Cotton v. McCulloh

• Decision Date: 15 December 2005
• Docket Number: No. 05-60.,05-60.
• Citation: 2005 WY 159,125 P.3d 252
• Parties: C. John COTTON, Appellant (Petitioner), v. Gerri E. McCULLOH, Appellee (Respondent).
• Court: Wyoming Supreme Court

Page 252

125 P.3d 252

2005 WY 159

C. John COTTON, Appellant (Petitioner), v. Gerri E. McCULLOH, Appellee (Respondent).

No. 05-60.

Supreme Court of Wyoming.

December 15, 2005.

COPYRIGHT MATERIAL OMITTED

Representing Appellant: C. John Cotton of Cotton Law Office, Gillette, Wyoming; and Stephen H. Kline of Kline Law Office, P.C., Cheyenne, Wyoming. Argument by Mr. Kline.

Representing Appellee: R. Michael Vang of Brown & Hiser, LLC, Laramie, Wyoming.

Before HILL, C.J., and GOLDEN, KITE, VOIGT, and BURKE, JJ.

KITE, Justice.

[¶ 1] Attorney C. John Cotton appeals from the district court's affirmance of a decision rendered by a panel of the Wyoming State Bar Committee on Resolution of Fee Disputes (the fee dispute committee). Mr. Cotton and client Gerri McCulloh disagreed about the amount of attorney's fees and costs Mr. Cotton was entitled to for representing her in a divorce and other related proceedings. The fee dispute committee ordered Mr. Cotton to refund $23,533.16 to Ms. McCulloh. The district court affirmed the fee dispute committee's decision. Finding no error, we also affirm.

ISSUES

[¶ 2] Mr. Cotton presents the following issues for our consideration:

1. Did the fee dispute committee and the district court fail to make necessary findings regarding mediation and GAL expenses, and regarding effect of appellant McCulloh's agreement to pay fees?

2. Should credit be afforded for $6,148.59 in mediation and initial GAL expenses paid at the request and the benefit of Gerri E. McCulloh?

3. Did the court award fees in February 1999, or did the parties treat the funds awarded by the court as fees modifying the initial cap, including the fees now at issue?

4. Are Gerri E. McCulloh's claims that she did not receive the bills, and did not treat the amounts disbursed as fees contrary to her own written admissions?

5. Are Gerri E. McCulloh's claims barred by principles of contract, laches and estoppel?

Ms. McCulloh articulates a single issue:

Did the fee dispute committee abuse its discretion by the manner in which it entered a judgment in the fee dispute arbitration hearing between Ms. McCulloh and Mr. Cotton?

FACTS

[¶ 3] This case is the most recent chapter in the ongoing saga of Ms. McCulloh's divorce from John Drake. In McCulloh v. Drake, 2001 WY 56, 24 P.3d 1162 (Wyo.2001) (McCulloh I), this Court reviewed the district court's determinations on the parties' divorce and Ms. McCulloh's separate tort claims. We reserved discussion of the child custody and support issues because an appeal of a post-decree custody modification was also pending before this Court. Id., ¶ 11-12, 24 P.3d at 1165. We concluded the district court did not abuse its discretion when it divided the marital property. Id., ¶ 19, 24 P.3d at 1168. With regard to Ms. McCulloh's tort claims, we recognized, under certain circumstances, a spouse may assert a claim for intentional infliction of emotional distress for conduct which occurred during the marriage and the tort claim should be heard separately from the divorce proceedings. Id., ¶¶ 26, 29-30, 24 P.3d at 1170-71. Consequently, this Court affirmed in part, reversed in part, and remanded to the district court for a jury trial on Ms. McCulloh's intentional infliction of emotional distress claim. Id., ¶¶ 29-30, 43, 24 P.3d at 1170-71, 1173.

[¶ 4] In 2002, we reviewed the district court's decision granting Ms. McCulloh's request for modification of the child custody provisions of the original divorce decree. Drake v. McCulloh, 2002 WY 50, 43 P.3d 578 (Wyo.2002) (McCulloh II). The district court ruled a substantial change in circumstances had occurred since the original decree and awarded primary custody of the child to Ms. McCulloh. Id., ¶ 1, 43 P.3d at 580. Finding sufficient evidence to support that conclusion, we affirmed the district court's decision. Id., ¶ 22, 43 P.3d at 585. Ms. McCulloh, subsequently, challenged the district court's denial of her petition for increased child support in McCulloh v. Drake, 2005 WY 18, 105 P.3d 1091 (Wyo.2005) (McCulloh III). We affirmed in part, reversed in part, and remanded for a determination of whether she was entitled to an increase in child support payments. Id., ¶ 29, 105 P.3d at 1098.

[¶ 5] The case at bar involves an attorney's fees dispute between Ms. McCulloh and Mr. Cotton. Ms. McCulloh was originally represented by another attorney in the divorce proceedings, but, after a failed mediation, she sought new counsel. Ms. McCulloh contacted Mr. Cotton, and he identified the potential tort claims. Ms. McCulloh and Mr Cotton entered into a representation agreement on October 17, 1998, which covered the divorce, initial appeal, and the tort claims. The fees section of the agreement included hourly and contingency fee provisions. The hourly fee provision included a cap on the hourly fees which Mr. Cotton could charge Ms. McCulloh. The agreement provided the maximum hourly fees for the divorce would be the greater of $15,000 or the amount of hourly fees assessed against the opposing party and the maximum hourly fees on appeal would be the greater of $2,500 or the amount of hourly fees assessed against the opposing party. Under the terms of the representation agreement, Ms. McCulloh was also responsible for reimbursing Mr. Cotton for any costs he paid on her behalf.

[¶ 6] While the divorce proceeding was pending, Mr. Cotton filed a motion requesting an award of attorney's fees and costs from Mr. Drake, pursuant to Wyo. Stat. Ann. § 20-2-111 (LexisNexis 2005).¹ The district court entered an Interim Stipulated Order of Distribution which confirmed the parties' agreement that Mr. Drake would pay Ms. McCulloh $50,000 on or before February 12, 1999. The court's order specifically stated that it was not ruling upon Ms. McCulloh's motion for attorney's fees and she could use the funds in any way she pleased, subject to the requirement she provide an accounting to Mr. Drake. In response to the district court's order, Mr. Drake sent a check to the clerk of the district court with a notation written on the memo line which stated "Legal Fees Plaintiff." Mr. Cotton arranged for Ms. McCulloh to sign a limited power of attorney, giving him the authority to execute any checks made payable to her from Mr. Drake or the clerk of the district court. Pursuant to the limited power of attorney, Mr. Cotton deposited the $50,000 in his trust account.

[¶ 7] Mr. Cotton prepared an accounting of the $50,000, which showed he disbursed approximately $35,000 to himself for attorney's fees. He gave approximately $2,800 to Ms. McCulloh and applied the remaining funds to the costs of the action. The district court held a bench trial and issued a decision letter in August 1999, addressing child custody, child support, property division, and Ms. McCulloh's tort claims. The district court's property division included a $200,000 cash award to Ms. McCulloh. Ms. McCulloh and Mr. Drake both appealed the district court's decision in McCulloh I.

[¶ 8] Early in 2000, Mr. Cotton and Ms. McCulloh believed the $200,000 cash award from Mr. Drake would soon be available. Mr. Cotton told her the check should be made payable to both of them and, if she did not agree, he would not continue to represent her in the on-going litigation with Mr. Drake. Ms. McCulloh did not agree with Mr. Cotton's claim to the property distribution and wrote a letter dated February 1, 2000, to the executive director of the Wyoming State Bar, questioning Mr. Cotton's billing practices and requesting a fee arbitration. However, instead of sending the letter, she simply read it to Mr. Cotton over the telephone. As it turned out, the $200,000 property distribution was not made available at that time.

[¶ 9] On June 15, 2001, this Court issued its decision in McCulloh I and a few days later Mr. Cotton and Ms. McCulloh had a meeting in his office to discuss the outstanding fees and costs. They were not, however, able to reach an agreement, and on August 3, 2001, Ms. McCulloh sent a letter to Mr. Cotton, again questioning his billing practices.

[¶ 10] In September 2001, Mr. Drake tendered $169,200 to the district court. Mr. Cotton sought and received an order from the district court for release of the funds to him and Ms. McCulloh. Ms. McCulloh contacted the district court clerk's office and directed them to deliver the money directly to her. Mr. Cotton filed a $138,829.88 attorney's fees lien against the proceeds, and the funds were tendered to him. Ms. McCulloh fired Mr. Cotton and demanded he send the property distribution proceeds to her. Nevertheless, he used Ms. McCulloh's limited power of attorney to disburse: $100,000 to himself for outstanding costs and fees; $40,000 to the district court to replenish an account which was held jointly by Ms. McCulloh and her minor son; $7,500 to pay Ms. McCulloh's prior attorney; and the remaining $21,700 to Ms. McCulloh.

[¶ 11] On December 13, 2001, Ms. McCulloh filed a petition for resolution of fee dispute with the fee dispute committee, and, soon thereafter, Mr. Cotton filed his own fee dispute petition. The fee dispute committee held a hearing on both petitions on July 12, 2002. On March 31, 2003, the fee dispute committee issued its resolution order, requiring Mr. Cotton to refund $71,033.16 to Ms. McCulloh. The fee dispute committee concluded Mr. Cotton's fees for the initial divorce and appeal were limited to the hourly fee cap contained in the parties' representation agreement, but the subsequent proceedings were not included in the fee agreement. The fee dispute committee also awarded him $4,000 for his contingency fee in the tort action. With regard to Mr. Cotton's request for reimbursement of costs, the fee dispute committee carefully reviewed each of his bills and awarded all of his claimed costs, with the exception of a few items which were billed in error.

[¶ 12] Mr. Cotton filed a motion for partial reconsideration, asking the fee dispute committee to...