Opinion ID: 2637181
Heading Depth: 3
Heading Rank: 4

Heading: Attorney's Fees and Prejudgment Interest

Text: There are two separate fee awards at issue in this appeal. The first is the award of actual attorney's fees under Rule 82 to Loretta in the amount of $15,679.96 for prevailing on the Rule 60(b) motion. The second is the court's award of $5,000 to Loretta in interim fees in order to litigate the property and debt distribution. In his recommendation concerning attorney's fees, Master Brown stated that James had taken advantage of Loretta's mental incompetence and physical disabilities and used her son in order to get her signature on a dissolution petition that was greatly and inequitably weighted in James's favor. The master found that James took advantage of his skills as a successful businessman and Loretta's incapacity in formulating the dissolution petition and concluded that James's actions amounted to bad faith conduct under Rule 82(b)(3)(G). The master therefore recommended that Loretta receive full actual reasonable attorney's fees under Rule 82. The superior court approved this recommendation. We have previously held that Rule 82 can be used to award attorney's fees to the prevailing party in a Rule 60(b)(6) motion to modify a divorce decree and that the divorce exception to Rule 82 is inapplicable to post-judgment modification and enforcement motions. [20] Thus, the only question is whether the trial court abused its discretion in awarding Loretta enhanced attorney's fees based on its finding that James had acted in bad faith. James argues that he did not act in bad faith during the course of the present proceedings and that his actions during the litigation did not meet the standard for bad faith or vexatious conduct required for enhanced fees under Rule 82(b)(3)(G). (Emphasis omitted.) He also maintains that bad faith conduct justifying an enhanced fee award must occur during the litigation and not during the underlying transaction. Loretta responds that James did act in bad faith because he did not disclose major assets on the dissolution petition and used Loretta's son to help prepare the petition and get Loretta to sign it. Loretta also claims that James acted in bad faith in litigating a patently incorrect claim that all the property was his separate property. The master's report found bad faith related to James's actions surrounding the drafting of the dissolution agreement and did not make any findings regarding any bad faith or vexatious actions taken by James during the litigation itself. In Cole v. Bartels, we noted that the bad faith conduct warranting an enhanced fee award under Rule 82(b)(3)(G) occurs during the litigation, not during the underlying transaction that is the subject of the litigation. [21] As there were no findings that James acted in bad faith during the litigation, but only during the drafting of the underlying dissolution agreement, it was an abuse of discretion to award enhanced attorney's fees based on a finding of bad faith. Thus, the award of $15,679.96 in Rule 82 attorney's fees is reversed and remanded to the superior court. When the master recommended that Loretta receive full Rule 82 attorney's fees, he also recommended that Loretta receive $5,000 in interim attorney's fees to litigate the remaining property and debt issues. The master noted that there was no evidence that the parties' relative financial situations were any different than at the time of the dissolution. The master stated that Loretta's gross annual income was only $22,020.78, including the monthly spousal support and prescription payments she received from James, while James's annual income was $124,879.86. The master determined that due to the parties' vastly disparate incomes and the fact that Loretta's financial situation was the fruit of an inequitable agreement, Loretta should be awarded interim attorney's fees. Judge Michalski approved this recommendation. We conclude that it was not an abuse of discretion to award the attorney's fees based on the significant difference in the parties' incomes, and we therefore affirm the interim fee award.
In the final property division order, the trial court awarded Loretta $164,325.50 with prejudgment interest from the date of the dissolution. James argues that it was error to award Loretta prejudgment interest on the property division. James contends that although a court may award prejudgment interest in a divorce case, it must balance a number of factors which were never taken into account by the superior court in this case. Loretta responds that the award of prejudgment interest was well within the discretion of the trial court because she was denied use of the property award for a period of almost four years and the award was therefore necessary to make her whole. In Morris v. Morris, we recognized that a trial court has broad discretion to award prejudgment interest in a divorce case but that interest should not be awarded if it would do an injustice. [22] As Loretta points out, she was denied the money and any interest on the money for the four years between the dissolution and the final property judgment. It is not apparent that the award would work an injustice on James; it was therefore not an abuse of discretion to award prejudgment interest in this case.