June 18, 2013, Utah Supreme Court Case Summaries

June 18, 2013

Supreme Court of the State of Utah

Redd v. Virginia Hill, 2013 UT 35, Case No. 20120552 (June 18, 2013)

ISSUE: Whether contingency fee agreement extends to an award of attorney fees.

Justice Parrish,

At issue in this appeal is the question of whether a contingency fee agreement extends to an award of attorney fees. Appellant Virginia Hill entered into a contingency fee agreement (Agreement) with attorney and Appellee Don Redd. The Agreement stated, in part, that “Attorney is entitled to ONE THIRD (33 1/3%) of all monies paid to or in client[’]s behalf for what ever [sic] cause related to this cause of action.” Hill does not dispute that she willingly signed the Agreement or that Redd is entitled to one-third of Hill’s primary award. Hill does dispute, however, that the Agreement entitles Redd to one-third of the court-awarded attorney fees.

At ¶ 1.

We hold that the Agreement is unambiguous. Under its terms, Redd is entitled to one-third of both the primary judgment and the court-awarded fees.

At ¶ 2.

The Court reviews the facts of the case.

At ¶ 3–12.

Analysis of Contract Language

We begin our analysis with an examination of “the language of [the Agreement] to determine meaning and intent.” Glenn v. Reese, 2009 UT 80, ¶ 10, 225 P.3d 185. “Where the language is unambiguous, the parties’ intentions are determined from the plain meaning of the contractual language, and the [Agreement] may be interpreted as a matter of law.” Id. (internal quotation marks omitted). If, however, the Agreement is ambiguous, we turn to extrinsic evidence to determine the intent of the parties. Daines v. Vincent, 2008 UT 51, ¶ 25, 190 P.3d 1269. Because the Agreement involves a disputed fee, any ambiguity is “resolved against the attorney and the construction adopted which is favorable to the client.” Jones, Waldo, Holbrook & McDonough v. Dawson, 923 P.2d 1366, 1372 (Utah 1996) (internal quotation marks omitted).

At ¶ 17.

Ambiguity exists if a contractual term or provision “is capable of more than one reasonable interpretation because of uncertain meanings of terms, missing terms, or other facial deficiencies.” WebBank v. Am. Gen. Annuity Serv. Corp., 2002 UT 88, ¶ 20, 54 P.3d 1139 (internal quotation marks omitted); see also Ward v. Intermountain Farmers Ass’n, 907 P.2d 264, 268 (Utah 1995) (stating that an ambiguous interpretation must be “reasonably supported by the language of the contract”).

At ¶ 18.

Though the Agreement does not specifically address the allocation of general damages, punitive damages, or attorney fees, the language of the contested provision embraces all such recoveries. The Agreement states that Redd receive one-third of “all monies” paid to Hill “related to” Ms. Hill’s “cause of action.” Webster’s Dictionary defines “all” as “the whole extent or quantity of,” “the entire number of,” “every one of,” and “any.” WEBSTER’S NEW COLLEGE DICTIONARY 36 (2007). The district court’s award of attorney fees falls within the definition of “all monies,” inasmuch as it was undoubtedly part of the “extent or quantity of” the money awarded to Hill based on Redd’s representation of Hill in the underlying case. And the attorney fees award was “one of” the components of “all monies” paid to Hill as a result of that lawsuit. Because the language of the Agreement embraces the court’s award of attorney fees, Redd is entitled to one-third of that award.

At ¶ 20.

Rule 1.5 of the Utah Rules of Professional Conduct

Hill next asserts that we possess the longstanding right to monitor fee agreements, and that allowing Redd to take a percentage of the attorney fees “thwart[s] the purpose of the award,” which is “to make the []client whole.” While we acknowledge our authority to monitor and approve fee contracts, we hold that the Agreement is not improper as written or applied.

At ¶ 21.

Rule 1.5 of the Utah Rules of Professional Conduct sets forth the requirements under which attorneys may enter into contingent fee agreements with their clients. Rule 1.5 explicitly allows contingent fee agreements except in certain limited instances not implicated by the underlying action. In all cases, however, rule 1.5(c) requires that [a] contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated.

At ¶ 22.

Many laypersons have no experience with contingent fee agreements. Thus, rule 1.5(c) is designed to require that attorneys put clients on notice as to the particulars of the parties’ obligations under contingent fee agreements. But while rule 1.5(c) requires notice, it does not require the use of specific language, nor does it set out a form that Utah attorneys must use.

At ¶ 23.

Here, the Agreement used ordinary language to describe the “method by which the fee is to be determined.” UTAH R. PROF’L COND. 1.5(c). The Agreement states that “[Redd] is entitled to ONE THIRD (33 1/3%) of all monies paid to or in [Hill’s] behalf for what ever [sic] cause related to this cause of action.” Thus, the Agreement unambiguously describes “the [recovery] percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal.” UTAH R. PROF’L COND. 1.5(c). This language is not overly verbose, legalistic, nor buried in pages of small-print boilerplate. In fact, the entire Agreement is contained on one type-written page.

At ¶ 24.

As required by rule 1.5(c), the Agreement also put Ms. Hill on notice as to the method by which “litigation and other expenses [were] to be deducted from the recovery; and whether such expenses [were] to be deducted before or after the contingent fee [was] calculated.” The Agreement states that the “[c]lient will be responsible for all costs and out-of-pocket expenses . . . from [the] client’s share of the settlement proceeds.”

At ¶ 25.

Rule 33 of the Utah Rules of Appellate Procedure

Redd asserts that he is entitled to attorney fees in this appeal based on rule 33 of the Utah Rules of Appellate Procedure, arguing that Hill’s appeal is “frivolous” and does not present a justiciable issue.

At ¶ 27.

Under rule 33, we have the authority to award attorney fees and costs as a sanction for a frivolous appeal. UTAH R. APP. P. 33(a). But the imposition of such a sanction is a serious matter and only to be used in egregious cases, lest the threat of such sanctions should chill litigants’ rights to appeal lower court decisions. See, e.g., Porco v. Porco, 752 P.2d 365, 369 (Utah Ct. App. 1988). “Sanctions are appropriate for appeals obviously without merit, with no reasonable likelihood of success, and which result in the delay of a proper judgment.” Farrell v. Porter, 830 P.2d 299, 302 (Utah Ct. App. 1992) (internal quotation marks omitted). We hold that Hill’s appeal does not present such a case and sanctions under rule 33 are therefore inappropriate.

At ¶ 28.