Brault Graham, LLC v. Law Offices of Peter G. Angelos, P.C., 2887

Citation211 Md.App. 638,66 A.3d 71
Decision Date03 May 2013
Docket NumberSept. Term, 2011.,No. 2887,2887
PartiesBRAULT GRAHAM, LLC, et al. v. The LAW OFFICES OF PETER G. ANGELOS, P.C.
CourtCourt of Special Appeals of Maryland

OPINION TEXT STARTS HERE

Albert D. Brault, (Brault Graham, LLC, Rockville, MD, William F. Gately, Howell & Gately, Towson, MD), on the brief, for Appellant.

Benjamin Rosenberg, (Andrew H. Baida, Stuart A. Cherry, Rosenberg, Martin, Greenberg, LLP, on the brief), Baltimore, MD, for Appellee.

Panel: EYLER, DEBORAH S., GRAEFF and HOTTEN, JJ.

GRAEFF, J.

This appeal arises out of a suit filed in the Circuit Court for Baltimore County by The Law Offices of Peter G. Angelos, P.C. (“PGA”), appellee, against Brault Graham, LLC (“BG”), William Gately, Esquire, and Albert D. Brault, Esquire (collectively appellants), seeking recovery of attorneys' fees.1Harry Bargar, now deceased, and Carole Bargar initially retained PGA, pursuant to a contingency fee agreement, to represent them in a complex medical malpractice case against various parties in Bargar, et ux. v. MidAtlantic Cardiovascular Associates, P.A., et al., Case No. 03–C–04000132, in the Circuit Court for Baltimore County. Mr. Gately, who was then employed by PGA, assisted by Mr. Brault, represented the Bargars on PGA's behalf for nearly five years. After a trial, a jury found in favor of the Bargars, awarding them a judgment in excess of $5 million. This Court vacated the judgment on evidentiary grounds in an unreported opinion, Sell, et al. v. Bargar, et ux., No. 408, Sept. Term, 2006 (filed Mar. 17, 2008), and remanded the case for a new trial.

At some point prior to this Court's decision, PGA terminated its relationship with Mr. Gately, with an effective date of April 30, 2008. The Bargars then discharged PGA and retained Mr. Gately and Mr. Brault under a new retainer agreement, which provided for a contingent fee of 40% in the event of recovery. Mr. Gately and Mr. Brault represented the Bargars for the next 18 months, ultimately settling the case for an undisclosed amount. The agreed contingency fee to Mr. Gately and Mr. Brault was deposited into BG's escrow account.

PGA then filed a quantum meruit claim in the circuit court, seeking to recover a percentage of the contingency fee paid to Mr. Gately and Mr. Brault. After a three-day bench trial, the circuit court granted judgment in favor of PGA and ordered Mr. Gately and Mr. Brault to pay PGA 65% of the fees recovered.

On appeal, appellants present two questions for our review,2 which we have rephrased as follows:

[211 Md.App. 644]1. Did the circuit court properly find that PGA was entitled to recover quantum meruit attorney fees?

2. Did the circuit court properly consider evidence of fee-sharing agreements with Mr. Gately and Mr. Brault?

For the reasons set forth below, we answer the first question yes, holding that the circuit court properly found that PGA was entitled to quantum meruit fees. With respect to the second question, however, we disagree with the court's analysis regarding fee-sharing agreements. Accordingly, we shall vacate the judgment and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

On January 8, 2001, Mr. Bargar arrived at St. Joseph's Hospital emergency room in cardiac distress. Mr. Bargar was informed that Dr. Mark Midei, who ran the cardiac catheterization lab, had determined that Mr. Bargar needed a “re-do” bypass surgery. Mr. Bargar requested that the surgery be performed by Dr. Peter Horneffer, a cardiac surgeon with Cardiac Surgery Associates, P.A. (“CSA”), who previously had performed bypass surgery on Mr. Bargar in 1992. Dr. Timothy Bessent, an emergency room physician, told Mr. Bargar, falsely, that Dr. Horneffer was not available to do the surgery. He said that Dr. Jeffrey Sell, a cardiac surgeon who, along with Dr. Midei, was associated with Midatlantic Cardiovascular Associates, P.A. (“Midatlantic”), a group of cardiac surgeons and cardiologists, would perform the surgery. The following day, Dr. Sell performed the bypass surgery on Mr. Bargar. On January 19, 2001, three days after Mr. Bargar was discharged, he suffered a massive heart attack and was left severely disabled.

At the time Dr. Sell performed the surgery on Mr. Bargar, CSA and Midatlantic were involved in a longstanding dispute. In February 2001, CSA and its affiliated surgeons, including Dr. Horneffer, retained PGA to represent them in a suit against Midatlantic (the “CSA case”), for unfair competition in hiring surgeons and unfair trade practices, including lying to patients regarding surgeon availability. Mr. Gately and another PGA attorney, H. Russell Smouse, along with Kathleen McDermott, who was retained as outside counsel as an expert in federal health care law, Medicare, fraud and abuse law, were counsel of record in the CSA case.

In September or October 2003, Mr. Bargar asked Dr. Horneffer about Mr. Gately's representation of CSA. Dr. Horneffer, who had worked closely with Mr. Gately in the CSA case, advised that he thought that Mr. Gately was an excellent lawyer.

Mr. Gately testified that, after he met with the Bargars and reviewed their potential claims against St. Joseph's Hospital and the physicians involved in his surgery, he recommended to Mr. Angelos that PGA take the case, thinking that the case had potential claims for both medical malpractice and fraud. Mr. Angelos directed Mr. Gately, who had limited experience in medical malpractice, to investigate the matter further, and Mr. Gately met with Thomas Summers, chairman of the medical malpractice department at PGA.

On October 23, 2003, Mr. Bargar entered into a contingent fee retainer agreement with PGA, in which he agreed to pay PGA 40% of any settlement, verdict, or recovery in the case, plus PGA's reimbursable out-of-pocket expenses. Mrs. Bargar entered into a similar agreement on November 3, 2003.

Mr. Gately was a direct employee of PGA at the time the retainer agreements were executed.3 He testified that he was advised that, as a direct employee, he would receive 25% of the fee of any case he brought into the firm. A “general case intake sheet” prepared for the new case file provided for a 25% split fee arrangement between PGA and Mr. Gately.4

In December 2003, Mr. Gately, with the assistance of Mr. Summers, drafted a complaint against Midatlantic, Dr. Midei, Dr. Sell, and other defendants, alleging, inter alia, medical malpractice, fraud, battery, and failure to obtain Mr. Bargar's informed consent for the surgery (the “Bargar case”). The complaint initially was filed with the Health Claims Arbitration Office, and on January 6, 2004, the case was removed to the circuit court. Although Mr. Gately believed that Mr. Summers would handle the medical malpractice aspects of the Bargar case, Mr. Summers withdrew from the case with Mr. Angelos' permission soon after the complaint was filed. From February 2004 through April 2005, Mr. Gately, despite numerous requests to Mr. Angelos for assistance with the medical malpractice matters, was the only attorney handling the Bargar case. He handled “voluminous and very involved” preliminary motions, conducted depositions, and met with the Bargars “constantly.”

In April 2005, Mr. Gately was advised that Mr. Angelos had authorized him to engage Mr. Brault's services to handle the medical malpractice aspects of the litigation. There was no discussion about Mr. Brault's fee until after the jury verdict. Mr. Gately recommended to Mr. Angelos that Mr. Brault receive a 25% to 30% fee, but Mr. Angelos refused. Following Mr. Gately's discharge from PGA, however, Mr. Smouse advised that Mr. Angelos had agreed that Mr. Brault was entitled to 25% of the Barger fee.5

On December 16, 2005, after more than three weeks of trial, the jury returned a verdict in favor of the Bargars, awarding $2,253,250 in compensatory damages against Midatlantic, Dr. Midei, and Dr. Sell, based on a failure to obtain Mr. Bargar's informed consent, battery, and fraud. The jury also awarded the Bargars $2,750,000 in punitive damages against Midatlantic based on fraud. The jury found no liability for medical malpractice. PGA agreed that the verdict was the product of the “phenomenal job” by Mr. Gately and Mr. Brault.

The Midatlantic defendants appealed the judgment to this Court. The issues were briefed in 2006 with the assistance of Mr. Howell, who was retained to assist Mr. Gately with the appellate proceedings, and who was compensated by PGA for his services in that regard. On March 7, 2007, the case was argued in this Court. On March 17, 2008, this Court vacated the judgment and remanded the case for a new trial based on evidentiary grounds. Between oral argument and the filing of this Court's opinion, no work was done on the Bargar case. On April 10, 2008, Mr. Gately and Mr. Brault filed a Motion for Reconsideration in this Court, which was denied.

At some point prior to this Court's decision, the relationship between Mr. Gately and PGA had “significantly deteriorated,” and Mr. Gately was informed that PGA would terminate its association with him, effective April 30, 2008. In the interim, there was discussion regarding who would notify the Bargars that Mr. Gately no longer would be employed by PGA. According to Mr. Gately, on April 15, 2008, after PGA failed to make arrangements for handling the Bargar case and failed to advise the Bargars of their dissociation with Mr. Gately, Mr. Gately mailed the following letter to the Bargars:

Please be advised that Peter G. Angelos on behalf of the law offices of Peter G. Angelos decided to sever his relationship with William F. Gately and Howell & Gately. As a result, Mr. Gately will no longer be in a position to work on the case on behalf of the law offices of Peter G. Angelos.

As the clients involved, you have the right to determine your future representation. You may continue to be represented by the law offices of Peter G. Angelos without the involvement of Mr. Gately. On the other hand, you may discharge the...

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