Mark Abrell v. Delaware County Regional Wastewater District ( 2019 )

FILED
Aug 27 2019, 8:42 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Mark L. Abrell Danyel N. Struble
Muncie, Indiana Beasley & Gilkison, LLP
Muncie, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Mark Abrell, August 27, 2019
Appellant-Defendant/Counterclaim- Court of Appeals Case No.
Plaintiff, 19A-PL-585
Appeal from the Delaware Circuit
v. Court
The Honorable Linda Ralu Wolf,
Delaware County Regional Judge
Wastewater District, Trial Court Cause No.
Appellee-Plaintiff/Counterclaim- 18C03-1809-PL-72
Defendant.
Bailey, Judge.
Case Summary
[1] Mark Abrell (“Abrell”) appeals an order denying him compensation for legal
work he performed pursuant to a contract with the Delaware County Regional
Wastewater District (“the District”) and ordering that he pay all attorney’s fees
incurred by the District in pursuing a replevin claim against Abrell and
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defending against Abrell’s counterclaim. We reverse and remand with
instructions to the trial court to determine the contractual fees Abrell is owed by
the District.
Issues
[2] Abrell presents two issues for review:
I. Whether the trial court clearly erred in denying his claim
for contractual attorney’s fees; and
II. Whether the District was entitled to an award of attorney’s
fees from Abrell as damages in the replevin action or as a
sanction for engaging in meritless litigation.
Facts and Procedural History
[3] On January 2, 2006, Abrell, who is an attorney, and the District entered into an
Agreement for Professional Services whereby Abrell would provide legal
services for the District. The District agreed to pay Abrell: (1) a retainer of
$600.00 per month, which included time spent at two regular monthly meetings
and unlimited telephone calls; (2) $175.00 per hour for legal work “in excess of
the time covered by the monthly retainer”; and (3) contingency fees collected
from debtors in collection matters. (Exhibit D.)
[4] Abrell presented his bills for legal services performed through February 24, 2017
and the District paid the bills submitted. Abrell prepared for and appeared at
the District meeting on March 1, 2017. At that meeting, Abrell was discharged
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as the attorney for the District. Abrell sent a final bill for $880.00, but the
District’s board members decided “not to pay the bill.” (Tr. Vol. II, pg. 26.)
[5] In June of 2017, the District’s new counsel took the active collections files from
Abrell. On August 14, 2017, the District counsel sent a demand letter to Abrell
regarding other files. Counsel issued a “final request” for the return of files and
advised Abrell that “the District has voted to not pay the final bill you
submitted.” (Exhibit A.) Counsel explained the District’s position that Abrell
had collected “unreasonable” fees in the past because the monthly meetings had
been reduced from two to one as of June 2015, without reduction in the retainer
amount. Id.
[6] In response, Abrell advised the District that he was retaining a statutory
attorney’s lien on his former client’s files. He asserted that his final bill
included several hours of preparation work and, as to past billings that had been
paid, he expressed his position that “the District business was condensed into
one meeting instead of two which meant more work preparing for the one
meeting.” (Exhibit C.)
[7] In March of 2018, the District filed with the Indiana Supreme Court
Disciplinary Commission a complaint against Abrell, alleging among other
things that he had wrongfully retained the District’s files. The complaint was
dismissed for failure to raise a substantial question of misconduct warranting
attorney discipline. On September 6, 2018, the District filed a complaint for
replevin, to recover files in Abrell’s possession.
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[8] Abrell filed a counterclaim, seeking payment of his final bill of $880.00 and his
portion of contingency fees related to collection matters. On December 3,
2018, the District agreed to post a security bond of $880.00 and Abrell tendered
the requested files to the District. The District also put $1,700.00 into escrow to
cover contingency fees due Abrell on collections matters.
[9] On January 29, 2019, the parties appeared for a bench trial, with Abrell
appearing pro se. At the outset, the District’s counsel advised “I don’t think
there is anything left in regards to obtaining the files” and requested that the
trial court adjudicate Abrell’s counterclaim and the District’s request for
attorney’s fees. (Tr. Vol. II, pg. 8.) Abrell testified in narrative form and the
District’s counsel affirmatively agreed with Abrell’s summarization of the facts.1
The District then presented its sole witness, District Board President Ray
Maynard (“Maynard”), “to explain why the board chose not to pay that [final
bill].” Id. at 23. Maynard testified that the final bill included an itemization for
services that should have been covered by the retainer but also he “had issues
with the monthly retainer” because the agreement contemplated two monthly
meetings and the meetings had been reduced to one due to “lack of business.”
Id. at 27. He acknowledged that the March 2017 bill had not been paid and the
prior bills had been paid without protest.
1
Counsel later clarified: “We may have a sharing situation on some of those [bills] for contingent cases. But
everything else that he stated I think we agree with.” (Tr. Vol. II, pg. 23.)
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[10] At the conclusion of the hearing, the trial court directed the parties to attempt to
settle the claim for contingency fees, with the following guidance. If Abrell
alone had worked on a collection case, the entire contingency fee would be his
and if both counsel had performed legal services on a District case, Abrell’s
share would be calculated on a quantum meruit basis. Thereafter, the parties
advised the trial court that they had reached an agreement and the District paid
Abrell $1,341.50 from the escrow funds. The District also submitted to the trial
court a revised attorney’s fees request including the hours expended to examine
files and reach settlement.
[11] On March 7, 2019, the trial court issued a judgment against Abrell for
$4,973.50 (comprised of the entirety of the District’s attorney’s fees of $4,816.50
and a filing fee of $157.00). Abrell’s counterclaim for his final bill in the
amount of $880.00 was denied. Abrell now appeals.
Discussion and Decision
Standard of Review
[12] When, as here, issues are tried upon the facts by the court without a jury, and
the trial court enters specific findings sua sponte, we apply a two-tiered
standard: whether the evidence supports the findings, and whether the findings
support the judgment. Trust No. 6011, Lake Cty. Trust Co. v. Heil’s Haven Condos.
Homeowners Ass’n, 967 N.E.2d 6, 14 (Ind. Ct. App. 2012). Findings and
conclusions will be set aside only if they are clearly erroneous, that is, when the
record contains no facts or inferences to support them. Id. A judgment is
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clearly erroneous when our review of the record leaves us with a firm
conviction that a mistake has been made. Id. We defer substantially to findings
of fact but not to conclusions of law. Id.
Counterclaim for Final Billing
[13] The trial court disposed of Abrell’s counterclaim as follows:
As to the issue of the contested attorney fees payable to
Defendant, Mark Abrell, Court finds that the Plaintiff does not
owe this contested fee and the Counterclaim filed [by] Defendant
should be denied. The original contract between the parties
provided for a retainer fee of $600.00 per month for two monthly
meetings of Plaintiff. In 2015, Plaintiff reduced the frequency of
board meetings to once per month, due to the reduction in the
amount of business that needed to be conducted. Early in 2017,
there was a discrepancy and disagreement as to what activities
were considered a part of Defendant’s monthly retainer. As a
result of this disagreement, the Board had a vote on whether or
not to pay the final bill of $880.00 to Defendant and, by a
majority vote, payment was denied.
Rule 1.5 of the Professional Rules of Conduct states that an
attorney cannot charge an unreasonable fee.
Appealed Order at 2.
[14] To the extent that the language suggests Abrell was discharged due to a billing
dispute or a bill was disputed prior to his discharge, it lacks evidentiary support.
The parties agreed upon the salient facts; the evidentiary record disclosed:
Abrell and the District were parties to a contract for legal services for more than
eleven years; District meetings were reduced from two per month to one per
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month in 2015; the District paid Abrell’s bills inclusive of February 2017
services, without protest; Abrell prepared for and appeared at the March 1,
2017 meeting where he was discharged upon an allegation unrelated to billing;
subsequently, new counsel sent Abrell a letter taking the position that Abrell
had been overpaid in the past.
[15] The interpretation and construction of a contract is a function for the courts.
Stenger v. LLC Corp., 819 N.E.2d 480, 484 (Ind. Ct. App. 2004), trans. denied.
When contract terms are clear and unambiguous, the terms are conclusive and
we do not construe the contract or look to extrinsic evidence, but will merely
apply the contractual provisions. Id. The District unilaterally terminated the
Agreement for Professional Services but had not done so when Abrell prepared
for and appeared at the March 1, 2017 meeting. He has received no payment
for those services. Although the District came to believe that they had overpaid
in the past, and the trial court found this argument persuasive, it is irrelevant to
the counterclaim before the trial court. The District did not pursue a claim for
disgorgement of attorney’s fees it had paid, nor was this an attorney disciplinary
action. Indeed, Abrell prevailed upon the collateral disciplinary complaint.
The District was contractually bound to pay Abrell for his legal services
performed but uncompensated as of March 1, 2017 and we therefore remand
for a determination of a reasonable fee.
Attorney’s Fees Award to the District
[16] The trial court awarded the District the entirety of its attorney’s fees, stating:
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As a result of Defendant’s unwillingness to return files to Plaintiff
prior to December 13, 2018, Plaintiff is entitled to damages for
failing to return files in a timely manner. Plaintiff was forced to
engage its current legal counsel to initiate this case and proceed
with an evidentiary hearing against the Defendant. The filing fee
for this case is $157.00.
Further I.C. 34-52-1-1 provides for attorney fees to be awarded to
the party recovering judgment. Plaintiff should be awarded
attorney fees to be paid by Defendant in this case. It is
unreasonable that it took twenty-two (22) months for the
Defendant to return the files to Plaintiff.
(Appealed Order at 2.)
[17] Indiana adheres to the “American Rule” with respect to the payment of
attorney’s fees, which requires each party to pay his or her own attorney’s fees
absent an agreement between the parties, statutory authority, or rule to the
contrary. Fackler v. Powell, 891 N.E.2d 1091, 1098 (Ind. Ct. App. 2008), trans.
denied.
[18] The District brought a replevin complaint against Abrell, pursuant to Indiana
Code Section 32-35-2-1, which provides in relevant part:
If any personal goods, including tangible personal property
constituting or representing choses in action, are:
(1) wrongfully taken or unlawfully detained from the owner or
person claiming possession of the property …
the owner or claimant may bring an action for the possession of
the property.
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[19] Indiana Code Section 32-35-2-33 provides that judgment for the plaintiff upon a
replevin action may be for (1) delivery or the value of the property and (2)
damages for the detention of the property. It includes no statutory provision for
the payment of attorney’s fees. See also Associates Inv. Co. v. Shelton, 122 Ind.
App. 384, 390, 105 N.E.2d 354, 356 (1952); Reimer v. Sheets, 128 Ind. App. 400,
402, 149 N.E.2d 554, 555 (1958) (prevailing parties in replevin actions are not
entitled to attorney’s fees as damages). The trial court’s award of attorney’s fees
to the District is not supportable on this basis.
[20] Additionally, the trial court referenced Indiana Code Section 34-52-1-1, which
provides for the payment of attorney’s fees when a litigant has pursued a claim
or defense that is frivolous, unreasonable, or groundless. Although factual
findings are reviewed under a clearly erroneous standard, we review de novo a
trial court’s conclusion that a party engaged in meritless litigation. Kahn v.
Cundiff, 533 N.E.2d 164, 167 (Ind. Ct. App. 1989), aff’d 543 N.E.2d 627 (Ind.
1989). A claim or defense is “frivolous” if it is taken primarily for the purpose
of harassment, if the attorney is unable to make a good faith and rational
argument on the merits of the action, or if the lawyer is unable to support the
action taken by a good faith and rational argument for an extension,
modification, or reversal of existing law. Id. at 170. A claim or defense is
“unreasonable” if, based on the totality of the circumstances, including the law
and the facts known at the time of filing, no reasonable attorney would consider
that the claim or defense was worthy of litigation. Id. at 170-71. A claim or
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defense is “groundless” if no facts exist which support the legal claim presented
by the losing party. Id. at 171.
[21] Here, the factual determination made by the trial court that the length of time
Abrell retained certain files was “unreasonable” is not equivalent to presenting
an “unreasonable” claim or defense. Moreover, Abrell substantially prevailed
upon his counterclaim when he recovered significant contingency fees. Indeed,
the District did not deny that Abrell was entitled to some recovery of fees and
set aside an escrow fund for that purpose. Notably, in argument before the trial
court, the District’s attorney clarified: “I am not saying Mr. Abrell’s claim is
frivolous[.]” (Tr. Vol. II, pg. 44.) The award of attorney’s fees to the District is
not supportable on grounds that Abrell engaged in meritless litigation.
Conclusion
[22] Pursuant to the Agreement for Professional Services, Abrell is entitled to
reasonable fees for his uncompensated legal work prior to his discharge as the
District’s attorney. The District did not demonstrate its entitlement to an award
of attorney’s fees.
[23] Reversed and remanded for further proceedings consistent with this opinion.
Najam, J., and May, J., concur.
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