[Cite as McMahon v. Cooke, 2024-Ohio-2170.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
CARL G. MCMAHON, :
Defendant, : No. 113190 v. :
ANDREA M. COOKE, ET AL., :
Plaintiffs-Appellees, :
[Appeal by ABKCO Music, Inc., :
Defendant-Appellant.] :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED IN PART, VACATED IN PART RELEASED AND JOURNALIZED: June 6, 2024
Civil Appeal from the Cuyahoga County Court of Common Pleas Probate Division Case No. 2015ADV211062
Appearances:
Reminger Co., L.P.A., Clifford C. Masch, and Adam M. Fried, for appellant.
Thompson Hine LLP, Thomas L. Feher, John C. Allerding, and Ashley M. Bailes, for appellee. FRANK DANIEL CELEBREZZE, III, J.:
Appellant ABKCO Music, Inc. (“ABKCO”) brings the instant appeal
from the probate court’s judgment on February 9, 2023, awarding appellee Andrea
M. Cooke1 (“Cooke”) attorney fees and costs. After a thorough review of the record
and law, this court affirms in part and vacates in part.
I. Factual and Procedural History
On October 9, 2015, “Carl G. McMahon, Trustee of the Andrea Marless
Cooke Family Trust u/a/d 6/24/2009,” (“McMahon”) filed a complaint against
Cooke and her minor children: S.C. (d.o.b. 8/9/2003), Al.C. (d.o.b. 3/29/2007),
M.C. (d.o.b. 6/15/2012), and “Jane/John Doe Cooke, the unknown and unborn
children of Andrea M. Cooke and the issue of such children.” The complaint alleged
that Cooke was the settlor and the children were the sole beneficiaries of the Andrea
Marless Cooke Family Trust (“the Trust”). While ABKCO was not joined as a
defendant until later, the substantial history of the litigation necessitates a thorough
recitation of the facts.
History and Events Preceding McMahon’s Complaint
Cooke is the granddaughter of legendary musician Sam Cooke, who was
murdered on December 11, 1964, at 31 years old. Cooke’s mother, Denise Arnett
Cooke, also referred to within the record as Denise Somerville Cooke (“Denise”), was
1 Cooke has commenced her own appeal that we have assigned as a companion to the
instant appeal. McMahon v. Cooke, 8th Dist. Cuyahoga No. 113186. one of Sam Cooke’s daughters. Denise passed away in May 2000, and Cooke, as her
only child, was the sole beneficiary of the estate.
In 1986, Denise contracted with ABKCO, releasing her (and her
“successors and assigns”) rights to Sam Cooke’s music to ABKCO in exchange for
periodic royalty checks (“the Royalty Agreement”). Until her death, Denise regularly
received royalties from ABKCO. While Denise’s estate was being wound up, Cooke’s
attorney, McMahon, notified ABKCO that Denise had passed and requested that all
future royalty payments be paid to Cooke. When Denise’s estate was closed in 2009,
Cooke, under McMahon’s counsel, organized the Trust to receive the royalty
payments and appointed McMahon as trustee. A contract dated April 13, 2010,
assigned Denise’s estate interest in the Royalty Agreement to the Trust. From this
point forward, all royalties were deposited into the Trust and McMahon distributed
them to Andrea as requested.
On August 28, 2015, Cooke filed a complaint in the probate court
against McMahon and the alternate trustee provided for in the trust instrument,
Joseph Silvaggio (“Silvaggio”), and was assigned Cuyahoga P.C. No.
2015ADV209988. The complaint alleged that McMahon and Silvaggio had
breached their fiduciary duties to Cooke and demanded an accounting, alleging that
her prior attempts to audit the financial activity of the Trust had been stonewalled
by McMahon and Silvaggio. McMahon filed a pre-answer motion to dismiss,
alleging that Cooke did not have standing to bring the complaint because she was
not a beneficiary of the trust, only the settlor of the trust. McMahon’s Complaint
In September 2015, while McMahon’s motion to dismiss was pending
in Cuyahoga P.C. No. 2015ADV209988, McMahon filed a separate complaint in the
probate court, from which this appeal stems, seeking (1) declaratory judgment
determining whether Cooke is a beneficiary of the Trust, (2) approval of McMahon’s
accounting with respect to the Trust, and (3) approval for McMahon to resign as
trustee.
The complaint requested that the court clarify the rights and
relationships under the Trust instrument. McMahon alleged that Cooke’s legal
custody of the children had been terminated in September 2015, and that the
children had been placed in the custody of the Cuyahoga County Division of Child
and Family Services (“CCDCFS”). Pursuant to Paragraph 3(a)2 of the Trust, only
beneficiaries to the trust were “the persons with withdrawal rights.” The complaint
alleged that since Cooke was not a beneficiary, she did not possess withdrawal rights
under the trust instrument, and since she lost custody of her children, was no longer
permitted to receive distributions from the Trust for their benefit.
2 3(a) provides, in its entirety:
The class of beneficiaries who are entitled to exercise the withdrawal rights provided in this paragraph 3 consists of all of my issue (including the issue of a child of mine) who are living at the time that a contribution is made to the trust. The withdrawal right of such person in that class shall be as specified by the person making the transfer. If there is no direction by such person as to the withdrawal rights of each member of the class, then the withdrawal rights of each class member shall be determined as follows: equally among each of my children, the then living issue of a child of mine who is then deceased to have the right of withdrawal, per stirpes, among them of that deceased child’s share. Prior to losing custody of her children, Cooke had been receiving
distributions from the Trust. After Cooke’s legal custody of the children was
terminated, Cooke continued to demand distributions from McMahon, insisting
that she was a beneficiary of the Trust, and McMahon obliged. Attached as exhibits
to the complaint were copies of numerous checks written from the Trust to Cooke
displaying memos such as “Andrea’s annual payments,” “automobile insurance,”
“automobile repairs,” “criminal attorney fees,” “automobile purchase,” and “rehab
allowance.” McMahon argued that pursuant to Paragraph 6(o)3 of the Trust, Cooke
was no longer eligible to receive distributions on the children’s behalf since her legal
custody had been terminated.
Shortly after McMahon filed the complaint, the probate court issued a
temporary restraining order, ordering McMahon to continue making distributions
to Cooke from the Trust in the amount of $250 weekly, as well as her rent and
utilities to maintain the status quo during the pendency of the litigation.
3 6(o) provides, in its entirety:
To make payments or distributions to an incapacitated or incompetent beneficiary, either directly to such one or to a parent, spouse, or guardian of such one or to any person or organization having charge of or the responsibility for the care of such beneficiary, to be applied for the sole use and benefit of such one. In making any distribution hereunder to a minor beneficiary, the Trustee may make such distribution to any person, bank, or trust company as custodian for such one under the Ohio Transfers to Minors Act. In making any such payment or distribution, the receipt of such recipient shall be a full release to the Trustee and the Trustee shall have no duty to see to the application of any such payment or distribution. The Children’s Answer, Counterclaim, and Cross-claim
The children answered, counterclaimed, and cross-claimed through
John P. Koscianski, the children’s guardian ad litem (“GAL”). The counterclaim
alleged that McMahon had breached his duties as trustee by making distributions to
Cooke, who was not a beneficiary of the Trust, and alleged that McMahon paid
himself “excessive fees” in violation of Section 7 of the Trust. The cross-claim asked
the probate court to hold McMahon and Cooke personally liable for any liabilities
incurred on behalf of the Trust.
McMahon’s First Amended Complaint
On November 20, 2015, McMahon filed his first amended complaint,
removing Jane/John Doe Cooke and adding An.C. (d.o.b. “1/2014”) and CCDCFS as
defendants.
Cooke’s Answer, Counterclaim, and Cross-claim
Cooke filed an answer, counterclaim, and cross-claim on December 21,
2015, incorporating all factual allegations from 2015ADV209988. Cooke alleged
that at the time she organized the Trust, she was unemployed, had not obtained
a high school diploma, and thus believed that the royalties would be her main
source of income for the duration of her life. Cooke alleged that at the time she
organized the trust, she intended to be a beneficiary of the trust and for her
children to be secondary beneficiaries.
The counterclaim alleged that at the time Denise’s estate had closed,
Cooke had full rights to the royalties. She alleged that the contract assigning her rights to the royalties to the Trust was signed by McMahon without her
authorization. Cooke’s final allegation was that McMahon had been making
distributions to her when asked and had never informed her that she was not a
beneficiary under the Trust.
Cooke requested dismissal of McMahon’s first amended complaint
and a reformation of the terms of the Trust to reflect her true intentions. In the
alternative, Cooke requested a declaratory judgment declaring that she is entitled to
the royalties and that all assets in the Trust to be turned over to her. In the
alternative, Cooke requested a judgment declaring that the Trust is void; a judgment
for compensatory damages against McMahon and indemnification should Cooke be
found liable to a third-party because of her personal use of funds from the Trust; an
order that McMahon provide a full accounting of the Trust since its inception
through the date of the order; and costs and fees.
ABKCO’s Involvement/The ABKCO Parties
ABKCO Music and Records, Inc. (“AMR”) first became involved when
Cooke subpoenaed AMR directly because Cooke was convinced that McMahon was
not properly maintaining records relating to the royalties and desired to obtain the
records directly from AMR. Though the issue is not germane at this point in the
litigation, ABKCO and AMR are two separate and distinct entities.
On August 19, 2016, ABKCO (not AMR), sent McMahon a letter
pertinently advising that [a]s a result of the pending proceeding, entitled Carl G. McMahon v. Andrea M. Cooke, et al. (the “Proceeding”), which involves competing claims as to the right to receive the songwriter royalty from [ABKCO], [ABKCO] will hold all such royalties until such time that there is an adjudication as to the proper recipient of such royalties.
The letter also pertinently provided:
As a result of the dispute between [Cooke] and the Trust[,] ABKCO, who has no interest in the outcome in the resolution of the dispute has incurred substantial attorney’s fees and costs. Consequently, [ABKCO] reserves any and all rights and remedies it may have in respect of such attorneys fees and costs including [ABKCO]’s right to charge all such fees and costs against future royalties payable to the Trust or such other individual or entity as a court may hereafter determine.
Upon receipt of this letter, McMahon filed a motion asking the probate
court to revisit Cooke’s $250 per week allowance. Because ABKCO elected to
withhold royalty payments and reserved the right to recover fees from the withheld
royalties, McMahon desired to preserve the approximate $35,000 in the Trust for
such purposes, as well as his trustee fees. The children’s GAL agreed that the
allowance should be terminated.
AMR and ABKCO Become Parties
On October 26, 2016, Cooke filed a motion requesting a temporary
and preliminary injunction, barring AMR from withholding the royalty payments.
The motion alleged that “[AMR]’s decision to cease paying [r]oyalties is a
culmination of a year-long dispute between the company and [Cooke] regarding
access to [AMR] records that are critical to this action. [AMR’s] real intention in
refusing to continue making payments is to subject [Cooke] to economic duress with
the intent of discouraging her from asserting her legal rights.” In a separate motion, Cooke sought leave to join AMR as a party to
the case and amend the complaint. Both filings specifically and exclusively delineate
“AMR” as the relevant party. It is, however, undisputed that the Royalty Agreement
provided that ABKCO was the only party to the agreement. Attached to the motion
were several letters exchanged between Cooke’s counsel and Michael B. Kramer
(“Kramer”), AMR’s attorney located in New York, exhibiting that AMR, through
Kramer, had been uncooperative in responding to subpoena requests.
The trial court granted Cooke’s motion to join AMR and accepted the
amended answer, counterclaim, and cross-claim. The court also granted Cooke’s
motion for a temporary injunction, enjoining AMR from ceasing to make payments
in accordance with the Royalty Agreement to the Trust and set a hearing on Cooke’s
application for a preliminary injunction. While AMR’s involvement was pending,
the parties to the case were embroiled in numerous, voluminous discovery disputes
pertaining to document requests and deposition scheduling.
Once AMR was joined as a cross-claim defendant, it filed a motion to
dismiss. The first motion to dismiss argued, for the first time since AMR’s
involvement, that AMR is not a party to and has no obligations under the Royalty
Agreement, which had been signed by ABKCO, not AMR. The motion alleged that
“Cooke has sued the wrong party. She sued AMR for breach of contract, declaratory
judgment, and accounting under a Royalty Agreement she claimed AMR breached.
But AMR was not a party to the Royalty Agreement.” Cooke opposed the motion to
dismiss, arguing that when Kramer initially responded to the subpoena requests more than a year ago, he “responded and suggested that AMR was the proper party
from whom Ms. Cooke should be seeking such information/documents.”4 Cooke
further alleged that AMR is the parent company of ABKCO, so AMR would have an
interest in the litigation despite not being a party to the Royalty Agreement. Cooke
filed a motion for leave to amend her answer again, this time desiring to add ABKCO
to the cross-claim and add claims against both ABKCO and AMR for the allegedly
improper actions of both entities. The court granted leave and allowed the
amendments.
In January 2017, ABKCO filed a complaint in the New York County
Supreme Court against McMahon and Cooke setting forth causes of action for 1)
breach of contract, and 2) attorney fees, both related to the question of whether
ABKCO had a right to set off the withheld royalty payments based on costs and fees
incurred in producing documents in furtherance of Cooke and McMahon’s dispute.
ABKCO Music, Inc. v. McMahon, 57 Misc.3d 1223(A), 2017 NY Slip Op 51653(U),
72 N.Y.S.3d 516 (Sup.Ct.).
4 Despite this allegation, the record demonstrates the contrary. Exhibit B to this filing is
a letter from Kramer, dated October 28, 2015, that advises:
Let me begin by stating that AMR, has no contractual obligations to your client whatsoever, and takes no position one way or the other with respect to the Litigation. AMR shall comply with any appropriate order of the court regarding to whom future accountings and payments should be made. However, as you are certainly aware AMR is not subject to the jurisdiction of an Ohio probate court or its subpoena power and any attempt by you to bring AMR into the Litigation would constitute an abuse of process subjecting your firm to appropriate proceedings, both civil and disciplinary. Shortly thereafter, ABKCO filed a pre-answer motion to dismiss the
second amended cross-claim, arguing that a New York court had first obtained
jurisdiction over the proper parties to the exclusion of the probate court.
Resolution of Trust-Related Claims
On March 2, 2017, McMahon filed a motion advising that all parties
except for ABKCO and AMR had reached an agreement that included reformation
of the Trust and a negotiated settlement owed to Cooke and the Trust for McMahon’s
actions. McMahon once again sought permission to resign as trustee.
While the aforementioned motions were pending, on April 7, 2017,
Cooke filed a notice of partial dismissal, dismissing (1) her cross-claims against AMR
without prejudice and (2) her cross-claims for misrepresentation/fraud, negligent
misrepresentation, conversion, and accounting against ABKCO.
On December 13, 2017, McMahon, Cooke, the children, and CCDCFS
filed a joint stipulation to dismiss all claims with prejudice, providing that “each
Party will bear their own fees and costs.” The agreement specified that Cooke was
“not dismissing her cross-claims against [ABKCO].”
With these motions and notices pending before it, the trial court set a
hearing for January 2018, noting that
[d]efendant Cooke has entered in an agreement to Reform the Andrea Marless Cooke Family Trust which may or may not affect her standing to maintain her cross[-]claims. The Court further finds that there is a question of fact and law as to whether the New York Court or the Cuyahoga County Probate Court has jurisdiction over the cross[-]claims. Following the hearing in January 2018, ABKCO filed a supplemental
brief to its pending motion to dismiss, noting that it “became necessary based upon
representations by [Cooke’s counsel] to this Court at the oral argument.” The
substance of the brief argued that (1) Cooke did not have standing to bring the
breach-of-contract and declaratory-judgment claims, (2) the probate court lacked
subject-matter jurisdiction over Cooke’s breach-of-contract and declaratory-
judgment claims based on the pending New York case, and (3) any purported
assignment of rights under the Royalty Agreement required ABKCO’s consent in
writing prior to the assignment, which had not happened when Cooke’s estate
interest was assigned to the Trust.
In April 2018, the court ruled on the motion to dismiss, finding that
(1) Cooke had standing to pursue her claims against ABKCO, (2) the court had
subject-matter jurisdiction over Cooke’s claims because the New York matter
involved different allegations, and (3) Cooke complied with all conditions precedent
for bringing an action against ABKCO. As such, the court denied ABKCO’s motion
to dismiss and ABKCO timely filed an answer and counterclaim to Cooke’s second
amended cross-claim.
Summary Judgment: Cooke and ABKCO
Following a pretrial held on May 15, 2018, another discovery dispute
ensued over ABKCO’s right to indemnification pursuant to Section 9 of the Royalty
Agreement. Despite the fact that the settlement between the other parties made
clear that ABKCO was to release the funds to the reformed Trust, ABKCO refused to release the withheld royalties until it subtracted the indemnification that it was
allegedly entitled to, which had not yet been determined. As a result, the trial court
ordered ABKCO to provide Cooke/the Trust with “(1) the amount [ABKCO] is
holding and (2) the amount [of] fees which [ABKCO] claims a right to offset against
the funds it is holding.”
On July 26, 2018, Cooke filed a motion for partial summary judgment
as to her breach-of-contract claim against ABKCO, her declaratory-judgment claim
against ABKCO, and ABKCO’s cross-claim against her. The motion argued that
ABKCO was not entitled to indemnification pursuant to the Royalty Agreement and
that ABKCO did not have the right to withhold any of the royalties at this point in
time.
ABKCO responded with a Civ.R. 56(F) motion, alleging that factual
discovery was incomplete. The court agreed and set a discovery schedule. Several
more discovery disputes arose, prompting the probate court to set a hard deadline
requiring that all discovery be completed by July 19, 2019. ABKCO was allowed until
August 19, 2019, to file its responsive motion to Cooke’s motion for summary
judgment, and its own motion for summary judgment. Immediately thereafter,
ABKCO filed a motion asking for a discovery extension, and significant briefing once
again ensued. The trial court denied the motion.
On August 19, 2019, ABKCO filed its brief in opposition to Cooke’s
motion for summary judgment and its own motion for summary judgment, urging
the probate court to rule in its favor as to Cooke’s breach-of-contract and declaratory-judgment claims. ABKCO argued that it was entitled to summary
judgment, raising the argument that Cooke did not fulfill the conditions precedent
for a breach-of-contract claim under the Royalty Agreement, which required Cooke
to provide notice and allow ABKCO the opportunity to cure the purported breach.
Around this time, the New York matter was resolved; the Supreme
Court of New York, Appellate Division, First Department, found that ABKCO did not
present sufficient facts to prove that the New York court had personal jurisdiction
over the matter. ABKCO Music, Inc. v. McMahon, 175 A.D.3d 1201, 2019 NY Slip
Op 06721, 109 N.Y.S.3d 264.
On November 20, 2019, the trial court denied Cooke’s motion for
summary judgment on the breach-of-contract and declaratory-judgment claims,
finding that summary judgment should be granted in favor of ABKCO as it pertains
to Cooke’s breach-of-contract and declaratory-judgment claims, and allowed
ABKCO to seek indemnification pursuant to Section 9 of the Royalty Agreement.
Cooke timely appealed to this court, which was dismissed for want of
a final, appealable order since the judgment did not determine the amount that
ABKCO was entitled to under Section 9 of the Royalty Agreement. See McMahon v.
Cooke, 8th Dist. Cuyahoga No. 109316 (Motion No. 536315).
The Attorney Fees Dispute
Cooke returned to the probate court and filed a motion asking the
court to set a prehearing schedule and hearing dates to resolve the outstanding
indemnity dispute, which the court complied with. In the respective trial briefs, ABKCO indicated that it was seeking
$414,527.25 in indemnification; Cooke argued that based on her calculations, only
$14,250 of the amount sought was reasonable. Thereafter, ABKCO amended its
indemnification request twice, seeking a final amount of $476,155.75.
On June 21, July 7, and July 12, 2021, the probate court conducted
hearings on the indemnity dispute. On September 9, 2021, the probate court issued
a journal entry detailing findings of fact and conclusions of law based on the trial
briefs and the hearings.
Pertinent to this appeal, the judgment entry ordered (1) all fees
incurred on behalf of AMR are disallowed, and that since Kramer only represented
AMR, all of his fees were disallowed; (2) all billing by Reminger & Co. LPA (ABKCO’s
counsel) until February 3, 2017, was on AMR’s behalf and therefore disallowed;
(3) any billed communications between Reminger & Co. LPA and Kramer were
disallowed; (4) the New York case filed by ABKCO for breach of contract was not
covered by the Royalty Agreement, and any fees stemming therefrom were
disallowed; (5) that ABKCO is entitled to $111,182.25, to be taken from the withheld
royalties before distribution to the Trust. Notably, the September 9, 2021 entry
ordered ABKCO to release all royalties being held, after subtracting the $111,182.25
that it was entitled to under Section 9 of the Royalty Agreement.
ABKCO attempted to appeal, but the appeal was dismissed for failure
to comply with App.R. 3(A). See McMahon v. Cooke, 8th Dist. Cuyahoga No. 110896
(Nov. 2, 2021), motion No. 550283. About two months after the September 9, 2021 judgment was entered,
Cooke filed a motion for order of contempt and sanctions against ABKCO, alleging
that ABKCO had not complied with the court’s order to subtract the amount that it
was entitled to and distribute the remainder of the withheld royalties. ABKCO
disputed that Cooke had standing to bring the motion, claiming the royalties are
payable to the reformed Trust. Nonetheless, without any decision or order of the
court, ABKCO willingly released the withheld royalties on December 8, 2021.
This dispute caused Cooke’s counsel to move for prejudgment interest
in the amount of $473,918.37 and postjudgment interest in the amount of
$55,857.68, as well as reasonable attorney fees. ABKCO opposed and a hearing was
set.
The hearing commenced on November 29, 2021, and the probate
court found ABKCO in contempt, but found that contempt finding was abated
because ABKCO voluntarily released the withheld royalties on December 8, 2021.
The court also found that ABKCO owed the Trust the requested prejudgment and
postjudgment interest for failing to make the royalty payments since 2016 and for
delaying the payment of withheld royalties following the court’s September 9, 2021
order. The court requested that Cooke submit applications for reasonable attorney
fees.
Cooke’s counsel ultimately requested $445,516.81 in legal fees from
ABKCO, stemming from the commencement of the matter, even before ABKCO’s
involvement. ABKCO opposed. On January 23, 2023, the court held a hearing and determined that Cooke was entitled to attorney fees in the amount of $440,647.50,
as well as costs totaling $6,779.31. In so reasoning, the probate court found:
Indeed, as demonstrated again at the hearing, the entirety of this dispute (and thus all time devoted by [Cooke’s counsel]) is a product of [ABKCO] falsely claiming to have incurred fees and improperly ceasing royalty payments in August 2016. See, 9.9.21 judgment entry at 84. [ABKCO] mislead this Court early on as to its involvement in this matter, attempted to “race” to the New York Court to deprive this Court of jurisdiction and then ignored this Court’s Order to pay the Royalty fees due to the Trust and Ms. Cooke. The actions of [ABKCO] justify an award of attorney fees for all work incurred on behalf of Ms. Cooke in enforcing payment of royalty fees and obtaining royalty statements pursuant to Section 9 of the Royalty Agreement.
Both Cooke and ABKCO initiated appeals. In the instant appeal, we
address ABKCO’s two5 assignments of error:
1. The trial court erred in awarding attorney fees and expenses to Appellee pursuant to the terms of the indemnification provision contained in the Royalty Agreement.
2. Even if this Court were to construe the trial court’s [o]rder on 9/9/21 as rendering judgment in favor of Cooke, the court should not have awarded any attorney fees or expenses incurred prior to the 9/9/21 Judgment Entry.
II. Law and Analysis
ABKCO’s first assignment of error challenges the probate court’s
award of attorney fees and expenses to Cooke and challenges the validity of the
5 ABKCO’s brief did not specifically delineate its assignments of error as required by
App.R. 16(A)(3). Nonetheless, we presume that the two subsection headings indicate ABKCO’s assigned errors. award in its entirety. The second assignment of error challenges the amount of fees
should this court find that the award was valid under the Royalty Agreement.
We begin with the few arguments that are undisputed. Both parties
agree that Section 5 (Accounting) of the Royalty Agreement controls the award of
fees and expenses relevant to this appeal, which reads:
Should suit be instituted by [Denise] against ABKCO with respect to enforcement of the terms of this Agreement or payments thereunder, it is understood and agreed that any judgment which would be rendered in favor of [Denise] shall include the payment of reasonable attorney’s fees incurred by [Denise].
Both parties agree that Denise’s interest in the Royalty Agreement
has since been assigned to the reformed Trust, of which Cooke is a beneficiary.
ABKCO has not raised any arguments about Cooke’s authority to request attorney
fees on behalf of the Trust or the reformed Trust. As such, for ease of reading, we
consistently refer to “the reformed Trust” as the party entitled to receive attorney
fees under Royalty Agreement. Both parties also agree that pursuant to Section 10
of the Royalty Agreement, interpretation of the Royalty Agreement is governed by
and construed under the laws and judicial decisions of the state of New York.
Finally, it is undisputed that Cooke has not personally incurred legal fees in this
matter because her counsel represented her pro bono.
A court’s decision to award attorney fees is typically reviewed for an
abuse of discretion. Motorists Mut. Ins. Co. v. Brandenburg, 75 Ohio St.3d 157, 160,
648 N.E.2d 488 (1995). But, if a trial court’s alleged error stems from the court’s
interpretation of a contractual agreement, the decision is subject to de novo review. Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978),
paragraph one of the syllabus (stating that the interpretation of a written contract is
a question of law). Since both parties agree that fees in this matter are governed by
Section 5 of the Royalty Agreement, we review the probate court’s decision de novo,
applying New York law.
In its first assignment of error, ABKCO argues that the probate court
misinterpreted the terms of Section 5 of the Royalty Agreement. ABKCO notes that
the Royalty Agreement provides that reasonable attorney fees are warranted from
“any judgment which would be rendered in favor of [the reformed Trust].” ABKCO
argues that no judgments were rendered in Cooke’s favor; she lost on summary
judgment and fees were awarded to ABKCO, albeit less fees than those requested.
By contrast, Cooke argues that she “prevailed,” in this matter, as
evidenced by the probate court’s explicit findings that she “prevailed,” even though
summary judgment was rendered in favor of ABKCO. She also argues that she
“prevailed” because the trial court only ordered that ABKCO could recoup a small
fraction of their requested fees before distributing the withheld royalties to the
reformed Trust. We note, however, that Section 5 does not use the word “prevailed,”
rather, it states “any judgment which would be rendered in favor of [the reformed
Trust].”
New York follows the general rule that attorney fees are incidents of
litigation and may not be collected unless the award is authorized by an agreement
between the parties. Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487, 491, 549 N.Y.S.2d 365, 548 N.E.2d 903 (1989). This rule exists to avoid placing
barriers in the way of those desiring judicial redress and providing open access to
courts. A. G. Ship Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 5, 511 N.Y.S.2d 216,
503 N.E.2d 681 (1986). In fact, New York law prefers that “deterring malicious or
vexatious litigation [should be achieved through] separate, plenary actions after the
challenged proceedings have concluded.” Id. at 618, citing Curiano v. Suozzi, 63
N.Y.2d 113, 480 N.Y.S.2d 466, 469 N.E.2d 1324 (1984). “[T]he court should not
infer a party’s intention to waive the benefit of the rule unless the intention to do so
is unmistakably clear from the language of the promise.” Hooper at 492. We must
therefore look to rules of contract interpretation in reviewing Section 5 of the
Royalty Agreement.
New York State law governing contractual interpretation is generally
harmonious with Ohio law. Contract interpretation requires a determination from
the words and other objective manifestations of the parties “what must be done or
forborne by the respective parties in order to conform to the terms of their
agreements.” Tomhannock, LLC v. Roustabout Resources, LLC, 33 N.Y.3d 1080,
2019 NY Slip Op 05058, 104 N.Y.S.3d 596, 128 N.E.3d 674. “The best evidence of
what parties to a written agreement intend is what they say in their writing.” Id.
“Where the terms of a contract are ‘clear and unambiguous,’ the intent of the parties
must be found within the four corners of the contract, giving a practical
interpretation to the language employed and reading the contract as a whole.” Id.
The words and phrases used by the parties must, as in all cases involving contract interpretation, be construed by their plain meaning. Ellington v. EMI Music, Inc.,
24 N.Y.3d 239, 245, 2014 NY Slip Op 07197, 997 N.Y.S.2d 339, 21 N.E.3d 1000.
The probate court appears to have taken Cooke’s view on these points.
In its order granting Cooke’s motion for interest and attorney fees, the probate court
found that “the Reformed Andrea Marless Cooke Family Trust did in fact ‘prevail’
when the September 9 Judgment ordered ABKCO to pay the Reformed Trust
$263,957.25 of Royalties owed to the Reformed Trust [] pursuant to the Royalty
Agreement.” (¶ 33, 8/24/2022 Judgment entry).
The probate court interpreted Section 5 as follows:
The Court finds that the award of attorneys’ fees under Section 5 of the Agreement does not require the Reformed Trust to have “prevailed” on its claim, so long as the award was made in an action where enforcement was sought. And in any event, the Reformed Trust is deemed to have prevailed pursuant to the September 9 order, where the Court has denied [ABKCO] recovery of the vast majority of the fees it sought, determined that [ABKCO] withheld royalties before it ever incurred fees subject to indemnification, and determined that the amount of royalties withheld were far in excess of [ABKCO]’s reasonable fees.
(¶ 40, 8/24/2022 Judgment entry).
We agree with ABKCO; the trial court’s interpretation of Section 5
does not interpret the plain meaning of the Royalty Agreement’s terms. The plain
text of Section 5 clearly provides that attorney fees are available if the following
conditions are met: (1) the fees arose in a suit “instituted by [the reformed Trust]
against ABKCO”; (2) the suit pertains to “the enforcement of the terms of the
[Royalty] Agreement or payments thereunder”; and (3) any judgment results that “would be rendered in favor of [the reformed Trust].” Section 5 does not use the
word “prevailed,” but instead requires that any judgment “would be rendered in
favor of” the reformed Trust.
ABKCO points this court to Graybill v. Van Dyne, 67 Misc.2d 228,
324 N.Y.S.2d 291 (Sup.Ct.1971), where the phrase “party in whose favor a judgment
is entered,” located in a statutory provision was interpreted. The Graybill Court
cited German-American Button Co. v. A. Heymsfeld, Inc., 170 A.D. 416, 156 N.Y.S.
223 (1915), and Kriser v. Rodgers, 195 A.D. 394, 186 N.Y.S. 316 (1921), for the
proposition that “[w]here there is one plaintiff and one defendant, there can be but
one prevailing party and but one judgment.” Graybill at 232.
After examining the statutory provision in Graybill versus the
language in Section 5 of the Royalty Agreement, we conclude that there is a key
distinction between the language used in the Graybill statute versus the Royalty
Agreement. This distinction hinges on the Royalty Agreement using the term “any”
judgment versus “a” judgment, implying that there may be numerous judgments
throughout a case, as was the case here where Cooke (and/or the reformed Trust)
was not successful on summary judgment, but was successful and did receive a
judgment “in her favor” relating to her postjudgment motion for contempt
complaining that ABKCO had not released the withheld royalties. Additionally, the
Graybill analysis relied on a party “prevailing.” The plain text of the Royalty
Agreement does not require a party to “prevail,” but rather, requires the reformed
Trust to receive any “judgment in [its] favor.” The New York State Civil Practice Law and Rules defines “judgment”
as “the determination of the rights of the parties in an action or special proceeding
and may be either interlocutory or final. A judgment shall refer to, and state the
result of, the verdict or decision, or recite the default upon which it is based.”
N.Y.C.P.L.R. Law 5011. See also N.Y.C.P.L.R. Law 105 (“The word ‘judgment’ means
a final or interlocutory judgment”); Burke v. Crosson, 85 N.Y.2d 10, 15, 623 N.Y.S.2d
524, 647 N.E.2d 736 (1995) (discussing the distinction between final and nonfinal
judgments in a case).
In the instant matter, the trial court entered judgment in favor of
ABKCO on summary judgment, and in favor of ABKCO in awarding fees pursuant
to Section 9, even though the fees were not as much as requested. There is no way
to construe this as a “judgment in favor” of Cooke. In fact, the trial court explicitly
denied Cooke’s summary judgment motion. ABKCO was awarded fees pursuant to
Section 9 of the Royalty Agreement, and even though the court did not award
ABKCO the total requested amount of fees, that does not undermine or somehow
indicate that ABKCO did not receive a judgment in its favor.
After the trial court determined that ABKCO was entitled to fees to be
taken from the withheld royalties, it ordered ABKCO to subtract the fees and release
the royalties on September 9, 2021. ABKCO, however, did not immediately comply and it became necessary for Cooke6 to enforce the trial court’s September 9, 2021
judgment.
The postjudgment motion for contempt arose (1) out of a suit
instituted by Denise/Cooke/the reformed Trust, (2) related to payments under the
Royalty Agreement, and (3) resulted in a judgment in her favor. ABKCO was found
in contempt of the court’s September 9, 2021 order, but at the time this judgment
was rendered, had already voluntarily released the withheld royalties on
December 8, 2021. Cooke is thus entitled to all fees stemming from the efforts
necessary to obtain the royalty payments to which she was entitled after the
September 9, 2021 judgment was entered by the probate court, until December 8,
2021, when the withheld royalties were released.
Based on the documentation submitted by Cooke’s counsel, partners
billed 41.8 hours and associates billed 12.3 hours in preparing the postjudgment
motion for contempt, for total fees of $27,417.50. Cooke’s counsel notes that these
numbers included “the Motion and Reply Brief, including preparation,
correspondence, and hearings.”
New York law does not permit a party to collect fees incurred by the
preparation of the fee application, known as “fees on fees.” Rodriguez v. First Elite
Mgt. Corp., Sup.Ct. No. 652082/2017, 2022 N.Y. Misc. LEXIS 24996, 2 (Dec. 19,
6 In the probate court, ABKCO argued that Cooke did not have standing to seek enforcement of the judgment because the interested party is actually the Trust, not Cooke. ABKCO has abandoned this argument on appeal, and we deem it waived for purposes of appeal. 2022). Unless “they are permitted in ‘unmistakably clear’ terms by the applicable
fee-shifting statutory or contractual provision.” Id., citing 546-552 W. 146th St. LLC
v. Arfa, 99 A.D.3d 117, 2012 NY Slip Op 5895, 950 N.Y.S.2d 24, ¶ 4; Valentini v. 326
E. 30th St. Owners, Inc., 76 Misc.3d 1207(A), 2022 NY Slip Op 50840(U), 173
N.Y.S.3d 479, ¶ 2 (Sup.Ct.). So we are unable to affirm the fees relating to Cooke’s
counsel’s preparation of the fee application.
As a final point, we note that ABKCO does not dispute the pre- and
postjudgment interests or the costs — only attorney fees awarded pursuant to
Section 5. As such, we do not address those amounts and conclude that since
ABKCO did not pursue them, they are owed as determined by the trial court.
ABKCO’s first assignment of error is sustained in part and overruled
in part; Cooke received a “judgment in her favor” as to the postjudgment efforts to
obtain the royalties that ABKCO withheld. She is therefore entitled to $27,417.50 in
fees. ABKCO’s second assignment of error is sustained.
III. Conclusion
Judgment affirmed in part and vacated in part. The trial court’s award
of attorney fees to Cooke’s counsel in the amount of $440,647.50 is vacated except
for $27,417.50 that we affirm, stemming from the judgment in Cooke’s favor in her
efforts to enforce the September 9, 2021 judgment.
It is ordered that appellant and appellee share the costs herein taxed.
The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate be sent to said court to carry this judgment
into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
________________________________ FRANK DANIEL CELEBREZZE, III, JUDGE
KATHLEEN ANN KEOUGH, A.J., CONCURS; MARY EILEEN KILBANE, J., DISSENTS (WITH SEPARATE OPINION)
MARY EILEEN KILBANE, J., DISSENTING:
I respectfully dissent from the majority opinion. I would affirm the
trial court’s award of attorney fees and costs to Cooke in its entirety. The trial court
presided over this case for the entirety of its lengthy and convoluted history, and as
such, was in the best position to determine an appropriate award of attorney fees.
While I concur with the majority opinion that fees in this matter are governed by
Section 5 of the Royalty Agreement, I disagree with the majority’s conclusion that
no judgments were rendered in favor of the reformed Trust because the probate
court ordered ABKCO to pay the reformed trust $263,957.25 of royalties.
I disagree with the vacation of the trial court’s $440,647.50 award of
attorney fees, save the $27,417.50 that the majority opinion leaves intact. Based on
the reasons above, and in light of the extensive work done by Cooke’s counsel, I
believe that Cooke is entitled to the trial court’s original award of attorney fees.
For these reasons, I respectfully dissent.