Case Title: Beal Bank, SSB v. Schilleci

Citation: 896 So. 2d 395

Docket Number: 1021223

State: alabama

Court: Alabama Supreme Court

Date: 2004-09-17T00:00:00Z

Document:
896 So. 2d 395 (2004)
BEAL BANK, SSB
v.
Frank S. SCHILLECI, Jr.
1021223.

Supreme Court of Alabama.
April 23, 2004.
Opinion on Return to Remand September 17, 2004.[*]
*396 Gary W. Farris and Graham H. Stieglitz of Burr & Forman, LLP, Birmingham, for appellant.
Douglas Corretti of Corretti, Newsom & Hawkins, Birmingham; and Donna Richardson Shirley, Birmingham, for appellee.
HARWOOD, Justice.
On November 8, 1999, George Babakitis, as administrator ad colligendum of the estate of Joseph T. Robino, Jr., deceased, filed a complaint seeking declaratory relief, asking the trial court (1) to set aside a foreclosure sale on property known as the Lorna Village Shopping Center ("Lorna Village") that was jointly owned by Joseph T. Robino, Jr. ("Joseph Jr."), and his brother, S.T. Robino ("S.T."); (2) to determine the amount of mortgage indebtedness on Lorna Village; and (3) to determine the amount of attorney fees and expenses Beal Bank, SSB ("Beal"), the mortgagee, was entitled to for conducting the foreclosure sale.
On February 18, 2000, Babakitis assigned to Frank S. Schilleci the estate's statutory right of redemption to Lorna Village, as well as all rights in any pending litigation. Schilleci petitioned the trial court to substitute him as the real party in interest in the declaratory-judgment action, and the trial court granted the petition insofar as it allowed him to enforce his property rights in the pending case. On March 6, 2000, Schilleci amended the complaint to ask that "the attorney fees be declared excessive, that the foreclosure sale be kept in place, and the Court declare and determine the amount that [he] can pay [Beal] in order to redeem ... Lorna Village Shopping Center"; he later filed a verified amended complaint. Thereafter, Schilleci redeemed the property from Beal. After various other motions, the case proceeded to a bench trial on the issue of the reasonableness of the attorney fees. The trial court, in an order dated December 19, 2002, stated, in pertinent part:
*399 The trial court subsequently entered a judgment, on January 24, 2003, against Beal, which stated, in pertinent part:
On January 30, 2003, Beal filed a motion to alter, amend, or vacate the judgment. On March 7, 2003, the trial court entered an order granting in part and denying in part Beal's motion; that order stated, in pertinent part:
On May 6, 2003, the trial court entered an order vacating the March 7, 2003, order. The new order stated, in pertinent part:
(Emphasis original.)
On appeal, Beal raises one issue:
This Court has stated that "`[t]he determination of whether an attorney fee is reasonable is within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of that discretion.' Ex parte Edwards, 601 So. 2d 82, 85 (Ala.1992), citing Varner v. Century Fin. Co., 738 F.2d 1143 (11th Cir.1984)." State Bd. of Educ. v. Waldrop, 840 So. 2d 893, 896 (Ala.2002).
On May 30, 1986, Lorna Village Partners ("LVP") obtained a loan from Guaranty Federal Savings and Loan ("Guaranty Federal") in the principal amount of $400,000. The loan was secured by a first-mortgage lien on Lorna Village, which is located in Birmingham, as well as by liens on other properties. Ultimately, through procedures not necessary to recount, Beal became the holder of the note and mortgage. The mortgage included the following provision:
(Emphasis added.)
In 1995, LVP assigned its rights, title, and interest in Lorna Village to the estate of Joseph T. Robino, which, in turn assigned the same to Joseph Jr. and S.T.
The legal proceedings that preceded the award of attorney fees at issue here are, in pertinent part, as follows. On January 27, 1998, Babakitis, as conservator for Joseph Jr., sued S.T. and his wife, Shirley, alleging that they collected rents on the properties owned jointly by S.T. and Joseph Jr., including Lorna Village, and never provided Joseph Jr. his share of the rental income. *401 On January 28, 1998, the trial court issued an order, temporarily restraining S.T. and Shirley from collecting rents on the properties and appointing Southpace Properties, Inc., to manage the various properties.
At some point, Beal instituted foreclosure proceedings on Lorna Village and filed a complaint, as well as an emergency motion, in the United States District Court for the Northern District of Alabama, seeking to have a receiver appointed for Lorna Village because, it claimed, S.T. and Joseph Jr. had defaulted in their obligation to Beal by failing to pay the principal and interest installments on the note secured by the mortgage on Lorna Village as they came due. On February 17, 1998, Beal moved to intervene as a plaintiff in Babakitis's action, alleging that it held a note that was in default and that the note was secured by a mortgage on certain properties, including Lorna Village, and asking the court to hold in an escrow account all rents and proceeds generated by Lorna Village; the motion was granted.
On February 27, 1998, Babakitis, in his capacity as conservator, filed a complaint for declaratory relief seeking "a determination by [the circuit court] of the validity of the right of Beal to institute foreclosure proceedings and conduct a foreclosure sale" on Lorna Village; he also filed an emergency motion for injunctive relief and a supporting brief, asking the court to enjoin Beal's foreclosure of Lorna Village. Beal filed an answer to the motion for declaratory relief. On March 11, 1998, the trial court issued an order temporarily enjoining Beal from foreclosing on the property "provided [Babakitis] post a surety bond or a cash bond in the amount of $25,000.00 with the Court" and appointed Southpace Properties, Inc., as receiver to "take charge of the daily operations and to manage the property and to collect the rents, income and revenue...." On March 12, 1998, Babakitis amended the emergency motion for injunctive relief and the complaint for declaratory relief.
On March 13, 1998, the trial court entered a preliminary injunction, restraining S.T. and Shirley from collecting rents on the properties jointly owned by S.T. and Joseph Jr., as well as ordering S.T. to comply with other provisions. On March 20, 1998, Beal filed a motion asking the court to reconsider its March 11 order, which enjoined Beal from foreclosing on Lorna Village. On March 24, 1998, Beal filed an amendment and a revision to its motion to reconsider; Babakitis filed a response. On March 25, 1998, Beal appealed the March 11 order to this Court, and we transferred that appeal to the Court of Civil Appeals. The Court of Civil Appeals ordered that the injunction be dissolved. Beal Bank, S.S.B. v. Babakitis, 723 So. 2d 687 (Ala.Civ.App.1998).
On March 25, 1998, Babakitis filed a verified application for the entry of a default judgment against S.T. and Shirley. On March 30, 1998, Western Surety Company issued an injunction bond to Babakitis. On April 1, 1998, S.T. and Shirley answered the complaint filed on January 27, 1998, and both filed motions to dismiss that complaint as well as Beal's application for intervention. On April 6, 1998, Beal filed an answer to Babakitis's complaint for declaratory relief. On April 13, 1998, Babakitis and Beal filed a joint motion asking S.T. and Shirley to show cause as to why they did not comply the court's March 13, 1998, order. The court ordered S.T. and Shirley to show cause, and that same day, it also denied Beal's motion to reconsider.
Joseph Jr. died on April 20, 1998. On May 13, 1998, Beal filed a motion to correct the record on appeal to the Court of Civil Appeals, which the trial court granted. Thereafter, Babakitis filed two motions *402 to correct the record on appeal, which were both granted.
On June 3, 1998, Beal filed its own motion to show cause as to why S.T. and Shirley did not comply with the trial court's March 13, 1998, order. Shirley filed a response to Babakitis's and Beal's motions to show cause on June 5, 1998. On June 10, 1998, Shirley filed a motion for a summary judgment. On June 11, 1998, after a hearing, the trial court entered an order that stated that it had found that Shirley was "in compliance with the Court's order" but that S.T. had failed to comply with the court's order, and it therefore held S.T. in contempt of court.
On July 8, 1998, Beal filed a motion asking the trial court to direct Southpace Properties to provide insurance on Lorna Village, which the trial court granted. On September 18, 1998, Babakitis, as personal representative of the estate of Joseph Jr., filed a motion to substitute himself, as administrator ad colligendum, as the plaintiff in these actions.
On September 22, 1998, the trial court amended its June 11, 1998, order holding S.T. in contempt to state that it found that "S.T. Robino has engaged in contumacious conduct in direct disobedience to the Court's order of June 11, 1998." The amended order also directed that S.T. be taken "into custody" and held "pending his compliance with the orders of this Court of March 13, 1998; and any further orders of this Court." On October 6, 1998, S.T. filed with this Court a notice of appeal from the trial court's June 11 and September 22 orders, which this Court transferred to the Court of Civil Appeals pursuant to Ala.Code 1975, § 12-2-7(6).
On October 13, 1998, Beal filed a motion to dissolve the March 11, 1998, temporary injunction preventing Beal from foreclosing on Lorna Village; the trial court denied the motion. On October 26, 1998, Beal filed a motion to compel and a motion for sanctions against Babakitis for his failure to respond to written discovery. On October 23, 1998, the Court of Civil Appeals reversed the judgment in Beal's appeal of the preliminary injunction and remanded the case to the trial court. Beal Bank, S.S.B. v. Babakitis, supra. The injunction was subsequently lifted.
On November 13, 1998, S.T. was placed in the Jefferson County jail on the trial court's order holding him in contempt. On November 17, 1998, he filed a petition for bankruptcy in the United States Bankruptcy Court for the Northern District of Alabama. That same day, the trial court ordered that "[S.T.] be released from the Sheriff's custody where he is being held for civil contempt pending further orders of the Bankruptcy Court." Subsequently, the Bankruptcy Court dismissed the adversary proceeding.
On December 10, 1998, Beal filed a motion to enforce the surety bond. That motion was supported by the affidavit of Gary W. Farris, who attested that the "total of the attorneys' fees and costs incurred in connection with the injunction amounts to $52,291.50." Thereafter, Beal filed a motion for a hearing on the motion to enforce the surety bond. The trial court set the hearing on that motion for January 27, 1999. On that date, the parties announced a settlement agreement in open court. On February 10, 1999, the trial court ordered Babakitis and Western Surety Company, which had issued the surety bond, to pay Beal $17,500. That same day, Babakitis moved for a protective order and to quash the taking of his deposition. On February 24, 1999, Beal filed an opposition to Babakitis's motion and it also filed a motion to enforce the settlement agreement, or, alternatively, a motion for a new hearing on the motion to enforce the surety bond.
*403 Babakitis responded to Beal's motion to enforce the surety bond on March 12, 1999. On March 30, 1999, the trial court granted Babakitis's motion for a protective order and to quash the deposition. On October 1, 1999, the Bankruptcy Court dismissed S.T.'s adversary proceedings. On October 29, 1999, Beal foreclosed on Lorna Village.
This case provides an example of how a simple procedure  the foreclosure of property under a power of sale  can evolve into a litigious ordeal. The trial court's December 19, 2002, order accurately describes the situation: "[t]his case ... has been a prime example of extended and often unnecessary litigation." Beal contends the trial court erred in reducing the amount of attorney fees from the amount claimed, $146,021, to $80,000, and asks this Court to reverse its order doing so. In Peebles v. Miley, 439 So. 2d 137 (Ala.1983), the Court adopted five additional criteria to the seven already existing that a court may consider when making a determination regarding the reasonableness of an attorney fee. Those 12 criteria are:
Van Schaack v. AmSouth Bank, N.A., 530 So. 2d 740, 749 (Ala.1988).
We stress that these criteria are evaluative and not an exhaustive list of specific criteria that all must be met when reviewing the reasonableness of an attorney fee. This Court stated as much in Graddick v. First Farmers & Merchants National Bank of Troy, 453 So. 2d 1305, 1311 (Ala.1984):
Our caselaw otherwise has developed the following body of principles pertinent to our review in this case:
Dent v. Foy, 214 Ala. 243, 249, 107 So. 210, 216 (1925).
King v. Keith, 257 Ala. 463, 470, 60 So. 2d 47, 52 (1952).
Ingalls v. Hare, 266 Ala. 221, 228, 96 So. 2d 266, 274 (1957).
However, while we have recognized that "the reasonableness of an award of attorney fees is within the discretion of the trial court, subject to correction only for an abuse of discretion," we have noted that when an appellate court reviews the award of an attorney fee "we must be able to discern from the record what factors the trial court considered in determining the amount of attorney fees." Lanier v. Moore-Handley, Inc., 575 So. 2d 83, 85 (Ala.1991), citing Van Schaack v. AmSouth Bank, N.A., supra (emphasis added).
City of Birmingham v. Horn, 810 So. 2d 667, 681-82 (Ala.2001). See also Lolley v. Citizens Bank, 494 So. 2d 19 (Ala.1986); Huntley v. Regions Bank, 807 So. 2d 512 (Ala.2001); Ex parte Edwards, 591 So. 2d 491, 493 (Ala.1990) ("The trial court reduced the requested fee of $75,301.56 to $9,000.00. In doing so, the trial court made no findings of record as to why such a reduction was made. We are not in a position to determine if in fact the trial court abused its discretion in awarding a lesser fee than was requested without first knowing the court's reason for doing so.").
*405 In Horn, supra, this Court took upon itself the task of independently assessing the reasonableness of certain blocks of billed attorney time specifically challenged as containing duplicative or unnecessary hours, and we modified the award based upon our determination from the record. However, unlike Horn, nothing in the case before us directs our attention to any discrete amounts of time alleged to be either excessive or redundant and certainly none that, in the aggregate, could account for the extreme elimination of hours the trial judge obviously undertook. Schilleci's attorneys simply make the argument that the total attorney fee claimed was unreasonable. The most the six witnesses called by Schilleci's counsel testified to is reflected by the following excerpts from their testimony:
This witness acknowledged that he did not know the hourly rate charged by the lawyers in the law firm representing Beal.
The second witness for Schilleci was not called as an expert witness, but, rather, was called because he was involved in the bankruptcy and foreclosure proceedings that were a part of the overall litigation.
The testimony of Schilleci's third witness came closer to alleging that redundancy exists in some of the hours billed by Beal, but was far too limited to be significant to the entire award, because he testified about only one facet of the total work done by Beal's attorneys:
During cross-examination, that witness testified:
When the fourth witness was asked if he had an opinion as to what would have been a fair and reasonable attorney fee, and, if so, what that opinion was, he responded:
However, on cross-examination, he testified that it was reasonable for the law firm to charge between $200-$250 an hour for court appearances, and $185-$200 for time spent outside court. It was simply his position that the law firm claimed to have spent too many hours on the matter.
The testimony of the fifth witness regarding a reasonable attorney fee was also applicable only to a portion of the proceedings:
However, once counsel for Beal posed a hypothetical that mirrored substantially what activities and litigation had taken place during the efforts to accomplish the foreclosure, the witness admitted that he would not accept that body of work for an attorney fee of only $3,000. Later in his testimony, although admitting that from everything he had seen the law firm did the work reflected in the bills he had reviewed, he expressed the view that not all of the work done in connection with the foreclosure was necessary:
The last witness presented by Schilleci testified that the most she ever charged for a foreclosure was $1,250, which is also the amount that she would have charged to do the foreclosure in this case. However, she alternately testified that the maximum attorney fee that could reasonably be charged for the foreclosure should be 10% of the unpaid principal, which would be $33,000.
In Ex parte Edwards, 601 So. 2d 82 (Ala.1992), this Court stated: "When an applicant for attorney fees `has carried his burden of showing that the claimed rate and number of hours are reasonable, the resulting product is presumed to be the reasonable fee to which counsel is entitled.'" 601 So. 2d  at 85, quoting Blum v. Stenson, 465 U.S. 886, 888, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984). See also Horn, supra (applicants for an attorney fee bear the burden of proving their entitlement to an award and documenting their appropriately expended hours).
Although Beal presented only one expert witness, that witness provided the court with extensive testimony regarding the reasonableness of the attorney fee sought, beginning his testimony with a recitation of what he had reviewed in order to render his opinion:
As opposed to Beal's witness, the witnesses testifying on Schilleci's behalf rendered their opinions based on piecemeal information. Some reviewed the billing logs, but were testifying only about the reasonableness of the fee charged in one facet of the proceedings. Others, who did not review the billing logs but rather a packet of information supplied by Schilleci, testified only generally that the total amount of the attorney fee charged was unreasonable. Only two witnesses made any reference to specific amounts of time they found to be unreasonable; the other witnesses spoke only generally. Yet all of the witnesses testified that the hourly rates charged were reasonable, keeping intact the presumption of reasonableness in that regard.
Having reviewed the record thus presented to us, given the wide numerical range presented by the testimony of the witnesses, we are not able to discern how the trial judge arrived at the lesser attorney fee of $80,000, which can only represent a rejection of certain hours claimed by the attorneys for Beal. We can understand his ruling only to mean that he identified certain activities and services billed by the law firm that were unreasonable in length or as staffed. As was the case in Edwards, 591 So. 2d  at 493, "[w]e are not in a position to determine if in fact the trial court abused its discretion in awarding a lesser fee than was requested without first knowing the court's reasons for doing so." Without some explanations by the trial judge as to what he discounted, we cannot determine whether he exceeded his discretion in awarding a lesser fee. Therefore, we remand this cause to the trial court for the entry of an explanatory order articulating the decision it made, and its reason for that decision, which resulted in the reduction of the attorney fee to $80,000. Due return shall be *410 made to this Court within 42 days of the date of this opinion.
REMANDED WITH DIRECTIONS.
HOUSTON, SEE, BROWN, and STUART, JJ., concur.
HARWOOD, Justice.
On April 23, 2004, this Court remanded this cause to the trial court "for the entry of an explanatory order articulating the decision it made, and its reason for that decision, which resulted in the reduction of the attorney fee to $80,000." 896 So. 2d  at 409. Although, quoting Lanier v. Moore-Handley, Inc., 575 So. 2d 83, 85 (Ala.1991), we recognized that" `the reasonableness of an award of attorney fees is within the discretion of the trial court, subject to correction only for an abuse of discretion,'" 896 So. 2d  at 404, we also quoted City of Birmingham v. Horn, 810 So. 2d 667, 682 (Ala.2001), for the proposition that "`the trial court's order regarding an attorney fee must allow for meaningful review by articulating the decisions made, the reasons supporting those decisions, and the performance of the attorney-fee calculation.'" We also acknowledged, however, the reiteration in several of our cases of the proposition that a trial judge might call to his or her aid the judge's own estimate of the value of the legal services in question, after considering the various elements otherwise established by the caselaw. 896 So. 2d  at 404.
On August 16, 2004, on remand the trial judge entered an 11-page "explanatory order," reciting in detail the various considerations, determinations, and calculations that had led to his excluding as unnecessary, unreasonable, redundant, and/or undescribed charges totaling $66,021 from the total attorney fee claimed of $146,021.
The order complies with our directive on remand, in that we are able to discern from the record what factors the trial court considered in determining the proper attorney fees to award. Reviewing the trial court's order explaining its considerations, determinations, and reasoning with the strong presumption in favor of the order, as explained in our original opinion, we cannot say that the trial court exceeded it discretion in the matter.
Accordingly, the trial court's order of December 19, 2002, as supplemented by its judgment of January 24, 2003, its order of May 6, 2003, and its order of August 16, 2004, on remand is due to be, and the same hereby is, affirmed.
AFFIRMED.
HOUSTON, SEE, BROWN, and STUART, JJ., concur.
[*]  Note from the reporter of decisions: The opinion was released by the Supreme Court under the date September 17, 2004. This case was actually released to the public on September 20, 2004.
[1]  The declaratory-judgment action that is the basis of this appeal was filed in November 1999. The original litigation between these parties was filed in January 1998.