Allard v. First Interstate Bank of Washington, N.A.

• Decision Date: 02 March 1989
• Docket Number: No. 55087-5,55087-5
• Citation: 768 P.2d 998,112 Wn.2d 145
• Court: Washington Supreme Court
• Parties: Freeman ALLARD & Evelyn Orkney, as beneficiaries of the trust of J.T. Stone & Georgiana Stone; Leon Thomas Allard, and Betty Jean Coleman, as beneficiaries of the same trusts; and Kimberly W. Osenbaugh as guardian ad litem for minors Holland Allard Covington, Jennifer Jean Coleman, Alicia Dawn Coleman, Clint Freeman Coleman, any beneficiaries yet unborn, Respondents, v. FIRST INTERSTATE BANK OF WASHINGTON, N.A., as Trustee of the trusts of J.T. Stone and Georgiana Stone, Appellant.

Page 145

112 Wn.2d 145

768 P.2d 998

Freeman ALLARD & Evelyn Orkney, as beneficiaries of the

trust of J.T. Stone & Georgiana Stone; Leon Thomas Allard,

and Betty Jean Coleman, as beneficiaries of the same trusts;

and Kimberly W. Osenbaugh as guardian ad litem for minors

Holland Allard Covington, Jennifer Jean Coleman, Alicia Dawn

Coleman, Clint Freeman Coleman, any beneficiaries yet

unborn, Respondents, v. FIRST INTERSTATE BANK OF WASHINGTON, N.A., as Trustee of the

trusts of J.T. Stone and Georgiana Stone, Appellant.

No. 55087-5.

Supreme Court of Washington,

En Banc.

March 2, 1989.

Davis, Wright & Jones, Richard A. Derham, Salde Gorton, Seattle, for appellant.

Edwards & Barbieri, Malcolm L. Edwards, Charles K. Wiggins, Bogle & Gates, Kimberly Osenbaugh, Seattle, Paul N. Luvera, Jr., Mount Vernon, for respondents.

CALLOW, Chief Justice.

First Interstate Bank (Bank) challenges the trial court's award of attorneys' fees to plaintiffs. The Bank contends that the trial court erred by relying on the terms set forth in a contingent fee agreement between plaintiffs and their attorney and erred by awarding fees based on an hourly rate in addition to those based on the contingent fee agreement. We uphold the trial court's award.

I.

In 1979, the plaintiffs brought suit against Pacific National Bank, defendant's predecessor, alleging a breach of the Bank's fiduciary duty in the management of two trusts. Plaintiffs contended that the Bank failed to obtain a reasonable price when it sold property in downtown Seattle owned by one of the trusts. The Bank prevailed at trial, and the plaintiffs appealed. This court reversed, in Allard v. Pacific Nat'l Bank, 99 Wash.2d 394, 663 P.2d 104 (1983), and remanded the case to the trial court for a determination of damages and attorneys' fees.

On remand, the trial court awarded approximately $2.5 million in damages to the plaintiffs. The court also awarded approximately $1 million in attorneys' fees. These fees included an award of approximately $225,000 to the firm of Oles, Morrison & Rinker, et al., which handled the initial trial and appeal. Additionally, the court awarded approximately $750,000 in attorneys' fees for the second trial. These fees included a contingent fee of $596,646 to the firms of Paul Luvera and Associates and Mullavey, Prout, Grenley, Sonkin & Foe, plus $80,000 in fees payable based on an hourly rate to the firm of Edwards & Barbieri for the services of Charles Wiggins and $65,000 in fees to the guardian ad litem.

The Bank has paid all of the attorneys' fees assessed against it with the exception of the $596,646 contingent fee. The Bank asserts that the trial court erred in giving consideration to the contingent fee agreement between plaintiffs and Mr. Luvera when awarding attorneys' fees. Additionally, the Bank contends that the $80,000 paid to Edwards & Barbieri should be deducted from this figure. The Bank appealed the award of attorneys' fees to the Court of Appeals, which certified the following questions to this court:

1) Whether the trial court may rely on a contingent fee agreement between the prevailing party and its attorney in computing and awarding a reasonable attorney fee?

2) Whether the trial court may award attorney fees charged at an hourly rate in addition to the fees awarded based on a contingent fee agreement?

II.

Both the Bank and the Court of Appeals have framed the issues in terms of the propriety of the trial court's reliance on the contingent fee agreement and the award of hourly fees in addition to those awarded under the agreement. However, the issue should be framed as to whether the trial court's award of attorneys' fees, as a whole, was reasonable.

RCW 4.84.020 provides that, "in all other cases in which attorneys' fees are allowed, the amount thereof shall be fixed by the court at such sum as the court shall deem reasonable ..." (Italics ours.) See also Singleton v. Frost, 108 Wash.2d 723, 727, 742 P.2d 1224 (1987); Key v. Cascade Packing, 19 Wash.App. 579, 585, 576 P.2d 929 (1978). The reasonableness of an award is subject to appellate review. Key, at 585, 576 P.2d 929. However, the trial court's determination of what constitutes a reasonable award will not be reversed absent an abuse of discretion. Boeing Co. v. Sierracin Corp., 108 Wash.2d 38, 64, 738 P.2d 665 (1987); Meyer v. University of Washington, 105 Wash.2d 847, 856, 719 P.2d 98 (1986); Allard v. Pacific Nat'l Bank, 99 Wash.2d 394, 407, 663 P.2d 104 (1983). "A trial court abuses its discretion when its exercise of discretion is manifestly unreasonable or based upon untenable grounds or reasons." Davis v. Globe Machine Co., 102 Wash.2d 68, 77, 684 P.2d 692 (1984). Also, "[a]n abuse of discretion exists only where no reasonable person would take the position adopted by the trial court." Singleton, 108 Wash.2d at 730, 742 P.2d 1224 (quoting Wilkinson v. Smith, 31 Wash.App. 1, 14, 639 P.2d 768 (1982)).

In this case, the trial court considered three primary factors in determining the amount of attorneys' fees to be awarded: 1) RPC 1.5(a), 2) the contingent fee agreement between plaintiffs and their attorney, and 3) the court's belief that the plaintiffs should be made whole. A finding of fact states:

The court has reviewed the fees and costs incurred and the contingent fee arrangements in light of the factors in RPC 1.5(a). The court has also observed Mr. Luvera's conduct of the case as lead counsel, the result obtained, and the beneficiaries' financial inability to retain counsel on an hourly fee arrangement, and finds $596,646 to be a reasonable award for attorney's fees and costs.

In addition, during oral ruling, the trial court stated:

Consequently, this court rules that the Allards and the Orkneys are to be made whole and will award attorneys fees to compensate them for all of the amount of money they have paid and owed to Mr. Oles [plaintiffs' counsel during the initial trial and appeal] and all of the amount of money they owe to Mr. Luvera.

The trial court acted reasonably when it considered the factors set forth in RPC 1.5(a) in determining the amount of attorneys' fees to be awarded. These factors include:

(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) The fee customarily charged in the locality for similar legal services;

(4) The amount involved and the results obtained;

(5) The time limitations imposed by the client or by the circumstances;

(6) The nature and length of the professional relationship with the client (7) The experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) Whether the fee is fixed or contingent.

RPC 1.5(a). We have recognized that the factors set forth in CPR DR 2-106(B), the predecessor to RPC 1.5(a), may be used as a guideline for determining reasonable attorneys' fees. See Singleton, 108 Wash.2d at 731, 742 P.2d 1224, Kimball v. PUD 1, 64 Wash.2d 252, 257, 391 P.2d 205 (1964); see also Informal Opinion 88-1, Contingent Fee Agreements in Cases Where the Court Sets a Reasonable Attorney's Fee, Wash.State Bar News, p. 23 (Feb. 1988).

Furthermore, the trial court also acted reasonably when it considered the contingent fee agreement between plaintiffs and their attorney in making its award. RPC 1.5(a) specifically authorizes consideration of whether the fee was fixed or contingent. See RPC 1.5(a)(4), (8). Pennsylvania v. Delaware Vly. Citizens' Coun. for Clean Air, 483 U.S. 711, ----, 107 S.Ct. 3078, 3085, 97 L.Ed.2d 585, 596 (1987) (Delaware II ), impliedly authorized the consideration of contingent fee agreements in making an award of attorneys' fees. In dicta, the Supreme Court noted,

the contingency factor was meant to focus judicial scrutiny solely on the existence of any contract for attorney's fees which may have been executed between the party and his attorney. "The fee quoted to the client or the percentage of the recovery agreed to is helpful in demonstrating that attorney's fee expectations when he accepted the case."

Delaware II, 483 U.S. at ----, 107 S.Ct. at 3085, 97 L.Ed.2d at 596 (quoting Johnson v. Georgia Hwy. Express, Inc., 488 F.2d 714, 718 (5th Cir.1974)).

A trial court may consider the existence of a contingent fee agreement in making its award of attorneys' fees, but should not rely solely on the terms of such an agreement in determining the amount. See Leubsdorf, Recovering Attorney Fees as Damages, 38 Rutgers L.Rev. 439, 476 (1986); Note, Attorney's Fees--Computing a "Reasonable Attorney's Fees" Under the Civil Rights Attorney's Fees Awards Act--Cooper v. Singer, 33 U.Kan.L.Rev. 367, 388 (1985). The court must independently decide what constitutes areasonable award. In a case involving condemnation proceedings, the trial court awarded attorneys' fees totalling 15 percent of the difference between the city's offer and the jury verdict, the same amount provided for in a contingent fee agreement between the condemnees and their attorneys. See Seattle v. Seattle-1st Nat'l Bank, 79 Wash.2d 490, 487 P.2d 777 (1971). We upheld the award, stating, "The [trial] court determined that, independently of the contract between the respondents and their attorneys, a fee of 15 per cent of the difference between the city's offer and the jury's verdict was reasonable." (Italics ours.) Seattle, at 493, 487 P.2d 777. Key v. Cascade Packing, supra, stated in reference to a contingent fee arrangement:

Such an arrangement is perfectly valid, but it should not control the size of the burden placed on a defendant. The existence of a contingent fee arrangement between an attorney and client says nothing about the reasonableness of an award of attorney's fee granted to a plaintiff against a defendant. The attorney's fee awarded...