Hill v. Astrue

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
September 25, 2007
FO R TH E TENTH CIRCUIT
Elisabeth A. Shumaker
Clerk of Court
BILLY J. HILL,
Plaintiff-Appellant,
v. No. 07-5009
(D.C. No. 02-CV-126-PJC)
M ICH AEL J. ASTRU E, (N.D. Okla.)
Commissioner, Social Security
Administration,
Defendant-Appellee.
OR D ER AND JUDGM ENT *
Before PO RFILIO, A ND ER SO N, and BALDOCK , Circuit Judges.
In the district court, Timothy W hite, counsel for plaintiff Billy Hill, moved
for an award of attorney’s fees under section 206(b)(1) of the Social Security Act,
42 U.S.C. § 406(b)(1). M r. Hill opposed the motion, and the Commissioner of the
Social Security Administration (SSA ) argued that the sum M r. W hite requested
was unreasonable. The district court denied the motion in its entirety, and this
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
appeal ensued. W e have jurisdiction under 42 U.S.C. § 405(g) and 28 U.S.C.
§ 1291, and we affirm.
Background
M r. Hill applied for disability insurance and supplemental security income
benefits under the Social Security Act in M arch 1997. The Commissioner denied
the application. M r. Hill appealed to the district court, where the parties
consented to proceed before a magistrate judge pursuant to 28 U.S.C. § 636(c).
W hile that action was pending, M r. Hill filed a second benefits application in
June 2002.
In connection w ith each application, M r. Hill apparently entered into two
contingent-fee agreements with his attorney, M r. W hite, a “Social Security Case
Fee A greement” and an “Attorney Fee Agreement.” Thus, in total, it appears
there were four fee agreements, but the record contains only the Social Security
Case Fee Agreement executed in 1998 and the Attorney Fee Agreement executed
in 2002. The entirety of the 1998 Social Security Case Fee Agreement provides
as follow s:
This is a Contingent Fee Agreement. If the case is won, then
the attorney fee shall be based on either twenty-five percent (25% ) of
the past due benefits generated or $175.00 an hour for the time
expended, whichever is more. Generally, there is a minimum
attorney fee of $2500.00, if [sic] but in no event shall the attorney
fee exceed fifty percent (50% ) of the past due benefits generated if
less than $5000.00 in past due benefits is generated. The attorney
fee includes any past due auxiliary benefits and/or SSI benefits that
are generated. If an Attorney Fee Agreement, as provided by
42 U.S.C. § 406, is filed in this case, then it will not apply if less
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than $10,000 in past due benefits is generated and a hearing is held,
or if a Request for Review is filed with the Appeals Council.
Aplt. App. at 27. The 2002 Attorney Fee Agreement provides, in relevant part:
THIS A GREEM ENT is entered into, pursuant to 42 U.S.C. § 406,
this 1st day of July, 2002 . . . .
1. This Agreement is a contingent fee agreement, so that
attorney fees are payable . . . only in the event that a
favorable administrative determination is rendered
on my Title II . . . disability claim and/or my Title XVI
Supplemental Security Income . . . claim.
2. M y Representative and I understand that for a fee to be
payable, the [SSA] must approve any fee my
Representative charges or collects from me for services
my Representative provides in proceedings before SSA
in connection with my claim(s) for benefits.
3. W e agree that if the [SSA] favorably decides my claim, I
will pay my Representative an attorney fee equal to the
lesser of either tw enty-five percent (25% ) of the
past-due benefits resulting from m y claim or the sum
of $5,300.00.
4. . . . W e further understand that the attorney fee for both
claims may not exceed the lesser of twenty-five percent
(25% ) of the combined past due benefits or $5300.00.
Aplt. App. at 30.
In November 2002 the district court granted the Commissioner’s unopposed
motion to remand the first application to the agency for further proceedings. In
February 2003 the district court granted M r. W hite’s unopposed motion for
$2,721.60 in attorney’s fees under the Equal Access to Justice Act, 28 U.S.C.
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§ 2412 (EAJA), for services rendered in the judicial proceedings because the
Commissioner’s position was not substantially justified.
In M arch 2003 an SSA administrative law judge (ALJ) found M r. Hill
disabled and awarded benefits based on his first application, dismissing as
duplicative his request for a hearing on his second application, which had been
denied initially and upon reconsideration. The ALJ also approved the 2002
A ttorney Fee A greement, w hich M r. W hite previously had filed with the SSA.
On July 28, 2003, the SSA issued a Notice of Award to M r. Hill, granting
him $80,216.70 in past-due benefits, a prospective monthly payment of $987.00,
and M ediCare eligibility. The agency withheld 25% of the past-due benefits,
$20,054.18, for possible payment of attorney’s fees under 42 U.S.C. § 406, which,
subject to an offset for any EAJA award, “establish[es] the exclusive regime for
obtaining fees for successful representation of Social Security benefits
claimants,” Gisbrecht v. Barnhart, 535 U.S. 789, 795-96 (2002). Out of the
withheld amount, the agency paid M r. W hite $5,300 under § 406(a)(2)(A) 1 for
work performed at the administrative level based on the 2002 Attorney Fee
Agreement.
1
As relevant here, § 406(a)(2)(A) provides that when past-due benefits are
awarded and a written agreement for compensation was previously presented to
the Commissioner in which the fee specified does not exceed the lesser of 25% of
the total amount of past-due benefits or $4,000 (raised to $5,300 in 2002, see
67 Fed. Reg. 2477 (2002)), the Commissioner shall approve the agreement, and
the fee specified in the agreement shall be the maximum fee for services at the
administrative level absent a request to increase it.
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On June 8, 2004, more than ten months after the Commissioner issued the
Notice of Award, M r. W hite filed a motion in the district court, which he later
amended, seeking $11,045.58 in attorney’s fees under § 406(b)(1)(A) for
17.8 hours of work performed at the judicial level. 2 M r. W hite based his request
on the 1998 Social Security Case Fee Agreement, in particular its provision that
the attorney fee would be based on the greater of 25% of the past-due benefits or
$175 per hour for time spent. He calculated the amount as 25% of M r. Hill’s
past-due benefits, less deductions for the EA JA award, the § 406(a) award, and
his own delay. 3 M r. Hill objected to any further award of fees, claiming, among
other things, that M r. W hite had been ineffective in his representation and already
2
In relevant part, § 406(b)(1)(A) provides:
W henever a court renders a judgment favorable to a claimant
under this subchapter who was represented before the court by an
attorney, the court may determine and allow as part of its judgment a
reasonable fee for such representation, not in excess of 25 percent of
the total of the past-due benefits to which the claimant is entitled by
reason of such judgment, and the Commissioner of Social Security
may, notwithstanding the provisions of section 405(i) of this title, but
subject to subsection (d) of this section, certify the amount of such
fee for payment to such attorney out of, and not in addition to, the
amount of such past-due benefits.
3
W hen an attorney obtains both an EA JA award and a § 406(b) award, the
attorney is required to refund the smaller award to the client. See Gisbrecht,
535 U.S. at 796. The proper procedure is for the attorney to make the refund
from the § 406(b) award, not to request a smaller § 406(b) award. See McGraw v.
Barnhart, 450 F.3d 493, 497 n.2 (10th Cir. 2006); Weakley v. Bowen, 803 F.2d
575, 580 (10th Cir. 1986). Thus, M r. W hite should have requested $13,767.18 in
his § 406(b) motion, as the district court later recognized. M r. W hite made the
other deductions voluntarily.
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had received the agreed-on fee, $5,300. The Commissioner, in a role resembling
that of a trustee for M r. H ill, see Gisbrecht, 535 U.S. at 798 n.6, opposed the
motion on a number of grounds, including that the resulting hourly rate was
excessive given the relative simplicity of the issues, the requested sum exceeded
the $5,300 amount agreed to in the 2002 Attorney Fee Agreement, and M r. Hill
was dissatisfied with the representation and objected to any further award. To the
extent the $5,300 cap did not apply, the Commissioner suggested that a
reasonable § 406(b) award would be $6,230 based on an hourly rate of $350.
The district court denied the motion on the ground that the court lacked
statutory authority under § 406(b) to award attorney’s fees where the underlying
court judgment remanded to the agency instead of awarding benefits. On appeal,
another panel of this court reversed, see Hill v. Barnhart, 184 F. App’x 744
(10th Cir. 2006), based on the holding of our intervening opinion in M cGraw v.
Barnhart, 450 F.3d 493, 503 (10th Cir. 2006), that Ҥ 406(b)(1) allows a district
court to award attorneys’ fees in conjunction with a remand for further
proceedings; it is not required, as a predicate to a § 406(b)(1) fee award, that the
district court remand for an award of benefits.”
After our remand, the district court held a hearing on the § 406(b) motion.
M r. Hill testified that the four agreements he signed were confusing and that he
thought the 2002 Attorney Fee Agreement meant he would pay M r. W hite no
more than a total of $5,300 for all work performed. He reiterated his objection to
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any further fee award. M r. W hite also testified, asserting that separate
agreements were necessary to recover fees for administrative and judicial work,
and that the 2002 Attorney Fee Agreement concerned only fees for administrative
work. He admitted that having two separate agreements was confusing, but
asserted that M r. H ill understood the agreements at the time he signed them. See
Aplt. App. at 147, 151; see also Aplt. Reply Br. at 7 (characterizing his own
testimony).
In a written decision, the district court denied the motion on three separate
bases. First, the district court found a conflict between the 1998 Social Security
Case Fee Agreement and the 2002 Attorney Fee Agreement: The 1998 agreement
described the fees payable as the greater of 25% of the past-due benefits or $175
per hour, but the 2002 agreement described the fees payable as the lesser of 25%
of the past-due benefits or $5,300 and was not limited to § 406(a) fees for
services before the SSA. Applying Oklahoma law and construing the ambiguity
created by the two agreements against their drafter, M r. W hite, 4 the court
concluded that the 2002 Attorney Fee Agreement controlled— M r. Hill had
“agreed to pay an attorney fee of the lesser of 25% of his past-due benefits or
4
The district court applied Okla. Stat. tit. 15, § 158 (“Several contracts
relating to the same matters, between the same parties, and made as parts of
substantially one transaction, are to be taken together.”); Okla. Stat. tit. 15, § 170(as a rule of last resort, “the language of a contract should be interpreted most
strongly against the party who caused the uncertainty to exist”); and Dismuke v.
Cseh, 830 P.2d 188, 190 (Okla. 1992) (addressing when contractual am biguity is
construed against drafter).
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$5,300 for counsel’s services without any reference to whether those services
were before the SSA or the court.” A plt. App. at 115. Thus, because M r. W hite
already had received $5,300 from M r. Hill’s past-due benefits, he was not entitled
to any additional fee under § 406(b).
The district court also provided two alternate bases for denying the motion.
The court reasoned that even if the 1998 Social Security Case Fee Agreement
controlled, it was per se unreasonable to the extent it permitted an award greater
than the § 406(b) cap of 25% of the past-due benefits. The court also found that
the § 406(b) motion was untimely under Fed. R. Civ. P. 60(b)(6) principles. This
appeal followed.
Discussion
W e review the denial of § 406(b) attorney’s fees for an abuse of discretion.
See McGraw, 450 F.3d at 505. A court abuses its discretion if it makes a clearly
erroneous factual finding, reaches an erroneous conclusion of law, or commits a
clear error of judgment. See Harsco Corp. v. Renner, 475 F.3d 1179, 1190
(10th Cir. 2007).
The touchstone of an award of attorney’s fees under § 406(b) is whether the
amount requested is reasonable, and the inquiry begins with the terms of the fee
agreement. See Gisbrecht, 535 U.S. at 807 (“[Section] 406(b) calls for court
review of [contingent fee] arrangements as an independent check, to assure that
they yield reasonable results in particular cases.”). W ith respect to the first basis
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for the district court’s ruling, M r. W hite’s overarching contention on appeal is
that the $5,300 cap in the 2002 Attorney Fee Agreement pertained only to w ork
performed before the agency and that the 1998 Social Security Case Fee
Agreement applied to work at the judicial level. M ore specifically, he first points
to paragraph two of the 2002 Attorney Fee Agreement, which states that SSA
approval is necessary for a fee aw ard for services rendered in proceedings before
the agency. See supra. This provision, he contends, indicates that the $5,300 cap
applied only to services rendered at the administrative level and compensable
under § 406(a) because the SSA is involved only in approving fee requests for
services rendered at the administrative level, not the judicial level. Drawing this
inference, however, requires familiarity with the statutory scheme and the
respective roles of the SSA and the district court in approving fee requests, and
would require the further deduction that reference to SSA approval, in and of
itself, necessarily precluded application of the agreement’s $5,300 cap to § 406(b)
requests requiring court approval. W e believe this is too great an expectation of a
layperson. M r. W hite’s protestation that M r. Hill in fact had this understanding
when he signed the agreements is unavailing; it does not overcome the uncertainty
of the language M r. W hite drafted. If M r. W hite intended the 2002 Attorney Fee
Agreement to apply only to § 406(a) requests, he could have included language
making that clear.
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M r. W hite also argues that “simultaneously” with M r. Hill’s execution of
the 2002 Attorney Fee Agreement, M r. Hill “executed a Social Security Case Fee
Agreement that specifically states that the ‘Attorney Fee Agreement, as provided
by 42 U.S.C. § 406, . . . will not apply . . . if a Request for Review is filed with
the A ppeals Council.’” Aplt. Br. at 27-28 (quoting the 1998 Social Security Case
Fee Agreement) (typeface altered; ellipses in original). M r. W hite’s apparent
conclusion is that because a Request for Review was filed, the 2002 Attorney Fee
Agreement is inapplicable. There are two problems with this argument. First, the
2002 Social Security Case Fee Agreement is not part of the record, so we cannot
be certain of its contents. Second, even assuming that M r. Hill signed such an
agreement and it contained language materially identical to that set forth in the
1998 Social Security Case Fee Agreement to which M r. W hite refers us (or even
simply construing the 1998 Social Security Fee Agreement together with the 2002
Attorney Fee Agreement), the meaning of “the Attorney Fee Agreement . . . will
not apply” is unclear. M r. W hite relied on the 2002 Attorney Fee Agreement in
obtaining § 406(a) fees for his administrative representation, so it certainly was
applicable in that context. And whether the Request for Review rendered the
$5,300 cap in that agreement inapplicable to § 406(b) fees is entirely unclear.
W e are not persuaded by any of M r. W hite’s other arguments pertaining to
the first basis for the district court’s decision, arguments that we find nearly as
confusing in their presentation as the agreements he drafted. W e briefly address
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two of those. First, M r. W hite argues that the district court ignored both his
degree of success in this case, which he contends is the “most critical factor” in
determining a reasonable attorney’s fee, and one of the purposes of the statute, to
enable attorneys to be paid a reasonable fee for legal services in Social Security
cases. Aplt. Br. at 19 (quotation omitted). These contentions overlook that the
district court construed the fee agreements against M r. W hite, finding that fees
payable from M r. Hill’s past-due benefits were capped at $5,300, a sum
M r. W hite already had received, and thus the agreements precluded any further
award under § 406(b) despite the ultimate success in obtaining benefits. Second,
the fact that M r. Hill entered the fee agreements freely and voluntarily likew ise
lacks any persuasive value given their ambiguity.
Conclusion
W e conclude that the district court did not abuse its discretion in denying
the motion for § 406(b) attorney’s fees on the ground that the 1998 and 2002
agreements were ambiguous and should be construed against M r. W hite.
Accordingly, we need not reach the other bases for the district court’s decision.
The order of the district court denying the motion for § 406(b) attorney’s fees is
A FFIRME D.
Entered for the Court
Bobby R. Baldock
Circuit Judge
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