Opinion
Civil Action CV-13-206
09-02-2016
PAUL LEVESQUE, et al, Plaintiffs v. DANIEL G. LILLEY, ESQ., et al, Defendants
ORDER
Thomas D. Warren Justice
Before the court is a motion by plaintiffs-counterclaim defendants Paul and Ida Levesque for summary judgment on the remaining issue in the case - the amended counterclaim by defendant Daniel G. Lilley Law Offices P.A seeking to collect its share of the contingent fee obtained after a settlement of the Levesques' claim against Central Maine Medical Center.
As set forth in the court's order dated February 11, 2016 all the other claims in this case have been settled.
Summary Judgment
Summary judgment should be granted if there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. In considering a motion for summary judgment, the court is required to consider only the portions of the record referred to and the material facts set forth in the parties' Rule 56(h) statements. E.g., Johnson v. McNeil, 2002 ME 99 ¶ 8, 800 A.2d 702. The facts must be considered in the light most favorable to the non-moving party. Id. Thus, for purposes of summary judgment, any factual disputes must be resolved against the movant. Nevertheless, when the facts offered by a party in opposition to summary judgment would not, if offered at trial, be sufficient to withstand a motion for judgment as a matter of law, summary judgment should be granted. Rodrigue v. Rodrigue, 1997 ME 99 ¶ 8, 694 A.2d 924.
Proceedings Leading to the Amended Counterclaim
The following facts are based on factual assertions that are not disputed in the summary judgment record and on the Law Court's decision in Levesque v. Central Maine Medical Center, 2012 ME 109, 52 A.3d 933.
On February 28, 2007 the Levesques entered a contingent fee agreement with Daniel G. Lilley Law Offices P.A (Lilley Law Office) to pursue claims against Central Maine Medical Center (CMMC) based on alleged malpractice while Paul Levesque was an inpatient at CMMC following surgery in April 2007. Plaintiffs/Counterclaim Defendants' Statement of Material Facts dated June 25, 2016 (Levesque SMF) ¶¶ 10, 12-14 (admitted). The contingency fee agreement is Exhibit 7 to the Levesque SMF.
A notice of claim was filed on October 26, 2007 naming CMMC and Dr. Alan Ingraham, the surgeon. 2012 ME 109 ¶ 7. The case then proceeded to a panel hearing that resulted in findings on November 26, 2008. 2012 ME 109 ¶ 8.
On behalf of the Levesques, the Lilley Law Office thereafter filed a complaint in the Androscoggin Superior Court on December 15, 2008. Levesque SMF ¶ 28 (admitted). The panel hearing and certain initial aspects of the lawsuit were handled by Christian Foster, an associate at the Lilley Law Office. Levesque SMF ¶¶ 24, 34 (admitted).
John Flynn, Esq., became employed by the Lilley Law Office in early February 2009 and at some point began working on the Levesque case. Levesque SMF ¶ 37 (admitted).
In February 2010 the court granted a motion for summary judgment filed by Dr. Ingraham. Levesque SMF ¶ 40 (admitted). In July 2010 the case went to trial against CMMC. Flynn was the only lawyer from the Lilley Law Office who appeared for the Levesques at the trial. Levesque SMF ¶ 42 (admitted with the qualification that Flynn was employed by the Lilley Law Office at the time of the trial).
One issue at the trial was whether the Levesques would be allowed to pursue a claim that Dr. Pamela Rietschel had been negligent and that CMMC was responsible for her negligence on a theory of apparent agency. 2012 ME 109 ¶¶ 10, 12. Dr. Rietschel had not been named in the notice of claim and the Law Court later stated that the Levesques did not dispute that Dr. Rietschel's alleged negligence had not been presented to the panel. 2012 ME 109 ¶¶ 8 & n.4, 10.
The trial court allowed the Levesques to proceed on a theory that CMMC was responsible for negligence on the part of Dr. Rietschel as an apparent agent of CMMC. 2012 ME 109 ¶ 12. The jury returned a verdict finding that Dr. Rietschel was an agent of CMMC, that CMMC and its employees and agents were negligent, and that the CMMC nurses were negligent. The Jury awarded the Levesques $420,000 in damages. Levesque ¶ 43 (admitted); Special Verdict Form attached as Exhibit 6 to Levesque SMF.
CMMC appealed to the Law Court. While CMMC's appeal was pending, Flynn left employment with the Lilley Law Office effective July 1, 2011. Levesque SMF ¶ 45 (admitted). Shortly thereafter, the Levesques terminated their representation by the Lilley Law Office and were thereafter represented by Flynn, who briefed and argued the appeal. Levesque SMF ¶ 46 (admitted); see listing of counsel in 2012 ME 109.
On August 21, 2012 the Law Court issued a decision vacating the judgment and remanding for further proceedings. The Law Court reasoned that the verdict appeared to be based at least in part on a finding of negligence by Dr. Rietschel and that the claim against Dr. Rietschel had not been presented to the prelitigation screening panel. The Law Court noted that the statute of limitations for presenting a claim against Dr. Rietschel had expired in April 2009 and that no claims involving her alleged negligence would be allowed on remand. Levesque SMF¶¶ 48-49 (admitted).
In May 2013 after the case had been remanded, the Levesques, represented by Flynn, reached a settlement with CMMC calling for payment to the Levesques of $200,000. From that amount, the sum of $90,000 - representing attorney fees approved by the trial court pursuant to 24 M.R.S. § 2961 - has been placed in Flynn's escrow account. Levesque SMF ¶¶ 51-52 (admitted).
Subsequently the Levesques filed a lawsuit against Daniel G. Lilley, Christian Foster, and the Lilley Law Office (collectively, the Lilley defendants) alleging that the failure to present a claim against Dr. Rietschel at the panel constituted malpractice that deprived them of the higher verdict that had been obtained at trial. The Lilley defendants disputed that claim and filed a third party claim against Flynn seeking contribution from Flynn for any damages awarded to the Levesques. The third party claim was based on the theory that Flynn was negligent in his handling of the case after he left the Lilley Law Office and thereby caused or contributed to the difference between the amount recovered by the Levesques at trial and the amount they ultimately received in settlement.
The Lilley defendants also asserted several other claims against Flynn which were dismissed pursuant to this court's order dated June 9, 2014.
The Lilley defendants also asserted a counterclaim against the Levesques alleging that the Lilley Law Office was entitled to the $ 90, 000 attorney's fee awarded after the settlement and placed in Flynn's escrow account.
The Levesques' malpractice claim against the Lilley defendants has been settled and that claim and the Lilley defendants' third party claim against Flynn have been dismissed with prejudice. Only the Lilley Law Office's amended counterclaim for the $90,000 attorney's fee remains to be resolved.
Although the surviving counterclaim is nominally brought on behalf of all of the Lilley defendants, it seeks recompense for legal work based on services performed by Lilley himself, by Foster, by Flynn (when he was still working for the Lilley Law Office) and by others at the Lilley Law Office. Any recovery therefore would be solely on behalf of the Law Office.
The counterclaim asserts a claim to the $90,000 based on three theories: (1) entitlement under the contingency fee agreement, (2) quantum meruit, and (3) unjust enrichment.
Contingent Fee Agreement
The contingent fee agreement between the Levesques and the Lilley Law Office provided that "[t]he contingency upon which compensation is to be paid is actual collection of judgment or settlement from, or on behalf of the opposing party(ies)." Levesque SMF Ex. 7 section (2). Although the Lilley Law Office contends that this provision survived the end of the attorney-client relationship between the Levesques and the Law Office, the Levesques are entitled to summary judgment on this claim.
This follows from (1) the undisputed fact that the Levesques had terminated their representation by the Lilley Law Office and had instructed that their file be transferred to Flynn, Levesque SMF ¶ 46, and (2) the absence of any provision in the contingent fee agreement addressing the extent to which the Levesques would be liable to pay a contingency fee on amounts recovered after the attorney-client relationship had ended. The absence of any such provision is dispositive because, at the time the contingent fee agreement was entered, Maine Bar Rule 8(e)(4) provided:
Each contingent fee agreement shall contain ... (4) a statement of the contingency upon which compensation is to be paid and whether and to what extent the client is liable to pay compensation otherwise than from amounts collected for that client by the attorney.(emphasis added). Because this required provision was not contained in the contingent fee agreement, the court concludes that, as a matter of law, that agreement cannot govern events that occurred after the attorney-client relationship had ended.
This language was omitted when the Supreme Judicial Court adopted the Maine Rules of Professional Conduct effective August 1, 2009 to more closely conform Maine's rules to the ABA Model Rules of Professional Conduct. The Reporter's Notes concerning the changes do not express any disapproval of the omitted language. More importantly, that provision was in effect and governed contingency fee agreements at the time the Levesques entered into their contingent fee agreement with the Lilley Law Office.
This also precludes the Lilley Law Office from relying on another provision of the agreement specifying that no settlement could be reached without the "advice, consent, and participation" of both the Levesques and the Lilley Law Office. Levesque SMF Ex. 7 section (5). That provision did not survive the termination of the attorney-client relationship.
Indeed, invoking that provision with respect to a settlement reached in 2013 would appear to contravene Rule 1.2(a) of the Maine Rules of Professional Conduct, which became effective in 2009: "Subject to the Rules with respect to Declining or Terminating Representation ... a lawyer shall abide by a client's decision whether to settle a matter." See ABA Annotated Model Rules of Professional Conduct (2007) at 81 (contingent-fee agreement that impinges upon the client's control over settlement decisions is prohibited).
Accordingly, the court does not need to reach the other arguments made by the Levesques with respect to the contingent fee agreement, including their argument that the Levesques were excused from any obligations that may have existed under that agreement because the Lilley Law Office had allegedly breached its express obligation to perform its legal services "with due diligence."
The court does not, however, agree with the Levesques' argument that it was a condition precedent to the Law Office's right to contractual compensation that such compensation could only be made by direct deduction from funds in the Lilley Law Office's trust account. Nor does it agree with the Lilley defendants' argument that because the Levesques' affirmative malpractice claim was dismissed with prejudice, the Levesques would not be entitled to raise an alleged breach of contract by the Lilley Law Office as a defense to the Law Office's contract claim. In the release signed by all parties to this case the Levesques expressly reserved all available defenses to the counterclaim for the $90,000 attorney fee.
Quantum Meruit and/or Unjust Enrichment
Concluding that the Lilley Law Office may not recover under the contingent fee agreement does not, however, necessarily foreclose its quantum meruit and unjust enrichment claims to recover for the fair value of its services or the benefit that its services (including the services of Flynn when he was still employed by the Lilley Law Office) provided to the Levesques. For instance, under certain circumstances a claim for unjust enrichment may be maintained even when a contract between the parties has been found to be void as a matter of law. Court v. Kiesman, 2004 ME 72 ¶¶ 14-15, 850 A.2d 330.
While the parties have also raised various arguments on the issue of whether the Lilley Law Office had a valid attorney's lien on the settlement proceeds, the Lilley Law Office's quantum meruit and unjust enrichment claims do not depend on the validity or invalidity of a lien.
The fact that a client has exercised his or her right to discharge a lawyer and seek other representation should not preclude an equitable claim for compensation. This is true even if the lawyer's contingent fee agreement fails to address the issue of what compensation may be owed in situations where a settlement or judgment is obtained by a subsequent lawyer. The most obvious example would be if a case were to be fully prepared by the client's first lawyer, the first lawyer were then discharged, and the client subsequently were to accept a settlement for the same amount that would have been available before the first lawyer's representation had terminated. Denying the first lawyer any fee under those circumstances would be unjust.
Whether or not this case resembles the above example is disputed. There are other circumstances here that may affect the Lilley Law Office's right to claim quantum meruit or unjust enrichment. However, the Lilley Law Office can certainly argue that its work, including that performed by Flynn as a Lilley employee, led to the jury finding that certain CMMC nurses were negligent and that finding conferred a benefit on the Levesques by causing or contributing to the settlement after remand. The court cannot find that the facts are undisputed and that the counterclaim for unjust enrichment is unavailing as a matter of law.
While counsel for the Levesques points out that a claim for unjust enrichment under somewhat analogous circumstances was rejected in Howard & Bowie, P.A. v. Collins, 2000 ME 148 ¶¶ 14-15, 759 A.2d 707, the unjust enrichment claim in that case was brought against the successor attorney. Here, at least nominally, the Lilley Law Office's unjust enrichment claim has been asserted against the clients who allegedly benefited from the Law Office's services. Even if Flynn is considered to be the real party in interest - because under the settlement in this case the $90,000 attorney's fee will go to him if not to the Lilley Law Office - he cannot claim that the claim is being asserted against the wrong party.
At a minimum, therefore, the court finds that the Lilley Law Office's counterclaim for unjust enrichment presents a disputed issue for trial. See Estate of Anderson, 2010 ME 10 ¶ 10, 988 A.2d 977 (unjust enrichment requires proof that (1) the claimant conferred a benefit on the recipient, (2) the recipient had appreciation or knowledge of the benefit, and (3) the circumstances would make it inequitable for the recipient to retain the benefit without payment of its value).
The court considers the quantum meruit claim to be doubtful. It can be argued that the Lilley Law Office has stated a claim for quantum meruit in that the Law Office alleges that (1) services were rendered to the Levesques (2) with the knowledge and consent of the Levesques (3) under circumstances that make it reasonable for the Law Office to expect payment. See Howard & Bowie, P.A. v. Collins, 2000 ME 148 ¶ 17.
However, the Howard & Bowie decision also states that quantum meruit recovery "rests on a contract that is inferred from the conduct of the parties." Id., quoting Paffhausen v. Balano, 1998 ME 47 ¶ 6, 708 A.2d 69. Bar Rule 8(e)(4) specifically required that the contingent fee agreement state whether and what extent that client would be liable for compensation in the event amounts were not collected by the Lilley Law Office. In violation of the Bar Rule, the fee agreement with the Levesques did not address that issue. Under these circumstances the court is reluctant to rule that the Lilley Law Office can argue that a contract should nevertheless be "inferred from the conduct of the parties."
The court is aware that there are jurisdictions that appear to allow quantum meruit recovery in contingent fee cases where attorneys have been discharged. However, most or all of those jurisdictions treat quantum meruit as an equitable doctrine essentially indistinguishable from unjust enrichment. See Howard & Bowie, P.A. v. Collins, 2000 ME 148 ¶ 11 n.2). In the court's view, determining the Lilley Law Office's right to compensation under principles of equity is appropriate because that approach allows consideration of (1) any particular policy issues raised by the attorney-client relationship and (2) the extent to which Flynn's efforts -after he left Lilley's employ - may have contributed to the recovery.
For instance, a rule that would allow counsel to obtain the full contingent fee even after the termination of that counsel's services might constitute an undue impairment of a client's right to discharge a retained attorney at any time, with or without cause, subject to M.R.Civ.P. 89(a). See Galanis v. Lyons & Truitt, 715 N.E.2d 858, 861 (Ind. 1999).
Since the motion for summary judgment is being denied on the unjust enrichment claim, the case will at least proceed on that count, and the court will reserve decision as to whether the quantum meruit claim can also proceed to trial.
The measure of damages on a quantum meruit claim would be the reasonable value of the services provided by the Liiley Law Office, Paffaausen, 1998 ME 47 ¶ 7. Litigating that issue might permit evidence to be offered on the issue of whether the Liiley Law Office was negligent - even though that claim has otherwise been settled.
The entry shall be:
Plaintiffs' motion for summary judgment dismissing count 1 of the amended counterclaim (contract claim) is granted. Plaintiffs' motion for summary judgment dismissing count 3 of the amended counterclaim (unjust enrichment) is denied. The court reserves decision at this time on the motion as it relates to count 2 of the amended counterclaim (quantum meruit). The Clerk is directed to incorporate this order in the docket by reference pursuant to Rule 79(a).