Huber v. Etkin
58 A.3d 772
Pa. Super. Ct.2012Background
- Appellant Huber appeals an order (Nov. 5, 2010; docketed Nov. 8, 2010) granting a new trial after a non-jury trial on dissolution assets and post-dissolution fees.
- Parties were former partners in Etkin & Huber, LLP (E&H) and Yankowitz, Etkin & Huber, LLP (YEH); dissolution occurred in 2007.
- E&H had no written partnership agreement; YEH had a written agreement; pre-dissolution profits were split 52% to Appellee and 48% to Appellant.
- Post-dissolution, clients were notified and given a choice of representation; Appellant sought pre-dissolution distributions, while Appellee sought post-dissolution contingency fees; trial court awarded Appellant about $163,902.60 for pre-dissolution distributions.
- Trial court relied on Solo v. Padova to decide contingency fees were not partnership assets; Appellee moved for post-trial relief; court granted a new trial; appellate panel affirmed the grant, but a dissent argued for client-rights supremacy over winding-up fiduciary duties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether post-trial relief was proper given the verdict and post-dissolution fee treatment. | Huber argues Solo misapplied law; post-dissolution contingency fees are partnership assets. | Etkin contends winding-up assets include post-dissolution fees; Solo is precedent. | New trial upheld; contingency fees realized during winding up are partnership assets. |
| Whether Solo governs or is distinguishable in this case. | Huber relies on Solo to deny partnership-asset status of post-dissolution fees. | Etkin argues Solo is not controlling for post-dissolution contingencies. | Solo not controlling; contingency fees during winding up are partnership assets. |
| Whether the UPA default rules defeat client choice rights at dissolution. | Huber asserts client choice rights trump UPA default when no prior agreement. | Etkin argues UPA default governs unless clients were informed otherwise. | UPA default subordinated to client-informed choices; clients’ options prevail unless parties agreed otherwise. |
| Whether the notices to clients adequately informed and permitted informed choice. | Letters did not describe winding-up duties; client choice should control. | Letters offered only three options without detailing ongoing fiduciary duties. | Clients’ choice controls; the letters did not foreclose informed alternatives that would respect client rights. |
| Whether the trial court abused its discretion in granting a new trial. | Huber contends no error in law; Solo misapplied; new trial unnecessary. | Etkin argues legal error in Solo and appropriate to reassess contingent-fee treatment. | No abuse of discretion; new trial warranted to address contingent-fee treatment. |
Key Cases Cited
- Solo v. Padova, 21 Phila. Co. Rptr. 22 (Pa.Com.Pl.1990) (contingency fees; partnership assets; post-dissolution)
- Lamparski v. Sikov, 384 Pa. Super. 491, 559 A.2d 544 (Pa.Sup. Ct. 1989) (valuation of contingency fees; too uncertain at death)
- Beasley v. Beasley, 359 Pa. Super. 20, 518 A.2d 545 (Pa.Sup. Ct. 1986) (contingency fees too risky to value for equitable distribution)
- In re Labrum & Doak, LLP, 227 B.R. 391 (Bankr.E.D. Pa. 1998) (post-dissolution winding up; partnership-assets guidance (bankruptcy court))
- Melenyzer v. Tershel, No. 99-5200, 2004 WL 5149401 (Ct. Prod. Washington 2004) (cases in progress at dissolution are partnership property (trial court))
- Bracht v. Connell, 313 Pa. 397, 170 A. 297 (Pa. 1933) (contracted assets when partnership resources used for an outside contract)
- Resnick v. Kaplan, 49 Md.App. 499, 434 A.2d 582 (Md.App. 1981) (contingent-fee cases; winding up; client choice interplay)
- Jewel v. Boxer, 156 Cal.App.3d 171, 203 Cal.Rptr. 13 (Cal.App. 1984) (income from winding up allocated to former partners)
- Welman v. Parker, 328 S.W.3d 451 (Mo.Ct.App.2010) (client-rights temper fiduciary duties in dissolution)
- Adler Barish, Daniels, Levin & Creskoff v. Epstein, 482 Pa. 416, 393 A.2d 1175 (Pa. 1978) (clients’ informed choice; competing for clients in dissolution)