Gerald R. Turner & Associates, S.C. v. Moriarty, 92-4123
| Citation | 25 F.3d 1356 |
| Decision Date | 14 October 1993 |
| Docket Number | No. 92-4123,92-4123 |
| Parties | GERALD R. TURNER & ASSOCIATES, S.C., Plaintiff-Appellant, v. Michael MORIARTY, Moriarty & Madigan, Donna Szczesny, et al., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
(William A. Jennaro, Thomas J. Lonzo, on brief), Cook & Franke, Milwaukee, WI, Rodney D. DeKruif, Racine, WI, Robert J. Bauman (argued), Law Office of Robert J. Bauman, Milwaukee, WI, for plaintiff-appellant.
Michael J. Jassak (argued), Habush, Habush & Davis, Racine, WI, for defendants-appellees Michael Moriarty, Moriarty & Madigan.
Mark Darnieder, Niemann, West & Darnieder, Milwaukee, WI, for defendant-appellee Donna Szczesny.
Arthur J. Vlasak (argued), Michele M. Ford, Vlasak, Rosenbaum, Weede & Britton, Joel P. Borowiec, American Family Ins., Milwaukee, WI, for defendant-appellee Hartford Ins. Co.
James E. Bartzen (argued), Boardman, Suhr, Curry & Field, Madison, WI, Arthur J. Vlasak, Michele M. Ford, Vlasak, Rosenbaum, Weede & Britton, Joel P. Borowiec, American Family Ins., Milwaukee, WI, for defendant-appellee Ins. Corp. of America.
Before CUDAHY, MANION, and KANNE, Circuit Judges.
Gerald R. Turner, a Wisconsin attorney, claims he is due roughly $100,000.00 in attorney's fees from a Texas lawsuit in which he and Michael A. Moriarty, a Texas attorney, served as co-counsel. Their client was Donna Szczesny, and with her approval, the two attorneys had agreed to split any recovery evenly. After Moriarty settled the case with the Hartford Casualty Insurance Company ("Hartford") and the Insurance Corporation of America ("ICA") for $1,500,000.00, Moriarty sent Turner a check for approximately $198,000.00 in full payment of his fees. 1 Turner protested the amount to Moriarty, but cashed the check. Turner, through his law firm, Gerald R. Turner & Associates, S.C., sued Moriarty, Hartford, and ICA for the remainder of his fee. 2 The district court granted summary judgment in favor of the three defendants. Turner appealed. We consider whether Turner's cashing of the check constituted accord and satisfaction under Wisconsin law and whether Hartford and ICA received adequate notice of any lien or assignment Turner had to the settlement amount. We affirm the district court's ruling regarding Hartford and ICA, but reverse its ruling with respect to Moriarty.
In 1985, Szczesny contacted Turner, a Wisconsin attorney, to create a guardianship for her husband, who was in a permanent vegetative state as a result of the medical treatment he had received in Texas. Turner advised Szczesny that she had a viable medical malpractice claim, and she approved the filing of a lawsuit. In a written agreement, Szczesny agreed to give Turner a forty-percent contingency fee, and she gave Turner a lien for that percentage of the recovery.
Because Szczesny's husband was injured in Texas and all defendants resided in Texas, Turner contacted Moriarty, a Texas attorney, to assist him with the lawsuit. In a letter dated December 3, 1985, from Moriarty to Turner, Moriarty agreed to split evenly with Turner the contingent attorney's fee on any recovery. Szczesny executed a new contract of representation and power of attorney, retained both Turner and Moriarty as her attorneys, agreed to pay a forty-percent contingency fee to the two attorneys, and assigned that percentage of the recovery to them.
The lawsuit proceeded in a Texas state court. For whatever reason, Moriarty canceled his appearance at the deposition of Szczesny's expert witness taken in Milwaukee, Wisconsin. Turner appeared in Moriarty's place. Counsel for Hartford and ICA were also at the deposition. After the deposition, Turner entered into negotiations for a settlement with Hartford and ICA. ICA offered to settle the lawsuit with Turner for $750,000.00, which was not accepted.
In August 1986, Turner sent a letter, approved by Szczesny, to Moriarty discharging him from the lawsuit. Turner claimed Moriarty had neglected the case, for example, by missing the long-scheduled deposition of an expert witness. As a result of the discharge letter, Moriarty flew to Wisconsin and spoke with Szczesny. He convinced her that he should remain on the case. Szczesny, thereafter, sent a letter to Turner in September 1986, informing him that she wanted Moriarty reinstated. She wanted Moriarty to become the "lead counsel" and for any settlement negotiations to be coordinated through his Texas office.
After being reinstated, Moriarty claims he did most of the work in the lawsuit. Turner contends that he also did a great deal of work. In mid-1988, Moriarty negotiated a settlement with Hartford and ICA in the Szczesny case for $1,500,000.00.
In June 1988, the Texas state court held a hearing on the settlement. During the evidentiary portion of the hearing, Szczesny agreed that Moriarty had done about ninety percent of the work in the case. She also agreed to Moriarty's proposal that Turner receive only one-third of the $600,000.00 contingency fee. Turner did not participate in the hearing because he had no notice of it. The Texas court approved the settlement amount and the forty-percent contingency fee, but it passed no judgment on how Moriarty and Turner should divide their fees.
Turner learned about the settlement after calling the Texas court for a status report on the lawsuit. He was unable to reach Moriarty, but he did speak with Szczesny. According to Turner, she denied having been in Texas or having participated in any settlement. Julie Flessas, an attorney in Turner's office, later spoke with Szczesny. According to Flessas, Szczesny said Turner was entitled to the agreed-upon fifty-percent fee split and that no dispute existed over the fee amount.
On July 6, 1988, Moriarty sent Turner a letter informing him of the $1,500,000.00 settlement. The letter further stated in relevant part:
During the evidentiary portion of the hearing, Mrs. Szczesny approved the payment to you of 1/3 referral fee and the Court approved the settlement and the payment of this referral fee. Accordingly, attached is our firm check for 1/3 of the gross attorney fee recovered in the case.
Your negotiation of the enclosed check, as evidenced on the check, will be full and final settlement and release for any attorneys fees, costs or expenses arising out of the cause of action....
As you know, aside from the client and Court approval, one of the constraints on the payment of attorneys fees is that the referral payment be commensurate with services performed by the referring attorney. This standard exists in both the American Bar Association Code of Professional Responsibility and the Texas Code of Professional Responsibility. Although the referral fee in this case might be considered excessive in light of your portion of services performed in the litigation in question, we will seek to justify payment of 1/3 referral in the context of this case if the attached check is negotiated accordingly.
Up until he received the July 1988 letter, Turner had never been apprised that there was any underlying doubt regarding the fifty-fifty fee split agreement he had with Moriarty.
On the front side of the check, which was in the amount of $198,333.33, was written "Full and Final Settlement and Release of any claim to attorney fees, costs and expenses arising out of [the Szczesny litigation]." On the back side of the check was written: "Negotiating this Instrument is acknowledgement of Full and Final Settlement and Release of any claim to attorney fees, costs and expenses arising out of [the Szczesny litigation]."
Approximately one month later, on August 5, 1988, counsel for Turner wrote to Moriarty. The letter stated in pertinent part:
I advised you in our telephone conference of August 4, 1988, that Turner is of the unequivocal position that they [sic] are entitled to 50% of 40% of the recovery ... consistent with the written fee splitting agreement between yourself and his office....
This letter is further notification of the position of Turner that the action taken by you is arbitrary and without basis, and that the amount due and owing to Turner under the written fee agreement is a liquidated amount easily calculable of $300,000.00. There was no dispute and is no dispute with regard to the sums due and owing and Turner's status in conjunction with the case has remained constant throughout.
Furthermore, the proposed accord and satisfaction is arbitrary and capricious and lacks consideration. Turner has the right to mitigate possible damages by cashing the check of $198,000.00 despite and without regard to the claimed accord and satisfaction.
The letter went on to say that Turner was demanding the balance of his fee, $102,000.00, and he would take legal action if necessary to recover the amount. Turner cashed the check on August 5, 1988, the same day the letter was sent. He did not modify or alter the restrictive endorsements on either side of the check.
Turner then sued Moriarty, Hartford, and ICA for the remainder of his fee in the United States District Court for the Eastern District of Wisconsin. The three defendants moved for summary judgment. A magistrate judge recommended that the district court grant each motion. The court approved the recommendation. The court granted summary judgment for Moriarty on the ground of accord and satisfaction under Wisconsin law. The court granted summary judgment for ICA on the ground that the court lacked personal jurisdiction over the out-of-state insurance company. The court also granted summary judgment for Hartford on the ground that Turner had no enforceable lien or assignment against it, because Turner had failed to give Hartford (or ICA for that matter) notice of either. Turner timely appeals these rulings.
We review de novo a district court's grant of summary judgment. Brookins v. Kolb, ...
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