Capron & Edwards P.C. v. Holden & Carr, P.C.

FILED
United States Court of Appeals
Tenth Circuit
May 20, 2009
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
__________________________
SAMUEL D. EDWARDS,
Plaintiff,
v. No. 07-7050
(E.D. Okla.)
JOHN DOE; JANE DOE, (D.Ct. No. CIV-04-096-W)
Defendants,
PEPSICO, INC., a North Carolina
corporation; CONOPCO, INC.,
d/b/a Thomas J. Lipton Company, a
Virginia corporation; B.W.
SINCLAIR, INC., a Texas corporation,
Defendant Cross-Claimant
Cross-Defendant,
LOCKWOOD GREENE ENGINEERS,
INC., a foreign corporation,
Defendant-Cross-Claimant,
v.
WM. W. MEYER & SONS, INC., an
Illinois corporation,
Defendant- Cross-Defendant,
and
PEPSI-COLA COMPANY, a North
Carolina corporation;
Defendant Cross-Defendant,
WHITLOCK PACKAGING
CORPORATION, INC,.
Third-Party-Defendant,
-----------------------------------
CAPRON & EDWARDS, P.C.,
Movant-Appellant,
v.
HOLDEN & CARR, P.C.,
Movant-Appellee.
____________________________
ORDER AND JUDGMENT *
Before MURPHY, HOLLOWAY, and O’BRIEN, Circuit Judges.
Capron & Edwards, P.C., appeals from the district court’s grant of
summary judgment in favor of Holden & Carr, P.C., enforcing its attorney’s lien
and adopting its interpretation of a fee agreement. We conclude Capron &
Edwards has standing to appeal and the district court’s exercise of supplemental
*
This order and judgment is not binding precedent except under the doctrines of
law of the case, res judicata and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
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jurisdiction was proper, but reverse because the court erred in interpreting the fee
agreement.
I. BACKGROUND
On March 4, 2004, Holden & Carr (formerly Holden & McKenna) entered
into a fee agreement (“Fee Agreement”) with Samuel Edwards (“plaintiff”).
Stephen J. Capron, then a member of Holden & Carr, negotiated and prepared the
Fee Agreement and executed it on behalf of the firm. The Fee Agreement
provides, in pertinent part:
WHEREAS, Client has agreed to employ Attorney to bring said
actions and prosecute the same through trial only, or otherwise
satisfactory settlement to Client and Attorney before trial
***
A. Except as otherwise limited by law, Attorney’s fees to
be paid by Client shall be calculated in accordance with
the following:
1. In the event said cause or causes are settled
without suit, or in the even[t] suit is filed and
successfully settled or otherwise resolved before
pre-trial, a sum equal to forty-five percent (45%)
of the first $200,000 of damages recovered will be
Attorney’s fee.
2. In the event said cause or causes are settled after
pre-trial, but before any appeal, or in the event
said cause or causes are successfully tried and
collection of any judgment is made before any
appeal is filed, a sum equal to fifty percent (50%)
of all damages recovered will be Attorney’s fee.
3. In the event that damages in excess of $200,000
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are recovered, a sum equal to fifty percent (50%)
of those damages in excess of $200,000 will be
Attorney’s fee in addition to the Attorney’s fee
described in paragraph number one.
4. In the event a judgment obtained is appealed by
the defendant or defendants, or in the event that
Client deems an appeal to be appropriate for any
reason, Attorney is not obligated to engage in any
representation of Client on appeal. Any such
representation will be negotiated separately from
this agreement for representation in the trial court,
and any agreement reached between the parties for
such representation will be subject to a separate
written contract or will not be enforceable by
either party.
***
6. All necessary costs and expenses of said
litigation, including the necessary personal
expenses of Attorney in connection therewith,
shall be advanced by Attorney, but shall be borne
and paid by Client and shall be deducted from that
portion of the total recovery before Attorney’s fee
is calculated.
***
B. With the exception of the pursuit of an appeal, Attorney
agrees that he will diligently institute and prosecute said
action to a final determination in the proper trial court
and make all reasonable and necessary efforts to collect
any judgment that may be rendered therein in favor of
Client. Further, Attorney will promptly communicate to
Client any and all offers of compromise of said cause.
***
D. If representation is terminated by Client or by Attorney
for any reason, Attorney shall be entitled to
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compensation at the rate of $200.00 per hour for all
work performed by Attorney for Client, and at the rate
of $100.00 per hour for all work performed by any
paralegal for Client. Further, Client grants Attorney a
lien against any proceeds from the immediately
completed litigation and any related litigation involving
the same parties or basic nucleus of common facts for
any amounts owed under this Agreement.
(Appellant’s App. at 145-47.)
On March 10, 2004, Holden & Carr filed a complaint in federal district
court on behalf of the plaintiff, seeking damages from multiple defendants for
injuries sustained in a workplace accident involving a rotary feeder machine used
to process tea. The caption of the complaint included the notation: “Attorney
Lien Claimed.” (Appellee’s Supp. App. at 1.) Capron acted as the lead attorney
at trial and, on February 18, 2005, the jury rendered a $1.5 million verdict in
favor of the plaintiff.
On June 30, 2005, Capron resigned from Holden & Carr to establish a new
firm, Capron & Edwards (no relation to the plaintiff). On July 11, the plaintiff
requested his file be transferred from Holden & Carr to Capron & Edwards. At
the time of this request, no money had been recovered from the defendants and
post-trial proceedings were still pending. Capron (now at Capron & Edwards)
represented the plaintiff in post-trial proceedings, in settlement discussions and
on appeal. 1 On February 13, 2006, seven months after the plaintiff’s file was
1
The plaintiff appealed from the district court’s entry of judgment as a matter of
law on his punitive damages claim. We affirmed. Edwards v. PepsiCo, Inc., 268 Fed.
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transferred to Capron & Edwards, the court entered various orders on post-trial
motions and, on March 24, 2006, final judgment was entered.
On June 30, 2006, Capron & Edwards informed Holden & Carr it had
received partial payment on the judgment. 2 Capron & Edwards requested Holden
& Carr submit documentation of the time it spent on the plaintiff’s case so it
could determine the hourly fee due under ¶ D of the Fee Agreement. Holden &
Carr responded by claiming entitlement to a contingent fee under ¶ A(3) of the
Fee Agreement. 3 Ultimately, Capron & Edwards deposited the disputed funds in
its trust account and paid the remainder to the plaintiff.
On July 3, 2006, Holden & Carr filed an application for hearing on
enforcement of its attorney’s lien. Before the court ruled on the application, the
plaintiff filed a motion to dissolve the claimed attorney’s lien. 4 On September 25,
2006, Holden & Carr moved for summary judgment seeking enforcement of its
lien. [Appellant’s App. at 126-70] Capron & Edwards filed a cross-motion for
summary judgment.
The district court granted Holden & Carr’s motion and denied Capron &
Appx. 756 (10th Cir. 2008).
2
Capron & Edwards ultimately received $1,777,134.77.
3
Holden & Carr seeks $846,125.24 in fees and $69,025.85 for costs.
4
That motion was denied as moot following the grant of summary judgment.
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Edwards’s cross-motion. The court found “no significant dispute in the facts
presented” and determined the issue was ripe for summary judgment.
(Appellant’s App. at 221.) The court determined the contract was unambiguous
and entitled Holden & Carr to a fee pursuant to the contingent fee clause (¶ A(3)),
not the termination of representation clause (¶ D), because Holden & Carr had
fully performed its contractual obligations prior to the transfer of representation.
Capron & Edwards requests the summary judgment order be vacated and funds be
apportioned pursuant to ¶ D. The plaintiff is not a party to this appeal.5
II. DISCUSSION
A. Standing
Holden & Carr claims Capron & Edwards lacks standing to appeal because
it is neither a party to, nor a beneficiary of, the Fee Agreement and is not affected
by the district court’s decision. Capron & Edwards argues it has standing because
“it has competing interests in the disputed funds.” (Appellant’s Opening Br. at
11.) Our review is de novo. See Stewart v. Kempthorne, 554 F.3d 1245, 1254
(10th Cir. 2009).
“Th[e] [standing] inquiry involves both constitutional limitations on
federal-court jurisdiction and prudential limitations on its exercise. In both
5
The plaintiff was a party to this proceeding in the district court, but is not a party
to this appeal. As explained by Capron & Edwards, “Plaintiff has already received his
recovery, less the disputed funds, and has no further interest in this matter, which is
essentially a disagreement between two law firms regarding the division of a fee.”
(Appellant’s Reply Br. at 5.)
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dimensions it is founded in concern about the proper—and properly limited—role
of the courts in a democratic society.” Warth v. Seldin, 422 U.S. 490, 498 (1975)
(citation omitted). “Standing is ‘an essential and unchanging part’ of the Article
III case-or-controversy requirement.” Byers v. City of Albuquerque, 150 F.3d
1271, 1274 (10th Cir. 1998) (quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 560 (1992)). If a plaintiff lacks Article III standing, a court has no subject
matter jurisdiction to hear its claim. See Stewart, 554 F.3d at 1254. “[D]efenses
challenging this court’s jurisdiction may be raised at any time.” Baca v. King, 92
F.3d 1031, 1034 (10th Cir. 1996).
The Supreme Court has explained:
[A] party seeking to invoke a federal court’s jurisdiction must
demonstrate three things: (1) injury in fact, by which we mean an
invasion of a legally protected interest that is (a) concrete and
particularized, and (b) actual or imminent, not conjectural or
hypothetical; (2) a causal relationship between the injury and the
challenged conduct, by which we mean that the injury fairly can be
traced to the challenged action of the defendant, and has not resulted
from the independent action of some third party not before the court;
and (3) a likelihood that the injury will be redressed by a favorable
decision, by which we mean that the prospect of obtaining relief from
the injury as a result of a favorable ruling is not too speculative.
Ne. Fla. Chapter of the Associated Gen. Contractors of Am. v. City of
Jacksonville, Fla., 508 U.S. 656, 663-64 (1993) (quotations and citations
omitted). The question presented here is whether Capron & Edwards meets the
first of these three requirements—that is, whether it has been injured in fact by
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the district court’s order.
“Counsel have standing to appeal from orders issued directly against them,
but not from orders applicable only to their clients.” Uselton v. Commercial
Lovelace Motor Freight, 9 F.3d 849, 854 (10th Cir. 1993) (citations omitted); see
also Weeks v. Indep. Sch. Dist. No. I-89, 230 F.3d 1201, 1213 (10th Cir. 2000)
(same). The key factor in determining whether an attorney has standing to appeal
is whether the attorney has been “aggrieved by the order from which appeal is
taken.” Uselton, 9 F.3d at 854. In Uselton, we dismissed the portion of class
counsel’s appeal which challenged a fee award to objecting counsel, concluding
“[o]nly the plaintiff class . . . could be considered aggrieved by that award.” Id.
at 855. Similarly, in Weeks, we concluded the plaintiff’s counsel did not have
standing to appeal from an order relating to the plaintiff’s costs and fees. 230
F.3d at 1213. However, in Riggs v. Scrivner, Inc., we held the plaintiff’s attorney
was the proper party to challenge the district court’s imposition of sanctions
against him as he was the party aggrieved by the order. 927 F.2d 1146, 1149
(10th Cir. 1991). 6
Capron & Edwards is aggrieved by the district court’s order as that order
limits its ability to recover for its representation of the plaintiff in post-trial and
6
We ultimately held we lacked jurisdiction to review the merits because the notice
of appeal failed to name the plaintiff’s attorney as a party to the appeal. Riggs, 927 F.2d
at 1149.
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appellate proceedings. Oklahoma law limits the attorneys’ fees a contingency fee
plaintiff can be required to pay: “It shall be lawful for an attorney to contract for
a percentage or portion of the proceeds of a client’s cause of action or claim not
to exceed fifty percent (50%) of the net amount of such judgment as may be
recovered . . . .” Okla. Stat. Ann. tit. 5, § 7. The district court interpreted the Fee
Agreement to entitle Holden & Carr to recover the majority of money the plaintiff
can be required to pay. 7 An “aggrieved party” is “[a] party entitled to a remedy;
esp. a party whose personal, pecuniary, or property rights have been adversely
affected by another person’s actions or by a court’s decree or judgment.”
B LACK ’ S L AW D ICTIONARY 1144 (8th ed. 2004). Certainly, Capron & Edwards’s
pecuniary interest is affected by the district court’s order. As required, this injury
is “concrete and particularized” and “actual or imminent, not conjectural or
hypothetical.” Ne. Fla. Chapter of the Associated Gen. Contractors of Am., 508
U.S. at 663 (quotations omitted). Thus, Capron & Edwards has standing to
appeal. 8
B. Supplemental Jurisdiction
7
The court held Holden & Carr was entitled to 45% of the first $200,000
recovered under ¶ A(1) and 50% of the remainder under ¶ A(3). Thus, under Oklahoma
law, the only amount remaining for Capron & Edwards for its representation of the
plaintiff would be 5% of the first $200,000 recovered ($10,000).
8
Capron & Edwards also contends it has standing by virtue of a common law
retaining lien. Because of our conclusion, we need not consider the claimed retaining
lien.
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Both Holden & Carr and Capron & Edwards argued before the district court
that it had supplemental jurisdiction to resolve this fee dispute. 9 The court
apparently agreed, though it did not include any discussion of jurisdiction in its
order. Neither party raises a jurisdictional question on appeal. Nonetheless, “we
have an independent duty to examine our own jurisdiction.” Amazon, Inc. v. Dirt
Camp, Inc., 273 F.3d 1271, 1274 (10th Cir. 2001).
“Federal courts are courts of limited jurisdiction. They possess only that
power authorized by Constitution and statute, which is not to be expanded by
judicial decree.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994) (citations omitted). The district court had original jurisdiction over the
underlying action (the personal injury litigation) under 28 U.S.C. § 1332. The
question here is whether the fee dispute between Holden & Carr and Capron &
Edwards forms “part of the same case or controversy” as the underlying action,
such that supplemental jurisdiction was proper. See 28 U.S.C. § 1367(a) (“Except
9
Supplemental jurisdiction encompasses what courts previously called ancillary
jurisdiction and pendent jurisdiction. As the Supreme Court explained in Exxon Mobil
Corp. v. Allapattah Servs.:
The terms of § 1367 do not acknowledge any distinction between pendent
jurisdiction and the doctrine of so-called ancillary jurisdiction. Though the
doctrines of pendent and ancillary jurisdiction developed separately as a
historical matter, the Court has recognized that the doctrines are two species
of the same generic problem. Nothing in § 1367 indicates a congressional
intent to recognize, preserve, or create some meaningful, substantive
distinction between the jurisdictional categories we have historically labeled
pendent and ancillary.
545 U.S. 546, 559 (2005) (quotations and citation omitted).
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as [otherwise] provided . . . in any civil action of which the district courts have
original jurisdiction, the district courts shall have supplemental jurisdiction over
all other claims that are so related to claims in the action within such original
jurisdiction that they form part of the same case or controversy under Article III
of the United States Constitution.”)
[D]isputes are part of the “same case or controversy” within § 1367
when they derive from a common nucleus of operative fact. The
“common nucleus” standard hails originally from United Mine
Workers of America v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed.
2d 218 (1966), a pre-§ 1367 case addressing pendent jurisdiction.
When both pendent and ancillary jurisdiction were codified in 1990
as § 1367, however, the “common nucleus” test was retained by
nearly all the Circuits to interpret the statute’s “case or controversy”
language.
Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 335 (2d Cir. 2006)
(quotations and citation omitted); see also Estate of Harshman v. Jackson Hole
Mountain Resort Co., 379 F.3d 1161, 1165 (10th Cir. 2004) (applying the Gibbs
standard under § 1367).
Were the dispute between a law firm and a party to the underlying
litigation, the answer would be a simple one. We have held: “Determining the
legal fees a party to a lawsuit . . . owes its attorney, with respect to the work done
in the suit being litigated, easily fits the concept of ancillary jurisdiction.”
Jenkins v. Weinshienk, 670 F.2d 915, 918 (10th Cir. 1982); see also Garrick v.
Weaver, 888 F.2d 687, 690 (10th Cir. 1989) (same); Kalyawongsa v. Moffett, 105
F.3d 283, 287-288 (6th Cir. 1997) (“[A]lthough attorneys’ fee arrangements are
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contracts under state law, the federal court’s interest in fully and fairly resolving
the controversies before it requires courts to exercise supplemental jurisdiction
over fee disputes that are related to the main action.”); Novinger v. E.I. DuPont
de Nemours & Co., 809 F.2d 212, 217 (3d Cir. 1987) (“Attorneys’ fee
arrangements in diversity cases . . . are matters primarily of state contract law.
Nevertheless the federal forum has a vital interest in those arrangements because
they bear directly upon the ability of the court to dispose of cases before it in a
fair manner.”).
The question here is not so simple as the dispute is between two law firms,
not a law firm and a party. At least one federal court has exercised supplemental
jurisdiction over a fee dispute between attorneys. In Avery v. Manitowoc County,
the court exercised supplemental jurisdiction over a fee dispute between a law
firm retained by a plaintiff under a contingency fee agreement and a latter-hired
attorney who represented the plaintiff through settlement finding the dispute to be
“part of the same case or controversy” as the underlying claim. 428 F. Supp. 2d
891, 893 (E.D. Wis. 2006). The court concluded it had jurisdiction over the fee
dispute because: (1) “courts have ancillary jurisdiction over fee disputes which
arise between a lawyer and a client;” (2) “the Supreme Court held that the
exercise of ancillary jurisdiction is appropriate where the subsidiary controversy
has direct relation to property or assets actually or constructively drawn into the
court’s possession or control by the principal suit;” and (3) at the request of the
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parties, the court “expressly retained jurisdiction to resolve the fee dispute.” Id.
at 893-94 (quotations omitted).
Here, unlike in Avery, the court did not have actual or constructive
possession of the disputed funds. Moreover, the court did not expressly retain
jurisdiction to resolve the fee dispute. However, the dispute involves an
attorney’s lien, which weighs in favor of jurisdiction because the lien creates a
direct connection to the underlying litigation. See Albuquerque Technical
Vocational Inst. v. Gen. Meters Corp., 17 Fed. Appx. 870, 871 (10th Cir. 2001)
(unpublished) (“Jurisdiction to consider [appellee law firm]’s attorney lien was
proper under 28 U.S.C. § 1367.”). 10
In Clark v. Kick, the district court for the Southern District of Texas
concluded it could have exercised supplemental jurisdiction over an
attorney/attorney fee dispute, though it was not called upon to do so. 11 79 F.
Supp. 2d 747 (S.D. Tex. 2000). The court explained:
10
Unpublished cases are not precedential. 10th Cir. R. 32.1. We cite Albuquerque
Technical only for its persuasive value.
11
Clark involved a dispute between Texas and California firms over the
apportionment of fees. After the California firm filed a notice of attorney’s lien, the
Texas firm filed a declaratory judgment action to settle the fee controversy. 79 F. Supp.
2d at 749. The California firm moved to dismiss the declaratory judgment action for lack
of personal jurisdiction, failure to join an indispensible party, failure to state a claim and
improper venue. Before considering the merits of the motion, the district court noted “it
appears that Plaintiffs’ most straightforward course of action in resolving this fee dispute
would have been to invoke this Court’s supplemental jurisdiction in the earlier action . . .
.” Id.-14-
A court has supplemental jurisdiction to hear fee disputes and lien
claims between parties and their attorneys, and between groups of
attorneys, without regard to the jurisdiction basis of the original
action, so long as the fee dispute relates to the original action. In
other words, once this Court’s jurisdiction has been properly invoked
to settle the controversy in the original action, and subject matter,
personal jurisdiction, venue and other concerns have been laid to rest
in the original action, the court has the power to settle fee disputes
arising out of that original action without regard to the citizenship of
the disputing attorneys and other niceties. All the Circuit Courts of
Appeal which have considered this question appear to agree on this
point.
Id. at 749-50 (citing cases from the Second, Third, Fifth, Sixth, Seventh, Ninth
and Tenth Circuits) (emphasis added). 12
However, in an unpublished case, the Seventh Circuit declined to exercise
supplemental jurisdiction over a dispute between an attorney and his former
partners. Cooper v. IBM Pers. Pension Plan, 240 Fed. Appx. 133 (7th Cir. 2007)
(unpublished). In Cooper, an attorney in a law firm that represented a plaintiff in
ERISA litigation withdrew from the firm before the case ended and sought fees
from the firm pursuant to a contract between himself and the firm following a
favorable settlement. Id. at 135. The attorney filed a motion “to enforce what he
styled an attorney’s lien on the fees due.” Id. The district court denied the
motion, concluding it lacked subject matter jurisdiction. The Seventh Circuit
dismissed the attorney’s appeal, concluding the attorney lacked standing and the
court lacked jurisdiction: “The dispute between [the attorney] and his ex-partners
12
From this Circuit, the Clark court cited Jenkins, 670 F.2d at 919.
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arises under a contract. It is unrelated to the dispute between Cooper and IBM, so
it cannot be adjudicated under the supplemental jurisdiction.” Id.We are persuaded by the reasoning of Avery and Clark. The fee dispute
here forms part of the same case or controversy as the plaintiff’s personal injury
litigation because it involves the two firms that represented the plaintiff in that
action and involves an attorney’s lien claimed in that action. Moreover, and
unlike in Cooper, the plaintiff is a party to the contract at issue (the Fee
Agreement) and our interpretation of that contract could impact the plaintiff, even
though he has disavowed any interest in the funds. While this action could have
been brought in state court, the district court did not overstep its bounds in
exercising supplemental jurisdiction. Its exercise of jurisdiction was judicially
economic and convenient for the litigants. See Estate of Harshman, 379 F.3d at
1164 (stating Congress enacted § 1367 “to vindicate values of economy,
convenience, fairness, and comity”).
C. Interpretation of the Fee Agreement
“This court reviews an award of summary judgment de novo, viewing the
record in the light most favorable to the non-moving party.” 13 Hammons v. Saffle,
13
Holden & Carr contends our review is for abuse of discretion as the claim below
was for enforcement of an attorney’s lien. See Albuquerque Technical, 17 Fed. Appx. at
874 (“Under both New Mexico and Tenth Circuit law, a decision by a trial court to award
attorney fees under a lien is reviewable for abuse of discretion.”); Garrick, 888 F.2d at
690 (“We review the magistrate’s award of attorneys’ fees for abuse of discretion.”). We
disagree, as the dispute here is principally over the interpretation of a contract, not over
whether Holden & Carr can enforce its attorney’s lien.
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348 F.3d 1250, 1254 (10th Cir. 2003). Summary judgment is appropriate only “if
the pleadings, the discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and that the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). “If there is no
genuine issue of material fact in dispute, this court then determines if the
substantive law was correctly applied by the district court.” Hammons, 348 F.3d
at 1254. Since this case is grounded on diversity jurisdiction, the substantive law
of Oklahoma governs. Blanke v. Alexander, 152 F.3d 1224, 1228 (10th Cir.
1998). The district court’s determination of Oklahoma law is entitled to no
deference and our review is de novo. Id. Under Oklahoma law, the interpretation
of a contract is a question of law reviewed de novo. May v. Mid-Century Ins. Co.,
151 P.3d 132, 140 (Okla. 2006).
The district court concluded Holden & Carr is entitled to a contingent fee
because it was obligated to represent the plaintiff “through trial only” and thus,
the contract was fully performed when the jury verdict was rendered. Capron &
Edwards contends the contract was not fully performed prior to the transfer of
representation because Holden & Carr’s contractual obligations extended to all
proceedings in the trial court. Moreover, Capron & Edwards claims the district
court’s interpretation of ¶ A(3) is contrary to its plain language, as it is only
triggered “[i]n the event that damages . . . are recovered” and damages were not
recovered (i.e., received) until after representation was transferred to Capron &
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Edwards. 14 (Appellant’s App. at 145.)
“The primary goal of contract interpretation is to determine and give effect
to the intention of the parties at the time the contract was made.” May, 151 P.3d
at 140; see also Okla. Stat. tit. 15, § 152 (“A contract must be so interpreted as to
give effect to the mutual intention of the parties, as it existed at the time of
contracting, so far as the same is ascertainable and lawful.”).
If the terms of a contract are unambiguous, clear and consistent, they
are accepted in their plain and ordinary sense and the contract will be
enforced to carry out the intention of the parties as it existed at the
time it was negotiated. The interpretation of a contract, and whether
it is ambiguous is a matter of law for the Court to resolve.
Contractual intent is determined from the entire agreement. If a
contract is complete in itself and viewed in its entirety is
unambiguous, its language is the only legitimate evidence of what
the parties intended. The Court will not create an ambiguity by using
a forced or strained construction, by taking a provision out of
context, or by narrowly focusing on the provision.
S. Corr. Sys., Inc. v. Union City Pub. Schs., 64 P.3d 1083, 1088-89 (Okla. 2002)
(footnotes omitted). “The mere fact the parties disagree or press for a different
construction does not make an agreement ambiguous.” Pitco Prod. Co. v.
Chaparral Energy, Inc., 63 P.3d 541, 545 (Okla. 2003).
Examining the Fee Agreement as a whole, we conclude it is not ambiguous
and was intended to cover all representation in the trial court. The district court
14
Capron & Edwards also contends the court erred in failing to perform an
equitable division of fees. Capron & Edwards did not make this argument before the
district court and thus, we will not consider it on appeal. See Laurino v. Tate, 220 F.3d
1213, 1218 n.4 (10th Cir. 2000) (“[Appellant] failed to show that he made this argument
in the district court, and we therefore decline to consider it.”).
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focused on one of the recital clauses, 15 which provides: “Client has agreed to
employ Attorney to bring said actions and prosecute the same through trial only .
. . .” (Appellant’s App. at 145.) As used here, “trial” does not extend to post-
trial proceedings. By their very name, post-trial proceedings are post, or after,
trial. However, two of the operative clauses suggest the parties did not intend for
the representation to conclude upon the return of a verdict.
Paragraph A(4) states: “Any such representation [on appeal] will be
negotiated separately from this agreement for representation in the trial court . . .
.” (Id.) Similarly, ¶ B provides:
With the exception of the pursuit of an appeal, Attorney agrees that
he will diligently institute and prosecute said action to a final
determination in the proper trial court and make all reasonable and
necessary efforts to collect any judgment that may be rendered
therein in favor of the Client.
(Id. at 146.) These paragraphs reveal the parties intended for Holden & Carr to
represent the plaintiff through a “final determination” in “the trial court,” not
simply the return of a verdict. To the extent the recital clause can be read
otherwise, it cannot control over the operative clauses. 16 See Thomas v. Dancer,
15
A recital clause (sometimes referred to as a “whereas” clause) is “[a] preliminary
statement in a contract . . . explaining the background of the transaction or showing the
existence of particular facts.” BLACK’S LAW DICTIONARY 1276 (7th ed. 1999). By
contrast, an operative clause is a clause “that gives effect to the transaction involved.” Id.
at 1119.
16
Holden & Carr argues we cannot consider the argument that a recital clause
cannot control over an operative clause because Capron & Edwards did not raise it with
the district court. (Appellee’s Br. at 26.) Capron & Edwards contends it did make this
argument, though it did not use the term “recital clause.” (Appellant’s Reply Br. at 6-7.)
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264 P.2d 714, 718 (Okla. 1953) (“As a general rule, recitals in a contract will not
control the operative clauses thereof . . . .”) (quotations omitted); see also Ferrell
Constr. Co. v. Russell Creek Coal Co., 645 P.2d 1005, 1009 (Okla. 1982)
(“Recital clauses in a contract generally do not constitute a covenant or a
contractual commitment.”).
The district court also erroneously interpreted ¶ A(3) because recovery is a
condition precedent to the application of that paragraph and recovery did not
occur prior to the transfer of representation. 17 (See Appellant’s App. at 145 (“In
the event that damages . . . are recovered . . . .”) (emphasis added).) Under
Oklahoma law, “[a] contract must receive such an interpretation as will make it
lawful, operative, definite, reasonable and capable of being carried into effect, if
it can be done without violating the intention of the parties.” Okla. Stat. tit. 15,
§ 159. The district court’s construction of ¶ A(3) does not make the Fee
Agreement definite or capable of being carried into effect because a contingent
While “[w]e will not consider an appellant’s new legal theory on appeal, even if it falls
under the same general category as an argument presented at trial,” Jantzen v. Hawkins,
188 F.3d 1247, 1257 (10th Cir. 1999) (quotations omitted), we can consider this
argument, as Capron & Edwards argued the contract should be interpreted as a whole and
claimed the language in the operative clauses (though not termed such) should control.
See Nelson v. Adams, USA, Inc., 529 U.S. 460, 469 (2000) (“It is indeed the general rule
that issues must be raised in lower courts in order to be preserved as potential grounds of
decision in higher courts. But this principle does not demand the incantation of particular
words; rather, it requires that the lower court be fairly put on notice as to the substance of
the issue.”).
17
We reject Holden & Carr’s contention that the “contingent event that entitled
Holden & Carr to its fee” was “representation through trial.” (Appellee’s Br. at 11.)
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fee cannot be calculated prior to the recovery of money damages.
The district court emphasized the fact “Plaintiff’s interpretation would
permit a client to terminate the legal representation in a deliberate effort to avoid
the more lucrative [for the firm] negotiated compensation formula. This after the
firm had taken on the time, expense, burden and risk of litigation . . . .”
(Appellant’s App. at 226.) It is not our job to rewrite a contract to make a better
deal for the parties:
The general rule is: “Where a contract has been voluntarily,
understandingly, and fairly entered into, and is free from fraud,
accident, mistake, or any other circumstance recognized as a ground
for equitable relief, a court of equity must, when its jurisdiction is
properly invoked, give full force and effect to such contract; it
cannot ignore, disturb, or alter the rights created by it, or grant relief
against their enforcement.” 30 C.J.S., Equity, § 62, p. 411. The fact
that for one of the parties the contract is unwise or improvident, or
that its enforcement is harsh when it was so intended to be, does not
alter the rule.
Cox v. Freeman, 227 P.2d 670, 678 (Okla. 1951). Moreover, as a general rule,
“the language of [a] contract should be interpreted most strongly against the party
who drafted the contract.” Dismuke v. Cseh, 830 P.2d 188, 190 (Okla. 1992). It
was Holden & Carr, not the plaintiff, who drafted the Fee Agreement. 18 Holden &
Carr determined the hourly fee set forth in ¶ D, which we presume is sufficient to
compensate it for its work, including some margin of profit. We are not
convinced that public policy considerations present a sufficient reason to stray
18
Though Capron drafted the contract, he did so on behalf of Holden & Carr, the
contracting party. Thus, we treat Holden & Carr as the drafter.
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from the unambiguous language of the Fee Agreement.
We REVERSE the grant of summary judgment in favor of Holden & Carr
and remand for proceedings consistent with this Order and Judgment.
Entered by the Court:
Terrence L. O’Brien
United States Circuit Judge
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