Gibson v. Buonauito
| Decision Date | 01 December 2022 |
| Docket Number | CV-21-557 |
| Citation | 2022 Ark. 206,655 S.W.3d 59 |
| Parties | Keith GIBSON, Marie Holder, Alec Farmer, Philip Taldo, and Robert S. Moore, Jr., as Members of the Arkansas State Highway Commission; Lorie Tudor, Director of the Arkansas Department of Transportation; Arkansas Department of Transportation; Asa Hutchinson, Governor of the State of Arkansas; Larry W. Walther, Director of Arkansas Department of Finance and Administration; Andrea Lea, Auditor of the State of Arkansas; and Dennis Milligan, Treasurer of the State of Arkansas, Appellants v. Shelly BUONAUITO, Mary Weeks, Verlon Abrams, and Sarah B. Thompson, Appellees |
| Court | Arkansas Supreme Court |
Leslie Rutledge, Att'y Gen., by: Vincent P. France, Ass't Att'y Gen., for appellants.
Friday, Eldredge & Clark, LLP, Little Rock, by: Kevin A. Crass and Kathy McCarroll ; and Rita S. Looney and Mark Umeda, Arkansas Department of Transportation, for appellees.
Brian G. Brooks, Attorney at Law, PLLC, by: Brian G. Brooks, amicus curiae, Arkansas Trial Lawyers Association.
Appellants Keith Gibson, Tom Schueck, Robert S. Moore, Jr., Alec Farmer, and Philip Taldo, Members of the Arkansas State Highway Commission; Scott E. Bennett, Director, Arkansas Department of Transportation ("the Department") (collectively "Highway Appellants"); Dennis Milligan, Treasurer of the State of Arkansas; Andrea Lea, Auditor of the State of Arkansas; Larry W. Walther, Director, Arkansas Department of Finance & Administration ("DF&A"); and Asa Hutchinson, Governor of the State of Arkansas (collectively "State Appellants") ("Highway Appellants" and "State Appellants" collectively as "appellants"), appeal a Pulaski County Circuit Court order awarding $18,160,000 in attorneys’ fees to the Conway law firm of Denton & Zachary, PLLC ("Denton & Zachary"), counsel for appellees Shelly Buonauito, Mary Weeks, Verlon Abrams, and Sarah B. Thompson (collectively "appellees"). For reversal, State Appellants argue that the circuit court erred in awarding attorneys’ fees and in its application of the Chrisco factors, as set forth in Chrisco v. Sun Industries , 304 Ark. 227, 800 S.W.2d 717 (1990). They also assert that they should not have to pay attorneys’ fees. Highway Appellants argue that sovereign immunity bars the fee award and that the circuit court abused its discretion in (1) awarding attorneys’ fees, (2) calculating the award using a percentage-contingency-fee method, and (3) applying the Chrisco factors. On cross-appeal, appellees contend that the circuit court erred in denying their motion for contempt against appellants. We reverse the circuit court's award of attorneys’ fees and costs, and on cross-appeal, we affirm the circuit court's denial of appellees’ motion for contempt.
We recited the underlying facts of this case at length in the previous appeal, Buonauito v. Gibson , 2020 Ark. 352, 609 S.W.3d 381. In Buonauito , we held that tax funds levied from Amendment 91 to the Arkansas Constitution could only be used for constructing or improving four-lane highways and that the use of Amendment 91 funds for two projects, CA0602 and CA0608 involving six-lane interstate highways, constituted an illegal exaction. Id. at 8, 609 S.W.3d at 386. We reversed and remanded for the circuit court to enter an order consistent with our opinion. Id. , 609 S.W.3d at 386. On remand, the circuit court entered an amended order declaring an illegal exaction and enjoining the use of Amendment 91 funds on the CA0602 and CA0608 projects.
The Department reviewed the Amendment 91 expenditures and determined that $83,745,901.56 of unreimbursed funds had been spent on project CA0602 and $37,363,490.28 of unreimbursed funds on project CA0608 for a total of $121,109,391.84 to be reimbursed to the Department's Amendment 91 fund.1 On January 28, 2021, the parties entered into a joint stipulation that "the net balance to be reimbursed to the Amendment 91 fund [was] $121,109,391.84." On February 1, 2021, the circuit court ordered that $121,109,391.84 "shall be reimbursed to the Amendment 91 fund." As part of the judgment, the circuit court reserved jurisdiction to consider the attorney's-fee issue.
Appellees had entered into a 25 percent contingency-fee agreement with Denton & Zachary in 2018. On February 16, 2021, appellees filed a motion for attorneys’ fees, costs, and expenses. In their brief, they relied on Walther v. Wilson , 2020 Ark. 194, 600 S.W.3d 554, as precedent to support a "reasonable contingency fee," and they requested $18,715.57 in costs and expenses. Attached to their motion was (1) an affidavit of Justin C. Zachary, lead counsel, who stated that his firm had spent 771.70 hours on the case; (2) Denton & Zachary's itemized bill totaling 771.70 hours; (3) Denton & Zachary's representation letters to separate appellees; (4) an itemized list of expenses totaling $18,715.57; (5) an affidavit of Dr. Ralph D. Scott, Jr., Ph.D., a professor of economics at Hendrix College; (6) a declaration of Thomas P. Thrash, an attorney with extensive litigation experience; and (7) an affidavit of Paul Byrd, a Little Rock attorney, who advocated for a fee award for appellees’ attorneys.
On March 30, 2021, appellants jointly responded to the motion for attorneys’ fees. They argued that appellees were not entitled to attorneys’ fees because (1) sovereign immunity prohibited an award of attorneys’ fees; (2) there was no statutory authority to award attorneys’ fees; (3) Walther , 2020 Ark. 194, 600 S.W.3d 554, was inapplicable because the funds had not been transferred to a private entity; and (4) there was no substantial benefit to the state or common fund. They asserted that even if appellees were entitled to attorneys’ fees, the requested amount of fees and costs was excessive, unreasonable, and should be significantly reduced. Attached to their joint response were (1) appellees’ responses to appellants’ requests for admission; (2) an affidavit of Jared D. Wiley, assistant chief engineer for planning at the Department; and (3) motions for attorneys’ fees filed by appellees’ counsel in other cases.
On April 6, 2021, appellees filed a motion for enforcement of the court's order, for civil contempt, and for funds to be deposited in the registry of the court for review by a special master. In their motion, they requested that appellants be found in contempt and that the circuit court enter an order directing $121,109,391.84 to be deposited into the registry of the court. Appellants responded and moved for dismissal because they had repaid the Amendment 91 fund and had sent proof of a full reimbursement on April 2, 2021.
The circuit court held a two-day hearing on the motions. The Department's director, Lorie Tudor, testified about its highway funding and its procedure for reimbursing $121,109,391.84 to the Amendment 91 fund pursuant to this court's order. Tudor explained that she and Wiley developed a funding plan "after the Supreme Court opinion" in which eight construction projects were ear-marked for Amendment 91 fund eligibility. She described the Department's reimbursement procedure as "an accounting exercise," stating, "[T]here's an account that's called Amendment 91 and there's an account for regular state funds, and we changed the coding on those projects to be in compliance." She further explained, Specifically, Tudor provided the following analogy:
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