Clerk of Superior Court of Guilford County v. Guilford Builders Supply Co., Inc.

• Decision Date: 20 October 1987
• Docket Number: No. 8718DC261,8718DC261
• Citation: 87 N.C.App. 386,361 S.E.2d 115
• Parties: . GUILFORD BUILDERS SUPPLY CO., INC., and Benjamin D. Haines. Court of Appeals of North Carolina
• Court: North Carolina Court of Appeals

Page 115

361 S.E.2d 115

87 N.C.App. 386

CLERK OF SUPERIOR COURT OF GUILFORD COUNTY v. GUILFORD BUILDERS SUPPLY CO., INC., and Benjamin D. Haines.

No. 8718DC261.

Court of Appeals of North Carolina.

Oct. 20, 1987.

Tuggle Duggins Meschan & Elrod, P.A. by Thomas S. Thornton, Jr., Joseph F. Brotherton, and Robert A. Ford, Greensboro, for defendant-appellant.

Benjamin D. Haines, Greensboro, pro se.

MARTIN, Judge.

Summary judgment is appropriate only in those cases where the materials before the court show that there is no genuine issue as to any material fact and that a party is entitled to judgment as a matter of law. G.S. 1A-1, Rule 56(c). An issue of fact is material if its resolution "would affect the result of the action." City of Thomasville v. Lease-Afex, Inc., 300 N.C. 651, 654, 268 S.E.2d 190, 193 (1980), quoting Koontz v. City of Winston-Salem, 280 N.C. 513, 518, 186 S.E.2d 897, 901 (1972). Although Haines and Guilford both claim to be entitled to summary judgment in the present case, their contentions clearly illustrate the existence of a genuine issue of fact. Guilford contends that Haines is not entitled to recover a contingent fee for collection of the Hayes account because he was discharged as Guilford's attorney before any part of the account was actually collected. According to Guilford's forecast of evidence, Haines was advised in December 1978 that Guilford had employed new counsel and that his services were no longer required. On the other hand, Haines testified at his deposition that he had never been discharged as Guilford's counsel in connection with the Hayes collection. He contends that, pursuant to the contingent fee agreement, he is entitled to one-third of the amount which Guilford collected from Hayes. In our view, the disputed question of whether Guilford discharged Haines as its attorney before collecting any part of the Hayes account is material to the resolution of this case and precludes disposition of the case by summary judgment.

The use of contingent fee contracts for compensation of attorneys has been expressly approved in North Carolina, High Point Casket Co. v. Wheeler, 182 N.C. 459, 109 S.E. 378, 19 A.L.R. 391 (1921), except when such a fee contract would be in direct contravention of the public policy of this State. Thompson v. Thompson, 70 N.C.App. 147, 319 S.E.2d 315 (1984), rev'd on other grounds and remanded, 313 N.C. 313, 328 S.E.2d 288 (1985) (domestic action). In High Point Casket Co., supra, the Court held that a contingent fee contract amounted to, "at least, an equitable assignment of the judgment pro tanto," Id. at 462, 109 S.E. at 380, 19 A.L.R. at 393-94, but the attorney's equitable interest has been held not to attach until the case is "prosecuted to a favorable judgment or settled by the contracting attorney." Covington v. Rhodes, 38 N.C.App. 61, 65, 247 S.E.2d 305, 308 (1978), disc. rev. denied, 296 N.C. 410, 251 S.E.2d 468 (1979) (emphasis original), quoting Potts v. Mitchell, 410 F.Supp. 1278, 1282 (W.D.N.C.1976). In the present case, however, Haines' entitlement to an attorney's fee was not contingent upon obtaining a judgment in favor of Guilford. Haines was employed to effect collection of Guilford's past due accounts receivable. "[T]he primary objective of a suit on a money demand is the collection of the debt. The obtaining of judgment is merely a necessary step to that end." Harrington v. Buchanan, 222 N.C. 698, 700, 24 S.E.2d 534, 536 (1943). The contingent fee contract provided for compensation only in the event of collection; neither party contends otherwise. Thus, Haines is not entitled to enforce the contract merely because he obtained a judgment on behalf of Guilford; he could acquire no equitable rights thereunder until collection actually occurred.

In Covington v. Rhodes, supra, a panel of this Court adopted the modern rule that an attorney employed pursuant to a contingent fee contract who is discharged before completion of the matter for which he was employed can recover only the reasonable value of his services as of the date of discharge, regardless of whether the discharge is with or without cause. Id. The Court explained that the special relationship of trust and confidence which must exist between attorney and client demands that the client must be able to terminate the relationship at will, with or without cause. "Such a discharge does not constitute a breach of contract for the reason that it is a basic term of the contract, implied by law into it by reason of the special relationship between the contracting parties, that the client may terminate the contract at will." Id. 38 N.C.App. at 65, 247 S.E.2d at 308, quoting Fracasse v. Brent, 6 Cal 3d 784, 791, 100 Cal.Rptr. 385, 389, 494 P.2d 9, 13 (1972). See also O'Brien v. Plumides, 79 N.C.App. 159, 339 S.E.2d 54, cert. denied, 318 N.C. 409, 348 S.E.2d 805 (1986). The court noted as well that a client's discharge of his attorney "on the courthouse steps" after completion of all but a minor part of the work required might justify a finding that the reasonable value of the attorney's services was equal to the entire fee to which he would have been entitled under the contract. Covington, supra, 38 N.C.App. at 66, 247 S.E.2d at 309. Under the foregoing rules, if Haines was, in fact, discharged after obtaining a judgment for Guilford, but prior to its satisfaction, he would be entitled to recover, upon Guilford's subsequent collection of the debt evidenced by the judgment, the reasonable value of the services which he rendered in Guilford's behalf.

The outcome is different, however, if Haines was not actually discharged by Guilford. If he was not so discharged, then the attorney-client relationship continued to exist up to and including the time during which Hayes made payments in satisfaction of the judgment against him. This being the case, and because Hayes was making payments to satisfy a judgment obtained by Haines, the contingency would have occurred during the existence of the attorney-client relationship and Haines' equitable rights under the contingent fee contract would attach. High Point Casket Co., supra; Covington, supra. Accordingly, Haines would be entitled to recover his full fee under the contingent fee contract. A determination of whether or not Haines was discharged, then, is a material issue of fact in determining the amount to which Haines is entitled by reason of his representation of Guilford in connection with the Hayes account.

We reject Guilford's argument that, because he completed his...