JUSTICE DOUGHERTY
This is the sequel to our decision in Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C.
This matter arose from a wrongful death lawsuit filed by the Estate of Richard A. Eazor (the Eazor Estate) deriving from a motor vehicle accident (the Eazor Litigation). The Eazor Estate was represented by Attorney William Weiler, Jr., who entered his appearance in the matter on March 24, 2005. See Proposed Stipulated Facts at ¶ 6. On December 1, 2005, Attorney Weiler became associated with Meyer Darragh. Attorney Weiler brought the Eazor Litigation with him and Meyer Darragh attorneys worked on the Eazor Litigation for a total of 71.25 hours over a nineteen-month period. See id. at ¶¶ 4, 39, 40 & Exhibit D to Proposed Stipulated Facts. In May 2007, Attorney Weiler resigned from Meyer Darragh. At the time of Attorney Weiler's resignation, Meyer Darragh understood it would continue as lead counsel in the Eazor Litigation along with Attorney Weiler at his new firm. Written correspondence at the time of Attorney Weiler's separation from Meyer Darragh indicated that Meyer Darragh would receive two-thirds of the attorneys' fees arising out of the Eazor Litigation, and Attorney Weiler would retain one-third of the fees. See Proposed Stipulated Facts at ¶ 18 and Exhibit 7 to Proposed Stipulated Facts.
Upon departing from Meyer Darragh, Attorney Weiler became affiliated with Malone Middleman. See Proposed Stipulated Facts at ¶ 22. In correspondence dated June 18, 2007, the Eazor Estate informed Meyer Darragh that it was moving its file to Malone Middleman and discharging Meyer Darragh as counsel. See Exhibit 14 to Proposed Stipulated Facts. Upon being retained by the Eazor Estate, Malone Middleman entered into a contingency fee agreement with the Estate, noting representation
Meyer Darragh demanded from Malone Middleman two-thirds of the counsel fees generated by the settlement of the Eazor Litigation pursuant to its agreement with Attorney Weiler or, in the alternative, payment based on quantum meruit in the amount of $17,673.93 for the work it performed and costs it incurred. See Proposed Stipulated Facts at ¶ 51. Malone Middleman did not pay any portion of the fees it collected to Meyer Darragh.
In September 2010, Meyer Darragh filed suit for breach of contract against Malone Middleman and for damages in quantum meruit against Malone Middleman and the Eazor Estate.
Both Meyer Darragh and Malone Middleman filed post-trial motions, which were denied, and both parties appealed to the Superior Court. In its Pa.R.A.P. 1925(a) opinion, the trial court first addressed Meyer Darragh's quantum meruit claim, noting Pennsylvania's jurisprudence regarding predecessor counsel's entitlement to a portion of a recovered contingent fee under a theory of quantum meruit against successor counsel, while inconsistent, does not prohibit such relief. See Trial Ct. slip. op. at 5. The court opined Meyer Darragh's work in the Eazor Litigation conferred benefits to Malone Middleman, and those benefits materialized into a settlement and receipt of a contingent fee of $67,000. See id. at 10. The court further noted cases where quantum meruit damages were denied involved contracts regarding the payment of fees to all counsel, and the terms of those contracts controlled in those disputes. See id. at 10-11, citing Ruby v. Abington Mem. Hosp. ,
The Superior Court first addressed Malone Middleman's challenge to the quantum meruit award, reversed the trial court's ruling on the issue, and held a predecessor law firm or attorney who is dismissed as counsel cannot maintain a claim in quantum meruit against a successor law firm who ultimately settles the case. Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C. ,
Malone Middleman filed a petition for allowance of appeal, questioning the Superior Court's award of breach of contract damages when no contract existed between itself and Meyer Darragh, and we granted review. Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C. ,
We further opined that, under this set of facts, the only recovery for Meyer Darragh would lie on a theory of quantum meruit .
Accordingly, Meyer Darragh sought review of the Superior Court's denial of its claim for quantum meruit damages by filing a petition for allowance of appeal nunc pro tunc . Now before us is the following issue:
Whether the Superior Court erred in vacating the Judgment of the Court of Common Pleas with respect to Meyer Darragh's quantum meruit claim when Meyer Darragh performed legal work and incurred expenses on behalf of the client and doing so would force Meyer Darragh to engage that client, who has already paid its legal fees in full, in litigation or allow Malone Middleman to be unjustly enriched.
Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C. ,
Specifically, Meyer Darragh cites Johnson v. Stein ,
Meyer Darragh also cites
Meyer Darragh distinguishes certain cases where predecessor counsel was not permitted to recover fees from successor counsel in a quantum meruit action. In Styer v. Hugo ,
Meyer Darragh further distinguishes Fowkes v. Shoemaker ,
Finally, Meyer Darragh argues the time it spent preparing the Eazor Litigation for trial, including conducting depositions, selecting expert witnesses, reviewing medical records and preparing motions, directly benefitted Malone Middleman. Meyer Darragh submits it is Malone Middleman-not the Eazor Estate-which is liable to it in a quantum meruit action because the client has already paid the attorney fees it owed, and requiring the Eazor Estate to pay again would be unfair. According to Meyer Darragh, the equities lie in its favor and against Malone Middleman, which received the benefit of Meyer Darragh's work. Brief for Appellant at 27, citing Meyer Darragh II ,
Malone Middleman argues the case law is consistent and not a single opinion holds that predecessor counsel can recover damages in quantum meruit claim against successor counsel. Malone Middleman claims the cases relied upon by Meyer Darragh-specifically Johnson and Feingold -provide mere dicta , and qualified dicta at best. Brief for Appellee at 19-22 ( Feingold "merely piles more dicta on top of the Johnson case's dicta ") (citation omitted).
Malone Middleman asserts Pennsylvania courts have continually held predecessor counsel who has been dismissed by a client does not have a quantum meruit claim against successor counsel who has settled the case and collected fees, and this rule is consistent with the equitable principles underlying a theory of recovery based on unjust enrichment. Malone Middleman argues in order for Meyer Darragh to recover damages in quantum meruit , it must demonstrate Malone Middleman's "enrichment"
Malone Middleman further submits this case is controlled by the Superior Court's decisions in Mager, Styer and Fowkes , which are all factually similar. Malone Middleman asserts all three cases involved attorneys who were discharged by their clients, who entered into contingency fee agreements with successor counsel, and predecessor counsel unsuccessfully sought quantum meruit damages against successor counsel. Malone Middleman argues the precedent applies here to bar Meyer Darragh from recovering from Malone Middleman.
Finally, Malone Middleman notes the client in this case never paid the 40% contingency fee it agreed to pay, and thus it would not be unfair for Meyer Darragh to sue the Eazor Estate (instead of Malone Middleman) to recover fees. Brief for Appellee at 34, citing Fowkes ,
A claim for damages in quantum meruit is fundamentally an equitable claim of unjust enrichment in which the party seeking recovery must demonstrate:
(1) [the] benefits conferred on defendant by plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. The application of the doctrine depends on the particular factual circumstances of the case at issue. In determining if the doctrine applies, our focus is not on the intention of the parties, but rather on whether the defendant has been unjustly enriched.
Shafer Elec. & Const. v. Mantia ,
In order to determine whether the defendant in a quantum meruit action has been unjustly enriched such that the plaintiff is entitled to damages, we consider whether the plaintiff has conferred a benefit on the defendant which has been realized and retained. Shafer ,
First, there is no question that Meyer Darragh's work on the Eazor Litigation contributed to the settlement ultimately negotiated by Malone Middleman. See Proposed Stipulated Facts at ¶¶ 12-17 and Exhibits 4, 5 and 25 to the Proposed Stipulated Facts (describing the work completed by Meyer Darragh on behalf of the Eazor Estate, including securing settlement of $15,000 from one insurer defendant to the Eazor Litigation). Accordingly, both Malone Middleman and the Eazor Estate received a benefit from Meyer Darragh's work on the Eazor Litigation. See Harris ,
Until today, our courts have not provided a clear roadmap on this question, but existing case law has allowed the possibility that the proper defendant in some quantum meruit situations might be successor counsel. For example, in Johnson , the court stated a predecessor law firm might have sued its clients directly to recover fees it lost when the clients moved their case to successor counsel, who obtained a settlement.
Moreover, we emphasize the cases relied upon by the Superior Court and Malone Middleman for the proposition that a predecessor law firm can proceed under a quantum meruit theory only against its former client, and not successor counsel, are factually distinguishable from this case. In Styer v. Hugo , for example, the client hired and fired two lawyers before hiring a third, and the third lawyer (Attorney Hugo) had no knowledge of a fee sharing agreement between the first two lawyers before achieving a settlement. The Superior Court determined under these circumstances any benefit that may have been transferred to Attorney Hugo as successor counsel was not unjust, and therefore he was not liable for quantum meruit damages. We note predecessor counsel's claim did not fail under these circumstances because there is a rule prohibiting all quantum meruit claims against successor counsel, but because predecessor counsel failed to demonstrate he conferred a benefit upon predecessor counsel which was unjust.
Nor did Mager create a rule that a quantum meruit claim by predecessor counsel lies only against the former client and never against successor counsel. Instead, predecessor counsel could not recover in that case because it could not establish the necessary elements of a breach of contract or quantum meruit claim against successor counsel. The Mager court's decision denying relief was grounded on the following: (1) the client agreed to indemnify successor counsel against any claim for fees by predecessor counsel and (2) predecessor counsel performed exceptionally minor work after agreeing to a contingent fee arrangement, and thus, there was no contingent fee earned upon which predecessor counsel could base a quantum meruit claim.
Malone Middleman nevertheless claims it cannot be liable to Meyer Darragh because it did not receive the full 40% contingent fee identified in its fee agreement. The argument fails. For whatever reason, Malone Middleman accepted less than 40% as full payment of its fee by the Eazor Estate. Its decision to do so does not inoculate it against a meritorious quantum meruit claim by Meyer Darragh, where the record shows unjust enrichment. See, e.g., Meyer Darragh II ,
Fowkes is inapposite. In that case, predecessor counsel was not permitted to seek quantum meruit recovery against successor counsel, and instead was required to sue the former client. Fowkes ,
Accordingly, we hold, under circumstances like those presented here, predecessor counsel may recover damages in quantum meruit against successor counsel in a contingent fee dispute. Such a claim is viable only where the facts demonstrate unjust enrichment, that is, successor counsel has received and retained a benefit from predecessor counsel, which would be unjust to retain without some payment to predecessor counsel. Our decision today does not preclude a quantum meruit claim by predecessor counsel against a former client, where the benefit is similarly conferred upon and unjustly retained by the client without payment to predecessor counsel.
Accordingly, we reverse the Superior Court's decision, and remand to the trial court for reinstatement of its award of $14,721.39 in favor of Meyer Darragh.
Jurisdiction relinquished.
Chief Justice Saylor, Justices Baer, Todd, Donohue, Wecht and Mundy join the opinion
Notes
As the Eazor Litigation was settled after suit was filed, Malone Middleman was slated to receive 40% of the net proceeds of settlement pursuant to its contingency fee agreement with the Eazor Estate. See Exhibit C to the Proposed Stipulated Facts. The amount collected from the insurers was $235,000. See Proposed Stipulated Facts at ¶¶ 36-37. Forty percent of the net proceeds of settlement is $94,000. See Brief for Appellee at 29-30. However, Malone Middleman accepted a fee of $67,000 from the Eazor Estate, or approximately 28.5% of the entire amount collected.
Attorney Weiler, who died in October 2009, was not included as a defendant.
In its trial brief and at argument before the trial court, Meyer Darragh abandoned its claim against the Eazor Estate by noting the executors had already paid to Malone Middleman the entire amount the firm had requested of them, and they owed no additional fees. See Meyer Darragh's trial brief at 21.
Meyer Darragh would net $48,887.81 in fees under the contract, approximately three times the $14,721.39 in fees awarded by the trial court under a quantum meruit theory. Meyer Darragh I ,
We granted review of the following issues:
(1) Whether the Superior Court erred in vacating the Judgment of the Court of Common Pleas with respect to Meyer Darragh's breach of contract cause of action and in awarding damages to Meyer Darragh against Malone Middleman, P.C. under a breach of contract theory of liability when no contract existed between Meyer Darragh and Malone Middleman, P.C.?
(2) Whether the Superior Court erred in extending the reach and holding of Ruby v. Abington Mem. Hosp.,, 50 A.3d 128 (2012), app. den. 2012 Pa. Super. 114 , 620 Pa. 710 (2013) from creating duties with respect to partner-attorneys leaving a law firm to creating duties to unrelated third-party after the departure of an employee, non-partner attorney? 68 A.3d 909
It is clear Meyer Darragh did not file such a cross-petition because it received the relief it sought when the Superior Court allowed recovery on the breach of contract action.
An attorney's lien, also known as a charging lien, is defined, in pertinent part, as "[t]he right of an attorney to have expenses and compensation due for services in a suit secured to the attorney in a judgment, decree or award for a client." Black's Law Dictionary 6th Ed. (1990) at 233. A charging lien will be recognized and applied when: (1) there is a fund in court or otherwise applicable for equitable distribution; (2) the services of an attorney operated to substantially or primarily secure the fund from which he seeks to be paid; (3) it was agreed counsel look to the fund and not the client for compensation; (4) the lien claim is limited to costs, fees or other disbursements incurred in the litigation that created the fund; and (5) equitable considerations exist that necessitate the recognition and application of the charging lien. Johnson ,
Meyer Darragh also cites decisions from other jurisdictions which have permitted predecessor counsel to recover fees from a successor under principles of quantum meruit . Brief for Appellant at 23-25, citing Melat, Pressman & Higbie, L.L.P. v. Hannon Law Firm, L.L.C. ,
Meyer Darragh insists it is entitled to $17,673.93, although the trial court, after examining the itemized bill the firm submitted and excluding the amounts related to work on the fee dispute, calculated its verdict at $14,843.89. Trial Ct. slip. op. at 14. Malone Middleman submits Meyer Darragh waived its claim for a higher quantum meruit award by failing to challenge the amount in the Superior Court, and in fact requesting the Superior Court to affirm the trial court's award of $14,721.39. See Appellant's Superior Court Brief at 25. Meyer Darragh has not provided any argument regarding reviewable error in the calculation of damages, and instead simply states it now seeks the higher amount. However, Meyer Darragh sought, and this Court granted, review on the sole question of whether a quantum meruit claim can be brought by predecessor counsel against successor counsel.
Malone Middleman also claims jurisprudence from other jurisdictions-including some of the case law relied upon by Meyer Darragh-supports a holding that quantum meruit damages may be recovered from successor counsel only when successor counsel was paid in full by the client. See Brief for Appellee at 36, quoting Crumley ,
The panel's conclusion there was no benefit conferred upon successor counsel led it to suggest-in dicta -that predecessor counsel might have a claim in quantum meruit against the clients instead. But Malone Middleman's suggestion Styer held a quantum meruit claim can only be brought against the former client is a mischaracterization of that decision.