788 F.2d 830 (2nd Cir. 1986), 266, Ackermann v. Levine
|Docket Nº:||266, Docket 85-7553.|
|Citation:||788 F.2d 830|
|Party Name:||Peter R. ACKERMANN, Dieter Schultze-Zeu, Dietger Feder, Detlef P. Eulitz and Karl-Heinz Lingner, Plaintiffs-Appellants, v. Ira LEVINE, Defendant-Appellee.|
|Case Date:||April 07, 1986|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Argued Oct. 21, 1985.
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William M. Barron, New York City (Eric J. Stenshoel, and Walter, Conston & Schurtman, P.C., New York City, of counsel), for plaintiffs-appellants.
Ralph S. Naden, New York City, for defendant-appellee.
Before PIERCE, MINER and DAVIS, [*] Circuit Judges.
PIERCE, Circuit Judge:
This is an appeal from a judgment and final order of the United States District Court for the Southern District of New York, Irving Ben Cooper, Judge, entered May 20, 1985, 610 F.Supp. 633, following an enforcement proceeding, holding unenforceable the default judgment issued by the Regional Court of Berlin in West Germany on December 12, 1980 in favor of plaintiffs and against defendant for 190,708.49
deutschemarks (DM), or approximately $100,000, plus interest, for legal fees allegedly owed by appellee.
Appellants argue that the district court erred in ruling that (1) service of the summons and complaint in the German suit by registered mail violated the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 20 U.S.T. 36, T.I.A.S. 6638 (Hague Convention) and constitutional due process, and (2) enforcement of the German default judgment for legal fees charged under the German fee statute and upheld by the German court would violate the public policy concern of New York courts that attorneys seeking recovery of fees "bear the burden of proving that a compensation arrangement is fair, reasonable and fully comprehended by the client." Ackermann v. Levine, 610 F.Supp. 633 (S.D.N.Y.1985) (hereinafter cited as "Op."), at 647.
We hold that service of process by registered mail satisfied the Hague Convention and constitutional due process, and that enforcement of the German default judgment would not violate New York public policy to the extent that the judgment reflects an award of attorneys fees for which the attorney presented in the enforcement proceeding, at a minimum, evidence of client authorization and appropriate work product.
We therefore affirm in part and reverse in part.
Peter R. Ackermann is a German citizen practicing law in West Berlin in the appellant law firm. Ira Levine is an American citizen engaged in the real estate business in New York, where he lives, and New Jersey, where he was the general partner of a limited partnership entitled Hudson View Associates in 1979, and at all pertinent times herein. In the spring of 1979, Levine was considering financing, developing and selling a proposed real estate project in Edgewater, New Jersey (the Edgewater Project). The total cost of the completed project was estimated at approximately $21 million, of which Levine's interest was approximately $6 million. 1 In May of 1979, Levine was introduced to Gottlieb Bauer Schlictegroll ("Bauer"), a West German business promoter en route from Costa Rica to West Germany via New York, and Walter Pfaeffle, a friend of Bauer and a West German journalist living in New York whom Bauer introduced to Levine as a "financial consultant." Bauer informed Levine that he knew potential German investors, including Peter Kuth. At a meeting at the Regency Hotel in New York, Levine gave to Bauer financial documents and written specifications of Edgewater Towers. It was agreed that Levine would pay Bauer a $600,000 commission if he raised the needed capital. The district court found that Bauer was "a devious opportunist who told a different story to each interested party," Op. at 636, and who thereby caused the failure of Ackermann and Levine to have a "meeting of minds." Op. at 636, 641.
Later in May, 1979, Levine received two telephone calls involving the potential interest of a German investment group called the Titan Group. Levine then visited Frederic Coudert, Esq., of the international law firm of Coudert Brothers, in New York, and asked if Mr. Coudert could represent him in West Germany. When Coudert replied that he did not have an office in West Berlin, Levine said, "I do not wish to go to Germany and sit down and hopefully sign a contract without any type of representation." Coudert then recommended three West Berlin law firms, including that of Ackermann.
In late May or early June, 1979, Levine went to West Berlin, with Coudert's list of firms, to talk with Kuth. Bauer met Levine at the airport and explained that Kuth was unavailable. Bauer suggested that Levine talk to Bauer's attorney and friend, Peter Ackermann. Noting the coincidence that Ackermann was affiliated with one of Coudert's recommendees, Levine met with Bauer and Ackermann. Unknown to Levine, a week earlier Bauer had spoken to Ackermann and given him Levine's documents, and suggested that Ackermann might be able to render legal and tax advice regarding the Edgewater Project.
The district court found that Ackermann and Levine had entirely different versions of their single pre-litigation face-to-face encounter. These two versions, like those of many other critical aspects of the record, "stem from the two almost opposite perspectives that each man brought to the meeting." Op. at 637. Levine's only goal was to sell his property, and he preferred to sell to a German investor because Bauer convinced him that he would thereby obtain a favorable price. He hoped to sign a contract with the Titan Group, and anticipated paying Bauer the negotiated $600,000 broker's fee. At the enforcement proceeding, Levine recalled meeting with Ackermann on this occasion for about twenty minutes.
Ackermann recalled a meeting with Levine lasting one to one-and-a-half hours, at which there was substantial legal discussion regarding the contemplated transaction. Ackermann understood his task to be to study the project and its structural requirements, as was customary for his firm to do, and then to explain to German banks "the legal and taxwise ramifications of this structure that I was to develop."
It is undisputed that the parties never discussed attorneys fees or the nature of their relationship. Ackermann testified, however, that Levine told him that he had been referred to Ackermann by the Coudert firm. The district court found "that the parties discussed, in general terms only, tax shelter schemes--a plan that benefited both Mr. Ackermann, who wanted to develop this approach, and Mr. Levine, who stood to gain financially from a German purchaser." The court also found that while there was no agreement for Ackermann to begin talks with any bank, it was resolved that Levine, Bauer and an accountant would commence talks with the Grundkreditbank in West Berlin. This conversation at the bank immediately followed the meeting with Ackermann, and was conducted entirely in German, which Levine apparently does not speak. Afterwards, Bauer explained to Levine that he thought the meeting was favorable, and that he would keep him apprised of subsequent developments.
Levine returned to New York the next day. Several days later, Bauer sent word that the bank remained interested but needed some time to consider the deal. Levine responded that he would not wait, as he had interested investors in the United States. Bauer replied that the bank needed only seven to ten days, to which Levine then agreed. Bauer suggested that "because of Mr. Ackermann's relationship with the bank, we should utilize Mr. Ackermann to go into the bank and discuss the project." Levine testified that he said, " 'I don't understand at this point why we are involving Peter Ackermann.... You are acting as a broker to sell my property.' " Levine further testified that Bauer explained, " 'We need Mr. Ackermann to go into the bank, because of his association with the bank, and he has agreed with us to share in our commission equally.' " On June 8, 1979, Levine wrote to Ackermann, stating:
Ackerman & Shuetze 'Zeu
1 Berlin 12
Attn: Peter Ackerman
I am very pleased to address this letter to you regarding our real estate project in Edgewater, New Jersey.
I wish to authorize your firm to negotiate this matter in the behalf of Hudson View Associates and I am looking forward
to a successful completion of these negotiations.
HUDSON VIEW ASSOCIATES
The district court found Ackermann to be a "moral, upright 'officer of the Court,' " Op. at 639, who reasonably believed that Levine wanted him to structure the deal as part of his duties in negotiating with the bank, rather than to act as a real estate broker, which Judge Cooper found lawyers may not lawfully do in Germany. Id.
On June 14, 1979, Ackermann sent Levine the following telex:
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6/14/79 2:30 p.m.
att: mr. ira Levine
re: edgewater towers
during a 2 hour session i have presented this project to the president of grundkreditbank and his two directors.
they have qualified your offer as 'very interesting' but too large to handle on their own.
they will attempt to convince another bank in frankfurt to run this as a joint venture. appropriate contacts will be made tomorrow.
in the event that the frankfurt bank--which has not yet been disclosed--shows serious interest, do you want me to negotiate the project with them?
peter r. ackermann
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Levine testified that he then called Ackermann, disappointed that the original proposal to the Grundkreditbank was rejected, and that in response to the question...
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