Thursday, September 2, 2010

Attorneys can Collect Attorneys' Fees in Action for Collection of Attorneys' Fees

David Hall, LLC v. Laroya (ICA September 2, 2010)

Background. The David Hall law firm is a law corporation with a single employee: David Hall. Hall agreed to represent James Laroya in exchange for fees. Laroya made no payments. The Hall firm initiated a complaint in the district court seeking $8,601.92 in fees, costs, and taxes for the services rendered to Laroya. The Hall firm then filed a proposed default judgment requesting a total $14,611.55, which included $2,632.50 for attorneys fees in litigating the instant case. The district court denied the motion and noted that the Hall firm could not collect fees "as you are essentially representing yourself." Eventually, however, default judgment was entered, which awarded $12,438.73 ($8,601.92 in fees, $2,821.84 for interest, $120 for costs, and $894.97 in other costs). It did not include the fees for the collection lawsuit. The Hall firm appealed.

The Assumpsit Statute. "Generally, under the 'American Rule,' each party is responsible for paying for his or her own litigation expenses." TSA Int'l Ltd. v. Shimizu Corp., 92 Hawai'i 243, 263, 990 P.2d 713, 733 (1999). But fees can be awarded "to the prevailing party where such an award is provided for by statute, stipulation, or agreement." Id. HRS § 607-14 is a statutory exception. "In all courts, in all actions in the nature of assumpsit . . . there shall be taxed as attorneys' fees, to be paid by the losing party and to be included in the sum for which execution may issue, a fee that the court determines to be reasonable . . . . The court shall then tax attorneys' fees . . . to be paid by the losing party; provided that this amount shall not exceed twenty-five per cent of the judgment." Id.

"Assumpsit is a common law form of action which allows for the recovery of damages for non-performance of a contract, either express or implied, written or verbal, as well as quasi contractual obligations." Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai'i 92, 121-22, 176 P.3d 91, 120-21 (2008).

This is in the Nature of Assumpsit. According to the ICA, because Laroya promised to pay legal services, the action to collect those fees owed is "in the nature of assumpsit." HRS § 607-14 is quite broad. "In all courts, in all actions in the nature of assumpsit[,]" the court "shall tax attorneys' fees[.]" That, according to the ICA, indicated that attorneys' fees are recoverable in an action for the collection of, well, attorneys' fees. In Middleditch v. Kawanakoa, 16 Haw. 803 (Terr. 1905), the Supreme Court of the Territory of Hawaii held that "[t]he fact that the attorney in this case is the plaintiff does not deprive him of the statutory right to attorneys' fees." The ICA held that there was no meaningful distinction between the individual attorney and his or her law firm. Based on the case law and the language of HRS § 607-14, the ICA held that the attorney's law firm could collect attorneys' fees in litigating an action for unpaid attorneys' fees.

An Interesting Footnote . . . The ICA relied on Middleditch, an old case from volume 16 of the Hawai'i Reports. It quoted the case, but had no specific citation. Middleditch comes from a curious part of that volume titled "Decisions Announced without Opinions During the Period Covered by this Volume." In Lau v. Lopez, 112 Hawai'i 231, 145 P.3d 774 (App. 2006), the ICA relied on Middleditch because the Hawai'i Supreme Court relied upon other opinions from this strange section of volume 16. That was apparently good enough for the Lau court. But compounding the problem is Hawai'i Rules of Appellate Procedure (HRAP) Rule 35, which prohibits the use of any and all "unpublished" appellate dispositions prior to July 1, 2008. The ICA again found no problem relying on Middleditch because it "was a published decision in the Hawai'i Reports[.]" Does this mean that anything that is literally printed in the Hawai'i Reports is fair game? In doing so, the ICA seems to read HRAP Rule 35 quite literally--if it's literally printed in the book, it's fair game--even if it is printed under a curious title like "Decisions Announced without Opinions."

Is a not-Quite-Ambiguous Statute an Ambiguity? "It is a well-established rule of statutory construction that this court's foremost obligation is to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself." Carlisle v. One (1) Boat, 119 Hawai'i 245, 256, 195 P.3d 1177, 1188 (2008). That rule is a tough one. "We cannot change the language of the statute, supply a want, or enlarge upon it in order to make it suit a certain state of facts. We do not make or legislate or make laws." State v. Klie, 116 Hawai'i 519, 525, 174 P.3d 358, 364 (2007).

Here, the ICA never really stated that HRS § 607-14 is ambiguous. It used the phrase "to the extent that the statute is ambiguous." The ICA looked at the language of HRS § 607-14 as well as its long legislative history. On top of that, it turned to decisions by courts of other jurisdictions. But these aids are available in interpreting a statute only when the statute is ambiguous. "When there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists." Fought & Co. v. Steel Eng'g and Erection, Inc., 87 Hawai'i 37, 45, 951 P.2d 487, 495 (1998). What is ambiguous about HRS § 607-14? The ICA never tells us. All that can be said is that the statute is broad. Perhaps the statute is so broad that it leads to uncertainty or indistinctiveness. But not here. The language may be broad, but it certainly seems plain: in all actions in the nature of assumpsit, all courts shall tax attorneys' fees. Then again, this is not the first time the plain-language rule has been fudged.

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