Gaughan v. Gaughan
| Decision Date | 16 January 1990 |
| Docket Number | No. C2-89-1100,C2-89-1100 |
| Citation | 450 N.W.2d 338 |
| Court | Minnesota Court of Appeals |
| Parties | In re the Marriage of Patrick J. GAUGHAN, Lower Court Petitioner, v. Barbara A. GAUGHAN, Lower Court Respondent. HILLSTROM & BALE, LTD., Respondent, v. Patrick J. GAUGHAN, Appellant. |
Syllabus by the Court
1. In an attorneys' lien proceeding under Minn.Stat. Sec. 481.13, where attorneys present evidence of the reasonable value of their services, the client must be afforded an opportunity to challenge that evidence.
2. Prejudgment interest under Minn.Stat. Sec. 549.09, subd. 1(b) is not allowed in an attorneys' lien proceeding.
Thomas P. Malone, Minneapolis, for Patrick J. Gaughan.
Neil Polfstein, Hillstrom & Bale, Ltd., Minneapolis, for Hillstrom & Bale, Ltd.
Considered and decided by FOLEY, P.J., and KALITOWSKI and STONE *, JJ., without oral argument.
Patrick Gaughan appeals from a judgment entered on June 7, 1989, in favor of Hillstrom & Bale, Ltd. (the Firm). Judgment was entered pursuant to an amended order and memorandum issued June 7, 1989.
In November, 1986, the Firm agreed to represent Gaughan in his marriage dissolution. Gaughan was told that attorney Robert Hillstrom would be the individual leading the representation and would charge $195 per hour for his services. The Firm did not inform Gaughan of the hourly rates of any other attorney.
Gaughan signed a written retainer in February, 1987. That agreement was silent as to the amount of the Firm's attorneys' fees or hourly rates. It did list the factors which would be used to determine the overall fee, but it left the determination of the fee to the Firm's discretion. The Firm warned Gaughan that because of the complexity of the dissolution action, the fee could exceed $500,000.
In March, 1987, Gaughan gave the Firm a $15,000 retainer. In September, 1987, the Firm requested another $50,000. Gaughan paid the additional $50,000, and asked the Firm to justify the request with an itemization of the services provided. The Firm sent Gaughan a letter indicating the total time spent in early October, 1987. In late October, the Firm gave Gaughan the itemization showing a total bill of approximately $110,000. Upon receipt of the itemization, Gaughan discharged the Firm.
On August 1, 1988, the Firm began a civil suit, based in contract, by filing a summons and complaint seeking $45,264.31. This amount represented the total bill less the $65,000 already paid by Gaughan. A week later, as part of the dissolution case, the Firm filed an application for an attorneys' lien for the same amount under Minn.Stat. Sec. 481.13 (1988). Thus, the Firm created two actions to determine how much money Gaughan owed the Firm.
On August 14, 1988, Gaughan answered the summons and complaint in the contract case. He also filed a counterclaim asking for a refund of all or part of the $65,000 paid to the Firm, alleging that the $65,000 paid was not exhausted by the Firm's legal services. Four days later, Gaughan served a request for production of documents on the Firm. The request asked for the original handwritten time slips used to compute the Firm's fee. 1 On that same day, the Firm, in the dissolution case, filed an amended application for an attorneys' lien.
On August 19, 1988, the trial court, in the dissolution case, heard the Firm's attorneys' lien application. Gaughan objected to the hearing on a number of grounds. He also moved for a continuance claiming that 11 days was not enough time to prepare a defense to the attorneys' lien application. The trial court rejected Gaughan's objections and denied his motion for a continuance.
At the hearing, the Firm orally moved the trial court for an order to quash Gaughan's request for production of documents. Gaughan argued that the original time slips were necessary to perform a handwriting analysis. This analysis, Gaughan argued, was necessary to prove his claim that the time slips were not filled out by the attorneys and were not filled out at the time the Firm performed the work. Gaughan alleged the analysis would prove the Firm's claimed fee was not reasonable and perhaps fraudulent and that he should prevail on his counterclaim.
Gaughan also claimed the trial judge had no jurisdiction to rule on the motion to quash. Gaughan argued the request for production of documents was related to the contract case, and the trial judge was assigned only to the dissolution case. Also because the hearing was only in regard to the attorneys' lien application, he argued that the trial judge could not rule on the Firm's motion.
The Firm admitted that the time slips were not filled out contemporaneously with the work done and often were not filled out by the attorneys, but rather by staff personnel based upon attorney notes. The Firm also admitted that many time slips covering many days were filled out at the same time. Based on this admission, the trial court saw no reason for the production of the original time slips, and quashed the request.
Although the trial court denied Gaughan's motion to continue the attorneys' lien application hearing, it did not rule on the application. Instead, the trial court accepted the computer-generated itemization of the Firm's bill and took the matter under advisement. The trial court also allowed the parties more time to submit further written arguments.
On September 14, 1988, Gaughan filed a notice to remove the trial judge from the contract case. The next day, the trial court heard Gaughan's motion to remove, and the Firm's motion to consolidate the contract case with the attorneys' lien application. The trial judge found the removal motion to be untimely and denied it. He reserved ruling on the consolidation request.
On November 10, 1988, Gaughan asked the trial court to reconsider its order quashing the request for production of documents. The trial court denied the motion on the grounds that the original time slips were unnecessary given the Firm's admission.
On March 13, 1989, the trial court issued an order and memorandum formally consolidating the two cases and finding the reasonable value of the Firm's services to be $95,386.81. After giving Gaughan credit for the $65,000 paid, the trial court ordered a $30,386.81 attorneys' lien to be charged against Gaughan's property.
On April 26, 1989, the attorneys' lien enforcement hearing was held. During the hearing, the Firm asked for prejudgment interest. The trial court reserved ruling on this motion. Gaughan moved for a hearing on the issues alleged in his counterclaim in the contract action. The trial court denied this motion, stating that Gaughan was not entitled to a refund of any money because the reasonable value of the Firm's services was over $65,000. Thus, there were no issues remaining to be tried in the counterclaim action.
On June 7, 1989, the trial court issued an amended order and memorandum, ordering enforcement of the attorneys' lien. The trial court also stated that it found in favor of the Firm for $30,386.81 in both the attorneys' lien application and the contract case, "with any payment on one judgment serving as a credit against the other judgment, dollar for dollar." The order also denied the Firm's request for prejudgment interest.
Gaughan filed a notice of appeal of the June 7 order and memorandum, alleging that the trial judge should have removed himself from the contract case, and that Gaughan did not get an opportunity to fairly litigate the issue of the reasonable value of the Firm's services. The Firm filed a notice of review alleging that the trial court erred in denying it prejudgment interest.
1. Did the trial court err in denying Gaughan's motion to remove?
2. Did the trial court err in determining the reasonable value of the Firm's legal services?
3. Did the trial court err by failing to award prejudgment interest to the Firm?
A party has a right to remove a judge from a trial or hearing. Minn.R.Civ.P. 63.03. 2
Gaughan requested production of documents in the civil contract action. On August 19, 1988, during the attorneys' lien application hearing, the Firm orally moved to quash Gaughan's request for production of documents. Neither the trial court nor Gaughan were notified that this motion regarding the contract action would be made at the attorneys' lien hearing. Although the trial judge was not previously assigned to the contract action, because he ruled on the Firm's motion to quash, the trial judge "presided at a motion * * * [and thus] may not be removed except upon an affirmative showing of prejudice on the part of the judge." Id. See also Zweber v. Zweber, 435 N.W.2d 593, 594 (Minn.Ct.App.1989), pet. for rev. denied (Minn. March 29, 1989).
In his notice to remove Gaughan made no showing of prejudice on the part of the trial judge. Therefore removal was not required under Minn.R.Civ.P. 63.03. Furthermore, Gaughan did not file his notice to remove until 26 days after the trial judge ruled on the Firm's motion. The trial judge's decision, denying Gaughan's notice of removal because it was not timely, was not an abuse of discretion and must be affirmed.
2. The reasonable value of the Firm's legal services.
"In actions for the recovery of money * * * the issues of fact shall be tried by a jury * * *." Minn.R.Civ.P. 38.01 (emphasis added).
The Firm brought a lawsuit against Gaughan based upon its contract. Gaughan counterclaimed. The trial court, in its amended order, granted judgment for the Firm in the contract action, although there was no trial, summary judgment or other adjudication of the merits of the contract claim. The trial court used summary proceedings to dispose of this common law suit. None of the issues in the claim, including the reasonable value of the Firm's fee, were litigated. For this reason, we reverse the judgment in the common law contract...
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