Court Opinion

ID: 903090
Source: CourtListenerOpinion
Date Created: 2013-06-18 17:15:32.257887+00
Date Added: 2024-06-11T09:08:46.410026
License: Public Domain

This opinion is subject to revision before final
                      publication in the Pacific Reporter

                                 2013 UT 35

                                    IN THE
       SUPREME COURT OF THE STATE OF UTAH
                              DON S. REDD,
                          Plaintiff and Appellee,
                                       v.
                            VIRGINIA HILL,
                        Defendant and Appellant.

                              No. 20120552
                           Filed June 18, 2013

                   Second District, Farmington
                  The Honorable Glen R. Dawson
                         No. 110702023

                                 Attorneys:
                Stephen I. Oda, Layton, for appellee
   Gregory B. Wall, Cory R. Wall, Salt Lake City, for appellant

   JUSTICE PARRISH authored the opinion of the Court, in which
    CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE NEHRING,
             JUSTICE DURHAM, and JUSTICE LEE joined.

   JUSTICE PARRISH, opinion of the Court:
                           INTRODUCTION
    ¶1 At issue in this appeal is the question of whether a
contingency fee agreement extends to an award of attorney fees.
Appellant Virginia Hill entered into a contingency fee agreement
(Agreement) with attorney and Appellee Don Redd. The Agreement
stated, in part, that “Attorney is entitled to ONE THIRD (33 1/3%)
of all monies paid to or in client[’]s behalf for what ever [sic] cause
related to this cause of action.” Hill does not dispute that she
willingly signed the Agreement or that Redd is entitled to one-third
of Hill’s primary award. Hill does dispute, however, that the
Agreement entitles Redd to one-third of the court-awarded attorney
fees.
   ¶2 We hold that the Agreement is unambiguous. Under its
terms, Redd is entitled to one-third of both the primary judgment
and the court-awarded fees.
                            REDD v. HILL
                       Opinion of the Court

                         BACKGROUND
    ¶3 In anticipation of filing competing motions for summary
judgment below, the parties submitted Stipulated Facts for Joint
Motions for Summary Judgment (Stipulated Facts). We rely on these
Stipulated Facts in setting out the pertinent background.
    ¶4 “In the early 1990s, Hill invested approximately $1.5
million with certain individuals, which monies were not properly
used for the purposes intended.” Hill hired Redd to help her
recover her misappropriated investment. Redd drafted the
Agreement, which both parties signed on August 29, 1997. The
Agreement states, in relevant part, that “Attorney is entitled to ONE
THIRD (33 1/3%) of all monies paid to or in client[’]s behalf for what
ever [sic] cause related to this cause of action.” The Agreement
further states that “[i]n the event legal proceedings are necessary to
enforce the terms of this agreement, the defaulting party agrees to
pay a reasonable attorney fee plus costs of Court.”
   ¶5 Over the next thirteen years, Redd represented Hill in
“various legal proceedings . . . against the various defendants.” The
underlying action “resulted in a judgment in favor of Hill for the
amount of $6,144,854.79.” The judgment included both punitive
damages and prejudgment interest.
    ¶6 Following the entry of judgment, Hill retained the law firm
of Wall & Wall to represent her in seeking to recover her attorney
fees. Hill argued that attorney fees should be calculated based on
her one-third obligation under the Agreement. But the district court
determined that “[attorney] fees should be based upon an hourly
rate charged to Hill [under the Lodestar formula] rather than any
contingent fee amount for which she may be responsible to her
attorney.” The district court thereafter determined that reasonable
attorney fees were $593,034.40 and awarded a supplemental
judgment in this amount.
    ¶7 Hill has collected both the underlying judgment and the
court-awarded attorney fees, and has paid Redd $2,046,236.60,
representing one-third of the $6,144,854.79 primary judgment. She
has not, however, paid Redd any portion of the supplemental
attorney fees award.
    ¶8 Redd filed a Demand for Payment as to his claim to one-
third of the $593,034.40 attorney fees award. After he did not receive
the requested payment, Redd filed an attorney’s lien against his
asserted one-third share. Redd’s lien was subsequently denied by

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                        Opinion of the Court

the district court. Redd then filed a declaratory action seeking a
declaration that he was entitled to one-third of Hill’s attorney fees
award.
    ¶9 After jointly submitting the Stipulated Facts, the parties
filed cross motions for summary judgment urging their divergent
interpretations of the Agreement. The district court ruled in favor
of Redd. It reasoned that
       the language in the fee agreement is unambiguous,
       [and] it applies the contingency fee to all money paid
       to the client for whatever cause. The plain meaning of
       the contingency fee agreement is that the 33 1/3%
       would apply to any award or judgment, whether for
       general damages, punitive damages, or attorney[] fees.
Therefore, the district court held that “the only possible
interpretation [of the Agreement] is that [Redd] should receive
33 1/3% of the $593,034.40 in attorney[] fees awarded to [Hill].”
    ¶10 Hill timely appealed the district court’s final order and
raises the question of whether “[Redd] is entitled to a judgment
against [Hill] under the [Agreement] entered into by the parties for
one-third of the attorney fee[s] award granted by the [d]istrict [c]ourt
in a separate proceeding, plus one-third of the whole or primary
judgment.”
    ¶11 After the district court entered its final judgment and after
Hill filed her notice of appeal, Redd filed a motion in the district
court for augmentation of judgment, seeking his attorney fees arising
from the declaratory action. He then filed a petition for
supplemental relief under Utah Code section 78B-6-406, restating the
claims he made in his motion for augmentation. The district court
denied Redd’s motion for augmentation in favor of proceedings on
the supplemental relief petition but has not yet ruled on the matter.
    ¶12 In this court, Redd filed a motion seeking summary
disposition of his appeal. We declined Redd’s invitation to rule on
summary disposition and deferred that motion pending plenary
presentation on the merits. We have jurisdiction under Utah Code
section 78A-3-102(3)(j).
                     STANDARD OF REVIEW
    ¶13 Summary judgment is proper only where “there is no
genuine issue as to any material fact and . . . the moving party is
entitled to a judgment as a matter of law.” UTAH R. CIV. P. 56(c). “In
considering a grant of summary judgment, we review the [district]

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                            REDD v. HILL
                        Opinion of the Court

court’s legal decision for correctness, giving no deference, and
review the facts and inferences to be drawn therefrom in the light
most favorable to the nonmoving party.” Peterson v. Coca-Cola USA,
2002 UT 42, ¶ 7, 48 P.3d 941 (internal quotation marks omitted.)
    ¶14 Because the parties stipulated that “[t]here are no private
understandings, side agreements, or other writings” related to the
Agreement, the district court was not required to look beyond the
four corners of the Agreement when it ruled on summary judgment.
“Questions of contract interpretation not requiring resort to extrinsic
evidence are matters of law, and on such questions we accord the
trial court’s interpretation no presumption of correctness.” Zions
First Nat’l Bank, N.A. v. Nat’l Am. Title Ins. Co., 749 P.2d 651, 653
(Utah 1988).
    ¶15 Finally, “[w]hether attorney fees are recoverable in an
action is a question of law, which we review for correctness.
However, the district court has broad discretion in determining what
constitutes a reasonable fee, and we will consider that determination
against an abuse-of-discretion standard.” Softsolutions, Inc. v. Brigham
Young Univ., 2000 UT 46, ¶ 12, 1 P.3d 1095 (alteration in original)
(citation and internal quotation marks omitted).
                             ANALYSIS
        I. REDD IS ENTITLED TO ONE-THIRD OF THE
           ATTORNEY FEES AWARD BASED ON THE
           PLAIN LANGUAGE OF THE AGREEMENT
    ¶16 Hill argues that the Agreement is ambiguous because it
does not directly address the allocation of attorney fees and that the
ambiguity should be strictly construed against Redd, who drafted
the Agreement. Redd counters that the Agreement is plain on its
face and that the intent of the parties should be determined from the
language of the Agreement. We agree with Redd.
    ¶17 We begin our analysis with an examination of “the
language of [the Agreement] to determine meaning and intent.”
Glenn v. Reese, 2009 UT 80, ¶ 10, 225 P.3d 185. “Where the language
is unambiguous, the parties’ intentions are determined from the
plain meaning of the contractual language, and the [Agreement]
may be interpreted as a matter of law.” Id. (internal quotation marks
omitted). If, however, the Agreement is ambiguous, we turn to
extrinsic evidence to determine the intent of the parties. Daines v.
Vincent, 2008 UT 51, ¶ 25, 190 P.3d 1269. Because the Agreement
involves a disputed fee, any ambiguity is “resolved against the

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attorney and the construction adopted which is favorable to the
client.” Jones, Waldo, Holbrook & McDonough v. Dawson, 923 P.2d
1366, 1372 (Utah 1996) (internal quotation marks omitted).
     ¶18 Ambiguity exists if a contractual term or provision “is
capable of more than one reasonable interpretation because of
uncertain meanings of terms, missing terms, or other facial
deficiencies.” WebBank v. Am. Gen. Annuity Serv. Corp., 2002 UT 88,
¶ 20, 54 P.3d 1139 (internal quotation marks omitted); see also Ward
v. Intermountain Farmers Ass’n, 907 P.2d 264, 268 (Utah 1995) (stating
that an ambiguous interpretation must be “reasonably supported by
the language of the contract”).
    ¶19 The Agreement states that “[Redd] is entitled to ONE
THIRD (33 1/3%) of all monies paid to or in [Hill’s] behalf for what
ever [sic] cause related to this cause of action.” (Emphasis added.) It
is uncontested that Redd was retained to represent Hill in the
underlying case. It is also uncontested that the district court
awarded attorney fees as a result of that representation. Thus, it
cannot be contested that the attorney fees award was “paid to or in
[Hill’s] behalf” with respect to the “cause of action” referred to in the
Agreement.
    ¶20 Though the Agreement does not specifically address the
allocation of general damages, punitive damages, or attorney fees,
the language of the contested provision embraces all such recoveries.
The Agreement states that Redd receive one-third of “all monies”
paid to Hill “related to” Ms. Hill’s “cause of action.” Webster’s
Dictionary defines “all” as “the whole extent or quantity of,” “the
entire number of,” “every one of,” and “any.” WEBSTER’S NEW
COLLEGE DICTIONARY 36 (2007). The district court’s award of
attorney fees falls within the definition of “all monies,” inasmuch as
it was undoubtedly part of the “extent or quantity of” the money
awarded to Hill based on Redd’s representation of Hill in the
underlying case. And the attorney fees award was “one of” the
components of “all monies” paid to Hill as a result of that lawsuit.
Because the language of the Agreement embraces the court’s award
of attorney fees, Redd is entitled to one-third of that award.
      II. THE AGREEMENT IS NOT IN CONFLICT WITH
      THE UTAH RULES OF PROFESSIONAL CONDUCT
    ¶21 Hill next asserts that we possess the longstanding right to
monitor fee agreements, and that allowing Redd to take a percentage
of the attorney fees “thwart[s] the purpose of the award,” which is
“to make the []client whole.” While we acknowledge our authority

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                             REDD v. HILL
                        Opinion of the Court

to monitor and approve fee contracts, we hold that the Agreement
is not improper as written or applied.
    ¶22 Rule 1.5 of the Utah Rules of Professional Conduct sets
forth the requirements under which attorneys may enter into
contingent fee agreements with their clients. Rule 1.5 explicitly
allows contingent fee agreements except in certain limited instances
not implicated by the underlying action.1 In all cases, however, rule
1.5(c) requires that
       [a] contingent fee agreement shall be in a writing
       signed by the client and shall state the method by
       which the fee is to be determined, including the
       percentage or percentages that shall accrue to the
       lawyer in the event of settlement, trial or appeal;
       litigation and other expenses to be deducted from the
       recovery; and whether such expenses are to be
       deducted before or after the contingent fee is
       calculated.
   ¶23 Many laypersons have no experience with contingent fee
agreements. Thus, rule 1.5(c) is designed to require that attorneys
put clients on notice as to the particulars of the parties’ obligations
under contingent fee agreements. But while rule 1.5(c) requires
notice, it does not require the use of specific language, nor does it set
out a form that Utah attorneys must use.
    ¶24 Here, the Agreement used ordinary language to describe
the “method by which the fee is to be determined.” UTAH R. PROF’L
COND. 1.5(c). The Agreement states that “[Redd] is entitled to ONE
THIRD (33 1/3%) of all monies paid to or in [Hill’s] behalf for what
ever [sic] cause related to this cause of action.” Thus, the Agreement
unambiguously describes “the [recovery] percentage or percentages
that shall accrue to the lawyer in the event of settlement, trial or
appeal.” UTAH R. PROF’L COND. 1.5(c). This language is not overly
verbose, legalistic, nor buried in pages of small-print boilerplate. In
fact, the entire Agreement is contained on one type-written page.
   ¶25 As required by rule 1.5(c), the Agreement also put Ms. Hill

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    Attorneys may not enter into contingency fee agreements “in a
domestic relations matter [when] the payment . . . is contingent upon
the securing of a divorce or upon the amount of alimony or
support . . . [or to] represent[] a defendant in a criminal case.” UTAH
R. PROF’L COND. 1.5(c)–(d).

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on notice as to the method by which “litigation and other expenses
[were] to be deducted from the recovery; and whether such expenses
[were] to be deducted before or after the contingent fee [was]
calculated.” The Agreement states that the “[c]lient will be
responsible for all costs and out-of-pocket expenses . . . from [the]
client’s share of the settlement proceeds.”
    ¶26 Because the contingent representation was not prohibited
by the Rules of Professional Conduct and the Agreement conforms
to the requirements of rule 1.5(c), the district court did not err in
enforcing the Agreement as written.
               III. REDD IS NOT ENTITLED TO HIS
                ATTORNEY FEES IN THIS APPEAL
    ¶27 Redd asserts that he is entitled to attorney fees in this
appeal based on rule 33 of the Utah Rules of Appellate Procedure,
arguing that Hill’s appeal is “frivolous” and does not present a
justiciable issue. He also requests a provisional award of attorney
fees based on the outcome of his Supplemental Relief Petition
currently pending before the district court. Hill responds that she
has presented a valid issue for appeal and that Hill’s arguments
based on his supplemental petition are improper. We agree with
Hill. Redd’s claim for attorney fees under rule 33 is without merit,
and we lack jurisdiction to decide Redd’s claim for attorney fees
raised in his Supplemental Relief Petition before the district court.
    ¶28 Under rule 33, we have the authority to award attorney
fees and costs as a sanction for a frivolous appeal. UTAH R. APP. P.
33(a). But the imposition of such a sanction is a serious matter and
only to be used in egregious cases, lest the threat of such sanctions
should chill litigants’ rights to appeal lower court decisions. See, e.g.,
Porco v. Porco, 752 P.2d 365, 369 (Utah Ct. App. 1988). “Sanctions are
appropriate for appeals obviously without merit, with no reasonable
likelihood of success, and which result in the delay of a proper
judgment.” Farrell v. Porter, 830 P.2d 299, 302 (Utah Ct. App. 1992)
(internal quotation marks omitted). We hold that Hill’s appeal does
not present such a case and sanctions under rule 33 are therefore
inappropriate.
    ¶29 We next turn to Redd’s claim for attorney fees based on the
outcome of his petition for supplemental relief currently pending in
the district court. Because Redd did not make a claim for attorney
fees in his initial complaint for declaratory judgement and because
the district court has yet to rule on his petition for supplemental
relief, we lack jurisdiction over this claim.

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                            REDD v. HILL
                       Opinion of the Court

    ¶30 Redd did not seek to recover attorney fees in his petition,
nor did he petition the district court for leave to amend. His claim
for attorney fees was first raised after the entry of final judgment.
We therefore lack jurisdiction to consider it.
                          CONCLUSION
    ¶31 The Agreement is unambiguous on its face. Because it
accords with the Rules of Professional Conduct, the district court did
not err when it enforced the Agreement as written. Therefore, Redd
is entitled to one-third of the court-awarded attorney fees in the
underlying action. Redd is not, however, entitled to attorney fees for
this appeal because he failed to request attorney fees in his petition
for declaratory judgment.

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