Wolf v. Frank, 75-2226

• Decision Date: 13 July 1977
• Docket Number: No. 75-2226,75-2226
• Citation: 555 F.2d 1213
• Parties: J. William WOLF et al., Plaintiffs-Appellees, v. Robert R. FRANK et al., Defendants-Appellants, Mallory H. Horton, as Receiver of Industrial Guaranty Bancorp., Defendant-Appellant, Continental Casualty Co., Movant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1213

555 F.2d 1213

J. William WOLF et al., Plaintiffs-Appellees, v. Robert R. FRANK et al., Defendants-Appellants Mallory H. Horton, as Receiver of Industrial Guaranty Bancorp., Defendant-Appellant Continental Casualty Co., Movant-Appellant.

No. 75-2226.

United States Court of Appeals Fifth Circuit.

July 13, 1977.

Robert E. Venney, John H. Gunn, Miami, Fla., for Industrial Guaranty.

Robert R. Frank, pro se.

Irving M. Wolff, Miami, Fla., for Frank, Roberts & Stein.

Steven R. Berger, Miami, Fla., David L. Swimmer, Wesley G. Carey, Miami, Fla., for Continental Casualty.

Eugene C. Heiman, Miami, Fla., for plaintiffs-appellees.

Appeals from the United States District Court for the Southern District of Florida.

Before TUTTLE, WISDOM and COLEMAN, Circuit Judges.

COLEMAN, Circuit Judge:

The District Court allowed the appellees attorneys fees in the sum of $259,611.50 for professional services rendered to the prevailing parties in a stockholders derivative action. The appellants say that the allowance was excessive. Appraising the record as a whole, and applying the legal principles which govern the matter, we agree.

We modify the Judgment of the District Court, affirm it as modified, and remand the case for compliance herewith.

Reference to the reported cases impressively demonstrates the increased burden being imposed on the federal appellate courts by disputes concerning the size of court-awarded attorneys fees. See the appendix to this opinion. In numerous cases the Fifth Circuit has elaborated upon situations justifying awards and has repeatedly enunciated the standards for ascertaining the appropriate amount of such an award.

It is black letter law that where such fees are due the amount to be fixed as reasonable is left to the sound discretion of the trial court, Electronics Capital Corporation v. Sheperd, 5 Cir. 1971, 439 F.2d 692, 693. It necessarily follows that such an award may not be set aside in the absence of an abuse of discretion, Weeks v. Southern Bell Telephone and Telegraph Co., 5 Cir. 1972, 467 F.2d 95, 97. Even more to the point, this Court has laid down the principle that in the absence of such an abuse it "matters not what we might have done if this were a case in which we were called upon to approve or confirm a fee in the exercise of our independent discretion", Nowell v. Dick, 5 Cir. 1969, 413 F.2d 1204, 1210.

Despite the firmness with which these principles have been laid down, disputes about attorneys fees continue to come to us in ever increasing numbers. This prompted our detailed opinion in Johnson v. Georgia Highway Express, Inc., 5 Cir. 1974, 488 F.2d 714, in which we set forth no less than twelve items to be considered by trial courts in fixing the amount of court-awarded attorneys fees. In the very recent case of Rainey v. Jackson State College, 5 Cir. 1977, 551 F.2d 672, this checklist was specifically reiterated and reaffirmed. ¹

One would suppose that with the road so clearly marked there would be little occasion for this Court to be further involved in prescribing the compensation for services rendered in those cases where the law authorizes the allowance of discretionary fees. One is even more emphatically impressed with such a feeling when it is remembered that the guidelines laid down in Johnson v. Georgia Highway Express, Inc., supra, made no change in the law theretofore existing in this Circuit. See Ranger Insurance Company v. Algie, 5 Cir. 1973, 482 F.2d 861; Weeks v. Southern Bell Telephone and Telegraph Co., supra; Clark v. American Marine Corporation, 5 Cir. 1971, 437 F.2d 959; Electronics Capital Corporation v. Sheperd, supra.

The pertinent facts of the case presently before us were well developed in our prior decision, Wolf v. Frank, 5 Cir. 1973, 477 F.2d 467, reh. den. 478 F.2d 1403, cert. den. 414 U.S. 975, 94 S.Ct. 287, 38 L.Ed.2d 218, reh den. 414 U.S. 1104, 94 S.Ct. 739, 38 L.Ed.2d 560. In that earlier appeal, concerning a judgment for the plaintiffs in the sum of $557,613.56, we instructed the District Court to

determine the amount of attorneys' fees and expert witness fees reasonably incurred by plaintiffs in maintaining the derivative claims on behalf of IGB (Industrial Guaranty Bancorp)

477 F.2d at 480. IGB was to reimburse the plaintiffs in whatever amount so found.

The argument here is not whether a fee should have been awarded. The controversy rages, and we use that term in its literal sense, over the amount of the fee.

On remand, numerous affidavits were filed by plaintiffs' attorneys relative to their claim for attorneys fees. The January 7, 1974, affidavit of Eugene Heiman requested a fee of 50% of the amounts recovered and paid over to IGB's receiver. He based this on the following stated considerations.

(1) The firm expended in excess of 1,500 hours on the case and not less than 90% of the time was spent on the derivative claims;

(2) There were numerous and difficult questions involved;

(3) Thirteen depositions were taken in addition to numerous acts of interrogatories propounded;

(4) Three pretrial conferences were held, 32 subpoenas were issued and many motions were filed or contested;

(5) The non-jury trial lasted six days;

(6) Various appellate tasks were performed before the Fifth Circuit Court of Appeals and the United States Supreme Court; and,

(7) The entire course of proceedings was bitterly contested.

Mr. Heiman's affidavit was supported by affidavits from three attorneys, Jepeway, Britton, and Waldin, as to what they would consider to be a reasonable fee in the case. These experts each stated that they had familiarized themselves with the proceedings and were familiar with the involved counsel. Britton and Waldin stated that a fair and reasonable fee would be either 40% of the ultimate total recovery or not less than $250,000. Jepeway recommended a 40% recovery.

In opposition to these affidavits, the defendants filed three affidavits of their own. The thrust of these was that the plaintiffs failed to distinguish the amount of time spent on the derivative claim (for which fees were recoverable) from the time spent on certain personal claims for which no fee could be recovered. Defendants' affidavits further complained of the lack of specificity in plaintiffs' affidavits. The defendants stated that the fee could only be based upon "actual services rendered" and that, in any event, they had never seen such a fee set at 50% of the amount recovered.

On January 15, 1974, the defendants deposed Messrs. Heiman, Jepeway, Britton, and Waldin. In response to questioning concerning the fee arrangement between himself and his client (Wolf), Heiman stated that Wolf was obligated to pay personally to the extent that his IGB stock had any value; Wolf had told Heiman that for any fees over that sum "we would have to look to whatever the Court would award".

Heiman testified that at the present he was charging $100 an hour for attorneys fees, plus $1,000 a day trial time. He stated further that for two of the younger partners who worked on the case, his firm charged $75 an hour. Heiman acknowledged that there was no delineation on the time slips between the individual and derivative claims but he said that after having reviewed the files, it was his opinion that 90% of the time was spent on the derivative claim.

The depositions of Jepeway, Britton, and Waldin were directed primarily to the considerations upon which they had based their affidavits. Each had examined Heiman's affidavit, the docket sheet, and other decisions On January 17, 1974, Heiman wrote Judge Atkins a letter wherein he set forth the amount of money already received from Wolf. Wolf had paid Heiman $11,762.15, of which $10,274.63 had been applied to costs and the remainder to fees.

dealing with the award of attorneys fees. Each further stated that they had lengthy conferences with Heiman as to what had transpired in the proceedings. In giving their opinions as to a reasonable fee, each stated they had considered the amount of time involved, the results achieved, the skill of the attorneys, and the legal questions presented.

The following day, the District Court conducted its first hearing and informed counsel of the standard it intended to apply in determining the amount of attorneys fees it would award. Judge Atkins stated that the award would not be figured on a percentage basis but would take into consideration the value of services rendered, the results achieved, the hours expended, the usual charge in the community, and the experience and expertise of the lawyers performing the work. At the hearing, testimony was taken from one Walter McManus, an IGB stockholder and director. McManus testified that one of the plaintiffs' attorneys, Mazloff, had suggested that the case for attorneys fees could possibly be settled for 75 to 100 thousand dollars. Mazloff did not contradict this.

The next day, in response to the Court's request, Heiman filed a supplemental affidavit. It stated that he had reviewed all the pleadings, motions, briefs, plus other material and had reviewed all the time slips. Accordingly, the following totals were presented as the hours spent on the derivative claims:

Heiman 536.25 Mazloff 725.80 Reckson 58.03 Other 152.58

1,472.66

To support these figures, 97 pages of time sheets were attached to the affidavits.

Heiman later filed two additional affidavits claiming a total of 263.66 hours for certain specified legal services. William Meadows also filed an affidavit claim for 32 hours and 15 minutes.

A final hearing on the matter of attorneys fees was conducted October 4, 1974. At this hearing, Heiman, Jepeway, Waldin, and Mazloff were questioned by counsel for the defendants. This did not result in the discovery of facts not already known.

On April 2, 1975, the District Court rendered its opinion. Johnson v. Georgia Highway Express, Inc., had been decided more than a year previously (January 21, 1974).

The District Court stated...