Parker Waichman LLP v. Salas LC
263 F. Supp. 3d 369
D.P.R.2017Background
- Parker Waichman LLP (successor to Parker Waichman Alonso LLP) and five other law firms executed a "CAPECO Agreement" to jointly prosecute claims arising from a 2009 Caribbean Petroleum explosion; the agreement required firms to advance capital expenditures and provided an ordered fee-distribution scheme (reimburse capital, reimburse out-of-pocket expenses, then equal sharing of remaining fees).
- Parker alleges it advanced $188,586.50 and substantial attorney/paralegal time, complied with the agreement, but defendants unilaterally terminated the CAPECO Agreement and distributed fees without reimbursing Parker.
- Parker sued for specific performance, rescission, quantum meruit, and fees/prejudgment interest; defendants moved to dismiss under Rule 12(b)(6) arguing (inter alia) Parker is not a signatory, the agreement is unenforceable for violating Model Rule 1.5(e), exceptio non adimpleti contractus bars relief, and quantum meruit is time-barred.
- The Court treated Parker as a party to the CAPECO Agreement (successor by name change and continued performance) and accepted Parker’s factual allegations for pleading-stage purposes.
- The Court concluded the agreement violated ABA Model Rule 1.5(e)(2) (no client written consent; confidentiality clause hid the fee-splitting) and held such fee-splitting agreements are contrary to Puerto Rican public order and therefore unenforceable — dismissing the specific performance claim with prejudice.
- The Court denied dismissal of Parker’s quantum meruit claim, finding equitable recovery permissible despite the unenforceability of the contract and that the claim was not time-barred under applicable statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Signatory status — can Parker enforce CAPECO? | Parker is successor to the original signatory and performed under the agreement after a corporate name change. | Parker is not a signatory (different entity name) and thus cannot sue on the contract. | Parker plausibly pleaded successor status and performance; dismissal denied on this ground. |
| Exceptio non adimpleti contractus (failure to perform defense) | Parker alleges full compliance with contractual obligations. | Defendants contend Parker failed to perform the contract’s central obligations, barring enforcement. | Court accepts Parker’s pleaded compliance; affirmative defense not a basis to dismiss. |
| Enforceability given Model Rule 1.5(e) fee-splitting requirements | Even if the Rule applies, the CAPECO Agreement can fit Model Rule 1.5(e)(1) because firms assumed joint responsibility; factual questions remain. | Agreement violates Model Rule 1.5(e)(2) (no client written consent; confidentiality prevented disclosure), making it unenforceable as against public order. | Court adopts a strict approach: fee-splitting agreement violated Model Rule 1.5(e)(2) and Puerto Rican public order; specific performance dismissed with prejudice. |
| Quantum meruit and statute of limitations | Parker may recover in quantum meruit for services rendered/benefit conferred; claim filed timely. | Defendants say the quantum meruit claim is time-barred (3-year limitations). | Court allows quantum meruit claim to proceed; action accrued after March 2012 and was timely under either civil (15-year) or commercial (5-year) limitation. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard: plausibility required to survive Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (courts must accept well-pled facts and disregard legal conclusions in pleading-stage review)
- Smilow v. Sw. Bell Mobile Sys., 323 F.3d 32 (1st Cir. 2003) (quantum meruit permits recovery for benefit conferred absent enforceable contract)
- Culebras Enters. Corp. v. Rivera-Rios, 846 F.2d 94 (1st Cir. 1988) (discussion that ABA Model Rules are binding in Puerto Rico when adopted by statute or court rule)
- Gagne v. Vaccaro, 255 Conn. 390 (2001) (court declined to enforce unethical fee-splitting agreement as against public policy but allowed recovery in quantum meruit)