Cox v. McDonough

Decision Date12 May 2021
Docket Number19-3317
PartiesHugh D. Cox, Jr., Appellant, v. Denis McDonough, Secretary of Veterans Affairs, Appellee.
CourtUnited States Court of Appeals For Veterans Claims

Argued March 16, 2021

On Appeal from the Board of Veterans' Appeals

Kenneth M. Carpenter, of Topeka, Kansas, for appellant.

Omar Yousaf, with whom William A. Hudson, Jr., Principal Deputy General Counsel; Mary Ann Flynn, Chief Counsel; and Sarah W Fusina, Deputy Chief Counsel, all of Washington, D.C., were on the brief for appellee.

Before ALLEN, TOTH, and FALVEY, Judges.

ALLEN Judge:

This case is about attorney fees. But it's also a cautionary tale about the consequences of one's choices. In its May 7, 2019, decision on appeal, the Board of Veterans' Appeals denied appellant-attorney Hugh D. Cox any fee in connection with his representation of his client, veteran Leroy Brinkley. Why such an apparently harsh result? The answer: Mr. Cox's choices. Appellant first chose to enter into a contract with the veteran that eliminated appellant's ability to obtain a fee in quantum meruit if the veteran discharged him for "good and adequate cause." And second, in representing the veteran appellant chose to act in a way that led the veteran to discharge him. In the decision before us, the Board determined that the veteran had discharged appellant for "good and adequate cause." And because the fee agreement appellant and the veteran entered into precluded the recovery of fees in quantum meruit in that circumstance the Board concluded that no fee was due to appellant.

Appellant raises a host of arguments, but he doesn't challenge the Board's central conclusion that the veteran had "good and adequate cause" to terminate him. Nor does he contest the validity of the agreement barring him from recovering fees in quantum meruit. Instead, he essentially contends that the Board was powerless to enforce the terms of the agreement he voluntarily entered into with his veteran-client. But, as we will explain, the Board acted well within its authority, and did not otherwise err, when it relied on the contractual phrase "good and adequate cause" to deny appellant any fee. In other words, the Board was empowered to hold appellant accountable for the choices he made in representing the veteran. Therefore, and because none of appellant's contentions have merit no matter how he frames them, we will affirm the Board decision before us.

I. FACTS AND PROCEDURAL HISTORY

In August 1996, the veteran retained appellant to represent him in an appeal from an April 1996 Board decision that denied reopening of a claim seeking service connection for a stomach disorder.[1] When the veteran retained appellant, they entered into a fee agreement, [2] the first of three such agreements into which they would enter over the next several years. Specifically, the veteran and appellant entered in a second fee agreement in April 2000, and a third in April 2005.[3] For present purposes, all three agreements shared two important features. First, all agreements provided for direct payment by VA to appellant of 20% of any past-due benefits recovered.[4]Second, all agreements addressed payment of fees for the work appellant did before termination, if the veteran should discharge appellant. Specifically, each agreement provided that "[i]f the Client discharges Attorney without good and adequate cause after the Attorney has fully performed, substantially performed, or contributed in any way to the results finally obtained by the Client, the Client shall be liable for payment of the Attorney's fees and expenses [in] quantum meruit."[5]

From 1996 to 2007, the veteran's claims moved up to the Court, down to the Agency, up to the Court again, and back down to the Agency again. Appellant represented the veteran through much of that litigation. In April 1998, while the veteran's appeal remained pending before the Court, appellant submitted a medical opinion in support of the veteran's claims.[6] In a May 2000 memorandum decision, this Court vacated the Board's denial of the veteran's request to reopen his claim for service connection for "psychophysiological gastrointestinal reaction" and remanded the case.[7] In February 2001, the Board likewise remanded the veteran's claim for compliance with the Veterans Claims Assistance Act of 2000 and for readjudication of the request to reopen.[8] In an April 2003 Supplemental Statement of the Case, VA declined to reopen the veteran's claim.[9] When the claim returned to the Board, the Board denied it in a November 2004 decision.[10] In March 2005, on the veteran's behalf, appellant appealed to this Court.[11]

Apparently, while that appeal was pending at this Court, the veteran decided to change representation. In August 2005, the veteran appointed Disabled American Veterans as his representative.[12]

Eventually, in a March 2007 memorandum decision, this Court remanded the matter yet again.[13] And in December 2007 the Board, in turn, remanded the veteran's claims.[14]

As of April 2008, appellant still appeared to be under the impression that he was the veteran's representative.[15] That month, he sent a letter to VA notifying the Agency that the veteran was scheduled for a hearing before a decision review officer and that the veteran would not attend the hearing because he was "unable to travel this far without medical difficulties."[16]

On November 29, 2009, the veteran informed appellant that he was terminating their attorney-client relationship effective immediately, because appellant "rarely (if ever) return[ed] [the veteran's] phone calls, and [appellant] . . . decline[d] [the veteran's] request for an in person hearing . . ., after which [the veteran] received an unfavorable decision."[17] Additionally, the veteran wrote that he "often receive[d] VA claim papers from [appellant] to complete, often without [appellant's] assistance." [18] In February 2010, appellant withdrew as the veteran's representative.[19] The veteran informed VA that, effective November 2009, appellant no longer served as his representative.[20] When, in April 2010, the Board sought to clarify the veteran's representation, [21] the veteran reiterated the complaints from his November 2009 letter to appellant.[22] In November 2010, the veteran executed a VA Form 21-22, appointing the American Legion as his representative. [23] The American Legion represented the veteran through the remainder of his proceedings with VA.[24]

After two more remand orders from the Board, one in 2011[25] and the other in 2012, [26] in July 2013 VA granted the veteran entitlement to "[s]ervice connection for depressive disorder, NOS (claimed as depression with his[tory] of gastrointestinal reaction) . . . with an evaluation of 50[%] effective February 16, 1993," and entitlement to a total disability rating based on individual unemployability (TDIU) effective October 17, 2001.[27] The RO based its findings on a November 14, 2012, examination.[28]

Our narrative now moves from the veteran's substantive claims to the ancillary issue of attorney fees related to VA's resolution of those claims. In July 2013, VA determined that a valid fee agreement between the veteran and appellant had existed and found that appellant was "eligible for a direct payment of fees by VA of $58, 586.30" (i.e., 20% of the award of benefits past due to the veteran).[29] In August 2013, the veteran disagreed with the RO's fee decision, [30] on the basis of appellant's poor and neglectful conduct as his attorney, which the veteran detailed, and the veteran asked that VA bar appellant from receiving fees for deficient work.[31] In a December 2013 Statement of the Case, VA continued the decision that the fee agreement was valid and that appellant was entitled to $58, 586.30.[32] That same month, the veteran appealed to the Board, reiterating that appellant did not adequately represent him, and in March 2015, the Board provided him a hearing, at which the veteran and his son repeated the bases for discharging appellant.[33] In a July 2015 decision, the Board concluded that the requirements for payment of attorney fees in the amount of $58, 568.30 had been met and that the fee was reasonable.[34] The veteran appealed to this Court, which, in a December 2017 memorandum decision, vacated the Board's July 2015 decision for failure to discuss the agreement's "good and adequate cause" provision and remanded the matter to the Board for readjudication.[35]

In the May 2019 decision on appeal, the Board reversed course and denied appellant any fees; it found that pursuant to the contract terms appellant was not entitled to the recovery of fees under quantum meruit because the veteran had discharged appellant for good and adequate cause.[36]The Board found that (1) all three fee agreements were valid;[37] (2) appellant was eligible for a fee related to the grant of service connection for depressive disorder, NOS;[38] and (3) appellant was not eligible for a fee related to the award of TDIU because there was no final Board decision on that issue.[39] Under the heading "Reasonableness," the Board walked through the regulatory presumption of reasonableness, which provides that fees limited to 20% of back benefits are reasonable; the Federal Circuit's holding in Scates v. Principi [40] including that the presumption does not apply when an attorney is discharged; the Scates reasonableness factors; and the regulatory reasonableness factors.[41] The Board also noted this Court's remand instructions in the December 2016 memorandum decision.[42] And, after analyzing appellant's conduct in light of VA regulations and appellant's State bar rules providing the standard of conduct for attorneys, [43] the Board concluded as a factual matter that the...

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