LPP Mortgage Ltd v Maras [2003] FMSC 47; 12 FSM Intrm. 112 (Chk. 2003) (29 September 2003)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as LPP Mortgage Ltd. v. Maras, [2003] FMSC 47; 12 FSM Intrm. 112 (Chk. 2003)

[2003] FMSC 47; [12 FSM Intrm. 112]

LPP MORTGAGE LTD.,
Plaintiff,

vs.

MURAKO MARAS and KEICHIRO DAWE,
Defendants.

CIVIL ACTION NO. 2002-1019

ORDER

Dennis K. Yamase
Associate Justice

Decided: September 29, 2003

APPEARANCES:

For the Plaintiff:
Craig D. Reffner, Esq.
Law Office of Fredrick L. Ramp
P.O. Box 1480
Kolonia, Pohnpei FM 96941

For the Defendant (Maras):
Camillo Noket, Esq.
Directing Attorney
Micronesian Legal Services Corporation
P.O. Box D
Weno, Chuuk FM 96942

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HEADNOTES

Attorney, Trial Counselor and Client - Fees
Attorney fee awards in the FSM Supreme Court are generally limited to those authorized either by statute or by contract. LPP Mortgage Ltd. v. Maras, [2003] FMSC 47; 12 FSM Intrm. 112, 113 (Chk. 2003).

Attorney, Trial Counselor and Client - Fees
It is an abuse of the trial court’s discretion to award attorney’s fees without first determining their reasonableness, and it is especially important for the court to scrutinize carefully and to strictly construe contractual provisions which relate to the payment of attorney’s fees. LPP Mortgage Ltd. v. Maras, [2003] FMSC 47; 12 FSM Intrm. 112, 113 (Chk. 2003).

Attorney, Trial Counselor and Client - Fees
The court is the final arbiter of whether an attorney fee award it orders is reasonable. Merely because an attorney has billed his client for a certain amount does not make that amount reasonable for a court-ordered award. LPP Mortgage Ltd. v. Maras, [2003] FMSC 47; 12 FSM Intrm. 112, 113 (Chk. 2003).

[12 FSM Intrm. 113]

Attorney, Trial Counselor and Client - Fees; Debtors’ and Creditors’ Rights
Except for unusual circumstances, 15% is the upward limit for an attorney’s fee to be deemed reasonable when it is awarded pursuant to a stipulation for the payment of attorney’s fees in a debt collection case. LPP Mortgage Ltd. v. Maras, [2003] FMSC 47; 12 FSM Intrm. 112, 113 (Chk. 2003).

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COURT’S OPINION

DENNIS K. YAMASE, Associate Justice:

On September 23, 2003, the plaintiff and defendant Murako Maras filed a stipulated motion for entry of judgment and a proposed judgment against defendant Murako Maras in LPP Mortgage Ltd.’s favor. Parties are invited to provide further support for part of the motion.

One item of the proposed judgment was "an award of attorney’s fees of $18,6548.94" [sic] which was to be added to the principal judgment amount of $89,415. The court has not approved the proposed judgment for two reasons. One is that it cannot determine with certainty what amount is meant by the figure "$18,6548.94."

The second reason is that, assuming that the fee award sought is meant to be in the $18,000 range, it may not be reasonable for a court award. Unless the court has overlooked it, neither the loan agreement nor the promissory notes seem to provide for the payment of an attorney’s fee award in the event of default on the loan repayment. The mortgage, in the event of a default on the promissory note, makes the defendant liable for "a reasonable attorney’s fee actually incurred not to exceed $300, if no complaint is filed or ½ of one percent of the principal and interest due and owing on the note, whichever is greater." Mortgage 17. This would seem to limit any attorney’s fee award in this case to $447.08.

Attorney fee awards in this court are generally limited to those authorized either by statute or by contract. FSM Telecomm. Corp. v. Worswick, [1999] FMSC 22; 9 FSM Intrm. 6, 18 (Yap 1999) (each party will normally bear its own attorney’s fees when there is no statutory or contractual basis for an attorney fee request). It is an abuse of the trial court’s discretion to award attorney’s fees without first determining their reasonableness, Senda v. Creditors of Mid-Pacific Constr. Co., [1996] FMSC 18; 7 FSM Intrm. 664, 673 (App. 1996), and it is especially important for the court to scrutinize carefully and to strictly construe contractual provisions which relate to the payment of attorney’s fees, Bank of the FSM v. Bartolome, 4 FSM Intrm. 182, 185 (Pon. 1990). Thus, the court is the final arbiter of whether an attorney fee award it orders is reasonable. Merely because an attorney has billed his client for a certain amount does not make that amount reasonable for a court-ordered award.

If the court has overlooked a provision entitling the plaintiff to an attorney’s fee award in excess of $447.08, then the interested parties are invited to provide such authority. The interested parties should then also address why an attorney’s fee award in this case should exceed fifteen percent of the outstanding principal and interest. Under Bank of Hawaii v. Jack, [1990] FMSC 7; 4 FSM Intrm. 216, 221 (Pon. 1990), except for unusual circumstances, 15% is the upward limit for an attorney’s fee to be deemed reasonable when it is awarded pursuant to a stipulation for the payment of attorney’s fees in a debt collection case.

The interested parties, the plaintiff and defendant Maras, shall file and serve their responses to this order no later than October 13, 2003. Any party may file and serve a reply to any response, within seven days or by October 20, 2003, whichever is sooner. The court will then rule on the motion.