Saturday, April 23, 2005

Winner gets no attorney fees in contract case for failure to prove fees at trial

In Lee v. Mulford, the Virginia Supreme Court reached the interesting conclusion that the successful litigant in the circuit court gets no attorneys fees, because it failed to prove them before the jury during the trial, and made the mistake of waiting until post-verdict proceedings to try to get fees.

In Safrin v. Travaini Pumps USA, Inc., in a footnote, the Court explained that in Lee, the holding was "that absent specific provisions in a contract or statute to the contrary, or a prior agreement of the parties with the concurrence of the trial court, a litigant is not entitled to have attorney’s fees decided by the court in post-verdict proceedings." What does the contract (or statute!) have to say for the fees to be resolved post-verdict? Is it enough that the contract or statute refers to a "prevailing party"? When such language applies, doesn't one have to prevail before it can claim fees?

This decision is very interesting to contemplate. It is not clear to me why the jury even addressed the attorneys' fees. The Court's opinion tries to make something out of the jury instruction that the jury should consider the whole contract. The jury, apparently, decided on its own to specify fees and costs - nothing in the opinion indicates that the lawyers or the judge said anything in particular about fees prior to the verdict. It is not clear to me that Lee had any reason to expect that the jury was going to make a decision on fees.

There are cases when attorneys fees from prior litigation are an element of damages, but the fees in the Lee case were for the case that was being tried. The Court concludes that Mulford had a right to a jury trial on the fee issue, but I'm not sure why that is so. In federal practice, under Rule 54(d)(2)(A), "Claims for attorneys' fees and related nontaxable expenses shall be made by motion unless the substantive law governing the action provides for the recovery of such fees as an element of damages to be proved at trial." Were the fees in Lee v. Mulford really "an element of damages" in the case? I'm not sure that is a given, even though the opinion says that Lee sought fees as part of the damages, as least not "legal" damages. In any event, I don't think there was any such jury trial right, at least not as to the amount, and maybe not at all. See, e.g., Ideal Electronic Security Co., Inc. v. International Fidelity Ins. Co., 129 F.3d 143 (D.C. Cir. 1997); McGuire v. Russell Miller, Inc., 1 F.3d 1306 (2d Cir. 1993); The Scotts Co. v. Central Garden & Pet Co., 256 F. Supp.2d 734 (S.D. Ohio 2003); Murphy v. Stowe Club Highlands, 171 Vt. 144, 761 A.2d 688 (2000).

In the Lee case, should the lawyer have proved during the trial an up-to-the-minute account of his hours? ("Well, it's 2:00, so I've got 5 hours in the case today, ladies and gentlemen of the jury.") Suppose the other side decides to dispute the amount of fees. Would trial counsel be subject to cross-examination about his rates and hours? Doesn't the policy behind the usual prohibition against advocates acting also as witnesses suggest that this will create a huge problem? Besides, the lawyering in many cases does not end with the verdict on the merits. Indeed, in the Lee case, the lawyering went on through the appeal to the Virginia Supreme Court. Is there a right to jury trial to decide who gets attorneys fees for working on an appeal?

The idea of a jury trial on fees makes me wonder, what do they get to decide. What if the jury decides lawyers shouldn't be charging more than minimum wage? What if the jury decided the lawyers over-worked a case? I wonder what the jury would have said about the fee applications in some of the cases I've seen. Probably, they would have said, why does the lawyer get more than the plaintiff?

I am also wondering about the jury verdict on costs. Surely, there is no right to a jury trial on court costs, which are controlled by statute. Va. Code 17.1-600, et seq. What is the meaning of the jury's verdict on costs in the Lee case? In federal practice, under some statutes such as 42 U.S.C. 1988(b), attorneys fees are costs, but there are no such Virginia statutes, that I can find.

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