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Defendant's Attorney: Barbara Smith, Christopher M. Blaesing, Clifford W. Plunkett, J. Dalton Person, Jeff Fletcher, Jess L. Askew , III, Kenneth Lee Marshall, Luke A. Lantta, Mark A. Moll, Niki T. Cung, Mark W. Dossett and Samantha Blassingame

Description: Fayetteville, Arkansas civil litigation lawyers represented Plaintiffs, who sued Defendants on breach of contract theories.


Plaintiffs, who are four sisters, filed this lawsuit on March 27, 2020, nearly three years after the death of their father, H.C. “Dude” Crain, Jr. They alleged in the lawsuit that they were the beneficiaries of a contract their father, Dude, entered into with their mother, Marillyn, when they divorced. Plaintiffs acknowledged they were aware of the existence of this contract-and their third-party beneficiary rights-since 1989, when their parents' divorce became final. The contract at issue was Dude and Marillyn's property settlement agreement, which required them to engage in estate planning and bequeath at least half their respective estates to their daughters.

Just months after Dude and Marillyn divorced, Dude married his second wife, Shirley. Marillyn died in 2006 and left all her assets to Plaintiffs. Dude, however, did not pass away until 2017, and although he prepared a will before his death, Shirley did not submit that will to probate, nor did she distribute any of Dude's significant assets to the Plaintiffs. Shirley maintains she had no idea that her husband had entered a contract with Marillyn to make a will. Because Shirley was apparently ignorant of Dude's contractual obligations, she assumed Dude's assets became hers when he died.[1] She proceeded to dispose of those assets as she saw fit for the next three years-until Plaintiffs petitioned to admit the will to probate in state court, and then collaterally sued Dude's Probate Estate in this Court for breach of contract. Shirley was named a Defendant in this action because she controlled all the assets that had once been Dude's at the time of his death. Plaintiffs claimed a 50% interest in those assets.

Attorney Dick Hatfield represented the Plaintiffs at the time the instant lawsuit was filed. Several months later, Plaintiffs hired another law firm to assist with the case, RMP, LLP. Four attorneys from RMP immediately entered their appearances on behalf of Plaintiffs: Tim Hutchinson, Seth Haines, Bo Renner, and Taylor Baltz. Several months later, another attorney from RMP, Lisa Geary, entered an appearance. Once the attorneys from RMP entered the fray, they took over the prosecution of the case, and Mr. Hatfield's involvement dropped off considerably.

All parties were in agreement that the Court would decide as a matter of law whether Dude breached the property settlement agreement. This did not mean, however, that the months leading up to summary judgment were uneventful. The parties engaged in complex, fact-intensive discovery punctuated with a number of disputes that required Court resolution. When the deadline to submit summary judgment motions finally arrived, both sides submitted voluminous briefing and hundreds of pages of exhibits. Then, on May 5, 2021, a little over a year after the lawsuit commenced, the Court held a day-long hearing on the parties' cross-motions for summary judgment. On May 24, 2021, the Court issued a memorandum opinion and order (Doc. 147) finding in favor of Plaintiffs. The Court determined that because Dude breached the contract to make a will, his Estate was liable to Plaintiffs for damages.

Most breach-of-contract cases would have ended with a finding of liability and a calculation of damages. However, this case was complicated by the fact that Plaintiffs filed suit against their father's Estate nearly three years after his death. Consequently, not only was specific performance of the contract impossible, but the task of identifying the assets subject to Dude's contractual obligation became exceedingly complex. In the years after Dude's death, Shirley had sold, donated, loaned, or invested the assets. Many of the publicly-traded assets had nearly doubled in value, and the parties hotly disputed who should enjoy the resulting gains. Shirley also argued she was equitably entitled to more than half the assets in dispute because she had been responsible for their investment and growth since Dude's death. She pointed out that she was married to Dude for nearly 30 years, and that fact should be considered when apportioning the property he owned and controlled at the time of his death.

The Court had little choice but to equitably impose a constructive trust on the disputed assets and to name Shirley as trustee. What followed next was a three-day bench trial to specifically identify and value the assets impressed by the constructive trust, which took place from July 19-21, 2021. Following post-trial briefing, the Court issued a lengthy memorandum opinion and order (Doc. 203) that itemized the assets subject to the constructive trust, valued those assets, and then apportioned each party's interest.

;Arkansas law permits Plaintiffs, as prevailing parties in a breach-of-contract action, to request a reasonable award of attorneys' fees from the breaching party- which, in this case, is Dude's Estate. See Ark. Code Ann. § 16-22-308 (“In any civil action to recover on [a] . . . breach of contract . . . the prevailing party may be allowed a reasonable attorney's fee to be assessed by the court and collected as costs.”).[2]Whether and how much to award in attorney's fees are left to the trial court's discretion. TCBY Sys., Inc. v. RSP Co., 33 F.3d 925, 930 (8th Cir.1994); First United Bank v. Phase II, 347 Ark. 879, 901 (2002). Shirley does not dispute that Plaintiffs are the “prevailing part[ies]” as defined by the statute. Moreover, the Arkansas Supreme Court confirms that “third-party beneficiaries [of a contract] are entitled to recover attorney's fees under Ark. Code Ann. § 16-22-308.” Stilley v. James, 347 Ark. 74, 80 (2001).

Shirley contends the Court should decline to award fees to Plaintiffs under § 1622-308 because such an award “would result in financial penalty” to her, “since she is the owner of at least half of all the Estate assets.” (Doc. 224, p. 5). Shirley reminds the Court that she was innocent of her husband's wrongdoing and, in an equitable sense, should “not be further held accountable for a breach of contract she did not, and could not, commit.” Id. In response, the Court observes that Plaintiffs were just as “innocent” of their father's breach as Shirley, and Plaintiffs, like Shirley, are now the owners of at least half of the Estate's assets. It cannot reasonably be disputed that Plaintiffs prevailed in this lawsuit, and, therefore, the Arkansas statute providing for the payment of their fees should reimburse them-to a point-for having to resort to litigation to vindicate their rights.

In its discretion, the Court finds that Plaintiffs are entitled to the reasonable attorneys' fees they expended in securing the judgment of liability against their father's Estate. However, the fees they incurred after that point-in proving up the assets subject to the constructive trust-cannot be as easily justified. The Court is persuaded that the remedy phase of the lawsuit was complex, time-consuming, and costly primarily because Plaintiffs delayed three years in filing suit. They delayed even though they were fully aware of their contractual rights for decades before their father passed away. They delayed even though they must have known within a few months of Dude's death that Shirley was not opening a probate estate nor transferring millions of dollars' worth of assets to them. Meanwhile, Shirley, apparently oblivious to Plaintiffs' contractual rights, believed for nearly three years after Dude's death that all his assets were hers to do with what she pleased. For example, she made certain decisions over the years with regard to publicly traded stock Dude owned prior to his death. The stock often changed in nature and character with the passage of time, and Shirley oversaw the management, sale, and sometimes reinvestment of those volatile assets while Plaintiffs essentially sat on their rights.

This is not to say that Plaintiffs filed their lawsuit out of time. They filed prior to the expiration of the statute of limitations, and they are certainly entitled to the full measure of their remedy for the breach. However, the equitable remedy phase of this particular breach-of-contract case is a distinctly unique matter in terms of a discretionary award of attorneys' fees. Such an award must be reasonable in the first instance, and in the Court's view, it would be unreasonable to award Plaintiffs the fees they incurred after the finding of liability on summary judgment. Therefore, the Court will only consider the reimbursement of attorneys' fees incurred prior to May 24, 2021.
Crain v. Crain (W.D. Ark. 2022)

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In considering whether the fees demanded by Plaintiffs' counsel are reasonable, the Court considered the following factors set forth by the Arkansas Supreme Court in Chrisco v. Sun Industries, Inc., 304 Ark. 227, 229-30 (1990), and cited to with approval by the Eighth Circuit, see All-Ways Logistics, Inc. v. USA Truck, Inc., 583 F.3d 511, 521 (8th Cir. 2009): the amount of time counsel invested in the lawsuit; the appropriateness of counsel's rates, given the experience and ability of the attorneys; the time and labor required to perform the legal services properly; the amount potentially at issue in the case; the results obtained; the novelty and difficulty of the issues involved; and the prevailing rate customarily charged in this area for similar legal services.

“While courts should be guided by [these] factors, there is no fixed formula in determining the reasonableness of an award of attorney's fees.” Phelps v. U.S. Credit Life Ins. Co., 340 Ark. 439, 442 (2000). “[W]hen the trial judge is familiar with the case and the service done by the attorneys, the fixing of a fee is within the discretion of the court.” Hartford Accident & Indem. Co. v. Stewart Bros. Hardware Co., 285 Ark. 352, 354 (1985); see also Burlington N. R.R. Co. v. Farmers Union Oil Co. of Rolla, 207 F.3d 526, 534 (8th Cir. 2000).

In diversity cases, an award of taxable costs to prevailing parties is governed by Rule 54(d) of the Federal Rules of Civil Procedure; however, Rule 54(d) does not give a court the discretion to tax whatever costs it deems appropriate. Taxable costs are set forth in detail at 28 U.S.C. § 1920 and include fees of the clerk and court reporter, fees for printed and electronically recorded transcripts necessarily obtained for use in the case, fees and disbursements for printing and witnesses, fees for copies of any materials necessarily obtained for use in the case, docket fees, and compensation of court-appointed experts and interpreters. Id. The fees charged to parties by privately retained expert witnesses are not compensable under § 1920. See Orduno v. Pietrzak, 932 F.3d 710, 720 (8th Cir. 2019) (finding that § 1920 does not explicitly authorize the taxation of expert witness fees as costs and approving the district court's decision to decline to award such costs).

Outcome:
IT IS ORDERED that Plaintiffs' Motion for Attorneys' Fees and Costs Against the Estate of H.C. Crain, Jr. (Doc. 208) is GRANTED IN PART AND DENIED IN PART, and the Estate of H.C. “Dude” Crain, Jr. is to pay Plaintiffs their reasonable attorneys' fees of $362,399.25 and costs of $10,586.83, plus post-judgment interest accruing at the appropriate federal rate until fully paid.

IT IS SO ORDERED.

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