Opinion
16-P-284
02-09-2017
FLETCHER TILTON, P.C. v. Ralph F. SBROGNA.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The defendant, Ralph F. Sbrogna, is a lawyer who left the plaintiff law firm, Fletcher Tilton, P.C. (Fletcher Tilton or firm), at the end of 2009. The terms of Sbrogna's separation from the firm are governed by a written contract executed by the parties on December 30, 2009 (separation agreement or agreement). At issue in the case before us is the application of the separation agreement to a particular fee earned in a case that Sbrogna handled. On cross motions for summary judgment, a Superior Court judge ruled that Fletcher Tilton was entitled to the entirety of the fee. Because we agree with the judge's ruling, we affirm.
The underlying tort case . The fee at issue was earned as a result of litigation that two sons brought against their father alleging physical and sexual abuse. Following the parties' lead, we refer to this as the Bolton case (a pseudonym). Sbrogna represented the sons, although he did not originate the case at the firm. In their contingent fee agreement with Fletcher Tilton, the sons agreed to pay a one-third contingency fee for any recoveries.
In 2003, the parties to the Bolton case reached a settlement, which inter alia required the father to pay the sons a cash award of $240,000. This generated an $80,000 contingency fee award for Fletcher Tilton. Pursuant to the financial arrangement under which Sbrogna was working at the time, he was credited for forty percent of that fee ($32,000). The $80,000 contingent fee, and the amount Sbrogna was credited for it, are not in dispute.
The 2003 Bolton settlement also required the father to disclaim any inheritance from his then-living mother (the sons' grandmother). This would allow any inheritance designated for the father to pass instead directly to his sons. At the time the settlement was executed, whether the sons ever would receive any such additional payments was highly contingent on two factors: how much of the grandmother's estate, if any, would remain when she died, and how much of that estate, if any, otherwise was to pass to the father. It was undisputed that any monies from the grandmother's estate that would pass to the sons as a result of their father's disclaimer would be subject to the contingency fee arrangement. As Sbrogna informed the sons when the settlement was reached, "[a]ny inheritance you subsequently receive will also be subject to the fee agreement with my firm."
The separation agreement . In September of 2009, Sbrogna and another lawyer, Roger Brunelle, informed the firm of their intention to leave at the end of the year. The parties then negotiated the separation agreement over the course of the next three months. The agreement set forth a process to identify which open contingency fee cases that Sbrogna and Brunelle were handling would go with them to their new firm and which would stay at Fletcher Tilton. The cases that Sbrogna and Brunelle intended to take with them were identified with particularity in exhibit A to the separation agreement, and the agreement specified how contingency fees eventually earned in such cases were to be split. In short, Sbrogna's new firm would be entitled to two-thirds of postseparation contingency fees earned from such cases (after expenses were deducted). The separation agreement stated that once Sbrogna left the firm, his rights to any compensation or benefits not spelled out in the agreement terminated.
The text of the relevant paragraph focuses primarily on those cases that Sbrogna or Brunelle originated while at Fletcher Tilton. However, the agreement contemplated that Sbrogna and Brunelle would take some cases originated by others.
One case was not included in exhibit A and was instead subject to a separately negotiated fee split.
Specifically, paragraph 3 of the separation agreement stated:
"Each of Sbrogna and Brunelle agree and acknowledge that their respective rights to receive and enjoy compensation and benefits from the Firm shall cease and expire at 11:59 p.m. on December 31, 2009 except as provided herein."
The Bolton case was not listed in exhibit A, and it is undisputed that the parties never discussed what remained of that matter in the context of negotiating the separation agreement. It is also undisputed that both before and after Sbrogna left, the firm requested updates on whether the additional payments called for by the Bolton settlement had come to pass.
The Bolton inheritance . The grandmother in the Bolton case died in 2012. A lawyer dealing with her estate informed Fletcher Tilton of her death and requested a signed copy of the inheritance disclaimer that the father had been required to execute as part of the 2003 settlement. The firm passed the request along to Sbrogna, who sent the signed disclaimer to the lawyer handling the estate in December of 2012. For the sons' share of what was due them, Sbrogna instructed the estate lawyer to make out the checks jointly to him "and to each of the boys." In June of 2013, Sbrogna passed the money along to the sons, less a $211,000 fee, which he deposited into his own personal account. This prompted Fletcher Tilton to bring the current case seeking to recover that fee.
Under the terms of the 2003 settlement, the father was required to execute the disclaimer "[c]ontemporaneous[ly] with the execution of this Agreement." In fact, Sbrogna did not obtain the signed disclaimer from the father until after the grandmother died.
Discussion . Although the amount of the remaining contingency fee that the sons owed was not resolved until the grandmother died, it was earned in 2003, when their case settled. That fee unquestionably was owed to Fletcher Tilton, and any rights that Sbrogna had to such monies derived from his contractual relationship with the firm, not from his relationship with the sons. Under the terms of the separation agreement, Sbrogna disavowed all rights to additional compensation from the firm except as expressly addressed by the agreement. Because the Bolton matter was not identified among the reserved matters listed in exhibit A and was not otherwise addressed by the separation agreement, Sbrogna waived any right to a share of the additional fee owed to the firm (as the judge correctly found).
Sbrogna attempts to get around this problem by invoking the doctrine of "mutual mistake." See Caron v. Horace Mann Ins. Co ., 466 Mass. 218, 223 (2013). According to him, the parties agreed to include in exhibit A all cases that he would take with him in which future contingent fees might be paid, and the Bolton case was left off the list merely through mutual inadvertence. In response, the firm maintains that there was nothing inadvertent about the fact that exhibit A did not include that case. It supports that argument by pointing to evidence that it remained aware of and periodically inquired after the potential additional fee in the Bolton case before the separation agreement was executed.
We need not decide whether the debate about inadvertence was amenable to resolution on summary judgment, because Sbrogna's claim of mutual mistake would fail in any event. For Sbrogna to succeed on this theory, he would need to show that, notwithstanding the terms of the written separation agreement, the parties had reached a meeting of the minds on how the remaining contingency fee in the Bolton case was to be split. Ibid . ("Central to [the mutual mistake] doctrine is the fundamental underpinning that the parties had reached an agreement on a point which they intended to enshrine in the written contract but which, for some reason, was mistakenly omitted from that written contract"). The Bolton case was not similarly situated to the cases listed in exhibit A, most significantly because the outstanding contingency fee in that case was earned six years before the separation agreement was executed. Had the Bolton case been discussed as part of the separation agreement negotiations, each party could have argued what percentage of that fee, if any, Sbrogna should be paid. However, it is undisputed that the Bolton case was not discussed in this context, and trying to predict what arrangement would have been reached had it been raised would amount to speculation. With Sbrogna, a sophisticated party, having agreed to disclaim any future payments from the firm not expressly covered by the agreement and unable to make out a case of mutual mistake, the judge correctly ruled that his claim to a share of the Bolton contingency fee failed as a matter of law. See Cabot Corp . v. AVX Corp ., 448 Mass. 629, 638 (2007) ("[W]here knowledgeable and fully represented parties choose to embody their relationship in a carefully crafted document, negotiated over several months, they are entitled to and should be held to the language they chose").
For example, Sbrogna could have argued that, based on the financial arrangement he had had with the firm in 2003 when the Bolton case settled, he should be paid at least forty percent of any additional contingency fee payments in that case. In response, the firm could have argued that that prior arrangement was no longer in effect and that under the financial arrangement that applied during the period that the separation agreement was negotiated, he generally would have earned no bonus from contingency fees paid on cases, like the Bolton case, that he did not originate.
The judge denied Fletcher Tilton's motion for reasonable attorney's fees, ruling that while Sbrogna's arguments were weak, they did not meet the "wholly frivolous" standard set forth in G. L. c. 231, § 6F. The firm's appeal of that denial to the single justice of this court has been stayed pending the resolution of this appeal. Meanwhile, in the current case, Fletcher Tilton has requested appellate fees on the same grounds. Although we, like the judge, find Sbrogna's arguments weak, we also do not find them so lacking in substance as to warrant the requested sanctions. We therefore deny the request for appellate attorney's fees. We additionally note that although we view as highly questionable some of Sbrogna's behavior (such as his transferring the entirety of the Bolton fee to his personal account when he never had any reasonable claim to it), neither is Fletcher Tilton blameless in this matter. For example, as the firm now all but acknowledges, the Bolton sons should have been notified of Sbrogna's leaving the firm (something that made the Bolton case an appropriate subject of the separation discussions). From the record before us, it appears that the agreement was executed at a time when the possibility of any significant additional payout from that orphan case was seemingly so remote that the firm felt no need to lay claim to it. The firm was apparently content instead to let Sbrogna handle the limited tasks that remained on the case without any prospect of additional compensation.
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Judgment affirmed .