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Wildman, Harrold, Allen and Dixon v. Gaylord

November 20, 2000

WILDMAN, HARROLD, ALLEN AND DIXON, PLAINTIFF- APPELLEE,
v.
ROBERT GAYLORD, DEFENDANT-APPELLANT (VIRGINIA GAYLORD, DEFENDANT.)



Appeal from the Circuit Court of Cook County. No. 98 L 04313 Honorable Sheldon Gardner, Judge Presiding.

The opinion of the court was delivered by: Justice Cohen

Plaintiff Wildman, Harrold, Allen & Dixon (Wildman) filed a breach of contract action against defendants Robert and Virginia Gaylord to recover attorney fees. Plaintiffs sought $56,869.34 in attorney fees and $1,553.34 in costs for legal services rendered on behalf of defendants in the areas of estate planning and corporations law. After a bench trial, the trial court entered a judgment against defendant Robert Gaylord in the amount of $43,316 for attorney fees and $529.09 in costs. No judgment was entered against defendant Virginia Gaylord, who was deceased at the time of trial. Robert Gaylord now appeals the trial court's judgment order of September 22, 1999, contending that the trial court: (1) "abused its discretion" by awarding attorney fees without following the dictates of controlling case law; and (2) erred in awarding Wildman an amount that was not supported by the manifest weight of the evidence.

We affirm the trial court's judgment and find that: (1) during a bench trial, the trial judge sits as the trier of fact and does not exercise broad discretionary powers when determining the reasonableness of attorney fees; (2)"manifest weight of the evidence" is the sole standard of review when a judgment awarding attorney fees follows a trial on the merits; (3) an attorney-plaintiff seeking to recover fees from his own client pursuant to a breach of contract or quantum meruit theory is not required to present "detailed contemporaneous time records" in order to sustain his burden of establishing that the attorney fees sought are reasonable; and (4) the trial court's judgment was supported by the manifest weight of the competent evidence.

I. BACKGROUND

Defendant Robert Gaylord initially contacted Stewart Dixon, a partner in the Wildman firm, in January 1989 regarding the possible dissolution of his marriage. Dixon consulted with Gaylord about his financial standing and legal rights in the event he decided to proceed with a divorce. Dixon's review of Gaylord's tax returns, financial statements and business records indicated that he was a man of substantial wealth. Instead of instituting divorce proceedings on Gaylord's behalf at this time, Dixon encouraged Gaylord to attempt a reconciliation.

Gaylord contacted Dixon again in July 1991 indicating that he wanted to meet and discuss "urgent" matters. At their initial meeting on July 18, 1991, Gaylord advised Wildman attorneys of a certain corporate action that was scheduled to be taken within the next 10 days by the board of directors of the Robelm Holding Company, Inc. (Robelm). At that time, Robelm's only holding was approximately 30% of the stock in Ingersoll International Inc. (Ingersoll), a closely held family machine tool business.

Gaylord owned shares in Ingersoll directly and also possessed beneficial interests in various trusts that held Ingersoll shares. Gaylord's brothers, Edmon and Clayton, sought to maintain control over the voting stock in Ingersoll by creating a voting trust with their combined shares. The actions threatened by Gaylord's brothers would have effectively frozen Gaylord out of control over Ingersoll for 30 years. These actions would also have had a material impact on Ingersoll dividends, a substantial source of Gaylord's income.

At the close of the July 18, 1991, meeting, Gaylord orally entered into a contract for legal representation with the Wildman firm and agreed to be billed for legal services at Wildman's customary hourly rates. Over the course of the next three months, Wildman performed extensive legal services on Gaylord's behalf in the areas of corporations law, estate planning and taxation. In October 1991, Wildman sent Gaylord a billing statement seeking payment of $56,869.34 in attorney fees and $1,553.34 in costs for legal services rendered on Gaylord's behalf. Gaylord refused to pay the Wildman bill. After several unsuccessful demands for payment, Wildman filed an action for breach of contract in the circuit court of Cook County. Following a bench trial, the trial court entered a judgment in favor of Wildman for $43,316 in attorney fees and $529.09 in costs. Defendant appeals.II.

STANDARD OF REVIEW

The initial issue that we must address is the applicable standard of review when a trial court's judgment awarding attorney fees is challenged. In determining the proper standard of review, it is critical that we first isolate the procedural mechanism through which plaintiff sought relief. In the case at bar, the judgment for attorney fees followed a bench trial on Wildman's breach of contract action. Wildman sought legal fees for services performed on behalf of defendants pursuant to a contract for legal representation.

On appeal, both plaintiff and defendant argue that the trial judge "exercised his discretion" when determining reasonable attorney fees and that the judgment should be reversed if we find an abuse of discretion. The parties' assertions are misguided. Preliminarily, it should be noted that the cases cited by the parties on this point are inapposite. Unlike the case at bar, a breach of contract action brought by an attorney-plaintiff, the cases cited by the parties as authority involve fee petitions brought in the context of an underlying action in which the attorney performing legal services was not a party. Kaiser v. MEPC American Properties, Inc., 164 Ill. App. 3d 978, 981-82 (1987) (lease provision required lessee to pay "all costs and expenses" of lessor including attorney fees); Fitzgerald v. Lake Shore Animal Hospital, Inc., 183 Ill. App. 3d 655, 658-59 (1989) (trial court granted lessor's fee petition pursuant to fee-shifting provision in lease); Prior Plumbing & Heating Co. v. Hagins, 258 Ill. App. 3d 683, 687-89 (1994) (trial court awarded plaintiff reasonable attorney fees pursuant to Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. (West 1998)); Chicago Title & Trust Co. v. Chicago Title & Trust Co., 248 Ill. App. 3d 1065, 1067-68 (1993) (trial court awarded plaintiff reasonable attorney fees and costs in foreclosure action pursuant to provision in trust deed); Heller Financial, Inc., v. Johns-Byrne Co., 264 Ill. App. 3d 681, 685 (1994) (trial court awarded plaintiff reasonable attorney fees pursuant to "fee-shifting" provision in lease).

In each of the above-cited cases, petitioners were parties to an underlying lawsuit who sought an award of attorney fees against an opposing party pursuant to a "fee-shifting" agreement or statutory provision. See Kaiser, 164 Ill. App. 3d 978. "Fee-shifting" provisions are exceptions to the long-standing general rule that the unsuccessful litigant in a civil action is not responsible for the payment of the opponent's attorney fees. Storm & Associates, Ltd. v. Cuculich, 298 Ill. App. 3d 1040, 1048 (1998); Chicago Title & Trust Co., 248 Ill. App. 3d at 1072; Kaiser, 164 Ill. App. 3d at 983.

In fee petition cases, the trial judge's familiarity with the underlying litigation allows him to independently assess the necessity and reasonableness of the legal services rendered. In re Estate of Healy, 137 Ill. App. 3d 406, 411 (1985). Significantly, if a trial court denies a petition seeking fees pursuant to a "fee-shifting" clause, the successful litigant's attorney is still entitled to payment from his own client. For these reasons, when ruling on a fee petition, the trial court has broad discretionary powers in awarding the attorney fees sought and its decision will not be reversed unless the court has abused its discretion. Kaiser, 164 Ill. App. 3d at 984; In re Estate of Healy, 137 Ill. App. 3d at 411; Lurie v. Canadian Javelin Ltd., 93 Ill. 2d 231, 239 (1982); Leader v. Cullerton, 62 Ill. 2d 483, 488 (1976).

The parties' misapprehension regarding the proper standard of review likely stems from the fact that two Illinois cases cite "abuse of discretion" as the applicable standard of review of a trial court's judgment awarding attorney fees without regard to the critical fact that the procedural vehicle chosen by plaintiff to recover attorney fees in those cases was a civil trial on the merits rather than a fee petition. Muller v. Jones, 243 Ill. App. 3d 711, 714 (1993); Neville v. Davinroy, 41 Ill. App. 3d 706, 711 (1976).

In Muller, a Fourth District case, a discharged attorney filed a civil action against its former client seeking recovery of attorney fees on a quantum meruit theory. Prior to his discharge, the plaintiff-attorney had performed legal services on behalf of defendant in a personal injury action. Following a bench trial on the merits, the trial judge awarded plaintiff $2,500 in attorney fees, plus $72.20 in court costs. Muller, 243 Ill. App. 3d at 712.

Relying on Mars v. Priester, 205 Ill. App. 3d 1060 (1990) and Kaiser v. MEPC American Properties, Inc., 164 Ill. App. 3d 978 (1987), the Muller court held that the trial court's judgment resulted from an "abuse of discretion" because the evidence and testimony presented by defendant at trial were not sufficiently specific to justify the trial judge's award. Accordingly, the appellate court reduced the trial court's judgment to $485.45 in attorney fees, plus $72.20 in court costs. The Muller court quoted the following passage from Mars as the applicable standard of review governing a judgment awarding attorney fees:

"In all cases where an award of attorney fees is appropriate, only those fees which are reasonable will be allowed, the determination of which is left to the sound discretion of the trial court. (Emphasis added) Mars v. Priester, 205 Ill. App. 3d at 1064, citing Kaiser, 164 Ill. App. 3d 978 (1987).

In Neville, a Fifth District case, a plaintiff-attorney filed an action alleging breach of an express oral contract for legal representation against his former client for legal services rendered at the contractual rate of $35 per hour in 10 different matters over a four-year period. The trial court, sitting as trier of fact in a bench trial, found that there was "an oral contract for services rendered with no mention of price involved." Neville, 41 Ill. App. 3d at 707. The Neville court further stated, "[i]n the allowance of attorney fees, courts may exercise their independent judgment and the amount thereof rests in their sound discretion." (Emphasis added.) Neville, 41 Ill. App. 3d at 711, citing Richheimer v. Richheimer, 59 Ill. App. 2d 354, 365 (1965) ("fee-shifting" provision in the divorce act gives trial court discretion in awarding attorney fees incurred by petitioner in the prosecution of the suit). Similar to the Muller court's reliance on Kaiser, the Neville court relies on Richheimer to support its proposition that "abuse of discretion" is the proper standard of review for all cases where attorney fees are the subject of the dispute. We disagree.

Contrary to the facts presented in Muller and Neville (bench trials on the merits), both Kaiser and Richheimer involved fee petitions brought as collateral proceedings to underlying actions. In ruling, the Muller and Neville courts failed to address the critical fact that there are fundamental differences between the standard of review and burden of proof applicable in cases where a party to an underlying action files a "fee petition" seeking a discretionary award of fees against the losing party and those cases where an attorney-plaintiff files a "civil action for breach of contract" seeking payment of fees from a former client. In light of this critical distinction, we find that the Muller and Neville courts erred in their application of the law. We decline to follow their analyses.

When deciding whether to grant a fee petition, trial courts have broad discretionary powers, may exercise their independent judgment and are not limited to the evidence presented by the parties in arriving at a reasonable fee. In re Estate of Healy, 137 Ill. App. 3d at 411. A trial court has the discretion to independently review and consider the contents of the entire court file in determining whether a party is entitled to fees and whether the fees requested are reasonable. Kaiser, 164 Ill. App. 3d at 986. It should be noted that an additional policy consideration in cases involving "fee-shifting" provisions is that the attorney for the successful litigant has no individual right to seek payment from the losing party. Stricter scrutiny by the trial court is warranted in these circumstances because the attorney submitting billing statements for approval by the trial court has no fiduciary relationship with the party ultimately liable for payment of the fees.

In Kaiser, the appellate court recognized the need for heightened scrutiny in fee petition cases. The court stated that a "petition for fees must specify the services performed, by whom they were performed, the time expended thereon and the hourly rate charged therefore." (Emphasis added.) Kaiser, 164 Ill. App. 3d 978 at 984, citing Fiorito v. Jones, 72 Ill. 2d 73 (1978). The Kaiser court further stated that "[b]ecause of the importance of these factors, it is incumbent upon the petitioner [in a fee petition case] to present detailed records maintained during the course of the litigation containing facts and computations upon which the charges are predicated." Kaiser, 164 Ill. App. 3d at 984, citing Flynn v. Kucharski, 59 Ill. 2d 61 (1974). Unlike findings in a fee petition case, which rest in the sound discretion of the trial judge, the reasonableness of attorney fees in a common law breach of contract action presents a question to be resolved by the trier of fact, following a fair and impartial trial. Laff v. Chapman Performance Products, Inc., 63 Ill. App. 3d 297, 308 (1978). In civil actions brought by attorney-plaintiffs to ...


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