OPINION AND ORDER
Bеfore the Court is defendants John F. Nevares and Associates,' P.S.C. (“Ne-vares”)’s, Salas LC (“Salas”)’s, and Eric J.
1. BACKGROUND
Parker alleges that it, as the successor to Parker Waichman Alonso LLP (“Parker Waichman Alonso”), is entitled to relief pursuant to a contract with defendants Salas, Nevares, and Quetglas. (Docket No. 93.)
Plaintiff and defendants executed a contract
The CAPECO Agreement provides for an ordered process of distributing attorney’s fees resulting from the underlying litigation. Id. The parties to the CAPECO Agreement agreed to prioritize the reimbursement of member firms’ capital expenditures. Id. Next, they agreed to allocate fees to reimburse out of pocket expensеs “not for specific cases.” Id. The parties agreed to distribute the remaining fees among themselves equally. Id.
Pursuant to the CAPECO Agreement, Parker allegedly invested $188,586.50 in capital expenditures necessary to prosecute the clients’ claims. (Docket No. 93 at p. 3.) Parker also “invested a substantial amount of ‘man hours’ in attorneys and paralegal time” to prosecute the claims contemplated by the CAPECO Agreement. Id. Parker alleges that it fully complied with all of its obligations under the CAPE-CO Agreement at all times. Id. at p. 4.
Later, defendants unilaterally terminated the CAPECO Agreement. Id. The CA-PECO Agreement did not permit unilateral terminatiоn but rather, provided for termination upon a vote of all signatories. Id. After terminating. the contract with Parker, defendants allegedly have or will receive “substantial sums in compensation to the damages claimed by the clients.” Id. at p. 5. Defendants have allegedly refused to pay Parker either to reimburse capital
In a second amended complaint against Salas, Nevares, and Quetglas, Parker seeks the following relief:' (1) specific performance of the CAPECO Agreement, (2) rescission of the CAPECO Agreement, (3) recovery under the doctrine of quantum meruit, and (4) attorney’s fees and prejudgment interest due to the defendants’ obstinacy in prosecuting the Parker’s claims. (Docket No. 93.)
Defendants filed a motion to dismiss, Docket No. 125, Parker opposed, Docket No. 131, and Nevares replied, Docket No. 139. The moving defendants argue that the Court should dismiss Parker’s claims against them because: (1) Parker is not a signatory to the CAPECO Agreement and, thus, cannot claim anything pursuant to it; (2) the CAPECO Agreement is unenforceable; (3) the doctrine of exceptio non ad-impleti contractus precludеs Parker from compelling specific performance of the CA-PECO Agreement; and (4) the quantum meruit claim is time barred. (Docket No. 125.)
II. LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual matter “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
III. DISCUSSION
A. Signatories to the CAPECO Agreement
Parker seeks relief pursuant to the CAPECO Agreement, which was executed by a signatory different from it. Pursuant to Article 1209 of the- Puerto Rico Civil Code, only contracting parties can bring actions that arise out of a contract. P.R. Laws Ann. tit. 31, § 3374 (“Contracts shall only be valid between the parties who execute them and their heirs.”); see also Torres v. Bella Vista Hosp., Inc.,
Parker, however, can claim that it is a party to the CAPECO Agreement signed by Parker Waichman Alonso. In considering a motion to dismiss, a Court may consider additional documents, such as official public records. Watterson v. Page,
Defendants do. not develop any legal argument for their charge that Parker cannot recover pursuant to the CAPECO Agreement, which was executed under its former name. Defendants failed to provide the Court with any controlling legal authority to support their argument. The Court is under no obligation to create legal arguments for the parties before it. U.S. v. Zannino,
' It can be inferred from the second amended complaint and the CAPECO Agreement that the parties treated Parker as a party to' the agreement signed under its previous name. Parker alleges that it continued fulfilling its obligations under the contract after1 the firm changed its name. (Docket No. 93 at p. 4.)- The complaint' states: “[a]t all relevant, times, Parker Waichman LLP fully complied, with all of its obligations under the CAPECO Agreement, including those towards the ,.. defendants.” Id. The contract included a confidentiality clause in which the,parties agreed that their work “be kept strictly confidential and not disclosed to anyone other than the attorney and firms belonging to the Group.” (Docket No, 125-1 at p. 3.) Parker, therefore, continued to fulfill its obligations with the defendants under a contract that explicitly limited participation to parties to the agreement.
For those reasons, Parker has sufficiently shown that the firm is a party to the contract in order to survive a motion to dismiss.
B. Exceptio non adimpleti contractus
The Puеrto Rico Civil Code implicitly includes the doctrine of exceptio non adimpleti contractus. FDIC v. Empresas Cerromonte Corp., No. 10-1623,
C. Attorney’s feés agreement in violation of Model Rule 1.5(e)
The major issue before the Court on this motion to dismiss concerns whether the Court will enforce a contract between •law firms that violates the Model Rules of Professional Conduct (“Model Rules”). The ABA is not legally binding on-practitioners “[ajbsent promulgations by means of a statute or a court rule.” Culebras Enterprises Corp. v. Rivera-Rios,
In order to maintain the effective administration of justice and the integrity of the Court, each attorney admitted or permitted to practice before this Court shall comply with the standards of professional conduct required by the Model Rules of Professional Conduct (the ‘Model Rules’), adopted by the American Bar Association, as amended. Attorneys who are admitted or permitted to practice before this Court are expected to be thoroughly familiar with the Model Rules’ standards.
Local Rule 83E. 'The applicable rules of ethical conduct in Puerto Rico are, therefore, the Model Rules. Southwire Co. v. Ramallo Bros. Printing, Inc., No. 03-1100,
Pursuant to Model Rule 1.5(e), there are three elements for a valid fee arrangement between lawyers of different firms: (1) the fee must either be divided in proportion to the services performed, or each lawyer assumes joint responsibility; (2) the client agrees in writing to the fee arrangement, including each lawyer’s share of the fee; and (3) the fee is-reasonable. (Docket No.
1. Model Rule 1.5(e)(1)
Defendants’ argument for dismissal rests in part on stipulations that are inconsistent with the requirements for a valid fee arrangement pursuant to Model Rule 1.5(e)(1). Defendants argue for dismissal because Parker states a claim to an equal share of attorney’s fees without alleging that it worked equally in the underlying litigation. Id. at p. 8. Defendants’ argument, however, relies on a selective understanding of the Model Rule. Pursuant to Model Rule 1.5(e)(1), lawyers of different firms may divide a fee if “the division is in proportion to the services performed by each lawyer, or each lawyer assumes joint responsibility for the representation.” (Docket No. 125-2 at p. 1) (emphasis added). For this reason, it is nеcessary to determine whether the contracting parties' agreed to share attorney’s fees equally based on equal work on the underlying litigation, or whether each firm assumed joint responsibility for the representation.
The CAPECO Agreement appears to condition the equal division of fees on the parties’ assumption of joint responsibility for their clients. The contract reads in pertinent part: “[i]t is the intent and purpose of this agreement that members of the Group shall commit to actively participate on plaintiffs’ behalf in the Litigation and shall fully cooperate with one another for the cоmmon benefit of plaintiffs.” (Docket No. 125-2 at p. 1.) The contract subsequently reiterates that “[sjince the members of the Group represent all plaintiffs collectively, the members of the Group hereby acknowledge and agree that all such clients to date have benefitted, and will continue to benefit, from the legal services and expenditures of the Group and its members.” Id. at p. 3. After analyzing the issue in the light most favorable to the plaintiff, as the Court must when considering a motion to dismiss, the Court concludes that the clear language of the CAPECO Agreement supports the view that the parties intended to assume joint responsibility for their clients. Parker’s complaint is not necessarily in contravention ,of Model Rule 1.5(e)(1) for failing to allege that the parties worked equally, on the underlying litigation. Dismissal is not proper on these grounds.
Defendants have no other basis for demanding that Parker’s claim'be dismissed for not alleging that it worked equally on the underlying litigation. Pursuant to Article 1044 of the Civil Code of Puerto Rico, contractual obligations “have legal force between the contracting parties, and must be fulfilled in accordance with their stipulations.” P.R. Laws Ann. tit. 31, § 2994; see also In re Alvarez,
There shall be no distribution of fees until the out of pocket expense and capital contribution of the member firms has been completely reimbursed. Capital contributions of the member firms will be reimbursed first. Out of pocket expenses that are not for specific cases will be reimbursed next, Thereafter, all fees will be shared equally as set forth above with disbursements handlеd pursuant to the retainer with the clients.
Id. The CAPECO Agreement’s clear terms demonstrate that the parties did not intend for all member firms to work equally in order to be entitled to an equal share in the remaining attorney’s fees. Defendants’ argument for dismissal, thus, fails. See Article 1233 of the Puerto Rico Civil Code. (“If the terms of a contract are clear and leave no doubt as to the intentions of the contracting parties, the literal sense of its stipulations shall be observed”); P.R. Laws Ann. tit. 31, § 3471; see also Borschow Hosp. & Med. Supplies v. Cesar Castillo Inc.,
2. Model Rule 1.5(e)(2)
It is clear that the parties failed to comply-with their obligations pursuant to Model Rule 1.5(e)(2),. Neither Parker, nor defendants claim to have notified their clients of the agreement or obtained the clients’ consent. Nor did they. (Docket Nos. 93 and 125.) Further, the CAPECO Agreement includes a confidentiality clause that requires that the terms of the' agreement, and thus the fee arrangement, “be kept strictly confidential and not disclosed to anyone other than the attorneys and firms belonging to the Group.” (Docket No. 125-1 at p. 3.) For this reason, assessing defendants’ motion to dismiss requires the Court to determine whether it will enforce a contract that violates Model Rule 1.5(e). This is a matter of first impression in this district. This Court has expressly adopted the Model Rules, but here the rule is not dispositive. The Preamble and Scope of the ABA Model Rules of Professional Conduct notes that courts are divided on the issue оf enforcing agreements among lawyers that violate the Model Rules. Preamble and Scope, Ann. Mod. Rules Prof. Cond. Preamble and Scope, (2015).
Defendants urge the Court to adopt the strict view and refuse to enforce a contract that violates the Model Rules. (Docket No. 125 at pp. 9-13). Courts that adopt the strict approach will not enforce agreements that violate ethical rules because they refuse “to be made an instrument of enforcing obligations arising out of an agreement that is against public policy, either in law or in equity.” Gagne v. Voccaro,
Parker argues in its opposition to the motion to dismiss, however, that the Court should adopt the equitable approach. (Docket No. 131 at pp. 7-19.) Under the equitable approach, the Court instead weighs a number of factors such as whether the client was deceived, Norton Frickey, P.C. v. James B. Turner, P.C.,
This Court has not addressed the issue of enforcing a contract that violates Model Rule 1.5(e). To do so, the Court first analyzes state law and then considers persuasive authority- from other jurisdictions and learned treatises, Id. “While conducting this inquiry, we pay particular heed to prior public policy pronounсements emanating from the state’s highest court, and assume that the state tribunal would select a rule that best implements those policies.” Wheeling, 799 ,F.3d 1, 10 (1st Cir. 2015) (internal citations omitted).
Contractual liberty is not without limits. Pursuant to Article 1207 of the Civil Code of Puerto Rico, parties may not enter into an agreement that is contrary to laws, morals, or public, order. P.R. Laws Ann. tit. 31, § 3372 (“contracting parties may make the agreement and establish the clauses and conditions which they may deem advisable, provided they are not in contravention of the law, morals, - or public order.”). The Supreme Court of Puerto Rico has “pristinely defined the concept of public order (“orden público”) as-a cause for the nullification of contracts executed in violation of that principle.” Cecort Realty Dev., Inc. v. Llompart-Zeno,
The Supreme Court of Puerto Rico has articulated a concept of public order that supports the Court’s view that the Court will not enforce a contract that violates Model Rule 1.5(e). In Puerto Rico, public order is “the collection of regulations on morals and public ethics that are occasionally stated in the law, but that even absent such explicit legislative statement, constitute the guiding principles of wise government.” Hernandez v. Mendez & Assoc. Dev. Corp., No. R-75-383,
It is particularly important that attorneys comply with the Model Rules that regulate professional conduct related to the attorney-client relationship. Puerto Rico law, like Model Rule 1.5(e), emphasizes the importance of -attorney-client relationship. The attorney-client relationship “should be grounded on absolute trust. Subject to the exigencies which arise from the obligations of a lawyer toward society, the laws, and the courts, every member of the bar owes his clients professional treatment characterized by ... the most complete honesty.” P.R. Laws Ann. tit 4 App. IX, § 18. The Supreme Court of Puerto Rico reinforced the unique importance of the attorney-client relationship:
An attorney’s professional services contract is markedly distinguishable from any other leave of services contract. It is sui generis. This type of contract is immersed in deontological rules that imbue the contractual relationship in furtherance of a higher public interest that can transcend the exclusive interest of the parties.
Nassar, No. RE-87-209,
All parties to this dispute, however, made the mutual transgression of executing a contract that stipulates that the contracting parties keep the fee arrangement strictly confidential. They willfully or negligently violated their obligation to disclose the fee-arrаngement to their clients. Cf. Local Rule 83(E)(a) (“Attorneys who are admitted or permitted to practice before this Court are expected to be thoroughly familiar - with the Model Rules’ standards.”). The Court seeks to protect public interest in maintaining the attorney-client relationship rather than protect the plaintiff and defendants’ contractual interests. Cf. Morales v. Municipio de Toa Baja,
In refusing to enforce a contract that violates Model Rule 1.5(e), the Court reсognizes that the strict approach is, in part, contrary, to Local Rule 83(E)(a), which calls for violations to be grounds for disciplinary proceedings. Local Rule 83(E)(a). The Court, however, has the discretion to disregard local rules. See Garcia-Goyco v. Law Environmental Consultants, Inc.,
For those reasons, the CAPE CO Agreement is contrary to' public order. The CAPE CO Agreement is, therefore, unenforceable. See Cecort,
D. Quantum Meruit
Notwithstanding the Court’s decision not to enforce a contract that violates Model Rule 1.5(e), Parker is able to pursue equitable relief. Attorneys who cannot enforce an agreement which violates an- ethical rule may still recover under the doctrine of quantum meruit. See Smilow v. Sw. Bell Mobile Sys.,
Moving defendants argue that recovery under quantum meruit is time barred pursuant to the three-year statute of limitations in Article 1867(1) of the Puerto Rico Civil Code; P.R. Laws Ann. "tit. 31 § 5297(1). This is not the applicable statute of limitations for the contract in question. Article 1867(1) deals with, among other things, an attorney seeking payment of fees for services rendered. See, e.g., Orraca-López v. E.L.A.,
Since neither plaintiff nor defendants argue whether the agreement is a civil contract or a commercial contract, the applicable statute of limitations is unclear. In the case of a civil contract, Article 1864 of the Puerto Rico Civil Code establishes a statute of limitations of fifteen years for contracts, like the one in question, which have no termination date. P.R. Laws Ann, tit. 31 § 5294; Nazario v. Johnson & Johnson Baby Prods., Inc.,
An action for quantum meruit accrues when the work for which the party seeks compensation is completed. Rousseau v. Diemer,
IV. CONCLUSION
For the reasons expressed above, defendаnts’ motion to dismiss plaintiffs complaint is DENIED. Defendants’ argument for dismissal based on plaintiff being a non-signatory to the CAPECO Agreement is DENIED. Parker’s specific performance claim is DISMISSED WITH PREJUDICE, and defendants’ motion for dismissal on plaintiffs quantum meruit claim is DENIED.
IT IS SO ORDERED.
Notes
. Olivia Manne, a second-year student at Columbia Law School, assisted in the preparation Of this Opinion and Order.
. Quetglas filed a motion for joinder regarding the motion to dismiss. (Docket No. 129.)
. Becnel .Law Firm LLC (“Becnel”) and Douglas and London ("Douglas") were also parties to the CAPECO Agreement, but they are not parties to this dispute. (Docket No. 125-1 at p. 2.)
.Becnel and Douglas also agreed to advance capital expenditures to fund the prosecution. (Docket 125-1 at p. 2); (Docket No. 93 at p. 3.)
. Although the Court grants the moving defendants’ dismissal of plaintiff’s claim for specific performance, the Court does not condone the implications of the moving defendants’ argument: after reaping all benefits from the contract, defendants deem it unenforceable as to the plaintiff for an ethical violation to which they are also a party. But the Court will not use an equitable doctrine to evaluate unethical conduct. The Court will not enforce a contract that is repugnant to “the effective administration of justice and the integrity of the Court.” Local Rule 83(E)(a).