Uthman Cavallo, M.D. v. Allied Physicians of Michiana, LLC

Aug 20 2015, 10:09 am

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE

Scott H. Duerring Mark D. Boveri

South Bend, Indiana John H. Lloyd

Krieg DeVault LLP

Mishawaka, Indiana

Stacy Walton Long

Krieg DeVault LLP

Indianapolis, Indiana

IN THE

COURT OF APPEALS OF INDIANA

Uthman Cavallo, M.D., August 20, 2015

Appellant-Defendant, Court of Appeals Cause No.

71A05-1406-PL-285

v. Appeal from the St. Joseph Circuit

Court

Allied Physicians of Michiana, Lower Court Cause No.

71C01-1104-PL-83

LLC,

The Honorable Michael G. Gotsch,

Appellee-Plaintiff. Judge

Pyle, Judge.

Statement of the Case

[1] Appellant/Defendant, Uthman Cavallo, M.D. (“Cavallo”), appeals the trial

court’s order denying his request for a jury determination of the amount of

attorney fees he owed Appellee/Plaintiff, Allied Physicians of Michiana, LLC

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(“Allied”), after Allied prevailed in a breach of contract claim against Cavallo.

Cavallo and Allied were parties to an employment contract, and Allied filed a

complaint against Cavallo alleging that he had breached the contract. Cavallo

filed a counter-claim and a jury demand, alleging in the counter-claim that

Allied, instead, had breached the contract. The trial court conducted a jury

trial, and the jury found that Cavallo had breached the contract.

[2] Subsequently, after the trial court entered judgment against Cavallo, Allied filed

a petition requesting attorney fees, which was based on a fee-shifting provision

in the contract. At a hearing regarding the petition, the trial court concluded

that Cavallo’s pre-trial jury demand applied to the post-trial petition, and the

court established a deadline for the parties to inform it whether they would like

to empanel a new jury to consider the issue. Cavallo filed a request for a jury

trial on the issue before the deadline, and Allied filed an objection to Cavallo’s

jury request after the deadline. Thereafter, the trial court denied the jury

request, concluding that Cavallo did not have a right to a jury trial, and

awarded Allied $89,706.11 in attorney fees.

[3] On appeal, Cavallo argues that: (1) Allied’s petition for attorney fees was

barred by res judicata and waiver because Allied failed to present evidence on

the issue at the trial on the underlying breach of contract claim; (2) the trial

court erred when it denied Cavallo’s request for a jury trial to determine

reasonable attorney fees because he had a right to a jury trial; and (3) the trial

court erred in awarding Allied attorney fees because it did not hold a hearing to

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determine the reasonableness of the amount awarded and because the award

was unreasonable. Also on appeal, Allied requests appellate attorney fees.

[4] We conclude that Allied’s claim was not barred by res judicata or waiver

because the issue of attorney fees could not necessarily have been raised during

trial, such that res judicata or waiver should apply. We also conclude that the

trial court did not err when it denied Cavallo a jury trial because Cavallo did

not have a right to a jury trial on the reasonableness of attorney fees; nor did the

trial court abuse its discretion in determining a reasonable amount of attorney

fees to award to Allied. Finally, because it is undisputed that the contract

between Cavallo and Allied provided for recovery of attorney fees, we grant

Allied’s request for appellate attorney fees and remand for further proceedings

so that the trial court may determine a reasonable amount.

We affirm and remand for further proceedings.

Issues

[5] 1. Whether Allied’s claim for attorney fees was barred by res

judicata or waiver.

2. Whether the trial court erred when it denied Cavallo’s request

to empanel a jury to decide a reasonable amount of attorney fees.

3. Whether the trial court abused its discretion in awarding Allied

attorney fees.

4. Whether Allied may recover appellate attorney fees.

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Facts

[6] Cavallo is a licensed medical doctor, and Allied is an Indiana limited liability

company that provides professional medical and surgical services. Cavallo

worked with a group called OB/GYN Associates of Northern America

(“OB/GYN”) from 2001 until late 2009, at which time Allied purchased

OB/GYN’s assets and entered into an employment agreement with Cavallo

(“the Contract”). The Contract contained a covenant not to compete, including

a fee-shifting provision applicable in the event that Allied prevailed in enforcing

the covenant not to compete.1

[7] On March 16, 2011, Allied filed a complaint against Cavallo, alleging that he

had violated the covenant not to compete by opening a competing medical

practice within twenty miles of Allied’s practice. The company requested

damages, including the costs of the action and attorney fees, as well as

1

Although Allied included alleged excerpts of the Contract in its brief, neither party included a copy of the

Contract in an appendix. We remind the parties that they are responsible for including the items necessary

for review in their respective appendices. See Ind. Appellate Rule 50(A)(2); App. R. 50(A)(3). Appellants

who fail to include the materials necessary for our review risk waiver of the affected issues or dismissal of the

appeal. See Nasser v. State, 727 N.E.2d 1105, 1110 (Ind. Ct. App. 2000) (finding that Appellant had waived

his sentencing argument because he had failed to include the presentence report in the record), trans. denied;

Yoquelet v. Marshall Cnty., 811 N.E.2d 826 (Ind. Ct. App. 2004) (finding that the Appellant could not prove

that the trial court erred in granting summary judgment when the Appellant failed to include all of the

documents necessary for review in its Appendix). But see App. R. 49 (stating that “[a]ny party’s failure to

include any item in an Appendix shall not waive any issue or argument”). Nevertheless, we have gleaned

evidence of the Contract’s contents from the proceedings below.

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preliminary and permanent injunctions prohibiting Cavallo from practicing at

the competing medical practice. Cavallo filed a counterclaim, arguing that he

had developed his competing medical practice with Allied’s approval and help

and that Allied had breached the Contract when it ejected him from his office,

sent him a cease and desist letter, and filed its complaint. Cavallo also

demanded a jury trial.

[8] From September 24-26, 2013, the trial court held a jury trial. At the conclusion

of the trial, the jury found in favor of Allied. It awarded the company a

judgment of $174,916.80, which did not include an amount for attorney fees

because Allied had not introduced any evidence or argument regarding its

attorney fees at trial.2 Subsequently, on October 16, 2013, Allied petitioned for

an award of attorney fees totaling $89,706.11. Cavallo objected to the petition,

arguing that the fee amount was unreasonable and that the request was

untimely because Allied should have tried the issue of attorney fees before the

jury.

2

The transcript from the underlying breach of contract trial was not requested or included in the record on

appeal. Cavallo included the preliminary jury instructions in his Appellant’s Appendix, but not the final jury

instructions. As a result, there is no evidence in the record that the jury was instructed to consider the issue

of attorney fees.

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[9] On December 18, 2013, the trial court conducted a hearing on the fee petition.

The court found that, because the Contract specified that Allied could seek

attorney fees in the event that it “prevailed” at trial, the cause of action for

attorney fees did not necessarily arise until after the jury trial. (Tr. 4). Thus,

the trial court concluded that Allied had not waived its attorney fee claim.

However, the trial court also held that Cavallo’s pre-trial jury demand still

applied to the fee claim. As a result, the trial court allowed the parties until

January 15, 2014 to decide whether they desired a second jury to be empaneled

to determine a reasonable amount of attorney fees.

[10] On January 14, 2014, Cavallo filed a response to the trial court’s ruling, in

which he requested a jury trial on the attorney fees. Allied filed an objection to

Cavallo’s jury request on February 3, 2014. It argued that the trial court should

deny the jury request because: (1) Cavallo’s previous jury demand applied only

to his counterclaim rather than to Allied’s original complaint; and (2) Cavallo

was not entitled to a jury on the reasonableness of attorney fees under Indiana

Trial Rule 38 because the attorney fee claim was an equitable issue that did not

trigger a right to a jury trial.

[11] On May 21, 2014, the trial court entered an order denying Cavallo’s jury

request and awarding Allied the $89,706.11 in attorney fees it had requested.

The trial court found, as Allied had argued, that Cavallo was not entitled to a

jury trial on the reasonableness of attorney fees under Trial Rule 38. The trial

court also concluded that the amount of Allied’s fee request was reasonable

based on the prevailing rate of legal services in the geographic location, the

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types of legal issues presented, the reputation and experience of counsel, the

time necessary to prepare for a multi-day jury trial involving professional

experts, and the types of expenses incurred. Cavallo now appeals.

Decision

[12] On appeal, Cavallo raises three issues: (1) whether Allied’s claim for attorney

fees was barred by res judicata or waiver; (2) whether the trial court erred when

it denied Cavallo’s request for a jury; and (3) whether the trial court abused its

discretion in awarding Allied attorney fees. In response, Allied raises a fourth

issue: whether we should award Allied appellate attorney fees. We will

address each of these issues in turn.

1. Res Judicata and Waiver

[13] Cavallo contends that Allied’s fee claim was barred by the doctrine of res

judicata, specifically claim preclusion, because it was “firmly interlaced with

the breach of contract claim” such that Allied should have presented evidence

on the claim at trial.3 (Cavallo’s Br. 7). He asserts that, because Allied had an

3

Cavallo appears to conflate the doctrines of res judicata and waiver as he claims that the attorney fee

request was “waived” as a result of res judicata. (Appellant’s Br. 9). Because his argument primarily

concerns res judicata, we will primarily address that issue. Nevertheless, because we find that an attorney fee

request might not ripen prior to a judgment, we conclude that Cavallo’s waiver argument also fails. Waiver

is defined as “the voluntary and intentional relinquishment of a known right.” Ryan v. Janovsky, 999 N.E.2d

895, 901 (Ind. Ct. App. 2013), trans. denied. A court may not review an issue that is not ripe. See Thomas ex

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opportunity to adjudicate the issue at trial—and, indeed, raised the issue in its

complaint—but failed to present any evidence on the fees, it could not petition

for the fees after the trial court entered the final judgment. In response, Allied

argues that its petition was timely, and therefore not barred by res judicata,

because its request for fees was not ripe until it became a prevailing party.

Allied notes that requesting attorney fees post-judgment is a widely-accepted

procedure.

[14] Preliminarily, we must note that Cavallo objected to Allied’s petition on

grounds of waiver, not res judicata, below and therefore has waived any res

judicata argument on appeal. Boatner v. State, 934 N.E.2d 184, 187 (Ind. Ct.

App. 2010) (stating that a party may not object at trial on one ground and seek

reversal on appeal based on another ground and that doing so results in waiver).

Waiver notwithstanding, we do not agree that Allied was barred from

requesting attorney fees post-judgment on the basis of res judicata.

[15] The “doctrine of res judicata prevents the repetitious litigation of disputes that

are essentially the same.” Kelly v. Kravec, 999 N.E.2d 433, 441 (Ind. Ct. App.

rel. Thomas v. Murphy, 918 N.E.2d 656, 662-63 (Ind. Ct. App. 2009), reh’g denied, trans. denied. Thus, because

we conclude here that the issue of attorney fees was not ripe below, Allied did not have the known right to

raise the issue of attorney fees and, therefore, could not have waived it.

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2013) (quoting Indianapolis Downs, LLC v. Herr, 834 N.E.2d 699, 703 (Ind. Ct.

App. 2005), trans. denied). It is divided into two branches: claim preclusion,

which Cavallo raises here, and issue preclusion. Dev. Serv. Alt., Inc. v. Ind.

Family and Soc. Serv. Admin., 915 N.E.2d 169, 179 (Ind. Ct. App. 2009), trans.

denied. Claim preclusion is relevant when a “‘final judgment’” on the merits has

been rendered in a prior action, and it acts to bar a subsequent action on the

same claim between the parties. Kelly, 999 N.E.2d at 441(quoting Indianapolis

Downs, LLC, 834 N.E.2d at 703). A “‘final judgment’” is one which “‘disposes

of all claims as to all parties[.]’” Id. (quoting Ind. Appellate Rule 2(H)(1)); see

also Bueter v. Brinkman, 776 N.E.2d 910, 912-13 (Ind. Ct. App. 2002) (quoting

Hudson v. Tyson, 383 N.E.2d 66, 69 (1978)) (“A final judgment ‘disposes of all

issues as to all parties, to the full extent of the court to dispose of the same, and

puts an end to the particular case as to all of such parties and all of such

issues.’”).

[16] The following four factors must be satisfied in order for claim preclusion to

apply:

(1) the former judgment must have been rendered by a court of

competent jurisdiction; (2) the former judgment must have been

rendered on the merits; (3) the matter now in issue was, or could

have been, determined in the prior action; and (4) the

controversy adjudicated in the former action must have been

between the parties to the present suit or their privies.

Evergreen Shipping Agency Corp. v. Djuric Trucking, Inc., 996 N.E.2d 337, 340 (Ind.

Ct. App. 2013) (quoting Hilliard v. Jacobs, 957 N.E.2d 1043, 1047 (Ind. Ct. App.

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2011), reh’g denied, trans. denied, cert. denied), reh’g denied, trans. denied. The factor

that Cavallo specifically raises is that “the matter now in issue was, or could

have been, determined in the prior action.” Id. He claims that, because Allied

raised its fee claim in its complaint, it “could have” adjudicated the matter

below and, therefore, it should have been barred from doing so after the

judgment was entered. Id.

[17] The test generally used for determining whether or not an issue “could have

been” decided previously, and as a result should be barred, is the identical

evidence test—“whether identical evidence will support the issues involved in

both actions.” Hilliard, 957 N.E.2d at 1047. Here, the determination of

Allied’s breach of contract claim depended on the evidence regarding the

Contract and Cavallo’s performance of the Contract. While Allied’s attorney

fee claim also depended on the language of the Contract, it required additional

evidence that the breach of contract claim did not require. Specifically, an

award of attorney fees, even pursuant to a contract, must be reasonable. Stewart

v. TT Commercial One, LLC, 911 N.E.2d 51, 58 (Ind. Ct. App. 2009), trans.

denied. Rule 1.5 of the Indiana Rules of Professional Conduct sets out a number

of factors for determining a reasonable fee, including:

(1) The time and labor required, the novelty and difficulty of the

questions involved, and the skill requisite to perform the service

properly;

(2) The likelihood, if apparent to the client, that the acceptance of

the employment will preclude other employment by the lawyer;

(3) The fee customarily charged in the locality for similar legal

services;

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(4) The amount involved and the results obtained;

(5) The time limitations imposed by the client or by the

circumstances;

(6) The nature and length of the professional relationship with

the client;

(7) The experience, reputation, and ability of the lawyer or

lawyers performing the services; and

(8) Whether the fee is fixed or contingent.

Daimler Chrysler Corp. v. Franklin, 814 N.E.2d 281, 287-88 (Ind. Ct. App. 2004).

In light of these factors, different evidence was necessary to determine Allied’s

request for attorney fees than was necessary to prove the underlying breach of

contract claim.

[18] Moreover, we agree with Allied and the trial court that Allied was not required

to produce evidence of its attorney fees at trial because the issue was not

necessarily ripe for adjudication. Allied argues that under the contract it could

only seek attorney fees if it were a prevailing party, and it could not become a

prevailing party before it was adjudicated as such. Regardless of the terms of

the contract, however, our Indiana Supreme Court has held that “[a] request for

attorney[] fees almost by definition is not ripe for consideration until after the

main event reaches an end. Entertaining such petitions post-judgment is

virtually the norm.” R.L. Turner Corp. v. Town of Brownsburg, 963 N.E.2d 453,

460 (Ind. 2012). This holding is consistent with one of the factors the trial court

must consider when determining whether an attorney fee is reasonable—the

time and labor required for the matter. See Daimler Chrysler Corp., 814 N.E.2d at

287-88. We conclude that, logically, an attorney may not know how much

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time and labor a matter will require until the matter has reached its conclusion.

Therefore, we are unwilling to hold that a party must request attorney fees

before a matter has reached its conclusion.4 Instead, in light of the different

evidence necessary to prove Allied’s breach of contract claim and the

reasonableness of its attorney fees, as well as the fact that Allied’s attorney fee

petition was not necessarily ripe before the end of the jury trial, we conclude

that Allied’s attorney fees were not an issue that “could have been determined

in the prior action” such that the issue should be barred under the doctrine of

res judicata. Evergreen Shipping Agency Corp., 996 N.E.2d 337 at 340.

2. Request for a Jury

[19] Next, Cavallo argues that the trial court erred in denying his request for a jury

to determine reasonable attorney fees. First, he asserts that Allied’s objection to

his jury request was not timely because the trial court ordered that the parties

respond regarding the necessity of a jury trial by January 15, 2014, and Allied

did not file an objection to Cavallo’s jury demand until February 3, 2014.

Alternatively, he argues that the claim for attorney fees was contractually-based

4

We are not holding that a request for attorney fees is never ripe before the conclusion of a matter. There

may be factual circumstances permitting a party to request and introduce evidence of attorney fees at trial.

However, that is not the case before us.

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and therefore legal, rather than equitable, in nature, such that he had a right

under Trial Rule 38 to a jury trial on the issue.

[20] In response, Allied contends that it was within the trial court’s discretion to

consider the objection to Cavallo’s jury demand. Allied also argues that: (1)

Cavallo’s pre-trial jury demand only applied to his counterclaim; and (2) the

determination of reasonable attorney fees was equitable, rather than legal, in

nature, and thus Cavallo did not have a right to a jury trial.

[21] Preliminarily, we must address Cavallo’s procedural argument that the trial

court erred in considering Allied’s objection to his jury request because it was

untimely. In its December 18, 2013 hearing on the fee petition, the trial court

determined that Cavallo’s pre-trial jury demand was applicable to the post-trial

fee claim, even though the trial had already concluded. As a result, the trial

court allowed the parties until January 15, 2014 to decide whether they desired

a second jury to be empaneled to determine the issue of reasonable attorney

fees. On January 14, 2014, Cavallo filed a response to the trial court’s ruling, in

which he requested a jury trial on the attorney fees. Allied did not object to this

response until February 3, 2014, well after the trial court’s December 18 hearing

and the court’s January 15 deadline. As a result, Cavallo now argues that the

trial court could not consider Allied’s objection because it was untimely.

[22] However, even without consideration of Allied’s objection, the trial court still

had discretion to change its ruling regarding the applicability of Cavallo’s pre-

trial jury demand. We have previously concluded that a trial court has wide

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discretion to correct errors, and we will reverse any such correction only for an

abuse of that discretion. Paulsen v. Malone, 880 N.E.2d 312, 313 (Ind. Ct. App.

2008). Accordingly, we conclude that it was within the trial court’s discretion

to correct its decision in the December 18 hearing that Cavallo’s pre-trial jury

demand applied to the fee claim.

[23] Next, Cavallo argues that the trial court erred in denying his request for a jury

because he had a right to a jury trial. In support of this argument, he cites

Parrish v. Terre Haute Sav. Bank, 431 N.E.2d 132 (Ind. Ct. App. 1982), reh’g

denied, trans. denied. In Parrish, the shareholders of R.P.S. Industries, Inc. signed

a promissory note in exchange for a short term capital loan from Terre Haute

Savings Bank. Id. at 133-34. The promissory note provided for payment of

reasonable attorney fees in the event of a default on the loan. Id. at 138. A few

months later, R.P.S. Industries did default on the note, and Terre Haute

Savings Bank filed a claim to recover the remaining amount owed, as well as

reasonable attorney fees. Id. at 134. The jury awarded the Bank a verdict for

damages and attorney fees in the amount of $5,000. Id. at 138, 139. The

attorney fees award was based on testimony from the Bank’s Collection

Manager that the Bank’s attorney had told her his fee would be $5,000. Id. at

139.

[24] On appeal, we reversed the award of attorney fees, finding that the Bank

Collection Manager’s testimony regarding what the attorney had told her he

would charge was not sufficient evidence of the reasonableness of the fees. Id.

at 139. We noted that, because the jury did not have expertise to determine the

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value of the attorney’s work, it required more evidence or testimony of the

value in order to determine a reasonable fee. Id. As a result, we remanded to

the trial court to determine a reasonable fee. Id.

[25] On rehearing, the Bank requested clarification regarding whether, on remand,

the issue of reasonable attorney fees needed to be determined by a jury or the

trial court. Parrish v. Terre Haute Sav. Bank, 438 N.E.2d 1, 2 (Ind. Ct. App.

1982) (“Parrish II”). In our analysis, we cited Trial Rule 39, which provided

that “[w]hen trial by jury has been demanded as provided in Rule 38, the action

shall be designated upon the docket as a jury action. Issues upon which a jury

trial is so demanded shall be tried by jury . . . .” T.R. 39. Based on this

language, we held that, since the shareholders had demanded a jury trial, they

were entitled to a jury trial on the issue of reasonable attorney fees upon

remand. Id. at 3.

[26] Allied argues that we should not rely on Parrish II for three reasons: (1)

according to Allied, Parrish is distinguishable from the instant case because,

there, the attorney fees “were not merely a recoverable cost if the bank

succeeded in enforcing its rights under the promissory note, but rather they

were a part of the bank’s damages[;]” (2) Cavallo demanded a jury trial with

respect to his counter-claim rather than Allied’s claim; and (3), as the trial court

concluded, Cavallo did not have a right to a jury trial under Trial Rule 38.

[27] With respect to Allied’s first argument, that the attorney fees in Parrish were

part of the Bank’s damages rather than a recoverable cost, we do not find a

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distinction between the two cases. In both cases, the attorney fees were

contractual in nature, and the prevailing party had to enforce its rights under

the legal instrument in order to recover attorney fees. In the case of Parrish, the

Bank had to prove that the shareholders had defaulted on the promissory note,

and here Allied had to prove that Cavallo had breached the Contract. See

Parrish, 431 N.E.2d at 138 (noting that the promissory note provided for

payment of reasonable attorney fees in the event of default).

[28] Next, Allied claims that Cavallo claimed a jury trial with respect to his

counterclaim rather than Allied’s claim. Specifically, Allied argues that, under

Trial Rule 38(B), Cavallo was required to make a jury demand as to Allied’s

breach of contract claim within ten days of answering it, but he did not.

Instead, according to Allied, he filed a separate counterclaim more than ten

days after answering Allied’s complaint and therefore waived his right to

demand a jury trial on the complaint. We do not find this argument persuasive

because it is apparent from the record that Cavallo filed his counterclaim

requesting the jury trial the same day that he filed his answer to Allied’s

complaint and, so, was within the ten day time period. Further, because the

trial court conducted a jury trial on the issues Allied raised in its complaint, we

conclude that it has waived its objection. Kenwal Steel Corp. v. Seyring, 903

N.E.2d 510. 516 (Ind. Ct. App. 2009) (stating that waiver is “an election by one

to forego some advantage he might have taken or insisted upon”).

[29] Finally, Allied argues that we should not rely on Parrish II because the

determination of a reasonable amount of attorney fees sounds in equity and

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Cavallo thus did not have a right to a jury on that issue under Trial Rule 38.

This argument was also the basis for the trial court’s denial of Cavallo’s jury

request, as the trial court found that Cavallo had not proven that the

determination of a reasonable amount of attorney fees would have been an

action at law—as opposed to an action in equity—prior to 1852 such that it

would receive a jury trial under Trial Rule 38. This argument is based on the

language of Trial Rule 38, which provides that:

Issues of law and issues of fact, in causes that prior to the

eighteenth day of June, 1852, were of exclusive equitable

jurisdiction shall be tried by the court; issues of fact in all other

causes shall be triable as the same are now triable. In case of the

joinder of causes of action or defenses which, prior to said date,

were of exclusive equitable jurisdiction with causes of action or

defenses which, prior to said date, were designated as actions at

law and triable by jury—the former shall be triable by the court,

and the latter by a jury, unless waived.

Under Trial Rule 39, [i]ssues upon which a jury trial is so demanded [under

Trial Rule 38] shall be tried by a jury,” subject to certain exceptions listed in the

rule. Allied has not alleged that any of the Trial Rule 39 exceptions apply here.

[30] In Songer v. Civitas, 771 N.E.2d 61 (Ind. 2002), our Indiana Supreme Court went

to great lengths to clarify the issue of when a party is entitled to a jury trial

under Trial Rule 38. There, the court explained that:

The right to a jury trial holds a special place in the system of

justice, and we guard it against encroachment. That said, it has

long been agreed that Article I, Section 20 [of the Indiana

Constitution] serves to preserve the right to a jury trial only as it

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existed at common law. Drawing as we do from English

common law roots and England’s symbiotic system of law courts

and equity courts, it is a well-settled tenet that a party is not

entitled to a jury trial on equitable claims. . . . Trial Rule 38(A) is

thus necessarily the starting point. The policy described by Rule

38(A) has existed in substantially the same form for over 120

years, commencing as a legislative enactment. See Rev. St. 1894,

Sec. 412; Rev. St. 1881, Sec. 409 (nearly identical statutory

forerunners of Trial Rule 38(A)). This legislative enactment and

the later judicial rule have informed the historic understanding of

the Constitutions meaning on the subject.

Id. at 63-64. In other words, causes of action that would have been tried in

equity before 1852 may not be tried before a jury, and causes of action that

would have been considered “legal” as opposed to equitable before 1852 may

be tried before a jury. See id. Accordingly, the question we must consider is

whether the determination of a reasonable amount of attorney fees is equitable

in nature.

[31] This issue has never been addressed in Indiana. However, we find federal

precedent on the issue of a right to a jury trial under the Seventh Amendment of

the United States Constitution persuasive. As under Trial Rule 38 and the

Indiana Constitution, the Seventh Amendment protects the right to a jury trial

in “[s]uits at common law,” U.S. Const. amend XII, which our Indiana

Supreme Court has explained “refers to ‘suits in which legal rights [are] to be

ascertained and determined, in contradistinction to those where equitable rights

alone [are] recognized, and equitable remedies [are] administered.’” Chauffeurs,

Teamsters and Helpers, Local No. 391 v. Terry, 494 U.S. 558, 565 (1990) (quoting

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Parsons v. Bedford, 28 U.S. 433, 447 (1830)) (emphasis in original). The nature

of the issues presented and the remedies sought determines whether an action

qualifies as “legal.” J.R. Simplot v. Chevron Pipeline Co., 563 F.3d 1102, 1115

(10th Cir. 2009).

[32] Traditionally, an ordinary breach of contract claim is considered legal in nature.

Id. However, federal circuit courts have held that attorney fees awarded as an

element of “costs” to a prevailing party in a breach of contract claim are not

legal in nature. Id. In part, this difference is based on the nature of an attorney

fee award. The general rule regarding attorney fees—known as the “American

Rule”—is that each party bears its own attorney fees. McGuire v. Russell Miller,

Inc., 1 F.3d 1306, 1312 (2nd Cir. 1991). Parties may agree by contract to permit

recovery of attorney fees. Id.; Stewart, 911 N.E.2d at 58. However, because

there is no common law right to recover attorney fees, federal courts have held

that the Seventh Amendment does not guarantee a trial by jury to determine the

amount of reasonable attorney fees. Resolution Trust Corp. v. Marshall, 939 F.2d

274, 279 (5th Cir. 1991); Empire State Ins. Co. v. Chafetz, 302 F.2d 828, 830 (5th

Cir. 1962). See Eastern Trading Co. v. Refco, Inc., 229 F.3d 617, 627 (7th Cir.

2000) (finding that the determination of a reasonable award of attorney fees

when the award was contractually-based was an issue “to be resolved after the

trial on the basis of the judgment entered at trial,” not an issue triable by the

jury), amended on denial of reh’g.

[33] Notably, the Second Circuit has recognized a distinction in cases where an

attorney fee claim is based on a contractual provision. In McGuire, the Second

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Circuit Court of Appeals distinguished between the determination of whether a

party may recover attorney fees at all and the determination of the reasonable

amount of fees. McGuire, 1 F.3d at 1313. The court said that a party has a right

to a jury trial on the former but not the latter. Id. Its rationale was that:

an action pursuant to a contract presents traditional common-law

contractual issues which should be submitted to a jury . . . but []

the subsequent determination of the amount of attorneys’ fees

owed presents equitable issues of accounting which do not

engage a Seventh Amendment right to a jury trial.

* * *

[D]efendants’ counterclaim for attorneys’ fees was a claim for a

contractual “legal right,” and plaintiff had the right to have a jury

decide whether defendants should recover attorneys’ fees under

the agreement. However, the subsequent action in this case to

determine a reasonable amount of attorneys’ fees was not an

action to enforce “legal rights” pursuant to a contract; rather,

such an action was equitable in nature.

Id. at 1314-15.

[34] Here, Cavallo does not dispute that Allied may recover attorney fees under the

Contract. Therefore, the distinction that the Second Circuit recognized is not

relevant. Instead, it is only relevant that federal courts have held that a party

does not have a right to a trial by jury to determine the reasonable amount of

fees. See Resolution Trust Corp., 939 F.2d at 279; Empire State Ins. Co., 302 F.2d

at 830; McGuire, 1 F.3d at 1313. In light of this precedent, we conclude that

Cavallo did not have a right to a jury trial to determine a reasonable amount of

attorney fees. Because, as stated in the federal jurisprudence, such a right was

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not recognized at common law and is generally considered equitable in nature,

we conclude that his request would likewise fail under Trial Rules 38 and 39.5

[35] We note that this conclusion is seemingly at odds with our conclusion in Parrish

II. However, here we are only addressing whether a party has a right to a jury

5

Claims in equity can be traced back to England. Henry L. McClintock, HANDBOOK OF THE PRINCIPLE OF

EQUITY 1 (2d ed. 1948). Traditional law courts developed rigid procedures for accepting and deciding cases

based on earlier cases, which became known as the common law. Id. It was not uncommon for citizens to

conclude that the common law courts were “new and crude, undeveloped and incomplete, harsh and

unrefined in many of its details.” Charles Herman Kinnane, A FIRST BOOK ON ANGLO-AMERICAN LAW 231

(1932). In response, the king “exercised the prerogative of interfering with the ordinary legal procedure to

meet the needs of special cases.” McClintock at 5. Employing an independent sense of moral justice, these

royal chancellors would hear and decide cases without regard for the common law. Kinnane at 231. These

chancery courts became known as courts of equity. Id. The common law courts, believing in a strict

interpretation of rules of pleading and procedure, believed that the equity courts were a royal encroachment

on the independence of the “true” judiciary. Id. The suspicion surrounding the king’s equity courts, followed

the colonists to America. Id. In fact, the colonies of Massachusetts and Pennsylvania did not establish

separate equity courts seemingly unable to “forget how the Court of Chancery had once been made into a

tool for the furtherance of royal power.” Id. at 323. However, most colonial legislatures understood the

value of allowing judges to fashion remedies outside the rigid bounds of common law and statutes, and most

states have subsequently established a single system of courts with jurisdiction to hear both legal and

equitable claims. Id. Eventually, our Federal Constitution enshrined this ideal in Article III, Section 2,

Clause 1, which states that the “judicial Power shall extend to all Cases, in Law and Equity . . . .” In 1938,

the United States Supreme Court and Congress adopted the Federal Rules of Civil Procedure which

established a single system for resolving legal and equitable claims. “Purely procedural impediments to the

presentation of any issue by any party, based on the difference between law and equity, was destroyed.” Ross

v. Bernhard, 396 U.S. 531, 539-540 (1970). Indeed, Indiana’s Constitution of 1816 provided that the judicial

power in this state shall extend to “matters of law and equity . . . .” IND. CONST. of 1816, art. V, § 1. While

this language was removed from Indiana’s current 1851 Constitution, “the General Assembly, following the

recommendations of a Civil Code Study Commission created in 1967, repealed a variety of antiquated trial

procedural statutes and enacted “rules of civil procedure” that were modeled substantially on the Federal

Rules of Civil Procedure. Budden v. Bd. of School Com’rs of City of Indianapolis, 698 N.E.2d 1157, 1163 (Ind.

1998). The upshot of this history behind the elimination of most procedural differences between legal and

equitable claims is that the most important distinction remains: whether a party is entitled to a jury trial for

an equitable claim. Because the determination of a reasonable amount of attorney fees is an issue that was

not available at common law, it is equitable and does not carry an entitlement to a jury trial.

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trial to determine a reasonable amount of attorney fees under Trial Rule 38.

There are instances where a jury may decide whether the amount of an attorney

fee award is reasonable, such as where the parties have stipulated to a jury

determination on the issue or contractually agreed to such a jury determination.

47 AM. JUR. 2D Jury § 47 (2015). We are only addressing a situation where (1)

attorney fees have been claimed pursuant to a contractual provision and (2) the

parties do not have an agreement that a jury may decide the reasonable amount

of attorney fees.

3. Attorney Fees

[36] Alternatively, Cavallo argues that the trial court abused its discretion in

awarding Allied attorney fees. His argument has two parts: (1) that the trial

court abused its discretion in awarding the fees without holding a hearing and

(2) that the trial court abused its discretion because the amount of fees it

awarded was not reasonable.

[37] When reviewing an award of attorney fees, we apply the clearly erroneous

standard to factual determinations, review legal conclusions de novo, and

determine whether the decision to award fees and the amount of the award

constituted an abuse of the trial court’s discretion. Smith v. Foegley Landscape,

Inc., 30 N.E.3d 1231, 1239 (Ind. Ct. App. 2015). This is because a trial court

has broad discretion in awarding attorney fees. Benaugh v. Garner, 876 N.E.2d

344, 347 (Ind. Ct. App. 2007), trans. denied. We will find an abuse of that

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discretion only when the trial court’s decision is clearly against the effect of the

facts and circumstances before the court. Smith, 30 N.E.3d at 1239.

[38] First, Cavallo argues that the trial court abused its discretion because it failed to

hold a hearing to determine the reasonableness of attorney fees. Although the

trial court held a hearing on the petition on December 18, 2013, the primary

issue at the hearing concerned whether Cavallo had a right to a jury trial.

Neither of the parties presented any evidence or argument regarding the

reasonableness of Allied’s requested fees of $89,706.11. However, Allied did

attach to its petition affidavits extensively documenting its counsels’ time on the

case. In spite of this evidence, Cavallo argues that the trial court’s decision was

an abuse of discretion absent a hearing.

[39] Cavallo cites to Stewart to support his argument that a trial court must hold a

hearing to determine reasonable attorney fees. However, we find that the

Stewart Court remanded for a hearing on the issue of attorney fees because there

was no evidence in the record of the time the attorney had expended or the

rates charged by the attorney, not because the trial court had failed to hold a

hearing. See Stewart, 911 N.E.2d at 59. Instead, we find the language in Wilcox

Lumber Co., Inc. v. The Andersons, Inc., 848 N.E.2d 1169, 1171 (Ind. Ct. App.

2006), persuasive. There, we stated that “although a hearing on attorney fees is

advisable in complex cases, it is not required in routine cases[.]” Id. (emphasis

added). Even though the instant case is arguably complex, not routine, this

language in Stewart indicates that a hearing is merely “advisable”—not

required—even in a complex case.

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[40] This interpretation is consistent with our holding in Nesses v. Specialty Connectors

Co., Inc., 564 N.E.2d 322, 328 (Ind. Ct. App. 1990). There, although the trial

court did hold a hearing on attorney fees, the parties did not provide a transcript

of the hearing on appeal. Id. Even without the transcript, we held that the

judge’s knowledge of the proceedings and counsels’ submitted affidavits of

billing statements, which included the dates, times, fees, and nature of the

services rendered, were sufficient to determine reasonable attorney fees. Id. at

326, 328. In light of this precedent, we conclude that the detailed billing

statements Allied provided the court here, combined with the trial court’s

knowledge of the proceedings, were sufficient for the trial court to determine

reasonable attorney fees. Accordingly, the trial court did not abuse its

discretion by failing to hold another hearing on the fees.

[41] Second, Cavallo argues that the amount of attorney fees the trial court awarded

Allied was unreasonable because it was “a fairly straightforward contract

dispute with no real novel questions of law” and because the trial court did not

consider the Indiana Rules of Professional Conduct’s factors for determining

the reasonableness of an attorney fee award. (Cavallo’s Br. 13). We review the

amount a trial court awards for attorney fees for an abuse of discretion. Storm

Damage Specialists of America v. Johnson, 984 N.E.2d 660, 667 (Ind. Ct. App.

2013). An abuse of discretion occurs when the trial court’s decision is clearly

against the logic and effect of the facts and circumstances before it. Id.

[42] Notably, even where, as here, the parties have agreed to attorney fees by

contract, the award of attorney fees must be reasonable. Bruno v. Wells Fargo

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Bank, N.A., 850 N.E.2d 940, 950 (Ind. Ct. App. 2006). Judicial notice of the

reasonableness of attorney fees is permitted in certain routine actions, such as

dissolutions of marriage, in which modest fees are sought. Smith, 30 N.E.3d at

1240. However, where the amount of the fee is not inconsequential, there must

be objective evidence of the nature of the legal services and the reasonableness

of the fee. Id.

[43] This Court has noted that “the hours worked and the rate charged are a

common starting point for determining the reasonableness of a fee,” but a trial

court may consider a number of factors. Stewart, 911 N.E.2d 51 at 59. The trial

court may look at the responsibility of the parties in incurring the attorney fees,

and the trial judge has personal expertise he or she may use in determining

reasonable attorney fees. Weiss v. Harper, 803 N.E.2d 201, 208 (Ind. Ct. App.

2003). In addition, as stated above, Indiana Professional Conduct Rule 1.5(a)

delineates the following factors for determining a reasonable fee:

(1) The time and labor required, the novelty and difficulty of the

questions involved, and the skill requisite to perform the service

properly;

(2) The likelihood, if apparent to the client, that the acceptance of

the employment will preclude other employment by the lawyer;

(3) The fee customarily charged in the locality for similar legal

services;

(4) The amount involved and the results obtained;

(5) The time limitations imposed by the client or by the

circumstances;

(6) The nature and length of the professional relationship with

the client;

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(7) The experience, reputation, and ability of the lawyer or

lawyers performing the services; and

(8) Whether the fee is fixed or contingent.

[44] Here, Cavallo argues that the trial court abused its discretion because it did not

consider each of the factors listed in Indiana Professional Conduct Rule 1.5(a)

and because the amount awarded was unreasonable. We disagree. First,

Cavallo does not cite any authority for the proposition that the trial court was

required to consider every factor in Rule 1.5(a), and we do not find any such

requirement. To the contrary, the first comment to the rule provides that “[t]he

factors specified in (1) through (8) are not exclusive. Nor will each factor be

relevant in each instance.” Ind. Professional Conduct Rule 1.5(a), cmt.

Similarly, our Indiana Supreme Court has stated that “our Rules of Professional

Conduct give us guidance as to factors to be considered in determining the

reasonableness of attorney fees.” Order for Mandate of Funds Montgomery Cnty.

Council v. Milligan, 873 N.E.2d 1043, 1049 (Ind. 2007) (emphasis added). This

language does not imply a mandatory requirement.

[45] In addition, it is clear that the trial court did consider several of the factors set

out in the rules of professional conduct. The court found that the amount of

attorney fees requested was

based on the prevailing rate of legal services in this geographical

location, and that the request for fees and expenses [was]

otherwise reasonable based on the types of legal issues presented,

the reputation and experience of counsel, the time necessary to

prepare for a multi-day jury trial involving professional experts,

and the types of expenses incurred.

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(App. 20). Also, the court reviewed affidavits Allied’s counsel had submitted

that extensively documented the work each of Allied’s attorneys performed on

the matter, including the hours they worked, the hourly rates they charged, the

nature of their services, and the legal issues involved. In light of this evidence,

we conclude that the trial court did not abuse its discretion in determining the

reasonableness of the attorney fees it awarded Allied.

4. Appellate Attorney Fees

[46] Finally, Allied requests that we award it appellate attorney fees for the work

that its attorneys completed in this appeal. We have previously held that when

a contract provision provides that attorney fees are recoverable, appellate

attorney fees may also be awarded. Humphries v. Ables, 789 N.E.2d 1025, 1036

(Ind. Ct. App. 2003). As it is undisputed here that the Contract provides for

attorney fees in the event that Allied prevails in enforcing the Contract, and

Allied has prevailed on appeal, we grant Allied’s request and remand to the trial

court for a determination of reasonable appellate attorney fees to award Allied.

[47] Affirmed and remanded for further proceedings.

Bailey, J., and May, J., concur.

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