Revson v. Cinque & Cinque

• Decision Date: 01 August 1999
• Docket Number: Docket No. 99-7747
• Citation: 221 F.3d 59
• Parties: (2nd Cir. 2000) ROMMY REVSON, Plaintiff-Counterclaim-Defendant-Appellant, v. CINQUE & CINQUE, P.C., Defendant-Counterclaimant-Appellee
• Court: U.S. Court of Appeals — Second Circuit

Page 59

221 F.3d 59 (2nd Cir. 2000)

ROMMY REVSON, Plaintiff-Counterclaim-Defendant-Appellant, v. CINQUE & CINQUE, P.C., Defendant-Counterclaimant-Appellee.

Docket No. 99-7747

August Term, 1999

UNITED STATES COURT OF APPEALS SECOND CIRCUIT

Argued Feb. 14, 2000

Decided Aug. 4, 2000

Appeal from an amended judgment of the United States District Court for the Southern District of New York, Denny Chin, Judge, dismissing plaintiff's claims against defendant law firm, and ordering plaintiff to pay defendant $732,370, including prejudgment interest, on counterclaim for the reasonable value of legal services.

Affirmed in part, vacated and remanded in part.

[Copyrighted Material Omitted] JUDD BURSTEIN, New York, New York (Benjamin J. Stone, Burstein & McPherson, New York, New York, on the brief), for Plaintiff-Counterclaim-Defendant-Appellant.

JAMES P. CINQUE, New York, New York (Robert W. Cinque, Cinque & Cinque, New York, New York, on the brief), for Defendant-Counterclaimant-Appellee.

Before: KEARSE, CALABRESI, and KATZMANN, Circuit Judges.

KEARSE, Circuit Judge:

Plaintiff Rommy Revson appeals from an amended judgment of the United States District Court for the Southern District of New York, Denny Chin, Judge, entered after a jury trial, (1) dismissing her claims for a declaratory judgment and monetary relief against her former attorneys, defendant Cinque & Cinque, P.C. ("Cinque & Cinque" or the "firm"), and (2) ordering Revson to pay the firm $732,370, including prejudgment interest, on its counterclaim for the reasonable value of legal services rendered to her. On appeal, Revson contends principally that the district court erred (a) in interpreting her retainer agreement with Cinque & Cinque as requiring her, as a matter of law, to pay fees in excess of the firm's hourly-rate charges; (b) in refusing to instruct the jury that the firm had the burden of proving that Revson fully understood that agreement to have the meaning the firm ascribed to it; and (c) in ruling that a letter written by Revson, which was held inadmissible to show a contingent fee agreement, was admissible as evidence of the value of the firm's services for quantum meruit recovery. For the reasons that follow, we conclude that the judgment should be affirmed to the extent that it dismissed Revson's claim that she terminated the firm for cause, and that in other respects, the judgment should be vacated and the matter remanded for a new trial.

I. BACKGROUND

Revson is the inventor of the "scunci," sometimes called a "scrunchy," a cloth covered, elasticized hairband sometimes worn around ponytails. Millions of dollars worth of scuncis are sold each year. As the patent holder, Revson was often engaged in negotiations or litigation with respect to patent and licensing rights. Cinque & Cinque was a New York City law firm whose partners were Robert W. Cinque ("Robert Cinque" or "Cinque") and James P. Cinque ("James Cinque" or "James"). The present action arises out of the firm's representation of Revson in connection with her scunci business, including two controversies with L&N Sales &amp Marketing, Inc. ("L&N"), and two with Riviera Trading, Inc. ("Riviera").

Some of the events are not in dispute. The following account is taken largely from the trial evidence and from an opinion of the district court dealing with the imposition of sanctions on Revson's present attorney in connection with his conduct in this litigation, see Revson v. Cinque & Cinque, P.C., 70 F.Supp.2d 415 (S.D.N.Y. 1999) ("RevsonI"). The sanctions issues are the subject of a separate appeal, dealt with in a separate opinion also filed today, see Revson v. Cinque & Cinque, P.C., Nos. 99 9427, 9443 (2d Cir. Aug. 4, 2000).

A. Cinque & Cinque's Representation of Revson

In March 1993, Revson retained Cinque & Cinque to represent her in connection with an ongoing arbitration against L&N ("first L&N matter"), replacing attorneys with whom she had become dissatisfied. The retainer agreement, in the form of a March 24, 1993 letter from Robert Cinque to Revson, signed by Revson on March 25, 1993 ("1993 Retainer Agreement" or "Agreement"), read as follows:

This letter will confirm that you have retained the firm of Cinque & Cinque, P.C. to represent you both as litigation counsel in your current dispute with the new L&N Sales & Marketing, Inc. and generally in connection with your activities as creative artist, inventor and patent holder.

My customary hourly billing rate is $325.00 and that of my brother James is $300.00. The time of our associates is billed at lesser rates depending upon the level of experience of the particular individual involved. These rates range between $150.00 and $250.00. Paralegal time is billed at the rate of $50.00 per hour.

While we keep daily records of the time we spent [sic], in fairness to you in this matter involving the many issues which arise from the current dispute with L&N our billing will take into account not only the amount of time spent, but also the result achieved.

Of necessity, a fair amount of duplication of attorney effort and time must take place, and I do not believe it appropriate to charge you the full rate for this. At the same time, if we are able to achieve an outstanding result or substantial benefit for you, then our billing would be adjusted accordingly following consultation with you. We generally render statements on a monthly or other periodic basis reflecting services rendered, disbursements incurred and the amount charged.

You have agreed to pay us a retainer on account in the sum of $25,000.00, the receipt of which we acknowledge. You are of course free to terminate our representation of you at any time and for any reason. If you do so, you will receive a refund of any unused portion of the retainer.

If the foregoing accurately sets forth our understanding, kindly sign and return one copy of this letter to me.

(1993 Retainer Agreement at 1-2.)

For nearly five years thereafter, Cinque & Cinque represented Revson in the first L&N matter and a number of other matters. During that period, Revson paid the firm fees totaling approximately $400,000. The firm's hourly rates did not change. Cinque testified, however, that during 1996 and 1997, the firm billed some $50,000 less than its normal hourly rates for the time spent, and that on at least one occasion, after negotiating a $300,000 licensing fee for Revson, Cinque billed her on a percentage basis five percent of the $300,000 fee.

The client-attorney relationship between Revson and Robert Cinque developed into a social relationship as well. At trial, Revson stated

[h]e was like a brother that I didn't really have. He was a friend. He and Jane [Klein, Cinque's companion,] were both friends. We had a lot of fun times together.

(Trial Transcript ("Tr."), at 62 63.) Cinque and Klein once visited Revson at a house Revson had rented in Sun Valley. In February 1997, Cinque and Klein visited Revson at her home in Florida for several days. Cinque spent some portion of that time--the parties dispute how much--working with Revson to prepare for the second L&N arbitration ("second L&N matter"). After Cinque and Klein left, Revson wrote Cinque a note that read, in part, as follows:

Dear Bob & Jane,

Sadness, tears, love, emptiness, and yet, happiness, belonging and a strong sense of friendship and family fill my heart as your little white car is pulling away from my happy little orange cottage (that you got for me from Riviera).

Time flies when we are together. My happiest moments are probably dinner, cocktails, and morning greetings when you both are near....

You probably know, that of course, it's a scary ... time for me, with everything I've worked so hard to create is [sic] on the line. Through encouragement, calmness, order & sensibility from both of you, I trust in your judgment and support.

In my life, very few people have believed in me and supported me and took the time out to understand me, Both of you did! For this, I love both of you....

One night at dinner, I had mentioned that I would give you 10% (ten percent) of whatever you recover for me from L&N. I want to unequivocally state that is exactly what "the deal" is. You stood by me and deserve it! This would make me happy.

I will not disappoint you with my courage and hard work, as I know you won't let me down like all the others did. I do look forward to standing shoulder to shoulder against L&N, you'll see. (Letter from Revson to Cinque and Klein dated February 12, 1997 ("February 1997 Letter" or "Letter"), at 1-5 (emphases in original).)

B. The Termination of the Relationship

In addition to the Riviera transaction referred to by Revson in her February 1997 Letter, Cinque negotiated a second Riviera agreement in the fall of 1997 ("RivieraII"). The agreement, executed on December 4, 1997, called for Riviera to pay Revson a total of $2.4 million, of which $1.5 million was paid to her at the closing, with the remaining $900,000 to be paid over three years. At the closing, Revson gave gifts to Cinque and to Riviera's attorney. On the following morning, Cinque telephoned Revson, in part to discuss whether she would be attending the deposition that day of a witness in the second L&N matter. In that conversation, Cinque raised the subject of the firm's fee for negotiating RivieraII. He referred to the 10 percent "deal" that Revson had promised in her February 1997 Letter with respect to L&N, and he suggested that the firm deserved a fee of a "little more" than 10 percent of the amounts to be paid under the second Riviera agreement. RevsonI, 70 F.Supp.2d at 420. Revson became upset and said she wanted to think about it.

Revson and Cinque did not discuss the matter again for some five or six days. On Thursday December 11, Cinque learned that Revson had consulted another attorney, Ronald Witkowski, about the second Riviera agreement and had negotiated a modification agreement. "Cinque was upset by this turn...