Reed v. Reed

• Decision Date: 23 November 1999
• Citation: Reed v. Reed, 10 S.W.3d 173 (Mo. App. 1999)
• Parties: (Mo.App. W.D. 1999) David Reed, Respondent, Neysa L. Day, Appellant, v. Janice Reed, Respondent. WD56601
• Court: Missouri Court of Appeals

10 S.W.3d 173 (Mo.App. W.D. 1999)

David Reed, Respondent, Neysa L. Day, Appellant, v. Janice Reed, Respondent.

WD56601

Missouri Court of Appeals Western District

11/23/99

Appeal From: Circuit Court of Jackson County, Hon. Charles Emmert Atwell

Counsel for Appellant: Neysa L. Day and David Reed, Pro Se

Counsel for Respondent: David Lee Wells

Opinion Summary: AppellantNeysa L. Day appeals the lower court's order in an action for contempt and petition for interpleader brought by RespondentJanice Reed.The court granted priority to Ms. Reed's claim of set-off over Ms. Day's attorney's lien that arose out of the prior dissolution action between Mr. and Ms. Reed.Because the contempt action and the dissolution action arose out of the same or similar subject matter, we find that the claim of set-off does have priority over Ms. Day's lien, and affirm that part of the lower court's decision.We also find, however, that the trial court abused its discretion in awarding Ms. Reed attorney's fees incurred by Ms. Reed defending against Mr. Reed's contempt action and filing an interpleader action, and remand for recalculation of those fees due for prosecution of the contempt motion only.

Division Two holds: We affirm, in part, the trial court's decision to grant priority to Ms. Reed's claim of set-off arising from her contempt action over Ms. Day's attorney's lien arising from the prior dissolution action because both actions arose out of the same transaction.In determining whether to grant Ms. Reed's motion for civil contempt alleging Mr. Reed's failure to comply with the previous dissolution decree, the lower court examined the dissolution decree in conjunction with the acts or omissions that arose out of the decree to see if the latter violated the former.The court did not set out to render a new judgment, but merely sought to enforce the dissolution decree.Moreover, the relief granted in Ms. Reed's contempt proceeding logically depended on the extent to which the court's previous decree was breached and the damage caused thereby.

We also affirm so much of the trial court's order as awarded Ms. Reed her fees in prosecuting the contempt action against Mr. Reed.While Missouri usually follows the American Rule, under which each party bears the expense of his or her own attorney's fees, that rule admits of numerous exceptions.One of those exceptions applies where, as here, an action for civil contempt must be prosecuted to enforce compliance with a court order.Since the attorney's lien is intended to allow the attorney recovery from the fund which the attorney's work created for the client, and the client is only entitled to the amount in the fund after the deduction of costs, it follows that the amount of the attorney's fees awarded as costs for the prosecution of the contempt action are properly offset against Mr. Reed's dissolution judgment before arriving at the net amount of the judgment to which Ms. Day's attorney's lien should attach.

However, this rationale does not apply to the defense of Mr. Reed's motion for contempt or to the interpleader, and no cases allowing attorney's fees in such actions as an exception to the American Rule have been cited.Accordingly, the lower court erred when it included in the award the fees incurred by Ms. Reed in defending against Mr. Reed's contempt action and prosecuting her interpleader action, and we reverse and remand the lower court's award of attorney's fees to Ms. Reed in her contempt action to the extent such fees represent the amount of the attorney's fees incurred defending against Mr. Reed's cross-motion for contempt and incurred in the interpleader, and affirm in all other respects.

Lowenstein, P.J., and Riederer, J., concur.

LAURA DENVIR STITH, JUDGE

AppellantNeysa L. Day appeals the lower court's order in an action for contempt and petition for interpleader brought by RespondentJanice Reed.The court granted priority to Ms. Reed's claim of set-off over Ms. Day's attorney's lien that arose out of the prior dissolution action between Mr. and Ms. Reed.Because the contempt action and the dissolution action arose out of the same or similar subject matter, we find that the claim of set-off has priority over Ms. Day's lien, and affirm that part of the lower court's decision.We also find, however, that the trial court abused its discretion in awarding Ms. Reed attorney's fees incurred in defending against Mr. Reed's contempt action and in filing an interpleader action, and remand for recalculation of those fees.

I.FACTUAL AND PROCEDURAL BACKGROUND

Seeking to dissolve his marriage with Ms. Janice Reed, and after discharging his original counsel, Mr. Reed engaged Ms. Day as counsel.As part of their engagement agreement, Mr. Reed agreed to pay Ms. Day $140.00 per hour in addition to reimbursement for all expenses.

On January 27, 1998, a visiting judge dissolved the marriage and divided the marital property.In order to equalize the division of the marital property, the lower court ordered the following in relevant part:

The judgment ordered that Ms. Reed "proceed to endorse, sign, execute and complete all necessary documents and applications to receive" the educational reimbursement check due to her from the City of Kansas City, in the amount of $9,937.50, within 7 days of receiving her grades for each respective semester.According to the order, within 5 days of the receipt of each reimbursement check, Ms. Reed was required to negotiate it to Mr. Reed.

The court ordered Ms. Reed to execute a promissory note in favor of Mr. Reed for $6,022.00, bearing interest at the rate of 8% per annum, to be paid in four installments of $1,625.94 beginning on February 1, 1998, and thereafter on May 1, August 1, and December 1, 1998.

The court awarded the marital residence to Mr. Reed.As part of this award, on February 1, 1998, Ms. Reed was required to surrender possession of the residence to Mr. Reed and, at that same time, Mr. Reed would become responsible for all encumbrances on the property.Primarily, the court referred to two mortgages on the property, the monthly payments of which Mr. Reed was now required to pay.The two mortgagees were Chase Manhattan and Amerus Bank who were owed monthly payments of $856.58 and $243.42, respectively, totaling $1,100.00 per month.If Mr. Reed failed to make timely payments on these notes, the court ordered that any payments then made by Ms. Reed would result in a judgment in her favor.Finally, the court ordered Mr. Reed to take appropriate steps to remove Ms. Reed's name as obligor on the mortgages securing the loans that encumbered the marital residence.Otherwise, the residence would be sold.The trial court awarded Ms. Reed certain personal property amounting to $1,445.00.

Mr. Reed failed to make the mortgage payments to either Chase Manhattan or Amerus Bank on February 1 or March 1, 1998, as required by the dissolution decree.Ms. Reed undertook to make those payments.Mr. Reed argued that he would have made these payments had Ms. Reed met her obligations under the judgment of dissolution, but that he had no money to do so because she had failed to either make the required payments on the promissory note or to pay over the tuition reimbursement.

On March 4, 1998, in an attempt to compel Ms. Reed to pay over these monies, Mr. Reed filed a motion to show cause why Ms. Reed should not be held in contempt for failing to adhere to the judgment.He claimed, inter alia, that Ms. Reed failed to pay any of her tuition reimbursement over to him even though it had been nearly six weeks since she had received her grades.¹In addition, he argued that Ms. Reed had not only failed to execute a promissory note in the amount of $6,022.00 but, more importantly, had failed to make the first payment required thereunder.²Mr. Reed asserted that, had Ms. Reed complied with these orders, he would have made the mortgage payments that he was otherwise unable to make with his salary.

Until Mr. Reed sold the marital residence on June 11, 1998, he made no mortgage payments and Ms. Reed continued to make the payments on both mortgages on April 1, May 1, and June 1, 1998, totaling $4,590.50.On July 31, 1998, Ms. Reed filed a counter-motion for contempt and a petition to interplead a check in the amount of $6,210.94, which was the balance of the educational reimbursement due Mr. Reed under the original decree of dissolution.Ms. Reed urged the court to hold Mr. Reed in contempt for his failure to make the mortgage payments on the marital residence and for his failure to return to Ms. Reed personal property in violation of the original dissolution decree.She noted that, out of the first check from the educational reimbursement, which she had endorsed over to him in early March 1998, Mr. Reed chose to pay part of his attorney's fees instead of making the mortgage payment required under the judgment.Ms. Reed requested the court to award to her the value of the personal property not recovered from Mr. Reed ($1,445.00), the mortgage payments she made that were to have been made by Mr. Reed ($4,590.50), and the attorney's fees she incurred in prosecuting her motion for contempt and interpleader and in defending against his motion for contempt($4,237.50).She also requested that if the court were to award her such a judgment, she be allowed to set it off against the amounts she otherwise owed Mr. Reed under the dissolution decree.³

Prior to the date set for hearing of the cross-motions for contempt, and the interpleader of the reimbursement check, Ms. Day withdrew as attorney for Mr. Reed.Nonetheless, Ms. Day appeared at the hearing, representing her own interest in her attorney's fees.Ms. Reed and her attorney, Mr. Wells, appeared and Ms. Reed testified.Mr. Reed did not appear.Judge Atwell, a different judge than had heard the dissolution itself, heard the case.He expressed consternation at Mr. Reed's failure to appear and held that,...