State ex rel. Schmidt v. Nye
State ex rel. Schmidt v. Nye
Opinion
The State appeals from the district court's order requiring it to pay attorney fees incurred by Ronald Nye, Joyce Nye, Terri Hurley, Gary McAvoy, and Vintage Memorabilia (hereinafter Defendants) in resisting and obtaining the dissolution of a preliminary injunction that was wrongfully issued. Finding no error, we affirm.
*588 FACTS
On September 27, 2012, the State filed an ex parte verified petition asking the district court, among other things, to temporarily restrain and then preliminarily and permanently enjoin Defendants from the sale, publication, replication, and distribution of any and all Kansas Bureau of Investigation file materials relating to the 1959 murder of members of the Clutter family in Holcomb, Kansas. That same day, the district court entered the ex parte temporary restraining order as requested. An amended ex parte temporary restraining order was filed on October 9, 2012.
*885 On December 17, 2012, the district court held an evidentiary hearing on the State's request to convert the ex parte temporary restraining order into a preliminary injunction. At the end of the hearing, the court granted the parties' joint request to submit legal arguments in support of their respective positions. On April 23, 2013, the district court granted the State's request and entered a preliminary injunction but left open the possibility for Defendants to request the court vacate it at a later date. Citing K.S.A. 60-905(b) as authority, the district court noted the State would not be required to post a bond in conjunction with the preliminary injunction.
On August 22, 2013, Defendants filed a motion to vacate the preliminary injunction. After significant delay due to discovery disputes, the State filed a motion for summary judgment on January 29, 2014. Defendants supplemented their motion to vacate on March 14, 2014, March 21, 2014, and June 6, 2014. The district court heard oral argument from the parties with regard to all pending motions on June 26, 2014, and took the matters under advisement. On November 7, 2014, Defendants filed an urgent request for a ruling on their motion to vacate. On November 26, 2014, the district court granted Defendants' motion to vacate the preliminary injunction, concluding that it should not have been granted in the first place.
On May 27, 2015, Defendants filed a motion to compel discovery that the State previously had failed to produce. Following a hearing, the district court granted that motion and ordered the State to produce the requested documents no later than July 7, 2015. Rather than produce the documents as ordered, the State filed a motion to voluntarily dismiss the case. Defendants indicated they did not object to voluntary dismissal but noted that allowing the State to do so before Defendants had an opportunity to present the court with various motions related to the litigation (including but not limited to their forthcoming motion for costs and attorney fees pursuant to K.S.A. 60-905 [b] ) would be highly prejudicial. Defendants subsequently filed a motion for costs and attorney fees. After further briefing and a hearing, the district court granted Defendants' motion for fees, awarding them $ 152,585 in attorney *886 fees, but denied awarding costs. The district court held that the amount of fees it awarded all stemmed from the wrongfully issued preliminary injunction that was requested by the State. The district court also granted the State's motion to dismiss.
ANALYSIS
On appeal, the State argues the district court erred in awarding Defendants attorney fees. Specifically, the State claims (1) it is protected from an award of attorney fees under K.S.A. 60-905(b) based on the doctrine of sovereign immunity, (2) the district court failed to consider the "injunction-bond" rule in making its decision to award fees, and (3) the district court abused its discretion in awarding fees. We address each of the State's claims in turn.
1. Sovereign immunity
The State argues it is entitled to sovereign immunity with respect to the district court's award of damages and attorney fees incurred by Defendants as the result of a wrongfully issued preliminary injunction. For the reasons stated below, we are not persuaded by the State's argument.
At common law, a state-as the sovereign-is immune from suit unless it consents or waives its immunity.
Commerce Bank of St. Joseph v. State
,
In support of its decision to award damages and attorney fees to Defendants that were incurred as the result of a wrongfully issued preliminary injunction, the district court determined the State waived any sovereign immunity to which it may have been entitled. On appeal, the State challenges that determination. Specifically, the State asserts that only the Legislature can provide the consent necessary to waive sovereign immunity and that it must do so in express terms through legislative enactment. The State argues that K.S.A. 60-905(b), the legislative enactment under which the *887 district court awarded damages and fees here, does not expressly consent to suit or waive sovereign immunity with respect to damages incurred by a defendant as the result of a wrongfully issued preliminary injunction requested by the State as a plaintiff.
We begin our analysis of the State's argument with K.S.A. 60-905(b), which provides as follows:
"Unless otherwise provided by statute or this section, no temporary injunction shall operate unless the party obtaining the same shall give an undertaking with one or more sufficient sureties in an amount fixed and approved by the judge of the court, securing to the party injured the damages such injured party may sustain including attorney fees if it be finally determined that the injunction should not have been granted. Neither the state nor any of its agencies shall be required to give an undertaking with one or more sufficient sureties in order to be granted a temporary injunction. For any other party, at the discretion of the judge, the undertaking required by this subsection may be waived."
In this statute, the Legislature expressly contemplates the State (1) as a party plaintiff seeking a temporary injunction and (2) as a party liable for damages and attorney fees when the temporary injunction is granted but later is determined to have been wrongfully issued. Based on the language of the statute, we find it is the injury sustained as a result of the wrongfully issued temporary injunction that gives rise to the State's liability for damages and attorney fees, not the posting of a bond. The Legislature's decision to exempt the State from posting a bond is immaterial to the issue of sovereign immunity. The purpose of a bond is to secure to the party injured by a temporary injunction those damages the injured party may sustain, including attorney fees.
Idbeis v. Wichita Surgical Specialists
,
While a clear expression by the Legislature is the hallmark of an effective waiver of sovereign immunity, the United States Supreme Court also has recognized that waiver can be premised on litigation conduct. See
Lapides v. Board of Regents of Univ. System of GA
,
No Kansas court has ever held that the State may waive its immunity from suit in state court through its litigation conduct. But sovereign immunity finds its source in the common law, and the common law adapts to changing circumstances to advance notions of fair play and equity. And, as noted above, recognizing that the State can waive sovereign immunity through its litigation conduct is not a novel notion. See
Lapides
,
*590 Such a holding provides the optimal balance between the interests of government entities and the interests of the wrongfully enjoined litigants. To that end, we note that a governmental entity seeking injunctive relief has the option not to seek a temporary injunction but instead to wait and obtain a permanent injunction after a full presentation of evidence and a determination of entitlement to the relief.
For all of the reasons set forth above, we hold the defense of sovereign immunity is not available to the State to shield it from liability for damages, including attorney fees, incurred by Defendants in seeking dissolution of the temporary injunction affirmatively sought and granted in its favor but later vacated based on a finding that it was wrongfully issued. The fact that the State was statutorily exempted from posting a bond to secure the availability of monetary funds in the event an award of damages and attorney fees was granted is immaterial to our holding.
2. Injunction-bond rule
"Where the trial court's authority to award attorney fees is questioned, an appellate court is presented with a question of law over which it exercises unlimited review."
Idbeis
,
The State claims the injunction-bond rule allegedly reflected in K.S.A. 60-905(b) only allows an award of damages and attorney *889 fees when the court orders the plaintiff to post a bond to secure money for potential damage and attorney fees. Because the court did not order it to post a bond before issuing the temporary injunction here, the State argues the court is necessarily precluded from requiring it to reimburse Defendants for damages and attorney fees it incurred in seeking to dissolve the temporary injunction. We disagree.
As we did in the preceding section, we again begin our analysis with K.S.A. 60-905(b), which the Legislature amended in 1988 by adding the following italicized language:
"Unless otherwise provided by statute or this section , no temporary injunction shall operate unless the party obtaining the same shall give an undertaking with one or more sufficient sureties in an amount fixed by the judge and approved by the clerk of the court, securing to the party injured the damages such injured party may sustain including attorney fees if it be finally determined that the injunction should not have been granted. Neither the state nor any of its agencies shall be required to give an undertaking with one or more sufficient sureties in order to be granted a temporary injunction. For any other party, at the discretion of the judge, the undertaking required by this subsection may be waived ." L. 1988, ch. 214, § 1.
Prior to its amendment, the statute required anyone requesting a temporary injunction to post a bond in order to provide security to the party injured for damages that the injured party may sustain (including attorney fees) if it were later determined that the injunction should not have been granted. See L. 1988, ch. 214, § 1; see also G.S. 1949, 60-1110 (version of statute in effect prior to 1963 incorporation of injunction provisions into code of civil procedure). This requirement was a condition precedent to the operation of the temporary injunction. Without a bond, the temporary injunction was of no force and effect.
Ostler v. Nickel
,
Notably, the State does not challenge the fact that a bond is no *890 longer a condition precedent to obtaining a temporary injunction or the fact that a temporary injunction can now be in full force and effect even if the court waives the bond requirement. Instead, the State relies on what it refers to as the injunction-bond rule, which historically limited the recovery of damages to the amount of money posted for the injunction bond. By *591 exempting the State from any requirement to post a bond, the State argues the Legislature intended to disallow any and all damages for a litigant who was injured as the result of a wrongful injunction put into place at the request of the State.
The injunction-bond rule is a judicially created equitable doctrine that, in Kansas, dates back over a century. See, e.g.,
State ex rel. Lewis, Co. Atty. v. Eggleston
,
Notably, the decisions creating and applying the injunction-bond rule did so based on the pre-1988 version of K.S.A. 60-905(b). The 1988 amendment undercuts the injunction-bond rule by allowing the State-and potentially any other party-to be exempted from the bond requirement. But the amendment did not otherwise alter the overall purpose of the statute: to compensate parties that are harmed by wrongfully granted injunctions. See
Idbeis
,
Notwithstanding the 1988 amendment to the statute, the State argues that the injunction-bond rule remains good law and prohibits the recovery of damages for a wrongful injunction in the absence of an injunction bond. In support of its argument, the State relies on three Kansas Supreme Court cases and one Kansas Court of Appeals case. Two of the Supreme Court cases,
Alder
,
The third case relied on by the State is
Idbeis
. This is the only case cited by the State that was decided after the 1988 amendment. We find, however, that this case does not support the State's assertion that, under K.S.A. 60-905(b), the amount of damages and attorney fees that can be recovered by an injured party is limited to the amount of money posted in an injunction bond. In
Idbeis
, our Supreme Court held as a matter of first impression that although K.S.A. 60-905(b) justifies awarding attorney fees to wrongfully enjoined parties, those parties are only entitled to fees incurred in defending against wrongfully obtained temporary injunctive relief and not to fees incurred in litigating the underlying permanent injunction lawsuit.
*892 Significantly, the Idbeis court did not construe *592 K.S.A. 60-905(b) to require a temporary bond injunction be posted before damages can be recovered under that statute.
In its memorandum decision and order holding that damages against the State are recoverable under K.S.A. 60-905(b) in the absence of an injunction bond from the State, the district court in this case relied on
Brady Fluid Svc., Inc. v. Jordan
,
" 'Whereas, the temporary injunction statute prior to 1988 had made the procurement of a surety bond a condition precedent to an effective temporary injunction, the statute, in its current state, makes the procurement of a surety bond merely a procedural tool for use by the trial judge. The substantive right to recover damages and attorney fees has always been a part of the statute, and, probably, within the inherent equitable powers of the Court. The current statute simply makes it optional as to whether or not the trial judge wants to secure the payment of the same with a surety bond.' "25 Kan. App. 2d at 795-96 ,972 P.2d 787 .
The plaintiff in Brady appealed and, like the State does in this case, argued on appeal that K.S.A. 60-905(b) only allows the award of damages and attorney fees where a bond is ordered to secure the potential damage and attorney fees. A panel of our court reviewed the history of K.S.A. 60-905(b) and found:
"To adopt Brady's interpretation would impose nonsensical results. For instance, under [Brady's] argument[,] ... if the bond was waived or if the State was asking for an injunction, the party enjoined would never have an opportunity to collect damages or attorney fees. We conclude that is not what the 1988 *893 amendment was designed for. That amendment changes only that the 'undertaking of a surety' is not always required, not that damages and attorney fees may not be recovered when the undertaking of a surety is not possible or is waived."25 Kan. App. 2d at 796 ,972 P.2d 787 .
The State argues the holding in
Brady
is distinguishable based on the facts; specifically, the district court used its discretion under K.S.A. 60-905(b) to waive the bond requirement for the plaintiff in
Brady
but in this case the district court was statutorily required to waive the bond requirement because the plaintiff was the State. We find this distinction makes no difference to the issue before the court. The question as presented by the State is whether damages and fees incurred as the result of a wrongful temporary injunction order are recoverable under K.S.A. 60-905(b) in the absence of an injunction bond. The language used by the Legislature in the statute does not reflect an intention to deny an injured party recovery for a wrongful injunction in the event an injunction bond was not posted. If that had been its intent, the Legislature presumably would have said so in the statute. In fact, it appears the Legislature amended the statute to conform to its primary purpose, "which contemplates that when a party obtains the extraordinary remedy of a temporary injunction and thereby temporarily deprives another of a right, the party should be responsible for any damages that arise if the restraint is wrongful."
Idbeis
,
The plain language of K.S.A. 60-905(b) does not predicate the recovery of damages on the posting of a bond; accordingly, the State's argument on this issue fails.
3. Reasonableness of attorney fees awarded
Because we have found that neither sovereign immunity nor the injunction-bond rule prohibits the district court from awarding
*894
Defendants attorney fees under K.S.A. 60-905(b), we now must determine whether the district court's award was reasonable. "In cases where a district court has authority to award attorney fees, that decision is reviewed for abuse of discretion. A party challenging such an award must show that no reasonable person would agree with the district court's decision or that the decision was not supported by substantial competent evidence. [Citation omitted.]"
Estate of Kirkpatrick v. City of Olathe
,
An award of attorney fees pursuant to K.S.A. 60-905(b) is "limited to those actually and proximately resulting from the effect of the temporary injunction itself, as opposed to litigation expenses independent of the temporary injunction."
Idbeis
,
To evaluate the reasonableness of a party's claim for attorney fees, a district court "should consider the eight factors set forth in KRPC [Kansas Rule of Professional Conduct] 1.5(a)."
Snider v. American Family Mut. Ins. Co.
,
"(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." KRPC 1.5(a) (2019 Kan. S. Ct. R. 300).
The district court is considered an expert on the issue of attorney fees and therefore may apply its own knowledge and professional experience in determining the value of services rendered.
*895
And while an appellate court is also considered an expert on the issue of attorney fees, it will not substitute its judgment for that of the district court on the amount of the fee unless in the interest of justice the appellate court disagrees with the district court.
Link, Inc. v. City of Hays
,
In this case the district court awarded Defendants $ 152,585 in attorney fees, $ 137,937.50 of which went to the Hendricks & Lewis, PLLC law firm and $ 14,647.50 of which went to the Cornwell & Vokins law firm. The district court based that award on a careful review of Defendants' attorney billing logs and the KRPC 1.5(a) factors. Specifically, the district court found that (1) the case was novel and difficult and therefore required significant time and skill to perform the necessary services appropriately; (2) the work in this case precluded the attorneys involved from working on other cases due to the time sensitivity of the action; (3) the hourly rates charged by both firms were within the range of those customarily charged for similar services in Topeka, Kansas; (4) the work required to obtain the result was exceptional particularly in light of *594 the constitutional issues involved; (5) Hendricks & Lewis had a prior relationship with one of the defendants and because it was an out-of-state firm, it was necessary to involve Cornwell & Vokins as local counsel; (6) all of the attorneys involved in the case were highly qualified and experienced; and (7) the fees assessed were based on hourly rates that were reasonable given the nature and uniqueness of the case. Based on a review of the record, we conclude that the district court's findings are supported by substantial competent evidence and that a reasonable person would agree with its award of attorney fees totaling $ 152,585.
Despite this, the State argues that the district court abused its discretion in a number of different ways. First, the State argues that the district court's award of attorney fees violates
Idbeis
"by awarding attorneys' fees Defendants would have incurred even if the temporary injunction had been denied." See
Second, the State argues that the district court abused its discretion by making an award of attorney fees that was based on excessive hourly rates. In particular, the State points to the hourly rates charged by Hendricks & Lewis and claims that (1) those hourly rates were higher than the prevailing hourly rates for Topeka and northeast Kansas and (2) Defendants provided no basis for the district court to conclude that the higher rates were reasonable. Despite the State's claims to the contrary, Defendants did provide a basis for charging the higher rates; namely, the significant amount of experience and strong national reputation of Hendricks & Lewis as well as the inherent difficulties of being an out-of-state firm that was forced to represent its long-time client and litigate a case in Kansas. Indeed, the district court specifically pointed to those justifications when finding that the hourly rates were reasonable. And again, the district court is considered an expert on the issue of attorney fees. In the absence of a showing that we must do so in the interest of justice, we will not substitute our judgment for that of the district court. See
Link
,
Finally, the State argues that the district court abused its discretion by making an award of attorney fees that was based on improper billing procedures. Specifically, the State complains that Defendants' attorneys overstaffed and overbilled the case from the outset. As a result, the State argues it was unreasonable and an abuse of discretion for the district court to make an award of
*897
attorney fees based on a request that was "chock full" of improper entries. Again, however, the State's argument is undercut by the fact that the district court carefully reviewed the billing records and excised those entries that it deemed to be improper. It is not our place to supplant that decision unless justice so requires. See
Link
,
4. Appellate fees and costs
After oral argument, Defendants filed a motion requesting attorney fees and other expenses incurred in this appeal. Defendants *595 rely on K.S.A. 60-905(b) as legal authority to support their request for fees and costs on appeal.
An appellate court may award attorney fees for services on appeal in a case in which the district court had authority to award attorney fees. Supreme Court Rule 7.07(b)(1) (2019 Kan. S. Ct. R. 50). Interestingly, whether the district court had authority to award fees was the issue in two of the three claims presented by the State on appeal. As set forth in detail above, we already have determined that the district court had authority to award fees under K.S.A. 60-905(b) ; accordingly, we also have that authority. See Supreme Court Rule 7.07(b)(1). Because Defendants' appellate attorney fees were occasioned entirely by the State's decision to appeal the district court's decision regarding its authority to award fees, we find an award of appellate attorney fees is justified. We now must decide whether the attorney fees and costs requested are reasonable.
As required, counsel for Defendants have provided this court with an itemized listing of the fees and expenses they request. The list indicates the person performing the work, the time involved, an hourly rate, and a brief description of the task. As also required, Defendants have provided this court with an analysis of the eight criteria set forth in KRPC Rule 1.5(a) to support their claim that the requested fee is reasonable and, therefore, ethically proper.
*898 We have reviewed the itemized listing of fees and expenses and have grouped them into the following categories:
FEES Research and draft appellate brief $ 84,557.50 Prepare for and attend oral argument $ 7,120.00 Travel to and from Topeka for oral argument $ 5,837.50 Research and draft motion for appellate fees $ 1,795.00 Miscellaneous motions and tasks $ 695.00 _____________________________________________________________ TOTAL FEES $ 100,005.00 EXPENSES Mileage to and from Topeka $ 162.52 Filing Fee - Motion for Pro Hac Vice $ 101.50 _____________________________________________________________ TOTAL EXPENSES $ 264.02 TOTAL FEES AND EXPENSES $ 100,269.02
Although the total sum of the itemized list of fees and expenses is $ 100,269.02, Defendants are not requesting this total sum. In their motion, Defendants state that "Mr. [Yale] Lewis has reduced his fee request by 50-percent, is not seeking reimbursement for airfare between Seattle, Washington and Kansas City, nor is he seeking reimbursement for hotel accommodations in Lawrence, Kansas."
The affidavit submitted by Mr. Lewis reflects that he spent 186.6 hours conducting *596 research, drafting the appellate brief, travel, and presenting oral argument. However, when added together, the hours listed on the affidavit actually total 174.8. Mr. Lewis charged $ 475 per hour for his services, which is a total of $ 88,030 in fees. Based on Mr. Lewis' unilateral offer to reduce his fee by half, his modified request is $ 41,515.
The affidavit submitted by Tai Vokins reflects that he, Krystal Vokins, and various paralegals spent 83.5 hours conducting research, drafting the appellate brief, travel, presenting oral argument, drafting motions, and completing other related tasks. Tai Vokins charged $ 250 per hour, Krystal Vokins charged $ 200 per hour, and the paralegals charged $ 75 per hour, which is a total of $ 16,975 in fees. Mr. Vokins also requests $ 264.02 in expenses for mileage and for the pro hac vice fee. All told then, Defendants are *899 requesting $ 58,490 in appellate fees and $ 264.02 for appellate expenses, for a grand total of $ 58,754.02.
The State vigorously opposes Defendants' motion for appellate fees and costs, arguing that the statute does not provide for such fees and even if it did, the appellate fees requested are not reasonable. We already have held that the statute provides for such fees so we turn to the State's second issue, the reasonableness of the amount requested. As set forth above, a court should consider the eight factors set forth in KRPC 1.5(a) in evaluating the reasonableness of an award of attorney fees.
We begin our analysis with the decision by Mr. Lewis to request only one-half the amount of hours he claims he spent researching and drafting the appellate brief in this matter. Although he cut his hours in half, the itemized billing records he submitted to the court in support of his request for fees reflect the time he spent before he reduced the amount of fees he requested. By doing so, Mr. Lewis effectively has made it impossible for this court to evaluate the reasonableness of the time reflected in the billing statement he submitted to the court. For example, the court may reduce the reasonable hours awarded if the number of compensable hours claimed by counsel includes hours that were unnecessary, irrelevant, and duplicative. We find the premodified billing statement presented by Mr. Lewis reflects many duplicative entries and perhaps excessive time billed. And again, Mr. Lewis has failed to provide a modified billing statement reflecting the reduced amount of hours he now requests for fees. The modified billing statement is necessary for us to properly evaluate the reasonableness of the modified fee requested. The modified billing statement would have had to include a description of the work he performed and the time involved for the fee requested , as opposed to hours he worked for which he is not requesting an award of fees.
With regard to the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly, we find the issue presented on appeal to be novel and fairly difficult. Significantly, however, the issue presented on appeal was the exact same issue presented to the district court. In fact, the parties submitted to the district court *900 approximately 257 pages in pleadings, arguing their respective positions on the issue. In addition, the court held a hearing on the issue as reflected by the record in 26 pages of transcript.
In addition to the attorney fee issue being heavily litigated below, we note the district court filed a well-reasoned and thorough memorandum decision and order on the attorney fee issue, which addressed each of the arguments made by the parties in their briefs on appeal.
Based on the eight factors set forth in KRPC 1.5(a), we find the $ 58,490 in attorney fees requested for work on this appeal to be excessive. In support of our finding, we note the issue in this appeal already had been extensively litigated through written motions and oral argument at the district court level. We also note the lack of sufficient information to evaluate the reasonableness of Mr. Lewis' reduced fee request. In addition, we find the fees requested for time spent to travel to oral argument is excessive. Finally, we find unreasonable the fees request for time spent to prepare the three motions for an extension of time to file Defendants' appellate brief. In *597 the absence of evidence to the contrary, such motions are for the convenience of counsel and their schedule. Because some of the entries in the affidavit submitted by Mr. Vokins include time spent on motions for extension of time as well as an additional task, we have calculated the total of those entries and credited half that amount to time spent on motions for extension of time and the other half to time spent on other tasks. For all of these reasons, we award to Defendants the sum of $ 15,450 in appellate attorney fees and the sum of $ 264.02 in expenses associated with this appeal. The award totals $ 15,714.02.
The decision of the district court awarding fees to Defendants is affirmed in its entirety, and Defendants' motion for appellate attorney fees and expenses is granted in part and denied in part.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.