Saimon v Wainit [2008] FMSC 61; 16 FSM Intrm. 143 (Chk. 2008) (29 September 2008)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2008-1044

SALOMON SAIMON,
Plaintiff,

vs.

TADASHI WAINIT,
Defendant.

___________________________________

ORDER GRANTING SUMMARY JUDGMENT IN PART

Ready E. Johnny
Associate Justice

Hearing: September 19, 2008
Decided: September 29, 2008

APPEARANCES:

For the Plaintiff: Salomon M. Saimon, Esq.
P.O. Box 750
Weno, Chuuk FM 96942

For the Defendant: Johnny Meippen, Esq.
P.O. Box 705
Weno, Chuuk FM 96942

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HEADNOTES

Civil Procedure  Summary Judgment
When no response has been filed to a pending summary judgment motion, the non-movant's failure to respond is deemed a consent to the motion, but the motion still must have a sound basis in law and fact in order for the court to grant it, and even though the non-movant's non-response to a summary judgment motion constitutes a failure to overcome the plaintiff's prima facie case, the movant plaintiff still must also overcome all affirmative defenses that the defendant has raised in order to succeed on his summary judgment motion. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 146 (Chk. 2008).

Contracts  Account Stated
An account stated is a species of contract action, in which the plaintiff must prove that the defendant agreed to pay a specific amount to the plaintiff. It is an agreement, based on prior transactions between the parties, that all terms of the account are true and that the balance struck is due and owing from one party to the other. An account stated is an agreement, expressed or implied, that an examination of the account between the parties has occurred, a statement of that account has been asserted, and accepted as correct. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 146-47 (Chk. 2008).

Contracts  Account Stated; Contracts  Implied Contracts
The existence of an account stated need not be express and frequently is implied from the circumstances. For example, where a creditor renders a statement and the debtor fails to object in a reasonable time, the open account may be superseded by an account stated. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 147 n.1 (Chk. 2008).

Attorney's Fees
In order for a law firm to prevail on a summary judgment motion on an account-stated claim for attorney's fees, it has to show that, as a matter of law, the defendant personally was the client for whom all the legal services were performed or that he had agreed to pay for all such services rendered. But that does not end the inquiry. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 147 (Chk. 2008).

Attorney's Fees; Contracts
Although fee suits appear from a distance to be basically suits to recover on a breach of contract or, in some instances, to recover for the reasonable value of personal services, on closer inspection, the law is clear that lawyers suing clients are not treated as are merchants suing former trading partners. The procedural landscape is much narrower and more tightly regulated. The burden is on the lawyer to present detailed evidence of services actually rendered. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 147 (Chk. 2008).

Attorney's Fees; Contracts
There are two principal ways in which attorney-fee suits differ from other kinds of collection suits between commercial strangers. One is that the court, exercising its supervisory powers over lawyers, can reduce the amount charged, and the other is that the defenses available to clients are expanded. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 147 (Chk. 2008).

Attorney's Fees; Contracts  Account Stated
An attorney seeking to recover unpaid attorney fees on the theory of account stated must prove the reasonable value of the services rendered if the fee agreement was entered into during the course of the attorney-client relationship. This is because when the account stated is for legal services, there is a presumption of undue influence when entered between an attorney and client during their fiduciary relationship. The attorney has the burden of showing that the transaction was fair and regular and entered voluntarily by the client with full knowledge of the facts. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 147 (Chk. 2008).

Attorney's Fees
Although a written agreement may provide for a specified attorney fee, the courts may inquire into the reasonableness of the fee. Thus, even when enforcing a fee contract, the attorney's fee must still be reasonable or the court may reduce it because the fee charged under the fee contract is always subject to reduction by the court in the exercise of a supervisory power over lawyers. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 148 (Chk. 2008).

Attorney's Fees
Just like any plaintiff, any party seeking attorney's fees, including a plaintiff law firm suing for the fees it claims to have earned, always bears the burden of providing sufficient evidence to prove its claim. More must be presented than bills issued to the client (or a mere compilation of hours multiplied by a fixed hourly rate) since this type of data does not provide the court with enough information about their reasonableness  a matter which the court cannot determine on the basis of conjecture or conclusions of the attorney seeking the fees. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 148 (Chk. 2008).

Attorney's Fees
To determine the legal fees' reasonableness, the court would need evidence of the services performed, by whom they were performed, the time expended thereon and the hourly rate charged therefor because an appropriate fee consists of reasonable charges for reasonable services. When there is nothing, other than the client's affirmation of debt while he was seeking counsel for a pending criminal appeal, to prove the reasonable value of the services rendered, the affirmation is insufficient. Merely because a client affirmed that a specified amount was due is not enough to prove the services' reasonable value. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 148 (Chk. 2008).

Judgments
Any final judgment, when it is not entered by default, must grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 148 (Chk. 2008).

Interest and Usury; Judgments
Pre-judgment interest cannot be awarded until the court has determined when payment would reasonably have been due. Saimon v. Wainit, [2008] FMSC 61; 16 FSM Intrm. 143, 148 (Chk. 2008).

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COURT'S OPINION

READY E. JOHNNY, Associate Justice:

On August 11, 2008, the plaintiff, Salomon Saimon, filed and served his summary judgment motion. No response was filed. A hearing was set for September 19, 2008 and duly noticed. Saimon appeared. The defendant, Tadashi Wainit, did not. The motion is granted in part. The reasons follow.

I.

On June 17, 2008, Saimon filed a complaint alleging that Wainit owed him, on an account stated, for legal work that Saimon, doing business as the Law Offices of Saimon and Associates, had done for Wainit. His complaint prayed for the $40,849.22 in fees for the account stated; 9% post-judgment interest; costs and attorney's fees; and "[a]ll costs and fees deemed just and equitable by the Court."

On July 1, 2008, Wainit, through counsel, answered. He admitted that the plaintiff performed the legal work and the dollar amount of the work, but denied that he was liable because, he asserted, the work was done for him in his official capacity as an Udot municipal official and Saimon understood that payment would be Udot Municipality's responsibility. Wainit also asserted that therefore Udot Municipality was an indispensable party to this action and that Saimon was required to name and serve Udot as well.

II.

Saimon's August 11, 2008 summary judgment motion seeks not only judgment for the $40,849.22 attorney's fees but also 9% prejudgment interest since July 19, 2006. Wainit did not respond to this motion. When no response has been filed to a pending summary judgment motion, the non-movant's failure to respond is deemed a consent to the motion, but the motion still must have a sound basis in law and fact in order for the court to grant it. Joe v. Kosrae, [2004] FMSC 28; 13 FSM Intrm. 45, 47 (Kos. 2004); see also Actouka v. Kolonia Town, [1991] FMSC 20; 5 FSM Intrm. 121, 123 (Pon. 1991).

Even though a non-movant's non-response to a summary judgment motion constitutes a failure to overcome the plaintiff's prima facie case, the movant plaintiff still must also overcome all affirmative defenses that the defendant has raised in order to succeed on his summary judgment motion. Lee v. Lee, [2004] FMSC 31; 13 FSM Intrm. 68, 71 (Chk. 2004); see also FSM Social Sec. Admin. v. Fefan Municipality, [2007] FMSC 4; 14 FSM Intrm. 544, 546 (Chk. 2007). Wainit's answer raised as a defense that Udot Municipality, not he, was responsible for the debt and that Udot was an indispensable party that had to be named and served.

III.

Attached to the summary judgment motion, as Exhibit A, was an attorney-client fee agreement between Wainit and Stephen V. Finnen (a former associate in Saimon's law office), signed by Wainit on July 19, 2006, and in which Finnen agreed to represent Wainit in a pending criminal appeal. Section eight of that document provides:

Client [Wainit] understands and affirms that a debt is owed to the Law Offices of Saimon & Associates, for previous representation, and that outstanding amount is $40,849.22. Client agrees to pay this amount within a reasonable time period. He may seek payment by other entities, such as the Municipality of Udot, but he is the one ultimately responsible for the debt. This affirmation is part of the consideration for this agreement.

Attorney-Client Fee Agreement at 3. This may be considered an account stated. "An account stated is a species of contract action, in which the plaintiff must prove that the defendant agreed to pay a specific amount to the plaintiff." Frank M. McDermott, Ltd. v. Moretz, [1990] USCA4 753; 898 F.2d 418, 421 (4th Cir. 1990). It is "'an agreement, based on prior transactions between the parties, that all terms of the account are true and that the balance struck is due and owing from one party to the other.'" S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1091 (9th Cir. 1989) (quoting Trafton v. Youngblood, 442 P.2d 648, 653 (Cal. 1968)). "An account stated is an agreement, expressed or implied, that an examination of the account between the parties has occurred, a statement of that account has been asserted, and accepted as correct."[1] Polygram, S.A. v. 32-03 Enterprises, Inc., 132 697 F. Supp. 132, 136 (E.D.N.Y. 1988).

In order for a law firm to prevail on a summary judgment motion on an account-stated claim for attorney's fees, it has "to show that, as a matter of law, [the defendant] personally was the client for whom all the legal services were performed or that he had agreed to pay for all such services rendered." LeBoeuf, Lamb, Greene & MacRae, LLP v. Worsham, [1999] USCA2 318; 185 F.3d 61, 64 (2d Cir. 1999). Section eight does that. In that section Wainit affirms his personal (and ultimate) responsibility for the debt. This is sufficient for Saimon to overcome Wainit's affirmative defense that Udot Municipality, not he, was responsible for the debt. It thereby also overcomes Wainit's claim that Udot Municipality is an indispensable party that must be joined.

There being no genuine issue of material fact concerning liability, Saimon is therefore entitled to summary judgment that Wainit is liable to him for attorney's fees for the work his office performed that resulted in the $40,849.22 billing.

IV.

But that does not end the inquiry. Although

[f]ee suits appear from a distance to be basically suits to recover on a breach of contract or, in some instances, to recover for the reasonable value of personal services . . . on closepection, the law law . . . is cthat rs sers suing clng clients are not treated as are merchants suing former trading partners. The procedural landsca muchower ore ty regulated. The burden is onis on the the lawyer to present detailed evidence once of serf services actually rendered.

Charles W. Wolfram, Modern Legal Ethics § 9.6, at 554 ) (footnote omie omitted). "There are two principal ways in which fee suits differ from other kinds of collection suits between commercial strangers." Id. at 555. One is that the court,cising its supervisory powe powers over lawyers, can reduce the amount charged, and the other is that the defenses available to clients are expanded. Id.

"[A]n attorney seeking to recover unpaid attorney fees on the theory of account stated must prove the reasonable value of the services rendered if the fee agreement was entered into during the course of the attorney-client relationship." Rhode, Titchenal, Bauman & Scripter v. Shattuck, 619 P.2d 507, 508 (Colo. Ct. App. 1980) (declining to extend same principle to accountant-client relationship because courts have no direct responsibility to monitor ethical standards of professions other than legal profession). This is because when the account stated "is for legal services, there is a presumption of undue influence when entered between an attorney and client during their fiduciary relationship. The attorney has the burden of showing that the transaction was fair and regular and entered voluntarily by the client with full knowledge of the facts." Nilsson, Robbin, Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec, [1988] USCA9 840; 854 F.2d 1538, 1543 (9th Cir. 1988).

"Although a written agreement may provide for a specified attorney fee, the courts may inquire into the reasonableness of the fee." Hebert v. Neyrey, 432 So. 2d 396, 401 (La. Ct. App. 1983). Thus, even when enforcing a fee contract, the attorney's fee must still be reasonable or the court may reduce it, Aggregate Sys., Inc. v. FSM Dev. Bank, [2002] FMSC 1; 10 FSM Intrm. 493, 496 (Chk. 2002), because "[t]he fee charged under the fee contract is always subject to reduction by the court in the exercise of a supervisory power over lawyers," Wolfram, supra, § 9.6, at 555t like any plainplaintiff, any party seeking attorney's fees, including a plaintiff law firm suing for the fees it claims to have earned, always bears the burdeproviding sufficient evidence to prove its claim. See People of Rull ex rel. Ruepong v. M/V Kyowa Violet, [2007] FMSC 39; 15 FSM Intrm. 53, 63 (Yap 2007), rev'd on other grounds[2008] FMSC 53; , 16 FSM Intrm. 49 (App. 2008). More must be presented than bills issued to the client (or a mere compilation of hours multiplied by a fixed hourly rate) since this type of data does not provide the court with enough information about their reasonableness  a matter which the court cannot determine on the basis of conjecture or conclusions of the attorney seeking the fees. Id.

In this case, the court has before it only the total bill, $40,849.22. Furthermore, Wainit's affirmation of that amount was part of the consideration for Finnen to represent Wainit in a pending criminal appeal in 2006, Finnen was the associate in Saimon's law office who, according to Saimon at oral argument, did the bulk of the work for the $40,849.22 bill. Saimon must therefore show that this amount is reasonable. To determine the legal fees' reasonableness, the court would need evidence of the services performed, by whom they were performed, the time expended thereon and the hourly rate charged therefor because an appropriate fee consists of reasonable charges for reasonable services. Id. There is nothing, other than Wainit's affirmation of debt while he was seeking counsel for a pending criminal appeal, to prove the reasonable value of the services rendered to Wainit. Wainit's affirmation is insufficient. Merely because Wainit affirmed that a specified amount was due is not enough to prove the services' reasonable value. Cf. Cushnie v. State Bar of Texas, 845 S.W.2d 358, 359-60 (Tex. App. 1993) (although client's vice-president told attorney that bill appeared reasonable, attorney sanctioned for charging $2,500-an-hour in a contract case).

V.

Pre-judgment interest was not prayed for in the complaint unless the catchall phrase, "[a]ll costs and fees deemed just and equitable by the Court" at the prayer's end was meant to include it. But since Wainit answered the complaint, any judgment against him will not be entered by default. Any final judgment, when it is not entered by default, must "grant the relief to which the party in whose favor it is rendered [Saimon] is entitled, even if the party has not demanded such relief in the party's pleadings." FSM Civ. R. 54(c).

But, assuming, without deciding, that Saimon could be entitled to pre-judgment interest as allowed in Coca-Cola Beverage Co. (Micronesia) v. Edmond, [1998] FMSC 20; 8 FSM Intrm. 388, 393 (Kos. 1998) (pre-judgment interest at the 9% statutory judgment rate is appropriate when the defendant knew precisely the amount to which he was obligating himself and the effective date of that commitment), there is no evidence before the court that would permit the court to determine when the "within a reasonable time period" would end and the sum would then be considered due and the pre-judgment interest on the sum would start to accrue. On July 19, 2006, Wainit agreed that the debt would be due "within a reasonable time period." The court must assume that "a reasonable time period" was intended to be longer than the thirty days set out in section four of the agreement for payment of future monthly billings for work to be done on the pending appeal, Attorney-Client Fee Agreement at 2, because of the debt's size and an acknowledgment that Wainit could seek payment from other "entities," which the parties must have expected would take some time. Pre-judgment interest cannot be awarded on attorney's fees claim, until the court has determined when payment would reasonably have been due. See Body, Vickers & Daniels v. Custom Mach., Inc., 602 N.E.2d 1237, 1242 (Ohio Ct. App. 1991) (on remand, trial court to determine when a Nov. 30, 1987 bill would reasonably have been due and award interest from that date).

VI.

Accordingly, summary judgment is granted in Saimon's favor on the issue of Wainit's liability for fees for services rendered by the Law Offices of Saimon & Associates and is denied as to the amount because there is nothing before the court to show the reasonableness of the amount sought.

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^[1]"The existence of an account stated need not be express and frequently is implied from the circumstances. For example, where a creditor renders a statement and the debtor fails to object in a reasonable time, the open account may be superseded by an account stated." Davis & Cox v. Summa Corp., [1985] USCA9 86; 751 F.2d 1507, 1515 (9th Cir. 1985) (citation omitted). In this case, the account stated is express because Wainit expressly affirmed the account.