Knox Kershaw, Inc. v. Kershaw

• Decision Date: 15 May 1992
• Citation: 598 So.2d 1372
• Parties: KNOX KERSHAW, INC. v. Royce KERSHAW, Jr., and Kershaw Manufacturing Company, Inc. 1901361.
• Court: Alabama Supreme Court

Page 1372

598 So.2d 1372

KNOX KERSHAW, INC. v. Royce KERSHAW, Jr., and Kershaw Manufacturing Company, Inc.

1901361.

Supreme Court of Alabama.

May 15, 1992.

William H. Mills of Redden Mills & Clark, Birmingham, for appellant.

James E. Williams and Oakley Melton, Jr. of Melton, Espy, Williams & Hayes, P.C., Montgomery, for appellees.

Robert Huffaker and Charles Stakely of Rushston, Stakely, Johnston & Garrett, P.A., Montgomery, for amicus curiae Miriam M. Kershaw.

SHORES, Justice.

This is the fourth time this case has been before this Court. ¹ It arose out of dispute between two brothers, Royce Kershaw, Jr., and Knox Kershaw, when differences of opinion caused them to separate ownership of two companies, Kershaw Manufacturing Company, Inc. ("KM Co."), and Knox Kershaw, Inc. ("KK, Inc."), which had been formed originally by their father. ² In separating the companies, they signed reciprocal noncompetition agreements. The question before us is whether the trial court followed the mandate of this Court on remand. Knox Kershaw and KK, Inc., appeal the trial judge's order awarding them $65,200 in attorney fees and providing for the extension of the noncompetition agreement for 90 days. ³

The two brothers divided the companies on September 1, 1983. Knox took over as sole owner of KK, Inc., and Royce, Jr., obtained sole ownership of KM Co. Knox and KK, Inc., originally filed suit on March 1, 1985, against Royce, Jr., and KM Co., seeking an injunction to enforce the noncompetition agreement, as well as monetary damages for breach of contract, an award of attorney fees, and an extension of the term of the noncompetition agreement. After a nonjury trial, the judge issued the injunction; however, he expressly reserved for a future determination the issues concerning the propriety of an award of damages and attorney fees and an extension of the term of the noncompetition agreement. Royce, Jr., and KM Co. filed a motion asking the trial court to alter, amend, or vacate its order or, in the alternative, for a new trial.

Thereafter, the trial court issued an "Order on Rehearing," dated February 5, 1986, whereby it amended and clarified the original order, but denied all other requested relief. Royce, Jr., and KM Co. appealed from this order. This Court modified that part of the trial judge's order pertaining to the validity of the territorial language in the covenant, but otherwise affirmed the trial court's order to the extent that it prohibited Royce, Jr., and KM Co. for five years from leasing anywhere in the United States or Canada where KK, Inc., did business prior to September 1, 1983. Kershaw v. Knox Kershaw, Inc., 523 So.2d 351 (Ala.1988). ⁴

KK, Inc., then filed a motion in the trial court requesting that a hearing be scheduled to determine whether it was entitled to damages, an award of attorney fees, and an extension of the term of the noncompetition agreement. The trial court denied the motion on January 13, 1989, and KK, Inc., timely appealed. On appeal, this Court affirmed in part, reversed in part, and remanded the case to the trial court with the following statement:

"In summary, that part of the trial court's judgment denying an award of actual damages is affirmed; however, the remainder of the judgment, denying an award of nominal damages, attorney fees, and an extension of the noncompetition agreement, is reversed, and the cause is remanded for further proceedings consistent with this opinion."

Knox Kershaw, Inc. v. Kershaw, 552 So.2d 126, 129 (Ala.1989).

A second trial judge held a status conference on November 16, 1989, following the remand from this Court. At that time, the parties submitted, by affidavit and by reference to pertinent parts of the 1985 trial record, the evidence and matters they desired to have the trial court consider in carrying out the mandate of this Court, as well as memorandum briefs. The trial judge ordered as follows:

"Accordingly, it is the ORDER, JUDGMENT and DECREE OF THE COURT that the Plaintiff have and recover of the Defendants the sum of $1.00 as nominal damages; attorneys' fees in the amount of $65,200.00 (652 hours at $100.00 an hour); and that the noncompetition agreement be and the same is hereby extended for a period of ninety days from the date of this Order; and by this Order, the Defendants, Royce Kershaw, Jr., and Kershaw Manufacturing Company, Inc., are hereby restrained from offering for straight leasing, undercutters, shoulder cleaners, yard cleaners, and switch undercutters for a period of ninety (90) days from the date of this order in any county or province in the United States or Canada in which the Plaintiff, Knox Kershaw, Inc., did business prior to September 1, 1983; provided, however, that this extension of the noncompetition agreement and this injunction shall not apply to any contracts or commitments made by the Defendant Kershaw Manufacturing Company, Inc., prior to the date of this Order."

Knox Kershaw and KK, Inc., then moved the court to alter, amend, or vacate the judgment of January 3, 1991, or, in the alternative, to grant a new trial. A third trial judge set the motion for a hearing on April 18, 1991; that judge heard the arguments of counsel and subsequently denied the motion. This appeal followed.

We must determine whether the second trial judge followed this court's mandate in Knox Kershaw, Inc. v. Kershaw, 552 So.2d 126 (Ala.1989): (1) when he awarded $65,200 in attorney fees and expenses to KK, Inc., and (2) when he extended the noncompetition agreement for 90 days but provided that the injunction should not apply to contracts made prior to the date of the order.

We first consider the question of attorney fees. The noncompetition agreement between these parties provides in pertinent part:

"If [KK, Inc.] employs an attorney to enforce the provisions of this [agreement] or incurs any other expense in connection with the enforcement of the provisions of this [agreement], Royce Kershaw will reimburse [KK, Inc.] for such expense if [KK, Inc.] is successful in enforcing the provisions of this [agreement]."

552 So.2d 126, 129 (Ala.1989).

The appellants, Knox Kershaw and KK, Inc., argue that, under this Court's mandate, the trial court was to look to the express terms of the noncompetition agreement for guidance in the awarding of attorney fees. They contend that the agreement relating to attorney fees provides that Royce Kershaw is to reimburse KK, Inc., and that the amount awarded by the trial judge is insufficient to reimburse KK, Inc. The appellants claim $91,007.68 in attorney fees.

The appellee, Royce Kershaw, urges us to affirm the decision of the trial court as equitable and reasonable under all the facts and circumstances of this case. He argues that the appellants are not entitled to be reimbursed for the fees incurred in connection with the unsuccessful damages claim in this case. He contends that the trial court was not provided with any breakdown of the attorneys' time or fees that were allocated to the unsuccessful damages claim and that, therefore, the trial court, in its proper exercise of discretion, reduced the attorneys' hourly rate to offset the full rate charged by the attorneys, which included their time spent in the preparation and prosecution of KK's unsuccessful claim for damages.

We have previously set forth the following 12 criteria that the trial court should consider in setting attorney fees: (1) the nature and value of the subject matter of the employment; (2) the learning, skill, and labor requisite to its proper discharge; (3) the time consumed; (4) the professional experience and reputation of the attorney; (5) the weight of his responsibilities; (6) the measure of success achieved; (7) the reasonable expenses incurred; (8) whether a fee is fixed or contingent; (9) the nature and length of a professional relationship; (10) the fee customarily charged in the locality for similar legal services; (11) the likelihood that a particular employment may preclude other employment; and (12) the time limitations imposed by the client or by the circumstances. Peebles v. Miley, 439 So.2d 137, 140-41 (Ala.1983). Although all of these criteria need not support the amount awarded--indeed, rarely would all 12 criteria be applicable in a case--they are available for the trial court to consider in connection with each claim for an award of attorney fees. Graddick v. First Farmers & Merchants National Bank of Troy, 453 So.2d 1305 (Ala.1984).

We recognize that the reasonableness of an award of attorney fees is within the discretion of the trial court, subject to correction only for an abuse of discretion. Van Schaack v....