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COURT OF APPEALS DECISION DATED AND RELEASED June 11, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-2117
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
STEPHANIE K. KALNES,
Plaintiff-Appellant,
v.
JULIE MONNIER,
Defendant-Respondent.
APPEAL from orders of
the circuit court for Milwaukee County:
MICHAEL J. BARRON, Judge. Reversed
and cause remanded with directions.
Before Wedemeyer, P.J.,
Sullivan and Schudson, JJ.
PER CURIAM. Stephanie K. Kalnes appeals from orders
denying her motions to recover actual attorney's fees in a landlord-tenant
case. Kalnes claims that the trial
court's arbitrary award of $2,500 for attorney's fees, when attorney's fees in
excess of $17,000 were incurred, was erroneous. Because the trial court erred in failing to review all of the
relevant factors, failed to apply the relevant facts to the appropriate legal
factors, and erroneously applied the law, we reverse the orders and remand this
case to the trial court to reconsider the amount of attorney's fees that should
be awarded.
I. BACKGROUND
Kalnes and Monnier
attempted to enter into a leasing agreement whereby Kalnes was to lease an
apartment from Monnier. Kalnes signed
the lease and paid Monnier $1,050 security deposit, plus $950 for first month's
rent. Monnier modified the lease after
Kalnes signed it. As a result, Kalnes
requested her money back because she would not accede to the changes. Monnier refused.
Kalnes filed suit
against Monnier, alleging violations of Wis.
Adm. Code § Ag
134. Monnier counterclaimed, attempting
to enforce the lease. The case was
tried to a jury, which returned a verdict finding that Monnier had never
provided Kalnes with a valid lease signed by Monnier. As a result, the trial court ruled that Monnier had violated Wis. Adm. Code §§ Ag 134.03 and 134.06(3). Based on these violations, the trial court
awarded Kalnes double her pecuniary loss, plus costs, plus attorney's fees,
pursuant to § 100.20(5), Stats.
Kalnes's attorney
submitted documentation itemizing the hours spent on the case and the hourly
fee charged. The itemized bill amounted
to approximately $17,500. Without
finding that the itemized hourly time was excessive or not incurred, and
without finding that the hourly fee was unreasonable, the trial court awarded
attorney's fees in the amount of $2,500.
The trial court focused primarily upon the fact that the amount in
dispute involved in the case was only $2,000, although it did reference some
additional factors.
Judgment was entered on
the verdict, although the parties agreed to keep the attorney's fee issue open
for appeal. Kalnes now appeals.
II. DISCUSSION
In initially addressing
the attorney's fee issue, the trial court ruled in pertinent part:
The
next question then becomes whether or not Mr. Savage is entitled to attorney
fees, and the answer is clearly he is.
The real question is how much.
Now,
there's been a motion filed and an affidavit by Mr. Savage about his fees
totaling over $16,000.00. And then this
morning he brings in another one for another $1,300.00. So somewhere around 17,500 he's looking for.
To
be candid with you, you aren't going to get anywhere close to that. I don't really care how much money you
charge Kalnes. The real question is
what's reasonable to assess against Monnier.
That's really the issue.
....
And to charge somebody because they lost a case 17,500 for a $2,000.00 case in
my judgment is way out of line.
I
don't think there's any question that Mr. Savage had to do a lot of work
because of the position of the landlady in this case.
....
In my judgment $2,500.00 is more than enough in
this case for a rather small case.
In
denying Kalnes's motion for reconsideration of this issue, the trial court
ruled in pertinent part:
[Y]ou
take into account the amount of controversy.
You take into account how much time and effort was necessary by the
lawyer, the standing of the lawyer in the community, all of those factors ....
....
I
looked at it as far as how much time and effort would be necessary in order to
simply prosecute the claim of the tenant in this case that is being worth no
more than $2,500.00. And I still feel
that way.
The amount of time that was spent was excessive
on this case for a $2,000.00 case.
The
trial court also indicated that it had considered the fact that Kalnes could
not recover attorney's fees for defending against the counterclaim of the
landlord. See Moonlight v.
Boyce, 125 Wis.2d 298, 307, 372 N.W.2d 479, 485 (Ct. App. 1985).
In reviewing this
matter:
Our
review of the circuit court's determination of the value of attorney's fees is
limited to determining whether the circuit court properly exercised its
discretion. A circuit court properly
exercises its discretion if it “employes a logical rationale based on the
appropriate legal principles and facts of record.”
Village
of Shorewood v. Steinberg, 174 Wis.2d 191, 204, 496
N.W.2d 57, 61 (1993) (citations omitted).
In reviewing the trial court's decision, we conclude that it erroneously
exercised its discretion because it did not address all the relevant facts, did
not apply the facts to the appropriate law, and did not apply the law
correctly. See Elfelt v.
Cooper, 163 Wis.2d 484, 498-99, 471 N.W.2d 303, 309 (Ct. App. 1991), rev'd
on other grounds, 168 Wis.2d 1008, 485 N.W.2d 56 (1992), cert. denied,
507 U.S. 908 (1993).
We first recite the
pertinent legal principles. Section
100.20(5), Stats., provides:
Any person suffering pecuniary loss because of
a violation by any other person of any order issued under this section may sue
for damages therefor in any court of competent jurisdiction and shall
recover twice the amount of such pecuniary loss, together with costs, including
a reasonable attorney's fee.
In
interpreting this statute, the Wisconsin Supreme Court noted several purposes
and policy interests behind § 100.20(5), Stats.: (1) the double damages and attorney's
fee award encourages injured tenants to bring legal actions to enforce their
rights; (2) in these types of cases the pecuniary loss is small when
compared to the cost of litigation—which makes it necessary to allow for a
recovery that is large enough to justify bringing suit; (3) the attorney's
fee award encourages attorneys to take these types of cases when otherwise, the
anticipated recovery would not justify the expense of litigation. Shands v. Castrovinci, 115
Wis.2d 352, 358, 340 N.W.2d 506, 509 (1983).
In addition, in determining what constitutes a reasonable attorney's
fee, the trial court should consider:
[T]he
amount and character of the services rendered; the labor, time, and trouble
involved; the character and importance of the litigation; the amount of money
or value of the property affected; the professional skill and experience called
for; the standing of the attorney in his profession; and the general ability of
the client to pay and the pecuniary benefit derived from the services.
Three &
One Co. v. Geilfuss, 178 Wis.2d 400, 415, 504 N.W.2d 393,
399 (Ct. App. 1993). Finally, according
to the Supreme Court Rules, in determining the reasonableness of a fee, “the
fee customarily charged in the locality for similar legal services” should also
be considered. SCR 20:1.5 (1990).
Although the trial
court's decision references some of these factors, the record demonstrates that
the trial court did not address all the factors, and it did not specifically
apply the facts of this case to the relevant factors. Instead, the trial court summarily concluded that $2,500 was
reasonable in this case given the small amount in controversy and the fact that
Kalnes could not recover any fees for defending the counterclaim.
In addressing primarily
the amount in controversy, the trial court failed to consider other appropriate
factors, including the purpose behind the statutory award. The trial court did not make any specific
findings regarding the bills submitted.
It did not, for instance, find that Kalnes's attorney's three hour
charge for drafting the complaint was excessive and that he should have only
charged two hours. Further, the trial
court did not find that Kalnes's attorney's hourly billing rate was “not the
fee customarily charged in the locality for similar legal services.” SCR 20:1.5 (1990). In order to reach a rational conclusion regarding attorney's fees
in this matter, the trial court needs to specifically address these and related
issues.
Moreover, we disagree
with the trial court's conclusion that Kalnes is not entitled to recover any
fees for defending the counterclaim.
Although the trial court is correct that the Moonlight
case prohibits recovering attorney's fees for defending against the landlord's
counterclaim, the instant case is distinguishable from Moonlight. Here, Monnier's counterclaim was nothing
more than her theory of defense against Kalnes's claim. Kalnes claimed there was not a valid lease
and Monnier's counterclaim alleged that there was a valid lease. In contrast, in Moonlight, the
counterclaim sought recovery for actual damages caused to the apartment. Moonlight, 125 Wis.2d at 301,
372 N.W.2d at 482. Therefore, it was
error for the trial court to apply Moonlight to the instant case.
The purpose of
§ 100.20(5), Stats., as
noted above, is to encourage tenants to enforce their rights. To hold in this case that Kalnes's recovery
should be limited simply because the landlord labeled her theory of defense as
a counterclaim, would violate the purpose and spirit of the statute. Accordingly, we reverse the order of the
trial court denying Kalnes's motion to reconsider the attorney's fee
issue. We remand this case to the trial
court with directions to reconsider what should be awarded as reasonable
attorney's fees. During this process,
the trial court should: (1) keep in mind the purpose behind
§ 100.20(5) as stated in the Shands case, and not limit the
attorney's fee award simply because the amount in controversy was small;
(2) address with specificity the legal fees submitted to determine which
charges, if any, were excessive or unnecessary, and address whether the hourly
rate was reasonable and customary; and (3) not exclude from the attorney's
fee award the costs to defend the counterclaim because the counterclaim was not
a true counterclaim, but only a theory of defense.
By the Court.—Orders
reversed and cause remanded with directions.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.