Davis v. Petito

BATTAGLIA, J. We have been asked to consider whether the gratuitous cost of pro bono legal services, 1 provided to a party in a custody modification proceeding, may be considered in awarding attorneys’ fees, pursuant to Section 12-103 of the Family Law Article, Maryland Code (1984, 2006 Repl.Vol.), 2 to the other party, who had retained private counsel. Joanna Davis, Petitioner, was ordered by the Circuit Court for Wicomico County to pay her ex-husband Michael A. Petito, Jr., Respondent, $30,773.54 in attorneys’ fees and costs, because the trial court ¹⁹⁴ determined that she was in a better financial position than Mr. Petito, due to her having received pro bono representation by the Sexual Assault Legal Institute (SALI), 3 whereas Mr. Petito had accumulated over $70,000 in legal fees as a result of retaining private counsel. The Court of Special Appeals affirmed the trial court’s order in a reported opinion, Davis v. Petito, 197 Md.App. 487 , 14 A.3d 692 (2011), even though Ms. Davis had argued that the trial court’s order discounting any perceived value associated with her representation contravened this Court’s decision in Henriquez v. Henriquez, 413 Md. 287 , 992 A.2d 446 (2010), in which we interpreted Section 12-103 to permit an attorneys’ fee award to a prevailing party, who also had received pro bono legal representation. 4 We granted certiorari, 420 Md. 81 , 21 A.3d 1063 (2011), to consider the following question: In determining an award of costs and attorney’s fees in a custody case, Family Law Article § 12-103(b)(2) of the Maryland Code requires the courts to consider, inter alia, the financial status and needs of each party. In assessing the parties’ financial status and needs, and ultimately ordering the Mother to pay $30,773.54 of the Father’s legal expenses, was it appropriate for the lower court to consider the fact that the Mother was represented pro bono and to disregard her day-to-day financial needs, particularly as they relate to caring for the Child? ¹⁹⁵ We shall hold that the consideration that one party was represented on a pro bono basis, in order to award attorneys’ fees to the other party who had retained counsel was erroneous under Section 12-103, and we shall order a remand to the trial court for reconsideration of the statutory factors in light of this opinion.

Background Joanna Davis and Michael Petito were married on December 12, 1998 and have one daughter, Sophia, born on October 22, 2003. In April of 2006, the Circuit Court for Wicomico County granted them an absolute divorce and awarded them joint legal custody but primary physical custody of the child to Ms. Davis. In December of 2008, Ms. Davis, through retained counsel, filed an Emergency Complaint for Immediate Custody, Injunctive Ex Parte and Pendente Lite Relief, in which she sought sole legal and physical custody of Sophia, because she alleged that Mr. Petito had sexually abused the child. Mr. Petito denied the allegations, initially without counsel and later, after having retained private counsel, filed a Counter Complaint for Modification of Custody, seeking joint physical and legal custody of Sophia and a decrease in his child support payments; he also specifically requested attorneys’ fees.

Eventually, Ms. Davis could not afford to pay an attorney and secured the services of SALI on a pro bono basis. A hearing ensued but, after the first five days, the Circuit Court Judge determined that Ms. Davis had not established by preponderance of the evidence that there was “any form of sexual abuse” by Mr. Petito; specifically, she found that “none of [Ms. Davis’s] experts are able to offer consistent credible opinions as to what exactly happened,” while she found “convincing and credible” the testimony of Mr. Petito’s expert, who was offered “for the general proposition that the minor child’s statements in this case are insufficient to support a finding of sexual abuse.” The parties then presented both oral and written comments regarding the award of attorneys’ fees under Section 12-103. ¹⁹⁶ As to attorneys’ fees and costs, Mr. Petito submitted a request for $76,052, arguing that the judge should award him the total amount under Section 12-103, because Ms. Davis lacked substantial justification to seek a modification in child custody. He also asserted that Ms. Davis had “financial circumstances [that] far exceeded] Mr. Petito’s financial circumstances” because she owned her own home and had pro bono representation, while he did not own property and had had retained private counsel; according to him, the Sexual Assault Legal Institute’s representation of Ms. Davis meant that “her attorneys’ fees have been paid in full whereas Mr. Petito has incurred debts in the sum of $61,340 ... borrowed from his 401 K and incurred significant unsecured liabilities ____” Ms. Davis conversely submitted a request for an award of attorneys’ fees and costs in the amount of $14,080.12, representing the amount she paid to her private attorney before she retained SALI. She urged that Mr. Petito was in a better financial position to pay for attorneys’ fees because his family had given him interest-free loans, whereas Ms. Davis had “no ability to pay [his] counsel fees,” having “less than $2,000.00 in cash.” She maintained that she had substantial justification to bring her claim based on the allegations of sexual abuse.

The judge awarded Mr. Petito $30,773.54 in attorneys’ fees, 5 reasoning that Mr. Petito had substantial justification for ¹⁹⁷ defending himself in this proceeding and that Ms. Davis’s financial circumstances were better than that of Mr. Petito because she had been represented on a pro bono basis, whereas Mr. Petito had incurred significant debt as a result of retaining private counsel: The Court may order attorneys fees under Family Law Article § 12-103, Annotated Code of Maryland, but not before considering the financial status of each party, the needs of each party, and whether there was substantial justification for bringing or defending the proceeding. Lieberman v. Lieberman, 81 Md.App. 575, 601 [ 568 A.2d 1157 ] (1990). The Court acknowledges that each party has expended significant financial resources as a result of this case. Mr. Petito, however, has suffered disproportionate financial hardship from these proceedings.

His counsel was privately retained, unlike Ms. Davis’s representation, which has been without charge since October 2009. He has exhausted his savings, credit, and taken loans in excess of $10,000 from his family. There can be no doubt that the needs of both parties are high, especially in light of the resources expended in these proceedings. The Court finds that Mr. Petito had a substantial justification in defending himself in these proceedings, initiated by Ms. Davis.

While the Court recognizes the struggle that any parent must have when believing their child has been sexually abused, particularly when the suspected abuser is the other parent, the Court ultimately was unable to make a finding that the evidence supported that sexual abuse occurred. Without defending himself, Mr. Petito risked losing his parental relationship with Sophia. By contrast, Ms. Davis was represented pro bono by SALI, and should bear shared responsibility for the legal fees according to her income in light of the full record herein. Ms. Davis thereafter filed a Motion to Alter or Amend the Order, arguing that the judge’s consideration of the pro bono ¹⁹⁸ status of Ms. Davis’s representation in awarding Mr. Petito attorneys’ fees and costs under Section 12-103 was erroneous in light of our holding in Henriquez, 413 Md. 287 , 992 A.2d 446 , which had been filed within days before the judge’s ruling.

Ms. Davis argued that “it is without significance that Ms. Davis is currently under retainer with a legal services organization,” and the Circuit Court should have instead focused on Ms. Davis’s financial circumstances and needs, namely her inability to afford to pay Mr. Petito’s fees; the judge denied Ms. Davis’s Motion. Ms. Davis timely appealed to the Court of Special Appeals, 6 which affirmed the trial court’s order in a reported opinion, ¹⁹⁹ 197 Md.App. 487 , 14 A.3d 692 (2011), concluding that the Circuit Court Judge properly considered the impact of the disparity in the cost of the parties’ attorneys’ fees on each party’s financial status, needs and substantial justification for bringing or defending the proceeding. The Circuit Court’s consideration that Ms. Davis was represented pro bono was limited to “accounting] for the amount of fees she had paid or was obligated to pay being substantially lower than what Petito would pay.” 197 Md.App. at 533 , 14 A.3d at 718 . The intermediate appellate court rejected Ms. Davis’s challenge that the Circuit Court Judge did not consider the relative needs of the parties, because the Circuit Court Judge considered the parties’ monthly incomes and amounts of attorneys’ fees incurred and determined that Mr. Petito’s justification in defending himself in the proceeding was more substantial than Ms. Davis’s justification in bringing it, and therefore justified his incurrence of more attorneys’ fees than Ms. Davis as well as the court’s decision that she share in the payment of the fees.

Id. at 533 , 14 A.3d at 719 . Discussion The award of attorneys’ fees and costs in child support proceedings is controlled by Section 12-103 of the Family Law Article, which provides: (a) In general. — The court may award to either party the costs and counsel fees that are just and proper under all the circumstances in any case in which a person: (1) applies for a decree or modification of a decree concerning the custody, support, or visitation of a child of the parties; or (2) files any form of proceeding: (i) to recover arrearages of child support; (ii) to enforce a decree of child support; or (iii) to enforce a decree of custody or visitation. ²⁰⁰ (b) Required, considerations. — Before a court may award costs and counsel fees under this section, the court shall consider: (1) the financial status of each party; (2) the needs of each party; and (3) whether there was substantial justification for bringing, maintaining, or defending the proceeding. (c) Absence of substantial justification. — Upon a finding by the court that there was an absence of substantial justification of a party for prosecuting or defending the proceeding, and absent a finding by the court of good cause to the contrary, the court shall award to the other party costs and counsel fees. Section 12-103 is an exception to the “American rule,” the general rule in Maryland that requires litigants to be responsible for their own legal fees, Thomas v. Gladstone, 386 Md. 693, 699 , 874 A.2d 434, 437 (2005) (“Under the common law ‘American Rule’ applied in Maryland, the prevailing party in a lawsuit may not recover the attorneys’ fees as an element of damages or costs unless ... there is a statute that allows the imposition of such”).

Before making an award of attorneys’ fees, Section 12-103 requires the trial court to consider the parties’ financial status, needs and whether there was a substantial justification for bringing, maintaining or defending a proceeding. Petrini v. Petrini, 336 Md. 453, 468 , 648 A.2d 1016, 1022 (1994). The present disagreement centers on the impact of one party having pro bono representation rather than privately-retained counsel. Ms. Davis contends that the judge erred by considering the fact that SALI’s legal services were of no cost to her as enhancing her ability to contribute to Mr. Petito’s attorneys’ fees.

Ms. Davis argues that Mr. Petito’s attorneys’ fees award contradicts our decision in Henriquez , in which we recognized that legal representation on a pro bono basis should be considered indicative of meager financial status and needs that prevent an individual from affording an attorney. She asserts that ordering her to pay the attorneys’ fees of a ²⁰¹ party who was capable of affording private counsel frustrates the purpose of pro bono legal service, which is to “facilitate access to the judicial system by alleviating the financial burden of paying for an attorney.” Finally, Ms. Davis contends that the trial court erroneously failed to consider her needs, particularly relating to caring for Sophia, and limited finances in ordering the attorneys’ fees award to Mr. Petito. Mr. Petito, in support of the Court of Special Appeals’s opinion and the trial court’s order, argues that Henriquez does not apply to this case and that the trial court’s consideration of SALI’s pro bono services was to point out the disproportionate financial statuses of the parties. Specifically, Mr. Petito argues that the trial court correctly concluded that he had “exhausted his savings and credit, and was forced to take loans from family members in order to pay his legal expenses” whereas Ms. Davis “continues to have legal services provided free of charge.” Finally, he maintains that a reversal in favor of Ms. Davis would introduce a new rule of law that “would allow individuals to use pro bono services as a shield to protect against awards of attorneys’ fees.... ” In considering an award under Section 12-103, the “absence of substantial justification of a party for prosecuting or defending the proceeding,” would, without good cause, result in an award of attorneys’ fees and costs to the other party, so long as those fees and costs are reasonable. 7 Under Section 12 — 103(b), however, substantial justification is but one consideration in the triad, the others being financial status and needs, to support fee shifting.

The award of attorneys’ fees in this case lumped the perceived values of the respective attorneys’ fees together and ²⁰² then applied a formula to assess Mr. Petito’s fees. The judge conflated Mr. Petito’s substantial justification for defending the custody proceeding with Ms. Davis’s use of pro bono legal services in bringing the claim, reasoning that “Mr. Petito risked losing his parental relationship with Sophia,” and “[b]y contrast, Ms. Davis was represented pro bono by SALI, and should bear shared responsibility for the legal fees according to her income____” Substantial justification for each party’s position, however, is measured by the issues presented and the merits of the case, not the amount of attorneys’ fees charged. In 1993, the Legislature repealed and reenacted Section 12-103 in order to introduce the mandatory award of attorneys’ fees and costs under subsection (c). 1993 Session Laws, Chapter 514. Testimony provided in the file for House Bill 381, which contained the current language of subsection (c), reflects that its purpose was to address the inability of custodial parents to finance judicial enforcement of court-ordered child support.

See Memorandum of Delegate Ellen R. Sauerbrey, Additional Testimony on HB 381, Alimony and Child Support — Mandatory Award of Expenses (Feb. 16, 1993), quoting Testimony of Jill Coleman (“But without child support coming in, who has the money to pay a lawyer to collect child support? This means that non-payment of child support is actually a powerful way of evading the obligation to pay child support.”). In support of House Bill 381, Judge Rosalyn B. Bell of the Court of Special Appeals, as a member of the Governor’s Task Force on Family Law, provided written testimony that custodial parents, who were entitled to receive court-ordered child support payments, often did not because the non-custodial parent refused to pay, knowing that the custodial parent could not afford to hire an attorney and enforce the order. While judges already had discretion to award attorneys’ fees, many did not choose to exact this toll: The Task Force often heard the same complaint from divorced persons,