Hyundai Motor America v. Alley

ZARNOCH, Judge. Appellant, Hyundai Motor America, is appealing a decision by the Circuit Court for Cecil County awarding attorney’s fees to appellee, Angela Alley, under the fee shifting provisions of the Maryland Automotive Warranty Enforcement Act, the Maryland Consumer Protection Act, and the federal Magnuson-Moss Warranty Act. The fees were awarded after the ²⁶⁴ parties negotiated a settlement of the case, and prior to any adjudication of the merits of appellee’s claims. Appellant presents the following questions: 1.

Did the circuit court err in granting appellee’s petition ' for attorney’s fees and costs based on a finding that appellee was a prevailing party under the fee shifting statutes at issue? 2. Did appellee satisfy her burden of presenting legally sufficient evidence as to the reasonableness of the fees claimed in order to support any fee award by the circuit court? 3. Did the circuit court properly apply the lodestar analysis in determining the amount of attorney’s fees to award? For the following reasons, we affirm in part and vacate and remand in part.

FACTS AND LEGAL PROCEEDINGS On June 19, 2006, Angela R. Alley (“Alley”), appellee, filed suit against Hyundai Motor America (“Hyundai”), appellant, in the Circuit Court for Cecil County, relating to the purchase of a new vehicle that was defective. Appellee alleged various claims arising under the Maryland Automotive Warranty Enforcement Act (“AWEA”), Md.Code Ann. (1975, 2005 Repl. Vol., 2007 Supp.), § § 14-1501 et seq. of the Commercial Law (CL) Article; the Consumer Protection Act (“CPA”), Md.Code Ann., CL §§ 13-301 et seq.; and the Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C.A. §§ 2301 . Appellee sought monetary damages, in an amount equal to the full contract price ($20,317) of the new 2005 Hyundai Sonata, plus “all collateral charges, attorney’s fees, and court costs.” A jury trial was scheduled for May 29, 2007.

On the day of the trial, after the court convened, but before the jury was selected, Hyundai and Alley reached a settlement under which Hyundai agreed to “swap-out” the one-year-old ²⁶⁵ 2005 Sonata with a new 2007 Sonata equipped with the same options as the vehicle replaced. The settlement agreement was read into the record in open court. 1 Reciting the details of the settlement, Hyundai’s counsel admitted that the new vehicle was worth “so much more” than the old vehicle. Left unsettled was whether appellee was entitled to attorney’s fees. The parties asked the court to retain jurisdiction over a petition for attorney’s fees, which it did.

The court did not expressly approve the settlement. 2 The recital of the settlement ended with Hyundai’s counsel stating that “this case will be dismissed with prejudice, as of today, with the agreement of the swap being put on the record.” However, no docket entry reflects a dismissal, either by court order or stipulation of the parties. See Maryland Rule 2-506. ²⁶⁶ On June 28, 2007, appellee filed a timely motion for attorney’s fees and costs totaling $12,311.40. As part of the motion, appellee presented a four-page invoice, dated June 27, 2007, from her attorney’s law firm, Kimmel & Silverman, P.C., with the dates various services were rendered, the initials of the person performing the task, a brief description of the service provided, the hours expended, the rate charge, and amount charged, which totaled $12,311.40. Appellant filed a response in opposition to the motion, arguing that the appellee was not a prevailing party for fee-shifting purposes, and was therefore not eligible for an award of attorney’s fees and costs.

It also claimed that, if the appellee were a prevailing party, she failed to satisfy her burden of presenting sufficient evidence as to the reasonableness of the fees requested. On September 6, 2007, the court heard both parties regarding the motion for attorney’s fees and granted appellee attorney’s fees in the amount requested. At the hearing, appellee’s counsel noted that Maryland courts apply the lodestar approach (see discussion, pp. 275-78, 960 A.2d at pp. 1265-67, infra) in determining the amount of reasonable attorney’s fees. He noted that his standard billing rate as an attorney with fifteen years experience was $275.00/hour.

He claimed that all the rates listed in the law office’s invoice were reasonable, and that under the lodestar methodology the firm could charge $90.00/hour for a paralegal, with differing rates for the attorneys depending upon the level of experience. He admitted that his firm had accepted the case on a contingency fee basis. The court found that appellee was a prevailing party and that the attorney’s fees claimed were reasonable. Without any further analysis under the lodestar approach, the court granted appellee’s motion and awarded attorney’s fees in the requested amount. 3 On September 26, 2007, appellant ²⁶⁷ filed a timely notice of appeal.

DISCUSSION 1. The circuit court did not err in finding that appellee was a prevailing party under state fee shifting statutes. Appellant argues that the court erred as a matter of law in granting appellee’s petition for attorney’s fees because she was not a prevailing party under the fee-shifting provisions of AWEA, MMWA, and CPA. Because they arose from “a common core of facts” and “related legal theories,” appellee’s state and federal claims are indivisible for purposes of determining prevailing party status.

Friolo v. Frankel, 373 Md. 501, 524-25 , 819 A.2d 354 (2003)(“Friolo I”). Thus, we need only decide whether appellee is a prevailing party for state law purposes, rather than determine her success under the federal MMWA. See Moedt v. Gen. Motors Corp., 204 Ariz. 100 , 60 P.3d 240, 243 (Ct.App.2002) (awarding attorney’s fees under state lemon law without addressing eligibility under MMWA).

For the reasons set forth below, we conclude that appellee was a prevailing party under AWEA and CPA. According to AWEA, “a court may award reasonable attorney’s fees to a prevailing plaintiff under this section.” CL § 14-1502(Z)(1) (emphasis added). The CPA also provides ²⁶⁸ that “[a]ny person who brings an action to recover for injury or loss under this section and who is awarded damages may also seek, and the court may award, reasonable attorney’s fees.” CL § 13-408(b) (emphasis added). Under the MMWA: If a consumer finally prevails in any action brought under paragraph (1) of this subsection, he may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys’ fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action, unless the court in its discretion shall determine that such an award of attorneys’ fees would be inappropriate. 15 U.S.C.A. § 2310 (d)(2) (emphasis added).

Although appellant concedes that, under these statutes, a settlement can confer prevailing party status on a litigant, it argues that such a settlement must take the form of a consent decree or other court-approved change in the legal relationship of the parties. Relying primarily on federal cases, such as the Supreme Court’s 5-4 decision in Buckhannon Bd. & Care Home, Inc. v. W.Va. Dept. of Health & Human Res., 532 U.S. 598 , 121 S.Ct. 1835 , 149 L.Ed.2d 855 (2001), appellant argues that “[a] defendant’s voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change.” Id. at 605 , 121 S.Ct. 1835 . These “[pjrivate settlements,” the Supreme Court said, will often be unenforceable by a federal court “unless the terms of the agreement are incorporated into the order of dismissal.” Id. at 604, n. 7 , 121 S.Ct. 1835 .

Appellant may very well be correct that under federal statutes, such as MMWA, actual judicial approval of a settlement, such as that obtained in a consent decree, is required before an attorney’s fee award can be made. See Rodriguez-Freytas v. N.Y. City Transit Authority, 95 F.App’x 392, 394 ²⁶⁹ (2d Cir.2004); Union of Needletrades, Indus. & Textile Employees, AFL-CIO, CLC v. U.S. Immigration & Naturalization Service, 336 F.3d 200, 206 (2d Cir.2003); Pitchford v. Oakwood Mobile Homes, Inc., 212 F.Supp.2d 613, 617 (W.D.Va.2002); Bruemmer v. Compaq Computer Corp., 329 Ill.App.3d 755 , 263 Ill.Dec. 516 , 768 N.E.2d 276, 288 (2002). But see American Disability Ass’n v. Chmielarz, 289 F.3d 1315, 1320 (11th Cir.2002) (court may still award attorney’s fees to prevailing party as long as: (1) it has incorporated terms of settlement into final order of dismissal or (2) it has explicitly retained jurisdiction to enforce terms of settlement); Dufresne v. DaimlerChrysler Corp., 975 So.2d 555, 556 (Fla. 2d DCA 2008) (quoting Smalbein ex rel. Estate of Smalbein v. City of Daytona Beach, 353 F.3d 901, 905 (11th Cir.2003)) (explicit retention of jurisdiction over terms of settlement is functional equivalent of entry of consent decree); Melton v. Frigidaire, 346 Ill.App.3d 331 , 281 Ill.Dec. 954 , 805 N.E.2d 322, 327 (2004) (consent degree not required if judicial sanction is obtained by incorporation of settlement agreement into court order or on retention of jurisdiction to enforce its terms).

However, here we are concerned only with state law. Thus, Buckhannon is not controlling. Alternatively, appellant contends that this Court’s decision in Blaylock v. Johns Hopkins Fed. Credit Union, 152 Md.App. 338 , 831 A.2d 1120 (2003) requires actual judicial approval of a settlement agreement before a party is considered to have prevailed for State fee-shifting purposes. In Blaylock , this Court held that a consumer who settled a claim under the CPA was a prevailing party for fee-shifting purposes and noted: [A] consumer who achieves victory by means of an agreement approved by the court is entitled to attorney’s fees, even though no consent decree or judgment is entered in favor of the prevailing party.

Id. at 355 , 831 A.2d 1120 (emphasis added). Appellant places undue reliance on the emphasized language. Under the facts of Blaylock , the settlement in ques ²⁷⁰ tion “was approved by the court.” Id. at 341 , 831 A.2d 1120 . The Court’s later equation of such a settlement with prevailing party status was more likely the description of a past fact than the establishment of a future minimum.

In short, we hold that Blaylock does not mandate an inflexible rule that judicial approval of a settlement is always required to make a litigant a prevailing party for state fee-shifting purposes. 4 Having decided that neither Buckhannon nor Blaylock forecloses appellant’s theory that she is a prevailing party, we must nevertheless determine whether in fact she holds that status with respect to her AWEA and CPA claims. Before examining what was achieved, in terms of whether the appellee succeeded, we consider how the settlement was accomplished, in terms of whether the procedure employed was inconsistent with the AWEA and the CPA. It is a common, longstanding practice for settling parties to read into the court record the terms of an agreement before a lawsuit is voluntarily dismissed. See, e.g., Parkinson v. Parkinson, 42 Md.App. 650, 651-52 , 402 A.2d 129 (1979), Jackson v. Jackson, 14 Md.App. 263, 268-69 , 286 A.2d 778 (1972).

Maryland cases recognize that such a “settlement order” is neither a judgment nor a court order. See Consol. Constr. v. Simpson, 372 Md. 434, 464-65 , 813 A.2d 260 (2002) (collecting cases). In Mitchell Props., Inc. v. Real Estate Title Co., 62 Md.App. 473 , 490 A.2d 271 (1985), this Court said: A settlement agreement is a contract which the parties enter into for the settlement of a previously existing claim by a substituted performance.

When this agreement is entered with the court, it is termed a settlement order; however, it is not a court order. Rather, it is a compromise ²⁷¹ between the parties, which they submit to the court to stay the proceedings in the case.[ 5 ] Id. at 482 , 490 A.2d 271 (citations omitted). Nevertheless, such a settlement is binding on the parties and enforceable against them. Smelkinson Sysco v. Harrell, 162 Md.App. 437, 453 , 875 A.2d 188 (2005) (“Sysco”).

According to 15A Am.Jur.2d Compromise and Settlement at § 49, “[a] party to a settlement seeking to redress a claimed breach, if the court case already has been dismissed, may bring an independent action for breach of contract; if the case has not been dismissed, the party may move for enforcement.” There are no jurisdictional concerns about subsequent enforcement in an independent state court action, such as those raised in Buckhannon with respect to federal courts. 532 U.S. at 604, n. 7 , 121 S.Ct. 1835 . See also Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 382 , 114 S.Ct. 1673 , 128 L.Ed.2d 391 (1994)(Absent district court retention of jurisdiction over the settlement or incorporation of the settlement in the dismissal order, “enforcement of the settlement agreement is for state courts.... ”). Neither the AWEA nor the CPA evidences an intent to impose any extraordinary procedural requirements on settling plaintiffs in order to be deemed as prevailing.

Noteworthy is the contrasting language of the federal MMWA, which authorizes a fee award “as part of the judgment.” 15 U.S.C.A. § 2310 (d)(2). In addition, when these state fee-shifting statutes were enacted — 1986 in the case of CPA and 1984 in the case of the AWEA — even under federal fee-shifting statutes, court-approved settlements were not required. See Buckhannon, supra, 532 U.S. at 622 , 121 S.Ct. 1835 (dissenting opinion of Justices Ginsburg, Stevens, Souter, and Breyer). The most likely intent of the General Assembly in adopting the fee shifting provisions in AWEA and the CPA would have been to ²⁷² incorporate the common, longstanding and uncomplicated Maryland practice for settling cases, viz. the reading into the court record of a valid enforceable settlement.

This is particularly true in light of the State’s policy, as reflected in the common law, of encouraging and promoting the settlement of litigation. See Sysco, supra, 162 Md.App. at 453 , 875 A.2d 188 . Finally, we note that the conclusion we reach is consistent with the decision of the Arizona Court of Appeals in Moedt, supra. There, the court rejected the contention that direct judicial involvement was necessary for a plaintiff to be a prevailing party under the fee-shifting provisions of the Arizona lemon law. 6 Moedt , 60 P.3d. at 243.

The Arizona court noted that its interpretation comported with the primary justification for fee-shifting provisions, “the promotion of settling, disagreements without extensive litigation,” as well as the goal of “strengthening] a purchaser’s ability to enforce the consumer-protection laws.” Id. For these reasons, we hold that even though the settlement did not receive express judicial approval, the procedure used was sufficiently indicative of prevailing party status and was not inconsistent with AWEA or the CPA. 7 Turning from “how” to “what,” we now consider whether appellee has in fact shown the requisite degree of success to be deemed a prevailing party. In Blaylock, supra, 152 Md. App. at 354-55 , 831 A.2d 1120 , this Court distilled these prevailing party formulas from cases in other