328 A.3d 330
Del. Ch.2024Background
- Minority partners in several cellular partnerships hired Michael Pullara, a Texas lawyer, to pursue breach of fiduciary duty claims against AT&T, the majority partner.
- Client agreements allowed Pullara to hire joint venture counsel at his discretion; Ajamie LLP was named as intended co-counsel, with all counsel working for a contingency fee plus reduced-rate hourly billing.
- Pullara and Ajamie signed a separate fee-sharing agreement, drafted and governed under Texas law, dictating how the contingency fee would be divided.
- After a lengthy, complex litigation, the minority partners secured substantial settlements from AT&T, but a dispute arose between Pullara, Ajamie, and the clients over Ajamie’s share of the fee.
- Ajamie sought to enforce a charging lien and claim its fee in the Delaware Chancery Court.
- The key conflict was whether Texas or Delaware ethics rules applied, and whether the fee-sharing agreement could be enforced, or if Ajamie was instead entitled to quantum meruit compensation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Governing Law for Fee-Sharing Enforceability | Delaware law should govern; agreement enforceable under Delaware rules | Texas law applies; Texas rules stricter on fee-sharing; agreement unenforceable | Texas law applies due to situs and client expectation factors; Texas rules govern |
| Enforceability of Fee-Sharing Agreement | Clients consented via client agreements; enforce as written | Clients never specifically consented to fee split; violates Texas Rule 1.04(f) | Sharing Agreement unenforceable; did not meet explicit client consent requirements |
| Alternative Quantum Meruit Remedy | Even if agreement unenforceable, Ajamie should recover reasonable value for services | Quantum meruit is proper remedy if contract fails, but calculation should be minimized | Ajamie may recover in quantum meruit for reasonable value of services, with an upward contingency adjustment |
| Amount of Recovery & Lien Enforcement | Full fee or contingency share plus interest | Only reasonable value minus sums already paid; no escrow pending other litigation | Ajamie receives $13,014,721.87 plus interest; escrow to be released; no freeze pending Texas litigation |
Key Cases Cited
- Bell v. AT&T Mobility Wireless Operations Hldgs. LLC, 299 A.3d 1 (Del. 2023) (Affirmed underlying judgment; relevant bellwether result reference)
- Mahani v. EDIX Media Grp., Inc., 935 A.2d 242 (Del. 2007) (Set forth factors for reasonable attorney fee awards under Delaware law)
- Citadel Holding Corp. v. Roven, 603 A.2d 818 (Del. 1992) (Prejudgment interest as a matter of right and computation guidance)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) (Delaware follows forum's choice of law rules)
- Hoover Slovacek LLP v. Walton, 206 S.W.3d 557 (Tex. 2006) (Texas attorney entitlement to compensation even absent enforceable contract)