Whitehorse v. Johnson

• Citation: 2007 OK 11,156 P.3d 41
• Decision Date: 27 February 2007
• Docket Number: No. 101957.,101957.
• Parties: Manilla WHITEHORSE, Administratrix of the Estate of Roland Noah Whitehorse, Deceased, Plaintiff/Appellant, v. Susan Joyce JOHNSON and Janet Laura Tippeconnic, Defendants/Appellees.
• Court: Supreme Court of Oklahoma

156 P.3d 41

2007 OK 11

Manilla WHITEHORSE, Administratrix of the Estate of Roland Noah Whitehorse, Deceased, Plaintiff/Appellant, v. Susan Joyce JOHNSON and Janet Laura Tippeconnic, Defendants/Appellees.

No. 101957.

Supreme Court of Oklahoma.

February 27, 2007.

Certiorari to the Court of Civil Appeals, Division III; Honorable William C. Hetherington, Jr., Trial Judge.

¶ 0 The appellant, Manilla Whitehorse, as Administratrix of her father's estate, filed a lawsuit against her sisters. Whitehorse sought an accounting of the proceeds of approximately $35,000.00 worth of property allegedly sold by the sisters acting pursuant to their status as their father's attorneys in fact. The parties entered into a settlement agreement which was approved by the trial court in a journal entry. Subsequently, Whitehorse filed a motion for attorneys' fees and costs, arguing that the sisters had failed to satisfy their obligations under the settlement agreement. The trial court denied the motion and the Court of Civil Appeals affirmed. We hold that when a settlement agreement which provides for attorneys' fees and costs in the event of a breach culminates in a court-approved judgment and is violated, the non-breaching party is entitled to reasonable attorneys' fees and costs.

CERTIORARI PREVIOUSLY GRANTED; COURT OF APPEALS OPINION VACATED; TRIAL COURT REVERSED AND REMANDED WITH DIRECTIONS.

Robert J. Haupt, Charles W. Wright, Oklahoma City, for Plaintiff/Appellant.

O. Joseph Williams, Norman, for Defendants/Appellees.

KAUGER, J.

¶ 1 The issue presented is whether a party may recover attorneys' fees and costs pursuant to a court-approved agreed judgment. We hold that when a settlement agreement which provides for attorneys' fees and costs in the event of a breach culminates in a court-approved judgment and is violated, the non-breaching party is entitled to reasonable attorneys' fees and costs.

FACTS

¶ 2 On August 26, 1998, the appellant, Manilla Whitehorse, the daughter of Roland Noah Whitehorse and Administratrix of his estate (Whitehorse) filed a lawsuit against her sisters, the appellees, Susan Joyce Johnson and Janet Laura Tippeconnic, (collectively sisters). Whitehorse alleged that the sisters, acting under their authority as attorneys in fact, sold some of her father's real property shortly before his death and improperly retained the proceeds of approximately $35,000.00. She sought an accounting of the proceeds.¹

¶ 3 On October 5, 2004, before the cause was to proceed to trial, the trial judge encouraged the parties to resolve their issues. Later that day, the parties agreed on a settlement, which was memorialized as a journal entry on November 22, 2004. The sisters agreed to: 1) judgment in the amount of $35,396.50; 2) cooperate in sharing and exchanging family photographs; 3) make available for one another the use of molds of their father's sculptures; 4) donate certain property; and 5) resolve all other pending litigation. The agreement provided that if the sisters complied with the settlement agreement the judgment against them would be reduced to $18,000;² and that each party would "bear its own attorneys' fees and costs."³

¶ 4 On January 19, 2005, Whitehorse filed a Motion to Tax Attorneys' Fees and Costs arguing that because the sisters failed to fulfill the terms of the journal entry, she was entitled to attorneys' fees and costs. Whitehorse also insisted that because she sought a simple accounting of the funds, attorneys' fees were recoverable pursuant to 12 O.S. 2001 § 936.⁴ The trial court denied the motion and determined that Whitehorse was not a prevailing party under § 936, because there was not a judgment on the merits.

¶ 5 Whitehorse appealed, and on August 18, 2006, in an unpublished opinion, the Court of Civil Appeals affirmed, determining that § 936 was inapplicable and that the judgment was not a contract. We granted certiorari on November 20, 2006.

¶ 6 WHEN A SETTLEMENT AGREEMENT WHICH PROVIDES FOR ATTORNEYS' FEES AND COSTS IN THE EVENT OF A BREACH CULMINATES IN A COURT-APPROVED JUDGMENT AND IS VIOLATED, THE NON-BREACHING PARTY IS ENTITLED TO REASONABLE ATTORNEYS' FEES AND COSTS.

¶ 7 The sisters argue that: 1) 12 O.S. 2001 § 936⁵ is inapplicable to the present cause and even if it were applicable, Whitehorse is not a prevailing party under the statute; and 2) the journal entry does not provide a legal basis for the recovery of attorneys' fees and costs. Whitehorse contends that: 1) attorneys' fees were recoverable pursuant to 12 O.S.2001 § 936; and, alternatively, 2) the settlement agreement provided for the recovery of attorneys' fees and costs in the event of a breach of the agreement.⁶

¶ 8 We agree that 12 O.S.2001 § 936 is clearly inapplicable to this cause. There are eight different types of actions enumerated in § 936 which could result in the award of attorneys' fees.⁷ These include: 1) open accounts;⁸ 2) statements of account;⁹ 3) accounts stated;¹⁰ 4) bills; 5) contracts relating to the purchase or sale of goods, wares, or merchandise; 6) notes; 7) negotiable instruments; and 8) labor and services. A demand for an accounting of proceeds of estate property alleged to have been falsely procured by attorneys in fact is not one of the actions listed under § 936. Nor would the fact that the cause resulted in a settlement agreement which a party now seeks to enforce, bring it within the scope of the statute.¹¹ This cause resembles more one for an equitable accounting — a proceeding to adjust mutual accounts and strike a balance — than any of the causes of action enumerated in § 936.¹² This, however, does not end our inquiry. The question remains concerning whether attorneys' fees and costs are recoverable pursuant to the settlement agreement which culminated in an agreed judgment.¹³

a. A Settlement Agreement Resulting in a Court-Approved Agreed Judgment Has the Same Force and Effect as a Contract.

¶ 9 The law and public policy favor settlements and compromises, entered into fairly and in good faith between competent persons, as a discouragement to litigation¹⁴ and such agreements are generally enforced absent fraud, duress, undue influence, or mistake.¹⁵ A contract is an agreement to do or not to do a certain thing.¹⁶ A settlement agreement is a contract¹⁷ which constitutes a compromise between two or more parties to avoid a lawsuit and amicably to settle their differences on such terms as they can agree.¹⁸ A contract includes not only the promises set forth in express words, but all such implied provisions as are indispensable to effectuate the intent of the parties and as arise from the language of the contract and the circumstances under which it was made.¹⁹

¶ 10 We have, in the context of a divorce proceeding, described a consent judgment as an agreement of the parties entered upon the record with the sanction of the court.²⁰ The judgment²¹ is the result of negotiations between the parties and the subsequent settlement of the issues involved presented to the court as a proposed judgment.²² Although a consent judgment is not a judicial determination of the rights of the parties, it acquires the status of a judgment through the judge's approval of the pre-existing agreement of the parties.²³ A consent judgment is in the nature of a contract and construed the same as any other contract,²⁴ and we recognize the entry of a consent decree as an appropriate procedure for the adjudication of the settlement of a justiciable controversy.²⁵

b. Under the American Rule, Parties to a Contract Can Agree to Pay Attorneys' Fees and Costs.

¶ 11 The sisters do not dispute that a valid agreement was reached, or that it was incorporated into and made part of the trial court's consent judgment of November 22, 2004. However, they contend that the judgment does not provide for the recovery of attorneys' fees as a matter of law.

¶ 12 Oklahoma follows the American Rule concerning the recovery of attorney fees. It provides that each litigant pay for legal representation and that courts are without authority to assess attorney fees in the absence of a specific statute or contract.²⁶ Exceptions to the Rule are narrowly defined because attorney fee awards against the non-prevailing party have a chilling effect on open access to the courts.²⁷

¶ 13 In the present cause, the parties were ready to go to trial, but at the request of the trial judge a settlement was reached.²⁸ The record reflects that: "[i]t is the intention of the parties that all matters...shall be settled today...."²⁹ The subsequent journal entry stated that should the sisters satisfy their obligations the judgment would be reduced to $18,000. The journal entry further provided that so long as the sisters satisfied their obligations each party would bear its own attorneys' fees and costs.³⁰

¶ 14 If the terms of a contract are unambiguous, clear and consistent, they are accepted in their plain and ordinary sense and the contract will be enforced to carry out the intention of the parties as it existed at the time it was negotiated.³¹ The interpretation of a contract, and whether it is ambiguous is a matter of law for the Court to resolve.³² Contractual intent is determined from the entire agreement.³³ If a contract is complete in itself and viewed in its entirety is unambiguous, its language is the only legitimate evidence of what the parties intended.³⁴ The Court will not create an ambiguity by using a forced or strained construction, by taking a provision out of context, or by narrowly focusing on the provision.³⁵

¶ 15 Applying these general principles, we hold that the purpose of the settlement agreement was to avoid a lawsuit and amicably settle the dispute on such terms as the parties agreed. The obvious purpose of including an attorneys' fees clause was to provide, as incentive for timely compliance with the terms of the settlement agreement, that each party would pay its own attorneys' fees and costs. Implicit in the provision...