SW BELL TEL. CO. v. PARKER PEST CONTROL, INC.

SUMMERS, Justice.

The telephone company sued for $3867.00, the unpaid balance on a yellow pages advertising contract. The pest control company defended on the basis that it had paid for all that the services were worth, and that the phone company had so misrepresented the business benefits of the advertising that it amounted to fraud. Just before trial defendant, pursuant to 12 O.S. 1981 § 1101, offered to confess judgment in the sum of $1500.00. Plaintiff accepted the offer, leaving only the question of attorney fees unresolved. The trial court awarded the plaintiff telephone company a $5000.00 counsel fee and defendant appeals. The Court of Appeals reversed, holding that no attorney's fee should have been awarded.

We have granted certiorari and now must address two questions:

(1) Are attorney's fees recoverable in a suit on an unpaid yellow pages advertising account?

(2) If so, can the fee set herein be upheld as reasonable?

We answer in the affirmative as to the first, in the negative as to the second.

In Wieland v. Danner Auto Supply, Inc., 695 P.2d 1332 (Okl. 1984), we held that a plaintiff recovering a judgment by confession (under 12 O.S. 1981 § 1101, as in this case) was a prevailing party the same as if judgment had been entered after a trial on the merits. See also Dulan v. Johnston, 687 P.2d 1045 (Okl. 1984). Wieland, supra, ordered an attorney's fee for the prevailing plaintiff under 12 O.S. 1981 §§ 936, 939, even though the defendant confessed the judgment.

In this case all agree that the written contract was silent on attorney fees, and that if plaintiff is to recover a fee it must be based on 12 O.S. 1981 § 936, which is as follows:

Defendant pest control company asserts that yellow page advertising is not a service, citing The Classified Directory Subscribers Association et al v. Public Service Commission of the District of Columbia, 274 F.Supp. 261 (D.C. Columbia 1966). We find the opinion less than persuasive. The issue there was whether such advertising rates were for the type of services designed to be regulated by the Public Service Commission, along with the rates for utilities, etc. The court ruled they were not. Our issue, however, must be resolved by examining the language of the unambiguous attorneys' fee statute in its plain and ordinary meaning. Alfalfa Elec. Co. Op. Inc. v. First National Bank & Trust Co. of Okla. City, 525 P.2d 644 (Okl. 1974); W.S. Dickey Clay Mfg. Co. v. Ferguson Inv. Co., 388 P.2d 300 (Okl. 1963).

The Court of Appeals in reversing the fee award relied on Russell v. Flanagan, 544 P.2d 510 (Okl. 1975) which held that a suit for breach of warranty, though "collaterally concerning labor or services" was "not a civil action for labor or services within the meaning of ... § 936". Id. at 512. We find this reliance to be misplaced, and refer to our language clarifying Russell v. Flanagan, supra, in Burrows Construction Co. v. Independent School District No. 2, Stephens Co., 704 P.2d 1136, 1138 (Okl. 1985):

By 68 O.S. 1981 § 1351 Oklahoma imposes a sales tax on all "services" not otherwise exempt. Specifically, advertising is so taxed under 68 O.S. 1981 § 1354(J), unless it is of the type otherwise exempted.

Webster's 9th New Collegiate Dictionary defines "service" as:

No argument is advanced that tends to convince us advertising is not a service. By this opinion we hold that it is. Nor is this a case arising from "an aspect collaterally relating to labor and service," as in Russell. It is simply a suit based on failure to pay for the service rendered, namely advertising. Our ruling in Burrows mandates that the opinion of the Court of Appeals be vacated and the telephone company allowed an attorneys' fee pursuant to § 936.

The question then becomes whether the award of $5000.00 is reasonable in light of the amount sued for and recovered. The telephone company's evidence submitted in support of its application for fee shows 113.25 hours performed by five attorneys at rates ranging from $50.00 to $90.00 per hour for a total fee claimed of $6585.00.

In Wieland, supra, we held that a plaintiff recovering a confessed judgment under 12 O.S. 1981 § 1101 is entitled to a reasonable attorneys fee for services "accruing up to and including the date defendant's offer to confess judgment was received." Id. at P. 1334. That date in the instant case was September 12, 1984. Plaintiff's time records admitted in evidence disclose that 32.0 hours of the attorneys' time billed and claimed were performed after that date. The fee allowed, even as reduced by the trial court, thus goes beyond that authorized in Wieland.

Defendant urges that a $5000.00 fee is patently excessive for a $3867.00 lawsuit ultimately settled for $1500.00. He assails the doctrine enunciated in State ex rel. Burk v. Oklahoma City, 598 P.2d 659 (Okl. 1979) as necessarily imposing excessive attorneys' fees in cases such as this. In Burk we mandated that the trial court first determine hourly compensation by multiplying hours times rate, and then adding to that an amount based on the following guidelines:

Several observations are in order.

First, the Burk directives were expressly given to be used "in this type of case." Burk, at P. 661. That case involved an "equitable fund" created for the victorious party through the efforts of its attorneys. We then evaluated cases from other jurisdictions in determining the standards used in fixing a fee to be charged against the "equitable fund." Since that time this court has not limited the standards set out in Burk for determining the amount of a fee to cases involving an "equitable fund", and has applied them generally where attorney fees are otherwise recoverable against the opposing party. See, for example, Professional Construction Consultants, Inc. v. State, 646 P.2d 1262 (Okl. 1982) (fee allowed pursuant to 12 O.S. 1981 § 936); Matter of Estate of Bartlett, 680 P.2d 369 (Okl. 1984) (fee for representing an administrator in probate); Briscoe v. Harper Oil Co., 702 P.2d 33 (Okl. 1985) (damages to real property). We have not, however, eliminated the Burk mandated "amount involved" as a factor to be considered. See, for example, Catlin Aviation v. Equilease Corporation, 626 P.2d 857 (Okl. 1981), holding that the trial court did not abuse its discretion in allowing a $600.00 attorney's fee to go with an $1167.00 judgment, notwithstanding that plaintiff's attorney had more than 100 hours in the case.

Second, in Oliver's Sports Center v. Nat. Standard Ins., 615 P.2d 291 (Okl. 1980) an attorneys' fee of $60,000.00 was challenged in a case where plaintiff recovered $160,000.00 on an insurance policy plus $20,000.00 compensatory damages for bad faith in failing to settle. The attorneys' fee, authorized by statute in such cases, was affirmed on appeal, as being consistent with Burk, supra. In Oliver's Sports, however, we said:

Other courts have considered the problem of excessive attorneys' fees due to the overworking of a case. In Travieso v. Travieso, 447 So.2d 940, 944 (Fla. Dist. Ct. App. 1984), the court said, quoting from Baruch v. Giblin, 122 Fla. 59, 164 So. 831, 833 (1935):

In Carkeek v. Ayer, 188 Mont. 345, 613 P.2d 1013 (1980) plaintiff sued for $6200.00 and recovered a judgment of $3311.00. After asking for $5700.00 in attorney fees the plaintiff was awarded $3000.00 and appealed. The appellate court affirmed the fee as reduced, saying (613 P.2d 1015)

In Argonaut Insurance Co. v. ABC Steel Products, 582 S.W.2d 883 (Tex.Civ.App. 1979) the court indicated that if the total of hours spent was as the attorney claimed then the case had been overworked, stating (P. 889)

See also Lytle v. Lytle, 266 Ark. 124, 583 S.W.2d 1 (1979).

We make these observations and quote from the other jurisdictions with approval to demonstrate that not in Burk nor anywhere else have we rejected the notion that an attorneys' fee must bear some reasonable relationship to the amount in controversy. It does, and that relationship must be considered in each case where an attorneys' fee is awarded.

Having said that we return to the facts of this case. Defendant pest control company's expert testified that this was a "simple collection case", that no special skill was required, and that it was overworked. The trial court basically disagreed, allowing a $5,000.00 fee. Our standard of review requires that we affirm unless we find an abuse of discretion. Burk, supra.

In the first place, the fee as allowed is excessive, and was thus an abuse of discretion, for the reason we have heretofore stated. Wieland, supra.

On the other hand, we agree with the trial court that this was no simple collection case. What may have started out as such case did not stay that way for long. Defendants' answer, subsequent pleadings and briefs made it into a case involving allegations of fraud. Essentially the defense was that the telephone company, in what amounted to constructive fraud, misrepresented the benefits that would accrue to defendants' business by enlarging its yellow page advertising. Defendant in its trial brief refers to hundreds of thousands of customers of the plaintiff who must be able to rely on the plaintiffs representations as to predicted results, and characterizes the case as involving "certainly a public interest". It was therefore predictable that the telephone company would hardly prosecute the case as a simple collection.

Taking into account all factors herein noted, including but not limited to the amount in controversy, we conclude that a reasonable attorneys fee for the plaintiff to be taxed against the defendant is $3000.00. The opinion of the Court of Appeals is vacated. The judgment of the trial court is modified as to the amount of the attorneys' fee only and otherwise affirmed.

DOOLIN, C.J., and LAVENDER, SIMMS, ALMA WILSON and KAUGER, JJ., concur.

OPALA, J., concurs in part; dissents in part.

HARGRAVE, V.C.J., dissents.

HODGES, J., disqualified.

OPALA, Justice, concurring in part and dissenting in part.

I concur in today's opinion only insofar as it holds that the contract in suit is one for "services" within the meaning of 12 O.S. 1981 § 936.

I cannot accede to the court's view, initially adopted in Wieland v. Danner Auto Supply, Inc.,1 and now reiterated here, which accords "prevailing party" status to a plaintiff who has accepted a defendant's lump-sum offer to confess judgment under the terms of 12 O.S. 1981 § 1101. The defendant's § 1101 lump-sum offer to confess judgment in this case should be construed as all-inclusive. It doubtless represents an effort to dispose of the offeror's entire legal liability in the contested action and it must hence be treated in law as embracing within its terms all the items which the adversary party-offeree could have recovered in its suit. The counsel-fee claim was here but an element of the total recovery sought. Our teaching in Wieland — allowing counsel-fee recovery to a plaintiff who has accepted a § 1101 lump-sum offer to settle — should be confined by today's decision to those § 1101 proposals of confession which in explicit terms (a) exclude counsel-fee liability from their purview, or (b) call for a post-acceptance adversary hearing to settle the fee to be allowed against the offeror.2

Lastly, I dissent from that part of today's opinion which gives this court's imprimatur to a $3,000 counsel-fee award for obtaining a $1,500 judgment by confession.3

No economic benefit can be derived from legal service whose claimed cost is twice the amount of recovery. The objective gauge for pragmatically measuring the marketplace value of a lawyer's forensic work must remain the same whether liability for its performance falls on the plaintiff who procured the rendition or on the plaintiff's vanquished adversary. Since no sane creditor would pay for collecting an obligation double the amount accepted as due from the debtor, judicial imposition of such counsel-fee liability makes no economic sense. It can be justified only as a punitive measure to deter defendants from waging forensic contests. There is no sanction in our law — decisional, statutory or constitutional — for judicial use of counsel-fee awards as a device to hamper the litigants' access to courts, and I would not countenance, however obliquely, a course of decision-making that runs so clearly counter to the law's long-established policy and to our constitutional order of free institutions.4

I would circumscribe the perimeter of the Wieland doctrine and reverse the fee award to the plaintiff-offeree with directions to vacate it in toto; I would let the unchallenged $1,500 judgment by confession stand and allow the plaintiff to recover additionally only ordinary cost items statutorily taxable of course5 in the district court; I would further direct that each party bear its own appeal-related counsel-fee expense.