Booker v. Midpac Lumber Co., Ltd.

• Decision Date: 01 December 1981
• Docket Number: No. 7534,7534
• Parties: R. G. BOOKER, Plaintiff-Appellee, v. MIDPAC LUMBER CO., LTD., Cesario R. Constantino, Stewart Lai and John Does 1-10, Defendants-Appellees, and D. N. Ingman, Formerly Attorney for Plaintiff-Appellant.
• Court: Hawaii Court of Appeals

Page 1359

636 P.2d 1359

2 Haw.App. 569

R. G. BOOKER, Plaintiff-Appellee, v. MIDPAC LUMBER CO., LTD., Cesario R. Constantino, Stewart Lai and John Does 1-10, Defendants-Appellees, and D. N. Ingman, Formerly Attorney for Plaintiff-Appellant.

No. 7534.

Intermediate Court of Appeals of Hawai'i.

Dec. 1, 1981.

Certiorari Granted Dec. 16, 1981.

Syllabus by the Court

In a situation where an attorney employed on a contingent fee contract has been discharged without legal cause before the happening of the contingency:

1. The client has a right to terminate the contract; and

2. The client is obligated to pay the attorney a reasonable fee; and

3. The fee shall be determined upon a consideration of all relevant factors; and

4. The terms of the terminated contingency contract and the estimated value of the case are relevant factors; and

5. When determining the fee, it is a manifest abuse of discretion to refuse to consider the terms of the contingency contract and the estimated value of the case; and 6. Notwithstanding the discharged attorney's objection or the former client's objection or both, the trial court may, in its discretion, determine the fee prior to the disposition of the case or the happening of the contingency; and

7. The trial court may, in its discretion, determine that the discharged attorney's fee is or is not contingent on the outcome of the case; and

8. The discharged attorney has standing to appeal the award of attorney's fees; and

9. The order awarding attorney's fees is an appealable collateral order.

D. N. Ingman, Honolulu, pro se, formerly attorney for plaintiff-appellant.

Christopher P. McKenzie, McKenzie, Trecker & Fritz, Honolulu (Benjamin L. Carroll, III, Kailua, with him on the brief), for plaintiff-appellee.

Before HAYASHI, C. J., and PADGETT and BURNS, JJ.

BURNS, Justice.

Booker hired Ingman as his attorney under a contingent fee contract to pursue a tort claim. Eight months after the accident and before the case came to trial, Booker, without legal cause, terminated Ingman's services and hired other attorneys to represent him.

Ingman appeals because he was willing to accept a $15,000.00 attorney's fee and the lower court awarded him only $1,500.00.

We decide that the lower court manifestly abused its discretion when it explicitly refused to consider two factors relevant to its determination of Ingman's fee.

On August 2, 1978, Booker was injured in a vehicular collision. On August 11, 1978, Ingman, as Booker's attorney, filed suit. On December 18, 1978, he filed Booker's answers to defendants' 38-page interrogatories. On December 22, 1978, he filed an amendment to the complaint. On February 9, 1979, he filed a statement of readiness and a one-page pretrial statement. He did not conduct any formal discovery in the case. Sometime prior to March 28, 1979, Booker discharged Ingman and hired Gould & McKenzie. ¹

On March 28, 1979, Ingman filed a "notice of a lien for his attorney's fee ... pursuant to his contract with plaintiff dated August 10, 1978." Booker responded by moving the court to determine the amount of fees due Ingman and to terminate Ingman's lien.

At the hearing on Booker's motion, Ingman argued that he was entitled to the contract amount less the percentage of time that the new counsel puts in on the case. ²

Although he never entered the document in the record, Ingman represented ³ to the lower court that he had a written contract entitling him to a one-third contingency fee. The lower court accepted his representation but indicated that it could not consider the alleged contract as a factor because the case was not completed and there was nothing upon which to compute a percentage. Further, when Ingman stated his opinion that "the case is worth more than a hundred thousand," the judge responded, "It doesn't matter what's (sic) the case worth."

The only factor which the court was willing to consider was "what (Ingman) did." Initially Ingman responded that he does not "keep hours on a contingency case" but that he "would estimate sixty to sixty-five hours." Later he admitted, "It could be on the high side" but stated, "I know I put (in) a lot more than twenty hours,...."

Ingman stated that considering all factors he "would accept $15,000.00." Based on the file and on Ingman's representations, the lower court decided that Ingman spent no more than twenty-five billable hours on the case, determined that Ingman was entitled to $60.00 per hour, and awarded him $1,500.00 attorney's fees plus costs.

Ingman appeals, alleging the lower court erred when it refused to consider his one-third fee contract, when it refused to consider the value of his former client's case, and when it made the fee determination prior to the disposition of his former client's case.

Although Ingman is not a party, he has standing to appeal. ⁴ Keating v. Keating, 43 Haw. 51 (1958).

We have jurisdiction to hear this appeal because the order appealed is an appealable collateral order. Scott v. Stuart, 22 Haw. 641 (1915).

With respect to the substantive issue on appeal:

The courts of the various jurisdictions are in agreement that, in view of the delicate and confidential nature of the relation between an attorney and his client, and of the evil engendered by friction and distrust, the client has the right to terminate the relation at his election, with or without cause. The courts further agree that when the client arbitrarily exercises this right without cause, the discharged attorney is entitled to compensation. But, the courts disagree as to the measure or basis of the attorney's compensation; that is, they differ as to what compensation should be given to the wrongfully discharged attorney. (Footnotes omitted.)

S. Speiser, Attorneys' Fees, § 4:26 (1973).

Some jurisdictions have taken the position that an attorney who has been employed on a contingent fee contract, and who has been discharged without fault on his part before completely performing the work that he was employed to do, is not entitled to recover the full compensation on the contract, but is limited to a quantum meruit recovery.

However, the courts of other jurisdictions take the view that while the discharged attorney may recover on quantum meruit, he is not limited thereto, but may, at his election, sue for the agreed compensation on the theory of constructive performance or for damages on the theory of breach of contract.

There are several jurisdictions in which there seems to be some doubt as to what constitutes the measure of recovery. (Footnotes omitted.)

92 A.L.R.3d 690 at 693 (1979).

Hawaii has adopted a "reasonable fee" rule. ⁵ Carroll v. Miyashiro, 50 Haw. 413, 441 P.2d 638 (1968). Accord, Fracasse v. Brent, 6 Cal.3d 784, 100 Cal.Rptr. 385, 494 P.2d 9 (1972).

Carroll is authority for the following statements of law:

1. Notwithstanding the discharged attorney's objection or the former client's objection, the trial court may, in its discretion, determine the fee prior to the disposition of the case or the happening of the contingency. ⁶ Contra, Fracasse v. Brent, supra.

2. The trial court may, in its discretion, determine that the discharged attorney's fee is or is not contingent on the outcome of the case. Contra, id.; Rosenberg v. Levin, --- So.2d ---- (1981). 7

3. Whenever it determines the discharged attorney's fee, the trial court shall take into consideration "all...