The Supreme Court of Virginia releases three published opinions today. In this one, it upholds a trial court’s partial attorney fee award in a Magnuson-Moss Warranty Act consumer dispute.
The Butchers purchased an $80,000 RV from General R.V. Center that proved defective. After failed negotiations with the dealer and manufacturer (Keystone), they filed suit alleging violations of the Virginia Consumer Protection Act and the Magnuson-Moss Warranty Act. The parties eventually settled, with Keystone agreeing to repurchase the camper for $106,500 and stipulating that the Butchers were prevailing parties for purposes of the Magnuson-Moss fee-shifting provision, but left the fee amount unresolved.
Throughout settlement negotiations, the Butchers’ counsel James Feinman refused to discuss attorney fees simultaneously with the merits, citing a potential conflict of interest. After settlement, he offered to accept $20,000 in fees but gave Keystone only three days to respond and provided no documentation. Keystone declined. Four months later, with no meaningful further negotiation, the Butchers filed a fee motion seeking over $40,000, more than double their earlier demand. The trial court ultimately awarded $24,885, covering time spent on the underlying matter, but it excluded the 19.43 hours Feinman spent litigating the fee petition itself, finding that portion unreasonable under the facts and circumstances of the case.
The Butchers appealed, arguing that the exclusion was legal error because the fees on fees were necessarily reasonable given that the underlying fees were found reasonable and because Keystone’s rejection of their settlement offers left them no choice but to litigate.
The Court of Appeals rejected that argument, as did the Supreme Court. The Supreme Court emphasized that the abuse-of-discretion standard—which applied here—permits reversal only when reasonable jurists could not differ, and it found that threshold had not been met. And it reaffirmed that “fees on fees”—attorney fees incurred while litigating a fee petition—are subject to the same reasonableness standard as all other fees.
The Court identified three aspects of the record that adequately supported the trial court’s discretionary finding. First, Keystone had repeatedly attempted to resolve the fee issue throughout the case, while Feinman had stonewalled those efforts, made a single undocumented demand with an unreasonably short deadline, and then allowed the requested fees to balloon from $20,000 to over $40,000 during four months of apparent inactivity. Second, the case itself involved minimal litigation activity. There was no discovery or contested motions. This made it reasonable to conclude that doubling the fee award to account for the fee litigation was excessive. Third, the fee petition was undermined by deficiencies in Feinman’s billing records, including block billing that obscured time spent on individual tasks, an apparent failure to maintain contemporaneous records, and the misattribution of an associate’s hours to Feinman himself.
The Court was careful to note, however, that fees on fees may well be entirely appropriate in other circumstances and that fee-shifting statutes serve an important purpose in incentivizing consumer representation. But this decision turned entirely on the particular facts of this case rather than a categorical rule limiting fees on fees.
A Virginia Appellate Law Blog 