Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C.
137 A.3d 1247
| Pa. | 2016Background
- In 2005 Attorney William Weiler began representing the Eazor estate, then joined Meyer Darragh under an employment agreement that assigned to the firm any fees for matters Weiler handled while employed.
- Weiler left Meyer Darragh in May 2007 (he was an employee, not a partner), agreed informally to split future fees two-thirds to Meyer Darragh and one-third to him, and removed the client file without firm permission.
- Weiler affiliated with Malone Middleman (though he never actually worked there due to illness); the Eazor estate then discharged Meyer Darragh and hired Malone Middleman, which later settled the case for $235,000 and received $67,000 in fees.
- Meyer Darragh sued Malone Middleman asserting (1) breach of contract (seeking two-thirds of the contingent fee based on Weiler’s employment agreement) and (2) quantum meruit; the trial court awarded quantum meruit relief against Malone Middleman but rejected contract relief.
- The Superior Court reversed the trial court on contract, applying Ruby v. Abington (holding successor firms take fees “subject to” departing partner agreements under the UPA) and awarded Meyer Darragh two-thirds of the fee; it also held predecessor firms cannot pursue quantum meruit against successor counsel (only against the former client).
- The Pennsylvania Supreme Court reversed the Superior Court on the contract claim: Ruby’s UPA-based rule for departing partners does not apply where the departing attorney was merely an employee, and no contract existed between Meyer Darragh and Malone Middleman; any recovery would lie in quantum meruit against the client, not breach of contract against the successor firm.
Issues
| Issue | Plaintiff's Argument (Meyer Darragh) | Defendant's Argument (Malone Middleman) | Held |
|---|---|---|---|
| Whether a successor law firm can be liable for breach of an employment fee‑sharing agreement to which it was not a party | Successor firm that hires the departing attorney takes fee rights "subject to" the preexisting employment agreement (per Ruby); fairness/equity requires enforcement | Contract law requires privity; successor never agreed to pay or protect Meyer Darragh’s interest, so cannot be liable for breach | Reversed Superior Court: no breach of contract liability because Malone Middleman was not party to Weiler–Meyer Darragh contract and Ruby’s rule (UPA) does not apply to an employee |
| Whether Ruby (UPA fiduciary/"unfinished business" rule) extends to employees who leave and take clients | Ruby’s equitable rationale should bind successors regardless of partnership status; Weiler could not convey better rights than he had | Ruby rests on UPA fiduciary duties among partners; those duties don’t exist for employees, so Ruby is inapplicable | Ruby limited: its UPA-based reasoning applies to departing partners, not non‑partner employees; Superior Court erred to extend it |
| Whether Meyer Darragh could alternatively recover against Malone Middleman in quantum meruit | (Not pursued on appeal) Meyer Darragh noted equitable factors and prior work by Meyer Darragh | Malone Middleman argued quantum meruit against successor is barred by Pennsylvania precedent; remedy lies against client | Majority treated quantum meruit as the appropriate theory for unpaid work but did not grant relief here; Meyer Darragh did not press quantum meruit on appeal to this Court |
| Whether agency or other doctrines (e.g., successor liability/landlord analogy) bind Malone Middleman to Weiler’s contract | Successor firm assumed obligations because Weiler acted as its agent or by analogy to successor obligations in other contexts | No agency: Weiler never acted within Malone Middleman’s authority (he never actually worked there); analogies are inapt | Rejected: agency and other suggested bases insufficient to impose contractual liability on Malone Middleman |
Key Cases Cited
- Ruby v. Abington Mem. Hosp., 50 A.3d 128 (Pa. Super. 2012) (successor firm’s right to fees is limited by departing partner’s employment agreement under the UPA/"unfinished business" doctrine)
- Shafer Elec. & Constr. v. Mantia, 96 A.3d 989 (Pa. 2014) (distinguishes contract and quantum meruit remedies; quantum meruit awards reasonable value of services)
- Mager v. Bultena, 797 A.2d 948 (Pa. Super. 2002) (client may discharge counsel and former attorney may recover in quantum meruit for services performed)
- Electron Energy Corp. v. Short, 597 A.2d 175 (Pa. Super. 1991) (party cannot be liable for breach of contract unless a party to the contract)
- Berger & Montague, P.C. v. Scott & Scott, LLC, 153 F. Supp. 2d 750 (E.D. Pa. 2001) (district court case allowing predecessor firm recovery against successor where an explicit inter‑firm fee agreement existed)