Booker v. Midpac Lumber Co., Ltd.

• Decision Date: 06 August 1982
• Docket Number: No. 7534,7534
• Citation: 649 P.2d 376,65 Haw. 166
• Parties: R. G. BOOKER, Plaintiff-Appellee, v. MIDPAC LUMBER CO., LTD., Cesario R. Constantino, Stewart Lai, and John Does 1-10, Defendants-Appellees, and D. N. Ingman, Formerly Attorney for Plaintiff, Appellant.
• Court: Hawaii Supreme Court

Page 376

649 P.2d 376

65 Haw. 166

R. G. BOOKER, Plaintiff-Appellee, v. MIDPAC LUMBER CO., LTD., Cesario R. Constantino, Stewart Lai, and John Does 1-10, Defendants-Appellees and D. N. Ingman, Formerly Attorney for Plaintiff, Appellant.

No. 7534.

Supreme Court of Hawai'i.

Aug. 6, 1982.

Reconsideration Denied Aug. 25, 1982.

Syllabus by the Court

1. The discharge of an attorney employed under a contingent fee contract prior to the occurrence of the contingency puts an end to the contract. However, he is entitled to a reasonable attorney's fee to be determined, upon consideration of all relevant factors, before or after the final disposition of the client's case.

2. The exercise of discretion by the trial judge shall not be disturbed upon appellate review except for the abuse thereof. This principle is applicable to a review of the reasonableness of an allowance or award of attorneys' fees.

3. Discretion denotes the absence of a hard and fast rule. When invoked as a guide to judicial action it means a sound discretion, that is to say, a discretion exercised not arbitrarily or wilfully, but with regard to what is right and equitable under the circumstances and the law, and directed by the reason and conscience of the judge to a just result.

4. Where the efforts of an attorney who was employed under a contingent fee contract would have a tendency to advance the client's claim or to enhance the possibility of a favorable result, the contract and the reasonably estimated value of the case should be considered in fixing a reasonable attorney's fee.

D. N. Ingman, pro se.

Christopher P. McKenzie, Honolulu (McKenzie, Trecker & Fritz, Honolulu, of counsel) for plaintiff-appellee.

Before RICHARDSON, C. J., LUM and NAKAMURA, JJ., and Retired Justices OGATA and MENOR assigned by reason of vacancies.

NAKAMURA, Justice.

The question is whether the circuit court abused its discretion in setting the amount of a fee to be allowed an attorney who was discharged without cause prior to the conclusion of a personal injury case in which there purportedly was a contingent fee agreement between attorney and client. Certiorari was granted to permit a review of the intermediate appellate court's decision vacating the circuit court's order because we noted a possible discrepancy between the appellate court's ruling and our prior decision on the determination of reasonable attorneys' fees within this context. Although we have examined the record closely, we are unable to detect an abuse of discretion on the part of the circuit court, and reinstate its fee order.

I.

Plaintiff-appellee R. G. Booker (Booker) was injured in a vehicular accident on August 2, 1978; a few days later he retained Appellant David N. Ingman (Ingman) to represent him in asserting a claim for damages resulting from the accident. The attorney filed a complaint on Booker's behalf in the Circuit Court of the First Circuit against Defendants-appellees Midpac Lumber Co., Ltd., Cesario R. Constantino, and Stewart Lai on August 11, 1978. A Statement of Readiness, an Order of Notice to Set Case for Trial, and a Pre-trial Statement were filed by Ingman on February 5, 1979. Although the filing of a Statement of Readiness denoted that the case was ready for trial, ¹ he had not engaged in any discovery or other preliminary proceedings authorized by the Hawaii Rules of Civil Procedure.

Booker discharged Ingman on March 2, 1979, and requested the attorney to submit a statement of costs and fees incurred for payment. Ingman was also asked to execute a formal withdrawal of counsel and to transmit the case files to Booker. The requests were not honored; instead, Ingman filed a Notice of Lien for Attorney's Fees on March 28, 1979. Booker thereupon filed a motion seeking the attorney's removal from the case by the circuit court. Ingman was removed from the case after a hearing conducted on April 18, 1979, and new counsel was substituted in his stead. He was further ordered to release the case files.

Rather than complying with this directive, Ingman moved for a reconsideration of the order for the release of the files. Booker responded with a Motion to Strike Lien and Determine Reasonable Attorneys Fees. The motion and counter-motion were heard on May 16, 1979, and the court denied Ingman's motion. But no definitive action was taken by the court on Booker's motion, as it was continued to another date for further hearing.

When the matter was heard again on June 15, 1979, Ingman acknowledged Carroll v. Miyashiro, 50 Haw. 413, 441 P.2d 638 (1968), was the controlling precedent. He argued our decision there supported his position that a fee equal to "the contract amount (one-third of the ultimate recovery from the suit) less the percentage of time that opposing counsel (Booker's new lawyer, Christopher McKenzie) puts in on the case," should be approved. The circuit court, however, indicated a disinclination to accept Ingman's viewpoint and queried him extensively about the actual hours expended on Booker's behalf. The attorney admitted he maintained no record of time spent but estimated he had devoted sixty to sixty-five hours to the case. The court, however, did not accept Ingman's "guess", for in its opinion the pleadings and other documents in the file failed to substantiate this. And from a review thereof, it concluded twenty hours was a generous estimate of the time expended on the case. The court nevertheless allowed a fee in the sum of fifteen hundred dollars premised on twenty-five hours of work at an hourly rate of sixty dollars.

Ingman appealed, and the appeal was assigned to the Intermediate Court of Appeals. The appellate court concluded "that the lower court manifestly abused its discretion when it explicitly refused to consider two factors relevant to its determination of Ingman's fee." Booker v. Midpac Lumber Co., 2 Haw.App. 569, 570, 636 P.2d 1359, 1361 (1981). In the appellate court's view Carroll v. Miyashiro, supra, decreed a consideration of the "contingency fee contract and the reasonably estimated value of the case." Booker v. Midpac Lumber Co., supra, at 573, 636 P.2d at 1363.

II.

Courts have generally held that a client has a right to discharge his attorney without cause, for they are mindful of the delicate and confidential nature of the attorney-client relationship and the baneful consequences of friction and distrust. S. Speiser, Attorneys' Fees § 4:24 (1973). They further agree the presence of a contingent fee agreement does not affect this right. But there is no general agreement on how the discharged attorney who was retained under such a contract should be compensated. Id. at §§ 4:32-:36.

In some jurisdictions an attorney's discharge prior to the occurrence of the contingency "is regarded as putting an end to the contract, so that his recovery of compensation, if any, must be upon quantum meruit for services actually rendered." In other jurisdictions the attorney "is entitled to recover as for constructive performance." Id. at § 4:33. But the fee recoverable is often "the amount of the settlement or judgment ultimately realized, less a fair allowance for services and expenses not expended by the discharged attorney in performing the balance of the contract." Id. at § 4:34. There is, however,

an increasing tendency to hold that an attorney employed on a contingent fee contract who is discharged without fault on his part before the happening of the contingency, is not, as a general rule, entitled to recover on the contract, but may recover merely on a quantum meruit the reasonable value of the services he rendered.

Id. at § 4:36 (footnote omitted). See also Annot., 92 A.L.R.3d 690 (1979).

As the litigants have observed, our prior involvement with the precise issue at hand has been confined to Carroll v. Miyashiro, supra, where the posture in which the case reached us obviated the necessity of a detailed discussion of the question. The conclusion there was also put in somewhat cryptic language; it read:

The amount of appellant's fee shall be determined by the circuit court, upon consideration of all relevant factors, at the time of, or prior to, the final disposition of plaintiff's case against the defendants.

50 Haw. at 414, 441 P.2d at 639. That we regarded an attorney's discharge prior to the materialization of the relevant contingency "as putting an end to the contract," however, is patent. For we pointedly left the determination of the attorney's compensation to the circuit court, with further discretion to decide what was reasonable under the circumstances even before the conclusion of the client's case.

The reference to the "consideration of all relevant factors" of course required no elaboration, since we had discussed the pertinent guides for ascertaining the real value of an attorney's service shortly before then in Sharp v. Hui Wahine, Inc., 49 Haw. 241, 413 P.2d 242 (1966). ² Thus, our task here is to examine the circumstances under which the circuit court approved the fee to determine whether its exercise of discretion was consistent with the tenets enunciated in Sharp.

III.

The Intermediate Court of Appeals concluded the circuit court's failure to consider "the contingency fee contract and the reasonably estimated value of the case" in fixing the discharged attorney's fee constituted "a manifest abuse of discretion." We do not doubt that the foregoing considerations may well be relevant and material to the determination of compensation where the attorney was retained under a contingent fee contract. Yet a review of the record convinces us that the circuit court's allowance of a fee primarily on the basis of time spent on the client's case was not necessarily error.

A.

The transcript of the hearing to determine a reasonable attorney's fee substantiates the circuit court's appreciation of Carroll v. Miyashiro and its implications. The transcript further confirms the court's unsuccessful attempts to facilitate a...