Verdene PAGE, Claimant-Appellant, v. McCAIN FOODS, INC., Employer, and Transcontinental Insurance Company, Surety, Defendants-Respondents, and Idaho Industrial Commission, Real Party in Interest-Respondent, and L. Clyel Berry, individually, Intervenor-Appellant.
No. 40568.
Supreme Court of Idaho, Twin Falls, November 2013 Term.
Jan. 3, 2014.
316 P.3d 671
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondent. David B. Young argued.
J. JONES, Justice.
This appeal arises from a long-litigated worker‘s compensation case, but revolves solely around the issue of attorney fees. Claimant‘s counsel, L. Clyel Berry, argues that he is entitled to a 40% attorney fee award, based on a contingent fee agreement he entered into with Claimant VerDene Page. The Industrial Commission, however, awarded Berry a 30% attorney fee award pursuant to
I. FACTS AND PROCEDURAL HISTORY
This case revolves solely around the issue of reasonable attorney fees, stemming from the long-lived case of Page v. McCain Foods. Beginning chronologically, on April 24, 2002, the claimant, VerDene Page, and her attorney and the appellant in the instant matter, L. Clyel Berry, both signed a contingent fee agreement ( “Fee Agreement“). The Fee Agreement reads in relevant part:
Once hearing in the matter has been commenced, attorney‘s fees will then be equal to 30% of all benefits obtained for you by L. Clyel Berry. Following the filing of an appeal or if the matter is scheduled for rehearing, attorney‘s fees will then be 40% of all benefits obtained.... You are hereby advised that, in Idaho, attorney‘s fees in workers’ compensation matters are regulated or governed by the Idaho State Industrial Commission and are subject to Commission approval. In workers’ compensation matters, attorney‘s fees normally do not exceed twenty-five percent (25%) of the benefits obtained for the Claimant by his/her attorney in a case in which no hearing on the merits has been completed. In a case in which a hearing on the merits has been completed, attorney‘s fees then normally do not exceed thirty percent (30%) of the benefits obtained for a Claimant by his/her attorney.
Years of litigation ensued. Claimant initially sought benefits for a knee injury, and the Commission denied her claim. She appealed, and in Page v. McCain Foods, Inc., 141 Idaho 342, 109 P.3d 1084 (2005) ( “Page I“), the Court held that the Commission erred (1) in concluding that Page‘s claim was barred because of her alleged failure to give proper notice; and (2) in concluding that Page did not experience an “accident.” Page I, 141 Idaho at 349, 109 P.3d at 1091. The Court then remanded the case to the Commission for further proceedings. Id. On remand, the Commission awarded Page total disability and related medical care benefits through November 26, 2001 ... a “1% whole person” permanent impairment, and ... a 5% permanent partial disability resulting from the accident. The Commission also determined Page failed to show she qualified for “odd-lot” status and determined she was not entitled to attorney fees for the first appeal. Page v. McCain Foods, Inc., 145 Idaho 302, 305, 179 P.3d 265, 268 (2008) (“Page II“). Page again appealed, and in Page II, this Court held that the Commission‘s physical impairment finding was supported by substantial and competent evidence, but reversed and remanded as to the following issues: (1) the Commission‘s denial of Page‘s motion to review the case to correct a manifest injustice; (2) the Commission‘s finding of apportionment of Page‘s permanent disability; (3) the Commission‘s denial of Page‘s motion to reconsider on the basis of timeliness; and (4) the Commission‘s finding that Page is not entitled to attorney fees on the first appeal pursuant to
Within the September Order and with regard to the attorney fee award, the Commission indicated that “[i]f the parties are unable to agree regarding the amount of attorney fees, Claimant‘s counsel shall, within twenty-one (21) days of entry of the Commission‘s order, file with the Commission a memorandum requesting attorney fees incurred in counsel‘s representation of Claimant and an affidavit in support thereof.” However, Berry never submitted a memorandum or affidavit with the Commission. Instead, the parties submitted to the Commission their “Stipulation Re: Attorney Fees” (“Stipulation“) on October 20, 2009. The Stipulation states:
[T]he parties, each by and through counsel of record, pursuant to the Commission‘s Findings of Fact, Conclusions of Law, and Order, dated and filed September 8, 2009, and hereby stipulate that attorney fees due Claimant by and from Defendants herein pursuant to the September 8, 2009, Award shall be the sum equal to thirty (30%) percent of the value of Title 72 benefits awarded Claimant by and/or encompassed within said September 8, 2009, Findings of Fact, Conclusions of Law, and Order.
The Commission approved the Stipulation on October 22, 2009, finding that “[t]he parties have agreed that, pursuant to the Commission‘s September 8, 2009 decision, Defendants will pay to Claimant attorney fees in the amount of 30% of the value of the workers’ compensation benefits awarded to Claimant by the decision.”
In order to satisfy the amounts owing pursuant to the September Order, and in line with the Stipulation, McCain Foods submitted three checks to Berry:
| Check 1 | $131,595.32 | Temporary disability benefits (TTD) |
| Check 2 | $ 64,099.41 | Medical benefits |
| $195,693.73 | ||
| Check 3 | $ 58,708.13 | Attorney fees—equaling 30% of $195,693.73 |
Rather than simply keeping Check 3 as his fee award, Berry instead added all three checks together and deducted 30% from that larger total. The end result of this unusual calculation was that instead of retaining 30% of the benefits awarded, he retained 39%. Berry then petitioned the Commission for its approval on December 30, 2009.
In its April 2010 Order Regarding Attorney Fees, (the “April Order“) the Commission denied Berry‘s petition, finding that a 40% fee award is not reasonable. Berry subsequently filed a motion to reconsider and request for hearing; however, a hearing was not immediately held because the Claimant was receiving medical care and wished to be present at the hearing.
In the months that followed, the case settled via mediation. On October 25, 2011, the parties signed and submitted to the Commission a Stipulation and Agreement of Partial Lump Sum Discharge ( “Lump Sum Agreement“). Thereafter, on November 9, 2011, the Commission entered an order approving
The total lump sum amount is $248,750.00. Fees from that amount have been requested at 40%. Such a fee has not been substantiated to the Commission in accordance with IDAPA 17.02.08.033. The Commission has approved fees of 30% from previous benefits awarded to claimant and will do so for this settlement. Fees and costs amount to $74,625.00 and $1,871.12, respectively, for a total of $76,496.12. Thus, the surety shall pay to Claimant‘s attorney the sum of $76,496.12 as reasonable fees and costs.
The Commission also ordered that $24,875.00, “the amount of proceeds of the Lump Sum Agreement requested for unsubstantiated attorney fees” be released by the surety to Berry, to be held in trust pending further order by the Commission.
Berry subsequently filed a Request for Calendaring Re Claimant‘s Counsel‘s Petition for Approval of Fees/Request for IDAPA 17.02.08.033.03.b Hearing. At the hearing, Berry “clarified that he was seeking an additional 10% in attorney fees from the September 2009 order, as well as an additional 10% in attorney fees from the lump sum settlement amount.” In its Order dated June 21, 2012, (the “June Order“) the Commission first determined that a ruling on the April 12 motion to reconsider was warranted—Berry had filed this motion, but a hearing had not been held because, as mentioned above, the Claimant wished to be present at the hearing but was undergoing medical treatment around that time. The Commission ultimately denied Berry‘s motion, holding that Berry was entitled only to the 30% fee award that McCain Foods had already given him in Check 3. As for whether Berry was entitled to 40% of the lump sum settlement agreement, as opposed to the already-awarded 30%, the Commission agreed with Berry, and held that he was entitled to attorney fees in the amount of 40% of $248,750.00 based on his “dogged persistence” that he maintained throughout years of litigation. Berry had already received 30% of that, which left 10%, or $24,875.00, as the remainder owed.
It was, perhaps, this same dogged persistence that led Berry to file yet another motion for reconsideration. The Commission denied this motion in its November 19, 2012 Order, (the “November Order“) finding that its June Order was supported by substantial evidence.
According to the Notice of Appeal, Berry now appeals the April Order, the June Order, and the November Order. It appears as though Berry has received a total of $180,344.96 in fees throughout this litigation; this appeal is occurring because he believes he is entitled to an additional 10% fee for the benefits awarded in the September Order.
II. ISSUES ON APPEAL
- Was the Commission‘s attorney fee award of 30% under
I.C. § 72-804 supported by substantial and competent evidence? - Do any Constitutional violations exist here?
- Is Berry entitled to attorney fees on appeal?
IV. DISCUSSION
A. Standard of Review.
“The standard of review of an Industrial Commission decision is twofold. This Court exercises de novo review of the Commission‘s legal conclusions. However, the Court will not disturb the Commission‘s factual findings so long as they are supported by substantial and competent evidence.” Allen v. Reynolds, 145 Idaho 807, 811, 186 P.3d 663, 667 (2008) (internal citations omitted). “The decision that grounds exist for awarding a claimant attorney fees [under
I.C. § 72-804 was supported by substantial and competent evidence.
Under
If the commission or any court before whom any proceedings are brought under this law determines that the employer or his surety contested a claim for compensation made by an injured employee or dependent of a deceased employee without reasonable ground, or that an employer or his surety neglected or refused within a reasonable time after receipt of a written claim for compensation to pay to the injured employee or his dependents the compensation provided by law, or without reasonable grounds discontinued payment of compensation as provided by law justly due and owing to the employee or his dependents, the employer shall pay reasonable attorney fees in addition to the compensation provided by this law. In all such cases the fees of attorneys employed by injured employees or their dependents shall be fixed by the commission.
Fee awards pursuant to
This Court has held that the Commission may make an attorney fee award under
1. The Commission correctly considered the Hogaboom factors and properly exercised its discretion in fixing a 30% fee award under I.C. § 72-804 .
In Hogaboom, this Court held:
[I]n awarding reasonable attorneys’ fees pursuant to
I.C. § 72-804 , the Industrial Commission need not be constrained by the contingent fee agreement in effect between the claimant and his attorney in the presence of a clause providing for the alternative of awarded attorney‘s fees. In such a case, as in the case of all awards of attorney‘s fees, the Commission must arrive at a reasonable award considering not only the Clark [v. Sage] factors cited supra, but the legislative intent behind the Workmen‘s Compensation laws andI.C. § 72-804 .
Hogaboom v. Economy Mattress, 107 Idaho 13, 17-18, 684 P.2d 990, 994-95 (1984) (citing Clark v. Sage, 102 Idaho 261, 629 P.2d 657 (1981)). In determining what a reasonable fee is, a contingent fee agreement, “though persuasive evidence, is not itself dispositive, but rather must be considered in conjunction with” the following factors:
(1) the anticipated time and labor required to perform the legal services properly; (2) the novelty and difficulty of the legal issues involved in the matter; (3) the fees customarily charged for similar legal services; (4) the possible total recovery if successful; (5) the time limitations imposed by the client or circumstances of the case; (6) the nature and length of the attorney-client relationship; (7) the experience, skill and reputation of the attorney; (8) the ability of the client to pay for the legal services to be rendered; and (9) the risk of no recovery.
Hogaboom, 107 Idaho at 15, 684 P.2d at 992 (quoting Clark, 102 Idaho at 265, 629 P.2d at 657).
Here, the Commission‘s decision to award a 30% attorney fee award pursuant to
Having considered Mr. Berry‘s petition and the Hogaboom factors, we do not find the requested fee of 40% to be reasonable. Claimant and Defendants have stipulated to fees of 30%.... [W]e do not find it reasonable to approve a petition that would take a portion of the fees from Claimant‘s awarded benefits rather than from Defendants.
In its June Order, the Commission cited Hogaboom before noting “[t]he most important fact in the assessment of attorney fees ... is that Counsel and Defendants came to an agreement as to the amount of attorney fees Defendants would pay Counsel in satisfaction of the award of
In conclusion, the record shows that the Commission considered the Hogaboom factors before ultimately awarding the 30% fee. Because the Commission properly considered Hogaboom, and because Berry stipulated to a 30% attorney fee award, we find that the Commission‘s determination was supported by substantial, competent evidence.
2. A fee agreement does not guarantee a certain attorney fee award, and an attorney fee award is not a “benefit.”
Berry also argues that (1) without the Stipulation he undoubtedly would have been awarded a 40% attorney fee award; and (2) the fee award is a “benefit obtained on appeal” that should be lumped in with the other benefits before he takes his cut.
Berry‘s argument that he undoubtedly would have been awarded a 40% attorney fee award without the Stipulation does not hold water because his own Fee Agreement even recognizes that the Commission has the final word with regard to attorney fee awards:
[I]n Idaho, attorney‘s fees in workers’ compensation matters are regulated or governed by the Idaho State Industrial Commission and are subject to Commission approval.... In a case in which a hearing on the merits has been completed, attorney‘s fees then normally do not exceed thirty percent (30%) of the benefits obtained for a Claimant by his/her attorney.
From the outset, then, Berry and his client knew that, ultimately, the fees they agreed upon would be subject to the Commission‘s approval. Even if Berry did not stipulate to the 30% fee award, it does not necessarily follow that he automatically would have been awarded 40% based on the Fee Agreement.
Berry also asserts that an attorney fee award constitutes a “benefit” obtained on appeal, and as such, he should be permitted to add that attorney fee award to the pot of other benefits awarded—here, TTD and medical—before calculating his percentage. Berry instituted this calculation scheme after the September Order, when McCain Foods issued him three checks: the first for medical benefits, the second for temporary disability, and the third for attorney fees. Rather than simply accepting the third check as his award, Berry added all three checks together and then took 30% of that. Berry‘s calculation resulted in a fee award not of 30%, but of 39%. The Commission held that Berry had miscalculated, stating that “[a]ttorney fees granted after an unreasonable denial are just that, attorney fees granted to pay the attorney so that a claimant does not have to carry the additional burden of paying attorney fees from the benefits claimant receives.”
This determination by the Commission was proper. Looking to its plain language, Section 804 provides that “the employer shall pay reasonable attorney fees in addition to the compensation provided by this law.”
3. The Commission did not err in considering Berry‘s petition for attorney fees under I.C. § 72-804 , as opposed to I.C. § 72-803 .
Berry asserts that “[i]t was error for the Commission to consider the Petition for Approval of Fees upon the basis of
In Page II, this Court remanded several issues to the Commission, and also held that the Commission‘s decision that Claimant was not entitled to attorney fees pursuant to
The record indicates that this is, and has been throughout, an
Our holding does not preclude the possibility that an attorney may be awarded attorney fees under both
C. Berry‘s constitutional arguments are without merit.
Berry raises two constitutional arguments on appeal. He first argues that he had a property interest in the 40% fee he was to receive under the Fee Agreement following the filing of an appeal and that he was deprived of 10% of that fee without due process because the Commission “had not enacted guidelines, clear or otherwise, re-garding
In support of his first argument, Berry cites Curr v. Curr, 124 Idaho 686, 864 P.2d 132 (1993) for the proposition that the Commission must “at a minimum ... formally publish clear guidelines upon which it will base ... fee modifications in order to eliminate any latent arbitrariness.” Id. at 692, 864 P.2d at 138. The foregoing statement was part of this Court‘s explanation that a claimant‘s attorney was entitled to procedural due process before the Commission could reduce the amount of the fee contracted between the attorney and his client. Id. The Court disapproved the Commission‘s sua sponte reduction of contracted attorney fees of several attorneys, including Berry, without “suitable advance notice to all of the parties directly involved, accomplished through properly enacted regulations, and without a meaningful hearing.” Id. The Commission had failed to make findings supporting the order reducing attorney fees until the attorneys appealed to this Court two months later. Id. at 690, 864 P.2d at 136. “The findings were generated after the order in an attempt to justify the earlier conclusions.” Id. at 691, 864 P.2d at 137. The Commission did not have a duly enacted regulation at the time and acted under a “letter of understanding.” Id. The Court stated, “[w]ithout clear guidelines nestled in appropriately promulgated regulations, attorneys’ actions are plagued by doubt ...” Id.
Curr provides no support for Berry in this case. Here, the Commission acted pursuant to a properly adopted regulation, IDAPA 17.02.08.033. Among other things, the rule provides that in a case where a hearing has been held and briefs submitted, a fee of “thirty percent (30%) of available funds shall be presumed reasonable.” IDAPA 17.02.08.033.01.e.ii. The rule further provides that a proponent of a fee greater than that percentage “shall have the burden of establishing by clear and convincing evidence entitlement to the greater fee.” IDAPA 17.02.08.033.03.d.
The Curr decision was based on fee agreements that were modified by the Commission acting without a promulgated regulation. However, after those agreements were made, and “prompted by a major concern that fees charged by claimants’ attorneys in workers’ compensation cases were unduly high, the Commission published a draft of formal regulations which proposed mandatory attorney fee guidelines.” Rhodes v. Industrial Commission, 125 Idaho 139, 140, 868 P.2d 467, 468 (1993). The Commission adopted such a regulation, the predecessor of IDAPA 17.02.08.033, and the Court upheld the same against equal protection and due process challenges. Rhodes, 125 Idaho at 142, 868 P.2d at 470. The Court observed that “[t]he regulation satisfies due process analysis under the” United States and Idaho constitutions. Id.
Furthermore, in Seiniger Law Offices, P.A. v. State, 154 Idaho 461, 299 P.3d 773 (2013), the Court observed that the claimant‘s attorney “admits that the Commission has the authority, as we have held, to determine what is a reasonable contingent attorney fee for representing claimants in worker‘s compensation cases.” 154 Idaho at 467, 299 P.3d at 779. In that case we turned away a number of constitutional challenges to the Commission‘s current attorney fee regulation, noting that the challenge in Curr was successful because the attorneys had been denied procedural due process, while the attorney in Seiniger had received procedural due process under the regulation. Id. at 468-69, 299 P.3d at 780-81. We noted in Seiniger that “the challenged rule was in effect prior to the execution of the fee agreement ... and Seiniger was given notice and an opportunity for a hearing before the Commission ruled as to the reasonableness of the attorney fees claimed.” Id. at 469, 299 P.3d at 781. That statement applies equally here.
Berry‘s second constitutional argument—that the Commission erred in failing to award him an attorney fee on the
He does argue that it is a violation of equal protection to regulate the fees charged by claimants’ attorneys, while leaving the fees charged by defendants’ attorneys completely unregulated. However,
D. Berry is not entitled to attorney fees on appeal.
In his plea for attorney fees pursuant to the “Private Attorney General Doctrine” and/or
IV. CONCLUSION
We affirm the Commission‘s fee award in the September Order. Costs to the Commission on appeal.