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Eugene Wayne Snider, D/B/A West Heating & Cooling v. American Family Mutual Insurance Co

April 19, 2013

EUGENE WAYNE SNIDER, D/B/A WEST HEATING & COOLING, APPELLANT,
v.
AMERICAN FAMILY MUTUAL INSURANCE CO., APPELLEE.



Review of the judgment of the Court of Appeals in 45 Kan. App. 2d 196, 244 P.3d 1281 (2011). Appeal from Wyandotte District Court; MICHAEL GROSKO, judge.

SYLLABUS BY THE COURT

SYLLABUS BY THE COURT 1. Generally, an issue cannot be raised for the first time in a petition seeking this court's review of a Court of Appeals' decision because an argument not made before the Court of Appeals is deemed abandoned. 2. A Kansas court may not award attorney fees unless a statute authorizes the award or there is an agreement between the parties allowing attorney fees. 3. The question of whether a court has the authority to award attorney fees is a question of law over which an appellate court has unlimited review. 4. If a party would be entitled to appellate attorney fees under a statute or contract upon prevailing on appeal, the party must timely file a Supreme Court Rule 7.07(b) (2012 Kan. Ct. R. Annot. 66) motion in order to preserve the right to those fees. Any contrary language in Berkshire Aircraft, Inc. v. AEC Leasing Co.,No. 90,581, 2004 WL 797251 (Kan. App. 2004) (unpublished opinion), is overruled. 5. The Court of Appeals is duty bound to follow Kansas Supreme Court precedent, absent some indication the Kansas Supreme Court is departing from its previous position. 6. Even if the awarding of attorney fees is mandatory under a statute, the amountof the award is within the sound discretion of the awarding court, which means the award will be reviewed on appeal under an abuse of discretion standard. A judicial action constitutes an abuse of discretion if the action (1) is arbitrary, fanciful, or unreasonable; (2) is based on an error of law; or (3) is based on an error of fact. Where it is argued an action was arbitrary, fanciful, or unreasonable, the party alleging the abuse of discretion must establish that no reasonable person would take the same action. 7. In evaluating the reasonableness of an award of attorney fees, including the reasonableness of a fee allowed to a prevailing party by statute, a court should consider the eight factors set forth in the Kansas Rules of Professional Conduct Rule 1.5(a) (2012 Kan. Ct. R. Annot. 492). 8. A party aggrieved by a decision of the Court of Appeals on a particular issue must seek review in order to preserve the matter for Kansas Supreme Court review. 9. A prevailing party entitled to an award of attorney fees under K.S.A. 40-908 is also entitled to fees incurred in the successful defense of an initial fee application because the primary purpose of the fee-shifting statute is to benefit the insured. The fact that the award of such fee ultimately results in the insured's attorney being paid to litigate the fee is collateral and incidental to the primary purpose of indemnifying an insured for the cost of counsel in an action against the insurer. 10. When a prevailing party seeks an award of attorney fees under a prevailing party fee statute, the most critical factor in determining the reasonableness of a fee is the degree of success obtained because prevailing party status alone may say little about whether the expenditure of an attorney's time was reasonable in relation to the success achieved. 11. In supplemental fee cases, a party who prevailed on the underlying merits of a case is not automatically entitled to recover attorney fees for all aspects of the supplemental fee litigation. A court considering an award of attorney fees in supplemental fee litigation must consider the relationship between the amount of the fees awarded and the results obtained. Consequently, supplemental fees should be excluded to the extent that the applicant ultimately fails to prevail in such litigation. A party is only entitled to supplemental fees commensurate with the degree of success achieved in litigating those fees, and a court should calibrate the fees to account for the degree of success. 12. Where a fee applicant relying on a prevailing party statute has achieved only partial or limited success, a court may attempt to identify specific hours that should be eliminated from a request for fees, or it may simply reduce the award to account for the limited success.

The opinion of the court was delivered by: Luckert, J.:

Judgment of the Court of Appeals reversing the district court is affirmed. Judgment of the district court is reversed and remanded with directions.

The opinion of the court was delivered by LUCKERT, J.:

In Evans v. Provident Life & Accident Ins. Co., 249 Kan. 248, 265, 815 P.2d 550 (1991), this court held that a party's request for civil appellate attorney fees is to be determined by the appellate court hearing the appeal. Supreme Court Rule 7.07(b) (2012 Kan. Ct. R. Annot. 66) provides a procedure for making such a request and specifies the time period after the appellate oral argument in which the request must be made.

In this case, Eugene Wayne Snider, d/b/a West Heating & Cooling, did not file a motion for appellate attorney fees in a successful appeal to the Court of Appeals that resulted in a remand to the district court. Snider v. American Family Mut. Ins. Co., No. 101,202, 2009 WL 2902588, at *15 (Kan. App. 2009) (unpublished opinion) (Snider I). In the district court proceeding on remand, Snider requested and received attorney fees related to both the district court and the appellate proceedings based on the authority of K.S.A. 40-908, a prevailing party attorney fee statute. Considering an appeal from that order, the Court of Appeals reversed the award of appellate attorney fees, determining Snider had waived his right to appellate attorney fees by not filing a motion for attorney fees with the Court of Appeals in the prior appeal. Snider v. American Family Mut. Ins. Co., 45 Kan. App. 2d 196, 205-08, 244 P.3d 1281 (2011) (Snider II).

Now, on petition for review of that decision, Snider asks us to reverse the Court of Appeals and overrule Evans or exclude Evans' holdingfrom those cases where a fee applicant did not prevail in the district court. This result would allow Snider to receive a judgment for the appellate attorney fees incurred in Snider I. In addition, Snider requests us to award him more fees for this current appeal-Snider II-than allowed by the Court of Appeals. We reject these requests and conclude that some aspects of Snider's arguments were not preserved; the Court of Appeals correctly applied Rule 7.07(b), Evans, and K.S.A. 40-908; and the Court of Appeals did not abuse its discretion in determining the amount of reasonable attorney fees related to this current appeal. Consequently, we affirm the Court of Appeals.

FACTS AND PROCEDURAL HISTORY

Snider held an insurance policy through American Family Mutual Insurance Company (American Family) that included coverage for "contractor's equipment." After air conditioning condensers, tools, and equipment were stolen from his residential storage facility, Snider filed a claim with American Family under the policy. American Family denied his claim, and Snider sued. The district court granted summary judgment for American Family; Snider appealed.

The Court of Appeals reversed the district court's decision and remanded with directions for the district court to enter summary judgment in favor of Snider. The Court of Appeals also ordered the district court to determine the amount of attorney fees to be awarded to Snider under K.S.A. 40-908. Snider I, 2009 WL 2902588, at *15. After appellate oral arguments, Snider did not file a motion for appellate attorney fees under Rule 7.07(b).

On remand, the district court held a hearing on the issue of attorney fees. Snider's attorney submitted an itemized list of attorney fees and expenses totaling $43,599.55. The district court awarded attorney fees to Snider in the amount of $5,000 and noted: "[T]his Court finds that Plaintiff's request is unreasonable on its face, especially requesting $22,000.00 to file and process an appeal." Snider appealed the district court's award of attorney fees.

The Court of Appeals held the district court abused its discretion in failing to award a fair and reasonable amount of attorney fees for services rendered at the district court level. After considering the factors under Kansas Rules of Professional Conduct (KRPC) Rule 1.5(a) (2012 Kan. Ct. R. Annot. 492), the Court of Appeals determined that Snider was entitled to receive $19,500 in attorney fees for his attorney's representation in the district court plus $155 in costs. Snider II, 45 Kan. App. 2d at 211.

Additionally, the Court of Appeals determined the district court "erroneously considered and included appellate attorney fees in its attorney fee award." Snider II, 45 Kan. App. 2d at 203. The court found that Snider failed to comply with Rule 7.07(b) because he did not file a motion for attorney fees with the Court of Appeals and did not submit an "affidavit specifying the nature and extent of the services rendered, the time he spent on the appeal, and the factors considered in determining the reasonableness of the fee." Snider II, 45 Kan. App. 2d at 205. The Court of Appeals also found the district court lacked the authority under K.S.A. 40-908 to grant attorney fees for appellate work. Snider II, 45 Kan. App. 2d at 206-07.

Snider timely filed a Rule 7.07(b) motion requesting appellate attorney fees for his second appeal, Snider II. The Court of Appeals entered a separate order awarding an additional $11,554.79 in appellate attorney fees and $754.79 for associated costs. We granted Snider's petition for review in which he raises arguments pertaining only to appellate attorney fees for Snider I and Snider II.

RULE 7.07(b) AND THE SEPARATION OF POWERS DOCTRINE

In his petition for review, Snider presents an argument he had not raised before the district court or the Court of Appeals: He argues Rule 7.07(b) is unconstitutional because it violates the separation of powers doctrine of the United States Constitution. According to Snider, Rule 7.07(b) adds requirements and language that unconstitutionally affect a party's right under K.S.A. 40-908 to obtain attorney fees.

Generally, an issue cannot be raised for the first time in a petition seeking this court's review of a Court of Appeals' decision because an argument not made before the Court of Appeals is deemed abandoned. State v. Ward, 292 Kan. 541, 580, 256 P.3d 801 (2011), cert. denied 132 S. Ct. 1594 (2012); Osterhaus v. Toth, 291 Kan. 759, 794, 249

P.3d 888 (2011). Snider had the opportunity to present this issue to the Snider II Court of Appeals when, in his reply brief, he rebutted American Family's argument that he had abandoned or waived his request for appellate fees in Snider I by not filing a timely motion with the Court of Appeals as required by Evans and Rule 7.07(b). Snider did not take advantage of this opportunity, and his failure to present any constitutional argument before the Court of Appeals prevents us from considering it on our review of the Court of Appeals' decision.

Consequently, we will not reach the merits of Snider's constitutional argument. SNIDER I APPELLATE ATTORNEY FEES AND RULE 7.07(b)

Snider's petition for review and briefs before this court build on several other arguments that were presented to the Court of Appeals. Snider asserts these issues were wrongly decided by the Snider II court.

Before focusing on the specifics of this argument, it is helpful to discuss some general rules regarding attorney fee awards. Foremost is the rule that a Kansas court may not award attorney fees unless a statute authorizes the award or there is an agreement between the parties allowing attorney fees. Unruh v. Purina Mills, 289 Kan. 1185, 1200, 221 P.3d 1130 (2009); United States Fidelity & Guaranty Co. v. Maish, 21 Kan. App. 2d 885, 905-06, 908 P.2d 1329 (1995). The question of whether a court has the authority to award attorney fees is a question of law over which an appellate court has unlimited review. Unruh, 289 Kan. at 1200; Idbeis v. Wichita Surgical Specialists, 285 Kan. 485, 490, 173 P.3d 642 (2007).

In this case, the authority to award attorney fees is granted under K.S.A. 40-908, and the procedure for seeking and awarding appellate attorney fees is established in Rule 7.07(b). The construction of K.S.A. 40-908 and Rule 7.07(b) involves legal questions over which we have unlimited review. Kansas Judicial Review v. Stout, 287 Kan. 450, 459-60, 196 P.3d 1162 (2008) (construction of a Supreme Court rule, like the construction of a statute, is a question of law).

K.S.A. 40-908 states, in pertinent part:

"That in all actions . . . in which judgment is rendered against any insurance company on any policy given to insure any property in this state against loss by fire, tornado, lightning or hail, the court in rendering such judgment shall allow the plaintiff a reasonable sum as an attorney's fee for services in such action including proceeding upon appeal to be recovered and collected as a part of the costs . . . ." (Emphasis added.)

Rule 7.07(b) applies to all requests for attorney fees related to an appeal, whether authorized under K.S.A. 40-908, a different statute, or by an agreement between the parties. Rule 7.07(b)(1) states that "[a]n appellate court may award attorney fees for services on appeal in a case in which the district court had authority to award attorney fees." (Emphasis added.) Under Rule 7.01(b)(2), as we have previously noted, a motion for attorney fees must be filed within the time period specified in the rule; currently, that specified time is 14 days after oral argument, but it was 15 days at the time of the decision in Snider II. See Snider II, 45 Kan. App. 2d at 205 (quoting Supreme Court Rule

7.07[b] [2010 Kan. Ct. R. Annot. 62]).

Turning to the specifics of Snider's arguments, he contends: (1) We should overrule Evans or limit its application to cases where the fee applicant prevailed in the district courtbecause it is impossible for a party who did not prevail in the district court to comply with Rule 7.07(b); (2) we should overrule or limit Evans because awarding fees at the appellate court level is contrary to K.S.A. 40-908; (3) we should overrule or limit Evans because a party who did not prevail in the district court is in a "catch 22" situation in requesting appellate attorney fees because of the potential futility of the request; and (4) Evans is distinguishable because the Snider I court delegated the task of determining appellate fees to the district court. We reject all of these arguments.

Before discussing those arguments, we briefly note what Snyder does not argue. Most significantly, he does not suggest that the Court of Appeals should not have reached the question of whether he waived his request for Snider I appellate attorney fees by not filing a Rule 7.07(b) motion. More specifically, he does not suggest that American Family failed to preserve that argument by not raising it before the district court when the district court considered the request for appellate fees incurred in Snider I. Instead, in Snider's petition for review he asks us to find error in the Court of Appeals' analysis of Rule 7.07(b), not in its decision to address the issue. At this stage, we conclude Snider has waived any argument he might have had that American Family did not preserve the Rule 7.07(b) issue by not raising it in the district court. See Ward, 292 Kan. at 580 (issue not raised in petition for review deemed abandoned).

Focusing on the four reasons Snider claims the Court of Appeals analysis was incorrect, Snider first argues it is impossible to comply with Rule 7.07(b) if a party loses at the district court level and then subsequently wins on appeal. Specific to this case, Snider asserts the district court did not have authority to award him attorney fees under K.S.A. 40-908 because the district court granted American Family summary judgment and thus had not ruled against an insurance company, which is a condition prerequisite to awarding attorney fees under K.S.A. 40-908. In turn, according to Snider, the Court of Appeals did not have authority to award him appellate attorney fees because Rule 7.07(b) gives appellate courts the right to award such fees only when "the district court had authority to award attorney fees." Consequently, according to him, a Rule 7.07(b) motion would have been futile. Snider also argues that a ...


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