Jordan Keys & Jessamy v. St. Paul Fire

• Decision Date: 03 March 2005
• Docket Number: No. 03-CV-1380.,03-CV-1380.
• Citation: 870 A.2d 58
• Court: D.C. Court of Appeals
• Parties: JORDAN KEYS & JESSAMY, LLP, Appellant, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Appellee.

870 A.2d 58

JORDAN KEYS & JESSAMY, LLP, Appellant, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Appellee.

No. 03-CV-1380.

District of Columbia Court of Appeals.

Argued January 19, 2005.

Decided March 3, 2005.

Kathleen A. Carey for appellant.

John J. Hathway for appellee.

Before SCHWELB and RUIZ, Associate Judges, and BELSON, Senior Judge.

SCHWELB, Associate Judge:

The question presented in this case is whether an insurance carrier (St. Paul Fire and Marine Insurance Company, hereinafter St. Paul or the carrier) is obligated to pay the plaintiff law firm (Jordan Keys & Jessamy, LLP, hereinafter Jordan Keys) for legal services performed by Jordan Keys on behalf of St. Paul's insured, Greater Southeast Community Hospital (the Hospital) in a medical malpractice suit. Although no express contract existed between Jordan Keys and St. Paul, Jordan Keys claimed in the trial court, and continues to contend on appeal, that it is entitled to recover on a theory that there was an "implied-in-fact" contract between the parties. In the alternative, Jordan Keys asserts that St. Paul has been unjustly enriched and that Jordan Keys has a right to recover in quantum meruit on a quasi contract theory.¹

The trial court dismissed Jordan Keys' complaint, as amended, for failure to state a claim upon which relief may be granted. We affirm.

I. THE AMENDED COMPLAINT

In its amended complaint, Jordan Keys alleged that the firm was retained by the Hospital to defend it in an action for medical malpractice based on brain injuries said to have been suffered by Kharee Thompson, the minor child of Steven A. Thompson and Tonya Thompson. Jordan Keys further alleged that it provided services to the Hospital, which included

numerous [c]ourt appearances, engaging in lengthy, complicated discovery, identifying and interviewing medical experts, defending the matter through mediation, and expending over three hundred attorney and paralegal hours. In addition, plaintiff incurred expenses on [the Hospital's] behalf in preparing the case for trial. Plaintiff did not receive full payment for services rendered and expenses paid.

At the time Jordan Keys provided its services, the Hospital was self-insured for the first $1,000,000 of liability. St. Paul provided excess coverage with a policy limit of $4,000,000. Jordan Keys acknowledges that, under its retainer agreement, its fees were to be paid by the Hospital, not by the carrier. According to Jordan Keys, however, St. Paul directed and controlled the litigation, and required Jordan Keys to provide regular status reports, evaluations, and summaries of depositions, dispositive motions, and court proceedings. St. Paul required these reports because, in the event that Mr. and Mrs. Thompson were awarded more than $1,000,000, the carrier, through its "excess coverage" policy, would be required to pay any amount above $1,000,000, up to the $4,000,000 limit.

On May 27, 1999, the Hospital filed a petition for bankruptcy protection. As a result, the Thompsons' malpractice action against the Hospital was stayed by order of the Bankruptcy Court. According to Jordan Keys, the Hospital owed the law firm in excess of $67,000 in unpaid legal fees and costs.

In the spring of 2001, the plaintiffs in the Thompson case agreed to proceed solely against St. Paul's $4,000,000 excess insurance policy, and not to seek recovery from the Hospital for the first $1,000,000 in liability, for which the Hospital was self-insured. Based on that agreement, the Bankruptcy Court lifted the stay of the Thompson litigation. The Hospital then tendered its defense to its carrier. Upon taking charge of the litigation, St. Paul elected to replace Jordan Keys as defense counsel in the suit by the Thompsons.

The events that allegedly followed are described in paragraphs 17-20 of the amended complaint:

17. Defendant [St. Paul] directed plaintiff [Jordan Keys] to provide its legal files, including documents privileged as attorney work product, to the new law firm in order that such firm might prepare for the pretrial conference and defend the suit at trial. Plaintiff asserted a lien on the client files and refused to forward its work product to the newly-retained law firm without having its legal bill satisfied by Defendant, who intended to and did ultimately rely upon plaintiff's work product in defense of the litigation to its own benefit, i.e., to protect its policy of excess insurance.

18. In the face of plaintiff law firm's refusal to follow Defendant's instructions and surrender all files, [the Hospital] then successfully petitioned the Bankruptcy Court to order plaintiff law firm to release the files to [the Hospital] and turn over non-work product documents to new counsel for [the Hospital].² In accordance with the order of the Bankruptcy Court, plaintiff released files, depositions, expert reports and non-work product documents to the new law firm.

19. The documents, pleadings, depositions and all other work completed by plaintiff in preparing the defense of the Thompson litigation are currently being utilized and relied upon by the new law firm in the defense of the claim to the benefit of the insurer, Defendant St. Paul Fire and Marine Insurance Company.

20. Defendant has failed to pay plaintiff in full for the legal work and fees expended on behalf of the defense of [the Hospital], all of which were reasonable and incurred in the course of representing and defending [the Hospital] in the Thompson litigation.

Jordan Keys asked the court to award it more than $67,000 in unpaid legal services allegedly provided to the Hospital, together with interest, costs and counsel fees.

II. THE TRIAL COURT'S RULING

Jordan Keys filed its action on or about October 18, 2002. St. Paul filed a motion to dismiss the amended complaint for failure to state a claim upon which relief may be granted or, in the alternative, for summary judgment. On October 30, 2003, the trial judge granted the motion to dismiss. The judge rejected Jordan Keys' claim of implied contract upon the following grounds:

In the present case, Plaintiff and [the Hospital] had an express contract requiring [the Hospital] to pay for legal work rendered by Plaintiff's firm. An implied contract cannot stand in the face of an express one. A third party cannot be held liable under an implied contract for work done under an explicit contract between two different parties merely because the third party benefits from the work. American Inv. & Management Co. v. Arab Banking Corp., 1993 U.S. Dist. LEXIS 1716 (D.D.C. February 17, 1993); Decatur Prod. Credit Ass'n v. Murphy, 119 Ill.App.3d 277, 74 Ill.Dec. 765, 456 N.E.2d 267, 274 (1983). Plaintiff cannot now seek to recover legal fees owed by [the Hospital] from St. Paul, a non-party to the contract. Finally, Plaintiff has not established that St. Paul was the entity for which the legal work was performed; rather, [the Hospital] was the entity to which Plaintiff firm rendered services. Further, Plaintiff has failed to present facts indicating that St. Paul was put on notice by unambiguous circumstances that St. Paul was expected to pay for services.

The judge did not explicitly address Jordan Keys' claim that St. Paul was liable to it on a theory of unjust enrichment. Jordan Keys filed a timely notice of appeal.

III. LEGAL ANALYSIS

A. Applicable legal standard.

The standard applicable to motions pursuant to Super. Ct. Civ. R. 12(b)(6) to dismiss a complaint for failure to state a claim upon which relief may be granted was correctly articulated by the trial judge in her order granting the motion:

In deciding a motion to dismiss, the [c]ourt accepts as true all allegations in the Complaint and views them in a light most favorable to the nonmoving party. Owens v. Tiber Island Condominium Ass'n, 373 A.2d 890 (D.C.1977). Dismissal is impermissible unless it appears beyond doubt that the plaintiff can prove no set of facts in support of her claim, which would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 41-45, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Abdullah v. Roach, 668 A.2d 801 (D.C.1995).

On appeal, we review the trial court's ruling de novo, and apply the same substantive standard as that applied by the trial judge in this case. Abdullah, 668 A.2d at 804.

B. Jordan Keys'"implied-in-fact" theory.

We agree with the trial judge that Jordan Keys' amended complaint, viewed in the light most favorable to the pleader, does not allege the elements of an implied-in-fact contract. "An implied-in-fact contract is a true contract, containing all necessary elements of a binding agreement; it differs from other contracts only in that it has not been committed to writing or stated orally in express terms, but rather is inferred from the conduct of the parties in the milieu in which they dealt." Vereen v. Clayborne, 623 A.2d 1190, 1193 (D.C.1993) (quoting Bloomgarden v. Coyer, 156 U.S.App.D.C. 109, 116, 479 F.2d 201, 208 (1973)). In Vereen, we described as follows the requirements for recovery under a contract implied-in-fact:

(1) valuable services being rendered; (2) for the person sought to be charged; (3) which services were accepted by the person sought to be charged, used and enjoyed by him or her; and (4) under such circumstances as reasonably notified the person sought to be charged that the [person rendering the services] expected to be paid by him or her.

623 A.2d at 1193 (citations omitted).

We find it unnecessary to determine whether Jordan Keys has satisfied the first three of the foregoing requirements, for its claim incontrovertibly founders on the fourth. At the time Jordan Keys provided services to the Hospital, St. Paul was not placed on notice that Jordan Keys expected to be paid for those services by St. Paul. On the contrary, as Jordan Keys acknowledges, it contracted to be paid by its client, the Hospital, and not by the Hospital's excess carrier, a party with which Jordan Keys had no agreement at all.

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