In Selleck v. Keith M. Evans Insurance, Inc., the Missouri Court of Appeals for the Eastern District remanded a case back to the trial court for further consideration on the reasonableness of an award of attorney’s fees, under the Missouri Merchandising Practices Act. The trial court ruling limiting plaintiff’s fees based upon his contingency fee agreement with his attorney was overturned.
Plaintiff sued his former employer in state Circuit Court for wrongful discharge, unpaid commissions under the MMPA, unjust enrichment and breach of contract. The litigation was “contentious” and “antagonistic”, with numerous discovery disputes. At trial, plaintiff requested damages for wrongful discharge in the amount of $160,000 and lost commissions in the amount of $11,709. Plaintiff presented evidence at trial that he had hired counsel on a contingency fee basis. The jury ruled for Defendant on the wrongful discharge claim, but awarded Plaintiff $10,000 for lost commissions on his MMPA claim.
Plaintiff’s counsel filed a post-trial motion seeking attorney’s fees in the amount of $221,292 under § 407.193, which states that a trial court “may award reasonable attorney’s fees and costs to the prevailing party.” Plaintiff’s counsel represented that they billed 788 hours by attorneys with hourly billing rates of $280 and $450. Noting that Plaintiff has entered into a one-third contingency fee agreement with counsel, the Court ruled that Plaintiff was entitled to reasonable attorney’s fees and awarded $3,333.33, or one-third of the $10,000 recovery. The Court found that the $221,292 claimed by plaintiff’s counsel was not reasonable and extremely excessive for the type of case involved. Plaintiff appealed.
Contingency Fee Agreement Does Not Serve as a Cap on MMPA Attorney’s Fees
Plaintiff’s single point on appeal was that the trial court erred in utilizing the contingency fee agreement to determine the award of attorneys’ fees under the MMPA. The Court of Appeals agreed. Although Missouri law does not prohibit consideration of a contingency fee agreement in making a reasonable-fee determination, it is only one of many factors that must be considered. However, the agreement cannot be used to impose an automatic ceiling on reasonable fees to be awarded. The Court must also consider other factors, including a determination of a “lodestar” amount – determined by multiplying the reasonable number of hours for the type of case by a reasonable hourly rate determined by rates customarily charged by the attorneys involved as well as other attorneys in the community offering similar services.
Concluding that the Circuit Court had used the contingency fee agreement to determine a cap on reasonable fees for Plaintiff’s counsel, the Court of Appeals reversed, and remanded the matter to the trial court for a determination of a reasonable fee based upon not only the contingency fee agreement, but also:
-the rates customarily charged by the attorneys and others in the community for similar services, -the number of hours reasonably expended on the case, -the nature and character of the services rendered, -the degree of professional ability required, -the nature and importance of the matter, -the amount involved or the results obtained, and -the vigor of the opposition.
Conclusion - Guidance for the Future
Although a contingency fee agreement may be considered in determining reasonable attorney’s fees under the MMPA, it is but one of many factors for the trial court to assess. The contingency fee provided for in the agreement cannot be used as a “cap” on MMPA attorney’s fees.