Perspectives: Attorney-fee appeals attract attention

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“The matter of fees is important, … [and] properly attended to, fuller justice is done to both lawyer and client.”

 Abraham Lincoln, “Notes for a Law Lecture” (July 1, 1850)

There is nothing that attracts the attention of attorneys more than lawsuits involving attorney fees. Six of them were decided this summer, one by the Supreme Court, a trio by the Minnesota Court of Appeals, and two by the 8th U.S. Circuit Court of Appeals.

Two of them, decided within a 48-hour span, involved the imposition of sanctions by lower courts. Both were overturned on appeal in the Minnesota Supreme Court and the Court of Appeals, respectively, while the claimants in the four other cases experienced mixed results.

The advice by Abraham Lincoln to lawyers some eight score and 13 years ago provides a framework for reviewing this half dozen fee cases.

Family feuds

A trial court does not have the inherent authority to make a fee award on conduct that occurs outside the context of litigation, according to the ruling of the Supreme Court in Buckner v. Robichaud, 992 N.W.2d 686 (Minn. July 5, 2023). The case arose from a post-marriage-dissolution dispute that was subject to a marital mediated settlement agreement concerning disposition of a college savings account for their daughter, then a minor, when she turned 21. After years of skirmishing, which included significant delays, and some obstructive conduct by the girl’s father. The fund was ultimately transferred to her.

But the court imposed a sanction of attorney’s fees against the father for his post-litigation behavior under its “inherent authority” to award fees, although the applicable statute, Minn. Stat. § 518.14, subd. 1, only allowed fees in connection with the litigation, rather than the behavior concerning the trust that occurred after the case was concluded.

The Court of Appeals upheld that determination, but the Supreme Court did not. The latter reasoned, in a decision written by Chief Justice Lorie Gildea, that a fee award was not “within the scope of the district court’s inherent authority.”

Reviewing case law regarding attorney fees awards, the chief justice noted the “limited boundaries of a district court’s inherent authority” to award attorney’s fees, which was surpassed in this case because the award of attorney’s fees was “not necessary to the performance of a judicial function.” She concluded that the trial court “exceeded the scope of its inherent authority in awarding attorney’s fees against the father for his behavior concerning the daughter’s trust because the misbehavior arose after the marriage dissolution was concluded.

An attorney’s fee sanction under the “bad faith” law, Minn. Stat. § 549.21 subd. 3 and Rule 11.03 of the Minnesota Rules of Civil Procedure also involved an intra-family feud that devolved into a three-year defamation lawsuit whose outcome was overturned by the Court of Appeals in Mazariegos v. Mazariegos, 2023 WL 4307059 (Minn. Ct. App. July 3, 2023)(unpublished). The case involved a family real estate dispute concerning land in Guatemala, which led the Nobles County District Court to impose a fee sanction against one of the litigants, who had survived a summary judgment motion for dismissal.

The appellate court reversed, holding that the sanction “did not comply with existing law.” The basis for that ruling was a precedent of the state Supreme Court in Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990), which was superseded by statute on other grounds, as recognized in Radloff v. First American National Bank of St. Cloud, 470 N.W.2d 154 (Minn. Ct. App. 1991), rev. den’d. (Minn. July 24, 1991).

The principle in that case is that a party “who survives [summary judgment] with the major claims intact” should not be sanctioned after the trial is concluded based upon these “surviving claims.” The exception to that principle, as set forth in Collins v. Waconia Dodge, Inc., 793 N.W.2d 145 (Minn. Ct. App. 2011) rev. den’d. (Minn. March 15, 2011), occurs when an issue that is improperly handled by counsel at trial had not previously been addressed at the summary judgment stage.

But, in this case, the basis for the fee sanction was the argument raised by counsel at summary judgement, which was insufficient to warrant dismissal of the case at that stage and, therefore, could not justify a fee award after a voluntary dismissal during the fourth day of proceedings. Because the fee sanction was “directly at odds” with the district court’s early decision denying summary judgment, the trial court abused its discretion in imposing attorney’s fee sanction “after [the claimant] had voluntarily dismissed the lawsuit in the midst of a four day bench trial.”

Federal fights 

 A fight over attorney’s fees in a federal court class action turned out unfavorably for the lawyers seeking a fee award in a claim for unpaid wages under the Fair Labor Standards Act, 29 U.S.C. §201, et. seq., and a parallel state law in Vines v. Welspun Pipes, Inc., 2023 WL 4247395 (8th Cir. June 29, 2023)(per curiam).

Following remand and a lower court’s second determination of fees, the 8th Circuit upheld a $500 award, reduced from a lodestar in excess of $14,000, due to the “unpleasant conduct” of the attorneys for the class action claimants who obtained a $211,000 settlement. The Court of Appeals agreed with the ruling of the trial judge that counsel for the class behaved in an “egregious” way, including rejecting substantial settlement offers preceding the final outcome. An upward award of $500 fee resulted was 500 times the original $1 award of the lower Court before a first appeal led to a remand.

The following day, the appellate court also sanctioned a claimant whose attorney engaged in an intra-family wage fight in Bachman v. Bachman, 2023 WL 4286722 (8th Cir. June 30, 2023) (per curiam). It upheld dismissal of the lawsuit as a sanction for “repeatedly engaging” in improper behavior ranging from ex parte calls to the judge to abusive discovery practices.

Concurrent cases 

 A contingency fee arrangement did not limit a claim for attorney’s fees in an eminent domain case in State by Commissioner of Transportation v. Schaffer, 2023 WL 5006256 (Minn. Ct. App. Aug. 7, 2023) (unpublished). The landowner in Dakota County, whose land was taken by the state for highway construction turned down a $43,000 offer and obtained an award of $92,000 at a contested hearing under Minn. Stat. § 117.031(a).

Upholding a ruling of the Dakota County District Court, the Court of Appeals, in a published decision, ruled that the prevailing party’s attorney was entitled to a fee award from the state under the statute in the lodestar award, based upon time spent multiplied by the applicable fee rate, which excluded the contingency fee retainer agreement between the attorney and the landowner.

A fee award under the statute is “not limited” to the amount specified in the attorney-client fee arrangement. Rather, the traditional lodestar was applied for a fee award under Minn. Stat. § 117.031(a).

In a concurrent case, the appellate court upheld an attorney fee award to a personal representative in a Hennepin County probate proceeding in Estate of Kellett, 2023 WL 5013535 (Minn. Ct. App. Aug. 7, 2023)(unpublished).

The grant, in part, of the fees sought by the personal representative by the Hennepin County District Court was proper. The amount south was “fair and reasonable” on grounds of “replete” instances of good faith action by the personal representative and her counsel done for the “benefit of the estate.”

Further, a claim of attorney fees by the pro se claimant was denied.

The cases comprising this sextet of appeals not only attract attention of the bar, but provide guidelines for attorneys, litigants and others in determining and granting fee awards in future litigation.

PERSPECTIVES POINTERS

 ‘Bad faith’ fee sanction under Minn. Stat. § 559.21

• Improper purpose, such as harassment or causing unnecessary delay or increasing cost.
• Not warranted by existing law or extension or modification or reversal of it.
• Lack of evidentiary support for claim.
• Unwarranted denials for lack of information or belief.

Marshall H. Tanick is an attorney with the Twin Cities law firm of Meyer Njus Tanick.

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