Hoffert v. General Motors Corp., 81-1002

• Decision Date: 14 September 1981
• Docket Number: No. 81-1002,81-1002
• Parties: Thomas M. HOFFERT, Individually and as next friend of John Thomas Hoffert, A Defendant Minor, Plaintiffs, v. GENERAL MOTORS CORPORATION, Defendant. COCHRANE & BRESNAHAN, P.A., Appellants, v. Russell B. SMITH, Guardian Ad Litem, Appellee. Summary Calendar. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 161

656 F.2d 161

Thomas M. HOFFERT, Individually and as next friend of John

Thomas Hoffert, A Defendant Minor, Plaintiffs, v. GENERAL MOTORS CORPORATION, Defendant.

COCHRANE & BRESNAHAN, P.A., Appellants, v. Russell B. SMITH, Guardian Ad Litem, Appellee.

No. 81-1002

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

Unit A

Sept. 14, 1981.

Rehearing and rehearing En Banc Denied Oct. 13, 1981.

Cochrane & Bresnahan, P.A., pro se., John A. Cochrane, St. Paul, Minn., for appellants.

Russell B. Smith, Dallas, Tex., Court-appointed, for appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before CHARLES CLARK, RUBIN and SAM D. JOHNSON, Circuit Judges.

CHARLES CLARK, Circuit Judge.

The controversy in this case is over contingent attorneys' fees recoverable from the proceeds of a settlement and judgment in favor of Colonel Thomas M. Hoffert and his minor son, John Thomas Hoffert. Cochrane & Bresnahan, P.A., the law firm representing the plaintiffs, appeals from an order of the district court reducing the firm's fees from one-third to one-fifth for its services in representing the plaintiffs. We affirm.

On August 15, 1978, the fourteen-year-old John Hoffert was severely injured when the 1973 Vega in which he was a passenger collided with a 1962 Buick at an intersection in El Paso, Texas. The Hofferts alleged that the Vega was not crashworthy because defectively designed and manufactured and that John sustained his injuries because the impact with the Buick dislocated the hood and drove it through the windshield into his head and body. As a result of the accident, John received serious and extensive injuries to his face, head, chest, and legs. Although the record suggests he has made remarkable progress in his recovery, John Hoffert is permanently blind in both eyes.

On November 2, 1978, Colonel Thomas M. Hoffert and JoAnne L. Hoffert, acting as parents and natural guardians of their injured son, executed a contract employing Cochrane & Bresnahan, P.A., to represent Colonel Hoffert and John in litigation arising out of the automobile collision. The retainer agreement provided that the law firm would receive 40% of any monies recovered for the Hofferts whether by settlement or by verdict.

Cochrane and Bresnahan originally filed suit in the District Court of Dallas County, Texas, against General Motors Corporation, the manufacturer of the Vega in which John Hoffert was injured. This proceeding was nonsuited and the action was refiled on behalf of Colonel Hoffert, individually and as next friend of his injured minor son, in the United States District Court for the Northern District of Texas. About two months later, the parties agreed to settle the lawsuit and presented the settlement agreement for approval of the district court. Under that agreement, General Motors paid $2,500,000 into an interest-bearing escrow account in the First National Bank of Dallas, Texas, pending court approval of the settlement terms.

The district court found that the question of how to apportion the settlement proceeds between the father and the son created a potential conflict of interest. Accordingly, it appointed a guardian ad litem, Russell B. Smith, to protect the interests of the Hofferts' son. Smith then spent about sixty-one hours evaluating the settlement terms, examining medical records and witness statements, conducting personal interviews, and investigating the risk of continued litigation. In the course of reviewing the terms of the settlement agreement, Smith advised Cochrane & Bresnahan that the district judge was concerned about the 40% contingency fee. The firm thereby agreed to reduce its fee to 33 1/3% of the recovery in order to obtain the district court's approval of the settlement agreement. On the basis of that reduction and of his independent review of the settlement terms, Smith prepared his report to the district court recommending approval of the settlement agreement.

Following a hearing, the district court approved the settlement agreement and entered judgment for the plaintiffs. However, the court disapproved Cochrane & Bresnahan's recovery of one-third of the Hofferts' award and limited the firm's share of the recovery to $500,000. The court then awarded $41,865.00 to Colonel Hoffert as reimbursement for extraordinary expenses incurred as a result of his son's injuries. In addition to the $500,000 attorney's fees recovery, the court awarded $27,988.70 to Cochrane & Bresnahan for reimbursement of expenses incurred in connection with the lawsuit. The court then directed the First National Bank to pay the entire remainder of the escrow account, including all interest accrued, to the trustees of a trust created for the benefit of John Thomas Hoffert. Contending that it is contractually entitled to 33 1/3% of the total recovery ($833,333.00), Cochrane & Bresnahan appeals from the order of the district court distributing the settlement proceeds.

The primary thrust of Cochrane & Bresnahan's argument is that the district court lacked jurisdiction to modify the amount of attorney's fees recoverable under the contingency fee agreement because it was not presented with a "case" or "controversy" within the meaning of Article III of the United States Constitution. For this proposition, Cochrane & Bresnahan relies upon Brown v. Watkins Motor Lines, Inc., 596 F.2d 129 (5th Cir. 1979). In Brown, the minor plaintiff was injured in an automobile accident, and his parents retained a lawyer on a one-third contingent fee contract to represent him in a suit against the owner and operator of the truck which struck him. The Probate Court of Alabama, the plaintiff's home state, appointed a guardian over the plaintiff's estate. The guardian, acting through the attorney retained by the minor's parents, brought a diversity action in the district court and obtained a $500,000 jury verdict for the minor plaintiff. This award was embodied in a final judgment of the district court and was paid into the registry of the court upon its direction. When the guardian moved the district court to disburse the registry funds to him in his capacity as the plaintiff's guardian, the district judge refused to order distribution of the proceeds until an ancillary guardianship was established in Mississippi, the forum state. After that was accomplished, the district court, over the objections of both the plaintiff's guardian and attorney, again refused to disburse the judgment proceeds to the minor's guardian and fixed the attorney's fees and expenses at $93,692.67, ordering the balance of the proceeds to be paid into the Chancery Court of Hinds County, Mississippi, where the ancillary guardianship had been set up.

Presented with these facts, we held that the absence of a live controversy before the district court deprived it of jurisdiction to apportion the jury award. We recognized that in ordinary circumstances a court has power to resolve a dispute between a judgment creditor and his attorney concerning the amount of the attorney's fee lien on the judgment. 596 F.2d at 131. However, we emphasized that the contingent fee contract had already been approved by the original guardianship court in Alabama and that neither the injured minor's parents nor his court-appointed guardian raised any objection to the amount of the fee. We therefore concluded that the district court after final judgment was without power to impose upon the parties a remedy they did not seek.

The judicial power conferred by the Constitution has been defined as " 'the power of a court to decide and pronounce a judgment and carry it into effect between persons and parties who bring a case before it for decision.' " If no party before a court makes or suggests any contest, but rather all litigants desire precisely the same result, there can be no case or controversy within the meaning of Article III.

596 F.2d at 131-32 (citations omitted).

Cochrane & Bresnahan maintains that this case is controlled by Brown because neither Colonel Hoffert, as the minor's next friend, nor Smith, as guardian ad litem, ever expressed any dissatisfaction with the size of the 33 1/3% contingent fee, and it emphasizes that Smith actually recommended approval of the settlement agreement in light of that amount. Nevertheless, though the facts presented in this appeal bear some superficial similarity to those involved in Brown, two significant distinctions set them outside the ambit of the principle applied there.

In Brown, the minor plaintiff was represented by a guardian appointed by the appropriate state court. Although the district court characterized the minor as a ward of the court, authority to allocate the judgment proceeds resided either with the Mississippi Chancery Court or with the Alabama Probate Court. Thus, the district court arrogated to itself responsibility for distributing the judgment proceeds which in fact belonged to the state court that created the guardianship. By contrast, the...