Opinion ID: 2552191
Heading Depth: 3
Heading Rank: 2

Heading: Amount of Attorney Fee Award

Text: ¶ 47 We now consider Softsolutions' argument that the awarded amount is unreasonable and should be vacated and remanded to the district court to determine a reasonable fee based on the actual salary of counsel and direct overhead costs (cost-plus rate), not on prevailing market rates charged by outside counsel (market rates). ¶ 48 In this case, the arbitrator awarded BYU $115,000 in attorney fees based upon a $150 per hour market rate. The district court agreed and awarded BYU an additional $28,987.50 for post-arbitration litigation, also based upon a $150 per hour rate. In determining a reasonable award of attorney fees, both the arbitrator and the district court considered the factors enumerated in Dixie State Bank v. Bracken, 764 P.2d 985, 990. [6] ¶ 49 Like the district court, BYU maintains that most courts have endorsed an award of attorney fees to in-house counsel by computing the value of their services in the same manner as fees are computed for outside counsel; that is, fair market value for similar services from a comparably experienced outside lawyer. By contrast, Softsolutions argues that if any fees should be awarded, a cost-plus rate should apply. ¶ 50 In Dixie, we did not draw the narrow distinction between a reasonable fee award based upon the use of in-house or outside counsel, and we have yet to address this issue in other cases. Indeed, in Dixie we held that in computing a reasonable attorney fee, a district court should consider, among other things, whether the billing rate is consistent with the rate customarily charged in the locality for similar services and that it should consider any other circumstances which it deems necessary. See Dixie, 764 P.2d at 990. ¶ 51 Courts that have considered what is a reasonable attorney fee award for services of in-house counsel have, in some cases, awarded fees using a cost-plus rate. [7] Other courts have employed a market-rate formula. [8] We are convinced that a cost-plus rate is the more reasonable measure of attorney fees to in-house counsel, and is consistent with the public policy that the basic purpose of attorney fees is to indemnify the prevailing party and not to punish the losing party by allowing the winner a windfall profit. See Jones, Waldo, 923 P.2d at 1375 (indicating attorney fee awards are means to `vindicate personal claims' rather than means to `generate fees' (quoting Falcone v. Internal Revenue Serv., 714 F.2d 646, 648 (6th Cir.1983))). ¶ 52 To assist the district court on remand, we set forth general guidelines to be considered in making such an award. Fees for in-house counsel are limited to consideration actually paid or for which the party is obligated, calculated using a cost-plus rate and taking into account (1) the proportionate share of the party's attorney salaries, including benefits, which are allocable to the case based upon the time expended, plus (2) allocated shares of the overhead expenses, which may include the costs of office space, support staff, office equipment and supplies, law library and continuing legal education, and similar expenses. See Lacer, 687 P.2d at 404. The party seeking recovery of fees has the burden of proving these amounts. ¶ 53 Turning to the case at hand, we draw a distinction between the attorney fees awarded by the arbitrator and reviewed by the district court, and those fees awarded by the district court for post-arbitration proceedings. The scope of review differs. ¶ 54 We look first to the arbitrator's award of attorney fees, totaling $115,000. In Buzas we stated that the role of a district court and this court in the review of an arbitrator's factual finding is severely limited. See Buzas Baseball, Inc. v. Salt Lake Trappers, Inc., 925 P.2d 941, 948 (indicating trial court does not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions of lower courts). Indeed, whether the [district or this] court agrees with the arbitrator's judgment is irrelevant, as long as the arbitrator construed and applied the [attorney fees provision of the] contract in an arguably reasonable manner and acted within the scope of his authority. Intermountain Power Agency v. Union Pac. R.R. Co., 961 P.2d 320, 323. Because the issue of attorney fees was clearly submitted to the arbitrator, and because the arbitrator reasonably applied the attorney fee provisions in the Agreement and acted within the authority delegated to him by the parties, we will not disturb this portion of the award. ¶ 55 Next, we turn to the district court's award of post-arbitration attorney fees totaling $29,987.50. We review the district court's award of attorney fees under an abuse of discretion standard. See Dixie, 764 P.2d at 991. Because the district court did not apply the rule of law relating to the proper measure of attorney fees recoverable by a nonlegal organization for the use of in-house counsel, we vacate that portion of the attorney fees award and remand the case to the district court to redetermine post-arbitration attorney fees for in-house counsel consistent with this opinion. ¶ 56 Finally, we address BYU's request for attorney fees on appeal. BYU has prevailed in this action, and therefore, we award it reasonable attorney fees incurred in this appeal, the amount to be determined by the trial court on remand, using the cost-plus rate.