Nelson & Hill, PA v. Wood

• Decision Date: 12 July 2000
• Docket Number: No. A00A0764, No. A00A0765.
• Citation: 537 S.E.2d 670,245 Ga. App. 60
• Court: Georgia Court of Appeals
• Parties: NELSON & HILL, P.A. v. WOOD. Wood v. Nelson & Hill, P.A.

537 S.E.2d 670

245 Ga. App. 60

NELSON & HILL, P.A. v. WOOD.

Wood v. Nelson & Hill, P.A.

Nos. A00A0764, A00A0765.

Court of Appeals of Georgia.

July 12, 2000.

Nelson, Hill, Lord & Beasley, Janet E. Hill, J. Hue Henry, Athens, for appellants.

Dreger & McClelland, Richard J. Dreger, Nicholas J. Pieschel, Roswell, for appellee. PHIPPS, Judge.

Nelson & Hill, P.A. represented C.A. Wood in a federal age discrimination lawsuit against Wood's employer. After a verdict was returned in Wood's favor, Nelson & Hill and Wood became embroiled in a fee dispute. Nelson & Hill sued Wood in Walton County Superior Court on a breach of contract claim which was later amended to a suit in quantum meruit. Wood counterclaimed for breach of fiduciary duty, punitive damages, breach of contract and bad faith. He subsequently reduced his claims to breach of fiduciary duty and punitive damages. The trial court granted summary judgment to Nelson & Hill on Wood's breach of fiduciary duty and punitive damages claims and entered a declaratory judgment that it was estopped from hearing Nelson & Hill's quantum meruit action for attorney fees because the federal district court had already awarded reasonable attorney fees for Nelson & Hill's representation of Wood. Both Nelson & Hill and Wood have appealed. We affirm the trial court's judgment on Nelson & Hill's claim because we find that as a matter of law Nelson & Hill cannot present a cognizable claim under a theory of quantum meruit. We also affirm the judgment on Wood's counterclaim because there is no genuine issue of material fact regarding the propriety of Nelson & Hill's handling of the proceeds of the federal litigation.

In May 1991, Nelson & Hill and Wood executed a contingency fee contract for Nelson & Hill to represent Wood in the administrative phase of his discrimination action. The contract specified that if the case was resolved through Equal Employment Opportunity Commission proceedings or settled while the case was pending before that agency, Nelson & Hill would receive 40 percent of any sums recovered. The contract further specified that if the case was not resolved at the administrative level, and if Wood wished to file a lawsuit and Nelson & Hill agreed to represent him, a new contract would be negotiated.

The case was not resolved in the administrative phase. Nelson & Hill drafted a new contract stating that it would represent Wood in the subsequent lawsuit and that its fee would be 33 percent of any settlement award or 40 percent of any trial award. The contract was never executed. Nevertheless, Nelson & Hill continued to represent Wood for more than two additional years and ultimately tried the case on his behalf in federal district court.

Wood was awarded $325,000 on his discrimination claim. Afterward Nelson & Hill petitioned the federal court for reasonable attorney fees to which they were entitled under federal law. Nelson & Hill presented affidavits and documentation regarding the time two attorneys and two paralegals spent working on the case. Nelson & Hill further requested $150 per hour as a reasonable hourly rate for the attorneys' time. They asked the court to award a total of $78,350 in fees and litigation expenses.

The federal court found that 30 of the hours submitted by the attorneys were duplicative and reduced the number of compensable hours by that amount. The court granted the remainder of Nelson & Hill's fee and expense requests and awarded a total of $74,850.

Subsequently, Nelson & Hill attempted to disburse the proceeds of the lawsuit. They intended to aggregate the damages and attorney fees award, transfer 60 percent of that amount to Wood, and retain 40 percent for the law firm. The disbursement was to take place at a meeting between Wood and one of the lawyers who tried his case. When Wood was informed of the share Nelson & Hill had calculated for him, Wood asserted that he had never agreed to pay the firm a 40 percent contingency fee for its trial work. He refused to accept the check that Nelson & Hill had cut for him.

Wood obtained different counsel to represent him in the fee dispute. But the matter was not resolved. Within six months of the intended disbursement of funds, the parties agreed that Nelson & Hill would disburse to itself and Wood the amounts that each was undisputably entitled to receive and that Nelson & Hill would place the remainder of approximately $90,000 in an escrow account with Merrill Lynch. Thereafter, Nelson & Hill and Wood filed their respective claims in Walton County Superior Court.

Case No. A00A0764

Nelson & Hill raises nine enumerations of error from the superior court's declaratory judgment finding that it was both judicially estopped and estopped by judgment from hearing the quantum meruit suit. Four enumerations challenge the applicability of the doctrine of judicial estoppel. Three enumerations relate to whether the trial court incorrectly determined that the facts of this case did not present a viable cause of action under quantum meruit. The eighth enumeration asserts that the trial court erred in ruling that Nelson & Hill could not seek to establish the value of their services in quantum meruit by presenting evidence of their original contingency fee contract with Wood or of oral discussions regarding a contingency fee. In its final enumeration of error, Nelson & Hill asserts that Wood would be unjustly enriched if it is not allowed to pursue its quantum meruit claim in a jury trial. Nelson & Hill does not challenge the court's determination that it was estopped by judgment from hearing this suit.

1. "Ordinarily, when one renders service or transfers property which is valuable to another, which the latter accepts, a promise is implied to pay the reasonable value thereof."¹ "Generally, an action of this type is one upon quantum meruit. [Cit.]"² Quantum meruit literally means "as much as he deserves."³ It is an equitable doctrine based on the concept that no one who benefits from the labor and materials of another should be unjustly enriched thereby.⁴ Where quantum meruit is applicable, the provider may recover the reasonable value of goods or services transferred, but value is defined in terms of value to the recipient.⁵

[J]udicial estoppel precludes a party from asserting a position in a judicial proceeding which is inconsistent with a position previously successfully asserted by it in a prior proceeding. "Thus, the `essential function and justification of judicial estoppel is to prevent the use of intentional self-contradiction as a means of obtaining unfair advantage in a forum provided for suitors seeking justice.' [Cits.]" The primary purpose of the doctrine is not to protect the litigants, but to protect the integrity of the judiciary. [Cits.] The doctrine does not require reliance or prejudice before a party may invoke it. [Cit.]⁶

"The doctrine is directed against those who would attempt to manipulate the court system through the calculated assertion of divergent sworn positions in judicial proceedings and is designed to prevent parties from making a mockery of justice through inconsistent pleadings. [Cit.]"⁷

Although judicial estoppel is a federal doctrine,⁸ it is applied by the state courts of Georgia to afford judgments of the federal courts the same effect here as in the courts where they were rendered.⁹ Frequently, judicial estoppel is employed to preclude the prosecution of unliquidated tort claims that discharged debtors failed to list as assets in their federal bankruptcy petitions.¹⁰

Here, the record contains the order of the federal court awarding fees to Nelson & Hill and affidavits in support of the request for fees and costs filed by the two Nelson & Hill attorneys who represented Wood. After reviewing those documents, we do not find that judicial estoppel applies to bar consideration of Nelson & Hill's claims for fees in quantum meruit. We do not find evidence in the record that Nelson & Hill purposefully adopted inconsistent positions in the different proceedings with the intention of manipulating the court system.

2. However, we agree with the trial court that under the facts of this case, Nelson & Hill could not maintain a suit in quantum meruit. In effect, the court's declaratory judgment is an award of summary judgment. The court considered evidence and essentially made a determination that Nelson & Hill was barred from bringing this suit.¹¹ That is properly a subject for determination by summary judgment.¹² There is no magic in nomenclature, and we judge pleadings, motions and orders not by their name but by their function and substance, being always mindful to construe such documents in a manner compatible with the best interests of justice.¹³ When the trial court's judgment is correct for any reason, we will affirm.¹⁴

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law.¹⁵ A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable inferences and conclusions drawn from it, in the light most favorable to the nonmovant.¹⁶

To recover in quantum meruit, the plaintiff must show that he has not already been compensated the reasonable value for the goods or services he conferred on the defendant.¹⁷ The uncontroverted evidence shows that Nelson & Hill received a reasonable fee through the award from the federal court.

Nelson & Hill requested fees based on the hours worked on the case by two lawyers and two paralegals. The lead counsel stated to the federal court in an affidavit, "I believe that the number of hours expended in this case are reasonable." The other lawyer asserted in his affidavit that the hours for which he sought compensation were "clearly reasonable and in no way excessive." The firm was compensated for all but 30 hours of the attorneys' time and was reimbursed for the...