Kudon v. F.m.e. Corp., 87-848.

• Citation: 547 A.2d 976
• Decision Date: 16 September 1988
• Docket Number: No. 87-848.,87-848.
• Parties: H. Kenneth KUDON, et al., Appellants, v. f.m.e. CORPORATION, d/b/a Friden Alcatel, Appellee.
• Court: Court of Appeals of Columbia District

Page 976

547 A.2d 976

H. Kenneth KUDON, et al., Appellants, v. f.m.e. CORPORATION, d/b/a Friden Alcatel, Appellee.

No. 87-848.

District of Columbia Court of Appeals.

Argued June 28, 1988.

Decided September 16, 1988.

Joseph M. Cahill, with whom Dale A. Cooter, Washington, D.C., was on the brief, for appellants.

John T. Kotelly, with whom Marlene D. Beckman, Washington, D.C., was on the bnef, for appellee.

Before PRYOR, Chief Judge, and MACK and NEWMAN, Associate. Judges.

PRYOR, Chief Judge:

Dale A. Cooter and Carl L. Gell, on behalf of appellant, the law firm of Cooter & Gell (Cooter & Gell), brought suit against appellee, f.m.e. Corporation, d/b/a Friden Alcatel (Friden Alcatel), one of four companies in the United States authorized to manufacture postage meters, alleging tortious interference with contractual relations with the United States Postal Service and seeking $50,000 in compensatory damages and $1,000,000 in punitive damages. Friden Alcatel denied liability and asserted counterclaims for breach of contract, conversion, and writ of replevin, and sought $2,105.10 in compensatory damages and $100,000 in punitive damages.

On March 10, 1986, a trial judge ruled that Friden Alcatel was privileged to interfere with Cooter & Gell's contract with the Postal Service and therefore granted Friden Alcatel's motion for summary judgment dismissing Cooter & Gell's complaint for tortious interference with contract. By order dated April 21, 1986, the pretrial conference judge instructed the parties to file cross motions for in limine rulings on the issue of attorneys' fees. On June 2, 1986, a third trial judge ruled that the provision in the lease agreements between the parties provided for reasonable attorneys' fees, including those fees incurred by Friden Alcatel in defending against Cooter & Gell's complaint and in prosecuting its own counterclaims, and that the amount of attorneys' fees was to be determined by the trial court in a separate bifurcated hearing subsequent to any verdict rendered by the jury in favor of Friden Alcatel.

On January 8, 1987, following a three-day trial, the jury awarded Friden Alcatel $814 in compensatory damages for its breach of contract claim, but no damages for its conversion claim. Then, on June 25, 1987, pursuant to the third trial judge's ruling, the presiding trial judge awarded Friden Alcatel $5,795 in attorneys' fees for its defense of Cooter & Gell's complaint, $8,200 for prosecution of its counterclaims, and $849.01 in costs.¹

On appeal, Cooter & Gell contends that under the Seventh Amendment to the Constitution it was entitled to a jury trial on the issue of attorneys' fees and that the trial court erred in ruling that it was contractually liable for attorney& fees incurred by Friden Alcatel in defending against the complaint for tortious interference with contract.² Finding these contentions unpersuasive, we affirm the judgment below in all respects.

I

On January 17, 1979, and on April 30, 1980, Cooter & Gell entered into two lease agreements with Friden Alcatel for the lease and usage of two postage meters. Cooter & Gell agreed to pay Friden Alcatel a monthly rental fee of $11.75, payable in advance 011 a semi-annual basis. The agreement provided that the lease was to remain in force for a term of one year and successive annual renewal periods thereafter.

In late 1980, Cooter & Gell ceased making rental payments but retained the meters and continued their use for the next four years. During that time, Friden Alcatel made several unsuccessful attempts by telephone and in writing to collect the rents due. Then, on January 16, 1984, pursuant to the terms of the lease agreements, Friden Alcatel dispatched a service representative to the offices of Cooter & Gell for the purpose of repossessing the meters. That attempt, however, proved unsuccessful. Then, on August 31, 1984, Friden Alcatel filed a Lost/Stolen Checkout Report with the United States Postal Service. Friden Alcatel stated in its cover letter that one of the meters held by Cooter & Gell was lost or stolen and that it was unable "to locate the customer to whom this meter was licensed." In addition, Friden Alcatel requested that if the meter were presented, it should not be set, and that its offices should be telephoned immediately. Sometime thereafter, when Cooter & Gell attempted to purchase postage for its meter, it was informed by the Postal Service that its meter license had been canceled. Friden Alcatel then dispatched another representative to repossess the meters, but that attempt again proved unsuccessful. The litigation which formed the basis for this appeal then followed.

II

Cooter & Gell contends that under the Seventh Amendment to the Constitution it was entitled to a jury trial on Friden Alcatel's claim for attorneys' fees because that claim arose from a private contract provision and was therefore in the nature of a legal claim for damages. Friden Alcatel responds that most courts which have addressed the issue have concluded that a claim for attorneys' fees arising from private contract provision is equitable in nature, and therefore, in the instant case, a jury trial was not constitutionally required.

The Seventh Amendment provides that "[i]n suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved." Although not incorporated to the states through the Fourteenth Amendment, the Seventh Amendment, "is, like other provisions of the Bill of Rights, fully applicable to courts established by Congress in the District of Columbia." E.R.B. v. J.H.F., 496 A.2d 607, 610 n. 6 (D.C.1985) (citations omitted). While historically the amendment was intended "to preserve the right to jury trial as it existed in 1791," Curtis v. Loether, 415 U.S. 189, 193, 94 S.Ct. 1005, 1007, 39 L.Ed.2d 260 (1974), the guarantees afforded have been interpreted to encompass

. . . not merely suits, which the common law recognized among its old and settled proceedings. but suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered. . . .

Id. (quoting Parsons v. Bedford, 3 Pet. 433, 446-47, 7 L.Ed. 732 (1830) (emphasis in original)). The Supreme Court has stated that "[t]he Seventh Amendment question depends on the nature of the issue to be tried rather than the character of the overall action." Ross v. Bernhard, 396 U.S. 531, 538, 90 S.Ct. 733, 738, 24 L.Ed.2d 729 (1970) (footnote omitted). "[W]here the issue in dispute is legal in nature a constitutional right to trial by jury attaches; where the issue, however, is equitable in nature there is no constitutional right to a jury trial." E.R.B. v. supra, 496 A.2d at 611 (citation omitted). The nature of the issue may be determined by considering "first, the pre-merger custom with reference to such questions; second, the remedy sought; and, third, the practical abilities and limitations of juries." Ross v. Bernhard, supra, 396 U.S. at 538 n. 10, 90 S.Ct. at 738 n. 10.

Although, "[a]t common law attorneys' fees are not compensable damages nor are they the appropriate measure of punitive damages," Cordeco Development Corp. v. Santiago Vasquez, 539 F.2d 256, 262 (1st Cir.) (citing Arcambel v. Wiseman, 3 U.S. (3 Dall.) 306, 1 L.Ed. 613 (1796); Day v. Woodworth, 54 U.S. (13 How.) 363, 371, 14 L.Ed. 181 (1851)), cert. denied, 429 U.S. 978, 97 S.Ct. 488, 50 L.Ed.2d 586 (1976), the English courts, for centuries, have been authorized by statute to award costs and attorneys' fees to the prevailing party, although the matter is discretionary. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 & n. 18, 95 S.Ct. 1612, 1616 & n. 18, 44 L.Ed.2d 141 (1975); 22 Am.Jur.2d Damages § 611 (1988). Under the American Rule, however, "attorney's fees are not ordinarily recoverable by a prevailing litigant unless a statute or a contract specifically provides for an award of such fees." Cahn v. Antioch University, 482 A.2d 120, 132-33 (D.C.1984).³ Thus, although consideration of the pre-merger custom is not diapositive, it "suggests that attorneys' fees and costs have traditionally been viewed as a determination to be made by the court rather than by a jury." A. G. Becker-Kipnis & Co. v. Letterman Commodities, Inc., 553 F.Supp. 118, 123 (N.D. 111.1982); Redshaw Credit Corp. v. Diamond, 686 F.Supp. 674 (E.D.Tenn.1988).

We next observe that "Mlle fact that a claim for attorneys' fees can be characterized as one for monetary damages does not compel its classification as a `legal' remedy." A.G. Becker-Kipnis & Co. v. Letterman Commodities, Inc., supra, 553 F.Supp. at 124 (citing Curtis v. Loether, supra, 415 U.S. at 196, 94 S.Ct. at 1009); Redshaw Credit Corp. v. Diamond, supra. Although there appears to be a dearth of case law on the subject, we are in agreement with those courts which have held that where an award of attorneys' fees is authorized by a private contract provision, such an award is more in the nature of an equitable, rather than a legal, remedy. See A.G. Becker-Kipnis & Co. v. Letterman Commodities, Inc., supra, 553 F.Supp. at 124 (claim for costs and attorneys' fees authorized by private contract is claim for reimbursement and thus more restitutionary in nature than claim for back pay); Cheek v. McGowan Electric Supply Co., 511 So.2d 977, 979 (Fla.1987) (contractual provision authorizing payment of attorneys' fees not part of substantive claim because only intended to make successful party whole by reimbursing him for expense of litigation); cf. Empire State Insurance Co. v. Chafetz, 302 F.2d 828, 830 (5th Cir.1962) (state statute authorizing award of reasonable attorneys' fees did not create independent right of action upon which suit for money judgment could be maintained nor did statutory cause of action resemble suit at common law and therefore jury trial not...