Shenecqua Butt v. United BrotherhoodShenecqua Butt v. United Brotherhood
Before: HARDIMAN, SCIRICA, and RENDELL, Circuit Judges
Sandra Thompson, Law Office of Sandra Thompson, LLC, 351 E. Princess Street, P.O. Box 1901, York, PA 17405, Counsel for Thompson, Appellant
OPINION OF THE COURT
HARDIMAN, Circuit Judge.
This appeal involves a dispute over legal fees. The District Court ordered attorney Sandra Thompson to pay predecеssor counsel, Ryan Paddick, $54,562.73 from Thompson‘s portion of a settlement fund. Thompson appealed, raising four arguments. We will affirm.
I
This controversy between attorneys Thompson and Paddick began over a decade ago. In 2009 and 2010, Shenecqua Butt, Theresa Howard, and Ellen Brown (collectively, the Clients), filed separate discrimination cases in the United States District Court for the Eastern District of Pennsylvania against, among others, the Unitеd Brotherhood of Carpenters & Joiners of America. After their cases were consolidated for discovery, the Clients suffered an adverse summary judgment in January 2012. Acting pro se, the Clients filed a notice of appeal in this Court.
The Clients then hired Paddick to handle their Third Circuit appeal. The night before the case was scheduled for oral argument, Paddick entered into contingency fee agreements with each of the Cliеnts. Those agreements provided that Paddick would serve as counsel on remand (if any) and promised Paddick a 40 percent fee of any trial or settlement proceeds.
Paddick prevailed in the appeal. Consistent with his agreement with the Clients, Paddick pursued discovery and prepared for trial. Paddick took twenty-four depositions, presented two oral arguments, attended two settlement conferences, аnd filed nine substantive motions or responses. When it came time to retain an expert witness in March 2015, however, Paddick was unable to advance the necessary funds. Paddick told the Clients: “if this puts you in a position where you feel the need to change counsel, I will cooperate with any new counsel.” Paddick v. Butt, 2018 WL 1991737, at *10 (E.D. Pa. Apr. 27, 2018).
In April 2015, the Clients terminated their relationship with Paddick and retained Thompson to pursue their claims for a 35 percent contingent fee. Paddick informed Thompson of his labors on behalf of the Clients and told her that “fees remain due on the work [he] did on the cases prior to [her] stepping in.” Id. at *10. Thompson did not respond. In September 2017, the Clients settled their cases for a total of $380,000, so under her fee agreement, Thompson‘s share was $133,000.
In October 2017, the District Court acknowledged the settlements and dismissed the Clients’ cases with prejudice. About a month later, Paddiсk moved to intervene in the Clients’ cases to enforce an attorney‘s charging lien against the settlement proceeds. The District Court granted Paddick‘s motion to intervene, set a hearing date, and ordered Thompson to hold the contested portion of the settlement proceeds in an escrow account “pending resolution of the motion.” Dist. Ct. Dkt. No. 321, at 2. In April 2018, the District Court found Paddick entitled to $54,562.73 for his work and ordered Thоmpson to pay Paddick that amount in her capacity as custodian of the escrow account. Dist. Ct. Dkt. No. 357, at 1. The District Court‘s order did not, however, explicitly state whether Paddick‘s fees were to be paid from the fees paid to Thompson or from the Clients’ portion of the settlement fund. Confusion
Thompson filed this timely appeal.
II2
Thompson‘s first (and most substantial) argument is that the District Court lacked jurisdiction to hear Paddick‘s motions. She claims the Court‘s jurisdiction “terminated” when the cases were dismissed with prejudice after settlement. Butt Br. 30. Thompson acknowledgеs that the District Court had the “inherent power to enforce its judgments.” Butt Br. 31 (quoting Peacock v. Thomas, 516 U.S. 349, 359 (1996)). But she contends that Paddick must seek to enforce his attorney‘s lien by suing the Clients in state court because the District Court did not retain jurisdiction over the case after it was dismissed and Paddick did not seek to intervene before the dismissal.
We disagree. The District Court had jurisdiction to resolve Paddick‘s lien motion, but not for the reason it cited (i.e., the supplemental jurisdiction stаtute,
Courts, including this one, have sometimes been imprecise when discussing ancillary enforcement jurisdiction. See, e.g., IFC Interconsult v. Safeguard Int‘l Partners, LLC, 438 F.3d 298, 309 (3d Cir. 2006) (treating the inquiries for ancillary and supplemental jurisdiction as the same); 13 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 3523 (3d ed. 2002) (“Today, the terms ‘ancillary,’ ‘pendent,’ and ‘supplemental’ аre all used, essentially interchangeably.“). This appeal provides us an opportunity to clear up “needless confusion,” WRIGHT & MILLER § 3523, in this area of law.
Unlike the sources of jurisdiction conferred by
Nor does ancillary enforcement jurisdiction end when a court renders a judgment on the merits or dismisses a case. As Chief Justice Marshall recognized: “[t]he jurisdiction of a [c]ourt is not exhausted by the rendition of its judgment, but continues until that judgment shall be satisfied.” Wayman v. Southard, 23 U.S. (10 Wheat.) 1, 23 (1825); see also Riggs v. Johnson Cnty., 73 U.S. (6 Wall.) 166, 187 (1867) (“Process subsequent to judgment is as essential to jurisdiction as process antecedent to judgment, else the judicial power would be incomplete and entirely inadequate to the purposes for which it was conferred by the Constitution.“). “It is well established that a federal court may consider collateral issues after an action is no longer pending,” including “motions for costs or attorney‘s fees.” Cooter & Gell, 496 U.S. at 395; see also White v. N.H. Dep‘t of Emp. Sec., 455 U.S. 445, 451 n.13 (1982) (explaining that, even “years after the entry of a judgment on the merits,” a federal court may award counsel fees); Nat‘l City Mortg. Co., 647 F.3d at 85 (hоlding the District Court had ancillary jurisdiction after judgment was entered in order to give effect to the remedy it granted).
These precedents lead us to conclude that the District Court had ancillary enforcement jurisdiction over the dispute between Thompson and Paddick. The Supreme Court has indicated that ancillary enforcement jurisdiction extends to attorney fee disputes. White, 455 U.S. at 447-48, 452, 454 (resolving a post-judgment motion for attorney‘s fees under
This Court has addressed the role of ancillary enforcement jurisdiction in the realm of legal fee disputes on several occasions, most importantly in Novinger v. E.I. DuPont de Nemours & Co., 809 F.2d 212, 217-18 (3d Cir. 1987), and In re Community Bank of Northern Virginia Mortgage Lending Practices Litigation, 911 F.3d 666, 671-74 (3d Cir. 2018). In Novinger, we upheld the district court‘s exercise of ancillary jurisdiction over a fee dispute between a client and the client‘s former counsel following a settlement agreement in the client‘s underlying case (but before the district court had аpproved the settlement and dismissed the action). Novinger, 809 F.2d at 213, 217. Because the former counsel was attempting to obtain a portion of the client‘s fund, the underlying case could not be fully resolved without a determination as to the fees. Federal courts, we noted, have a “vital interest” in resolving fee disputes in such a case “because they bear directly upon the ability of the court to dispose of cases beforе it in a fair manner.” Id. at 217. The district court‘s ability to enforce and effectuate the settlement agreement, then, “necessarily includes the power to resolve disputes with respect to the payment of attorneys’ fees and expenses.” Id.
Thirty years later we circled back to a question left unresolved in Novinger: whether “ancillary jurisdiction extends to the resolution of a post settlement fee dispute between two attorneys, оnly one of whom was attorney of record.” Id. at 218 n.4. We held ancillary jurisdiction did not exist. In re Cmty. Bank, 911 F.3d at 672. That was because the district court “ha[d] no control over the [settlement] funds” and “the fee-splitting dispute ha[d] no impact on the timing or substance of the litigants’ relief in the underlying case.” Id.
This case differs from In re Community Bank in meaningful ways. Most notably,
Given the abundance of caselaw supporting the application of ancillary enforcement jurisdiction to attorney‘s fee disputes—even after disposition of the underlying case wherе jurisdiction was not explicitly retained—we hold the District Court did not err in exercising such jurisdiction over this fee dispute that was raised for the first time after dismissal of the underlying case but was necessary to effectuate the Court‘s judgment.
III
Having concluded the District Court properly exercised jurisdiction over the fee dispute, we turn to the merits of Thompson‘s remaining arguments. The District Court correctly addressed each at length in its thorough and well-reasoned opinion. See Butt, 2018 WL 1991737, at *2-21.
A
Thompson claims the District Court erred when it awarded Paddick fees because the doctrines of duress and unclean hands bar him from any recovery. We disagree.
1
Thompson‘s duress argument is based on the notion that the Clients signed contingency agreements with Paddick only after he approached them the night before their Third Circuit argument and threatened to not appear. According to Thompson, “perceiving the impending threat and danger to their appeal,” the Clients “were induced into retaining Paddick.” Butt Br. 33. These facts render the agreements void, Thompson claims.
The District Court rejected this argument, finding the Clients failed to produce clear and convincing evidence of “a wrongful act or threat by [Paddick] that left the [Clients] no reasonable alternative.” Butt, 2018 WL 1991737, at *5 (quoting Seal v. Riverside Fed. Sav. Bank, 825 F. Supp. 686, 695 (E.D. Pa. 1993)). The Court pointed to evidence of a positivе relationship between the Clients and Paddick after the Third Circuit argument. It also emphasized that the Clients did not exercise their rights to terminate their agreements with Paddick until over two years after signing them. Finally, after weighing conflicting testimony from the Clients and Paddick as to Paddick‘s alleged threat to not appear for oral argument, the Court found “Paddick‘s testimony on this point more credible than that which was offered by the Former Clients.” Id. at *6. Beсause these factual findings were not clearly erroneous, see Fields v. Speaker of Pa. House of Reps., 936 F.3d 142, 149 (3d Cir. 2019), we agree with the District Court that Thompson failed to establish duress by clear and convincing
2
Even if the agreements were valid when entered, Thompson argues, Paddick is still barred from quantum meruit recovery under the doctrine of unclean hands. Thompson provides a laundry list of alleged missteps Paddick made at various stages of his representation of the Clients. See Butt Br. 34-40. Considered together, Thompson asserts, Paddick‘s failures bar recovery of fees.
As the District Court aptly noted, “inadequacy in [Paddick‘s] representation of the [Clients] goes to the amount of quantum meruit recovery.” Butt, 2018 WL 1991737, at *14 (quoting Mulholland v. Kerns, 822 F. Supp. 1161, 1170 (E.D. Pa. 1993)). Without “convincing evidence that Paddick ha[d] committed illegal acts in his representation of the Former Clients,” Paddick was not barred from reasonable compensation for the value of his services. Id.
Paddick may not have provided the Clients flawless representation. But his acts do not constitute unconscionable conduct such that recovery should be precluded. See, e.g., In re Est. of Pedrick, 482 A.2d 215, 222-23 (Pa. 1984). We agree with the District Court that any such shortcomings in performance go to the amount he deservеs under the equitable doctrine of quantum meruit. Imperfect representation does not necessarily bar Paddick from recovery.
B
Thompson‘s fallback position is that even if Paddick is entitled to fees, they must be paid from the Clients’ share of the settlement fund. Under her contingency fee agreement with the Clients, Thompson “limited her liability as substituting counsel for any of Paddick‘s actions or inactions.” Butt Br. 42 (emphasis omitted). Thompson cites the language in her agreements—coupled with the fact Paddick filed his motion against the Clients instead of Thompson—to show that Paddick‘s fee cannot be taken from Thompson.
In a separate order and opinion following a hearing, the District Court rejected Thompson‘s argument, holding that the fees must come from Thompson‘s $133,000. See Paddick v. Butt, 2018 WL 2359401 (E.D. Pa. May 24, 2018). “The consequence of what Thompson would like us to do,” the District Court wrote, “would leave her clients with just over half (51%) of their settlement proceeds.” Id. at *5. Relying on a Massachusetts Supreme Court case as persuasive authority, the District Court held that Thompson‘s request was “manifestly unjust,” id., because a client “should never be made to pay twice,” id. (quoting Malonis v. Harrington, 816 N.E.2d 115, 123 (Mass. 2004)) (District Court‘s emphasis).4
For the reasons set forth in the District Court‘s thorough opinion, we will affirm the Court‘s order that Paddick‘s fees must come from Thompson‘s portion of the settlement fund.
C
Thompson‘s final argument—that Magistrate Judge Strawbridge “abused his discretion
The District Court, relying heavily on the Supreme Court‘s decision in Liteky v. United States, 510 U.S. 540 (1994), disagreed, holding that no “reasonable observer considering the totality of the circumstances would believe that the Court was acting based upon bias, prejudice, or any other improper motive.” Butt, 2018 WL 1991737, at *21. Our independent review of the record revealed no evidence of bias by Magistrate Judge Strawbridge. The negative comments he made reflected his views on the merits of Thompson‘s arguments, not prohibited bias.
As to the first allegation—that the judge expressed frustration with Thompson—the District Court correctly noted: “judicial remarks during the course of a trial that are critical or disapproving of, or even hostile to, counsel . . . ordinarily do not support a bias or partiality challenge,” Liteky, 510 U.S. at 555, and do not support such a challenge here. Thompson‘s second allegation—that the Court suggested Paddick would recover his fee from Thompson—is likewise not grounds for recusal. “[O]pinions formed by the judge on the basis of facts introduced or events occurring in the course оf the current proceedings, or of prior proceedings, do not constitute a basis for a bias or partiality motion.” Id. A remark as to the perceived strength of the case after a day of testimony would not, to a reasonable observer, “reflect[] a fixed or immovable view about the merits of Paddick‘s request for a counsel fee.” Butt, 2018 WL 1991737, at *20. Finally, Thompson‘s claim that Judge Strawbridge acted as counsel against her when he questioned witnesses is equally unavailing. “A judge‘s ordinary efforts at courtroom administration” are “immune” from a recusal challenge. Liteky, 510 U.S. at 556.
The District Court accurately described the governing law set forth in Liteky and correctly applied it here. The Court did not abuse its discretion when it denied Thompson‘s recusal motion. See Edelstein v. Wilentz, 812 F.2d 128, 131 (3d Cir. 1987).
*
*
*
For the reasons we have explained, the District Court had ancillary enforcement jurisdiction over the fee dispute between Paddick and Thompson. And because Thompson‘s other claims lack merit, we
Notes
Unlike those sources, ancillary enforcement jurisdiction relates to the power of a federal court to exercise jurisdiction over separate proceedings. Although not mentioned in § 1367, this common-law doctrine has survived the codification of supplemental jurisdiction and remains independent of the statute. See, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 379 (1994); Peacock, 516 U.S. at 356; Nat‘l City Mortg. Co. v. Stephen, 647 F.3d 78, 85 (3d Cir. 2011); Robb Evans & Assocs., LLC v. Holibaugh, 609 F.3d 359, 363 (4th Cir. 2010).