Opinion ID: 1259048
Heading Depth: 2
Heading Rank: 2

Heading: Request for Writ of Prohibition on Attorney Fee Issue

Text: Regarding TIG's request for a writ of prohibition on the attorney fee issue, TIG contends that the lower court erred in entering its October 4, 2006, order requiring TIG to pay attorney fees. Further, TIG contends that even if it is determined that an award of attorney fees was appropriate, the amount of fees is excessive. [10] In syllabus point two of Sally-Mike Properties v. Yokum, 179 W.Va. 48, 365 S.E.2d 246 (1986), this Court held: As a general rule each litigant bears his or her own attorney's fees absent a contrary rule of court or express statutory or contractual authority for reimbursement. This principle is acknowledged as the American rule and is designed to achieve equal access to the courts for the resolution of bona fide disputes. Id. at 52, 365 S.E.2d at 250; see also Nelson v. West Virginia Public Employees Ins. Bd., 171 W.Va. 445, 450, 300 S.E.2d 86, 91 (1982). Judicial exceptions to that rule have been consistently noted, as recognized in syllabus point three of Sally-Mike: There is authority in equity to award to the prevailing litigant his or her reasonable attorney's fees as `costs,' without express statutory authorization, when the losing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons. The potential for an award of attorney fees in a case involving a breached settlement agreement was recently addressed by this Court in Sanson v. Brandywine Homes, Inc., 215 W.Va. 307, 599 S.E.2d 730 (2004). In Sanson, the plaintiffs, subsequent to an alleged agreement regarding settlement, argued that they had not granted formal authority to settle. The circuit court held a hearing on the issue, ultimately concluding that the settlement agreement should be enforced and that attorney fees should be paid by the party causing the delay in resolution. In approving the award of attorney fees, this Court explained: Having determined that a valid settlement agreement was made, we do not believe the circuit court abused its discretion by ordering the Sansons to pay Skyline's attorney's fees and costs incurred to enforce the settlement. 215 W.Va. at 313, 599 S.E.2d at 736; see also State ex rel. Bronson v. Wilkes, 216 W.Va. 293, 607 S.E.2d 399 (2004). In evaluating the competing claims in Sanson, this Court observed that the defendants had fully performed their obligations by tendering the settlement check and release. The Sansons returned the check three months later, forcing the motion to enforce the settlement agreement. This Court approved the circuit court's reasoning that the defendant should not have to bear the financial burden caused by the [plaintiffs'] attempt to rescind a valid and enforceable settlement agreement. 215 W.Va. at 312, 599 S.E.2d at 735. With specific regard to insurance claims, this Court held as follows in syllabus point one of Hayseeds, Inc. v. State Farm Fire & Casualty, 177 W.Va. 323, 352 S.E.2d 73 (1986): Whenever a policyholder substantially prevails in a property damage suit against its insurer, the insurer is liable for: (1) the insured's reasonable attorneys' fees in vindicating its claim; (2) the insured's damages for net economic loss caused by the delay in settlement[;] and [(3)] damages for aggravation and inconvenience. Expanding on that principle, this Court, in Jordan v. National Grange Mutual Insurance Co., 183 W.Va. 9, 393 S.E.2d 647 (1990), observed as follows: The rationale set forth in Hayseeds, Aetna Casualty & Surety Co. v. Pitrolo [176 W.Va. 190, 342 S.E.2d 156 (1986)] and in Thomas [ v. State Farm Mutual Automobile Ins. Co., 181 W.Va. 604, 383 S.E.2d 786 (1989)] for allowing the recovery of reasonable attorney's fees from one's own insurer is applicable whether the insured substantially prevails in the litigation as a result of a settlement or as the result of a jury verdict. In either case, the insured is out his [or her] consequential damages and attorney's fees. 183 W.Va. at 12, 393 S.E.2d at 650 (quoting Hayseeds, 177 W.Va. at 329, 352 S.E.2d at 79). In the present case, the lower court stated as follows in its October 4, 2006, order: this Court has no hesitancy in finding that the conduct of TIG in delaying the implementation of an agreed settlement for nearly one year is nothing other than oppressive. The lower court, relying upon Sanson, indicated that the non-breaching party should not have to bear the financial burden caused by another party's attempt to rescind or invalidate an enforceable settlement agreement. The appropriate standard for such a determination was discussed during an August 25, 2006, hearing on the issue of attorney fees. TIG argued that because it was precluded from participating in the plenary hearing, it had never been granted an opportunity to present issues pertinent to a determination of its obligations and its degree of culpability in the postponement of a finalized settlement. Specifically, TIG maintained that it had been literally sitting on the sidelines waiting for confirmation of an authentic, final settlement agreement TIG also asserted that [s]o far as even oppressiveness, I don't see any fact put forth by Mr. Fitzsimmons that TIG was acting in any bad way. I'll just use the term `bad' to encompass all the different terms that were used in the Sally-Mike case. In response to TIG's argument in that regard, the lower court expressly addressed the Sanson opinion and stated: I think, quite frankly, if I had the authority, which I do not, that I would take Sanson-Brandywine and basically say, anytime that you are enforcing a settlement agreement and you prevail, you shouldn't have to be burdened with those expenses. . . . The limitation in that argument, however, is that this Court, in Sanson, encountered and specifically identified a very simple, uncomplicated course of events: Skyline fully performed its obligations by tendering the settlement agreement and release after it was notified that the Sansons accepted the settlement. Three months later, the Sansons returned the settlement check, claiming that no agreement had ever been reached. 215 W.Va. at 312, 599 S.E.2d at 735. Unlike the case at bar, there was apparently minimal opportunity in Sanson for misunderstanding, miscommunication, or a legitimate question regarding the parameters of the settlement contemplated by the parties. On the contrary, the present case is littered with examples of uncertainty with regard to the precise parameters of the settlement, its terms, and the consent of the integral parties. Thus, this case is clearly distinguishable from Sanson. Under the unique facts of this case, we find that it was inequitable to permit an award of attorney fees against TIG without a full evidentiary hearing and the opportunity for TIG to participate fully. The Sally-Mike precept referencing the authority to award attorney fees when the losing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons remains viable, and an effort must be made to determine the extent to which the losing party acted in such manner. 179 W.Va. at 51, 365 S.E.2d at 249. In discussing the exceptions to the general American rule that a litigant is generally responsible for his own legal fees and such fees are not recoverable from the opposing party in the absence of statute, rule of court, or agreement, other jurisdictions have also recognized that circumstances indicating obduracy of one party may justify the imposition of attorney fees. The term obdurate has been defined by Webster's dictionary as stubbornly persistent in wrongdoing. Webster's New Collegiate Dictionary, 784 (Merriam Webster 1979). In the realm of legal discussions, the term appears to be rarely defined with precision. Other substitutes for the term obduracy include such terminology as this Court utilized in Sally-Mike, such as bad faith, vexatiousness, wantonness, oppressiveness, or obstreperousness. See, e.g., 42 Pa.C.S.A. § 2503(7) (1978) (Repl.Vol.2004) (Pennsylvania section of Judicial Code permitting a party to be awarded counsel fees as a sanction against another party for dilatory, obdurate or vexatious conduct during the pendency of an action). A proper factual record demonstrating obduracy must be established. In Upson v. Board of Trustees, 124 N.H. 787, 474 A.2d 582 (1984), for instance, the court held that attorney fees could not be awarded where there had been no showing of obduracy sufficient to justify such an award. 474 A.2d at 584. The underlying action in Upson involved entitlement to apply for disability retirement benefits. Holding that the plaintiff was entitled to apply for benefits, the court examined the issue of assessment of attorney fees and found that such fees are to be awarded where litigation had been necessary to secure a clearly defined and established right. However, the court further found that the absence of evidence of bad faith precluding a finding of entitlement to attorney fees as a matter of law. The court remanded to allow development of the issue of bad faith. Id. Similarly, in Oakwood v. Makar, 11 Ohio App.3d 46, 463 N.E.2d 61 (1983), the Court of Appeals of Ohio found that attorney fees were not to be awarded where a party mistakenly misallocated funds, since no fraudulent purpose for the accounting errors was evident. The Oakwood court held that no express finding had been made showing that the defendant had acted in bad faith, vexatiously, wantonly, obdurately, or for oppressive reasons. 463 N.E.2d at 66. Without a showing of fraudulent purposes on the part of appellant, the award of attorney fees is unwarranted. Id. As addressed above, a request for writ of prohibition will be examined with emphasis upon whether the lower tribunal's order [was] clearly erroneous as a matter of law. Hoover, 199 W.Va. at 15, 483 S.E.2d at 15, syl. pt. 4. Thus, under the facts of this case, we find that the lower court erred in granting attorney fees against TIG without allowing TIG to participate in the evidentiary hearing addressing the pertinent issues culpability for the extensive delays of this case. It is appropriate to grant a writ of prohibition and to remand this matter for a full evidentiary hearing to determine the extent of TIG's culpability in delaying the settlement. Subsequent to the evidentiary hearing on remand, if the lower court determines that attorney fees should be assessed against TIG, the lower court shall ascertain the reasonable award by reference to syllabus point four of Aetna Casualty & Surety Co. v. Pitrolo, 176 W.Va. 190, 342 S.E.2d 156 (1986), in which we held as follows: Where attorney's fees are sought against a third party, the test of what should be considered a reasonable fee is determined not solely by the fee arrangement between the attorney and his client. The reasonableness of attorney's fees is generally based on broader factors such as: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.