Wright v. Wright, No. M2008–01181–SC–R11–CV.

• Court: Supreme Court of Tennessee
• Writing for the Court: OPINION
• Citation: 337 S.W.3d 166
• Decision Date: 29 March 2011
• Docket Number: No. M2008–01181–SC–R11–CV.
• Parties: David Lee WRIGHT ex rel. Kaitlyn Lee WRIGHTv.Anita J. WRIGHT et al.

337 S.W.3d 166

David Lee WRIGHT ex rel. Kaitlyn Lee WRIGHT
v.
Anita J. WRIGHT et al.

No. M2008–01181–SC–R11–CV.

Supreme Court of Tennessee. at Nashville.

Oct. 6, 2010 Session.March 29, 2011.

[337 S.W.3d 169]

James P. Romer, Jamestown, Tennessee, for the appellant, Kaitlyn Lee Wright, a minor, in his capacity as guardian ad litem.Johnny V. Dunaway, LaFollette, Tennessee, for the appellee, David Lee Wright, parent and next friend of Kaitlyn Lee Wright, a minor.John A. Day, R. Burke Keaty, II, and Phillip H. Miller, Nashville, Tennessee, for the Amicus Curiae, Tennessee Association for Justice.

OPINION CORNELIA A. CLARK, C.J., delivered the opinion of the court, in which JANICE M. HOLDER, GARY R. WADE, WILLIAM C. KOCH, JR., and SHARON G. LEE, JJ., joined.CORNELIA A. CLARK, C.J.

We granted this appeal to determine the proper method for computing a reasonable attorney's fee when the attorney represents a minor. In this case, after the attorney obtained a $425,000 settlement for a minor injured in an automobile accident, the trial court awarded the attorney $141,666.66, or one-third of the recovery, pursuant to the terms of the attorney's contingent fee agreement with the minor's father. The court-appointed guardian ad litem appealed the fee award, and the Court of Appeals reversed. Upon remand, the trial court conducted an evidentiary hearing and determined that $131,000 would be a reasonable attorney's fee, and the Court of Appeals affirmed. Reviewing for an abuse of discretion, we hold that the trial court applied the correct legal standard by analyzing the ten factors set forth in Tennessee Supreme Court Rule 8, Rule

[337 S.W.3d 170]

of Professional Conduct 1.5(a). We further hold that the fee award was neither illogical, based on an erroneous assessment of the evidence, nor an injustice to the minor. We therefore affirm the judgment of the trial court.

BACKGROUND Filing and Settlement of Action

On May 12, 2005, nine-year-old Kaitlyn Lee Wright was seriously injured in an automobile accident. Marjorie Copley, Kaitlyn's paternal grandmother (“Grandmother”), was driving Kaitlyn home from school in Fentress County when Grandmother's vehicle collided head-on with another vehicle. Grandmother died in the collision. Kaitlyn sustained serious injuries and was admitted to the University of Tennessee Medical Center from May 12 to May 30, 2005, where she underwent multiple surgeries to repair her injuries. After her discharge, Kaitlyn completed a significant course of outpatient physical therapy and had a follow-up surgical procedure to remove hardware from her left ankle.¹ The medical expenses for Kaitlyn's treatment totaled $183,814.30.

At the time of Kaitlyn's accident, her parents were divorced. Since 2001, David Lee Wright (“Father”) and Tracy Nivens (“Mother”) have shared joint custody of Kaitlyn. On June 9, 2005, Father retained attorney Johnny V. Dunaway to pursue Kaitlyn's claim for personal injuries and executed a one-third contingent fee agreement with Dunaway. The fee agreement provided that, “[if] a claim is made on behalf of any infant or incompetent and if court rules or law requires, the fee will then be such as may be approved by the court.” The next day, Father, in his capacity as Kaitlyn's parent and next friend, filed a complaint through counsel in Fentress County Circuit Court for common-law negligence and negligence per se. The complaint named as defendants Anita J. Wright, the driver of the other vehicle in the accident,² and Ellen Collins, the administratrix of Grandmother's estate. The complaint originally requested monetary damages of $250,000 but was later amended to request $500,000.

Mother retained a different attorney and filed her own personal injury action in Fentress County Circuit Court on June 23, 2005. In a November 29, 2005, hearing, Circuit Judge John McAfee dismissed Mother's action ³ and, citing the involvement of “competing parents,” appointed James P. Romer as Kaitlyn's guardian ad litem in Father's suit.

On July 24, 2006, the parties settled the case during a judicial settlement conference presided over by Circuit Judge John A. Turnbull. According to a handwritten document entitled “Memo of Understanding—Mediated Settlement,” Grandmother's estate agreed to pay $425,000 on behalf of Kaitlyn. In addition to this amount, Grandmother's estate agreed to pay all court costs, including the guardian

[337 S.W.3d 171]

ad litem's fee and deposition expenses in an amount not to exceed $5,000.⁴ Each party would pay its own discretionary costs. The memo further provided that, “[a]fter payment of contractual attorney fees the Court will [be] requested to approve the minor's settlement to be invested long term (i.e., through a structured annuity).” The complaint would then be dismissed with prejudice.

Challenge to Attorney's Fee and First Appeal

On August 30, 2006, Dunaway faxed a proposed settlement order to counsel for Grandmother's estate and to Romer, inquiring whether they suggested changes or could approve the order as drafted. The proposed order provided for payment from the settlement of $141,666.66 to Dunaway for “contractual attorney fees,” ⁵ $3,021 to Dunaway for advanced expenses, and $62,517.74 to Blue Cross Blue Shield of Tennessee (“BCBS”) for its subrogation claim for medical expenses. From the $217,794.60 of net proceeds, $17,794.60 would be deposited into a certificate of deposit held in trust and managed by Father for any of Kaitlyn's emergency needs that might arise before she reached majority. The remaining $200,000 would be invested long term in a court-approved structured annuity or other investment. On September 8, 2006, not having received requested feedback from other counsel about the proposed order, Dunaway prepared a motion for approval of a minor settlement and advised counsel for Grandmother's estate and Romer that he would appear in Fentress County Circuit Court on September 25, 2006, for court approval of the settlement.⁶

By letter dated September 11, 2006, Romer recommended to Dunaway that a hearing take place on the amount of the attorney's fee. Dunaway replied to Romer the same day, maintaining that the amount of the attorney's fee was outside the scope of Romer's duties as guardian ad litem. On September 15, 2006, Romer filed a response to the motion to approve the minor's settlement, requesting a hearing to review the proposed order and to determine a reasonable attorney's fee for Dunaway.

During the ensuing hearing before Judge McAfee, Romer argued that, under Tennessee law, a next friend cannot bind a minor by contracting with counsel for attorney's fees and that the trial court, when setting a reasonable attorney's fee in a minor settlement, should exercise its discretion using the factors set forth in Tennessee Supreme Court Rule 8, Rule of Professional Conduct (“RPC”) 1.5(a)(1)–(10). In response, Dunaway argued that, because the contingent nature of the fee was “one of the major factors to be considered” and because he invested “a lot of work” in the case, he should receive the contracted-for contingency fee. In its ruling from the bench, the court stated that it had “considered” the RPC 1.5 factors, but made no specific findings as to any of them. The court then found that Dunaway's one-third contingency fee was not “unreasonable in any way.” Noting that, if Kaitlyn could have contracted with an attorney, “more than likely that lawyer would have charged a third,” the trial

[337 S.W.3d 172]

court stated that it “fully and firmly support[ed] the free market approach” and “ha[d] no intentions of interfering with this.”

Accordingly, on September 25, 2006, the trial court entered a judgment approving the settlement. The trial court awarded Dunaway “contractual attorney fees” of $141,666.66 and distributed the remaining settlement proceeds as stated in the proposed order that Dunaway had circulated. On November 9, 2006, the trial court issued supplemental orders concluding that the $141,666.66 contingency fee on a total recovery of $425,000 was a fair and reasonable fee and directing the payment of that fee from the settlement proceeds.

Following the entry of the final judgment on January 18, 2007, Romer appealed the amount of the attorney's fee.⁷ The Court of Appeals reversed the fee award, “remanded to the trial court for a full hearing,” and directed the trial court to consider and make findings on all the relevant RPC 1.5 factors. Wright ex rel. Wright v. Wright, No. M2007–00378–COA–R3–CV, 2007 WL 4340871, at *6–7 (Tenn.Ct.App. Dec. 12, 2007) (“First Appeal”). The intermediate appellate court reaffirmed the legal rule that a next friend representing a minor cannot bind the minor by a contract with counsel for the amount of attorney's fees. Id. at *4. The Court of Appeals concluded that the September 25, 2006 hearing was deficient because of the absence of proof concerning the time Dunaway spent on the case, lack of specific findings concerning each of the RPC 1.5(a) factors, and failure to acknowledge that Dunaway bore the burden of establishing the reasonableness of his fee request. Id. at *6. The intermediate appellate court concluded that the trial court erred in “believ[ing] that the contingent fee agreement trumped all the other relevant factors set out in RPC 1.5(a).” Id.

Remand Hearing and Second Appeal of Attorney's Fee

After the Court of Appeals' opinion reversing the fee award and remanding to the trial court, Dunaway filed a motion in Fentress County Circuit Court for approval of his attorney's fee.⁸ He attached an affidavit detailing the time and legal services that he had rendered in the case. Judge McAfee conducted an evidentiary hearing on April 9, 2008, during which he heard Dunaway's testimony and admitted exhibits into evidence.⁹ Counsel for Grandmother's estate did not participate in the hearing or take a position on Dunaway's fee. Dunaway's testimony and the accompanying exhibits establish the following facts.

According to...