United States Court of Appeals

FOR THE EIGHTH CIRCUIT

 

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No. 96-1118

No. 96-1119

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Farmland Industries, Inc., *

*

Appellant - Cross Appellee,*

*

v. *

*

Frazier-Parrott Commodities, *

also known as Parrott *

Corporation, doing business as * Appeals from the United States

Parrott Corporation, Inc.; * District Court for the

Heinold Commodities, Inc.; * Western District of Missouri.

DeKalb Agresearch, Inc.; *

Christopher R. Parrott; Horace *

Seixas; John Dunn, *

*

Defendants, *

*

Heinold Holdings, Inc., *

*

Appellee - Cross Appellant.*

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 Submitted: September 13, 1996

 Filed: April 15, 1997

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Before BEAM, HEANEY, and JOHN R. GIBSON, Circuit Judges.

___________

JOHN R. GIBSON, Circuit Judge.

Farmland Industries, Inc. brings before us another, and perhaps the

final chapter in its litigation against Frazier-Parrott
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Commodities, Inc. and others. The district court awarded Heinold Holdings,

Inc. attorneys' fees pursuant to Farmland's contract with Heinold

Commodities, Inc. Farmland argues that the attorneys' fees provision in

the contract is unenforceable under Missouri law and that a party to the

contract did not incur the attorneys' fees awarded. Farmland also argues

that the district court used the wrong standard to determine the amount of

the attorneys' fees award. Heinold Holdings cross-appeals, arguing that

the district court should have awarded prejudgment interest on its

attorneys' fees award. We reverse the district court's denial of

prejudgment interest and affirm in all other respects.

In 1985 Farmland entered into a contract with Heinold Commodities in

which Heinold Commodities agreed to facilitate commodities trades for

Farmland, and Farmland agreed to pay Heinold Commodities' "costs and

attorneys' fees incurred in defending against any claim brought by

[Farmland] in any suit, arbitration or reparations proceeding in which

Heinold [Commodities] is the substantially prevailing party."

In 1986 Farmland sued Heinold Commodities and others, accusing them

of defrauding Farmland by manipulating Farmland's commodities trades.

During Farmland's lawsuit, Heinold Holdings, which owned Heinold

Commodities, agreed to pay Heinold Commodities' attorneys' fees.

Thereafter Heinold Commodities' attorneys directly billed Heinold Holdings

for all services rendered on behalf of Heinold Commodities. Heinold

Commodities assigned its attorneys' fees claim against Farmland to Heinold

Holdings.

Farmland's lawsuit proceeded to trial, and the district court

directed a verdict in favor of Heinold Commodities at the close of the

evidence. The jury returned a verdict in favor of the other defendants on

all of Farmland's claims. We affirmed. Farmland 
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Indus. v. Frazier-Parrott Commodities, Inc., 871 F.2d 1402 (8th Cir. 1989).

After prevailing against Farmland, Heinold Commodities moved for

summary judgment on its claim for attorneys' fees based on its contract

with Farmland. At the same time, it asked the district court to substitute

Heinold Holdings for Heinold Commodities in the claim for attorneys' fees

because of the assignment. Heinold Holdings asserted that it was entitled

to recover $748,288.38 for attorneys' fees incurred by Heinold Commodities

in defending against Farmland's lawsuit.

The district court substituted Heinold Holdings for Heinold

Commodities, but denied the motion for summary judgment. After a hearing,

the district court reduced the amount of attorneys' fees requested by

Heinold Holdings because it determined that part of the fees were not

incurred by Heinold Commodities. Relying on United States ex. rel. C.J.C.,

Inc. v. Western States Mechanical Contractors, Inc., 834 F.2d 1533 (10th

Cir. 1987), the court further reduced the attorneys' fees claimed by

Heinold Holdings to an amount that it considered to be reasonable. The

court awarded Heinold Holdings $516,359.30 in attorneys' fees, but denied

Heinold Holdings' request for prejudgment interest on that award.

I.

Farmland argues that the district court erred in awarding attorneys'

fees under the contract because no reasonable interpretation of the

contract permits an award in this case. It argues that we should use

Missouri law to interpret the contract, even though the contract states

that Illinois law governs its interpretation. We will assume without

deciding that Missouri law 
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governs our interpretation of the contract.

Under Missouri law we must enforce a contract as written and

according to the plain meaning of the words in the contract when the

contract is clear and unambiguous. See Cross v. Ladue Supply, Inc., 424

S.W.2d 108, 110 (Mo. Ct. App. 1967). An ambiguity exists when a contract

is susceptible to more than one reasonable interpretation. See Coughenour

v. Bates, 785 S.W.2d 291, 297 (Mo. Ct. App. 1990). Whether a contract is

ambiguous is a question of law which we review de novo. See Jim Carlson

Constr., Inc. v. Bailey, 769 S.W.2d 480, 482 (Mo. Ct. App. 1989); Slotkin

v. Willmering, 464 F.2d 418, 422 (8th Cir. 1972).

Farmland acknowledges that the plain language of the contract

requires an attorneys' fees award when Farmland brings any claim against

Heinold Commodities and Heinold Commodities prevails. Nevertheless,

Farmland argues that it is unreasonable to allow attorneys' fees in this

case because its claims against Heinold Commodities had nothing to do with

its contract with Heinold Commodities.

We conclude that the clear language of the contract rebuts Farmland's

argument. The attorneys' fees provision is unambiguous. It gives Heinold

Commodities a contractual right to recover its attorneys' fees "incurred

in defending against any claim brought by [Farmland] in any suit . . . in

which Heinold [Commodities] is the substantially prevailing party."

(Emphasis added).

This plain language of the contract is broad enough to cover

Farmland's claims against Heinold Commodities resulting from its actions

facilitating the commodities trades. To hold otherwise would contradict

the plain language of the contract. See Slotkin, 464 F.2d at 421-22.
 Farmland contends that Missouri's public policy of open

1

access to courts is found in section 14 of article I of the

Missouri Constitution, which provides:

Open courts--certain remedies--justice without sale,

denial or delay. That the courts of justice shall be

open to every person, and certain remedy afforded for

every injury to person, property or character, and that

right and justice shall be administered without sale,

denial or delay.

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We also reject Farmland's argument that following the plain language

of the contract leads to an unreasonable result. Although Farmland's

claims were not based on its contract with Heinold Commodities, they arose

out of trades facilitated by Heinold Commodities for Farmland under the

contract. The plain language of the attorneys' fees provision made it

reasonably foreseeable at the time of contracting that the provision would

apply in this type of case.

II.

Farmland argues that the attorneys' fees provision violates Missouri

public policy and is unenforceable. Farmland asserts that Missouri has a

public policy of open access to courts and that requiring Farmland to pay 1

attorneys' fees impedes its access to the courts and penalizes it for going

to court.

Missouri law permits an award of attorneys' fees in a variety of

circumstances, see Skyles v. Burge, 830 S.W.2d 497, 499 (Mo. Ct. App.

1992), including when a contract provides for such an award, see JackesEvans Mfg. Co. v. Christen, 848 S.W.2d 553, 557 (Mo. Ct. App. 1993); Gibson

v. Gibson, 687 S.W.2d 274, 277 (Mo. Ct. App. 1985). Despite this

precedent, Farmland argues that it violates Missouri's public policy of

open access to courts to enforce a 
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contractual attorneys' fees provision in a lawsuit unrelated to enforcement

of the contract containing the provision.

We reject Farmland's argument. Farmland has not cited, nor have we

found, any case which denies an award of attorneys' fees because it

violates Missouri's public policy of open access to its courts. Indeed,

such an action would be contrary to Missouri cases which have long allowed

attorneys' fees awards without concern for impeding access to courts. Cf.

McPherson Redev. Corp. v. Shelton, 807 S.W.2d 203, 206 (Mo. Ct. App. 1991).

Granting an award of attorneys' fees to a successful party does not

prevent any party from asserting its rights in court. Such an award does

not bar the door to the courthouse, but simply makes the losing party's

trip to the courthouse more expensive. Missouri law allows parties to

provide for attorneys' fees in their contracts. See Skyles, 830 S.W.2d at

499; Gibson, 687 S.W.2d at 277. We hold that an attorneys' fees award in

this case does not violate Missouri public policy.

We also hold that the attorneys' fees provision is not an

impermissible penalty. It is but part of Farmland's consideration

supporting its contract with Heinold Commodities. In exchange for Heinold

Commodities' promise to facilitate trades for Farmland, Farmland promised

to pay Heinold Commodities' attorneys' fees in the event Farmland

unsuccessfully sued Heinold Commodities. By enforcing the attorneys' fees

provision, we are giving Heinold Commodities the benefit of its bargain

with Farmland.
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III.

Farmland argues that it is not liable for some of the attorneys' fees

awarded by the district court because some of the fees awarded were not

incurred by Heinold Commodities. Under Farmland's contract with Heinold

Commodities, Farmland is liable only for attorneys' fees incurred by

Heinold Commodities. Farmland contends that the Heinold Commodities'

attorneys directly billed Heinold Holdings for most of their fees and that

Heinold Holdings, not Heinold Commodities, paid those bills and incurred

those fees.

The facts of this case do not support Farmland's argument. Farmland

sued Heinold Commodities, and it hired attorneys to defend Farmland's

lawsuit. The district court awarded fees only for the attorneys' services

rendered on behalf of Heinold Commodities. Although Heinold Holdings paid

some of Heinold Commodities' attorneys' fees during the course of the

lawsuit, this does not change the fact that the attorneys represented

Heinold Commodities and that Heinold Commodities was liable for their fees.

Thus, Heinold Commodities incurred the fees awarded by the district court.

See Morse/Diesel, Inc. v. Trinity Indus., Inc., 875 F. Supp. 165, 179

(S.D.N.Y. 1994).

IV.

Farmland argues that the district court erred in relying on United

States ex rel. C.J.C., Inc. v. Western States Mechanical Contractors, Inc.,

834 F.2d 1533 (10th Cir. 1987), to determine the amount of Heinold

Holdings' attorneys' fees award.

In Western States the Tenth Circuit Court of Appeals held that a

court should deferentially review a claim for attorneys' fees 
 Farmland has not argued that the district court should have 2

used state law to determine the amount of attorneys' fees to award

under the contract.

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under a contract in order to give the party contractually entitled to those

fees the full benefit of his bargain and to ensure that the fees are

reasonable and equitable. Id. at 1548-49. The district court carefully

analyzed Western States, adopted its reasoning, and granted attorneys' fees

that fell within a range that it considered reasonable and equitable.

Farmland asserts that the district court should not have followed

Western States. Farmland contends that Western States should apply only

to those cases in which a party seeks fees under a contract because of

another party's breach of that contract. Farmland argues that because it

did not breach its contract with Heinold Commodities, the district court

erred in following Western States.

2

We see nothing in Western States that supports Farmland's argument.

Western States involved claims brought by subcontractors against the prime

contractor and its bonding company under the Miller Act. Id. at 1536.

While Western States refers to the situation where contracting parties have

agreed that a breaching party will be liable for attorneys' fees, it goes

on to state that the purpose of the award is to give the parties the

benefit of the bargain and that the court's responsibility is to enforce

that bargain. Id. at 1547-49. We do not see anything in the Western

States opinion that limits attorneys' fees claims to breach of contract

cases. Certainly, there is nothing in Western States that limits the award

of attorneys' fees in a case such as this, where the contract clearly

refers to any claim and any suit, and Farmland's suit arose from the work

that Heinold Commodities 
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contracted to do. We reject Farmland's attempt to limit Western States to

only attorneys' fees claims that are a result of a breach of contract.

V.

Heinold Holdings cross-appeals the district court's denial of

prejudgment interest on its attorneys' fees award. Heinold Holdings argues

that Missouri law requires prejudgment interest in this case.

The parties agree that Missouri law governs whether Heinold Holdings

is entitled to prejudgment interest on its contractual claim for attorneys'

fees. Under Missouri law "[c]reditors shall be allowed to receive interest

at the rate of nine percent per annum, when no other rate is agreed upon,

for all moneys after they become due and payable, on written contracts .

. . ." Mo. Rev. Stat. § 408.020 (1994). A court must award prejudgment

interest when section 408.020 applies. See Slay Warehousing Co. v.

Reliance Ins. Co., 489 F.2d 214, 215 (8th Cir. 1974) (per curiam). The

general rule is that section 408.020 applies when the amount due on a

party's contract claim is liquidated, that is, fixed or certain. See

Catron v. Columbia Mut. Ins. Co., 723 S.W.2d 5, 6 (Mo. 1987); Dierker

Assocs. v. Gillis, 859 S.W.2d 737, 746 (Mo. Ct. App. 1993). This general

rule is based on the idea that a party should be liable for prejudgment

interest only when that party knows the exact amount owed. See Fohn v.

Title Ins. Corp., 529 S.W.2d 1, 5 (Mo. 1975).

Missouri courts, however, have subjected this general rule to various

interpretations and exceptions. See Catron, 723 S.W.2d at 6; Vogel v. A.G.

Edwards & Sons, Inc., 801 S.W.2d 746, 757 (Mo. Ct. 
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App. 1990)("[A]s has been pointed out and demonstrated, the exceptions to

the liquidation rule are legion.")(quotation omitted). One exception

requires prejudgment interest on unliquidated claims for the reasonable

value of services rendered. See Denton Constr. Co. v. Missouri State

Highway Comm'n, 454 S.W.2d 44, 59-60 (Mo. 1970). When a party is liable

for the reasonable value of services, he is under a legal duty to liquidate

the sum due and must pay interest from the time he should have paid the

claim. See id. at 60. This exception applies when a party is liable for

the reasonable value of services rendered by an attorney. See Laughlin v.

Boatmen's Nat'l Bank, 189 S.W.2d 974, 979 (Mo. 1945). Even though the

claim is unliquidated in the sense that the amount due is to be measured

and determined by the standard of the reasonable value of the attorney's

services, a court must grant prejudgment interest on that claim. See id.;

see also Catron, 723 S.W.2d at 7 (discussing Laughlin). The Missouri

Supreme Court has carved out this exception because prejudgment interest

has traditionally been used to compensate a party for the loss of the use

of money to which the party was entitled. See Catron, 723 S.W.2d at 7.

We conclude that this case falls within this exception to the general

rule and requires an award of prejudgment interest on Heinold Holdings'

claim for attorneys' fees. The contract in this case gives Heinold

Holdings a claim for the reasonable value of the services rendered by

Heinold Commodities' attorneys. Indeed, the district court reduced Heinold

Holdings' claim for attorneys' fees to a reasonable amount. The Missouri

Supreme Court has held that a party is entitled to prejudgment interest on

an unliquidated claim for the reasonable value of services rendered. See

Denton, 454 S.W.2d at 59-60; Laughlin, 189 S.W.2d at 979-80. Therefore,

we must grant Heinold Holdings prejudgment interest on its attorneys' fees

award.
We reverse the district court's denial of prejudgment interest on

Heinold Holdings' award of attorneys' fees and remand to the district court

for calculation of Heinold Holdings' prejudgment interest. We affirm the

judgment of the district court in all other respects.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.