Laryssa Elder, Individually, and as Administratrix of the Goods, Chattels and Credits of Alfred Elder, Deceased v. Metropolitan Freight Carriers, Inc.

ADAMS, WEIS, Before HUNTER and Judges. Circuit THE COURT OPINION OF WEIS, Judge. Circuit challenges a district court’s appeal This enforce its rule regulating con- magistrate suggested fees in tort actions. We hold that tingent defendant’s wrong- might order of dismissal in a carrier premature prefer insurance an order of deprive pay action did not the court of district court to ful death the money.1 De- compliance with its fee Minion, to enforce fense counsel sent a letter to Mr. required confirming Nor was it to accede to schedule. settlement and concluding: allowed the rule but higher a fee than “I shall await word from you with re- approved by a state court which had no spect proceedings to before the Surrogate negligence over the Ac- case. County of Suffolk where I plain- believe cordingly, we affirm. tiff is domiciled. I believe that his find- ings at least have to incorporated will 3, 1972 by On October a truck owned of in the Order Dismissal if a separate Carriers, Metropolitan Freight defendant hearing required. is not I am checking highway the center line of a Inc. crossed in and will you.” on this advise Jersey and collided head-on with the in wagon which Alfred Elder was a station March On collision, Elder was killed in the passenger. signed an order which read: as survivors a widow leaving and three appearing “It that it reported has been to minor children. the court that the above-entitled action settled; has been Surrogate’s The Court for Suffolk Coun- York, is, where Elder had been ty, New domi- “It on this day March, 18th of family where his continued to ciled and “ORDERED that this action hereby reside, issued restricted letters of adminis- dismissed, without costs and without widow. Mrs. au- tration to the Elder was to prejudice right, upon good cause wrongful to institute a death ac- thorized shown within days, reopen the ac- to settle the case without the tion but not if the tion settlement is not consummat- approval. Surrogate’s She retained the ed.” Smithtown, New York law firm of Schecht- April On 1975 defense counsel wrote to er, Wilshod, appellant & in Schechter magistrate stating: fact, wrongful prosecute death action “Because action, of the nature of the a on a one-third basis. That wrongful death, for suit and the exist- Robert engaged firm C. Minion of Garden children, ence of who suffered pecuni- a York, as trial City, New counsel. loss, ary the matter presently awaits a Mr. determined that Minion the suit determination of Suf- brought in the should be United Dis- States York, County, folk where the dece- Jersey. for New Under the trict Court resides, family dent’s the manner of dis- Grossman, of that Kenneth rules my tribution. It was understanding that bar, member of the New was re- when an Order is issued the Surro- Later, to act as “docket” counsel. tained gate, incorpo- it would be reviewed and McKeever was substituted for Mr. Robert rated in an Order the United States Grossman. directing payment District Court and en- tering a dismissal. discovery, After some routine the case pretrial conference before a was called “Since the matter was conferenced with Magistrate January, in you you United States on several occasions and are most efforts, it, parties agreed his with I am Through writing you familiar with $300,000.00. Judge At the copy asking a settlement Stern upon they necessity discussed the maintain an open conference Court file on it until Surrogate’s Court and the approval the Order of Court July hearing Then, turn, gate. 1. At a before the district court on resubmitting proposed Minion, counsel, Mr. trial for, effect, approval this Court order to stated: Surrogate Court order.” basis, then, got “It was on that that we into submitting it to Surro- the business your reviewed this may then be “Now it is before Honor on the merits. issued and in a final incorporated Order.” respectfully suggest Court and I that it is New York law that controls.” The court asked McKeever, plain- Mr. May On position, for the defendant’s and counsel counsel, wrote the dis- tiff’s New replied: proceedings before judge reporting trict and stated: ques- “I ask this to resolve the Court payment 18, 1975, amounts Court “On March [district] order, settlement, money and their allocation.” dis- entered captioned preju- ease without missing the The Court: good cause right, upon shown dice to the you “I technically cannot it. I will tell do if days, action within 60 has been why. dismissed is not consummated. settlement Since cannot, think, sponte, sua re- I here. period expire May 60-day will the wants move to open. If defendant next, precaution, request this is as a may something that else.” be that extend the aforesaid time the Court judge Later the stated: sufficiently period comple- to allow for wrong. “I think —if matter proceedings tion the before the New be I the suggest dismissed, Surrogate. May York I another it I is is dismissed. am ample which should be time for days jurisdiction more than I have. asserting regard- the all matters consummation of you It be immaterial ing (emphasis supplied) the settlement.” so, you free sign the order not. If are litiga- out of here so far as this walk judge May signed On 1975 the district that, tion concerned. No farther than extending period reopening the for order thoughts. you I’ll other tell for I have thirty days. for additional you ques- If to brief right now: want the Two later weeks counsel sent tion, I’ll a decision on it. make fine. copies lawyers to the the defendants’ however, you, will bind for That decision Surrogate’s providing order for distribution point at you that submitted to will among the widow and children and setting court of this whether this jurisdiction the in excess substantially counsel fees of the status of this mat- the matter —whatever the New Jersey amount allowable under utterly unclear. . .” ter is by Rule.2 some For reason disclosed record, present the defense counsel did not the order to the district a later filed agreed, counsel Plaintiff’s July. until the first week of The court brief, argued that the matter. Before and July scheduled a conference of counsel for however, adjourned, court hearing the and, time, questioned at that the attorney defense comment. asked the of the to fix counsel position with responded He that he had no pending in New Jersey.

fees for a respect to how the funds should be distrib- that, being suggested The court then uted. plaintiff point At counsel for the one Jersey bar, of the defense that, member suggested since the time set in the guilty improper conduct might be expired, counsel order March 1975 had money in a to settle case paid if he case stood dismissed and the court no had question which would violate the court’s the fee. manner Subse- however, lawyer quently, the same said: rules. by approxi- recovered;

2. The fixed was (2) $2000 on the next 40% $55,000.00 mately $47,000 recovered; in excess of that allowable (3) on next 33'/3% under Rule which had been $50,000 recovered; (4) on the next 20% adopted by per- the district court. New York any (5) recovered over on amount 10% orie-third, mits a fee of but New $100,000. 1:21-7, Rule R. Court with certain ex- only upon Higher are allowable order of ceptions, following uses schedule: court. (1) recovered; $1000 first 50% plain- spec- the district court would enter an order October hearing on aAt ifying contested how the to be lawyers settlement funds were tiff’s question of conflict well as as letter sent defense distributed. parties of the By agreement 3,May magistrate, 1975 to the of laws. on counsel hearing, the funds not copy judge, requested conclusion to the district awith to the to be distributed dispute kept purpose under for open the file be that that leaving disposi- for lawyers, and parties have alerted the court to the should and disputed coun- question only errors in its dismissal order. fees. sel court extended the time When the parte ex is before court appeal This days, it is thirty an additional reopening counsel. by plaintiff’s filed the briefs on counsel, expecting understandable interest any has disclaimed The defendant completed before that ex- procedures to to be awarded of fees amount in the date, press felt need to for a piration no to file Elder has declined Mrs. lawyers,3 Appar- the dismissal order. correction of plain- notification despite proper brief busy of a trial schedule of ently because conflict of interest.4 lawyers tiff’s both sides or a failure of commu- counsel on the submission contends Appellant between them as to which of the nication to the district court proposed task, perform no exten- lawyers gratuitous and unnec- counsel defense requested. the June 18 deadline was sion of However, is clear essary. 28, 1975, the hearing July At would be the settlement contemplated specifically requested counsel a rul defense approval by after both only consummated on allocation. At that ing from the court district court. The and the the power court had the to consider the point and the between counsel correspondence under Fed.R.Civ.P. request as motion the to the court on Mr. Minion statement 60(b) the of inad open dismissal because finding. 28, permit no other 1975 July open of counsel. Also to the vertence problem of The entering an order sua option was the the case after the exist over continued in 60(a) Rule because of error sponte under the dismissal order fixed in ninety days the court record.6 errors.5 by the court’s own part in created Rule 60 availability of relief under The 18, 1975, which of March order The form appellant’s contention that the defeats the matter on the ostensibly terminated upon expiration date fixed “died” docket, intent case express did court’s amendment March 18 order and its understanding was that Their parties. actually completed Freight Metropolitan Carriers has taken case before the 3. proceeds procedures. position the settlement that since settlement registry paid of the district into the appeal. in this has no interest pertinent the defendant provides part: in 60 6. Fed.R.Civ.P. payment also reduced the court The district “(a) mistakes Mistakes. Clerical Clerical to be made to had directed parts judgments, orders or other Company, Liberty the work- Insurance Mutual arising from over- and errors therein record $11,150 subrogee, compensation from men’s may sight be corrected or omission $7,233.33. question about has been raised No any or on its own initiative time of court that action. any party no- and after such motion of the tice, any, orders. as the court if plaintiff’s counsel reflects that 4. The record litiga- fully kept informed as the Elder Mrs. Inadvertence; Mistakes; “(b) Ne- Excusable gave copies of the progressed her Evidence; Fraud, Newly glect; Discovered present in the She was were filed. briefs which upon as are such terms motion and etc. On October, hearing during court legal party just, his relieve a order, judgment, representative a final from (1) following proceeding reasons: for the juris- or mistake, the district court’s The concern about inadvertence, surprise, or excusable advisability suggests the in this matter diction ” dismissing neglect. reconsidering practice . 518 Lawyers Jersey Supreme Ass’n v. New “revived.” thereafter and could 258, (1974); Court, A.2d 350 66 N.J. 330 Marr, B. Dick

Thus, as A. Co. v. such cases 97, 188 491, Peck, 6 N.Y.2d N.Y.S.2d denied, Cir.), cert. 344 Gair U.S. 197 F.2d 498 denied, 361 43 cert. U.S. 169, (1952); L.Ed. 680 Unit N.E.2d 97 160 73 S.Ct. (1960). 4 Deaton, (5th L.Ed.2d 380 207 F.2d 726 Cir. S.Ct. 80 ed States States, 1953); v. United 272 Humphreys dispute proposi- does not Appellant 1959), (9th and Bomer v. Ribi Cir. F.2d limit a court tion that (6th 1962), not in coff, are that, prin- under conflicts of law argues but Accord, Moore, Federal Practice 5 J. point. Faith and the Full Credit Clause ciples and (1976). power The court had the 141.05[2] Constitution, States dis- of the United and, thus, under Rule 60 the case acquiesced in the fee should have trict court ability to enter an order it did not lack Surrogate. merit to by the We find no set of distribution. contention. either court, however, chose The district to base recognized that The district court of mem professional conduct questions of conflict of law resolution action was not errone its bar. This bers of general principles set out governed practicing counsel was a ous. Defense Co., Mfg. Co. v. Stentor Electric in Klaxon bar, the district court’s as was member of Inc., 85 L.Ed. U.S. S.Ct. McKeever, one of counsel. Mr. there held Erie (1941). The Court pro Minion had been admitted haec vice Mr. Tompkins, 304 Co. v. Railroad and, accordingly, was to the local (1938), requires 82 L.Ed. 1188 during practice the course of his be rules case, that, diversity a federal district in a the district court.7 A court has author fore rulings of apply the conflict of law court appropriate to issue orders to members ity The Supreme in which it sat. the state Here, in enforcement of its rules. of its bar invoking the argument met the Court also the court had been asked for an where and Credit Clause of the Constit Full Faith distribution, had the underlying dispute in the case ution.9 lawyers the defense distribute to direct that in Delaware the district court was whether only permitted by the fee plaintiff’s counsel Practice the New York Civil was bound the local rule.8 judgment interest to a Act to add Schlesinger Teitelbaum, v. In 475 F.2d when it was conceded of contract breach Cir.), denied, 1111, (3d cert. 414 94 137 U.S. applied York law to the substan that New 840, (1973), 38 L.Ed.2d 738 we re S.Ct. concluding of the case. In that aspects tive applicable law viewed the and concluded governed, of the forum the law Court has the authority that a district court to stated: contingent fees on sums recovered “Here, however, New section 480 of the through process. the use of its That case way in no Act is Civil Practice York here. also American Trial controls See 1953), pro (10th application for admission haec 253 where the fee had In his Cir. 7. vice, satisfied, he had “familiar- judgment Minion stated that Mr. before the was been fixed Pro- the Sections of Law and attorney ized himself with “[Wjhere Judge wrote: Murrah repre- of this forum and Law and Rules cedural under a contract with a fund in a suit recovers consult with Mr. Gross- here that he will sents compensated providing shall be that he a client necessary.” man, any point should that be creates, hav- only of the fund he out power fix the ing has to of the suit Peters, (7th Bounougias 369 F.2d 247 payment attorney’s compensation and direct its denied, 1966), U.S. 87 S.Ct. 386 cert. the fund.” out of distinguishable in a 232 18 L.Ed.2d including important points, the fact number of IV, statutory imple- Section 1 received 9. Article judgment some had been satisfied that Judiciary and is Act of 1790 in the mentation ancillary jurisdiction years before the court’s § at 28 U.S.C. codified McRee, invoked. In Garrett

519 validity related to the of the contract in say another that New York may suit, merely abrogate to an incidental item of but the limitations which New Jersey interest, damages, respect impose upon with to which has chosen those prac- who at the forum commonly courts been tice in its courts. the exercise of its apply their own or paramount courts, free some other law concern with its they as see fit.” 313 61 U.S. S.Ct. Jersey provide party free to that no at 1022. required pay be contingent excessive legal processes. fee to utilize its per-We Similarly, contingent the amount of a fee is why ceive no reason such a provi- beneficial to the measure of damages not related in a litigants sion should be denied who are non- tort case. Indeed, questioned residents. regulating Rules such an exclusion would be valid. bar, of members of the to conduct pertain Moreover, we note appellant that has law which determines to substantive to overcome two other failed formidable cause parameters the existence question of which obstacles. schedule designed promote rules are action. Such apparently of fees should be used was never litigation disposition efficient called to the attention of the Surrogate and in the public’s confidence bar. enhance ruling point. he made no As a “unquestioned reaffirmed We have result, there was no direct conflict between “the that all federal courts have principle” the District Court of New and the requirements for prescribe both to pertinent Court. It is also before practice admission to and to [them] had no over the who discipline attorneys have been admit defendant to whom the district court’s or- In re practice ted to before [them].” directed, der was the defense attorneys, Abrams, Cir.), F.2d cert. counsel or the fund denied, 423 payment from which was to be made.9 (1975). It follows that such L.Ed.2d deep rules are of concern the court which The order of the district court was not them, far more so than the promulgated and, accordingly, it erroneous will be af- scrutiny under Klaxon. When practice firmed. local rules of a federal court are it is doubtful that the questioned, choice of of the forum

law doctrines state come into HUNTER, III, Judge JAMES Circuit However, conceding arguendo play. (dissenting): in which the district court sits has the state interest, appellant majority’s still can cognizable respectfully dissent from the holding jurisdic- the district prevail. court had deposit of the amount of tion to order may New York indeed have an abid attorneys’ fees in excess of the New ing in allocating proceeds concern the fee schedule. wrongful among death action the survivors domiciliaries, who are its by and that interest This case was dismissed an order on 18, 1975, may respected by be prejudice New March “without to the courts. Sarahson, right, good Mellk v. 49 N.J. 229 cause shown within days, A.2d 625 60 (1967); Henry Richardson-Merrill, reopen 508 to the action if settlement is not 1975). quite F.2d 28 But it thirty-day is consummated.” One extension apparent recognized proceeds Thus, 10. It is that the the settlement as follows:” in- jurisdiction. concerned, the limitations on his The order in sofar as the defendants were the defendants, its final form read that “the politan Freight Metro- Surrogate purported only approve, to not to Carriers, Joseph Inc. and Har- direct. dy, are authorized to disburse and distribute reopen granted to was no a case that had once been time but of settlement the reopen to the case majority one moved within the declares the court. before time, and no further erroneous, extended extensions I am not is but this not sought. McRee, In Garrett v. persuaded. 1953), the relied (10th Cir. the right to the jurisdiction after the court had of majority, Two the weeks dis- parties requested the Schlesinger Teitel- expired, suit.4 case underlying signature approving denied, their set- baum, (3d Cir.), court’s cert trict 475 F.2d 137 York the New 38 L.Ed.2d tlement of during the course the trial it was was aware The court decree.1 Court’s ap- was finalized and settlement pro- but jurisdiction2 lack of post-dismissal any before by the proved on its jurisdiction based assert ceeded to Here, case. at Id. dismissal rules local court enforce ability to hand, underlying wrongful other practice be- to attorneys admitted among before the had been dismissed suit death it.3 fore the issue of finalized and settlement arose, yet the court asserts attorneys’ fees opinion there majority According to jurisdiction ability of this to “retain” jurisdiction: two theories are issue, though the suit has even substantive Rule 60 of the case under reopen the to dismissed. been Procedure, and the of Civil Rules Federal professional regulate to court’s parties requested If the had not the dis- its bar. As for the members of conduct of imprimatur trict court’s on their settlement may ability the court theory, whatever first decree, Surrogate’s the New York and on exer- reopen the case was not to have had the district doubt court have nor court parties cised. Neither the New York attorneys notified that their prior Rule to amend the acted under agreement fee made juris- could had the court order. That York with their New York client violated juris- that it did have does mean Jersey’s diction say To schedule. that the attorneys’ coming diction. act of before court the case had been after dismissed enabled theory more jurisdiction is The second jurisdiction court “retain” the case court disturbing. The district claimed necessary extent to the their agree- contingent fee ability regulate the resulting contingent fees is to misconstrue requirement jurisdic- attorney a New York and his New the ment of from tion. because that fee resulted York client nonetheless, present . uncertainty matter of 1. There is some in the record as to attorneys’ does approval not address itself to the the district court’s was nec [wrongful dispute essary merits of point. death] . . at this “It be immaterial to concededly you so, sign are foreclosed you the order whether I this order not. If Rather, proceeding goes of the Court. this are to walk here so free out of far as this ability litigation of this Court to maintain and en- is Record concerned.” at 18. among force its members own Rules requested act the court to Thus,

2. When practice Bar admitted to clearly, before it. hesitated, decree, this the Court retains wrong. saying, I think —if the mat- “I prevent breach of extent its own dismissed, dismissed, I am ter of its rules officers own Court. asserting I have.” more than Record 18. Record at appeal, 4. After verdict was affirmed jurisdiction thought proceeds accordingly deposited judgment lacked it The court attorneys’ attorney’s fees: subject still decide could case but with lien McRee, disputed probably for the amount. Garrett v. true that this it is While worked 1953). (10th jurisdiction divest this Court litigation, aspect of this substantive over the

Assuming that the district court would be applying Jersey’s in New

correct fee sched- AMERICAN IRON AND STEEL INSTITUTE, Petitioner, contingent agreement ule to a between non-residents, case,5 in a diversity that au- juris- derive from the court’s thority would ENVIRONMENTAL PROTECTION the case. Here the district court diction AGENCY, Respondent. claims, majority agrees, it has and the in this case jurisdiction to STEEL NATIONAL CORPORATION jurisdiction when it does have it because Petitioner, al., et reasoning regulate fees. This circular can produce does in a federal court. ENVIRONMENTAL PROTECTION

AGENCY, Respondent. my opinion the district court was with- 75-2124, Nos. 75-2148. out to order a deposit of the United States Court of Appeals, attorneys’ amount which the fees ex- Third Circuit. Jersey’s ceeded New fee schedule. Accord- I would vacate the ingly, order of the dis- Argued Sept. 7, 1976. court. trict Decided Oct. might governed place making Tompkins,

5. Under Erie Railroad Co. v. (New York), agreement (1938) unless contravenes L.Ed. 1188 and progeny, strong policy sitting diversity its applies substantive federal court forum. procedures promulgated by fee schedule was own The the forum Jersey Supreme state’s substantive New Court under its law. Thus the threshold inquiry regulate practice in state is whether a courts and the limit on fees is procedural attorneys. professional substantive or in terms of Erie. state behavior regulation attorneys’ generally The Lawyers Jersey fees is Trial Ass'n v. New American Court, held to be Supreme substantive. See 1A Moore’s Feder N.J. 330 A.2d 350 0.310, (1975 Supp.). al (1974). ¶ Practice n. 25t Here we have neither state court attorney, leading me to first if a complicated by a state ask This case is conflict of laws apply implications. state court would choose to Under Klaxon Co. v. Stentor second, Co., Mfg. if it to such a case and Electric 313 U.S. 61 S.Ct. its fee schedule choose, the au- whether would have 85 L.Ed. 1477 the federal court is to did so attempting apply thority The federal court forum state’s to do so. conflicts rules. Al- problem Jersey might apply though is left with the Klaxon New York law to follow action, apply wrongful predicting court would what law a state death it is not clear apply were not in a state court. if the case what law New to the fee here question contract, easy agreement. agreement not an one. As a the fee

Case Details

Case Name: Laryssa Elder, Individually, and as Administratrix of the Goods, Chattels and Credits of Alfred Elder, Deceased v. Metropolitan Freight Carriers, Inc.

Court Name: Court of Appeals for the Third Circuit

Date Published: Sep 16, 1976

Citation: 543 F.2d 513

Docket Number: 75-2424

Court Abbreviation: 3rd Cir.