Opinion
Civil Action CV-20-131
12-07-2023
TROUBH HEISLER, LLC, Plaintiff, v. RONALD WALLS, Defendant.
Plaintiff-Daniel Felkel Esq. and William McKinley, Esq. Defendant-Thomas Hallett, Esq.
Plaintiff-Daniel Felkel Esq. and
William McKinley, Esq.
Defendant-Thomas Hallett, Esq.
DECISION AND ORDER
Deborah P. Cashman, Justice
By complaint, Plaintiff Troubh Heisler, LLC brings claims of Breach of Contract (Count I), Account Annexed (Count II), and Quantum Meruit (Count III) against Defendant, Ronald Walls.
A bench trial was held on August 10, 2023. Troubh Heisler was represented by its attorneys Daniel R. Felkel, Esquire and William McKinley, Esquire. Defendant, Ronald Walls, was not present but was represented by Thomas F. Hallett, Esquire. Also present was Rachel Walls, Ronald Wall's daughter and Power of Authority, who was permitted to assist counsel on Mr. Walls's behalf. Having considered the evidence presented at trial as well as the arguments of the parties, a decision is in order. In addition to the oral testimony, the court requested and received written arguments from the parties after the close of the evidence.
FACTUAL FINDINGS
The court has fully reviewed the testimonial and other evidence presented at trial as well as the written submissions by counsel for the parties. Based on the evidence and the court's own assessment of the credibility of the witnesses, the court makes the following findings of fact:
In the Spring of 2014, Defendant (hereinafter Walls) met with William McKinley, Esquire, (hereinafter McKinley) an attorney employed by Plaintiff, McKinley is an experienced attorney who, among other fields, specializes in medical malpractice. Walls was seeking representation in a medical malpractice suit resulting from surgery in Boston, Massachusetts. Notwithstanding the fact that McKinley was not admitted to practice in Massachusetts, he began the process of securing a qualified standard of care expert and a medical malpractice attorney licensed in Massachusetts to join the case. This process proved to be difficult, and the case was rejected by a number of experts and potential Massachusetts lawyers and firms.
With the statute of limitations due to run on February 8, 2015, and without a qualified expert or Massachusetts counsel, McKinley recommended that Walls abandon the lawsuit. Walls rejected that idea and implored McKinley to continue to search for both an expert and Massachusetts counsel. McKinley agreed, and the parties entered into a limited representation agreement dated January 23, 2015. (Defendant's Exhibit 1.) McKinley, through an attorney at Plaintiff that was also admitted in Massachusetts, filed a complaint prior to the expiration of the statute of limitations. This allowed 90 days for the service of the complaint, and for the parties to secure both an expert and Massachusetts co-counsel.
During the 90-day period, with the assistance of an independent contractor nurse consultant, McKinley secured a qualified standard of care expert who opined that the standard of care had been breached and the breach caused Walls's injuries. Having located an expert, McKinley turned to securing Massachusetts counsel. He approached Owen Pickus, Esquire, a Maine attorney who was also a licensed physician and who specialized in medical malpractice cases. He was also admitted to practice in Massachusetts. Attorney Pickus agreed to join the case.
On July 20, 2015, Walls executed a contingent fee agreement with. Plaintiff. McKinley executed this on behalf of Plaintiff on August 3, 2015. (Plaintiff's Exhibit 5.) The agreement provides in relevant part:
(3). The Clients are not to be liable to pay compensation otherwise than from amounts collected for them by the Attorneys, except as follows: for actual costs and disbursements.
(5). The Clients are, in any event, to be liable to the Attorneys for the Attorneys' reasonable expenses and the disbursement as hereinafter specified.
A. Court costs - cost of action, including:
1. Filing fees paid to the Clerk of Courts (estimated expense: $600.00);
2. Fees for service of process and other documents (estimated expense: $200.00);
3. Attendance fees and travel costs paid to witnesses (estimated expense $200.00);
4. Expert witness fees and expenses estimated expense: $20,000.00); .
5. Costs of medical reports (estimated expense: $2,000,00);
6. Costs of visual aids (estimated expense: $1,000.00);
7. Costs of taking depositions (estimated expense: $5,000.00).
B. Travel expenses - expenses for travel by the attorney on behalf of the client (estimated expense: $3,000.00)
C. Telephone - disbursements for long-distance telephone calls made by the attorney on behalf of the client (estimated expense: $100.00).
D. Postage - postage paid by the attorney for mailings on behalf of the client (estimated expense: $100.00).
E. Copying - costs of copying done by the attorney on behalf of the client (estimated expense: $500.00).(Contingent Fee Agreement, Plaintiffs Exhibit 5; Defendant's Exhibit 2.) Attorney Pickus had been engaged by the parties at the time the fee agreement was executed between Plaintiff and Walls and is referenced in paragraph 4 of the agreement: "The fee will be split equally between Owen Pickus, Esq. and Troubh Heisler." [Id.)
As the case proceeded through pretrial litigation, both Attorney McKinley and Attorney Pickus entered appearances as attorney of record, with Attorney McKinley being admitted pro hoc vice.
In May of 2016, McKinley became aware that under Massachusetts law, there are limitations regarding the maximum contingency percentage that counsel in a medical malpractice case could receive and he advised Attorney- Pickus of this fact. On June 1, 2016, Walls executed a new fee agreement with Attorney Pickus specifically referencing the authorized percentages under Massachusetts law. (Plaintiff's Exhibit 6; Defendant's Exhibit 3, ¶ 5.) McKinley is referenced in this contingency fee agreement as follows: "William McKinley has referred this case to Owen Pickus, DO, Esq. &Associates and is entitled to a fee agreed to by both counsel, of the net legal fee. Mr. McKinley's share shall not increase the total fee which Client pays to Lawyer. Owen Pickus and -..... William McKinley shall share the total fee equally." (Id. at ¶ 18.)
The court specifically finds that this agreement did not supersede, replace, or void in any way the contingent fee agreement with Plaintiff. Further, the court finds that although the Pickus fee agreement references McKinley as “referring counsel Attorney McKinley continued to act as so counsel in the case and continued to be an attorney of record. Throughout the duration of the case, Walls's relationship with Pickus was strained and McKinley was tasked with the majority of the client engagement, responsibilities as well as witness preparation of the Walls family for trial.
A jury trial was held in the Suffolk County Superior Court November into December of 2018. The trial lasted approximately nine days. Attorney Pickus functioned as lead counsel and McKinley functioned as co-counsel including handling portions of the evidence presentation. At the completion of the trial, the jury deliberated for approximately five hours and returned a defense verdict.
After the trial, Plaintiff attempted to collect the unpaid disbursements from Walls. During this post-trial time, McKinley had little to no contact with Walls himself, rather his daughter, Rachel Walls, acting as his power of attorney, engaged with Plaintiff. McKinley and Ms. Walls exchanged email communications regarding the outstanding costs and expenses. Full breakdowns of costs, expenses, and monies already collected from Walls in 2015 were provided to Ms. Walls. In an effort to finalize the payment, Plaintiff agreed to lower the hotel and food costs by $1,477.58. Plaintiff also did not charge for any phone calls, photocopies, or other internal expenses, although authorized under the fee agreement.
Throughout the duration of the case, Plaintiff expended 1, 269 attorney and/or paralegal hours on Walls's representation, and 865 of those hours occurred after the execution of the Pickus contingent fee agreement in June of 2016. Plaintiff also expended $54,000 of its own funds on behalf of Walls, with $29,000 in expenses after the execution of the Pickus contingent fee agreement. These hours and funds are separate and distinct from work completed by Attorney Pickus.
Plaintiff attempted to work with Walls through his power of attorney, Ms. Walls, to finalize the outstanding bill for appropriate costs. When questioned, Plaintiff provided documents to support the requested costs as well as to demonstrate the offset for prior payments. Additionally, Plaintiff agreed to reduce the costs at Ms. Walls's request regarding hotel and food costs during the trial. Plaintiff also sent the required arbitration notice to Walls. No demand for fee arbitration was made by Walls. The court finds that at no point did Plaintiff assent to relieving Defendant of his obligation under the contingent fee agreement. Further, there is no evidence to support the assertion that
Defendant communicated to Plaintiff that the contingent fee agreement was no longer in effect.
DISCUSSION
For the first time at trial, Defendant argues that when he entered into the contingent fee agreement with Pickus and Associates, there was a novation substituting Pickus and Associates for Plaintiff in the contractual fee agreement. "A novation is a substituted contract that includes a party that was neither the obligor nor the obligee of the original duty." Restatement (Second) of Contracts § 280 (Am. L, Inst. 1981). However, [f]or a novation to take place, the obligee must assent to the discharge of the obligor's duty in consideration for the promise of the third party to undertake that duty." Id. § 280, cmt. e. Defendant argues that the assent of Plaintiff, as the third party, is not required for a novation to occur in this case. However, in this case, Plaintiff is the obligee in the fee demand, not Defendant. Defendant relies on the Restatement of Contracts in support of his argument, but that reliance is misplaced.
e. Substitution of obligee. A simple novation involving a substitution of obligees results when an obligee promises his obligor to discharge the obligor's duly in consideration for the obligor's promise to a third person to render either the performance that was due from the obligor or some other performance. ... A substitution of obligees may also result when the obligor's promise is one made directly to the obligee but is one to render the performance to a third person as beneficiary. If the third person is an intended beneficiary, there is a novation. . . .The assent of the third person is not required.Id. Defendant did not ask Plaintiff to accept the assignment of the contract to Pickus and Associates and Plaintiff did not specifically assign the contingent fee agreement to Pickus and Associates. Rather, each firm executed independent contingent fee agreements with Defendant. "Novation may be established either by direct evidence or circumstantially by proof of facts from -which the intention to effect such an agreement may be reasonably implied. In determining whether novation was intended, the court may consider the subsequent conduct of the parties." Nightingale v. Leach, No. CV-01-60, 2005 WL 2714048, at *10 (Me. Super. Ct., Feb. 25, 2005) (quoting 58 Am. Jur. 2d Novation § 40). The court does not find that there is sufficient evidence, either directly or by inference, that Plaintiff assented to the discharge of the obligor's duty, and therefore, the court finds that no novation was intended.
Defendant also argues that the contingent fee executed between Plaintiff and Defendant was invalid due to Massachusetts law. The court is not persuaded by this argument. Having found that the contract was valid and therefore enforceable, the court does not reach the claim of quantum meruit.
Per the terms of the contingent fee agreement, Defendant was responsible for payment of costs to Plaintiff, regardless of the outcome of the case. Plaintiff has demonstrated by a preponderance of the evidence the costs expended by Plaintiff on Defendant's behalf in his case, and that Defendant has failed to make any payments since 2015 towards those expended costs. Defendant is liable for costs to Plaintiff in the amount of $39,084.24.
CONCLUSION
Based on the evidence adduced at trial and pursuant to Maine law, it is hereby ORDERED as follows:
Judgment shall enter in favor of Plaintiff for breach of contract in the amount of $39,084.24 against Defendant, Ronald Walls, plus statutory interests and costs.
The clerk shall incorporate this Order on the docket by reference pursuant to M.R. Civ. P. 79(a).