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Lambert v. Sea Oats Condominium Association, Inc.

Supreme Court of Virginia

April 13, 2017

MARTHA A. LAMBERT
v.
SEA OATS CONDOMINIUM ASSOCIATION, INC.

         FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH James C. Lewis, Judge

          OPINION

          WILLIAM C. MIMS, JUSTICE

         In this appeal, we consider whether the circuit court abused its discretion by limiting the amount of an award of attorney's fees based on the amount of damages recovered by the prevailing plaintiff. We also consider the stage of a proceeding at which a prevailing party who seeks an award of attorney's fees must meet its burden of proving that the amount sought is reasonable.

         I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW

         Martha A. Lambert owns a unit in the Sea Oats Condominium. In January 2014, she filed a warrant in debt in the general district court asserting that the Sea Oats Condominium Association, Inc. ("the Association") failed to pay $500 to repair an exterior door to her condominium. She alleged that the door was a common element and that the Association bore the burden of repairing it under the Association's declaration, its bylaws, and Code §§ 55-79.41 and 55-79.79(A). She sought, among other things, $500 in damages and an award of attorney's fees. The general district court thereafter entered judgment for the Association.

         Lambert appealed to the circuit court. In her bill of particulars there she again sought $500 in damages and an award of attorney's fees. At trial, Lambert testified and called an additional witness. She then rested. The Association then called two witnesses and rested. Lambert declined to present rebuttal evidence.

          At the conclusion of her closing argument, Lambert reminded the court that she was seeking an award of attorney's fees and supplied an affidavit stating that $8232.00 had been incurred. She noted that the Association had not had an opportunity to review the affidavit and requested a later hearing under Rule 3:25 to determine the reasonableness of the amount she sought. The Association then made its closing argument. It did not object to Lambert's request for an award of attorney's fees. It did not object to the affidavit when Lambert supplied it or when the court said it would mark the affidavit as filed.

         The court awarded judgment to Lambert for $500. It asked the Association how much time it needed to review Lambert's attorney's fees affidavit and expressed its preference that the parties respond in writing rather than holding a hearing. The Association asked for three weeks to respond and Lambert asked for one week thereafter to reply. The court adopted these dates as deadlines.

         In the Association's written response, it argued that under Chawla v. BurgerBusters, Inc., 255 Va. 616, 623, 499 S.E.2d 829, 833 (1998), Lambert was required to prove the reasonableness of her attorney's fees request during her prima facie case. Unlike the customary process in jury trials, it argued, Lambert did not seek to bifurcate the case by segregating the issue of attorney's fees from the merits of the underlying action. She adduced no evidence of her attorney's fees until she supplied the affidavit in her closing argument, after she had rested her case. This was after her prima facie case, the Association reasoned, so the circuit court could not award any attorney's fees.

         The Association also argued that the amount of attorney's fees Lambert sought was not reasonable for two reasons. First, it contended that the amount of attorney's fees in the affidavit was 16 times the amount of the judgment. It noted that in West Square, L.L.C. v. Communication Technologies, 274 Va. 425, 432-35, 649 S.E.2d 698, 701-03 (2007), this Court affirmed a circuit court's ruling that reduced an award of attorney's fees from the $80, 000 sought to $10, 000 when the prevailing party obtained an award of damages of $35, 000. The court's ruling thus reduced an award of attorney's fees from more than twice the amount of damages awarded to less than a third. Second, it asserted that the amount of attorney's fees in the affidavit was not reasonable because it included (1) work that should have been performed by staff, rather than an attorney; (2) work duplicated when Lambert chose to change counsel during the course of the proceeding; and (3) work likely completed when counsel represented Lambert in an earlier lawsuit.

         The court thereafter issued an opinion letter, without waiting for Lambert's reply to the Association's response, awarding Lambert only $375 in attorney's fees and asking her to prepare and circulate a final order. Lambert nevertheless filed a reply to the Association asserting that (1) attorney's fees are often decided after a ruling on the merits, (2) nothing requires the presentation of evidence of attorney's fees before the merits have been decided, and (3) in any event, the Association had agreed to the procedure for deciding attorney's fees that the court had proposed at trial.

         Citing Couch v. Manassas Autocars, Inc., 77 Va. Cir. 30 (Prince William Cnty. Cir. Ct. 2008) and Maximus, Inc. v. Lockheed Information Management Systems Co., 47 Va. Cir. 193, 204-05 (Richmond City Cir. Ct. 1998), Lambert also argued that circuit courts have ruled that there is no relationship between the amount of damages awarded and the reasonableness of the amount of attorney's fees incurred to obtain the award. Further, she noted that this Court ruled in Wilkins v. Peninsula Motor Cars, Inc., 266 Va. 558, 563, 587 S.E.2d 581, 584 (2003), that by authorizing an award of attorney's fees in a statute the General Assembly evidenced its intent to encourage private parties to enforce the statute through civil litigation. She asserted that Code § 55-79.53 is such a statute. Using the amount of damages awarded as a factor to determine the reasonableness of the amount of attorney's fees incurred, she continued, would undermine this legislative intent because private parties would not undertake private enforcement litigation where the money damages were small if they had to pay attorney's fees out of pocket. The statutes the General Assembly intended private parties to enforce would then have no effect.

         Thus, Lambert concluded, the court was required under the statute to award her reasonable attorney's fees because she prevailed on the claim in her warrant in debt. However, she conceded that some of the entries in the affidavit reflected work duplicated when she changed counsel. She therefore reduced her attorney's fees request from $8232.00 to $6918.50. However, she sought an additional $2650 for work incurred after the affidavit was provided to the court at trial, for a total of $9568.50.

         The court responded with a letter stating that it had reviewed Lambert's reply and was renewing its award of only $375 in attorney's fees. Lambert filed a motion to reconsider, again asserting that the amount of damages awarded is not a proper factor for the court to consider when evaluating the reasonableness of the amount of attorney's fees to award. The court held a hearing on the motion, at which it ruled that

I felt compelled to impose a relationship between the amount in controversy and the level to which I was going to require the defendant to pay your fees. And rightly or wrongly, I thought $6, 000 in attorney's fees on a case involving a dispute of $500 was not fair to the defendant. I didn't feel you were being the least bit unreasonable in any respect. You did a magnificent job for this young lady, but I just didn't think it was right to impose that kind of attorney's fees in a case where the amount in controversy was $500, and it was a close call. . . . It was a close call for you to win at all. And so I well understand, and I well appreciate your unhappiness with my setting the attorney's fees at what I did, but I'm going to stand by it and deny your motion. . . . Not for one instant because you didn't do a great job, because you did, but I just didn't think it was the right thing to do.

         Lambert thereafter prepared a final order consistent with the court's ruling. However, the court rejected the objections she included on the final order. It held another hearing at which Lambert entered her objections on the record orally. The Association also renewed its objections that Lambert was not entitled to any award at all because she had presented no evidence relating to attorney's fees in her prima facie case, and that the amount of attorney's fees Lambert sought was not reasonable. The court thereafter entered a corrected final order awarding Lambert $500 in damages and $375 in attorney's fees.

         We awarded Lambert this appeal and awarded the Association an ...


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