November 13, 2014 Session
Appeal from the Chancery Court for Shelby County No. CH022091 Arnold B. Goldin, Chancellor
David E. Caywood, Memphis, Tennessee, for the appellant, Jennifer Furnas Coleman.
Bradley Wayne Eskins and James E. King, Jr, Memphis, Tennessee, for the appellee, Marty Alan Coleman.
J. Steven Stafford, P.J., W.S., delivered the opinion of the Court, in which Brandon O. Gibson, J., and Kenny Armstrong, J., joined.
J. STEVEN STAFFORD, JUDGE
Facts & Procedural History
Jennifer Furnas Coleman ("Mother") and Marty Alan Coleman ("Father") were divorced on March 10, 2003. At that time, a Permanent Parenting Plan was in place, which provided that the parties' two minor children would have regular, unsupervised parenting time with Father. On June 9, 2006, Mother filed a Petition to Modify the Permanent Parenting Plan and to Temporarily Suspend Father's Parenting Time. As the ground for the modification, Mother alleged that Father was addicted to drugs and alcohol and was a danger to the children. Mother sought an immediate injunction against Father's parenting time, which the court granted on the same day that Mother filed her Petition. She also requested recovery of her reasonable attorney's fees, private investigator fees, and other suit expenses for having to bring the petition to protect the minor children's best interest. Attached to Mother's petition was an Affidavit of Complaint against Father for the illegal possession of cocaine and a positive drug screen of Father. Also included was an affidavit of Dr. Amy Beebe, a psychologist for one of the parties' minor children, wherein Dr. Beebe recommended that visitation between Father and the minor children be temporarily terminated. At the time Mother originally filed her petition, Jason Creech represented Mother. Mr. Creech was an associate attorney who had been practicing law for six years and billed $200.00 per hour for services.
According to Father, he acknowledged his problems with alcohol and drug abuse and made a settlement offer ("original settlement offer") so as to avoid litigating Mother's motion. The original settlement offer stated that Father would have supervised visitation with his children. It also provided that Larry and Anne Coleman (collectively, "Grandparents"), Father's parents, would serve as supervisors. Visitation would be terminated if Father failed to meet certain conditions, and would only be resumed upon Dr. Beebe's recommendation. Mother did not agree to the original settlement offer, which was signed only by Father, Father's counsel, and Grandparents.
Trial for Mother's petition was set for June 20, 2006, but was rescheduled to July 20, 2006 by written order. In the written order, signed July 7, 2006, the trial court ordered that Father could have supervised parenting time. On July 20, 2006, Father filed a response to Mother's petition. Father admitted that he had sought treatment for his alcohol and cocaine use, but denied that he had an ongoing addiction to cocaine and denied any continued cocaine use. He conceded that he had sought treatment for his substance abuse and that he had relapsed after his treatment at the Betty Ford Center and after his treatment at Passages Treatment Center. He further conceded he failed a drug test on April 26, 2006. He denied that the Parenting Plan should be amended. He requested that unsupervised visitation be reinstated pursuant to the Permanent Parenting Plan.
On July 17, 2006, Mr. Creech, Mother's counsel, deposed Father. He billed Mother 6.5 hours to prepare for and take Father's deposition. During the deposition, Father admitted numerous times to alcohol and drug use. He admitted he had a substance abuse problem involving alcohol, cocaine, and marijuana. He also admitted that he had consumed alcohol and driven with his minor children, and he admitted he had been arrested three times for driving under the influence. He further admitted he had taken his children to school late and that he had sent them to school without breakfast. He testified that, in December 2005, he was so hung over that the children could not wake him to take them to school.
Based on evidence gathered from Father's deposition and from a private investigator, Mr. Creech later indicated that he was ready to proceed to trial at that time on Mother's petition. As of July 20, 2006, discovery had been completed, and the case was set to proceed to trial. At this time, Mother's legal expenses totaled approximately $16, 277.80.
The case was not resolved as expected, however. Instead, on August 2, 2006, Mother hired David E. Caywood to take over representation of her case. Mr. Caywood wrote a letter to Father's counsel indicating he had been retained, acknowledging that the trial had been continued and reset for August 31, 2006, and stating that he would be prepared for trial on that date. At the time Mr. Caywood received the file, it included Mother's petition, Father's positive drug screen for cocaine, an affidavit of Dr. Beebe recommending suspension of visitation, a private investigator's report indicating Father's alcohol consumption at bars, Father's deposition, and the proposed consent order from Father.
The hearing on Mother's petition was again rescheduled for September 14, 2006. However, on September 14, 2006, Father's counsel presented a letter to the trial court from Dr. Thomas Bannister, Father's psychiatrist, who stated that Father was "acutely ill" and unable to attend the September 14, 2006 hearing. Father's counsel requested a continuance. Mother opposed the continuance and stated that she had an investigative report indicating that Father had been at a bar consuming alcohol on September 13, 2006 and did not appear acutely ill at that time. Still, the trial court continued the matter to September 27, 2006.
On September 21, 2006, Father's counsel requested another continuance because Father was leaving immediately for The Meadows, a treatment center in Arizona. Rather than resetting the hearing for another time, the trial court dropped the matter from its calendar and entered an order providing that it would be scheduled upon Father's return from The Meadows. In the interim, the trial court suspended Father's parenting time.
On November 22, 2006, Father filed a Motion to Appoint a Guardian Ad Litem. The trial court granted Father's motion on January 30, 2007. Linda Holmes was appointed Guardian Ad Litem ("GAL") and ordered to conduct an investigation upon the order's entry.
Legal Fees Billed to Mother during Litigation
Despite the fact that this case was scheduled to have been resolved, the dispute, and the legal fees associated with that dispute, were far from over. From August 2006 to April 2007, when the case was settled, the parties made several appearances before the trial court. Consequently, Mother incurred additional attorney's fees from Mr. Caywood, including his own time and the time of his associate and paralegal. For example, the parties argued over whether Father should be entitled to Christmas visitation with the children due to his continued alcohol use. Although Father admitted his alcohol abuse, Mother incurred over $35, 000.00 in private investigator fees to surveil Father and report on his alcohol use. Mother explained the continued surveillance by stating that while Father sometimes admitted his alcohol use, he sometimes denied that he was abusing alcohol, and yet continued to seek visitation with the children.
Despite his appearance at a deposition when Mother was represented by Mr. Creech, Father was required to appear at a second deposition in April 2007. Mr. Caywood and his office billed over 120 hours in preparation for the deposition, and a total of 205.85 hours for legal services in April 2007, totaling $42, 963.00. Father's deposition lasted under two hours. During this deposition, Father again admitted that he continued to consume alcohol and abuse drugs. Regardless, Mother resumed private investigation of Father.
After Father's deposition, the parties entered into a settlement agreement, which was similar to the original settlement offer that had never been accepted by Mother. Specifically, both the original settlement offer and the settlement agreement provided a series of conditions for Father to meet before being allowed visitation, and also provided that visitation could be terminated upon the recommendation of the children's psychologists. The settlement agreement was announced on the record; however, the parties reserved the issue of attorney's fees and suit expenses. On July 27, 2007, a written Order Pertaining to the Best Interests of the Parties' Minor Children, which memorialized the parties' settlement, was entered nunc pro tunc to April 26, 2007. The order provided that each child's psychologist would determine what contact Father was to have with that particular child. Further, Father was ordered to comply with the recommendations of Dr. John McCoy, a specialist in the field of substance abuse. Father would also have to attend sixty Alcoholics Anonymous meetings in sixty days. On August 3, 2007, Mother filed her Petition for Suit Expenses. At this time, Mother's legal expenses totaled $49, 594.74.
Legal Fees Billed to Mother after Settlement
From May 2007 until approximately February 2009, Mother incurred more fees while attempting to collect from Father the fees allegedly stemming from her original petition. Although the parties had reached a settlement in April 2007, Mr. Caywood's office continued to bill Mother for legal services allegedly related to suit expenses. Mr. Caywood's office also billed Mother monthly for legal services performed in May 2007 through February 2009 while the parties litigated the issue of attorney's fees and suit expenses. The hours of legal services performed during these months range from 1.05 hours to 97.15 hours per month. Mother was also charged for copying expenses during these months. In preparation for the hearing on Mother's legal expenses, Father retained an expert on attorney's fees in family law matters, Michelle Betserai.
Despite the fact that the parties had settled their dispute, in November 2007, March 2008, and June 2008, Mother again incurred fees related to the use of a private investigator. This time, the surveillance was not just limited to Father, but also to Father's counsel, ostensibly to show that Father's counsel improperly asked to reschedule a deposition.
On October 30, 2008, the parties finally went before the Special Master for a hearing on the issue of attorney's fees and suit expenses. The total requested by Mother at this time was approximately $354, 872.89. The hearing was reset for February 4, 2009 and eventually concluded on February 6. The following individuals testified at the hearing: Mr. Caywood, Mother's counsel; Dan Taylor and Dorothy Pounders, Mother's experts on attorney's fees; Michelle Betserai, Father's expert on attorney's fees; and Mother.
Mr. Caywood testified as to his fees and rates, and he also testified that the fees were justified because they were incurred protecting the best interests of the children. He testified that he attempted to have "paralegals and associates do as much of the work as I can . . . It's not economically feasible for me, for example, at 385 dollars an hour to be doing work that a paralegal, for example, in 2007 was being charged out at 135 dollars an hour." Mr. Caywood's testimony indicated that Father's admissions to substance abuse were not as clear as Father argues. In fact, Mr. Caywood testified that he did not
see [Father as someone] who was in, or had much chance, of entering the phase of what they call a recovering alcoholic. . . . I am also receiving letters from his then attorney basically to the effect that Mr. Coleman had come back from one of these institutions and he was a changed person; he was going to go to these AA meetings.
I told [Mother] we put surveillance on him because he said he was going to get around to addressing this problem; that he was going to do this, going to do that. You know, if he stopped drinking after that deposition and stayed out of those bars and done what he should have done, well, then he would have said, I did what I said I was going to do.
Mr. Caywood also testified about issues with the GAL, which he asserted caused Mother to incur additional attorney's fees. According to Mr. Caywood, the GAL had attempted to overhaul the parties' April 26, 2007 order, settling the issue of visitation. Mr. Caywood explained: "So now everything that I had done in order to obtain for the benefit of these children that April 26, 2007 order, as far as the [GAL] is concerned, is down the drain, and the [GAL] approved the April 26 order and she was involved in the drafting of it . . ." Mr. Caywood's testimony expounded on the hardships he and Mother faced throughout the litigation, giving as an example several instances where Father attempted to regain his visitation rights. When Father attempted to regain some visitation, Father would state that he had been a great father to the children and had not engaged in questionable activity around the children, and then would subsequently check into a rehabilitation facility again or, in one case, be arrested for driving under the influence. To Mr. Caywood, Father's continuous battle with substance abuse could not be reconciled with his requests for visitation.
When Mother testified, she stated she was unsure of Mr. Caywood and his associate's rates. However, she still believed the ultimate bill for Mr. Caywood's services of over $350, 000.00 was justified because it protected her children.
Ms. Betserai testified that the hours billed by Mr. Caywood's office were excessive and that the amount billed for private investigation fees was excessive in light of Father's admitted substance abuse. On the other hand, Mother's experts Mr. Taylor and Ms. Pounders opined as to the reasonableness of Mr. Caywood and his associate's hourly rates, but they did not opine on whether the number of hours billed was excessive. They also did not review the file and determine whether the final bill was reasonable.
During this time, before the Special Master issued his report, Mother made several attempts to disqualify the GAL and the court-appointed evaluator. The trial court denied all of Mother's attempts. Mother also filed a Motion to Recuse the trial judge on April 22, 2009. On April 24, 2009, the matter was transferred from Chancellor Walter Evans to Chancellor Arnold Goldin. The motion to recuse was granted by written order dated May 15, 2009.
The Special Master entered his report on March 25, 2010, finding that Mother's request for attorney's fees and suit expenses was excessive. He awarded Mother a total of $124, 824.05. In the Report of the Special Master, he found that the rates charged by Mr. Caywood and his associates to be reasonable. Ultimately, he reported that Mr. Caywood's total fees of $56, 844.50 for 146.25 hours of legal services was reasonable. However, he reported that the "time billed by other personnel at the Caywood firm" amounted to a request by Mother of $217, 263.00. The Special Master stated: "With little to no proof supporting this amount and considering the amount of the fees of [Mother's former counsel] and Mr. Caywood, the Special Master finds $5, 000[.00] to be reasonable." The Special Master reported that Father should reimburse Mother in the following amounts:
[Mother's former counsel, Mr. Creech]
[Mr. Caywood's firm]
Both Mother and Father filed objections to the Special Master's findings of fact and conclusions of law to the ...