Opinion ID: 1667472
Heading Depth: 1
Heading Rank: 6

Heading: issue of attorney's fees:

Text: Attorney's fees paid to defendants' counsel for the first trial of this case and the appeal of same until such time as the Supreme Court issued its opinion, if not paid, shall be paid by Greene Group, Inc. Attorney's fees paid to counsel for the defendants on the retrial of issues in this Court, as required by the Supreme Court, shall be allowed as paid or claimed, with one-half of the fee to be paid by Greene Group, Inc. and one-half to be paid by the individual defendants, Bryant, Phelps, and May, in proportion to the respective ownership of such individuals in Greene Group, Inc. Counsel for plaintiff is awarded an attorney's fee of Nine Hundred Five Thousand, Six Hundred Three ($905,603.00) Dollars. This sum is comprised of the Fifty-Five Thousand, Six Hundred Three ($55,603.00) Dollars previously paid to plaintiffs' counsel by past or present plaintiffs and an award of Eight Hundred Fifty Thousand ($850,000.00) Dollars. Additionally, plaintiffs' counsel is awarded actual expenses incurred by his firm through the date of this decree in the amount of Sixty-One Thousand, Seven Hundred Nineteen and 31/100 ($61,719.31) Dollars. This fee and the expenses are to be paid by Greene Group, Inc. In Reynolds v. First Alabama Bank of Montgomery, N.A., 471 So.2d 1238 (Ala. 1985), this court spoke to the issue of attorney fees. We noted that Alabama follows the American rule: `In Alabama, attorney's fees are recoverable only where authorized by statute, when provided in a contract, or by special equity, such as in a proceeding where the efforts of an attorney create a fund out of which fees may be made. Shelby County Commission v. Smith, 372 So.2d 1092 (Ala.1979); State ex rel. Payne v. Empire Life Ins. Co., 351 So.2d 538 (Ala.1977).' 471 So.2d at 1241, quoting Eagerton v. Williams, 433 So.2d 436, 450 (Ala.1983). We said further that Alabama recognizes exceptions to the American rule where fraud, willful negligence, or malice has been practiced. Reynolds, at 1243. There is also a well-recognized exception to the American rule in stockholder's derivative actions. See Mills v. Electric Auto-Lite Co., 396 U.S. 375 at 394, 90 S.Ct. 616 at 626, 24 L.Ed.2d 593 (1970). The United States Supreme Court has recognized that a litigant or lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable fee from the fund as a whole. Boeing Co. v. Van Gemert, 444 U.S. 472, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980). See also Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939). The case of Peebles v. Miley, 439 So.2d 137 (Ala.1983), involved the sensitive issue of how reasonable attorney's fees are determined. Id. at 138. In Peebles we set forth the yardsticks to be used by our courts in determining reasonable attorney fees. The first six factors cited were set forth by Justice Somerville over 77 years ago: `The general principle is everywhere established that an attorney is in such a case entitled to reasonable compensation for his services, appropriate to his employment, rendered by him to his client.  Humes v. Decatur, etc., Co., 98 Ala. 461, 470, 13 South. 368 [1893]. In the estimation of their value many elements may be material for consideration, among which are the nature and value of the subject-matter of the employment; the learning, skill and labor requisite to its proper discharge; the time consumed; the professional experience and reputation of the attorney; the weight of his responsibility; and the measure of success achieved.' Peebles, 439 So.2d at 140, quoting Faulk & Co. v. Hobbie Grocery Co., 178 Ala. 254, 59 So. 450 (1912). Forty years later, Justice Simpson added as an additional factor that in determining a reasonable attorney's fee, the trial judge should take into consideration the reasonable expenses incurred by the attorney. Id. See King v. Keith, 257 Ala. 463, 60 So.2d 47 (1952). Peebles adopted an additional five factors from the American Bar Association's Model Code of Professional Responsibility, DR 2-106(B) (1982): 1. Whether a fee is fixed or contingent. 2. The nature and length of a professional relationship. 3. The fee customarily charged in the locality for similar legal services.... 4. The likelihood that a particular employment may preclude other employment. 5. The time limitations imposed by the client or by the circumstances. 439 So.2d at 141. The 11 factors set out in Peebles are the factors to consider in determining a reasonable attorney fee. Reynolds involved a 7-figure fee, and this Court studied 21 cases, which were included in an appendix to the opinion in that case, as a means to determine a reasonable attorney fee by comparison with fees customarily charged in various jurisdictions for similar legal services. We said as follows: The cases that we have considered have taught us that generally, even with the fine tuning of assessing the factors in Peebles, courts in complex six-figure and seven-figure judgments have assessed fees from 20% to 25% of the recovery. This has generally worked out to be the rule in our own State, as evidenced by the Appendix, but this is not to say that there have not been courts that have assessed one-third, or even higher fees which we, after reading the decisions, also conclude were reasonable. 471 So.2d 1238, 1245. Counsel for the minority stockholders contend that their attorney fees should be based upon a percentage (20%) of the successful common fund recovery achieved for Greene Group, Inc., as a result of this shareholders' derivative litigation. The majority argues that the trial court's total award of $967,322.31 in attorney fees and expenses is not unreasonable and inadequate as a matter of law and should be affirmed. In support of their position, counsel for the minority offered the testimony of Frank M. Bainbridge, lead attorney for the minority, and four other attorneys. Each of these witnesses testified that a reasonable fee for the minority's counsel would be 20% of the common fund recovery to date and 20% of any future common fund recovery, as and when paid. In support of their position, counsel for the majority presented five attorneys. All testified that the fee award should be based upon the time expended and some multiplier of hourly rate, which is known as the lodestar approach. We have reviewed the evidence carefully and find that this stockholders' derivative action is a common fund case. Therefore, counsel for the minority is due to recover 20% of the common fund presently due to be paid over to Greene Group, Inc., through December 1989. We remand the case to the trial judge to determine a fair and appropriate percentage amount, if any, to be awarded to minority counsel based on the future sums due to Greene Group, Inc., as a result of the minority counsel's representation of minority stockholders. We have weighed the evidence presented to the trial court against the factors enunciated in Peebles and Reynolds, as well as Mashburn v. National Healthcare, Inc., 684 F.Supp. 679 (M.D.Ala.1988); and Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). The testimony, examined in light of these factors, supports the award of 20% of the common fund due through December 1989, and an award of future sums if any, as determined by the trial judge. We therefore reverse and remand as to the attorney fees for minority counsel. 88-98 WRIT GRANTED. 88-99 WRIT GRANTED. 88-120 AFFIRMED IN PART, REVERSED IN PART, AND REMANDED. 88-121 AFFIRMED IN PART, REVERSED IN PART, AND REMANDED. MADDOX, JONES, SHORES, ADAMS and KENNEDY, JJ., concur. ALMON, HOUSTON and STEAGALL, JJ., concur in part and dissent in part.