692 A.2d 1004 | N.J. Super. Ct. App. Div. | 1997
The opinion of this court was delivered by
In June, 1992, plaintiffs, Francine Glick and Annette Kraus, retained Jonathan D. Strum, an attorney licensed to practice law in the District of Columbia and the State of New York, to represent them in an employment discrimination action against their former employer and related companies, defendants, Barclays De Zoete Wedd, Inc., Barclays De Zoete Wedd—Information Technology Group, Barclays De Zoete Wedd, Ltd. (Barclays), and Laslo Gross.
In September, 1992, Strum forwarded to plaintiffs a proposed contingent fee agreement for their review and signature. Under the proposal, Strum would receive 33)6% of the recovery if the matter did not go to trial; 40% of the recovery if suit was filed; and 50% of the recovery if Strum filed an appeal or took action on behalf of plaintiff to enforce the judgment. The proposal also stated that no fee would be payable if there was no recovery.
By letter dated September 22, 1992, Kraus requested a change in the proposal to exclude the severance pay previously offered by defendants from the calculation of Strum’s fee. Kraus added, “Otherwise it is fine.” Glick never responded to Strum. Strum never revised the contingency agreement or forwarded it to plaintiffs for signature and nothing further was done with respect to the fee.
Atman filed a motion to admit Strum pro hap vice
By letter dated October 21, 1994, plaintiffs advised Strum that they had retained new counsel in the litigation against Barclays and requested a listing of documented expenses incurred by Strum. They asked that Strum release all files to Neil Mullin of Smith Mullin, P.C. By letter dated October 25, 1994, Mullin advised Strum that it was a matter of “utmost importance and urgency” that Strum promptly forward the file to Smith Mullin and requested that Strum submit an invoice for costs and disbursements. The letter also stated that Smith Mullin would honor any lien submitted by Strum and that it would place money sufficient to cover such lien in escrow until resolution. Substitu
Strum sent Smith Mullin an “interim invoice” dated November 23, 1994, for expenses incurred and costs advanced in the amount of $10,849.66, $2,400.59 of which amount represented the balance owing to Altman for legal services. No charges for professional services rendered by Strum or Scott were included in this invoice. According to the certification of Strum’s present attorney, Judith Rodner, based on her review of the file, Strum and Scott conducted discovery between April 30, 1993, and November 1, 1994, prior to the substitution of counsel. However, as of the date of oral argument on this appeal, Strum and Scott have neither rendered any bill to plaintiffs for services, nor have they provided an itemized listing or summary of the hours spent by them in representing plaintiffs.
By letter dated April 24, 1995, to Smith Mullin, Rodner confirmed that there was a fee dispute and requested Smith Mullin’s “agreement” to honor her client’s lien and place monies in escrow. On May 10, 1995, Rodner sent another letter to Smith Mullin confirming their agreement to place $250,000 in escrow. Smith Mullin promptly responded to such letter, denying any such agreement, reminding Rodner that Strum had not yet submitted any timesheets or invoices, and characterizing Rodner’s demand for a lien in such amount as “outrageous.” More correspondence between Rodner and Smith Mullin followed, with Smith Mullin making repeated requests for a copy of the contingent fee agreement or an itemized statement of services to no avail.
On June 2,1995, plaintiffs filed a fee arbitration request. In the application, plaintiffs represented that they discharged Strum “for good cause” for failing to provide diligent, competent representation. In response, Rodner sent a letter to the Fee Arbitration Committee suggesting that its jurisdiction over this matter was questionable because the amount in dispute exceeded $100,000. Smith Mullin disagreed with Rodner over the existence of a valid
On June 6,1995, Strum and Scott filed a motion in the Superior Court, Law Division, Essex County, under the caption and docket of the Barclays litigation (which by then had settled), seeking reciprocal discovery and a hearing on the apportionment of attorney fees. Rodner certified that such motion was prompted by Smith Mullin’s refusal to release information concerning the settlement and to engage in reciprocal discovery.
Smith Mullin countered that Strum and Scott were attempting to avoid the fee arbitration process by “disguising” their fee dispute with plaintiffs as a dispute with Smith Mullin and that Strum and Scott were proceeding improperly and “parasitically” by filing their motion under the docket of a lawsuit which had already been dismissed, instead of filing a new complaint to which plaintiffs could raise defenses and a counterclaim for legal malpractice. Smith Mullin certified that Rodner had, despite repeated requests, refused to produce copies of any written retainer agreement or any invoices or timesheets reflecting the services rendered by Strum and Scott to plaintiffs. A hearing on this motion was stayed, pending a decision by the Fee Arbitration Committee.
On June 9,1995, Smith Mullin advised Rodner that $250,000 had been placed in escrow, pending the outcome of the fee arbitration matter. A stipulation and order of dismissal was filed in the Barclays litigation, following the settlement. The terms and amount of the settlement remain undisclosed.
On August 25, 1995, the Fee Arbitration Committee, under the authority of R. l:20A-2(b), declined jurisdiction over the fee dispute due to the fact that the amount in controversy exceeded $100,000 and because of the complexity of the issues. The Committee’s action caused the stay of Strum and Scott’s first motion to be lifted.
Strum and Scott immediately forwarded copies of two retainer agreements and Kraus’ letter of September 22,1992, requesting a modification which Strum and Scott represented constituted the agreements between themselves and plaintiffs. Despite the judge’s denial of their motion to compel discovery, Strum and Scott also included notices to produce and deposition notices. Smith Mullin advised Strum and Scott that plaintiffs would not be complying, based on the trial judge’s denial of the earlier motion for reciprocal discovery.
On October 11, 1995, Strum and Scott refiled the notice of motion for discovery. Plaintiffs filed opposition as well as a cross-motion seeking the award of counsel fees. In their letter brief, plaintiffs pointed out that the copy of the retainer agreement provided by Strum and Scott was not a true copy of the proposed retainer agreement supplied by Strum to plaintiffs in 1992. The retainer agreement first provided by Strum and Scott included a provision that associate counsel could be hired at Strum’s discretion, with the client bearing the expense of such services. Such provision was not included in the proposed agreement actually provided to plaintiffs by Strum.
At a hearing held on October 27,1995, the trial judge held that, in the absence of an executed agreement, Strum and Scott could not support their application for any fee, even on a quantum meruit basis. The judge rejected Strum and Scott’s argument that there was an enforceable retainer agreement:
The best we have is a letter back from one of them saying this is okay with Francine and I or whatever it happens to say except for this, but it’s never been signed. The agreement’s never been signed. Lawyers are responsible now to make certain that they’re protected on all fashions and the retainer agreement itself should have been signed. One can’t bind the other because they’re both*307 plaintiffs, so the very strongest thing you have is the certifications to the Court under other circumstances and that’s not a retainer agreement. That’s just saying hey, they’re representing me. There’s no showing of an agreement as to how there was going to be payment.
Strum and Scott argued that the court rules only require executed retainer agreements in tort cases and that, for other types of cases, the rules only require a writing. The judge dismissed this argument on the basis that employment discrimination is a tort. In conclusion, the trial judge found:
Your clients did not get an agreement that was entered into spelling out in detail what the agreement was and signed off by all parties. There is no agreement of the minds and, quite frankly, I don’t care what his certification says now when he gets caught at different retainer agreement being supplied to the Court. He is an attorney, he has an obligation to make certain that what comes to the court is exactly what transpired.
After hearing plaintiffs’ argument on their cross-motion for attorney fees under the frivolous litigation statute (N.J.S.A. 2A:15-59.1), the trial judge found that Strum and Scott’s application for a fee under an agreement which was never supplied to the judge or to the adversary was contrary to notions of “fair play.” On that basis, the judge awarded $1955 in attorney fees to plaintiffs.
Strum and Scott appeal, contending that Strum’s correspondence with plaintiffs, including a proposed agreement along with Kraus’s response, met the standards of RPC 1.5(b) and that, in any event, quantum meruit recovery is available in a situation such as this which does not involve fraud or other wrongdoing on the attorneys’ part. We have carefully reviewed this record in light of these contentions and have concluded that Strum and Scott did not have an enforceable contingent fee agreement with plaintiffs but that quantum meruit recovery against plaintiff is a theoretically available remedy.
I
We turn first to the question of whether Strum and Scott had a valid contingent fee agreement with plaintiffs. Certainly Scott had no such agreement with plaintiffs. Indeed, this record
Strum, on the other hand, relies on his proposal to plaintiffs and Krauss’s response as creating a valid and enforceable contingent fee agreement. Not so. Because the nine count complaint filed on plaintiffs’ behalf claimed damages, at least in part, based upon the alleged tortious conduct of Barclays and Laslo Gross, the applicable governing rule is R. 1:21-7 which sets forth, in relevant part, the details of a contingent fee agreement in a tort ease:
(c) In any matter where a client’s claim for damages is based upon the alleged tortious conduct of another, including products liability claims, and the client is not a subrogee, an attorney shall not contact for, charge, or collect a contingent fee in excess of the following limits:
(1) 33)6% on the first $500,000 recovered;
(2) 30% on the next $500,000 recovered;
(3) 25% on the next $500,000 recovered;
(4) 20% on the next $500,000 recovered; and
(5) on all amounts recovered in excess of the above by application for reasonable fee in accordance with the provisions of paragraph (f) hereof____
(g) Where the amount of the contingent fee is limited by the provisions of paragraph (c) of this rule, the contingent fee agreement shall be in writing, signed both by the attorney and the client, and a signed duplicate shall be given to the client [emphasis added].
Clearly the provisions of R. 1:21 — 7(g) were not met by Strum. Although Strum’s original proposal was in writing, it was never signed by plaintiffs, nor was a duplicate of the signed document provided to plaintiffs. While Kraus indicated to Strum which provisions of his proposal were acceptable and which were not, Strum never responded to her counter proposal; did not prepare a new agreement; and did not obtain her signature or that of Glick or provide either with a duplicate, thus contravening R. l:21-7(g).
Strum and Scott argue that R. 1:21-7 is not the guiding principle here but that the applicable rule is RPC 1.5(b) which provides:
When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated in writing to the client before or within a reasonable time after commencing the representation (emphasis added).
A contingent tee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated [emphasis added].
While it is arguable that, under this Rule which generally governs contingent fee agreements, Strum and Krauss had a valid agreement, it is implicit in the language of RPC 1.5(c) that the offer, as well as client’s acceptance, of the terms of the retainer be in writing. Nevertheless, this is not the applicable rule. It is the more specific R. 1:21-7 which governs this case. That rule details the provisions necessary for a valid contingent fee agreement in every tort case and does not distinguish between cases which plead only tort causes of action and those which include other claims. To whatever extent a plaintiffs complaint seeks damages for tortious conduct, the contingent fee agreement falls squarely under R. 1:21-7, the provisions of which were not met by Strum’s proposal.
II
In the absence of such an agreement, the question remains as to whether Strum and Scott are entitled to quantum meruit recovery. Under ordinary circumstances, a client may discharge an unwanted attorney with or without cause. “The client’s right to terminate at will is not a breach of contract but a contract term implied at law based upon the special relationship of trust and confidence between attorney and client.” Cohen v. Radio-Electronics Officers Union, 275 N.J.Super. 241, 261, 645
Quasi-contractual obligations are imposed by law to bring about justice, without reference to the parties’ intent. St. Paul Fire & Marine Ins. Co. v. Indemnity Ins. Co. of North America, 32 N.J. 17, 22, 158 A.2d 825 (1960). Quantum meruit is a form of quasi-contract, permitting recovery of as much as is deserved. Kopin v. Orange Products, Inc., 297 N.J.Super. 353, 367, 688 A.2d 130 (App.Div.1997) (citations omitted). Where an attorney performs legal services for another at his request, but without any agreement or understanding as to the remuneration, the law implies a promise on the party who requested such services to pay a just and reasonable compensation. Kopin, supra, 297 N.J.Super. at 367, 688 A.2d 130 (quoting Conklin v. Kruger, 79 N.J.L. 326, 328, 75 A. 436 (Sup.Ct.1910)). Thus, to prevail, the dismissed attorney must demonstrate that the former client would be unjustly enriched by the receipt and retention of a benefit without compensation, where the attorney, in conferring the benefit, expected to be paid. Kopin, supra, 297 N.J.Super. at 367, 688 A.2d 130 (citing Cohen v. Home Ins. Co., 230 N.J.Super. 72, 82, 552 A.2d 654 (App.Div.1989)).
Because the proper measure of compensation under quantum meruit is as much as is deserved, La Mantia v. Durst, 234 N.J.Super. 534, 537, 561 A.2d 275 (App.Div.), certif. denied,
Plaintiffs concede in their brief that quantum meruit is a method by which Strum and Scott could theoretically be compensated in this case, but argue that the performance of those lawyers was inadequate and thus warranted no remuneration. We need not dwell on plaintiffs’ characterization of Strum and Scott’s lawyering because the trial judge did not permit a plenary hearing on this issue. The trial judge made no findings as to the reason for the lawyers’ discharge, thus leaving a record devoid of evidence upon which the issue could be resolved.
Pinter conflicts with two other decisions of this court. In La Mantia, supra, 234 N.J.Super. 534, 561 A.2d 275, the panel was faced with the problem of a lawyer who had done work in good faith without an agreement and indicated that quantum meruit was available to him. Indeed, Pinter acknowledged that its result was inconsistent with that achieved in La Mantia. Pinter, supra, 293 N.J.Super. at 127, 679 A.2d 728. Likewise, the result in Pinter is at odds with In re Estate of Travarelli, 283 N.J.Super. 431, 662 A.2d 572 (App.Div.1995). There a panel of this court
Cognizant as we are of the salutary purposes meant to be achieved by Pinter, we nevertheless respectfully disagree with it. To us, it is too harsh a result to deny all compensation to an attorney who was retained and rendered services in good faith based solely on a failure to obtain a written fee agreement in conformity with R. 1:21-7 (or RPC 1.5(c)) where no wrongful or unethical conduct is found to exist. Indeed this kind of a situation is exactly what the doctrine of quantum meruit was meant to remedy. We agree with Judge Shebell’s concurrence in Pinter, that failure to comply with the contingent fee rule “merely bars the award of a contingent fee, but not a reasonable fee based on the services actually rendered.” Pinter, supra, 293 N.J.Super. at 128, 679 A.2d 728. For that reason, the trial judge’s refusal to consider quantum meruit recovery is reversed. The matter is remanded for a determination of Strum and Scott’s entitlement to legal fees based upon the doctrine of quantum meruit.
The award of counsel fees to plaintiffs on Strum and Scott’s motion is also reversed. That award was based upon the frivolous litigation statute, and more particularly upon Strum and Scott’s conduct in this case which the judge believed violated notions of “fair play.” The judge viewed the frivolous litigation statute as applicable here, despite the fact that this case was cast as a motion (See Lewis v. Lewis, 132 N.J. 541, 626 A.2d 422 (1993)), because she concluded that Strum and Scott’s application should have been made by way of a new complaint. In any event,
Affirmed in part; reversed and remanded in part.
Kristine Hergenrother was also a named plaintiff in the action. She is not a party to this fee dispute.
Defendant, Laslo Gross, opposed the motion by claiming a conflict of interest based on Strum’s previous representation of him. Plaintiffs both submitted certifications in support of Strum’s motion for admission.
This decision was modified and remanded in Cohen v. Radio-Electronics Officers Union, 146 N.J. 140, 679 A.2d 1188 (1996). The Supreme Court therein adopted the "modem rale” that the client's right to discharge an attorney is an implicit term of the contract for legal services. Id. at 163-64, 679 A.2d 1188.