Ochse v. Henry

REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 1118
September Term, 2012
STEVEN J. OCHSE, ET UX.
v.
WILLIAM O. HENRY, ET UX.
Matricciani,
Graeff,
Moylan, Charles E., Jr.
(Retired, Specially Assigned),
JJ.*
Opinion by Moylan, J.
Filed: February 25, 2014
*Kehoe, J., did not participate in the Court's decision
to designate this opinion for publication pursuant to
Maryland Rule 8-605.1.
This appeal is the latest chapter in a long running battle between the appellants,
Steven J. Ochse and Shari Ochse ("the Ochses"), and their neighbors, the appellees, William
O. Henry and Jessie Henry ("the Henrys"), over title to residential real property the Ochses
purchased from the Henrys on December 14, 2001. The dispute concerned a 30-foot wide
strip of land traversing the property that, unbeknownst to the parties at the time of the
Ochses' purchase, had been conveyed to Dorchester County by a previous owner in 1919 for
a county road that was never built. The Ochses filed a four-count complaint against the
Henrys in the Circuit Court for Dorchester County on December 11, 2007, later adding
Dorchester County as a defendant, seeking reformation of the deed, declaratory relief,
injunctive relief, and damages for breach of contract, breach of special warranties, and fraud
in the inducement. The Henrys filed a counterclaim seeking an award of attorney's fees
pursuant to a provision of the contract of sale that specifically survived merger with the
deed.
On August 4, 2008, the circuit court ruled on cross-motions for summary judgment,
declaring that Dorchester County owned the 30-foot wide strip of land in fee simple. After
a bench trial, the court also found that the contract of sale merged into the deed and that
there was no breach of special warranties of title. Pursuant to the fee-shifting provision that
survived merger with the deed, the court entered an award in favor of the Henrys and against
the Ochses in the amount of $100,020.00. The court denied all other relief.
The Ochses appealed to this Court. As a result of Court-ordered mediation,
Dorchester County executed a quitclaim deed granting its interest in the 30-foot wide strip
of land to the Ochses and was dismissed from the case. On December 21, 2011, this Court
issued a reported opinion, Ochse v. Henry, 202 Md. App. 521, 33 A.3d 480 (2011), cert.
denied, 425 Md. 396, 41 A.3d 571 (2012), reversing the circuit court's grant of summary
judgment and vacating the award of attorney's fees in favor of the Henrys. We remanded
for the circuit court to reconsider its award of attorney's fees because, as a result of our
holding that the Henrys had breached their contractual duty to convey marketable title to the
Ochses, the Ochses became the prevailing party entitled to a fee award.
On remand, without a hearing, the circuit court awarded $215,710.60 in fees against
the Henrys and in favor of the Ochses. This was substantially less than the $333,354.00 the
Ochses had initially requested and the $355,731.78 the Ochses requested in a supplemental
motion. The Ochses have now appealed from the court's fee award in their favor. We find
no abuse of discretion in the court's approach, but we shall vacate the award and remand for
reconsideration in light of the Ochses' April 27, 2012 supplemental motion for fees, which
the circuit court appears to have overlooked.
Facts and Proceedings
Before we address the circuit court's decision on remand, we must first examine our
reported opinion that ordered the remand.1 The Ochses did not achieve a landslide victory.
On the contrary, we affirmed the circuit court on all but one legal issue. We held that the
1
As the facts of the parties' underlying dispute were fully set forth in our earlier
opinion, we shall not recount them here.
-2-
Henrys did not breach a special covenant against encumbrances, 202 Md. App. at 532, 33
A.3d at 487, and that the Henrys did not breach a covenant of special warranty of title, id.
at 535, 33 A.3d at 489. In order to sue on the contract of sale, which would ordinarily merge
with the deed, the Ochses had to show either fraud or mistake. Although the Ochses claimed
that evidence of the Henrys' material misrepresentations was "overwhelming and consistent,"
we affirmed as not clearly erroneous the circuit court's factual finding
that the Henrys did not fraudulently induce the Ochses to purchase the
property because, though Mr. Henry knew that the area had been used as a
road, he honestly believed that it was merely an old dirt road and had no
reason to suspect that Dorchester County owned a segment of the property.
Id. at 541, 33 A.3d at 492. We also rejected the Ochses' claim that the Henrys had been
willfully blind to the possibility of a county road over the property. Id. at 542, 33 A.3d at
492.
We reversed only on the issue of mutual mistake of fact, an issue that had been so
peripheral at trial that we felt it necessary to first address whether it had been preserved for
our review. Id. at 542, 33 A.3d at 492-93. Although we decided this issue in favor of the
Ochses, we also explained that it was, for purposes of resolving title to the property, moot.
The factual scenario in this case could not have occurred in the absence
of fraud or mutual mistake. If the Henrys knew that there was a road across
the property and did not disclose this to the Ochses, there was fraud. If neither
party was aware of the road across the property, there was mutual mistake of
material fact. Because the circuit court found the absence of fraud, there must
have been mutual mistake. Accordingly, the contract of sale did not merge
into the deed, and the Ochses should have been able to sue on the contract.
Nevertheless, as a result of the mediation this Court ordered, the Ochses
received Dorchester County's interest in the 30-foot wide strip across the
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Ochses' parcel. The issue of title is thus resolved because the Ochses now
own the entirety of the 4.791 acre parcel in fee simple absolute.
Id. at 543, 33 A.3d at 493 (emphasis supplied).
For all practical purposes, the Ochses had been made whole and no longer had any
claim of injury as of the time Dorchester County conveyed to them its interest in the
driveway. From that point on, the Ochses possessed un-clouded fee simple title to the entire
property. Success on the breach of contract claim against the Henrys – indeed, success on
any aspect of the post-mediation appeal – was purely academic in all respects but one: it
meant that the Ochses would qualify as the "prevailing party" and be entitled to an award of
attorney's fees pursuant to the fee-shifting provision in the contract of sale.
As the circuit court had determined that the Henrys were the prevailing party and
entered a fee award in their favor, we vacated that award and remanded for reconsideration.
We explained:
In light of our holdings above, we conclude that the circuit court was
acting within the terms of the contract and deed by awarding attorney's fees.
Regardless of whether the contract merged with the deed, the attorney's fees
provision of the contract survived. The apportionment of attorney's fees,
however, was in error. While the Henrys did not breach the special covenants
because the defect in title was created by their predecessors in title, the Henrys
had a duty to convey marketable title to the 4.791 acres in the contract, which
survives merger with the deed on the basis of mutual mistake. The Ochses
now own the 4.791 acre parcel in fee simple, but at the time of the
conveyance, the Henrys did not convey marketable title to the Ochses,
breaching the contract. As such, we shall vacate the circuit court's
determination of attorney's fees and remand for that court to reconsider its
award of attorney's fees in light of this opinion.
-4-
Id. at 544, 33 A.3d at 494. In response to a motion for reconsideration, we further
explained:
[O]ur previously filed opinion in this matter has been clarified to indicate that
the Ochses are able to sue on the underlying contract based on mutual mistake
or misrepresentation, avoiding merger of the contract with the deed. Because
the contract contained an attorney's fees provision, the Ochses are entitled to
attorney's fees. While title issues have been resolved, the circuit court must
view the case as it appeared when initiated.
Id. at 526 n.2, 33 A.3d at 483 n.2.
On remand, the Ochses filed a motion requesting a fee award on January 24, 2012.
They sought a total of $333,354.00 and provided itemized billing records. They specified
that, of that total, $176,525.37 was incurred "up to the time of trial." This was similar to the
fees incurred by both of the defendants through the trial, $174,143.20.
On April 23, 2012, the Court of Appeals denied the Henrys' petition for a writ of
certiorari to review our decision in the first appeal, as well as the Ochses' conditional cross-
petition. On April 27, 2012, the Ochses filed a supplemental motion for fees that reflected
the additional costs incurred in relation to the certiorari petition. The supplemental motion
requested a revised total of $355,731.78.
-5-
On July 12, 2012, the circuit court ruled without a hearing2 and explained its
$215,710.60 award in a six-page opinion. Although the court confused our holding
regarding breach of a special warranty against encumbrances with our holding regarding
breach of contract and mutual mistake of fact, the court correctly noted that we "upheld [its]
findings as to all counts except Count III."3 The court recognized the Ochses' new status as
the prevailing party and acknowledged our direction "to 'view the case as it appeared when
initiated' and to disregard the subsequent resolution of title issues resulting from the court-
ordered mediation."
The court followed our direction in Congressional Hotel Corp. v. Mervis Diamond
Corp., 200 Md. App. 489, 499-500, 28 A.3d 75, 81-82 (2011) (citing Monmouth Meadows
2
Neither party requested a hearing on remand. After the court scheduled a hearing,
sua sponte, for August 1, 2012, the Ochses moved on May 30, 2012 to reschedule it. The
court acknowledged this motion and viewed it as a motion to reschedule "or, in the
alternative, to rule without a hearing, as one is not required by the rules nor requested by a
party." The Ochses do not contend on appeal that the circuit court erred or abused its
discretion by not holding a hearing on the motion for fees.
3
In both their complaint and amended complaint, the Ochses had captioned count
three as "Breach of Contract & Special Warranty with Injunctive Relief." They alleged:
30. The Defendants have breached the Contract of Sale with respect to
the representations as to whether the "driveway" as depicted on the Plat is a
right-of-way permitting others to cross the Ochse property and further, the
Defendants have breached their special warranty of title provided to the
Plaintiffs.
Although the Ochses were unable to sue on the contract of sale unless they first proved fraud
or mutual mistake of fact, they pled fraud separately, as count four, "Fraud in the
Inducement." The Ochses did not allege mutual mistake of fact at all in their complaint or
amended complaint.
-6-
Homeowners Ass'n v. Hamilton, 416 Md. 325, 336-37, 7 A.3d 1, 7-8 (2010)), to consider
the eight factors specified in Maryland Lawyers' Rule of Professional Conduct 1.5. The court
also noted that it could consider "any other factor reasonably related to a fair award of
attorneys' fees." Congressional Hotel, 200 Md. App. at 500, 28 A.3d at 82 (quoting
Monmouth Meadows, 416 Md. at 337-38, 7 A.3d at 8). In the court's estimation, a critical
"other factor" was the limited nature of the Ochses' appellate victory on the merits, as well
as the limited relationship between this victory and the thrust of the Ochses' efforts at trial.
The court explained:
The Court, unlike an appointed arbitrator, has been involved in the dispute
between the Ochses and the Henrys throughout the pendency of this litigation.
The substantial majority of the time and effort put forth by the Ochses' counsel
during the pendency of the litigation in [the] trial court addressed Count IV,
the claim against the Henrys for Fraud in the Inducement. In spite of the
length of time spent litigating the fraud issue, this Court ultimately determined
that there was a lack of any substantial evidence that the Henrys made
fraudulent misrepresentations to the Ochses. It is a significant factor for this
Court that the substantial majority of the time in trial and litigation effort put
forth by Plaintiffs addressed the issue of willful fraud. After a careful review
of the record of hearings, trial, and the Court's notes, this Court finds that only
a small fraction of the effort expended towards litigation at the trial level
focused on the issue of the breach of the special warranty against
encumbrances.[4]
Because the Ochses had "prevail[ed] on some issues in [the] case but [did] not prevail
on other issues," the court decided that a "proportionate award" was appropriate. The court
4
As we have noted, the circuit court confused our holding on the special warranty
against encumbrances with our holding on mutual mistake of fact. As we also have noted,
however, mutual mistake of fact was also a peripheral issue at trial.
-7-
distinguished this private contractual dispute from "civil rights and other statutory provisions
which provide for fee-shifting to encourage certain forms of advocacy." The court believed
that awarding the total fees the Ochses had requested would not be "appropriate or
desirable" because
[i]f the Court were to blindly award all expended attorneys' fees in a case
when a party prevailed on any claim, such awards would serve as a financial
incentive for attorneys to tack on and excessively litigate as many far-flung
claims as possible, so long as they believed they could prevail on at least one
claim in a case with a fee-shifting provision.
(Emphasis in original).
The court found a reasonable award to be "the entirety of the post-trial and appeal
costs, as well as one-fourth of the attorney's fees expended in trial." Thus, from the Ochses'
initial request of $333,354.00, the court deducted $114,731.40 (its calculation of three
fourths of the attorney's fees through the trial), as well as $2,912.00 (which the court
determined to be a double entry), to reach an award of $215,710.60. The court made no
mention of the Ochses' April 27, 2012 supplemental motion for fees. On July 16, 2012,
judgment was entered in favor of the Ochses and against the Henrys, jointly and severally,
in the amount of $215,710.60.
Discussion
On this appeal, the Ochses contend that the circuit court erred in reducing the award
they requested to reflect the fact that they ultimately prevailed on only one of the four counts
of their amended complaint, which count was not the primary focus of their time and effort
-8-
at trial. The Ochses maintain, relying on our opinion in Weichert Co. of Md. v. Faust, 191
Md. App. 1, 989 A.2d 1227 (2010), aff'd on other grounds, 419 Md. 306, 19 A.3d 393
(2011), that, instead of fashioning a proportionate award, the court should have viewed all
of their claims as arising out of a common core of facts and granted the full amount they had
requested. They argue that their unsuccessful efforts to prove fraud at trial were necessary
to their ultimate success on their breach of contract claim and, in any event, all of their
claims were based on the premise that the Henrys had breached the contract of sale by not
conveying fee simple title to the whole property. The Ochses also contend that the circuit
court failed to consider fees they incurred in mediating their appeal against Dorchester
County and in successfully opposing the Henrys' petition for a writ of certiorari, as reflected
in their supplemental motion for fees.
The Henrys contend that the circuit court properly awarded the Ochses the amount
of fees that it deemed reasonable. The Henrys agree that the Ochses were successful in the
litigation, insofar as they achieved their goal "of having the driveway become a 'dead end'
for their use only." Nevertheless, the Henrys maintain that, ever since the 1919 deed was
discovered and disclosed to the Ochses on March 28, 2008, litigation against them was futile
as far as that practical objective was concerned because Dorchester County was the only
party that "could fix the driveway problem." The Henrys point to at least $47,500 in claimed
attorney's fees that, in their view, could be attributed strictly to the Ochses' fight against the
County. The Henrys contend that the circuit court properly entered a "proportionate award"
-9-
because the "common core of facts" doctrine does not apply to contractual fee-shifting
provisions concerning private disputes. They assert that the doctrine is limited to statutory
fee-shifting provisions implicating some broader social policy, such as civil rights cases,
where the doctrine provides "an added incentive to attorneys to take socially important cases
that might otherwise be undesirable."
On remand from our December 21, 2011 decision, the circuit court had no discretion
as to whether to grant an award or whether to grant an award to the Ochses as the prevailing
party. Its only area of discretion was with regard to the amount of the award the Ochses
would receive. Nevertheless, that discretion is wide. An award of attorney's fees will not
be disturbed unless the court "exercised [its] discretion arbitrarily or [its] judgment was
clearly wrong." Danziger v. Danziger, 208 Md. 469, 475, 118 A.2d 653, 656 (1955). See
also Atlantic Contracting & Material Co., Inc. v. Ulico Cas. Co., 380 Md. 285, 316, 844
A.2d 460, 478 (2004).
The Court of Appeals has drawn a firm line between contractual fee-shifting cases,
which arise out of a private agreement, and statutory fee-shifting cases, which involve some
overriding public policy. Statutory fee awards generally make use of the lodestar approach,
by which the court simply multiplies the time an attorney spent on a case by a reasonable
hourly rate and then adjusts the result up or down to arrive at a reasonable award based on
the circumstances of the case and after considering factors such as the twelve enumerated
in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974). See
- 10 -
Friolo v. Frankel, 373 Md. 501, 528-30, 819 A.2d 354, 370-71 (2003). Although statutory
fee-shifting provisions "were not designed as a form of economic relief to improve the
financial lot of attorneys, nor were they intended to replicate exactly the fee an attorney
could earn through a private fee arrangement with his client," they are intended "to enable
private parties to obtain legal help in seeking redress for injuries resulting from the actual
or threatened violation of specific ... laws" by assuring an attorney "that he will be paid a
'reasonable fee.'" Friolo, 373 Md. at 526, 819 A.2d at 369 (quoting Pennsylvania v.
Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565, 106 S. Ct. 3088, 3098,
92 L. Ed. 2d 439 (1986)). In other words, statutory fee-shifting provisions are designed to
encourage attorneys to take on cases that might otherwise be financially undesirable but
which serve some greater, legislatively-established, social purpose.
In contractual fee-shifting cases, the Court of Appeals has rejected the lodestar
approach in favor of an approach based on Maryland Lawyers' Rule of Professional Conduct
1.5,5 in part to discourage awards that bear no rational relationship to the work a case
5
Rule 1.5(a) sets forth the following factors a court should consider:
(1) the time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal service
properly;
(2) the likelihood, if apparent to the client, that the acceptance of the
particular employment will preclude other employment of the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(continued...)
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reasonably requires of an attorney or the amount at issue in the litigation.
[U]nlike the lodestar method, Rule 1.5 does not carry with it the notion that
the importance of the right vindicated will justify an expenditure of attorney
time that is hugely disproportionate to the dollar amount at issue in the case.
Indeed, when applying Rule 1.5, trial judges should consider the amount of
the fee award in relation to the principal amount in litigation, and this may
result in a downward adjustment. Although fee awards may approach or even
exceed the amount at issue, the relative size of the award is something to be
evaluated.
Monmouth Meadows Homeowners Ass'n v. Hamilton, 416 Md. 325, 337, 7 A.3d 1, 8 (2010)
(emphasis supplied). This Court has reiterated that, in determining reasonableness, a court
should be guided by the factors set forth in Rule 1.5, but also "may consider, in its
discretion, any other factor reasonably related to a fair award of attorneys' fees," and "should
consider the amount of the fee award in relation to the principal amount in litigation."
Congressional Hotel Corp. v. Mervis Diamond Corp., 200 Md. App. 489, 500, 28 A.3d 75,
82 (2011) (emphasis supplied).
Although the factors considered under the lodestar and Rule 1.5 approaches are
5
(...continued)
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the
client;
(7) the experience, reputation, and ability of the lawyer or lawyers
performing the services; and
(8) whether the fee is fixed or contingent.
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similar, the underlying policy differences are clear. As we further explained in
Congressional Hotel:
A contractual fee-shifting provision is designed by the parties, not by
the legislature. Such a provision is simply an agreement between private
parties to pay the attorneys' fees and costs reasonably incurred in the course
of litigation. Thus, it usually serves no larger public purpose than the interests
of the parties. And, therefore, while an award of attorneys' fees and costs in
a contractual fee-shifting case "may approach or even exceed the amount at
issue," the "relative size of the award" takes on added significance in such a
case because the contractual provision lacks the "public policy underpinnings"
of a statutory fee-shifting provision.
200 Md. App. at 505, 28 A.3d at 84-85.
Above all, a court's duty in fashioning an award pursuant to a contract is to determine
the reasonableness of a party's request. As the Court of Appeals explained in Myers v.
Kayhoe:
Contract provisions providing for awards of attorney's fees to the prevailing
party in litigation under the contract generally are valid and enforceable in
Maryland. Even in the absence of a contract term limiting recovery to
reasonable fees, trial courts are required to read such a term into the contract
and examine the prevailing party's fee request for reasonableness. The party
requesting fees has the burden of providing the court with the necessary
information to determine the reasonableness of its request. The trial court's
determination of the reasonableness of attorney's fees is a factual
determination within the sound discretion of the court, and will not be
overturned unless clearly erroneous.
391 Md. 188, 207, 892 A.2d 520, 532 (2006) (emphasis supplied). "In order to apply Rule
1.5 to a fee award, a court does not need to evaluate each factor separately, and it need not
necessarily hold an evidentiary hearing to determine an appropriate award." SunTrust Bank
v. Goldman, 201 Md. App. 390, 402, 29 A.3d 724, 730 (2011). See also CR-RSC Tower
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I, LLC v. RSC Tower I, LLC, 429 Md. 387, 465, 56 A.3d 170, 217 (2012).6
The Ochses' main contention is that the circuit court abused its discretion by granting
a "proportionate award" instead of the full amount they requested. They maintain that they
were entitled to the full amount, even though they failed on all but one of the claims they
asserted, because all of their claims arose out of a common core of facts, and thus fees
expended on successful and unsuccessful claims should have been combined rather than
separated. We see no error or abuse of discretion in the circuit court's approach.
The "common core of facts" doctrine exists as a bridge that allows a court to award
a fully compensatory fee where an attorney may not have prevailed on each and every claim
or defense but still has achieved excellent results. See Friolo, 373 Md. at 522-25, 819 A.2d
at 367-69 (discussing Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40
(1983)). It solves the problem of courts not being able to compensate attorneys for fees that
cannot easily be allocated between fee-shifting claims and factually or legally related non-
fee-shifting claims. The doctrine removes the requirement of allocation and treats as one
claims that are based on a common core of facts or related legal theories. In its purest form,
it allows an award of not only those fees attributable to fee-shifting claims and fees common
to fee-shifting and non-fee-shifting claims, but rather all fees attributable to fee-shifting and
factually related non-fee-shifting claims. See Weichert, 191 Md. App. at 18, 989 A.2d at
6
By order of October 17, 2013, the Court of Appeals established procedural rules for
parties seeking awards of attorney's fees pursuant to statute or contract, which apply only to
actions commenced on or after January 1, 2014. See Md. Rules 2-701 et seq.
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1237 ("If the court finds that two claims are factually related, the doctrine not only awards
the costs common to all claims, but also awards costs that arise solely by virtue of the non-
fee-shifting claim.").
Although the common core of facts doctrine may be applied to both contractual and
statutory fee-shifting,7 in the court's discretion, it does not rule out the proportionate award
the circuit court fashioned in this case. The doctrine is merely one part of one factor a court
should consider (the results obtained) when determining the reasonableness of a fee award,
as part of the totality of the circumstances, when a prevailing party prevails on less than all
7
The Henrys devote a substantial portion of their brief to arguing that the common
core of facts doctrine is limited to statutory fee-shifting cases, in large part because, they
contend, it is inextricably intertwined with the lodestar method of calculating fees, which
the Court of Appeals has expressly limited to statutory fee-shifting. See Monmouth
Meadows, 416 Md. at 334-38, 7 A.3d at 6-8. The Henrys all but ignore the fact that
Weichert, the only Maryland case to explicitly adopt the common core of facts doctrine, was
a contractual fee-shifting case. Although one of the counterclaims in Weichert was brought
pursuant to the Maryland Wage Payment and Collection Law, Md. Code (1991, 2008 Repl.
Vol.), §§ 3-501 et seq. of the Labor & Employment Article, our discussion of the common
core of facts doctrine dealt exclusively with a fee-shifting provision in a non-solicitation
addendum to an employment contract between the parties. Although the defendant prevailed
on her Wage Act counterclaim, her entitlement to attorney's fees was based solely on her
successful defense against the plaintiff's breach of contract claim. See 191 Md. App. at 10,
989 A.2d at 1232. Diamond Point Plaza Ltd. P'ship v. Wells Fargo Bank, N.A., 400 Md.
718, 929 A.2d 932 (2007), which dealt with the problem of allocating fees among different
claims or parties, involved two contractual fee-shifting provisions, one involving a mortgage
and the other involving a lease. Similarly, Reisterstown Plaza Assocs. v. General Nutrition
Center, Inc., 89 Md. App. 232, 597 A.2d 1049 (1991), where we also discussed the doctrine,
dealt with a fee-shifting provision in a lease agreement between the parties. Maryland law
is clear that the common core of facts doctrine may be applied to contractual fee-shifting.
This is not fatal to the Henrys' argument, however, because, as we shall explain, application
of the common core of facts doctrine is discretionary and was not required in this case.
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of the asserted claims for relief. It enlarges (rather than reduces) the wide discretion courts
enjoy in fashioning reasonable fee awards pursuant to contractual fee-shifting provisions.
The common core of facts doctrine derives from the Supreme Court's decision in
Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983). That case
involved an award of attorney's fees to a prevailing plaintiff in federal civil rights litigation
pursuant to 42 U.S.C. § 1988. Although Hensley was a statutory fee-shifting case, its
reasoning is compatible with a contractual fee-shifting analysis. The "results obtained" are
a major factor common to both approaches. See Rule 1.5(a)(4).
The issue before the Court in Hensley was whether, pursuant to 42 U.S.C. § 1988,
"a partially prevailing plaintiff may recover an attorney's fee for legal services on
unsuccessful claims." Id. at 426, 103 S. Ct. at 1935-36. At the outset, the Court noted that,
once a plaintiff establishes that he is entitled to a fee award, "[i]t remains for the [trial] court
to determine what fee is 'reasonable.'" Id. at 433, 103 S. Ct. at 1939. In the statutory fee-
shifting reasonableness inquiry, the lodestar method is merely the starting point. The court
must consider the award in the context of the results the plaintiff obtained.
The product of reasonable hours times a reasonable rate does not end
the inquiry. There remain other considerations that may lead the [trial] court
to adjust the fee upward or downward, including the important factor of the
"results obtained." This factor is particularly crucial where a plaintiff is
deemed "prevailing" even though he succeeded on only some of his claims for
relief. In this situation two questions must be addressed. First, did the
plaintiff fail to prevail on claims that were unrelated to the claims on which
he succeeded? Second, did the plaintiff achieve a level of success that makes
the hours reasonably expended a satisfactory basis for making a fee award?
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Id. at 434, 103 S. Ct. at 1940 (emphasis supplied).
Even though they may be part of the same lawsuit, services expended on "distinctly
different claims for relief that are based on different facts and legal theories" than the
successful claim must be excluded from a fee award. Id. at 434-35, 103 S. Ct. at 1940. On
the other hand, where a plaintiff presents multiple claims "involv[ing] a common core of
facts or ... based on related legal theories[, m]uch of counsel's time will be devoted generally
to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-
claim basis. Such a lawsuit cannot be viewed as a series of discrete claims." Id. at 435, 103
S. Ct. at 1940. In such a case, the trial court "should focus on the significance of the overall
relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation."
Id.
The Court made clear that, in fashioning an award in a case with multiple claims,
"[t]he result is what matters" and "the most critical factor is the degree of success obtained."
Where a plaintiff has obtained excellent results, his attorney should
recover a fully compensatory fee. Normally this will encompass all hours
reasonably expended on the litigation, and indeed in some cases of
exceptional success an enhanced award may be justified. In these
circumstances the fee award should not be reduced simply because the
plaintiff failed to prevail on every contention raised in the lawsuit. Litigants
in good faith may raise alternative legal grounds for a desired outcome, and
the court's rejection of or failure to reach certain grounds is not a sufficient
reason for reducing a fee. The result is what matters.
If, on the other hand, a plaintiff has achieved only partial or limited
success, the product of hours reasonably expended on the litigation as a whole
times a reasonable hourly rate may be an excessive amount. This will be true
even where the plaintiff's claims were interrelated, nonfrivolous, and raised
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in good faith. Congress has not authorized an award of fees whenever it was
reasonable for a plaintiff to bring a lawsuit or whenever conscientious counsel
tried the case with devotion and skill. Again, the most critical factor is the
degree of success obtained.
Id. at 435-36, 103 S. Ct. at 1940-41 (emphasis supplied) (footnote omitted).
The Court reiterated that, in cases where the plaintiff achieves less than full success
on all claims, the trial court has wide discretion to reduce a fee award accordingly.
There is no precise rule or formula for making these determinations.
The [trial] court may attempt to identify specific hours that should be
eliminated, or it may simply reduce the award to account for the limited
success. The court necessarily has discretion in making this equitable
judgment. This discretion, however, must be exercised in light of the
considerations we have identified.
Id. at 436-37, 103 S. Ct. at 1941 (emphasis supplied).
Thus, the Court held:
[T]he extent of a plaintiff's success is a crucial factor in determining the
proper amount of an award of attorney's fees under 42 U.S.C. § 1988. Where
the plaintiff has failed to prevail on a claim that is distinct in all respects from
his successful claims, the hours spent on the unsuccessful claim should be
excluded in considering the amount of a reasonable fee. Where a lawsuit
consists of related claims, a plaintiff who has won substantial relief should not
have his attorney's fee reduced simply because the [trial] court did not adopt
each contention raised. But where the plaintiff achieved only limited success,
the [trial] court should award only that amount of fees that is reasonable in
relation to the results obtained.
Id. at 440, 103 S. Ct. at 1943 (emphasis supplied).
This Court first touched on the common core of facts doctrine in Reisterstown Plaza
Assocs. v. General Nutrition Center, Inc., 89 Md. App. 232, 597 A.2d 1049 (1991). In that
case, RPA, a commercial landlord, had sued its tenant, GNC, a retail establishment, for
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unpaid rent under a lease agreement. GNC counterclaimed, arguing, in part, that it had been
constructively evicted due to an unresolved rodent problem. Both parties sought attorney's
fees under a provision in the lease agreement. A jury returned a general verdict in favor of
GNC, and the court awarded GNC damages and attorney's fees. On appeal, RPA argued that
the fee-shifting provision in the lease applied to certain of GNC's defenses and
counterclaims, but not others.
We held that GNC was entitled to a fee award under the lease for all fees incurred
because "all of the expenses incurred by GNC were a result of the enforcement of the lease
agreement." Id. at 244, 597 A.2d at 1055. GNC had successfully defended against RPA's
lawsuit, "which was brought to enforce GNC's obligations under the lease," and "all of
GNC's counterclaims ... were grounded in breaches by RPA of its duties and obligations as
a landlord." Id. This included GNC's tort counterclaims for nuisance and negligence, which
"arose out of the same transaction and required proof or denial of essentially the same facts."
Id. at 246, 597 A.2d at 1056. We rejected RPA's argument that GNC should not be entitled
to fees unless they could be "segregated" between contractual and extra-contractual claims.
Id. We noted that RPA ignored a line of cases from Texas and Oregon holding that "[a]
party may recover attorney fees rendered in connection with all claims if they arise out of
the same transaction and are 'so interrelated that their prosecution or defense entails proof
or denial of essentially the same facts.'" Id. at 245, 597 A.2d at 1056.
Similarly, the Court of Appeals touched on the difficulty that may arise in allocating
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fees among different claims or parties in Diamond Point Plaza Ltd. P'ship v. Wells Fargo
Bank, N.A., 400 Md. 718, 929 A.2d 932 (2007). That case involved two contractual fee-
shifting provisions: one located in a mortgage agreement, with respect to one set of
defendants, and the other located in a lease agreement, with respect to the other set of
defendants. The Court made clear that, when dealing with a mixture of claims that allow
fee-shifting and claims that do not, or separate fee-shifting claims involving different parties,
lawyers should be prepared to allocate fees and expenses to the appropriate claims. When
the interrelationship between different claims makes allocation impracticable or impossible,
however, that difficulty should not bar recovery of a fee award altogether.
When that prospect of allocation exists, however, as it would when
fee-shifting is possible and likely to be sought, the matter becomes more
complex. Some claims may allow fee-shifting while others may not, and the
lawyer must be prepared to establish how much time is allocable to the claims
for which fee-shifting is sought. Similarly, as here, when separate claims,
each allowing fee-shifting, are filed against different defendants, the lawyer
must be prepared to establish how much time is allocable to the claims for
which fee-shifting is sought against each of the defendants.
A precise allocation is not always practicable, however. In drafting
pleadings, motions, discovery, or memoranda that concern multiple claims,
possibly against different defendants, it may not always be possible to make
a precise allocation of time or expenses among those claims. A deposition, a
telephone conversation, settlement negotiations, a court proceeding may
involve several claims and several defendants. It is not reasonable to expect
the lawyer to have in tow an industrial engineer with a stop watch to measure
how much time was devoted to one claim or another. Moreover, as MRPC
1.5 makes clear, time spent is not the only factor in determining
reasonableness.
We quite agree that a party against whom a fee award is sought has a
right to know the basis of the claim, so that it can be defended, and to require
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the party seeking the award to establish, by a preponderance of the evidence,
that party's right to the amount sought. We agree as well that, where the fee
request is based primarily on time spent – a form of lodestar – the best
evidence ordinarily would be a clear delineation in the attorneys' billings of
the time spent and expenses incurred with respect to the particular claims upon
which the fee request is based. Because such a precise delineation may not
always be practicable, however, we do not regard it as a sine qua non of the
right to recover, for to conclude otherwise would, in many cases, deny all
recovery where some recovery is clearly warranted.
400 Md. at 760-61, 929 A.2d at 957-58 (emphasis supplied).
We dealt with the common core of facts doctrine in more depth in Weichert Co. of
Md. v. Faust, 191 Md. App. 1, 989 A.2d 1227 (2010), aff'd on other grounds, 419 Md. 306,
19 A.3d 393 (2011). That case concerned a fee-shifting provision located within a non-
solicitation clause in an employment contract between Weichert Co., a real estate brokerage,
and Faust, a vice-president and manager. Faust had resigned from Weichert to join a
competing brokerage firm and, within the next few months, 67 of the 82 agents she had
managed at Weichert followed her to the new firm. We summarized the ensuing litigation
as follows:
Weichert alleged breach of contract, employee piracy, breach of fiduciary
duty, and unfair competition. Faust brought counterclaims for Maryland
Wage Act violations, breach of contract, fraud, and negligent
misrepresentation. The jury found Faust liable only for breach of her duty of
loyalty and awarded Weichert $250,000.00 in damages. On Faust's
counterclaims, the jury found on one count that Weichert had violated the
Maryland Wage Act and awarded Faust $116,000.00 in damages.
After trial, both parties petitioned for attorney's fees and expenses
under the Fee Provision of the Agreement. Faust sought attorney fees and
expenses of $1,485,500.43, and Weichert sought fees and expenses totaling
$2,203,037.65. The court denied Weichert's petition but granted Faust's
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petition, awarding her $946,014.50 in attorney's fees.
191 Md. App. at 5-6, 989 A.2d at 1229 (footnotes omitted). We concluded that the fee-
shifting provision was limited to litigation regarding the non-solicitation clause in the
employment contract. As Faust successfully defended against Weichert's breach of contract
claim, she was the prevailing party for fee-shifting purposes, despite Weichert's success on
its breach of fiduciary duty claim and unrelated to Faust's success on her Wage Act claim.
Id. at 9-10, 989 A.2d at 1231-32.
Weichert argued on appeal that the circuit court should not have applied the "common
core of facts" doctrine to include in its award fees related to claims other than Weichert's
breach of contract claim. We noted that the doctrine removes two concerns attendant to fee
awards in cases with multiple claims or parties: allocation of cost and measurement of cost.
We illustrated the problem as follows:
For example, an attorney could ask a single deposition question whose answer
is relevant to multiple claims. If only one claim gives rise to fees, should the
party be able to recover fees for the time spent preparing and asking the
question? It would seem so, but should they recover the fee in whole or in
part? If in part, what part? Do we simply divide by the total number of
claims, or do we use some ratio based on the proportion of recovery for each
claim?
Id. at 17-18, 989 A.2d at 1236. If a fee-shifting claim and a non-fee-shifting claim are
factually related, the common core of facts doctrine allows a court to bundle together in its
award the total costs of both claims. "If the court finds that two claims are factually related,
the doctrine not only awards the costs common to all claims, but also awards costs that arise
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solely by virtue of the non-fee-shifting claim." Id. at 18, 989 A.2d at 1237.
On the facts before us in Weichert, we held that the court did not abuse its discretion
in awarding Faust fees incurred on claims other than her defense of Weichert's breach of
contract claim, which was the only claim directly related to the fee-shifting provision. "[A]ll
of Weichert's claims alleged that Faust had solicited Weichert's employees to defect. Thus,
disproving that fact was a necessary defense to each claim, and it formed the common
factual core of the court's fee award." Id. at 20, 989 A.2d at 1237-38.8
Critical to our resolution of this appeal, our doctrinal holding in Weichert was not as
sweeping as the Ochses might wish. We specifically held "that the 'common core of facts'
doctrine comports with Maryland Law." Id. at 20, 989 A.2d at 1237 (emphasis supplied).
We did not hold that the doctrine is mandatory. On the contrary, we specifically left open
the possibility that another method of allocation could prove more reasonable in a particular
case:
Certain circumstances could make another method more reasonable,
but we leave that to the discretion of the trial court.
Id. at 19-20, 989 A.2d at 1237 (emphasis supplied). In other words, trial courts may use the
common core of facts doctrine in appropriate cases, but they are not necessarily required to
do so in every case.
8
This is not to say that Faust had achieved wholesale victory in the trial court.
Despite the common core of facts doctrine, the circuit court awarded Faust less than two
thirds of the fees she requested.
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In the case now before us, we cannot say that the circuit court abused its discretion
by fashioning a "proportionate award" instead of applying the common core of facts
doctrine. In our view, the Ochses achieved success in this case in two respects: 1) through
appellate mediation, they obtained fee simple title to their entire property from Dorchester
County; and 2) through our decision in the first appeal, they avoided merger of the contract
of sale with the deed so as to be able to pursue an award of attorney's fees against the
Henrys. On remand from our earlier decision, the circuit court was required to follow our
instruction to "view the case as it appeared when initiated," even though title issues had been
resolved in appellate mediation. 202 Md. App. at 526 n.2, 33 A.3d at 483 n.2. In other
words, the circuit court was required to recognize that the Ochses were entitled to a fee
award from the Henrys, even though the Ochses' victory on the title issue was not a direct
result of their litigation against the Henrys. The court was required to fashion a reasonable
fee award to compensate the Ochses for expenses they incurred in the litigation. The court
was not necessarily required to apply the common core of facts doctrine to award a fully
compensatory fee as a reward for having achieved excellent results. See Hensley, 461 U.S.
at 435-36, 103 S. Ct. at 1940-41.
The circuit court did not view the Ochses' first appellate victory as an excellent result.
Rather, the court observed that, "[e]ven in the present posture of the case, the Henrys still
prevail" on three out of the four counts of the Ochses' amended complaint. The court
recalled its own familiarity with this case, having presided "throughout the pendency of this
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litigation." After reviewing the record and its own notes, the court concluded that "the
majority of the time in trial and litigation effort put forth by [the Ochses] addressed the issue
of willful fraud," whereas "only a small fraction of the effort expended towards litigation at
the trial level focused on [the issue on which the Ochses succeeded on appeal]."9 Fraud and
mutual mistake are indeed related; in fact, to some extent our decision in the first appeal
came down to a process of elimination between the two. See 202 Md. App. at 543, 33 A.3d
at 493 ("Because the circuit court found the absence of fraud, there must have been mutual
mistake."). Nevertheless, the court was not required to ignore the fact that the Ochses had
hung their hat on fraud at trial – which claim was not accepted at trial or on appeal – yet
somehow prevailed on a related issue that they had virtually ignored at trial. The court was
free to consider, as part of the totality of the circumstances, the thin relationship between the
Ochses' appellate success and the thrust of their efforts at trial.
If the court had made its decision before the Ochses filed their supplemental motion
for fees on April 27, 2012, we also would have been hard pressed to find an abuse of
discretion or error in the amount of the award. In our view, the court's award was eminently
reasonable with regard to the Ochses. Indeed, the Henrys could legitimately complain that,
from their point of view, the award was unreasonably large. An important consideration is
the award's relationship to "the principal amount in litigation." See Congressional Hotel,
9
The circuit court referred to this issue as "the breach of the special warranty against
encumbrances." We can only assume that the court meant to refer to the only issue on which
we reversed in our first decision, mutual mistake of fact.
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200 Md. App. at 500, 28 A.3d at 82. Although the Ochses did not specifically seek
monetary damages in their complaint,10 they have maintained, in their motion for fees on
remand and in this appeal, that they stood to lose the entire $700,000.00 value of their
property in the event that they were not able to obtain title to the 30-foot wide strip of land
traversing the property.11 The award granted is only about 31% of that $700,000 figure, but
the Ochses' initial requested award of $333,354.00 would have been about 48% of that
potential loss.12
10
In the Ochses' complaint and amended complaint, they requested damages only as
alternative relief and specified only "damages as may be appropriate."
11
In their brief to this Court, the Ochses explain:
As discussed in the [Motion to Enter Award of Attorney's Fees], as a result of
the Henrys' breach of contract, the Ochses: (i) were facing a Seven Hundred
Thousand Dollar ($700,000.00) loss in the value of their property; (ii) would
have possessed an unmerchantable virtually worthless property in which they
had invested hundreds of thousands of dollars; and, (iii) were being slowly
forced towards bankruptcy.
Appellants' Brief at 5 n.3, 21. As the purchase price for the property in 2001 was
$325,000.00, we can only assume that the $700,000.00 figure represents the Ochses'
estimation of the value of the property as of the 2012 motion for fees and includes the
"hundreds of thousands of dollars" they had invested in the property since purchasing it in
2001. Although the Ochses' primary objective was some sort of equitable relief – gaining
clear title to their entire property by some means, including the 30-foot wide strip of land –
we can analogize their claimed potential loss in value of the property to an amount of
claimed damages.
12
We also note that, contrary to the Ochses' assertion on this appeal, the court awarded
the Ochses all of the fees they claimed to have incurred in their successful first appeal to this
Court, including fees they incurred successfully mediating the first appeal against Dorchester
County. Although the court distinguished between various claims asserted at trial, the court
(continued...)
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Nevertheless, we are constrained to vacate the court's award and remand for further
consideration. Although we find no abuse of discretion in the circuit court's approach, we
find two inconsistencies in how the court executed its stated intent in its July 12, 2012
opinion and order. The court stated its intent to award "the entirety of the post-trial and
appeal costs," but appears to have ignored costs the Ochses incurred in successfully
defending against the Henrys' petition for a writ of certiorari in the Court of Appeals after
their victory in this Court on the first appeal. The court identified the Ochses' total requested
award as $333,354.00. This was the amount the Ochses requested in their first motion for
fees, filed on January 24, 2012. The court seems to have overlooked the supplemental
motion the Ochses filed on April 27, 2012, which included costs incurred in the Court of
Appeals and requested a total of $355,731.78. We shall remand for the circuit court to take
the Ochses' April 27, 2012 supplemental motion into account in fashioning its award.
We also note that the court stated its intent to deduct from the Ochses' total requested
award "three-fourths of the fees charged through the trial," and so deducted $114,731.40.
According to the Ochses' initial motion for fees, they incurred $176,525.37 "up to the time
of trial," three fourths of which would have been $132,394.03. The court will have the
opportunity on remand to review its calculations and resolve any computational errors.13
12
(...continued)
made no distinction between costs incurred litigating against Dorchester County and costs
incurred litigating against the Henrys.
13
In their brief, the Ochses also request that we remand with instructions to the circuit
(continued...)
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JUDGMENT OF THE CIRCUIT COURT
FOR DORCHESTER COUNTY VACATED.
CASE REMANDED TO THAT COURT FOR
FURTHER PROCEEDINGS CONSISTENT
WITH THIS OPINION. COSTS TO BE
SPLIT EQUALLY AMONG THE PARTIES.
13
(...continued)
court to "award [them] their costs and expenses for this appeal." Appellants' Brief at 25.
Insofar as the Ochses' request involves additional attorney's fees for this appeal, we shall
leave this to the circuit court's discretion on remand.
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