. 1, 1983.

Review Denied Oct. 18, 1983.

Sternberg, Sternberg & Rubin, Ltd. by Ronald I. Rubin, Phoenix, for plaintiffs-appellees and cross-appellants

Biaett & Bahde by Kenneth Biaett, Glendale, for defendants-appellants and cross-appellees.

OPINION

MEYERSON, Judge.

In this appeal, we set forth guidelines for the filing of affidavits in support of requests for attorneys' fees where the parties have agreed by contract that the prevailing party shall be entitled to recover reasonable fees. Although the court normally disposes of such matters by unpublished orders, because of the growing number of fee applications, this opinion is necessary to give guidance to counsel in submitting fee requests. See Note, Statutory Attorney's Fees in Arizona: An Analysis of A.R.S. Section 12-341.01, 24 Ariz.L.Rev. 659, 680 (1982).

I. BACKGROUND OF THE LITIGATION

Appellees and cross-appellants Seymour Schweiger and Jimmie Komatsu (Schweiger) initiated this litigation in 1976 by filing an action against China Doll Restaurant, Inc. (China Doll) seeking to terminate a lease existing between the parties and damages for breach of an alleged oral agreement to mutually cancel the lease. Schweiger leased property located in Phoenix to China Doll for use as a restaurant.

In China Doll Restaurant, Inc. v. Schweiger, 119 Ariz. 315, 580 P.2d 776 (Ct.App.1978), we reversed a summary judgment which was entered in Schweiger's favor concerning the termination of the lease based upon China Doll's alleged breach. We upheld a summary judgment against China Doll on its counterclaim against Schweiger for lost profits for a Mexican restaurant which China Doll intended to operate on the premises. On remand, and following a trial, judgment was entered in favor of Schweiger finding that China Doll had breached an oral agreement to cancel the lease of the property. Schweiger recovered lost rents for the remaining period of the lease and was compensated for expenses needed to restore the premises. The trial court denied Schweiger's request for attorneys' fees, refused to amend the judgment to include an award for pre-judgment interest and refused to grant punitive damages. China Doll appealed from the judgment awarding Schweiger lost rents and damages and Schweiger filed a cross-appeal from the portion of the judgment denying attorneys' fees, pre-judgment interest, and punitive damages.

In a memorandum decision filed November 23, 1982, we upheld the judgment in Schweiger's favor with respect to lost rents and damages, and in Schweiger's cross-appeal, we reversed the trial judge's ruling denying attorneys' fees but affirmed the portions of the order denying pre-judgment interest and punitive damages. In our memorandum decision, we advised the parties that Schweiger could submit an application for attorneys' fees for legal services rendered on appeal.

II. THE FEE APPLICATION

In accordance with our memorandum decision, Schweiger filed a statement of costs and attorneys' fees requesting $235 ¹ in costs and $10,331.75 in attorneys' fees. China Doll filed an objection asserting that the affidavit was insufficient because it failed to disclose work performed in the superior court proceedings, failed to itemize the services provided, particularly between those services performed in connection with the cross-appeal, and more generally that the amount of fees was unreasonable. Schweiger filed a supplemental statement in which he itemized the attorneys' fees and added fees incurred for the motion for rehearing Schweiger avowed that no time was included for work performed in the superior court. China Doll opposed the supplemental statement of costs generally re-stating arguments raised in its original objections. ²

III. DETERMINING A REASONABLE FEE

A. Introduction

Like most courts, this court is faced with an ever-burgeoning growth of fee applications in a myriad of cases. Increasingly, the court's time is taken up with determining reasonable fees in cases ranging from contract disputes to litigation which arises under numerous statutes ³ containing attorneys' fees provisions. The slow but steady shift from the historic American rule, which provides that in the ordinary case each party should bear its own fees, to the English rule, which provides that the prevailing party is ordinarily entitled to recover fees, is changing the nature of litigation and the judicial function in many instances.

We do not mean to suggest, however, that this evolution is necessarily bad. We recognize that in many instances important rights will be vindicated only because the prevailing party may recover fees. And this court has held that the award of fees is one way to discourage the filing of frivolous or meritless claims. Price v. Price, 134 Ariz. 112, 654 P.2d 46 (Ct.App.1982). Thus, more judicial time will necessarily be devoted to a consideration of requests for fees and, hopefully, through this opinion, we can establish guidelines for the filing of fee applications which will facilitate the work of counsel as well as the work of this court.

The basis for the fee request in this case is a contractual provision in the parties' lease which provides that the lessor (Schweiger) may recover from the lessee (China Doll) reasonable attorneys' fees in connection with any legal proceeding in which the lessor shall prevail. Thus, in this opinion, we do not attempt to address special concerns which may exist in fee applications based upon statutes limiting or restricting the amount of fees which may be awarded. ⁴ Nor do we address herein the special considerations which arise in cases where fees are charged to the client on other than an hourly basis for time expended. ⁵ We are concerned only with determining reasonable attorneys' fees in commercial litigation. See generally 2 S. Speiser, Attorneys' Fees § 15:1-49 (1973).

B. Previous Arizona Decisions

In Leggett v. Wardenburg, 53 Ariz. 105, 85 P.2d 989 (1939), the court held that in connection with the predecessor statute to A.R.S. § 14-3720 (providing for reasonable attorneys' fees in certain probate proceedings) the "payment of an attorney's fee must be reasonable and bear a direct relation to the amount involved, and the quality, kind and extent of the service rendered." Id. at 107, 85 P.2d at 990. In a domestic relations matter, the supreme court stated that "[l]awyers are entitled to a fair and reasonable compensation for their services. Courts should not hesitate in fixing an amount for attorney's fees based upon the evidence, and which is in accordance with the usual reasonable charges made by members of the profession." Blaine v. Blaine, 63 Ariz. 100, 108, 159 P.2d 786, 789 (1945). The court went on to set the fee giving consideration to the "efforts of counsel in this cause, the time involved, the evidence as to the value of the services, and the character of the case ...." Id. And, in an action arising under a contract which contained a provision for the payment of reasonable attorneys' fees, the supreme court, without setting forth the components of a reasonable fee, held that it is error to award fees absent any proof of what is "reasonable." Crouch v. Pixler, 83 Ariz. 310, 315, 320 P.2d 943, 946 (1958).

The elements to be considered in determining a reasonable attorneys' fee were enumerated by the supreme court in Schwartz v. Schwerin, 85 Ariz. 242, 336 P.2d 144 (1959). In Schwartz, the amount of compensation had not been agreed upon by the parties, and thus the court held that the attorney's claim must be based on quantum meruit to establish the "reasonable value of services rendered." Id. at 245, 336 P.2d at 146. The court identified the factors to be considered in determining a reasonable fee as follows:

(1) the qualities of the advocate: his ability, his training, education, experience, professional standing and skill;

(2) the character of the work to be done: its difficulty, its intricacy, its importance, time and skill required, the responsibility imposed and the prominence and character of the parties where they affect the importance of the litigation;

(3) the work actually performed by the lawyer: the skill, time and attention given to the work;

(4) the result: whether the attorney was successful and what benefits were derived.

Id. at 245-46, 336 P.2d at 146. See Rule 29(a), Rules of the Arizona Supreme Court DR 2-106. ⁶ The court noted that no one element should predominate or be given undue weight. Thus, although Schwartz v. Schwerin is a useful starting point, it fails to give specific guidance in how the enumerated factors are to be used in calculating a reasonable fee. See generally Goodman, Attorney's Fees in Arizona, Adopting a New Approach, 18 Ariz.B.J. 8 (April, 1983).

C. Reasonable Billing Rate

The beginning point in a development of a reasonable fee is the determination of the actual billing rate which the lawyer charged in the particular matter. This can be distinguished from the traditional measure used in public-rights litigation which is generally referred to as the reasonable hourly rate prevailing in the community for similar work. Copeland v. Marshall, 641 F.2d 880, 892 (D.C.Cir.1980). Unlike public-rights litigation, and contingent-fee litigation, for example, in corporate and commercial litigation between fee-paying clients, there is no need to determine the reasonable hourly rate prevailing in the community for similar work because the rate charged by the lawyer to the client is the best indication of what is reasonable under the circumstances of the particular...