# Petition for Writ of Certiorari — Cadle Co. II, Inc. v. Chasteen

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1993
- **Citation:** 510 U.S. 865

## Text

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JUL 16 1998

OFFICE LU: [HE CLERK
—

ans

NO.

IN THE
SUPREME COURT OF THE UNITED STATES

October Term, 1993

THE CADLE II COMPANY, INC., Petitioner,
Ve

CHARLES R. CHASTEEN,
BILL M. CARTER,
JIMMY J. HOLMES,
AND LINDELL D. ROBERTS, Respondents.

PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT
OF APPEALS FOR THE TENTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

BRUCE F. KLEIN
ATTORNEY FOR PETITIONER

205 N.W. 63RD, SUITE 160
OKLAHOMA CITY, OKLAHOMA 73116
(405) 848-8842

Si MATS SIS
AEA SI Ab eh Raat tam38 rid, es ;

QUESTIONS PRESENTED FOR REVIEW

A. Whether the United States
Magistrate and the United States Court of
Appeals for the Tenth Circuit erred by
finding that an award of attorney’s fees
for Respondents’ counsel of $62.50 per
hour was unreasonable when Respondents’
counsel agreed to accept the sum of
$62.50 per hour as compensation during
the pending litigation?

B. Whether 12 0.S. § 936 which
provides that the “prevailing party"
shall be allowed a reasonable attorney’s
fee to be set by the court and to be
taxed and collected as costs in any civil
action to recover on a Note requires an
imposition of an award of attorney’s fees

to the prevailing party to reimburse the

prevailing party for only the amount of

attorney’s fees the prevailing party has
incurred?

Cc. If the Court does award $125.00
as the only reasonable attorney fee, do
the Respondents get to keep the extra
$62.50 and only pay $62.50 to the
attorney or does the attorney get twice

his fee?

ii

LISTED PARTIES TO THE PROCEEDINGS IN THE

COURT BELOW

The caption of the case in this
Court contains the names of all of the
parties to the proceeding in the United

States Court of Appeals for the Tenth

Cireuit.
TABLE OF CONTENTS

PAGE
Question Presented for Review ..... i
List of Parties to the Proceedings
eS” re © ot
Ee
Statement of Jurisdiction ....... 2
Constitutional Provisions, Treaties,
Statutes, Rules and Regulations
DT URS 6 6 « 6 6 + 6s ts ew ew e 8
El |
Reasons for Granting Writ ...... 10

iii

COIR 6 6 sk ke et th leh we ee 29

BempenGist «os tt KK 6 MRO eC aS
TABLE OF AUTHORITIES
STATUTES
a ee ae es en er rere
26 G.8.6. S$ 293900) ea A Oe ee
196.8. 3 906 Ac wn we ee Se
CASES

Blum v. Stenson, 465 U.S. 886, 893-94,
104 S.Ct. 1541, 1546, 79 L.Ed. 2d 891,
895 (1984) ° . 2s 2 6 © £ €5:8 av, ae

Pennsylvania v. Delaware Valley Citizens’
Counsel For Clean Air, 478 U.S. 546, 106

S.Ct. 3088, 92 L.Ed. 2d 439

(1986) (Delaware Valley I) ..... . 14

Vanegas v. Mitchell, 110 S. Ct. 1679,
1663, 1684 (1990) . . «+» sss 28; 23

Johnson v. Georgia Highway Express, 488
F.26 7id, 7Fi® (3G Cites 2976) « 4 os 15

Save Our Cumberland Mountains, Inc. v.
Hodel, 857 F.2d 1516, 1528-30

(®.C. Cir. 1988)

ote 6 6 -e -o et e eee > ee © Pee 5 ee 2) ee

Florida Rock Industries, Inc. v. United
States, 9 Cl. Ct. 285, 288, 290 (1985)
a Se a See ee Ras 235 290 Bes OO

iv

TF

IN THE SUPREME COURT OF THE UNITED STATE

OCTOBER TERM, 1993

THE CADLE II COMPANY, INC., Petitioner,
Vv.

CHARLES R. CHASTEEN,
BILL M. CARTER,
JIMMY J. HOLMES,
AND LINDELL D. ROBERTS, Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT

OF APPEALS FOR THE TENTH CIRCUIT

The Cadle Compary II, Inc., the
Petitioner herein, respectfully prays
that a writ of certiorari issue to review
the judgment of the United States Court
of Appeals for the Tenth Circuit, entered
in the above-entitled case on March 29,

1993.

OPINIONS BELOW

The Opinion of the United States
Court of Appeals for the Tenth Circuit,
whose Judgment is herein sought to be
reviewed, was rendered on March 29, 1993,
and entered on March 29, 1993, in Case
Number 92-6318, is unreported and is
reprinted in the Appendix hereto, infra,
pages 1-10. The prior Order of the United
States Magistrate Judge of the United
States District Court for the Western
District of Oklahoma, in Case Number CIV-
90-1270-R, entered on August 26, 1993, is
unreported and is reprinted in the
Appendix hereto, infra, pages 1-16.

STATEMENT OF JURISDICTION

The Judgment of the Court of Appeals

was entered on March 29, 1993. The

Petitioner, The Cadle Company II, Inc.,
timely filed its Petition For Rehearing

on April 12, 1993. The United States

eT |

Court of Appeals denied the Petitioner’s
Petition For Rehearing on April 19, 1993.
The jurisdiction of this Court is invoked
pursuant to 28 U.S.C. § 1254(1).
CONSTITUTIONAL PROVISIONS, TREATIES,
STATUTES, RULES AND REGULATIONS INVOLVED
12 0.8. § 936
ATTORNEY’S FEES TAXED AS COSTS IN ACTION
ON CERTAIN

ACCOUNTS, BILLS AND CONTRACTS.

In any civil action to recover on an
open account, a statement of account,
account stated, note, bill, negotiable
instrument, or contract relating to the
purchase or sale of goods, wares, or
merchandise, or for labor or services,
unless otherwise provided by law or the
contract which is the subject to! the

action, the prevailing party shall be

™to" should be "of",

3

allowed a reasonable attorney fee to be '
set by the court, to be taxed and
collected as costs.

STATEMENT OF THE CASE

The Petitioner, The Cadle Company,
II, Inc. ("Petitioner") brought this
action in the United States District
Court for the Western District of
Oklahoma on August 7, 1990, invoking the
jurisdiction of the District Court
pursuant to 28 U.S.C. § 1332(a)(1), as
the amount in controversy exceeded
$50,000.00 and there was diversity of
citizenship between the Petitioner and
Respondents.

The Petitioner sought to enforce
payment of the balance of a promissory
note executed and delivered by a
corporate debtor, Dayspring Church, Inc.,
to the Oklahoma National Bank & Trust

Company from the four Respondents. (The

eo

corporate debtor, Dayspring Church is not
a party to the litigation.) A jury trial
was held in the above-styled matter
beginning March 18, 1991, continuing on
March 21, 1991, and concluding on March
22, 1991. The jury returned a verdict
for the Respondents, and awarded the
Petitioner nothing on its Complaint.
(The Petitioner timely appealed the jury
verdict. The Court of Appeals affirmed
the jury’s verdict on January 23, 1992.)
Sometime during the pendency of the
District Court proceedings, Respondents
and their attorney agreed to a reduction
in the hourly rate charged. The
agreement for a reduction to $62.50 per
hour was retroactive to the beginning of
the case. After Respondents were
Successful at trial, Respondents’
attorney requested attorney’s fees at the

rate of $125.00 per hour.

|

On April 8, 1991, the Respondents
filed their Application To Tax Attorney’s
Fees Against The Plaintiff. The
Petitioner filed its Objection To The
Defendants’ Application To Tax Attorney’s
Fees Against Plaintiff on April 23, 1991.
Petitioner argued that Defendants were
not entitled to attorney’s fees because
guaranty agreements were not within the
Class of contracts that 12 0.S. § 936
authorized an award of attorney’s fees to
the prevailing party. Petitioner further
argued that the Court should be limited
to the rate of $62.50 per hour in
computing a reasonable attorney’s fee
because that was the hourly rate charged
by Respondents’ counsel pursuant to an
agreement reached between Respondents and
their attorney.

On May 17, 1991, the Honorable Judge

David L. Russell issued an order

determining that the Respondents were

entitled to attorney fees pursuant to 12
O.S. § 936. Appellant appealed the Order
of May 17, 1991, by Notice of Appeal
filed on June 17, 1991. It was later
determined that the Notice of Appeal
filed on June 17, 1991, was premature and
Petitioner filed a Motion To Dismiss for
lack of appellate jurisdiction.

On January 23, 1992, counsel were
advised that the Judgment in favor of the
Respondents was affirmed by the Court of
Appeals. On February 5, 1992, the
Respondents filed their Motion To Tax
Attorney’s Fees And Costs combined with
their Motion To Refer Attorney’s Fee
Requested To The District Court and Brief
In Support in the United States Court of
Appeals for the Tenth Circuit. The Court

of Appeals for the Tenth Circuit by Order

iin aii iad is

filed on February 27, 1992, granted the
Respondents’ Motion For Attorney’s Fees
on appeal and remanded the matter to the
District Court for a determination of
reasonable attorney’s fees.

On March 19, 1992, the Respondents
submitted their Renewed And Supplemented
Application To Tax Attorney’s Fees
Against The Plaintiff. Petitioner filed
its Objection To Respondents’ Renewed And
Supplemented Application To Tax
Attorney’s Fees Against The Plaintiff on
April 7, 1992. Respondents filed an

~ Addendum to their Renewed And
Supplemented Application To Tax
Attorney’s Fees Against The Plaintiff on
June i8, 1992.

On July 17, 1992, the attorneys for
the parties executed a consent to proceed
before the United States Magistrate

respecting the Defendants’ Renewed And

ee Ee

Supplemented Application To Tax
Attorney’s Fees Against The Plaintiff
filed March 19, 1992. A hearing was held
on August 18, 1992, before Magistrate

Doyle W. Argo. The issue before the

Court was the reasonable hourly rate for
Respondents’ attorney. By order of
August 26, 1992, Magistrate Doyle W. Argo
found the Respondents were entitled to
attorney’s fees in the sum of $19,425.00.
The Magistrate Judge determined that a
“reasonable hourly rate" for Respondents’
attorney is $125.00 per hour. On
September 18, 1992, the Petitioner timely
filed its Notice of Appeal. On March 29,
1993, the Court of Appeals affirmed the
Magistrate Judge’s decision determining
that a reasonable hourly rate for
Respondents’ counsel was $125.00 per
hour. The Petitioner timely filed its

Petition For Rehearing, and by Order

entered on April 19, 1993, the Court of
Appeals denied Petitioner’s Petition For
Rehearing. The Petitioner timely files
its Petition For a Writ of Certiorari to
the United States Court of Appeals for
the Tenth Circuit.

REASONS FOR GRANTING THE WRIT

Certiorari should be granted because
the District Court and the Court of
Appeals have departed far from the
accepted and usual course of judicial
proceedings in determining that
Respondents’ should be awarded attorney’s
fees at the rate of $125.00 per hour.

The issue in this case is whether an
attorney who agreed to reduce his
attorney’s fee during the pendency oi an
action may, after prevailing at trial,
seek to obtain an award of attorney’s fee
based upon an hourly rate twice what he

charged his clients.

10

Ny

The Oklahoma Statute which provides
the basis for an entry of award of
attorney’s fees both in Federal Court and
State Court provides that "the prevailing
party is entitled to reasonable
attorney’s fees...." The attorney’s fees
paid by the Respondents to their counsel
were based upon an agreed hourly rate of
$62.50 per hour. The Respondents’
counsel indicates that this is "a
hardship reduction." This reduction to
$62.50 per hour by Respondents’ counsel
continued through the trial of this
matter. After the jury returned with a
verdict in favor of the Respondents, a
Motion For Attorney’s Fees was filed by
Respondents’ counsel requesting
attorney’s fees in the amount of $125.00
per hour. The District Court relied on

Save Our Cumberland Mountains, Inc. vy.

Hodel, 857 F.2d 1516 (D.c. Cir. 1988).

11

In distinguishing Florida Rock

Industries, Inc. v. United States, 9 Cl.

Ct. 285 (1985), the Court stated, "(h)ere
Plaintiff cannot seriously argue that the
prevailing rate of an attorney of Mr.
Tobin’s experience and qualifications is
$62.50 per hour." While the Petitioner
does not dispute a reasonable hourly rate
for Respondents’ counsel under most
circumstances would be $125.00 per hour,
Petitioner submits that the District

Court should have relied on Florida Rock.

Florida Rock determined that a "market

rate" for attorney’s services was the

primary standard in determining a

reasonable hourly rate. The Florida Rock
Court found that since the attorney and
his client had agreed to a particular
hourly rate, the market had spoken.

Florida Rock, 9 Cl. Ct. 288, 290.

12

The Court of Appeals consistent with
the lower court, found the case of Save

Our Cumberland Mountains, Inc. v. Hodel

to be more persuasive then Florida Rock.

The Court of Appeals determined that
there was no Oklahoma law which addressed
the issue of whether a court should
enforce an agreement between an attorney
and his client for a reduced hourly rate
against a non-prevailing party. The
Court of Appeals then determined that it
would have to "predict" how the Oklahoma
courts would rule on the issue. The
Court of Appeals incorrectly determined
that the reasonable hourly rate should be

based upon Respondents’ counsel’s normal

hourly rate of $125.00 per hour.

The Court of Appeals and the lower
court have failed to consider the express
Statutory language 12 0.S. § 936 which

provides that "the prevailing party" is

13

entitled to an award of reasonable
attorney’s fees. The Statute does not
refer to the prevailing party’s attorney,
but refers specifically to the prevailing
party. The Oklahoma Statute is similar
to the Congressional Mandate for
Attorney’s Fees in the Relocation Act

which is the subject of the Florida Rock

case. The language of the Relocation Act |
provides that a successful plaintiff
shall be "reimbursed" for attorney’s fees
and other expenses. Such is the
philosophy behind an award of attorney’s
fees to the prevailing party. An award
of attorney’s fees enables a successful
party to be reimbursed for his "out-of-
pocket" attorney’s fees while allowing a
private party to obtain legal
representation for the prosecution or

defense of lawsuits. See Pennsylvania v.

Delaware Valley Citizens’ Counsel For

14

ee oe

Clean Air, 478 U.S. 546, 106 S.Ct. 3088,
92 L.Ed. 2d 439 (1986) (Delaware Valley

I); Save Our Cumberland Mountains, Inc.

v. Hodel, 857 F.2d 1516, 1528 (D.C. Cir.

1988) (Justice Starr, dissenting).

The attorney’s fees awarded in cases
should be adequate to attract competent
counsel, but should be reflective of an
amount which does not produce windfalls

to attorneys. Blum v. Stenson, 465 U.S.

886, 893-94, 104 S.Ct. 1541, 1546, 79
L.Ed. 2d 891, 895 (1984). As the court

in Johnson v. Georgia Highway Express,

488 F.2d 714 (5th Cir. 1974) noted "[i}
in no event, ...should the litigant be
awarded a fee greater than he is

contractually bound to take, if indeed,

the attorneys have contracted to an

amount." Johnson v. Georgia Highway

Express, 488 F.2d 714, 718 (5th Cir.

1974). The existence of a market

15

arrangement, whereby an attorney agrees
to perform certain work and the client

agrees to make certain payments, would

seem to establish with a fair degree of
accuracy the reasonable attorney’s fees
and expenses incurred by plaintiff in

this litigation. Florida Rock, 9 Cl.Ct.

at 288. The reason for an award of
attorney’s fees is to enable a prevailing
party to be made whole for the expenses
incurred in achieving victory. An
attorney should not be awarded a windfall
on the basis of the result achieved,
litigation risk or other consideration.

Florida Rock, 9 Cl.Ct. at 290.

Justice Starr, in his dissenting
opinion in Hodel succinctly summed up the
reasons why an award of attorney’s fees
should be based upon the hourly rate as

agreed between attorney and client:

16

eT F

"The same theme was evident in
Delaware Valley II. There,
again speaking through Justice
White, a plurality of the Court
articulated the enablement goal
in rejecting ‘enhancement for
risk of loss’ for successful
plaintiffs. "[A]} Fundamental
aim of [(fee-shifting] statutes
is to make it possible for
those who cannot pay a lawyer
for his time and effort to
obtain competent counsel, this
by providing lawyers with
reasonable fees to be paid by
the losing defendants." The
Court has re-articulated the
enablement theme time and
again, and enablement, as the
Supreme Court has described it,

is a minimalist test. It does

17

not mean access to F. Lee
Bailey, Gerry Spence,
"Racehorse" Haynes or the
leading trial lawyer ina
particular locale. It means as

the Court put it in Hensley v.

Eckerhart, ‘Effective access to

the judicial process.’ The
idea is to permit plaintiffs to
secure the services of a
competent lawyer. Indeed, that
is the very language used in
the legislative history to
describe the three cases.
‘These cases have resulted in
fees which are adequate to
attract competent counsel, but

which do not produce windfalls

to attorneys.’ ‘Adequacy’ and
‘competency’ are the key words

that give life to the

18

TT P

‘enablements’ theory. Laffey
itself captured the enablement
goal in the following passage:
The ‘windfall’
Congress sought to
avoid is the awarding
of fees in excess of
the rate at which
qualified counsel
would be willing to
represent civil
rights claimants who
have legitimate
grievances. The
congressionally-
mandated inquiry is

thus not into the

‘true value’ or worth
of an attorney’s
services. Instead,

the trial court must

19

ascertain the fee at
which competent
counsel would be
willing to accept
meritorious civil
rights cases. As
this Court recently

stated in Murray v.

Weinberger, ‘the

purpose of the
statute ... is to
benefit meritorious
claimants - not to
subsidize the legal
profession.’
But, be that as it may,
enablement ‘should be tested
systematically, not on whether
a particular attorney, no
matter how able and

distinguished, will see fit to

20

take on a particular

representation. As the
Delaware I Court put it so
succinctly: "[(I]jf plaintiffs,
such as Delaware Valley, find
it possible to engage a lawyer
based on a statutory assurance
that he will be paid a
‘reasonable fee’, the purpose
behind the fee-shifting statute
has been satisfied." It is ‘a
lawyer’, not the lawyer of
choice, that the statute seeks
to provide." [Citations
omitted. }
Hodel, 857 F.2d at 1528-30 (Justice
Starr, dissenting).
It is also important to afford the
Respondents’ counsel the benefit of his
bargain. In reaching the agreement, the

attorney and the clients have already

21

considered and weighed all of the

relevant factors. Florida Rock, 9 Cl.Ct.

at 290. Certainly, the fact that
Respondents’ counsel reduced his fee is
evident of the "enablement theme" which
requires access not to the greatest trial
lawyers in the United States, but
effective access to the judicial process.
The Respondents, by having their day in
court, had the effective access to the
judicial process that is consistent
throughout the opinions of this Court.

This Court, in Vanegas v. Mitchell,

110 S. Ct. 1679 (1990), noted that "it is
the party who is...eligible for an award
of attorney’s fees." Statutory awards of
attorney’s fees may also co-exist with

private fee arrangements. Just as a

party is entitled to receive the fees in
an appropriate case, this Court has

recognized that it is a party’s right to

22

ee

waive, settle or negotiate the
eligibility for fees. Vanegas, 110 S.
Ct. at 1683. This Court, in Vanegas,
distinguished Blanchard v. Bergeron by
noting "Blanchard did not address
contractual obligations of plaintiffs to
their attorneys;...." This Court paid
deference to the contract between
attorney and client and held the
agreement to be valid. Vanegas, 110 S.
Ct. at 1684.

In Blum, this Court rejected a 50%
“enhancement bonus" requested by the
attorneys for the prevailing party. The
Court determined that a 50% enhancement
was unnecessary and that the fee or
hourly rate charged by each attorney
multiplied by the number of hours for
each attorney fully compensated the
attorneys. Blum is similar to the

instant case in that the Respondents’

a3

counsel is seeking a 50% "enhancement
bonus" from the amount he charged his
client. He seeks this "bonus" only
because his clients prevailed at trial.
The $62.50 hourly rate charged by
Respondents’ counsel fully compensates
Respondents’ counsel. This is the hourly
rate that he agreed to accept from the
Respondents and such a rate would have
been fully compensatory in the event that
the Respondents did not prevail. If
there is to be one fee paid by
Respondents to their attorney if they
lose and another fee to be paid by
Petitioner to Respondents’ Attorney if
Respondents prevail, the additional fee
is in the form of an "enhancement bonus"
from the amount Respondents’ counsel
charged his clients. To provide
Respondents’ counsel with an increased

hourly rate would provide the windfall

24

|

sought to be avoided when awarding
attorney’s fees in excess of the rate at
which qualified counsel would be willing
to represent parties with legitimate

grievances. Hodel, 857 F.2d at 528-30

(Justice Starr dissenting).

The underlying action was an action
by the successor in interest to the
Federal Deposit Insurance Corporation
(hereinafter referred to as "FDIC")
against four guarantors, seeking payment
of the balance due of a note executed by
a corporate debtor. While the amount
sought by Petitioner at trial was nearly
$400,000.00, it is doubtful that the
Respondents could satisfy a judgment if
one had been entered. Typically, ina
case such as this, the debtor is unable
to pay the judgment, much less pay
attorney’s fees to the plaintiff’s

counsel. In that instance, the fees

25

would remain unpaid, or might even be
discharged in bankruptcy.

However, if a solvent creditor
actively pursues a judgment against
debtors and is the non-prevailing party,
the creditor, at least in Oklahoma, will
likely be required to pay debtor’s
attorney’s fees. In that case, an award
of attorney’s fees in excess of that
which the debtors contracted for
essentially punishes the creditor for
pursuing the debtor. An award of
attorney’s fees in excess of $62.50 per
hour serves as a deterrent to creditors
seeking effective access to the judicial
system.

Because of his agreement with his
clients, Respondents’ attorney is not
able to seek additional fees from his
clicnts. His request, for fees in excess

of what he contracted for, rises to a |

26

li aerieaeeemiaianiiii in

request for a 50% "enhancement bonus"

from the Petitioner as a result of
prevailing at trial. The entry of such
an award serves to discourage a
creditor’s access to effective judicial
process. An award of attorney’s fees in
excess of that which Respondents
contracted for punishes rather than
reimburses.

The banking system and the FDIC are
the back-bone of this Country. The
Petitioner is a part of the process which
provides that the FDIC shall liquidate
failed institutions and sell their assets

to replenish the deposit insurance. An

award of attorney’s fees in excess of
what the Respondents’ attorney contracted
for not only unjustly enriches
Respondents’ attorney, but acts as a
deterrent to those similarly situated to

the Petitioner from seeking redress of a

27

guarantor’s promise to pay the debt of
another. The entry of award of
attorney’s fees in excess of that which
the Respondents are required to pay to
their attorney serves as a deterrent to
Petitioner’s access to the judicial
system, thereby rendering the process
ineffective.

The incorrectness of this award of
attorney’s fees is further amplified by
the express language of 12 0.S. § 936
which provides that the prevailing party,
not his attorney, shall be awarded
reasonable attorney’s fees. The logical
extension of this Statute is that 12 O.S.
§ 936 is designed to reimburse, not
unjustly enrich. A prevailing party,
according to 12 0.S. § 936, is reimbursed
for its "out-of-pocket" attorney’s fees.

To do otherwise unjustly enriches the

28

prevailing party’s attorney and serves to
subsidize the legal profession.

CONCLUSION

WHEREFORE, Petitioner respectfully
prays that a writ of certiorari be
granted.

ylly submitted,

UCE F. KLEIN, OBA #11389
205 N.W. 63rd, Suite 160
Oklahoma City, OK 73116
(405) 848-8842

Dated July 16, 1993

she3: Pet\Chasteen.cer

29

APPENDIX

A. ORDER AND JUDGMENT OF THE UNITED
STATES COURT OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

THE CADLE COMPANY,
II, INC.

)
)
)
Plaintiff-Appellant, )
)
Vv. ) No. 92-6318

) (D.C. No. CIV-
CHARLES R. CHASTEEN; )
BILLY M. CARTER; )
)
)
)
)

BILLY M. HOLMES; and
LENDELL D. ROBERTS,

90-1270-R)
W. D. Okla.

Defendants-Appellees.

ORDER AND JUDGMENT®'

Before LOGAN, MOORE and BRORBY, Circuit
Judges. |

'This order and judgment has no
precedential value and shall not be cited,
or used by any court within the Tenth
Circuit, except for purposes of
establishing the doctrines of the law of
the case, res judicata, or collateral
estoppel. 10th Cir. R. 36.3.

1

After examining the brief and
appellate record, this panel has
determined unanimously that oral argument
would not materially assist the
determination of this appeal. See Fed. R.
aoe. PF 3418) 3- 200A: Cit: Ri 34.369. The
cause is therefore ordered submitted
without oral argument.

This case is founded upon diversity
jurisdiction and presents for appeal the
issue of whether prevailing counsel should
be awarded attorney fees based upon a
reasonable hourly rate or the agreed upon
rate. The district court applied the
reasonable hourly rate and we affirm.

The significant matters are not
disputed. Appellee prevailed in federal
district court. As this was a diversity
suit, the trial court applied the law of
the forum (Oklahoma) and awarded Appellee

reasonable attorney fees.

The problem arises in that during the
litigation Appellee’s counsel
retroactively reduced his fees from $125
per hour to $62.50 per hour, due to his
client’s poor financial condition.
Appellant does not challenge whether $125
per hour is a reasonable hourly rate for
Appellee’s attorney, but instead asserts
that Appellee’s attorney should have been
awarded $62.50 per hour, the amount he
actually charged the client. The facts
leading up to the reduced billing and the
district court’s rationale were succinctly
stated as follows:

There is no questions that

the hourly rate Mr. Tobin

eventually agreed to with his

clients was not a_ reasonable
hourly rate for his services,

nor was it the market rate.

Because he had some sympathy

with his’ clients’ financial

position and reduced his hourly

rates does not in my opinion
entitle the Plaintiff, as the

nonprevailing party, to the
benefit of that bargain.... The

a eT

key factor is the prevailing
market rate for the services of

attorney of comparable

experience and qualifications.
I see no reason why the same
determination should not apply
when an attorney, because of
financial concern for his/her
client, has charged the client a
rate below a "reasonable" hourly
rate.

The trial court concluded the key

factor to be the prevailing market rate

for the services of the attorney rather

than the agreed reduced rate that resulted

from the attorney’s financial concern for

his client.

Appellant asserts, as its only issue,

that the trial court erred by awarding the

reasonable rate rather than the agreed

upon rate. Appellant accepts all factual

findings of the trial court.

The parties agree we review the trial

court’s

award of attorney fees to

determine if the trial court abused its

discretion. Iqbal v. Golf Course

Superintendents Ass’n of America, 900 F.2d

227, 228 (10th car. 1990). The

establishment of hourly rates in awarding

° ~<

attorney fees is within the discretion of
the trial judge. Gurule v. Wilson, 635
F.2d 782, 794 (10th Cir. 1980), overruled
on other grounds sub nom. Cox v. Flood,
683 F.2d 330, 331 (10th Cir. 1982).
"Under the abuse of discretion standard, a
trial court’s decision will not be
disturbed unless the appellate court has a
definite and firm conviction that the
lower court made a clear error of judgment
or exceeded the bounds of permissible
choice in the circumstances." McEwen v.
City of Norman, 926 F.2d 1539, 1553-54
(10th Cir. 1991).

AS we are applying the law of the
forum, we first look to Oklahoma law.
Okla. Stat. Ann. titl. 12, § 936 (West

1988) provides: "(T]he prevailing party

shall be allowed a reasonable attorney fee
to be set by the court." Oklahoma cases
hold that a court, in fixing the value of
a reasonable attorney fee, should consider
every fact or circumstance "bearing on
fair compensation for the professional
services rendered." Walls v. Russell, 519
P.2d 936, 938 (Okla. Ct. App. 1974),
overruled on other grounds sub nom. Russel
v. Flanagan, 544 P.2d 510, 512 (Okla.
1975). A reading of the Oklahoma cases,
however,reveals no cases directly on
point. When there is no law directly on
point, our task is to attempt to predict
how the Oklahoma courts would decide the
issue.

If there is a common thread running
through attorney fee cases, it is that of
reasonable compensation in light of all
the circumstances. The fee agreement

existing between an attorney and client is

but one of the circumstances to be

considered. If the fee agreement fails to
provide for reasonable compensation, then
the fee agreement along should not be
determinative in an action against a
nonparty to the agreement for a
"reasonable attorney’s fee." This
principle was enunciated in Blanchard v.
Bergeron, 489 U.S. 87 (1989), when
considering whether a litigant could
recover an attorney fee in excess of the
fee agreement. There the Supreme Court

stated:

As we understand [42
U.S.C.} § 1988’s provision for
allowing a "reasonable
attorney’s fee," it contemplates
reasonable compensation, in
light of all of the
circumstances, for the time and
effort expended by the attorney
for the prevailing plaintiff, no
more and no less. Should a fee
agreement provide less than a
reasonable fee calculated in
this manner, the defendant

should nevertheless be required
to pay the higher amount.

Id. at 93.

In the case before us, Oklahoma law
mandates "a reasonable attorney fee"; it
does not mandate the agreed upon fee
arrangement.

Appellant argues this result would
unjustly enrich the prevailing party’s
counsel and result in a windfall.
Appellant cites Florida Rock Indus., Inc.
v. United States, 9 Cl. Ct. 285 (1985), as
Supporting its position that the attorney
fee should be limited to the amount fixed
by the attorney-client contract. In
Florida Rock, the Claims Court held that
"where there is a bona fide contractual
arrangement whereby the client has
committed to pay the amount billed by the
attorneys, --. the court should not

second-guess the workings of the market in

determining the reasonableness or
appropriateness of the fees." Id. at 288.
However, market value, as indicated by a
fee arrangement, does not reflect what is
? "reasonable attorney ' fee" if the
attorney reduces the fee rate because of a
client’s poor financial condition.
Instead, market value is but one of the
factors to be considered in determining
reasonableness.

Nor are we persuaded by Appellant’s
"windfall" argument. Attorneys who reduce
their hourly rates for poor clients should
not be penalized for so doing. Save Our
Cumberland Mountains, Inc. v. Hodel, 857
_F.2d 1516 (D.C. Cir. 1988) (en banc).

Based upon the facts of this case, we
cannot hold the trial court abused its
discretion in awarding reasonable attorney

fees in lieu of the agreed rate.

The judgment is AFFIRMED.
Entered for the Court:
WADE BRORBY

Circuit Judge

ENTERED MARCH 29, 1993

10

APPENDIX
B. ORDER OF THE COURT

IN THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF OKLAHOMA

THE CADLE COMPANY
Ii, INC.,

Plaintiff,

CHARLES R. CHASTEEN,
ET AL.,

)
)
)
)
Vv ) CIV-90-1270-R
)
)
)
)
Defendants. )

O R DER

On the 18th day of August, 1992, this
matter came on for hearing on the
Defendants’ Application and Supplemented
Application to Tax Attorney Fees. The
Plaintiff appeared by counsel Bruce F.
Klein and the Defendants appeared by
counsel Paul K. Tobin. The parties have
consented to magistrate judge jurisdiction
pursuant to 28 v.6.¢. §636(Cc), for
purposes of a ruling on the attorney fee
application. Having considered the

evidence presented, the briefs of the

Fe

parties, and the arguments of counsel, the
following order is entered.

PROCEDURAL HISTORY

This diversity action was instituted
by the Plaintiff seeking to collect from
the Defendants as guarantors, the balance
owed under a promissory note. The matter
was tried to a jury and the jury found in
favor of the Defendants and against the
Plaintiff. A Judgment in accordance with
the jury verdict was entered by the Court
on March 25, 1991. Thereafter, on April
8, 1991, the Defendants filed their
initial applications for attorney fees,
seeking an attorney fee award of
$16,150.00 based upon 129.2 hours expended
by Defendants’ attorney at $125.00 per
hour. Plaintiff timely objected to the
application, but by an order dated May 17,
1991, United States District Judge David

L. Russell found that the Defendants were

entitled to a reasonable attorney fee.
Judge Russell ordered the parties to
confer in an attempt to agree upon the
amount of attorney fees to be awarded, but
the parties were unable to reach such an
agreement. On March 19, 1992, Defendants
filed their supplemented application for
attorney fees, seeking a total attorney
fee award of $20,787.50 based upon 166.3
hours at $125.00 per _ hour. In the
supplemented application, Defendants
advised the Court that the Tenth Circuit
had recently affirmed the judgment on
appeal, and had found that the Defendants
were entitled to attorney fees for the
appeal, with this Court to determine the
amount of fees to award. On April 7,
Plaintiff filed its objection to the
supplemented application, contending that
the hours claimed by the Defendants were

excessive as was the hourly rate. On June

18, 1992, Defendants filed an addendum to
the supplemented application showing that
the Plaintiff’s attorney expended over 100
hours more on this case than did the
Defendants’ attorney. On July 17, the
parties consented to magistrate judge
jurisdiction and the matter was then
referred to the undersigned Magistrate
Judge for disposition of the attorney fee
application.

ISSUE

The sole issue before the court is to
determine a reasonable fee as Defendants’
entitlement to an attorney fee award has
already been established by Judge
Russell’s order of May 17, 1991, and by
the Tenth Circuit’s order of February 27,
1992.

DISCUSSION

The most useful starting point in

determining the amount of a reasonable

attorney fee is to take the number of
hours reasonably expended in the
litigation and multiply the hours by a

reasonable hourly rate. Cooper v. Utah,

894 F.2d 1169, 1171 (10th Cir. 1990);

Brown v. Phillips Petroleum Company, 838

F.2¢0 451, 453 (19th Cir. 19868), cert.
denied, 488 U.S. 822 (1988), quoting from

Hensley v. Eckerhart, 461 U.S. 424, 433

(1983).

Although Plaintiff objected in its
brief to the number of hours Defendants’
counsel expended in the case, Plaintif‘*’’s
counsel admitted at the hearing that the
Plaintiff does not seriously challenge
this. Further, as noted earlier,
Plaintiff’s counsel expended over 100
hours more in the prosecution of this
action than the Defendants’ attorney did
in defending it. Having reviewed the

application and the detailed time records

¢
5
,
i
f
i
g
f
|
|
|
,
t

provided by Defendants’ counsel, the Court
is of the opinion that all of the hours
expended by counsel were reasonably spent
in defense of this lawsuit, with the
exception of the 10.9 hours discussed
below.

Defendants’ attorney seeks
reimbursement for 10.9 hours spent in
sutkteneat discussions with the Plaintiff
prior to the lawsuit being filed. The
clear wording of the Oklahoma statute
under which Defendants are entitled to an
attorney fee award, (12 Okla. Stat. §936),
appears to limit the fee award to the time
Spent after the lawsuit was filed. Absent
any citation by Defendants of case or
other controlling law to the contrary, the
Court finds that the Defendants are not
entitled to a fee award for the 10.9 hours
spent in settlement discussions prior to

the filing of the lawsuit. Accordingly,

the Court finds that the number of hours
reasonably expended by the Defendants’
attorney in this litigation was 155.4
hours, which is the number cf hours
claimed by Defendants’ counsel less the
10.9 hours discussed above.

As noted, the second element in
determining a reasonable attorney fee is
to determine a reasonable hourly rate.
Mr. Tobin seeks compensation at $125.00
per hour, which is his normal hourly rate.
However, although Mr. Tobin initially
billed his clients in this case at this
normal hourly rate, he later agreed to
reduce his’ rate to $62.50 per _ hour
retroactively to the beginning of this
litigation, due to his clients’ financial
condition. Plaintiff therefore contends
that Mr. Tobin should be limited to the

$62.50 as a reasonable hourly rate.

—

The Court is familiar with Mr.
Tobin’s qualifications and in an
application filed by him in another
lawsuit, I found that a reasonable hourly
rate for his services was $125.00 per
hour. In my opinion, a different result
is not required here, just because Mr.
Tobin reduced his hourly rates for the
benefit of his clients. Further, the
Court is generally familiar with the
hourly rates charged by attorneys in the
Oklahoma City area, and I find that the
hourly rate sought by Mr. Tobin is in line
with hourly rates charged by attorneys of
Similar experience.

It is clear from Tenth Circuit case
law that in calculating a _ reasonable
hourly rate, the district courts are to
consider the prevailing market rates in
the area for an attorney of like

experience and qualifications. See, e.g.,

|

Lucero v. City of Trinidad, 815 F.2d 1384,

1385 (10th Cir. 1987). The customary
hourly rate of a lawyer is relevant but
not conclusive in determining the hourly
rate. ig. Further, any fee agreement
between the client and the attorney is
relevant, but not conclusive. As U.S.
District Judge Robin J. Couthron noted in
an article published in the Oklahoma Bar
Journal:

Many attorneys spend considerable
time and effort proving, both in
support of claims for fees and in
defense thereto, the contract or
agreement for payment between the
claiming attorney and his client.
Generally, this exercise is seldom
worth the effort. The fee is not
limited or set by counsel’s contract
with the client, rather it is the
court’s obligation to find and award
a reasonable fee calculated in the
usual way.

Robin J. Cauthron, "Proving Attorney’s

Fees in Federal Court," 61 Oklahoma Bar

Journal 2813, 2815 (1990).

Neither counsel has shown that’ the
Oklahoma courts would apply any different
standard in establishing a "lodestar" fee.

There is no question that the hourly
rate Mr. Tobin eventually agreed to with
his clients was not a reasonable hourly
rate for his services, nor was it the
market rate. Because he had some sympathy
with his clients’ financial position and
reduced his hourly rates does not in my
opinion entitle the Plaintiff, as the
nonprevailing party, to the benefit of
that bargain. As Judge Cauthron noted in
her article, in determining a reasonable
hourly rate, the Court considers the
attorney’s agreement with his/her client
and considers that attorney’s_ normal
hourly rate, but these factors are
relatively unimportant in the final
determination. The key factor is the

prevailing market rate for the services of

10

an attorney of comparable experience and
qualifications. I see no reason why the
same determination should not apply when
an attorney, because of financial concern
for his/her client, has charged the client
a rate below a "reasonable" hourly rate.
Plaintiff cites to the case of

Flerida Rock Industries, Inc. v. United

States, 9 Cl. Ct. 285 (1985) in support of
its position that Defendants’ attorney is
limited to the hourly rate agreed to
between him and his clients. However, in
that case, the Court agreed that a "market
rate" for the attorney’s services was the
primary standard in determining a
reasonable hourly rate, but the Court
found that since the attorney and his
clients had agreed to the particular fee,
the market had spoken. ia. oat. 266,. 290:
Here, Plaintiff cannot seriously argue

that the prevailing rate of an attorney of

11

Mr. Tobin’s experience and qualifications

is $62.50 per hour. The Court finds that

the case of Save Our Cumberland Mountains,

inc. v. Hodel, 857 F.2d 1516 (D.c. Cir.
1988), to be more persuasive. In Hodel,
the court noted that attorneys who reduced
their hourly rates for poorer clients
should not be penalized when seeking
attorney fees as a prevailing party, by
being limited to the reduced hourly rate
charged the client. Rather, the
prevailing market rate is the proper
Standard to apply. Id. The Court further
rejects Plaintiff’s contention that
compensating Defendants’ attorney at a
higher hourly rate than the contract he
had with his clients results in a
"windfall." Awarding Mr. Tobin an
attorney fee award calculated on the
number of hours he reasonably expended in

the litigation times a reasonable hourly

12

ee

rate, by definition, necessarily cannot
produce a windfall.

As note, Defendants’ entitlement to
an attorney fee award arises under an
Oklahoma statute, but the wording of that
statute appears consistent with this
analysis as it allows the Court to award
"a reasonable attorney fee." i2 OKla.
Stat. §936.

Under federal law, the lodestar fee
once calculated will normally produce a

reasonable attorney fee. See Cooper v.

Utah, 894 F.2d at 1171. In fact, recent
Supreme Court and Tenth Circuit opinions
have recognized that most of the factors
federal courts use to consider in
determining whether a bonus or enhancement
waS appropriate, are subsumed into the

lodestar calculation. See, S.@.,

Pennsylvania v. Delaware Valley Citizens’

Counsel for Clean Air, 478 U.S. 546, 565

13

(1986); see also, City of Burlington v.

Dague, 112 S.Ct. 2638 (1992); Homeward

Bound, Inc. v. Hissom Memorial Center, 963

F.2d 1352 (10th Cir. 1992). However, as
the Court’s jurisdiction is based upon
diversity of citizenship, we apply

Oklahoma law with respect to an attorney

fee award. et. Clark Drilling
Contractors, Inc. v. Schramn, ne... $35
F.2d 1306, 1309 ra0chn. Cir. 1987). Under

Oklahoma law, once a reasonable attorney
fee is determined based on an hours times
rate basis, the Court is to determine
whether or not a bonus or enhancement is

appropriate based on the following

factors:
(a) time and labor required;
(b) novelty and difficulty of the

questions;

(c) the skill requisite to perform
the legal services properly;

(d) the preclusion of other
employment by the attorney due
to acceptance of the case;

(e) the customary fee;

14

(f) whether the fee is fixed or
contingent;

(g) time limitations imposed by the
client or the circumstances;

(h) the amount involved and the
results obtained;

(i) the experience, reputation and
ability of the attorney;

(j) the undesirability of the case;

(kK) the nature and length of the
professional relationship with
the client; and

(1) awards in similar cases.

Oliver’s Sports Center, Inc. Vv.

National Standard Insurance Company, 615

P.2d 291, 295 (Okla. 1980); State ex rel.

Burk v. City of Oklahoma City, 598 P.2d

659, 661 (OKla. 1979). The Defendants
here do not seek an enhancement or bonus
award and they have not presented any
justification for such bonus under the
above-cited factors. - Thus, I find that
the factors justifying a bonus or enhanced
fee are not present in this case. I
further find that an hourly rate for the
hours reasonably expended appears to fully

compensate counsel.

a

Accordingly, the Court finds that a

reasonable attorney fee award in favor of
the Defendants and against the Plaintiff
is $19,425.00 calculated at 155.4 hours
times $125.00 per hour. It is therefore
ordered, adjudged and decreed that the
Defendants have and recover judgment in
the amount of $19,425.00 against the
Plaintiff as a reasonable attorney fee.
Appropriate interest pursuant to 28 U.S.C.
§1961 shall accrue from the date of
judgment.

IT IS SO ORDERED this 26th day of

August 1992.

s/ Doyle W. Argo
DOYLE W. ARGO
UNITED STATES MAGISTRATE JUDGE

16

APPENDIX
C. ORDER DENYING PETITION FOR
REHEARING

ENTERED APRIL 19, 1993

UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

THE CADLE COMPANY
Ai, iRC.,

Plaintiff-Appellant,

)

)

)

)

)
Vv. ) No. 92-6318

) (D.C. #CIV-90-

CHARLES R. CHASTEEN, )
BILLY M.HOLMES, )
)
)
)

LENDELL D. ROBERTS,

1270-R)

Defendants-Appellees.

ORDER
Entered April 19, 1993

Before LOGAN, MOORE and BRORBY, Circuit
Judges.

This matter comes on for
consideration of appellant’s petition for
rehearing.

Upon consideration whereof, the
petition for rehearing is denied.

Entered for the Court
ROBERT L. HOECKER, Clerk
s/Patrick Fisher

By Patrick Fisher
Chief Deputy Clerk

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1188%3A1. Public record. Not legal advice.