DINTER v. SEARS, ROEBUCK & CO.
278 N.J. Super. 521 (1995)
651 A.2d 1033
RIKI DINTER AND ELLIOTT DINTER, PLAINTIFFS-APPELLANTS, v. SEARS, ROEBUCK & COMPANY, DEFENDANT, AND BERTRAM SIEGEL, AND SIEGEL & SIEGEL, INTERVENORS-RESPONDENTS.
Superior Court of New Jersey, Appellate Division.
Decided January 10, 1995.
Bennett J. Wasserman argued the cause for appellants.
Bertram Siegel argued the cause for respondents Bertram Siegel and Siegel & Siegel ( Bertram Siegel, of counsel; Todd Siegel, on the brief).
Frank P. Addas appeared on behalf of defendant Sears, Roebuck & Company ( Addas & Potenza, attorneys; Mr. Addas, on the briefs).
Before Judges PETRELLA, HAVEY and BROCHIN.
The opinion of the court was delivered by PETRELLA, P.J.A.D.
On this appeal we decide what is in essence a fee dispute between successive trial attorneys, arising from an order of the trial court allocating fees following disposition of a negligence case. After a no cause of action in the first trial, and a reversal and remand following an appeal, the second trial attorney settled the underlying negligence action. The trial judge, over objection, awarded intervenor-respondent Bertram Siegel and his law firm of Siegel & Siegel a $45,000 quantum meruit fee, and $7,656.68 as reimbursement of costs and disbursements made by the Siegel firm prior to and during the trial on behalf of plaintiffs Riki and Elliott Dinter.
This appeal has its origins in a slip and fall negligence case which Siegel tried to a no cause of action before a jury in 1990.
The Dinters argue the Siegel firm is not entitled to a fee or any portion of Wasserman's fee. They assert that their contingent fee agreement with Siegel ended upon entry of the adverse judgment or by mutual agreement when the Siegel firm refused to advance the funds for transcripts for an appeal and instructed the Dinters to obtain new attorneys. The Dinters essentially argue that a quantum meruit award cannot be sustained here, particularly when there was a valid contingent fee agreement in effect. In the alternative, they argue that the Siegel firm breached the retainer agreement and terminated it by refusing to proceed with the appeal, except on new terms, and by refusing to file a notice of appeal. Finally, they argue that the award of quantum meruit fees is contrary to public policy and New Jersey Court Rules.
The Dinters retained the Siegel firm in connection with Riki Dinter's slip and fall on November 30, 1987. Riki Dinter and
Significantly, the contingent fee agreement here did not require Siegel to undertake an appeal on behalf of the Dinters. See R. 1:21-7(d).
It is undisputed that from the inception of this slip and fall negligence case the Siegel firm had advanced the costs and
Plaintiffs then sought to obtain another attorney to take the appeal. Despite Siegel's pledge to cooperate, he did not turn over the file to the Dinters' new attorney. He apparently also told that attorney that he would not file an appeal. One attorney wrote Siegel requesting that he file a notice of appeal to preserve the Dinters' right to appeal, but Siegel advised that he would not do so, perhaps because of the necessity to pay a filing fee and concomitantly advance a deposit for costs and order transcripts. See R. 2:5-3.
The Dinters ultimately retained Mark J. Friedman of the offices of Howard C. Truger to prosecute the appeal that resulted in our opinion in Dinter v. Sears, Roebuck & Co., 252 N.J.Super. 84, 599 A.2d 528 (App.Div. 1991), where we reversed and remanded the case because of the trial judge's ruling denying the Dinters' attorney access during the trial to written statements taken by an insurance investigator from Sears' employees. Those statements had not been requested in discovery
After our November 14, 1991 reversal of the jury verdict, the Dinters retained Wasserman and entered into a new contingent fee retainer agreement with him. On November 31, 1991, the Dinters wrote Siegel and requested that he send the entire file to their new attorney. They again wrote Siegel on December 11, 1991, requesting the file
Siegel still did not send the file to the Dinters' new attorney as requested. On January 24, 1992, the trial judge signed an order compelling Siegel to turn over the file, and postponing Siegel's
The new trial attorney, Wasserman, conducted additional discovery and obtained various court orders to compel Sears to provide certain additional discovery items. Eventually, the case was settled before trial for $850,000. On July 23, 1993, the trial judge entered an order directing Sears to pay the settlement, but to retain $218,226.79, the amount due for fees and disbursements under Wasserman's contingent fee agreement, in an interest-bearing account, for potential apportionment between Wasserman and Siegel. The trial judge subsequently entered the disputed January 3, 1994 order which granted Siegel a quantum meruit fee and reimbursement of costs.
Plaintiffs rely on paragraphs numbered two and three of the contingent fee agreement in arguing that Siegel breached the agreement, and thus is not entitled to compensation, because his firm had a duty, as established by Siegel's prior practice of advancing costs and the Dinters' understanding, to proceed with the appeal, and continue to pay the costs on appeal. There is, however, insufficient basis in the agreement to conclude that Siegel had an obligation to proceed with an appeal. The reference to expenses which might include "transcripts on appeal" is in the context of discretion in advancing costs as well as to a potential claim for reimbursement.
We recognize that where there is an ambiguity with respect to the interpretation of an agreement between an attorney and client, the agreement is ordinarily interpreted in favor of the client. See Jersey Land & Development Corp. v. United States, 342 F.Supp. 48 (D.N.J. 1972); Samuel Williston, A Treatise on the Law of Contracts § 1285A, at 931 (3d ed. 1967). Here, however, it is clear that Siegel could and did refuse to go forward with the appeal after the entry of the verdict, and the retainer agreement terminated with the adverse verdict and entry of judgment for the
Contingent fee agreements are subject to regulation and control under the Court Rules promulgated by our Supreme Court. See R. 1:21-6(b)(3) through (9), and R. 1:21-7. Ordinarily, an attorney who undertakes to represent a client under a contingent fee agreement is only entitled to an attorney's fee (as distinguished from potential reimbursement of reasonable and necessary costs and disbursements advanced on behalf of the client) in the event the attorney prevails. The written contingent fee agreement and the Court Rules govern the relationship of the parties. An attorney may advance costs for instituting litigation, but he is not required to fund or finance litigation.
Historically, a lawyer was not authorized to finance litigation or acquire a proprietary interest in a cause of action. To do so was considered champerty and maintenance. 14 Am.Jur.2d Champerty and Maintenance § 1, at 842. This doctrine has been modified or not applied in New Jersey where it clashed with contingent fee type contracts and the advancement of costs and expenses. See Schomp v. Schenck, 40 N.J.L. 195, 201-207 (Sup.Ct. 1878); Hughes v. Eisner, 8 N.J.Super. 351, 72 A.2d 901 (Ch.Div. 1950), reversed on
In conjunction with our present Court Rules, the Rules of Professional Conduct (which superseded the Disciplinary Rules) circumscribe contingent fee agreements. See RPC 1.5(a)(8), (c). RPC 1.8(e) states that: "A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation." It goes on to provide an exception in discretionary terms with respect to advancing "court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; ..."
The form contingent fee agreement used by Siegel thus provides in paragraph 3 (quoted in full above): "you may be required
Where an attorney is discharged by the client without good cause there may be an entitlement to a portion of an ultimate recovery based on quantum meruit, or perhaps other grounds. Any quantum meruit fee in such circumstances would emanate from services actually rendered at the request of and for the benefit of the client to date of discharge. See Buckelew v. Grossbard, 189 N.J.Super. 584, 461 A.2d 590 (Law Div.), aff'd o.b. 192 N.J.Super. 188, 469 A.2d 518 (App.Div. 1983) (contingent fee); In re Estate of Poli, 134 N.J.Super. 222, 338 A.2d 888 (Cty.Ct. 1975) (contingent fee); 7 Am.Jur.2d Attorney & Client § 298, at 321-322. There may also be some entitlement to quantum meruit where the attorney is discharged without good cause where there is a retainer agreement for a fixed period or specific matter. See Cohen v. Radio-Electronics Officers, 275 N.J.Super. 241, 252-253, 645 A.2d 1248 (App.Div. 1994) (fixed retainer agreement as contrasted with a contingent fee agreement).
Thus, if Siegel had been discharged without good cause by the Dinters before completion of his services under the contingent fee agreement he might well have been entitled to some fee based thereon or on quantum meruit. See Buckelew v. Grossbard, supra (189 N.J. Super. at 587-588, 461 A.2d 590); In re Estate of Poli, supra (134 N.J. Super. at 227, 338 A.2d 888). Of course, the client has the right to discharge the attorney with or without good cause, see Cohen, supra (275 N.J. Super. at 258, 645 A.2d 1248), but not necessarily without compensation.
This rule applies with even greater force where the withdrawing attorney failed to earn the contingent fee, having achieved no recovery for the client. See Faro v. Romani, 641 So.2d 69 (Fla. 1994); Plaza Shoe Store, Inc. v. Hermel, 636 S.W.2d 53, 59-60 (Mo. 1982). Where the client elects to proceed with an appeal with a new attorney after the first attorney was unsuccessful at the trial level, it has been held that quantum meruit is not available because the lawyer completed his work at the trial level, albeit, unsuccessfully. Robinowitz v. Pozzi, 127 Or.App. 464, 872 P.2d 993, 996 (1994). The Pozzi court reasoned:
Here, we are satisfied that Siegel's retainer agreement terminated when he declined to prosecute an appeal for the Dinters and told them to retain another attorney if they wished to appeal. His relationship with the Dinters as their attorney in this matter terminated with the trial.
As we have indicated, a trial attorney is not required under our Rules of Court to take an appeal. See R. 1:21-7. Because there was no agreement which required Siegel to represent the Dinters on appeal, the attorney/client relationship terminated not only upon entry of the adverse judgment, but upon Siegel's express refusal to take an appeal, and even beyond this, the express confirmation by the Dinters of the fact that Siegel was no longer to represent them in any fashion in the matter.
In this case the trial judge in awarding quantum meruit relied on International Materials v. Sun Corp., supra (824 S.W.2d 890). However, that case is distinguishable because there the attorney withdrew from representation for "just cause." Here, Siegel withdrew and terminated his representation after the adverse jury verdict. He was free to do so under the Court Rules and his agreement with the Dinters.
Under paragraph number 4 of the contingent fee agreement Siegel and his firm were only entitled to a fee when a settlement or verdict in favor of his client in excess of the costs and expenses
Siegel argues that he and his firm were "retained by plaintiffs as trial counsel throughout the pendency of the appeal." Nothing in the record or in reason supports this contention. No affidavit or certification from the Dinters indicates that to have been the case. Until we decided the earlier appeal there was nothing properly before the trial court in this matter. This is so despite Siegel's inappropriate efforts before the first appeal was decided to invoke the jurisdiction of the trial court during the pendency of that appeal by moving for a new trial between the time the appeal was argued and our decision in that earlier appeal, whether or not he convinced the Dinters to allow him to make such a motion. We add that, although it might be inferred, nothing in the record indicates that occurred. Even so, Siegel's action was inappropriate. It was for appellate counsel to request a limited remand.
Of course, we recognize that Siegel's interest in the case might be heightened after oral argument of the first appeal because we had directed that the employee's statement be given to the court and to the Dinters' appellate attorney. As we observed, the appeal eventually turned on the content of that statement (which had previously been withheld at trial under a claim of attorney work-product). In any event, Siegel should not be compensated for attempting a motion which had little or no basis to succeed and
We reject Siegel's contention that he was entitled to a quantum meruit award under the circumstances of this matter for yet another reason. To permit such a recovery would potentially allow any attorney who completes his trial representation under a contingent fee agreement, without achieving a monetary recovery for the client, to refuse to prosecute an appeal, but nonetheless assert a quantum meruit claim if another attorney prosecuted the appeal and then obtained a favorable result. We do not construe either the contingent fee rules or the attorney/client relationship as contemplating such a result. Indeed, such an approach might also cause a prospective new attorney to pause before undertaking representation to prosecute an appeal or subsequent trial after a remand.
We also reject Siegel's claim that he is entitled to a contingent fee based on Sears' previous settlement offer during the course of the first trial, which offer was rejected by the Dinters. Siegel was clearly not entitled to a contingent fee based on a settlement offer that was rejected by his clients, whether he might have recommended acceptance or rejection of that offer. See 7A C.J.S. Attorney & Client § 320, at 615; cf. Buckelew v. Grossbard, supra (189 N.J. Super. at 588, 461 A.2d 590) (quantum meruit fee for discharged attorney calculated by reference to settlement figure he recommended before trial where the attorney kept no time records, ultimate recovery far exceeded the recommended settlement, and plaintiff, discharged attorney, and successor attorney agreed that discharged attorney would be paid from fee actually realized by successor attorney).
In light of our decision, we need not reach the Dinters' argument that the judge's order granting Siegel a quantum meruit fee is contrary to New Jersey's public policy.
Reversed as to the quantum meruit fee award and affirmed as to costs and disbursements, subject to review by the trial court as to reasonableness and necessity.
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