Lead Opinion
Patrick Eng, individually and on behalf of his partners in the Missouri law firm of Eng & Woods (collectively “Eng & Woods”), filed a declaratory judgment action against Cummings, McClorey, Davis & Acho, PLC (“CMDA”), a Michigan law firm, seeking a judgment that Eng & Woods need not share a portion of the attorney’s fees awarded to the firm in a personal injury action. CMDA cross-claimed to recover one-third of the fee award. The district court
I.
We recite the facts in the light most favorable to CMDA. See Dovenmuehler v. St. Cloud Hosp.,
Acho spoke with Richina the following day, who indicated that he wanted CMDA to handle any suit arising from the accident. Richina agreed that CMDA would either pursue the lawsuit in Missouri or refer the case to a Missouri law firm, although Richina never signed a representation agreement with CMDA. Acho decided that CMDA would not try the case itself and began researching Missouri firms to refer the case to, eventually settling on Eng & Woods. Acho called Patrick Eng, a founding partner at Eng & Woods, and the two agreed that Eng & Woods would handle the case. According to Acho, Eng also agreed that CMDA would retain one-third of the fees that Eng & Woods garnered from the case, a fact that Eng & Woods vigorously disputes. Acho put Eng in touch with Richina and, on November 16, 2006, both Richina and MitRahina entered into contingent fee contracts with Eng & Woods. In the contracts, Eng & Woods agreed to represent Richina and MitRahina in any case arising out of the death of their mother, in exchange for one-third of all sums recovered. Neither contract made any mention of any agreement with Acho or CMDA.
On December 1, 2006, Acho sent a letter to Eng purporting to memorialize the alleged agreement they had made. It stated:
This letter will serve as a follow-up to our phone conversations of the past two weeks. First, please accept my sincere thanks for agreeing to take on this tragic case. Anytime individuals lose their lives, a case takes on more significance and it makes us fight just that much harder. Your client, Mike [Richina], was referred to me by his uncle, Ernie Fazio, who has been my client for several years. I in turn contacted you via the recommendation of my father, Ronald Acho, who holds you in high regard.
As we agreed on the phone, this firm will retain a one-third (33 1/3%) consulting fee against any recovery Eng & Woods garners on behalf of Mike [Richina], or any other party the firm represents as a result of the action. We understand, of course, that the fee is after your actual costs. I will work with you on the case as liaison, keeping in constant communication with Ernie Fazio, and when necessary, Mike [Richina]. I will also be on call at any time for you or your partner, should you need any assistance.
If you have any questions or concerns, or if this is not an accurate recital of our understanding, please contact me at once. I look forward to working with you, and eventually bringing this to a successful resolution.
(Appellant’s
Eng & Woods pursued the wrongful death claim in Missouri state court, with Woods acting as lead counsel for Richina and MitRahina.
In January 2008, after hearing that the case had settled, Acho contacted Eng about payment of his portion of the attorney’s fee award, first via telephone and then in a letter dated January 22, 2008. Acho argues that Eng acknowledged in this telephone call that there had been a fee arrangement, though Eng was not sure of the exact amount. The same day that Eng received Acho’s January 22 letter, Woods sent Acho a check in the amount of $18,562.50 “in consideration for the contact information for purposes of obtaining Mr. Richina’s case.” This amount represented 10% of the fee from Richina, or 5% of Eng & Woods’s entire fee from the case. Following his receipt of this check, Acho called Eng and the two had a heated argument about the amount of their fee arrangement. During this conversation, Eng told Acho that he would stop payment on the check unless Acho agreed to accept it. Acho agreed to accept the check but told Eng that he expected another check for the difference owed him under the alleged agreement. Eng stopped payment on the check.
Eng & Woods filed a declaratory judgment action against CMDA in federal court in May 2008, seeking a declaration that CMDA had no right to any portion of the attorney’s fees recovered by Eng & Woods from Richina and MitRahina. CMDA counter-claimed for breach of contract, fraud and misrepresentation, unjust enrichment, and bad faith breach of duty. The parties filed cross-motions for summary judgment. The district court granted summary judgment for Eng & Woods, holding that, even if an agreement existed between Eng and Acho, the agreement was unenforceable under Missouri law because it did not comply with the Missouri Rules of Professional Conduct. The court also held that CMDA’s counterclaims failed as a matter of law due to the unen
II.
CMDA appeals the district court’s grant of summary judgment in favor of Eng & Woods. First, CMDA argues that a fee-splitting agreement existed between Acho and Eng and that this agreement complied with both the letter and the purpose of the Missouri Rules of Professional Conduct. Second, CMDA argues that, even if we find the fee-splitting agreement unenforceable, it should be allowed to pursue its claims of fraud, misrepresentation, and unjust enrichment.
“We review a district court’s grant of summary judgment de novo, giving the nonmoving party the most favorable reading of the record as well as the benefit of [all] reasonable inferences that arise from the record.” Gentry v. Georgia-Pacific Corp.,
A.
“Attorney’s fees are not owned, they are earned.” Neilson v. McCloskey,
A division of fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation;
(2) the client is advised of and does not object to the participation of all the lawyers involved; and
(3) the total fee is reasonable.
Mo. Sup.Ct. R. 4-1.5(e) (2006).
The parties do not dispute that the total fee was reasonable, or that, at least as
Recognizing that this lack of a written agreement could be fatal its claim, CMDA argues that the December 1 letter Acho sent to Richina is sufficient to constitute a “written agreement” for purposes of Rule 4-1.5(e)(l) and that Richina’s actions clearly demonstrate that he knew of and accepted the fee-splitting agreement. The December 1 letter purports to confirm earlier communications between Acho and Richina regarding a fee-splitting agreement, but we question whether Missouri courts would consider it to be a “written agreement.” As the district court noted, “[i]f the version of Rule 4-1.5(e) in effect in 2006 had allowed for fee-splitting agreements where an attorney merely sent his or her client a letter confirming the client’s agreement to the fee-splitting, the amendment in 2007 to specifically allow for this procedure would not have been necessary.” Eng v. Cummings, McClorey, Davis & Acho, P.L.C., No. 08-4103,
CMDA argues that Tobin v. Jerry,
CMDA argues that we should construe Rule 4-1.5(e) the same way the Tobin Court construed Rule 4-1.5(c). However, we see a key distinction: in Tobin, “the record [was] crystal clear [that] there was a signed agreement,”
Second, even if the December 1 letter qualifies as a written agreement, it does not meet Rule 4~1.5(e)(l)’s joint responsibility requirement. By its terms, Rule 4-1.5(e)(1) requires that the written agreement itself inform the client that each lawyer will assume joint responsibility for the case, not just that the lawyers will split the fee between them. CMDA attempts to sidestep this requirement by pointing to the “many phone calls and ... many contacts with the clients” that CMDA had during the pendency of this case, arguing that this shows CMDA had assumed joint responsibility. (Appellant’s Br. 28.) We disagree. Rule 4-1.5(e) requires that the written agreement itself state that each lawyer is jointly responsible. See Londoff,
To the extent that CMDA’s contact with the clients is relevant to our analysis of joint responsibility, it appears that CMDA overstates the amount and extent of contact it actually had with Richina and MitRahina and understates Eng & Woods’s role in the case. CMDA has admitted that it had no direct contact whatsoever with MitRahina. And it appears to include Acho’s contact with Fazio within its definition of “client contact.” For example, in its brief, CMDA notes that “Mr. Acho received multiple telephone calls from Mr. Fazio while the litigation was pending requesting information on the status of the lawsuitf,]” (Appellant’s Br. 28), and that “Mr. Acho had constant contact with Mr. Richina and Mr. Fazio throughout the handling of the case ... [,]” (id. at 31 n. 2). As Fazio was not a party to the wrongful death suit, any contact with him is arguably irrelevant to our analysis here. Thus, we are left with Acho’s occasional telephone conversations with one client, Richina, as the entirety of CMDA’s “client contact.” While we can readily agree that keeping a client informed about the status of his case is an important element of the attorney/client relationship, we see nothing
Finally, even if CMDA’s actions show the exercise of some level of professional responsibility, they do not amount to “joint responsibility” as that term is used in Rule 4 — 1.5(e)(1). The comments to the Rules state that “[jjoint responsibility for the representation entails the obligations stated in Rule 5.1 for purposes of the matter involved.” Mo. Sup.Ct. R. 4-1.5(e) cmt. (2006).
B.
Having determined that any alleged fee-splitting agreement between CMDA and Eng & Woods is unenforceable, we must next decide whether CMDA’s
Initially, we note that several of Eng & Woods’s actions give us pause. Eng received Acho’s December 1 letter explaining the fee-splitting agreement and discussed it with Woods, but took no action on it, even though the letter asked Eng to contact Acho at once if it was “not an accurate recital of our understanding.” (Appellant’s
Nevertheless, we agree with the district court that the unenforceability of the alleged fee-splitting agreement is fatal to CMDA’s counterclaims. Missouri courts have held that no cause of action lies for breach of contract or other claims seeking to recover on the basis of an unenforceable agreement. See Law Offices of Gary Green, P.C. v. Morrissey,
III.
Like our colleagues on the Missouri Court of Appeals, “[w]e on this Court are not so far removed from the real world not to know that in commerce between attor
For the foregoing reasons, we affirm.
Notes
. The Honorable Nanette K. Laughrey, United States District Judge for the Western District of Missouri.
. As Eng & Woods notes, a literal reading of this letter seems to indicate that CMDA is
. Beverly's third child, Lorene Barbiere, was represented by another firm.
. It appears that Barbiere received a larger portion of the settlement than Richina or MitRahina.
. In 2007, Rule 4-1.5(e) was revised to allow fee splitting if "(1) ... each lawyer assumes joint responsibility for the representation; (2) the client agrees to the association and the agreement is confirmed in writing; and (3) the total fee is reasonable.” Mo. Sup.Ct. R. 4-1.5(e) (Supp.2009).
. At oral argument, CMDA made clear that it was not arguing it should be paid in proportion to the work it performed.
. Due to this lack of communication with MitRahina, it appears that any alleged agreement to share the fee from her recovery also runs afoul of Rule 4-1.5(e)(2), which requires that "the client is advised of and does not object to the participation of all the lawyers involved.”
. At the time of the agreement, Rule 4-1.5(c) provided that "[a] contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined.” Mo. Sup.Ct. R. 4-1.5(c) (2006). The Rule has since been amended to require that the agreement be signed by the client. See Mo. Sup.Ct. R. 4-1.5(c) (2009) ("A contingent fee agreement shall be in a writing signed by the client....”).
. Following the 2007 revisions to Rule 4-1.5(e), "Qloint responsibility for the representation entails financial and ethical responsibility for the representation as if the lawyers were associated in a partnership.” Mo. Sup. Ct. R. 4-1.5(e) cmt. (Supp.2009).
. Although we are bound to apply settled Missouri law on this point, we note that other federal courts have come to different conclusions when interpreting rules similar to Rule 4-1.5(e). See Freeman v. Mayer,
. To the extent that CMDA may have relied upon its native Rules of Professional Conduct, we note that it appears this alleged agreement would have been valid. See Mich. Rules of Profl Conduct R. 1.5(e) (allowing lawyers to split a fee if "(1) the client is advised of and does not object to the participation of all lawyers involved; and (2) the total fee is reasonable”).
Concurrence Opinion
concurring in part and dissenting in part.
I concur with the majority that Mo. Sup.Ct. Rule 4-1.5(e) bars all of CMDA’s claims arising from the fee sharing agreement. Because I am convinced the Supreme Court of Missouri would allow CMDA’s properly pled and preserved claim that it was fraudulently induced to enter into the agreement, I respectfully dissent.
Missouri courts recognize a distinction between fraudulent inducement to enter into a contract, and fraudulent misrepresentation based upon breach of a contract. See, e.g., Titan Constr. Co. v. Mark Twain K.C. Bank.,
The majority affirms the dismissal of CMDA’s fraudulent inducement claim based upon cases which either did not involve a fraud claim at all, see, e.g., Law Offices of Gary Green, P.C. v. Morrissey,
The majority also cites Lebcowitz v. Simms,
CMDA is not in equal fault with Eng & Woods. CMDA was negligent in failing to determine under what circumstances Missouri’s ethics rules permitted fee sharing agreements between attorneys. But the victim of fraud is often negligent, to a greater or lesser extent, in failing to investigate the fraudster. See Shechter v. Brewer,