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No. 103,340 IN THE COURT OF APPEALS OF THE STATE OF KANSAS EUGENE WAYNE SNIDER, d/b/a WEST HEATING & COOLING, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE CO., Appellee.

SYLLABUS BY THE COURT 1. Where a trial court has the authority to grant attorney fees, its decision is reviewed under an abuse of discretion standard.

2. A trial court is vested with wide discretion to determine the amount and the recipient of an award of attorney fees. When reviewing an award of attorney fees, an appellate court does not reweigh the testimony or the evidence presented or reassess the credibility of witnesses. An award of attorney fees will not be set aside on appeal when supported by substantial competent evidence.

3. The trial court itself is an expert in the area of attorney fees and can draw on and apply its own knowledge and expertise in determining their value. An appellate court is also an expert on the reasonableness of attorney fees. Nevertheless, an appellate court does not substitute its judgment for that of the trial court on the amount of the attorney fee award unless in the interest of justice an appellate court disagrees with the trial court.

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4. In deciding the reasonableness of an attorney fee, the eight factors set forth in Rule 1.5(a) (2010 Kan. Ct. R. Annot. 458) of the Kansas Rules of Professional Conduct should be considered.

5. An abuse of discretion may be found if a trial court's decision goes outside the framework of or fails to properly consider statutory limitations or legal standards.

6. Civil appellate attorney fee awards are to be determined by the appellate court hearing the appeal. Motions for attorney fees incurred before the Court of Appeals should be determined by the Court of Appeals.

7. Before appellate attorney fees are awarded to an insured under K.S.A. 40-908, the insured must file a motion under Supreme Court Rule 7.07(b) (2010 Kan. Ct. R. Annot. 62) along with the proper attachments.

8. Provisions allowing an award of attorney fees are not passed to benefit the attorney or to burden litigants. Rather, they are passed to enable litigants to obtain competent counsel.

Appeal from Wyandotte District Court; MICHAEL GROSKO, judge. Opinion filed January 7, 2011. Reversed and remanded.

James E. Kiley, Jr., The Kiley Law Firm, LLC, of Overland Park, for appellant.

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Matthew W. Geary, of Dysart Taylor Lay Cotter & McMonigle, P.C., of Kansas City, Missouri, for appellee.

Before PIERRON, P.J., GREEN and MARQUARDT, JJ.

GREEN, J.: Eugene Wayne Snider, d/b/a West Heating & Cooling, (Snider) appeals from the trial court's judgment awarding Snider $5,000 in attorney fees in its lawsuit against American Family Mutual Insurance, Co. (American Family). Snider argues that the trial court abused its discretion in awarding attorney fees. We agree. The trial court in this case failed to adequately consider the factors under Supreme Court Rule 1.5(a) (2010 Kan. Ct. R. Annot. 458) and instead entered an award of attorney fees in the exact amount of Snider's recovery under the policy. Moreover, it is apparent that the trial court improperly included appellate attorney fees in its judgment. Because the trial court went outside of the legal framework for awarding attorney fees, we find an abuse of discretion in the trial court's judgment. After reviewing the record in this case and Snider's attorney's billing statements, in light of the factors under Rule 1.5(a), we determine that Snider is to be awarded $19,500 in attorney fees plus $155 in costs. Accordingly, we reverse and remand with instructions for the trial court to enter a judgment awarding Snider $19,655 in attorney fees and costs.

Snider held a Business Key Policy of insurance through American Family that contained inland marine coverage for "contractor's equipment." After 12 air conditioning condensers, tools, and equipment were stolen from Snider's residential storage facility in Kansas City, Kansas, Snider made a claim to American Family for insurance coverage for those items under the policy. American Family determined that the 12 air conditioning condensers were not items covered by his insurance policy and denied Snider's claim for the air conditioning condensers. Snider v. American Family Mut. Ins. Co., case No. 101,202, unpublished opinion filed September 4, 2009, slip op. at 3-4.

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Snider sued American Family alleging that there was coverage under his insurance policy. Snider asked for a judgment against American Family for $5,000 plus interest, attorney fees, and costs. Both Snider and American Family filed cross-motions for summary judgment. American Family argued that there was no coverage for Snider's air conditioning condensers because they were not "contractor's equipment" as defined in the insurance policy. Slip op. at 4-5.

The trial court determined that the explicit terms of Snider's insurance contract with American Family did not provide coverage for theft and, therefore, Snider was not entitled to compensation for the theft of the air conditioning condensers. As a result, the trial court granted summary judgment to American Family. American Family moved for reconsideration of the trial court's decision. American Family admitted that Snider's insurance policy provided insurance coverage for theft but argued that the policy did not cover the condenser units under the terms and definitions of the policy contract. The appellate record, however, fails to include any ruling on American Family's motion for reconsideration. Slip op. at 5-7.

Snider appealed the trial court's ruling to this court and argued that the trial court erred in granting summary judgment to American Family for two reasons: (1) because theft was a covered peril under the policy; and (2) because the air conditioning condensers came within the definition of "contractors' equipment" under the policy. This court agreed with both of Snider's arguments and reversed the trial court's decision. This court remanded the case with directions to enter summary judgment in favor of Snider. In addition, this court agreed with Snider's argument that he was entitled to attorney fees under K.S.A. 40-908 and remanded the case for a determination of attorney fees to be awarded to Snider under K.S.A. 40-908. Slip op. at 15.

On remand, the trial court held a hearing on the issue of attorney fees. At the hearing, Snider's attorney submitted an itemized list of attorney fees and expenses 4

totaling $43,599.55. The attorney fees were charged at a rate of $225 per hour for services rendered by Snider's actual attorney and $150 per hour for services rendered by an associate.

American Family's attorney argued that $43,599.55 was very excessive for "a fairly simple first party insurance case where the only dispute is as a matter of law" and where the insurance policy limit was only $5,000. American Family's attorney pointed out that there were no depositions taken and no experts in the case and that the matter was decided on cross-motions for summary judgment. American Family's attorney further pointed out that the issues briefed in the summary judgment motions were the same issues that were briefed on appeal.

On the other hand, Snider's attorney argued that $43,599.55 in attorney fees and expenses was not unreasonable based upon the amount of time he spent on the issues in this case and in responding to motions, filing his own motions, and appealing the case to this court.

At the conclusion of the hearing, the trial judge asked American Family's attorney what he thought would be a reasonable award of attorney fees. American Family's attorney responded that he thought "anything beyond probably $10,000 would be a little bit excessive in this case just for the amount of time and work that was involved." The trial judge reserved ruling on the issue of attorney fees until after he had an opportunity to review the documentation submitted by Snider.

In a written journal entry, the trial court awarded attorney fees to Snider in the amount of $5,000.

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On appeal, Snider contends that the trial court abused its discretion in awarding him only $5,000 in attorney fees in this case. Snider asks this court to review the record in this case and determine the amount of reasonable attorney fees to be awarded.

Standards of Review

Where the trial court has the authority to grant attorney fees, its decision is reviewed under the abuse of discretion standard. Estate of Kirkpatrick v. City of Olathe, 289 Kan. 554, 572, 215 P.3d 561 (2009). The trial court is vested with wide discretion to determine the amount and the recipient of an award of attorney fees. When reviewing an award of attorney fees, an appellate court does not reweigh the testimony or the evidence presented or reassess the credibility of witnesses. An award of attorney fees will not be set aside on appeal when supported by substantial competent evidence. In re Marriage of Burton, 29 Kan. App. 2d 449, 454, 28 P.3d 427, rev. denied 272 Kan. 1418 (2001).

The trial court itself is an expert in the area of attorney fees and can draw on and apply its own knowledge and expertise in determining their value. An appellate court is also an expert on the reasonableness of attorney fees. Nevertheless, an appellate court does not substitute its judgment for that of the trial court on the amount of the attorney fee award unless in the interest of justice an appellate court disagrees with the trial court. Johnson v. Westhoff Sand Co., 281 Kan. 930, 940, 135 P.3d 1127 (2006). "Fees which are not supported by 'meticulous, contemporaneous time records'" identifying the specific tasks being billed should not be awarded. Davis v. Miller, 269 Kan. 732, 748, 7 P.3d 1223 (2000).

In deciding the reasonableness of an attorney fee, the following eight factors set forth in Rule 1.5(a) (2010 Kan. Ct. R. Annot. 458) of the Kansas Rules of Professional Conduct should be considered:

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"(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 by the lawyer;

"(3) the fee customarily charged in the locality for similar legal services;

"(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."

Our Supreme Court has urged consideration of these factors in determining the reasonableness of attorney fees. See Davis, 269 Kan. at 751.

Trial Court's Award of Attorney Fees

In awarding $5,000 in attorney fees to Snider, the trial court stated as follows:

"The Court heard arguments of counsel and has reviewed documentation of fees provided by Mr. Kiley. That documentation shows that he billed at a rate of $225.00 per hour since initial involvement in this case in 2006. The total request for fees is approximately $44,000.00 to handle a case in which the amount in controversy was approximately $5,000.00. Approximately $22,000.00 is billed for the period through this court's ruling. An additional $22,000 is requested to process the Appeal of that decision.

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"Pursuant to K.S.A. 40-908, Mr. Kiley is entitled to be awarded reasonable attorney fees. The amount of the award is within the sound discretion of the Trial Court (Weinrich v. Employers Mutual Ins. 35 K.A. 2d 582).

"Given the nature of the underlying action, the time usually required to handle such an action and the nature of the issues involved, this Court finds that Plaintiff's request is unreasonable on its face, especially requesting $22,000.00 to file and process an appeal.

"It is therefore ORDERED, ADJUDGED, and DECREED that American Family Mutual Insurance Company pay Mr. James E. Kiley, Jr. attorney fees in the amount of $5,000."

Snider's Argument

Snider contends that the small amount of attorney fees awarded by the trial court in this case would be punitive against Snider and his attorney and would grant insurance companies full discretionary power to deny modest insurance claims without the fear of being held accountable for the attorney fees incurred by the insured. Moreover, in arguing that the attorney fee award in this case constituted an abuse of discretion on its face, Snider maintains that the trial court's one-page journal entry provides woefully insufficient detail and constitutes an improper "eyeballing" technique of calculating reasonable attorney fees.

As Snider points out, the trial court's decision does not demonstrate that it adequately considered the eight factors under Rule 1.5(a) in determining the reasonableness of attorney fees to be awarded to Snider. Aside from the trial court's conclusory statement, "[g]iven the nature of the underlying action, the time usually required to handle such an action and the nature of the issues involved, this Court finds that Plaintiff's request is unreasonable on its face," there is nothing in the journal entry indicating that the trial court applied the Rule 1.5(a) factors to the facts of this case to 8

come up with the $5,000 award of attorney fees. Instead, it is apparent that the trial court limited Snider's award of attorney fees to the amount that he was able to recover under his policy.

American Family cites this court's decision in State ex rel. SRS v. Cleland, 42 Kan. App. 2d 482, 496-97, 213 P.3d 1091 (2009), for its proposition that there is no requirement that the trial court expressly go through the factors in Rule 1.5(a). In Cleland, however, the trial court made specific findings about the petitioner's repeated efforts to attempt to collect child support from the defendant and the involvement by the petitioner's attorney in the case in awarding the petitioner $1,000 in attorney fees. Although the trial court did not specifically mention the factors in Rule 1.5(a), the trial court's findings allowed this court to adequately review the trial court's decision as to what would be reasonable attorney fees in the case.

Unlike Cleland, the trial court in the present case did not make any specific findings as to how it came up with the $5,000 attorney fee award. As we will discuss later, Snider's attorney spent a substantial amount of time in pursuing Snider's claim against American Family and eventually obtaining a favorable judgment, forcing American Family to pay Snider's claim. Nevertheless, the trial court in this case apparently disregarded the time spent by Snider's attorney in attempting to seek coverage for Snider's claim, in filing suit against American Family, and in responding to numerous motions and requests at the trial court level. Instead, the trial court awarded attorney fees in the exact amount of the $5,000 award of recovery in the underlying action. There is not substantial competent evidence in the record to support the $5,000 attorney fee award. While "the amount involved and the results obtained" is one of the factors to be considered under Rule 1.5(a), it should not form the sole basis for the award.

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In holding that the purpose of K.S.A. 40-908 is to allow a fair and reasonable compensation to an insured's attorney who has successfully sued on the insurance policy, our Supreme Court has stated:

"The purpose of K.S.A. 40-908 is not to penalize an insurance company for making what it deems to be a bona fide defense to an action to recover on an insurance policy, but to permit the allowance of a fair and reasonable compensation to the assured's attorney in the event, after having been compelled to sue on the policy, he or she is successful in that effort." Hamilton v. State Farm Fire and Cas. Co., 263 Kan. 875, Syl.

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