Consolver v. Hotze, 110,483

• Decision Date: 09 June 2017
• Docket Number: No. 110,483,110,483
• Citation: 395 P.3d 405
• Parties: Mahnaz CONSOLVER, Appellant, v. Chris HOTZE, Defendant, and (Bradley A. Pistotnik and the Affiliated Attorneys of Pistotnik Law Offices, P.A.), Appellees.
• Court: Kansas Supreme Court

395 P.3d 405

Mahnaz CONSOLVER, Appellant,

v.Chris HOTZE, Defendant,and(Bradley A. Pistotnik and the Affiliated Attorneys of Pistotnik Law Offices, P.A.), Appellees.

No. 110,483

Supreme Court of Kansas.

Opinion filed June 9, 2017

Stephen L. Brave, of Brave Law Firm, LLC, of Wichita, argued the cause and was on the briefs for appellant.

Jonathan Sternberg, of Jonathan Sternberg, Attorney, P.C., of Kansas City, Missouri, argued the cause, and Jennifer M. Hill, of McDonald, Tinker, Skaer, Quinn & Herrington, P.A., of Wichita, was with him on the briefs for appellees.

The opinion of the court was delivered by Stegall, J.:

This case concerns a fee dispute between two attorneys—Bradley A. Pistotnik and Stephen L. Brave—each of whom represented Mahnaz Consolver at different stages of her personal injury lawsuit. Pistotnik filed the case after Consolver engaged him through a contingency fee agreement. Although Consolver and Pistotnik's relationship was strained throughout the representation, it endured through discovery to the mediation stage of the case, during which Pistotnik and defense counsel agreed that defendant would offer $300,000 to settle the case if Consolver could show that she needed an additional surgery to repair her knee. Before defense counsel could make a formal offer, however, Consolver terminated Pistotnik without cause.

Immediately thereafter, Consolver hired Brave, who later settled the case for $360,000. Pistotnik filed an attorney lien on the judgment, and following an evidentiary hearing, the district court found that Pistotnik was entitled to a fee in the amount of $86,944.27 and expenses in the amount of $10,156.81. Consolver appealed, and the Court of Appeals reversed the district court. We granted review.

FACTUAL AND PROCEDURAL BACKGROUND

In April 2011, Consolver hired Bradley A. Pistotnik of Affiliated Attorneys of Pistotnik Law Offices, P.A., to represent her in a personal injury action against Chris Hotze for injuries arising out of a car accident. Prior to filing the case, Consolver signed a standard contingency fee agreement with Pistotnik providing that Pistotnik would advance all expenses and labor in the pursuit of Consolver's claims and that Consolver would owe nothing in the event no recovery was obtained. If there was a recovery, the fee agreement required Pistotnik to be paid one-third of the amount after reimbursing expenses or, if the recovery occurred after the pretrial conference, then 40 percent of the amount after expenses. The contract was silent regarding what would occur if the lawyer-client relationship terminated before Consolver's claim was resolved.

Through Pistotnik, Consolver filed a petition in Sedgwick County District Court against Hotze, alleging that in February 2011, a vehicle being driven by Hotze collided with another vehicle, which resulted in injuries to Consolver. Hotze denied many of the allegations and requested a jury trial. Consolver originally claimed damages in the amount of $1,130,000 but later increased her claim to $1,405,961.40. A trial date was eventually set for August 7, 2012.

Shortly after the representation began, Consolver and Pistotnik's relationship began to deteriorate. The record before us details numerous disputes between the two, but we need not recount them here. Highly summarized, the record indicates that Consolver believed Pistotnik was too busy to focus on her case and did not pursue it with sufficient zeal, while Pistotnik believed that he pursued Consolver's claims with prudence and skill and gave her case exactly the level of attention it required.

In May 2012, the parties to the lawsuit spent a day in mediation attempting to settle the case. Pistotnik claimed that mediation "[d]iscussions concluded with the understanding that an offer for the sum of three hundred thousand dollars ($300,000.00) would be made, contingent upon proof that [Consolver] would require additional surgery[,] and [Hotze] was requiring additional records and bills from health care providers for recent treatment." In support of this claim, Pistotnik provided an affidavit from Hotze's attorney Craig Kennedy detailing the events surrounding mediation. Kennedy averred that on the day of mediation, he and Pistotnik had agreed that a $300,000 settlement offer would be made to Consolver if she provided proof that she was to undergo a second knee surgery. Kennedy and Pistotnik spoke on several occasions after mediation about getting the necessary medical records.

The affidavit further stated that Kennedy received an email from Pistotnik on June 20, 2012, stating that Consolver had been scheduled for surgery. One week later on June 27, 2012, Kennedy told Pistotnik in person that he was obtaining authorization for the $300,000 settlement and would be sending out a formal offer letter in the next several days. Kennedy called Pistotnik the next day—June 28, 2012—to inform him that he expected to receive authority to offer a $300,000 settlement. On the same day he called Pistotnik, Kennedy received an email from Pistotnik informing him that Consolver would no longer accept the $300,000 settlement offer. An email from Pistotnik to Kennedy indicates that Consolver rejected the $300,000 because her doctor had told her that she would need surgery next month and a knee replacement in the future. Pistotnik said in the email that he thought they would "need to get into the 400k range to get settled."

The day after receiving the email, Kennedy received official authority to submit the $300,000 offer. Because Kennedy was unable to contact Pistotnik that day, he sent Pistotnik an email on June 30, 2012, offering $300,000 to settle the case. On July 2, 2012, Kennedy confirmed the offer through a letter sent to Pistotnik. Finally, the affidavit stated that Hotze and his insurance carrier had made no offers in excess of $300,000 and that all settlement negotiations had been with Pistotnik Law Offices. Meanwhile, however, Consolver had terminated Pistotnik's representation on June 28.

Consolver disputed this version of facts at the hearing below. She claimed the last offer she received during mediation was $225,000, which she rejected. According to Consolver, Kennedy suggested he might be able to increase the offer to $300,000 if Consolver provided proof that she was going to undergo another surgery. But Consolver alleged that Pistotnik did not try to obtain proof of another surgery until June 19, 2012. Consolver claimed that Kennedy only communicated the $300,000 offer to Pistotnik after the termination occurred. Consolver contended that Kennedy knew Pistotnik had been terminated when the offer was made and that Kennedy knew Consolver had indicated on June 28 that she was not going to accept it. However, despite not having proof that Consolver would need an additional surgery, Kennedy still offered $300,000 to Pistotnik on July 2.

On the day of the termination—June 28, 2012—the pretrial conference was fast approaching. Consolver admitted she was aware Pistotnik's contingency fee rose to 40 percent when the case reached the pretrial stage. Although she claimed this was not the reason she terminated Pistotnik, she admitted she did not want to pay Pistotnik the larger fee.

On July 2, 2012, Pistotnik and his firm filed a notice of attorney's lien "pursuant to K.S.A. 7-108 on the tendered settlement offer of $300,000.00 pursuant to written contract providing that expenses would be reimbursed and that attorney fees would be one-third." According to Pistotnik, "[t]he lien amount [was] $10,156.81 for litigation expenses and costs plus attorney's fees in the amount of $96,614.39 for a total of $106,771.20." Consolver then filed an application with the district court to determine the amount due, if any, on the attorney lien pursuant to K.S.A. 7-109. Consolver argued that Pistotnik was not entitled to the contingency fee recovery because the case had not been settled and Pistotnik was only entitled to the reasonable value of services actually provided.

Pistotnik argued in response that Consolver deliberately changed lawyers after mediation and immediately before a fee escalation to obtain a lower fee with a new attorney. He agreed that his motion was not yet ripe for determination but argued that if Consolver eventually recovered, Pistotnik's contingency in the contract had been met. Pistotnik further argued that Kansas law does not require a quantum meruit evaluation if there is a contingency fee contract. Pistotnik detailed the expenses he had incurred during the year and 2 months he had represented Consolver, which included producing a file of over 5,000 pages, creating and sending a settlement brochure to defendant's insurance carrier, taking numerous depositions, hiring three expert witnesses, obtaining reports from all expert witnesses, and frequently consulting with Consolver.

While the amount of Pistotnik's attorney lien remained unresolved, Consolver's prosecution of her tort claims continued with new representation. The same day Consolver terminated Pistotnik, she hired Stephen Brave. Pistotnik withdrew from the case, and the district court reopened discovery and set new deadlines. Brave conducted additional discovery, including obtaining different expert reports. Brave also obtained the 911 call from the accident and raised a new argument that arbitration was binding on the insurance company. The district court eventually ruled against Consolver on this issue, and Kennedy later testified that although the issue took a long time to resolve, it did not change the value of the case.

Brave eventually settled the case against Hotze for $360,000. Kennedy testified that the increase from $300,000 to $360,000 was due to the fact that Consolver became employed, increasing her potential damages for loss of income. However, Brave and Pistotnik were unable to resolve the disputed lien. Therefore, with a settlement obtained and funds available to make payment for the expenses of litigation and...