D. Michael Burke
Richard
L. Douglas
Burke, Shultz & Harman Suzanne
Williams-McAuliffe
Martinsburg, West Virginia Martinsburg,
West Virginia
Attorney for the Appellee Attorneys
for the Appellant
The Opinion of the Court was delivered PER CURIAM.
CHIEF JUSTICE MAYNARD and JUSTICE DAVIS dissent and reserve the right to file dissenting opinions.
1. “Where the issue on appeal from the circuit
court is clearly a question of law or involving an interpretation of a statute,
we apply a de novo standard of review.” Syl. Pt. 1, Chrystal
R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995).
2. “A circuit court's interpretation of a
mandate of this Court and whether the circuit court complied with such mandate
are questions of law that are reviewed de novo.” Syl. Pt. 4, State
ex rel. Frazier & Oxley, L.C. v. Cummings, 214 W.Va. 802, 591 S.E.2d
728 (2003).
3. “The general rule is that when a question
has been definitely determined by this Court its decision is conclusive on
parties, privies and courts, including this Court, upon a second appeal or
writ of error and it is regarded as the law of the case.” Syl. Pt. 1, Mullins
v. Green, 145 W.Va. 469, 115 S.E.2d 320 (1960).
4. “Upon remand of a case for further proceedings after a decision by this Court, the circuit court must proceed in accordance with the mandate and the law of the case as established on appeal. The trial court must implement both the letter and the spirit of the mandate, taking into account the appellate court's opinion and the circumstances it embraces.”
Syl. Pt. 3, State ex rel. Frazier & Oxley, L.C. v. Cummings, 214 W.Va. 802, 591 S.E.2d 728 (2003).
Per Curiam:
By way of this appeal, attorney Laura Coltelli
Rose (hereinafter referred to as “Appellant”) challenges the October
15, 2002, order of the Circuit Court of Berkeley County. This order relates
the lower court's finding that a portion of the attorney's fee Appellant
charged on a contingency fee basis for recovery of medical payment insurance
benefits (hereinafter referred to as “med-pay” or “med-pay
benefits”) was excessive and unreasonable, and then directs Appellant
to refund the same to her client, Douglas Bass (hereinafter referred to as “Appellee”).
Appellant contests the ruling and argues that the lower court grounded its
conclusion regarding the unreasonableness of the fee charged on an improper
method of review and did not follow the law of the case doctrine and ignored
the mandate of Bass v. Coltelli-Rose, 207 W.Va. 730, 536 S.E.2d 494
(2000) (hereinafter referred to as “Bass II” (See
footnote 1) ). Based upon review
of the briefs, the pertinent record, and arguments of counsel,
we reverse the decision of the
lower court and remand the case for entry of an order consistent with this
opinion.
In conducting its review of the fee, the lower
court separately examined Appellant's representation in the following four
activities: (1) collection of med-pay benefits through the insurance contract
held by the driver of the vehicle in which Appellee was a passenger at the
time of the accident; (2) collection of med-pay benefits through the insurance
contract of Appellee; (3) negotiation of a liability settlement; and (4)
collection from an underinsured motorist policy. This examination consisted
of the lower court separately applying the twelve factors for determining
the reasonableness of an attorney's fees set forth in Aetna Casualty & Surety
Company v. Pitrolo, 176 W.Va. 190, 342 S.E.2d 156 (1986), (See
footnote 2)
to each of the four activities. The lower court explained in its resulting
October 15, 2002, order that this approach was taken because “the
Supreme Court has seen fit to consider the different recoveries as separate
recoveries, and considers the reasonableness of the contingency fee with
reference to each factor of the recovery.” The lower court also noted
in the October 15 order that the overall fee charged for all of the work
Appellant performed in the case would not be excessive if the basis of comparison
would have been the total fee in relation to the total amount recovered. (See
footnote 3) Nevertheless, based on its categorical analysis,
the lower court concluded that the portion of the fee charged for collection
of med-pay from the driver's policy was excessive and ordered Appellant to
refund the entire amount charged, $6,250, (See
footnote 4) plus pre-and post-judgment interest. (See
footnote 5) Appellant petitioned this Court for appeal
of the judgment, which was granted on June 18, 2003.
Appellant maintains dismissal of the case on remand
was warranted because the unequivocal mandate and law of the case in Bass
II is that the contract executed between the attorney and client contemplated
a contingency fee for the recovery of med-pay as well as recovery from all
other sources. Thus, according to Appellant, the lower court did not faithfully
apply the law of the case because it found that a portion of the contingent
fee charged by Appellant was excessive for no other reason than it involved
med-pay recovery.
To be clear, the quarrel with the lower court's
treatment of this case on remand is not with the authority of the court to
test the reasonableness of the fees charged. Rather, we are asked to determine if the manner in which the lower court conducted
its review of the fees charged and the conclusion reached as a result of
this review were faithful to the mandate of Bass II. (See
footnote 6)
The mandate of Bass II is embodied in our stated conclusion about the reach of the contract for services entered into by Appellant and Appellee:
Rather than limiting the application
of Rose's contingent fee to recoveries obtained from third-party tortfeasors,
we interpret the plain wording of the provision in question to encompass any
recovery secured from a party who is legally obligated to compensate Douglas
Bass for the losses occasioned by the car accident in which he was involved.
Bass II, 207 W.Va. at 734, 536 S.E.2d at 498 (emphasis added). Thus
the letter as well as the spirit of this Court's mandate in Bass II is
that all payments, from whatever legally obligated source, received through
the efforts of the attorney in furtherance of the valid contingency agreement
are subject to the terms of the contingent fee agreement.
In the interim between the remand of Bass II and
the entry of order now on appeal, this Court rendered a decision which has direct
bearing on the matter before us. (See
footnote 7) In the case styled Lawyer Disciplinary Board
v. Morton, 212 W.Va. 165, 569 S.E.2d 412 (2002), we specifically identified
the standards for determining whether a lawyer's charge for collecting med-pay
benefits is an excessive or unreasonable fee. Appellee correctly relates that Morton does
not stand for the proposition that it is always permissible to charge a contingency
fee against the recovery of med-pay. In developing this point, Appellee notes
that although application of a contingency fee to med-pay is not per se unreasonable
pursuant to Morton, an analysis of the work actually done for the client
is necessary prior to determining whether the resulting fee should be sustained.
While this is an accurate summation, it stops short of explaining that in Morton we
said the reviewing court's analysis is to be conducted by looking at all of the
services performed during the term of the contract. We held in Morton that
it is incumbent upon the reviewing body “to fairly examine all of the relevant
circumstances of a lawyer's engagement and the professional services in fact
rendered when considering whether compensation is excessive.” Id. at
170, 569 S.E.2d 417. Thereafter we specifically said “that focusing on a
single component of that compensation without consideration of the entire engagement
and services rendered may lead . . . to an unjust conclusion . . . .” Id. Consequently,
we are somewhat perplexed with the lower court's statement in its October 15,
2002, order that our “opinions which have considered the matter of the recovery of medical payment under a contingent fee contract of employment
. . . [require reviewing courts] to consider the different recoveries as
separate recoveries, and consider[] the reasonableness of the contingency
fee with reference to each factor of the recovery.” In light of Morton,
it is obvious that the segmented activity method the lower court employed
when completing the fee review was incorrect. (See
footnote 8) The review of discrete activities of representation
by the lower court only served to lead to the type of unjust conclusion we
were attempting to prevent in Morton, as evidenced by the lower court's
finding that the total fee charged was not excessive when all elements
of the representation were considered. Moreover, by conducting its review
based on segmented activities, the circuit court essentially decided that
a portion of the contingent fee based on med-pay was entirely exempt from
the mutually agreed upon contingent fee. As this conclusion appears to be
contrary to our decision in Bass II, we believe the circuit court
violated the law of the case doctrine by ordering Appellant to refund the
fee for this singular activity. Accordingly, we reverse the decision of the
lower court.
Despite our reversal, further proceedings in this
matter are not warranted because the lower court has found as part of its
order that the fee charged in relation to the entire recovery is not excessive. We agree and further note that the overall
charge is actually less than the contracted contingency fee of thirty-three
and one-third percent. (See
footnote 9) Appellant testified at the hearing and outlined
the general time and effort she spent on Appellee's case, including the legal
research that was required to compose a five-page letter to one of the insurers
regarding the validity of recovery. The record showed that Appellant had
worked on all aspects of this case for a period of two years and that she
arrived at a successfully negotiated settlement without having to file a
law suit. In so doing, she had to deal with two insurance companies, two
separate policies of insurance and four separate coverages. Additionally,
Appellant voluntarily reduced her fee for the med-pay recovery from the driver's
policy, apparently recognizing to some degree the less intense effort needed
to obtain that recovery.
Appellee continues to assert that recovery of med-pay
benefits from the driver's policy involved no risk and, therefore, the circuit
court was correct in finding and concluding that this portion of med-pay
recovery was a virtual certainty and did not require the skills of an attorney.
While these benefits may have been obtained with relative ease, at the time
the contingency fee agreement was signed there was no certainty of recovery
let alone reason to know the amount or type of services which would prove
successful. We refuse to play “Monday morning quarterback.” Furthermore,
the seemingly effortless recovery of med-pay from the driver's insurance policy may well have been facilitated by the
involvement of an attorney in this case.
Be that as it may, Appellee's argument points to
a concern we have with Appellant's testimony about maintaining time records.
Appellant indicated that she typically does not keep time records for cases
in which the work she performs is contingency based in terms of fee structure.
It may be that many lawyers who do work under a contingent fee contract do
not keep time records. It should be obvious from this case that keeping good
time records would be the more prudent course. The burden of proof is always
upon the attorney to show the reasonableness of the fees charged. Syl. Pt.
2, Committee on Legal Ethics of West Virginia State Bar v. Tatterson,
177 W.Va. 356, 352 S.E.2d 107 (1986). The same burden to prove reasonableness
remains with the attorney under any fee structure. Attorneys who fail to
effectively document their efforts on behalf of a client run the risk of
being unable to convince a reviewing court, based on their word alone, of
the reasonableness of the fee charged or, in cases where it applies, the
full and proper value of fees to be awarded on a quantum meruit basis.
Based on the foregoing reasons, we
set aside that portion of the October 15, 2002, order of the Circuit Court
of Berkeley County directing refund of attorney fees. As the lower court has
heretofore determined and declared that the fee charged was not unreasonable
or excessive when the entire representation is considered in light of the full
recovery obtained, the case is remanded for the entry of an order of dismissal.
point four of Pitrolo 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.
176 W.Va. at 191-92, 342 S.E.2d at 157. These factors are derived from Rule
1.5(a) of the West Virginia Rules of Professional Conduct.