UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
November 14, 1980
LEWIS W. HAMILTON, DECEASED, APPELLANT
FORD MOTOR COMPANY ET AL.
THE DISTRICT OF COLUMBIA, A MUNICIPAL CORPORATION, ET AL.; MRS. LEWIS W. HAMILTON, ADMINISTRATRIX OF THE ESTATE OF LEWIS W. HAMILTON, DECEASED, AND AS WIDOW AND NEXT OF KIN OF LEWIS W.
HAMILTON, DECEASED, APPELLANT
THE DYGHTON CORPORATION
MOTOROLA, INC. ET AL.; MRS. LEWIS W. HAMILTON, ADMINISTRATRIX OF THE ESTATE OF LEWIS W. HAMILTON, DECEASED, AND AS WIDOW AND NEXT OF KIN OF LEWIS W.
HAMILTON, DECEASED, APPELLANT
ECONO-CAR INTERNATIONAL, INC. ET AL. NOS. 79-2177 TO 79-2179 1980.CDC.275
Before WRIGHT, Chief Judge, and MIKVA and EDWARDS, Circuit Judges.
UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT
Mrs. Lewis W. HAMILTON, Administratrix of the Estate of
Appeals from the United States District Court for the District of Columbia (D.C. Civil Action Nos. 75-0232, 75-1449 and 75-1866).
Opinion for the Court filed by Circuit Judge EDWARDS.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE EDWARDS
This case is an appeal from a District Court order declaring that a court-ordered award of attorneys' fees should be given directly to the plaintiff's attorneys and not the plaintiff. Because we find that the Retainer Agreement between the plaintiff and her attorneys governed the award, and that the plaintiff fully compensated her attorneys as required by that agreement, we reverse the District Court's order, remanding the case for an order directing that the court-ordered award of attorneys' fees be given to the plaintiff. I. BACKGROUND
The plaintiff in this case, Mrs. Hamilton, hired the law firm of Williams & Connolly, *fn1 to prosecute her claim for the wrongful death of her husband. The Retainer Agreement between Mrs. Hamilton and her attorneys provided that:
I hereby retain the law firm of WILLIAMS, CONNOLLY & CALIFANO to represent me against whomsoever may be liable in my claim for damages arising out of an accident which occurred on or about November 15, 1974 in the District of Columbia concerning my husband, Lewis W. Hamilton, deceased.
I agree that the fee of WILLIAMS, CONNOLLY & CALIFANO for these professional services will be one-third of any amount recovered. *fn2
The fourth paragraph of the agreement provided that Mrs. Hamilton was responsible for the costs of the litigation, regardless of the outcome of the case.
The law firm filed an action on Mrs. Hamilton's behalf against several defendants. During the course of pre-trial discovery, two defendants, Westinghouse and Econo-Car, refused to produce documents that the plaintiff's attorneys had requested. The Magistrate handling discovery issued an order compelling discovery, but the defendants continued to refuse to turn over the documents. The plaintiff's attorneys then filed a motion for default judgment and other relief pursuant to Rule 37 of the Federal Rules of Civil Procedure.
In ruling on the plaintiff's motion, the Magistrate declined to grant a default judgment, *fn3 but he ordered "the imposition of all reasonable expenses including attorneys' fees incurred by the injured party due to the wrongful acts of the party at fault." J.A. at 5.
Following this order, Williams & Connolly submitted affidavits detailing their expenses and work done relating to the defendants' abuse of discovery. Based on their then-current hourly rates, the lawyers claimed $50,746.50 in attorneys' fees and $2,886.22 in expenses. See Plaintiff's Application for Fees, J.A. at 6; Supplemental Memorandum in Support of Plaintiff's Application for Fees, J.A. at 8. The Magistrate issued an order stating that the "Plaintiff is awarded fifty thousand dollars ($50,000) in reasonable expenses including attorney's fees." J.A. at 39. The District Court later affirmed this order. See J.A. at 40. Defendants Westinghouse and Econo-Car paid the award to Mrs. Hamilton, who in turn endorsed the check to her attorneys. *fn4
The plaintiff's wrongful death claim eventually was tried, and the jury awarded Mrs. Hamilton and her husband's estate $700,000 in damages. *fn5 See Amended Judgments on the Verdicts, J.A. at 44, 45. As required under the terms of the Retainer Agreement, Mrs. Hamilton paid one-third of this amount to her attorneys as legal fees and an additional amount of $59,097.16 as litigation expenses. See Settlement Accounting, J.A. at 2.
In October 1978 counsel for Mrs. Hamilton's husband's estate questioned whether the law firm rightfully retained the Rule 37(b) award. Following the estate's formal demand for return of the award, the law firm filed a motion to have the trial court declare that the law firm "is the rightful owner" of the award. Motion for Modification and Clarification or Alternatively for Declaratory Judgment, J.A. at 46, 48. The law firm argued that "the plaintiff had not in fact incurred said expenses .... (and the) firm at no time (had) been compensated by the plaintiff for the time spent in pursuit of the discovery compliance." J.A. at 48. *fn6 After Mrs. Hamilton's independent counsel filed a memorandum opposing the motion, the trial court filed a Memorandum and Order holding that it had properly awarded the money to the law firm. See J.A. at 78, 82. *fn7 II. ARGUMENT
The issue before this court is one of first impression in this circuit. Its resolution turns on the meaning to be ascribed to the contingency fee contract in this case, and on the purpose underlying an award of attorneys' fees under Rule 37(b).
Rule 37(b) of the Federal Rules of Civil Procedure sets forth the sanctions a party may seek when an opposing party has failed to comply with a court order compelling discovery. It permits "the court in which the action is pending (to) make such orders ... as are just." In addition to listing five orders that a court may issue, Rule 37(b)(2) also provides:
In lieu of any of the foregoing orders or in addition thereto, the court shall require the party failing to obey the order or the attorney advising him or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.
The principal purpose of Rule 37(b) is punitive, not compensatory. It "provides generally for sanctions against parties or persons unjustifiably resisting discovery." Advisory Committee Note to 1970 Amendments of the Federal Rules of Civil Procedure, 48 F.R.D. at 538. *fn8 Although Rule 37(b) is silent as to whom the judge may award attorneys' fees, the judge "may make such orders ... as are just." Thus, it is possible to construe the rule as leaving the trial judge discretion, under the proper circumstances, to award attorneys' fees directly to attorneys. *fn9
Such a question can only be presented, however, if the Retainer Agreement authorizes such a result. In this case we hold that the plain terms of the Retainer Agreement must be read to preclude any award of compensation to the plaintiff's attorneys.
It is elementary that an attorney may not seek compensation from the client in addition to that provided in the contract between the attorney and the client. In In re Laughlin, 105 U.S. App. D.C. 185, 265 F.2d 377 (D.C.Cir.1959), this court affirmed a District Court order denying attorneys additional compensation for handling the appeal of a wrongful death action. The attorneys had claimed that the contingency fee agreement between them and their client covered only legal work performed at the trial level. This court disagreed, stating that "in the absence of a specific provision in the contract for additional fees the contract must be construed to include the services rendered on appeal." Id. at 378. The court made clear that all compensation was to be covered by the terms of the contract. *fn10
In the present case, all parties agree that the disputed work performed by plaintiff's counsel seeking discovery and pursuing discovery sanctions was work contemplated by the Retainer Agreement. Indeed, plaintiff's counsel conceded that "all of the time expended by the paraprofessional and lawyers of Williams & Connolly was necessary in order to protect the plaintiff's discovery rights under the Federal Rules of Civil Procedure." Affidavit of Pierce O'Donnell, P 6, J.A. at 13. Whether or not they anticipated a Rule 37(b) award from the court, lawyers from Williams & Connolly were contractually obligated to perform this work relating to abuses of the discovery process. Consequently, they can expect no further compensation from the plaintiff. *fn11
Even though the Retainer Agreement does not expressly cover Rule 37(b) awards, the contract is nevertheless controlling in this case. It is undisputed that plaintiff's attorneys drafted the Retainer Agreement between them and Mrs. Hamilton. The normal rule of construction in contract law provides that ambiguous provisions are to be construed against the party who drafted the agreement. See North American Graphite Corp. v. Allan, 87 U.S. App. D.C. 154, 184 F.2d 387, 390 (D.C.Cir.1950). This principle applies with even greater force in the instant case because the client has had no legal training, and the persons who drafted the agreement are attorneys. If there is any dispute over the terms of the Retainer Agreement, then any ambiguity must be construed against the attorneys.
Following the principles set forth in Laughlin, we hold that absent a provision in the contract allocating Rule 37(b) awards of attorney's fees, the plain terms of the Retainer Agreement in this case provide that the one-third contingency fee is the sole source of compensation for the attorneys. Williams & Connolly do not dispute that the Retainer Agreement is clear with respect to the amount to be paid for attorneys' fees, i. e., one-third of the judgment (excluding the Rule 37(b) award) plus expenses. Nor do they claim that the Rule 37(b) award can be considered an award of attorneys' fees covered by the parties' contract. Given these considerations, and in light of our finding that the disputed work performed by Williams & Connolly was done pursuant to the parties' contract, the attorneys here surely have no entitlement to the award given under Rule 37(b). *fn12 On the facts of this case, we hold that Mrs. Hamilton is the proper recipient of the Rule 37(b) award. *fn13
Other jurisdictions have held that awards of attorneys' fees are to be given to the client and not directly to the attorneys. *fn14 The public policy justification supporting this position is plain. The client, whose interests the attorney should be vigorously representing, cannot possibly anticipate the possible turn of events that may take place during the course of litigation. The client expects that the fee agreement will provide the sole source of income for the attorney. The attorney, on the other hand, has the technical knowledge and experience to be able to anticipate awards of attorneys' fees. Consequently, absent specific statutory provisions to the contrary, public policy considerations compel us to put the burden on the attorney to state specifically who shall receive court-awarded attorneys' fees. Although requiring express provisions in a retainer agreement may not put the client and the attorney in the identical bargaining position in negotiating fee agreements, at least express provisions give the client some opportunity to object to fee arrangements. Mrs. Hamilton had no such opportunity in this case. *fn15
In Chalmers v. Oregon Automobile Ins. Co., 263 Or. 449, 502 P.2d 1378 (1972) (en banc), the Oregon Supreme Court reviewed a statutory award of attorneys' fees in light of a contingency fee agreement between the plaintiff and his attorneys. In deciding whether the attorney or the plaintiff should get the award, the court noted the "basic unfairness" that a client would feel if, in addition to the client's fee, the court paid the attorney an additional fee. 502 P.2d at 1381. The court went on to hold that:
If, however, the contingent fee agreement makes no specific reference to any possible attorney fee which may be awarded by the court and makes no specific provision for the manner in which any such fee is to be considered in computing the amount, source, and manner of distribution of the contingent fee, we hold that any attorney fee awarded by the court shall be offset as a credit or deduction from the amount of the agreed contingent fee, as computed upon the basis of the amount of the judgment.
Id. We agree with the holding of the Oregon Supreme Court. *fn16 III. HOLDING
Because we have found that the Rule 37(b) award should go entirely to the plaintiff in this case, we vacate the District Court's order and remand for an order consistent with this opinion.