Hinerman v. Levin

• Citation: 172 W.Va. 777,310 S.E.2d 843
• Decision Date: 13 December 1983
• Docket Number: No. 15897,15897
• Court: Supreme Court of West Virginia
• Parties: Raymond A. HINERMAN v. Sam LEVIN.

Page 843

310 S.E.2d 843

172 W.Va. 777

Raymond A. HINERMAN v. Sam LEVIN.

No. 15897.

Supreme Court of Appeals of

West Virginia.

Dec. 13, 1983.

Syllabus by the Court

1. To the extent that a defendant exercises the privilege of conducting activities within the state he enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations; and, so far as those obligations arise out of or are connected with the activity within the state, a procedure which requires the defendant to respond to the suit brought to enforce them can, in most instances, hardly be said to be undue.

2. West Virginia has personal jurisdiction over workers' compensation claimants when actions are brought against them seeking compensation for professional representation relating to their claims for West Virginia Workers' Compensation.

3. Appellate review of the propriety of a default judgment focuses on the issue of whether the trial court abused its discretion in entering the default judgment.

4. "A motion to vacate a default judgment is addressed to the sound discretion of the court and the court's ruling on such motion will not be disturbed on appeal unless there is a showing of an abuse of such discretion." Syl. pt. 3, Intercity Realty Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970).

5. In determining the propriety of a default judgment, this court will consider the following factors: 1) the degree of prejudice suffered by the plaintiff from the delay in answering; 2) the presence of material issues of fact and meritorious defenses; 3) the significance of the interests at stake; and 4) the degree of intransigence on the part of the defaulting party.

6. West Virginia Code 23-5-5 [1973] requires that an attorney's fee for representing a client in a single workers' compensation claim shall not exceed twenty percent (20%) of the claimant's recovery during a period of two hundred eight weeks even if the attorney's fee comes from two separate sources and results from two separate contractual agreements. This limitation applies to the litigation of one claim up to the rendition of a final order, but does not apply to new claims, such as reopenings, that may be related to the first claim but involve the full litigation of a new case. If a separate award is given to the claimant, the attorney may receive the agreed additional payment for his services on this new claim up to the statutory limit.

William T. Fahey, Barnes, Watson, Cuomo, Hinerman & Fahey, Weirton, for appellee.

David R. Gold, Gold & Khourey, Moundsville, for appellant.

NEELY, Justice:

Sam Levin, the appellant in this action, is a Russian immigrant. He came to the United States in 1975 and moved to Wheeling, West Virginia in April of 1977 to avail himself of employment opportunities as a mining engineer because he had experience in that field.

While working in that capacity, the appellant suffered a heart attack. He filed a workers' compensation claim and was represented on that claim by legal counsel for the United Mine Workers (UMW) of District 6 free of charge. At that time, the UMW's legal counsel in that district was Raymond Hinerman, the appellee in this action. The claim was disputed on several grounds. There was some question concerning whether the appellant had a pre-existing heart condition, whether the present condition arose from and in the course of employment, and there was dispute among medical experts concerning the severity of the condition. The initial determination was that a twenty percent (20%) award would fully compensate the appellant for his work-related injury.

Appellant protested this rating. While his appeal was being processed, District 6 of the UMW replaced Raymond Hinerman with Craig Broadwater as their legal counsel. Mr. Broadwater suggested to the appellant that he should privately retain the appellee to continue representing him on his appeal because of Mr. Hinerman's prior experience with the complex issues involved in appellant's case.

Mr. Broadwater made clear to the appellant that this private legal representation would not be free, and in fact showed him a copy of the West Virginia statute on attorneys' fees in workers' compensation cases, W.Va.Code 23-5-5 [1973]. The appellant then solicited the services of the appellee as his private counsel. There followed oral conversations and a written and signed agreement confirming the terms under which the appellee agreed to act as the appellant's attorney. The agreement into which the two parties entered was a standard contingent fee arrangement which called for the appellee to receive 20% of all compensation awarded for a period of 208 weeks. This was the maximum fee allowed by statute.

While the appeal was being prepared, the appellant moved to Florida. He remained in constant communication with the appellee through collect phone calls to him. After appellee had presented his oral argument before the Workers' Compensation Appeal Board and the expiration of the appeal period without action by the employer, the appeal board ordered an increased rating of total permanent disability. On 8 June 1983, the Commissioner directed payment to the appellant of $19,732.38 as retroactive benefits and a monthly award of $1,162.38.

Without informing the appellee, the appellant had phoned and sent a telegram to the Commissioner revoking her authority to honor appellee's demand for attorneys' fees. When appellee learned of this, he sent a letter dated 8 July 1982 demanding twenty percent (20%) of the award to date. After six weeks of repeated demands for payment pursuant to the contractual arrangement, appellee filed a civil suit on 17 August 1982.

The appellee filed a motion for default judgment in that action on 4 October 1982 with notice to the appellant that a hearing would be held on that motion on 14 October 1982. On 8 October 1982 the court received a letter from a lawyer, David Gold, requesting a continuance and stating that he had just been contacted by the appellant but had not yet agreed to act as counsel for the appellant. At the 14 October 1982 hearing, appellee's motion was granted, but appellant was given an additional ten days to assert bona fide defenses. When appellant did not exercise this option, a default judgment as to liability was entered on 27 October 1982.

On 29 October 1982, Mr. Gold, who is currently the appellant's counsel, sent a letter to the court seeking another continuance while he conferred with the appellant's Florida counsel. Meanwhile, appellee gave notice to all the parties of a hearing set for 16 November 1982 for an attachment. On 4 November 1982, the clerk of the circuit court received a letter of general denial from the appellant; but the court has since noted that it did not see a copy of this letter nor was a copy sent to appellee. On 8 November 1982, appellant's counsel advised the court by letter that he had not yet concluded arrangements with the appellant concerning his employment. At the 16 November 1982 hearing, appellant's written motion to set aside default judgment was delivered by another attorney, Arch Riley, Jr.; the motion was considered and denied by the court. Finally, on 3 December 1982, Mr. Gold filed another motion to vacate default judgment giving notice of a hearing to be held on 16 December 1982. On that date, the trial court conducted a full hearing and issued findings of fact and conclusions of law in a memorandum of opinion, and entered an order denying the motion.

Appellant filed a petition seeking review by this court on 17 May 1983. He alleged four errors: 1) the trial court lacked personal jurisdiction over the appellant; 2) the trial court erred in granting default judgment; 3) the trial court erred in failing to vacate the default judgment and in allowing appellee's monetary recovery; and 4) the trial court erred in allowing appellee to recover an attorney's fee in excess of the statutory maximum set in W.Va.Code 23-5-5 [1973]. We granted the petition and now find for the appellee on the first three issues and for the appellant on the fourth issue.

I

Because the due process clause of the Fourteenth Amendment places a constitutional limitation on the power of a state court to render a valid judgment in a case in which it does not have in personam jurisdiction, Kulko v. California Superior Court, 436 U.S. 84, 91, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978), we will first address the issue of this court's personal jurisdiction over the appellant. There are two prongs to the due process standard: first, the defendant must be given adequate notice of the suit, Mullane v. Central Hanover Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950); and second, the defendant must have sufficient "minimum contact with the state which seeks to exercise personal jurisdiction over him." International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The appellant in this case received personal notice of the suit and does not claim that notice was inadequate; consequently, we will limit our discussion to the minimum contact issue.

This court set out the proper test for sufficient contact to establish personal jurisdiction in the Syllabus of S.R. v. City of Fairmont, 167 W.Va. 880, 280 S.E.2d 712 (1981):

The standard of jurisdictional due process is that a foreign corporation must have such minimum contact with the state of the forum that the maintenance of an action in the forum does not offend traditional notions of fair play and substantial justice.

Quoting Syl. Pt. 1 Hodge v. Sand Manufacturing Company, 151 W.Va. 133, 150 S.E.2d 793 (1966). In Fairmont, we went on to note that the thrust of Supreme Court decisions in this area was that states would be deemed to have personal jurisdiction if this was reasonable in light of several factors: 1) the burden on the defendant; 2) the forum state's interest in adjudicating the dispute; 3) the plaintiff's...