No. 89-502 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

THE ASSOCIATION OF UNIT OWNERS OF DEER 

LODGE CONDOMINIUM, INC., a Montana corporation, 

Plaintiffs, Appellants and Respondents, 

and THE BOARD OF DIRECTORS OF THE ASSOCIATION - . OF UNIT OWNERS OF DEER LODGE CONDOMINIUM, INC., o', 

-- & - * 

Plaintiff and Respondent, -A . 

vs . BIG SKY OF MONTANA, INC., et al., 

Defendants. 

PAGE WELLCOME, P.S.C., a nonparty affected 

by the determination in the ~istrict Court, 

Appellant. , . c3 

APPEAL FROM: District Court of the Fifth Judicial District, 

In and for the County of Madison, 

The Honorable Frank M. Davis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Page Wellcome; Wellcome, Frost & Bartlett, Bozeman 

Montana (Class) 

Max Hansen, Dillon, Montana (Wellcome) 

For Respondent: 

J. Robert Planalp; Landoe, Brown, Planalp & Kommers, 

Bozeman, Montana (Association, Board) 

Michael J. Lilly, Bozeman, Montana 

Patrick G. Frank, Missoula, Montana 

Filed: 

Submitted on Briefs: January 25, 1990 

Decided: April 9, 1990 
Justice Fred J. Weber delivered the Opinion of the Court. 

This class action was the subject of an approved settlement 

on July 18, 1988, by the District Court for the Fifth Judicial 

District, Madison County. After a hearing on August 5, 1988, the 

District Court made its Order fixing attorney fees. Upon motion 

by the Association of Unit Owners of Deer Lodge Condominium 

(Association) on June 1, 1989, the District Court reduced the 

original award of attorney fees. Page Wellcome appeals such 

reduction in his fees. We affirm. 

The sole issue for our consideration is whether the District 

Court erred in reducing Mr. Wellcome's attorney fees? 

This case was previously before this Court when it was ordered 

to proceed as a class action with the Association and its Board of 

Directors acting as representatives. See State ex rel. Boyne USA, 

Inc. v. District Court (1987), 228 Mont. 314, 742 P.2d 464. After 

an adjustment by the District Court, the plaintiffst Class 

received, by way of cash and other property, in excess of six 

million dollars. A series of settlement hearings were held on the 

Bovne case culminating in an August 5, 1988 hearing on the issue 

of attorney fees to be paid to Mr. Wellcome. Mr. Wellcome was 

represented by associates of his firm at the hearing. 

On August 5, 1988, the District Court ordered attorney fees 

to be paid as follows: 

[Tlhe attorneys will receive TWO HUNDRED THOUSAND AND 

00/100 DOLLARS ($200,000.00) of the cash settlement 

proceeds from the initial cash payment. An additional 
sum of TWO HUNDRED THOUSAND AND 00/100 DOLLARS 

($200,000.00) shall be paid from the first sale proceeds 

when the real property owned by the members of the class 

and the Deer Lodge Condominium Association or any part 

thereof is sold by the association. In addition to the 

foregoing the attorneys shall have an interest equal to 

TWENTY-FIVE PERCENT (25%) (one-fourth) of the sale price 

of the real property which percentage shall be applied 

to the sale price of all real property less the TWO 

HUNDRED (sic) AND 00/100 DOLLARS ($200,000.00) previously 

paid from the land sale proceeds. Such percentage amount 

shall then be reduced by any real estate commission paid 

on behalf of the association to a Montana licensed real 

estate agent in connection with such sale, the amount or 

percentage of which commission shall be agreed to (by the 

attorneys) prior to the real estate listing. If no 

licensed real estate agent is paid by the association 

then the TWENTY-FIVE PERCENT (25%) (one-fourth) of the 

land sale proceeds shall not be reduced and shall be paid 

in full to the attorneys. 

In addition to the foregoing, the attorneys shall 

also receive the automobile credit attributable to the 

two (2) bedroom unit owned by the association. 

The initial TWO HUNDRED THOUSAND AND 00/100 DOLLARS 

($200,000.00) payment as hereinabove specified shall be 

paid to the attorneys for the class on August 12, 1988. 

The balance of the attorneys' fees in the additional 

amount of TWO HUNDRED THOUSAND AND 00/100 DOLLARS 

($200,000.00) together with the TWENTY-FIVE PERCENT (25%) 

(one-fourth) interest in the real property shall be paid 

to the attorneys when the land is sold and pending such 

sale the attorneys shall have a lien and charge against 

the real property owned by the Deer Lodge Condominium 

Association, and each and every condominium unit in the 

Deer Lodge Condominiums, in order to insure payment of 

such attorneys' fees as hereinabove specified. . . . 

In September 1988, Mr. Wellcome left the country for an 

extended world tour. Subsequently the Association obtained new 

counsel. On June 1, 1989, the Association, through the Board of 

Directors, filed a motion with the District Court asking it to 

reconsider its Order granting Page Wellcome in excess of 

$794,748.58 in attorney fees. The motion argued that the award 

violated Montana law and did not take into account a substantial 
amount of attorney fees and costs previously paid to Mr. Wellcome; 

that the award was based on the court's presumption that Mr. 

Wellcome would continue to represent the plaintiffs, when in fact, 

his representation was terminated; that notwithstanding the court's 

award, Mr. Wellcome's firm continued to charge on an hourly basis; 

and that the attorney fees were extreme in comparison to the 

benefits received by the Class members. 

On June 30, 1989, after discovering that the record disclosed 

matters of which the Court was not previously aware, the Court 

entered its Order striking the contingent fee portion of the fee 

and reducing the cash balance still owing from $200,0~00 to 

$100,000. When Mr. Wellcome returned from his vacation, he pursued 

this non-party claim for his attorney fees. In its opinion and 

order on the Motion to Reassess, the District Court noted in its 

findings that the record before it disclosed matters of which it 

was not aware on August 5, 1988, including: (1) Mr. Wellcome had 

previously been paid $373,748.58 as fees and reimbursement of 

costs; (2) a previous attorney had been paid $135,000; (3) the 

value of the property received by the Class was not $1,000,000 as 

contemplated; but actually one-half of that sum; and (4) the court 

had not been advised of the existing law as to contingent fees in 

a class action. The court further noted that there was no evidence 

that these matters were misrepresented or withheld from the court. 

The court listed in its findings the attorney fees that had been 

paid to Mr. Wellcome as of June 13, 1989 as follows: 

Payment fees & costs through August 5, 1988 $226,948.11 

Payment of August 5, 1988 200,000.00 
Payment by Safeco Insurance Company 

Credit for Chrysler Automobile 

TOTAL 

Although the court praised Mr. Wellcome's work on this case, it 

concluded that the Itfee as originally approved, and under the 

facts, some of which were unknown to the Court, was not an 

equitable one1', and the Itfunds on hand and anticipated are not 

sufficient to pay the approved fee." Thus, it ordered the 

contingent fee portion (the percentage of the sale) stricken and 

reduced the cash balance of $200,000 to $100,000. Mr. Wellcome 

appeals the amended award. We affirm. 

I 

Did the District Court err in reducing Mr. Wellcomels attorney 

fees? 

Mr. Wellcome maintains that the District Court erred when it 

reduced his fees, arguing that the District Court's initial Orders 

in 1988, awarding fees to Class counsel, after notice to the Class, 

were appropriately entered. He asserts that he followed the same 

fee agreement as Mike Coil, the counsel who originally represented 

the Association, which provided both an hourly rate to be paid as 

the litigation progressed, together with a contingent fee based 

upon a declining percentage scale at the conclusion of the 

litigation, and that such agreement was acceptable to the 

Association. Mr. Wellcome further contends that the District 

Court's findings are not supported by the evidence and that the 

August 5, 1988, Order was not appealed from, and was therefore 

binding, based on lack of an appropriate appeal and laches. 
Relying on Western Media, Inc. v. Merrick (1988), 232 Mont. 

480, 757 P.2d 1308, the Association urges that an award of attorney 

fees consisting of both a contingency fee and an hourly rate is 

unreasonable, whether or not the case involves a class action. 

In reducing the attorney fees to Mr. Wellcome, the District 

Court cited Waters v. City of Chicago (Ill. App. 1981), 420 N.E.2d 

599, for the proposition that in a class action an award of 

attorney fees is I1contingent upon success, and upon the existence 

of a fund from which the fees can be paidf1, and that the evaluation 

of settlement must be "fair, reasonable, and in the best interests 

of all affected." We approve and adopt this standard for the 

evaluation of attorney fees in a class action. 

The question of whether an attorney and client could agree to 

pay either an hourly rate or a contingent fee, whichever was 

larger, was addressed by this Court in Western Media. In Western 

Media, the parties agreed to payment of attorney fees of either a 

40% contingent fee of any amount recovered or an hourly rate, 

"whichever calculation results in the larger compensation to the 

attorney.I1 This Court stated: 

The circumstances to be considered in determining the 

compensation to be recovered are the amount and character 

of the services rendered; the labor, time, and trouble 

involved, the character and importance of litigation in 

which the services were rendered, the amount of money or 

the value of property to be affected, the professional 

skill and experience called for, the character and 

standing in the profession of the attorneys; the result 

secured by the services of the attorneys may be 

considered as an important element in determining their 

value. 

[Tlhe amount fixed as [contingent] attorney fees is 

largely discretionarv with the District Court. 
Even though attorney's compensation is provided for under 

825-10-301, MCA, which allows the amount and manner to 

be left to agreement, express or implied this type of 

clause takes away the rationality behind contingency fee 

contracts. (citations omitted). 

Western Media, 757 P. 2d at 1310. The result under Western Media 

is that the clause allowing a contingent fee or an hourly rate was 

not approved but was disapproved. 

In its conclusions of law dated June 30, 1989, the District 

Court concluded that the previously approved attorney fees must in 

law and in equity be amended and adjusted by striking the 

contingent fee portion of the approved fee and reducing the cash 

balance from $200,000.00 to $100,000.00. The court's rationale 

was contained in a memorandum which stated in part as follows: 

In the Court's view, the contingent fee portion of the 

attorney fee is not only contrary to the law in class 

actions, it is under the facts confiscatory. The court 

has reviewed the applicable cases, specifically Waters 

v. City of Chicaso, 402 N.E.2d 599, 604 (Ill.). . . . 

Having made these observations, the court must consider 

the equities. The fee as originally approved, and under 

the facts, some of which were unknown to the court, was 

not an equitable one. The funds on hand and anticipated 

are not sufficient to pay the approved fee. Equity 

requires the ordered adjustment, e.g., striking the 

contingent fee and reducing the further cash payment. 

The present case has been an extremely complex and prolonged 

example of class litigation. This Court is not in the position to 

accurately evaluate the extent of the attorney services provided 

and the fees which are reasonable as compensation for such 

services. The District Court on the other hand was the court which 

handled the complex litigation and under this circumstance is the 
court peculiarly qualified to make the attorney fees determination. 

We conclude that there is substantial evidence to support the 

findings on the part of the District Court and that the District 

Court properly applied the law of Montana to the determination of 

the fees. 

We affirm the fee determination on the part of the District 

Court. 

We note that both parties raise other issues with regard to 

the underlying class litigation. We conclude that the attorney 

fees issue is the primary issue addressed by both parties and 

therefore do not find it necessary to consider any of the other 

matters presented by the parties. 

\ '/ Chief Justice d' \