Opinion ID: 498428
Heading Depth: 1
Heading Rank: 4

Heading: The Hugg Appeal

Text: 47 The contract between Western and Hugg was executed on a Hugg work order form. That work order provided that Should the account be referred to an attorney for collection, the undersigned shall pay all attorney's fees and collection expenses. R.Vol. II at 18. The trial court found that Hugg was entitled to attorneys' fees pursuant to this provision of the contract. 48 In a post-trial hearing, Hugg's attorneys submitted a request, with supporting records, for $13,538.72. The trial court reduced the award in three separate adjustments. First, the trial court deleted certain hours from the pretrial billings. R.Vol. XXIII at 3328-30. Next the court discounted the entire pretrial bill by 25% based on a perceived tendency to puff the time charged. Id. at 3330. Finally, the court ignored the time billed by Hugg's two attorneys for the trial and reasoned that, if the Hugg claim had been tried alone, rather than consolidated with the CJC and Sanchez claims it would have taken only a few days and allowed recovery for the time of one lawyer for four days, or $1200. Id. at 3331. These decisions by the district court reduced the claim for attorneys' fees to $4,885.37, which Hugg appeals as inadequate. 49 In this case, the parties relied on New Mexico law. Hugg structured its claim for attorneys' fees to conform to standards expressed by the New Mexico courts and Western objected to that claim based on those same standards. 13 The district court properly determined that these New Mexico decisions were not controlling and chose instead to rely on federal standards for awarding attorneys' fees under the federal Civil Rights Act 14 and proceeded to calculate a reasonable fee for the work performed by Hugg's attorneys. These decisions, and many others awarding fees under a long list of federal statutes, suggest factors to be considered and weighed by district courts in fashioning fee awards. 15 Many of those factors are also relevant to an award of fees pursuant to a contract. However, because the purpose of an award of attorneys' fees under the federal civil rights acts or other statutes is fundamentally different from the purpose of a contract for fees between parties in a commercial agreement, the district court applied the wrong standard and scrutinized the claim for fees too closely. Accordingly, we remand the question to the district court for a review consistent with the purpose of the contract provision: to make the non-breaching party whole. 50 Close scrutiny of awards under federal fee-shifting statutes is justified because these 51 statutes were not designed as a form of economic relief to improve the financial lot of attorneys, nor were they intended to replicate exactly the fee an attorney could earn through a private fee arrangement with his client. Instead, the aim of such statutes was to enable private parties to obtain legal help in seeking redress for injuries resulting from the actual or threatened violation of specific federal laws. 52 Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, --- U.S. ----, 106 S.Ct. 3088, 3098, 92 L.Ed.2d 439 (1986). See also Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, --- U.S. ----, 107 S.Ct. 3078, 3091, 97 L.Ed.2d 585 (1987) (Blackmun, J., dissenting) (basic purpose of statutory attorneys fees [is to ensure] that 'private citizens ... have a meaningful opportunity to vindicate the important Congressional policies which these laws contain' ) (quoting in part S.Rep. No. 94-1011, 94th Cong.2d Sess. 2, (1976), U.S.Code Cong. & Admin.News 1976, p. 5908). To achieve this purpose, 53 the district court must carefully scrutinize the total number of hours reported to arrive at the number of hours that can reasonably be charged to the losing party, much as a senior partner in a private firm would review the reports of subordinate attorneys when billing clients whose fee arrangement requires a detailed report of hours expended and work done. 54 Ramos v. Lamm, 713 F.2d 546, 555 (10th Cir.1983). 55 In contrast, where contracting parties have agreed that a breaching party will be liable for attorneys' fees, the purpose of the award is to give the parties the benefit of that bargain, and the court's responsibility is to enforce that bargain. 16 Normally, where the court is merely enforcing a contractual provision authorizing attorneys' fees, the fees are routinely awarded and the contract is enforced according to its terms. See Fortier v. Dona Ana Plaza Partners, 747 F.2d 1324, 1337-38 (10th Cir.1984) (applying New Mexico law); Engel v. Teleprompter Corp., 732 F.2d 1238, 1241 (5th Cir.1984); Austin v. Parker, 672 F.2d 508, 518-20 (5th Cir. Unit A 1982); 6 Moore's Federal Practice p 54.78 (1987). 56 When the agreement between the contractor and the subcontractor provides for attorneys' fees, the subcontractor may recover from the contractor and its Miller Act surety consistent with the terms of that agreement. See United States ex rel. Micro-King Co. v. Community Science Technology, Inc., 574 F.2d 1292, 1295 (5th Cir.1978); United States ex rel Carter Equip. Co., v. H.R. Morgan, Inc., 554 F.2d 164, 166 (5th Cir.1977); Travelers Indem. Co. v. United States ex rel Western Steel Co., 362 F.2d 896, 899 (9th Cir.1966); Ibex Indus., Inc. v. Coast Line Waterproofing, 563 F.Supp. 1142, 1146 (D.D.C.1983). This does not mean, however, that the trial court should simply award the full amount billed by the prevailing party's attorneys. We reject Hugg's argument that the contract necessarily requires the recovery of all attorneys' fees. Clearly, the trial court has discretion to adjust or even deny a contractual award of fees if such an award would be inequitable or unreasonable. See United States ex rel DeBlasio Constr., Inc. v. Mountain States Constr. Co., 588 F.2d 259, 263 (9th Cir.1978) (affirmed trial court's decision to deny fees where recovering party was partly at fault); Gorman Pub. Co. v. Stillman, 516 F.Supp. 98, 113 (N.D.Ill.1980) (court's power to deny contractual award of attorneys' fees as inequitable or unreasonable is based on implied covenant of good faith and fair dealing); United States v. Hankins Constr. Co., 510 F.Supp. 933, 940 (E.D.Mo.1981) (denied contract award of attorneys' fees to Miller Act defendant where it would have been inequitable). 57 While Miller Act plaintiffs may recover attorneys' fees, the cases awarding such fees under contractual provisions do not offer a clear statement of the law that applies to these claims or the standard by which they are reviewed. However, the Fifth Circuit has characterized the district court's role in reviewing contractual awards of attorneys' fees when enforcing maritime liens as follows: 58 Where attorney's fees are provided by contract, a trial court does not possess the same degree of equitable discretion to deny such fees as it has when applying a statute providing for a discretionary award. Of course, it may nevertheless, reduce the contractual attorney's fees claimed if it finds such an award would be inequitable and unreasonable. 59 General Elec. Credit Corp. v. Oil Screw Triton, VI, 712 F.2d 991, 995 (5th Cir.1983) (quoting in part Cable Marine, Inc. v. M/V Trust Me II, 632 F.2d 1344, 1345 (5th Cir. Unit B 1980)). 17 We adopt this as the appropriate standard to apply to Hugg's claim for attorneys' fees. In other words, the trial court's role is to determine if the claimed fees are inequitable or unreasonable. If so, the trial court has discretion to deny or reduce the fee award. However, the trial court is not responsible for independently calculating a reasonable fee. 60 This distinction is subtle but important, as demonstrated by a review of Hugg's claim. First, the consolidated trial of the three actions against Western required seventeen days of hearings. Hugg's claim was by far the simplest of the three actions, yet Hugg was forced to participate throughout the trial, because its claims were interwoven with the other actions. Moreover, when Western initially moved to consolidate the hearings, Hugg objected, arguing that its case would be drawn out and more expensive if consolidated with the claims of Sanchez and CJC. But in reviewing the billings for Hugg's attorneys at trial, the district court ignored the consolidation and reduced the award to approximate the costs of a single trial on Hugg's claim. The district court's action was probably proper if the task was to independently calculate a reasonable fee, 18 but at the same time, it is apparent to us that billing for the time actually consumed in litigating Hugg's claim in the consolidated trial was not unreasonable. This is particularly true in this case because the consolidation was at the request of, and for the benefit of, the breaching party. The trial court's adjustment penalizes Hugg (and deprives Hugg of the contract bargain) to Western's benefit. Similarly, the trial court found that the claim could have reasonably been tried by one attorney, but it is not necessarily unreasonable that a party would employ two trial attorneys to litigate a commercial claim of this nature. Applying the same reasoning, if the trial court finds that the pretrial billings overstated the time actually spent preparing for trial, the claim is unreasonable and must be reduced. 61 While we are directing the district court to apply a different standard to contractual awards of attorneys' fees, we should also make it clear what we are not holding. In considering whether a fee is unreasonable or excessive, the trial court need not wholly disregard the familar factors from the federal cases awarding fees in a statutory context. See, e.g., Ramos v. Lamm, 713 F.2d 546 (10th Cir.1983). The district court may choose to use these factors, not to compute a reasonable fee, but to assist in determining if the fees claimed are unreasonable or inequitable. In addition, it remains important for the district court to provide a concise but clear explanation of its reasons for any adjustments to the fee award. Mares v. Credit Bureau of Raton, 801 F.2d 1197, 1201 (10th Cir.1986) (quoting Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983)). 62 Hugg also asks for the attorneys' fees incurred in executing this appeal. We direct the district court to award fees for the costs of defending against Western's appeal, but Hugg is not entitled to recover attorneys' fees for the costs of appealing the district court's fee award. Those fees are not recoverable under the terms of the Hugg subcontract. The Hugg claim for attorneys' fees is remanded to the district court for proceedings consistent with this opinion.