1999 Conn. Super. Ct. 11351 | Conn. Super. Ct. | 1999
The court finds the facts as hereafter set forth. On January 24, 1991, the plaintiff's wife, Patricia Moore — Rohan, applied for a $100,000 life insurance policy to be issued by First Colony Life Insurance Company. The beneficiary was to be her husband, the plaintiff. On February 14, 1991, less than one month later, Moore-Rohan was diagnosed as having terminal lung cancer. Shortly after that, Rohan spoke with the defendant about the likelihood of First Colony paying the proceeds of the new life insurance policy. They also discussed the possibility of reinstating a Prudential life insurance policy that had lapsed.
First Colony issued its policy in March, 1991. On April 29, 1991, Moore-Rohan died. After her death, Rosenblatt represented the plaintiff with respect to both the Prudential and First Colony policies. It soon become evident that the Prudential policy could not be reinstated and Rosenblatt therefore focused his effort on the First Colony policy.
Rosenblatt told Rohan repeatedly in June that he believed suit would be necessary to collect the proceeds of the First Colony policy. He also told Rohan that the litigation would be "horrendous." Rosenblatt's beliefs about the litigation were based on the chronological facts, i.e., that Moore — Rohan was diagnosed with cancer so soon after she applied for the insurance CT Page 11352 and that she died so soon after the policy was issued. He had no factual basis for his conclusions. Neither First Colony nor Rohan's insurance agent had denied payment or indicated there would be a problem with payment.
On June 14, 1991, Rohan and Rosenblatt met and discussed a fee arrangement. The defendant asked Rohan what type of fee arrangement he wanted. Rohan initially said an hourly fee, but also said that he had no money to pay a fee on that basis. They therefore agreed to a one-third contingency fee. They did not discuss whether the contingency fee would apply if the matter was resolved without the need to file suit. Because Rosenblatt repeatedly stated that litigation was inevitable, Rohan believed filing suit would be necessary and the contingency fee was therefore appropriate. At the time the fee agreement was made, Rohan was distraught over his wife's death and under the care of a psychologist. He was worried about paying the funeral bill and saving his house from foreclosure. Rosenblatt confirmed the agreement for a contingency fee in a brief letter dated June 18, 1991. He did not ask Rohan to sign a copy of the letter.
On August 20, 1991, First Colony paid the face amount of the policy plus interest from the date of death. James Sawyer, Rohan's insurance agent, delivered the check to Rohan at his house. Happy to have the money, Rohan promptly called Rosenblatt to inform him that the policy had been paid. Rohan also asked Rosenblatt how much of a fee he owed. Rosenblatt told him it was "a lot of money, $33,333.33". Rosenblatt also told Rohan he needed the money to pay his share of the expense of remodeling his law office. Rohan deposited the insurance check and then mailed Rosenblatt a check for $33,333.33.
At the time that Rohan paid $33,333.33 to Rosenblatt, Rohan, a Hartford police officer, did not know what an appropriate attorney's fee would be under the circumstances. He trusted Rosenblatt and accepted his assurance that the fee was reasonable. Some months later Rohan had second thoughts about the amount of Rosenblatt's bill. He spoke with Sawyer and wrote to First Colony to find out how much work Rosenblatt had done. In July, 1992, he consulted a new attorney and retained him to seek the return of most of the $33,333.33 that he paid Rosenblatt. Rohan filed for fee mediation with the Connecticut Bar Association and appeared with his new counsel at the fee mediation hearing. Rosenblatt refused to appear or participate in the fee mediation. CT Page 11353
Rosenblatt never provided Rohan with a detailed bill showing the work that was done and the time that he spent, despite Rohan's requests. At trial Rosenblatt was evasive about how much time he spent to collect the First Colony policy. He stated that he met with Rohan, corresponded and spoke with Rohan, First Colony, Sawyer and Equifax, did some document review and did one to two days of research in the law library. He finally conceded during his testimony that he did not do "a lot of work" on this case and that he did not spend more than twenty-five hours on the matter.
Rohan testified that he trusted and relied on Rosenblatt and feels that Rosenblatt took advantage of him. He believes the defendant should be paid for the time he spent on the First Colony case, but that $33,333.33 is an exorbitant fee for the work that was done.
Rohan's amended complaint is set forth in three counts. The first count alleges that Rosenblatt breached his duty to Rohan in several respects, including by deceiving Rohan into thinking that $33,333.333 was a reasonable fee under the circumstances and by deceiving Rohan as to the true extent of his efforts to obtain the insurance proceeds. He further alleges that Rosenblatt knew or should have known that First Colony was treating the claim as a routime matter.
An attorney-client relationship imposes a fiduciary duty on the attorney. Beverly Hills Concepts, Inc. v. Schatz Schatz,Ribicoff Kotkin,
The attorney as fiduciary bears a two fold burden in dealings with the client. First, the attorney bears the burden of proving fair dealing with the client. Secondly, the attorney bears a higher burden of proof than the customary standard; the attorney must prove fair dealing with the client by clear and convincing evidence. Id., 21; Dunham v. Dunham,
Based on these cases, the threshold issue before the court is whether the defendant has proven by clear and convincing evidence that he dealt fairly with Rohan with respect to the attorney's fee that he charged. The court finds that he has not met his burden of proof.
A contingent fee is appropriate only where there is a genuine risk whether the attorney will be able to bring an asset into the client's possession. ABA/BNA Lawyers' Manual on professional Conduct, § 41:901, No. 147, p. 3. Before an attorney enters into a contingency fee agreement with a client, the client needs to be fully informed as to the degree of risk involved. Committee onLegal Ethics v. Tatterson,
The circumstances as they actually existed in June, 1991 did not warrant a contingency fee agreement and a contingent fee agreement was not reasonable at that time. Rosenblatt's belief that "horrendous" litigation would be necessary was based only on the chronology of events relating to the issuance of the policy, not on any objective facts. First Colony never indicated to Rosenblatt or Rohan that it would resist payment of the policy. No such indication was given by Equifax or Sawyer either. Therefore, in June, 1991, when the parties agreed to a one-third CT Page 11355 contingency fee agreement, there was not a significant risk that the policy would not be paid and a contingency fee agreement was not appropriate.
Rosenblatt claims that an Equifax form stated that the claim was contestable. An Equifax claim investigation report prepared in June, 1991, does read "Type Report: Death Claim-Contestable." However, there was no evidence that Rosenblatt saw this form or even knew of it in June, 1991. Moreover, the form is not evidence that the claim would be contested, only that the contestability period in the policy had not expired and the policy therefore was "contestable."
The parties disagree as to whether, in determining the reasonableness of the fee paid the defendant, the court is limited to the circumstances that existed at the time the agreement was made or whether the court can consider subsequent events up through the conclusion of the representation. If the court is limited to the facts at the time the agreement was made, the court has found the fee unreasonable for the reasons set forth above.
Several cases, however, hold that it is appropriate to consider the reasonableness of a fee in light of events up through the conclusion of the representation. In McKenzieConstruction, Inc. v. Maynard,
This issue does not appear to have been decided by our Connecticut appellate courts. This court is persuaded, however, that the majority rule, endorsed in the McKenzie case, is the better rule. Under the circumstances here, all of the events CT Page 11356 relating to the reasonableness of a contingent fee, including the events subsequent to the making of the agreement, should be considered in determining the reasonableness of that fee. Indeed, given that the "result obtained" and the "time and labor required" to perform the legal service are factors to be considered by the court under Rule 1.5 of the Rules of Professional Conduct, and those factors can only be determined at the conclusion of the representation, the court believes it necessarily must consider facts subsequent to the making of the contingency fee agreement.
The circumstances when the representation came to an end in August, 1991 demonstrate that a contingency fee agreement was unreasonable. An analysis of the factors set forth in Rule 1.5 shows that a fee of $33,333.33 was clearly unreasonable. The result obtained, payment of the policy, although a good one, could have been reasonably expected in that First Colony had never indicated that it would not pay the policy. After the brief investigation by Equifax, First Colony promptly disbursed the policy proceeds. Rosenblatt's time and labor were not significant, a maximum of twenty-five hours of fairly routine work consisting primarily of correspondence and phone calls. The skill required was minimal; there were no novel or difficult questions involved. The matter did not require special skill or experience; Rosenblatt is primarily a labor lawyer, but this was not a labor matter. With respect to the fee customarily charged in the locality for similar legal services, Attorney James Kernan testified that based on all the circumstances a reasonable fee for these services would be a fee based on an hourly rate or a contingent fee of only two to three percent.
The defendant presented the testimony of Attorney John D. Moore with respect to the reasonableness of the fee charged Rohan. Moore has taught legal profession classes at the University of Connecticut Law School and has been a member since 1990 of the Committee on Professional Ethics of the Connecticut Bar Association. Moore testified that the $33,333.33 contingent fee charged Rohan was not a breach of any duty owed by Rosenblatt to Rohan and was "reasonable under all the circumstances" as they existed when the agreement was made. He referred to Rule 1.5 of the Rules of Professional Conduct, and reviewed some of the factors in the Rule.
Moore failed, however, to consider whether there was in fact a significant risk of litigation at the time when the contingency CT Page 11357 fee was agreed upon and further failed to consider events that occurred after the fee agreement was entered into. He failed to explain his refusal to consider events after the fee agreement was made in light of the fact that "the time and labor required" for the matter and "the results obtained," factors to be considered under Rule 1.5, could not be determined until after the representation was concluded. The court did not find his testimony persuasive.
The defendant has failed to sustain his burden of showing by clear and convincing evidence that he dealt fairly with Rohan in charging him a fee of $33,333.33 for the uncontested collection of the proceeds of the First Colony life insurance policy. The court finds for the plaintiff on the first count of his complaint.
In his post-trial brief, the defendant objected strenuously to the plaintiff's characterization of the first count of the complaint as a claim to recover an excessive attorney's fee. He asserts that Rohan's attorney always referred to the first count as a legal malpractice claim and the defendant was therefore misled. There is no merit to this contention. The term "legal malpractice" has been found broad enough to encompass a claim for an excessive attorney's fee based on the breach of the attorney's ethical duties of good faith and fidelity. Schultz v. Harney,
The defendant also claims that the plaintiff has sued the wrong party, contending that the fee was paid to the firm of Rosenblatt and Mills. There was no evidence that payment was made to the firm. Moreover, the plaintiff's fee agreement was with Rosenblatt only and he credibly testified that it was Rosenblatt he paid.
In the second count the plaintiff alleges that the CT Page 11358 defendant's actions constitute a violation of the Connecticut Unfair Trade Practices Act ("CUTPA"), General Statutes §
"The purpose of CUTPA is to protect the public from unfair practices in the conduct of any trade or commerce, and whether a practice is unfair depends on the finding of a violation of an identifiable public policy." Krawiec v. Blake Manor DevelopmentCorp.,
Our Supreme Court has adopted the so-called "cigarette rule" used by the Federal Trade Commission to determine whether an act or practice is unfair within the meaning of CUTPA. Normand JosefEnterprises, Inc. v. Connecticut National Bank,
The defendant contends that a single incident cannot give rise to a CUTPA claim, citing, inter alia, Quimby v. KimberlyClark,
The facts in this case satisfy all three components of the cigarette rule. Rosenblatt's actions in charging an unreasonable fee and deceiving Rohan as to its unreasonableness offend public policy as set forth in the common law regarding the attorney-client relationship. The common law establishes that Rosenblatt owed Rohan a fiduciary duty. He was required to show a high degree of fidelity to Rohan and to deal with him fairly, all as set forth in the common law cases set forth earlier in this decision. Despite these obligations to Rohan, Rosenblatt overreached and violated the trust Rohan had in him by charging an excessive fee and assuring Rohan it was reasonable. The court finds that the defendant's actions offend public policy.
Rosenblatt's actions furthermore were unethical and oppressive. He charged a fee that was not reasonable, in violation of Rule 1.5 of the Rules of Professional Conduct, and he took advantage of Rohan, his client, for his own personal financial gain. Finally, Rosenblatt's actions caused substantial injury to Rohan, a person of modest means who has been deprived at all times of the significant amount of money, $33,333.33, which he paid Rosenblatt in 1991 and which Rosenblatt has failed to refund.
The plaintiff has established the defendant's violation of CUTPA. The Court will enter judgment on behalf of the plaintiff for damages of $33,333.33 at the hearing hereafter described. (The defendant has filed no counterclaim for the quantum meruit value of his services.) It is not necessary to consider the third count of the plaintiff's complaint, which seeks the same relief as the first two counts.
The plaintiff also seeks an award of punitive damages pursuant to General Statutes §
At the outset of trial, the parties agreed with the court's suggestion to defer the amount of any punitive damages or attorney's fees to be awarded until there was a ruling on the merits of the case. The court will hear argument from the parties on these issues at a supplemental hearing to be held on Wednesday, September 1, 1999, at 2:00 p. m.
Finally, the court notes that on April 15, 1997, the plaintiff filed an offer of judgment for $30,000 under General Statutes §
Vertefeuille, J.
