HAROLD H. DISHMAN, Appellant (Defendant),
FIRST INTERSTATE BANK, Appellee (Plaintiff)
Appeal from the District Court of Albany County. The Honorable Jeffrey A. Donnell, Judge.
Representing Appellant: Mitchell H. Edwards and Julie M. Edwards of Nicholas & Tangeman, LLC, Laramie, Wyoming. Argument by Mr. Edwards.
Representing Appellee: Megan Overmann Goetz and Jodi D. Shea of Pence and MacMillan LLC, Laramie, Wyoming. Argument by Ms. Goetz.
Before BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.
[¶1] The district court granted a partial summary judgment in favor of First Interstate Bank (FIB) on its judicial foreclosure claim against Harold H. Dishman. The district court later held a bench trial on FIB's claim for attorney fees and granted most of FIB's requested fees and costs. Mr. Dishman appeals, claiming the district court violated the rules of civil procedure by allowing FIB's detailed billing statement into evidence when the bank did not produce it until just before trial. Mr. Dishman also claims FIB's request should have been denied, in whole or in part, because the fees were unreasonable.
[¶2] We conclude FIB was required to produce its detailed billing statement in support of the claim for attorney fees, but its failure to provide it earlier was harmless. Given FIB failed to produce the detailed fee statement and did not follow the rules of civil procedure in claiming the information was privileged, the fees associated with the efforts to withhold the information were not reasonable, and the district court abused its discretion by awarding them. The district court also abused its discretion by awarding fees incurred in unnecessary and unproductive work. Furthermore, in the interests of equity, we reduce the fees incurred by FIB after the summary judgment to account for its discovery violations. We, therefore, affirm in part, reverse in part, and remand.
[¶3] The issues in this case are:
1. Whether the district court correctly interpreted and applied Wyoming Rules of Civil Procedure 26 and 37 with regard to FIB's obligation to disclose its detailed attorney fee statement.
2. Whether the district court abused its discretion in awarding attorney fees to FIB.
[¶4] The underlying facts of this case are essentially undisputed. In 2004, Mr. Dishman obtained a $20,000 line of credit from FIB, secured by a mortgage on his house in
Laramie, Wyoming. He renewed the loan in 2009. From March 2004 through January 2013, Mr. Dishman made all payments on the loan through automatic withdrawals from his account at FIB.
[¶5] Mr. Dishman, who suffered from dementia, moved into a nursing home at the Laramie Care Center (LCC). In December 2012, LCC submitted an application to have his social security benefits redirected to pay some of the costs of his care. After the funds were diverted, the FIB account from which the automatic withdrawals for payment of the loan were taken was closed, resulting in Mr. Dishman's default on the loan.
[¶6] On October 4, 2013, FIB filed a complaint against Mr. Dishman for judicial foreclosure, seeking the principal balance due on the loan of $14,831.50, together with accruing interest, costs and attorney fees. FIB attempted various methods to obtain service of process on Mr. Dishman, including personal service on him at the mortgaged property, which was vacant; personal service on him at the nursing home, which was not allowed by staff; personal service upon a staff member at the nursing home; and service by publication.
[¶7] Mr. Dishman's granddaughter, Lori Dow, was designated as his attorney in fact under a Durable Power of Attorney signed by Mr. Dishman in 2004. Ms. Dow initially did not respond to FIB's efforts to contact her but, after receiving a November 19, 2013, letter about the pending action, she contacted FIB and retained counsel to file an answer on behalf of Mr. Dishman. The parties exchanged disclosures pursuant to W.R.C.P. 26, and FIB served additional discovery requests upon Mr. Dishman. Although they did not make any formal discovery requests, Mr. Dishman's attorneys repeatedly asked FIB to provide its detailed attorney fee statement so they could evaluate the attorney fees claim. FIB provided verified statements of the attorney fee totals but did not provide the actual billing statements.
[¶8] The case languished for some time while Mr. Dishman's attorney in fact attempted to sell the property and the parties looked into collateral matters, including the potential that a Medicaid lien would be filed on the house. With the dispositive motion deadline nearing, FIB filed a motion for summary judgment on all of its claims on July 29, 2014. In response to the summary judgment motion, Mr. Dishman conceded he owed the principal balance, accruing interest, late fees, annual fees, taxes, and insurance but contested some of FIB's specific claims, including the amount of accrued interest, a cost described as a " lender's foreclosure policy," and attorney fees. Mr. Dishman objected to the attorney fees request because FIB had not provided its itemized bills, making it impossible to review the reasonableness of the fees.
[¶9] After considering the parties' filings, the district court granted FIB a partial summary judgment in the amount of $24,631.42, which included the principal due, accrued interest, and most of FIB's costs. The district court concluded, however, there were genuine issues of material fact concerning the lender's foreclosure policy and FIB's attorney fees request.
[¶10] FIB filed a motion for in camera review of its unredacted verified statement of costs and attorney fees. It asserted in general terms that the billing statement included confidential information protected by the attorney-client privilege. However, FIB never pointed to any specific item in the billing which would have been privileged. FIB also filed an affidavit from an outside attorney stating its fees were reasonable in light of the circumstances. On October 6, 2014, both parties filed trial summaries, which included their lists of witnesses and exhibits. FIB's trial summary did not include its unredacted attorney fee statement. On October 7, 2014, the district court denied FIB's motion for in camera review of its unredacted attorney fee bills. On October 9, 2014, FIB supplemented its exhibit list with the unredacted statement of fees and costs.
[¶11] The district court held a bench trial on the outstanding issues on October 14, 2014. Mr. Dishman objected to admission of the unredacted fee statement because FIB did not produce it as required by the rules of civil procedure. The district court overruled Mr. Dishman's objection and allowed FIB's
unredacted fee statement into evidence. FIB later filed a supplemental statement to add the fees associated with the trial, bringing the total amount of fees and costs requested by FIB to $20,615.49.
[¶12] The district court entered an order on November 18, 2014, granting FIB most of its requested fees. The order stated, in relevant part:
19. [Mr. Dishman] raises the issue . . . that FIB should not be permitted to present its attorney's fees and costs to this Court because it did not timely submit or disclose its itemized billings. . . . In fact, FIB asserted that this material was privileged and Dishman did nothing to challenge that assertion. Ultimately, this Court held that the subject material was not privileged and FIB promptly produced same. Mr. Dishman had avenues of relief available to him long prior to the trial herein, including seeking this Court's order to compel discovery, of which Mr. Dishman did not avail himself. He cannot now be he[ard] to complain of FIB's assertion of privilege when he took no action to challenge and from which he now seeks to benefit.
. . . .
22. [T]he Court has reviewed the Verified Statement of Attorney's Fees and Costs, provided as Exhibit 24 herein, as well as the Supplemental Verified Statement of Fees, filed on October 20, 2014, and has considered the evidence and testimony presented at trial. The Court has considered Mr. Dishman's Defendant's Response in Opposition to Plaintiff's Supplemental Verified Statement of Fees, filed on November 4, 2014. It is mindful of the fact that Mr. Dishman is not asserting that the hourly rate charged was " too high" but simply contending that the amount of time/work invested in his foreclosure action is not reasonable, particularly where the principal amount due was only $14,831.50.
23. This Court agrees with the parties that a " simple" foreclosure matter would not, and should not, approach anywhere near $15,000 in costs and attorney's fees. The Court also is empathetic to Mr. Dishman's position that, after loyally paying FIB for almost nine years, the cessation of his monthly payments [was] beyond his control in that, despite its knowledge of Mr. Dishman's financial obligations to FIB, the Laramie Care Center arranged for Mr. Dishman's social security payments to be paid directly to LCC, rather than to FIB, apparently without Mr. Dishman's knowledge or consent. [footnote omitted]. This arrangement ultimately led to Mr. Dishman's default and, eventually, to this litigation. Finally, the Court is cognizant of the fact that Mr. Dishman now owes the State of Wyoming more than the likely value of this property in that he owes approximately $173,000.00 for Medicaid services provided to him and his deceased spouse, Patricia Dishman.
24. However, this case was anything but simple. Considering the complications involved in locating Mr. Dishman; the issues concerning his potential incompetence; Mr. Dishman's significant equity in the property; dealing with the vacancy of the property; addressing Medicaid/Medicare concerns; the involvement of multiple attorneys and law firms [for Mr. Dishman]; and the delays in resolution caused, in part, by allowing Ms. Dow to attempt to sell the property, the vast majority of the charge[d] fees and costs are reasonable and were, indeed, necessary. This case involved complicated issues, which took a significant amount of attorney time even though the amount initially sought was relatively small, and the rates charged were reasonable and customary. Overall, this Court does not believe such amounts were unreasonable.
25. The only fees with which this Court takes issue involve those incurred for the hiring and retention of Scott Meier as an expert witness for the purpose of the reasonableness of attorneys' fees. Those amounts were: [list of billing entries totaling $2,394.50].
26. The Court finds these amounts unnecessary in light of Wyoming Statute § 1-14-126(b), which allows the court discretion to award reasonable attorney's fees " without requiring expert testimony."
. . . .
29. The Court . . . awards a total of attorneys' fees and costs in the amount of $18,220.99 (the result of the requested amount of $20,615.49 less the amounts associated with Mr. Meier of $2,394.50).
(emphasis in original). Mr. Dishman filed a timely notice of appeal.
STANDARD OF REVIEW
[¶13] We review the question of whether the district court correctly interpreted the rules of civil procedure de novo. Windham v. Windham, 2015 WY 61, ¶ 12, 348 P.3d 836, 840 (Wyo. 2015) (applying de novo standard of review to Rule 37 interpretation). The district court's decision awarding attorney fees is reviewed under the abuse of discretion standard. Morrison v. Clay, 2006 WY 161, ¶ 16, 149 P.3d 696, 701 (Wyo. 2006). A court abuses its discretion if it exceeds the bounds of reason under the circumstances. Joe's Concrete & Lumber, Inc. v. Concrete Works of Colorado, Inc., 2011 WY 74, ¶ 12, 252 P.3d 445, 448 (Wyo. 2011).
1. General Law on Attorney Fees Awards
[¶14] Wyoming subscribes to the American rule regarding recovery of attorney fees. The rule makes each party responsible for its own fees unless an award is permitted by contract or statute. Thorkildsen v. Belden, 2012 WY 8, ¶ 10, 269 P.3d 421, 424 (Wyo. 2012); Garwood v. Garwood, 2010 WY 91, ¶ 32, 233 P.3d 977, 984 (Wyo. 2010). The party who is seeking an award of fees has the burden of proving the reasonableness of the claimed fees. To meet that burden, the claimant must present an itemized billing reflecting the time and the rate and evidence demonstrating the fee was reasonable. Tolin v. State, (In re NRF), 2013 WY 9, ¶ 7, 294 P.3d 879, 882 (Wyo. 2013). See also Pekas v. Thompson, 903 P.2d 532, 536 (Wyo. 1995). The claimant must show the " nature of the service performed, the time expended, and the hourly fee customarily charged for such service." Ringolsby v. Johnson, 2008 WY 127, ¶ 17, 193 P.3d 1167, 1171 (Wyo. 2008), quoting Jones Land & Livestock Co. v. Fed. Land Bank of Omaha, 733 P.2d 258, 265 (Wyo. 1987) (emphasis omitted). As part of his duty to claim only reasonable fees, an attorney must exercise " billing judgment." Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S.Ct. 1933, 1939-40, 76 L.Ed.2d 40 (1983). " 'Billing judgment is usually shown by the attorney writing off unproductive, excessive, or redundant hours.'" NRF, ¶ 9, 294 P.3d at 883-84, quoting Green v. Adm'rs of Tulane Educ. Fund, 284 F.3d 642, 662 (5th Cir. 2002). An affidavit from a party or an attorney stating only the total amount of fees and that the amount is reasonable is not sufficient to satisfy the burden of proof. See, e.g., Meyer v. Travelers Ins. Co., 741 P.2d 607, 609 (Wyo. 1987); Greenough v. Prairie Dog Ranch, Inc., 531 P.2d 499, 503-04 (Wyo. 1975).
[¶15] In determining the reasonableness of the fee request, Wyoming courts follow the federal lodestar test, which requires a determination of " (1) whether the fee charged represents the product of reasonable hours times a reasonable rate; and (2) whether other factors of discretionary application should be considered to adjust the fee either upward or downward." Weiss v. Weiss, 2009 WY 124, ¶ 8, 217 P.3d 408, 410-11 (Wyo. 2009), quoting Forshee v. Delaney, 2005 WY 103, ¶ 7, 118 P.3d 445, 448 (Wyo. 2005). The district court has broad discretion in fashioning an attorney fee award. See, e.g., Garwood, ¶ 38, 233 P.3d at 986; Jensen v. Milatzo-Jensen, 2013 WY 27, ¶ 35, 297 P.3d 768, 779 (Wyo. 2013). Wyo. Stat. Ann. § 1-14-126 (LexisNexis 2015) provides a list of factors the court may consider in determining an appropriate fee award:
(b) In civil actions for which an award of attorney's fees is authorized, the court in its discretion may award reasonable attorney's fees to the prevailing party without requiring expert testimony. In exercising its discretion the court may consider the following factors:
(i) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to ...