Crockett & Myers v. Napier, Fitzgeralld & Kirby

• Decision Date: 20 July 2006
• Docket Number: No. 2:05-CV-00877-PMP-PAL.,2:05-CV-00877-PMP-PAL.
• Parties: CROCKETT & MYERS, LTD., a Nevada Corporation, and J.R. Crockett, Jr., Esq., an individual, Plaintiffs, v. NAPIER, FITZGERALD & KIRBY, LLP, a New York limited liability law partnership, and Brian P. Fitzgerald, Esq., an individual, Defendants. Napier, Fitzgerald & Kirby, LLP, a New York limited liability law partnership, and Brian P. Fitzgerald, Esq., an individual, Counterclaimants, v. Crockett & Myers, Ltd., a Nevada Corporation, and J.R. Crockett, Jr., Esq., an individual, Counterdefendants.
• Court: U.S. District Court — District of Nevada

Page 1184

440 F.Supp.2d 1184

CROCKETT & MYERS, LTD., a Nevada Corporation, and J.R. Crockett, Jr., Esq., an individual, Plaintiffs, v. NAPIER, FITZGERALD & KIRBY, LLP, a New York limited liability law partnership, and Brian P. Fitzgerald, Esq., an individual, Defendants.

Napier, Fitzgerald & Kirby, LLP, a New York limited liability law partnership, and Brian P. Fitzgerald, Esq., an individual, Counterclaimants, v. Crockett & Myers, Ltd., a Nevada Corporation, and J.R. Crockett, Jr., Esq., an individual, Counterdefendants.

No. 2:05-CV-00877-PMP-PAL.

United States District Court, D. Nevada.

July 20, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Joice B. Nidy, Samuel S. Lionel, Lionel, Sawyer & Collins, Las Vegas, NV, for Plaintiffs/Counterdefendants.

Mark A. Hutchison, Scott A. Flinders, Las Vegas, NV, for Defendants/Counter claimants.

ORDER

PRO, Chief Judge.

Presently before this Court is Plaintiffs'/CounterDefendants' Motion to Dismiss Defendants'/CounterClaimants' Second Amended Counterclaim Pursuant to FRCP 12(b)(6) (Doc. # 46), filed on May 15, 2006. On June 16, 2006, Defendants/CounterClaimaints filed an Opposition to Plaintiffs'/CounterDefendants' Motion to Dismiss Second Amended Counterclaim Pursuant to FRCP 12(b)(6) (Doc. # 51). Plaintiffs/CounterDefendants filed a Reply (Doc. # 52) and a Request for Permission to Exceed Page Limitation for Reply Brief (Doc. # 53) on June 30, 2006.

I. BACKGROUND

On January 15, 2001, Michael Nostro died while undergoing a CT scan-guided needle biopsy in Nevada. On or about June 5, 2001, Michael Nostro's wife, Wende Nostro retained Brian P. Fitzgerald, Esq., to investigate the death of her husband in Nevada and to determine whether a viable medical malpractice claim existed. Mr. Fitzgerald is an attorney licensed to practice law in the State of New York and a member of Napier Fitzgerald & Kirby, L.L.P., a limited liability law partnership engaged in the practice of law in New York.

On or about June 28, 2001, Mr. Fitzgerald contacted Nevada attorney J.R. Crockett, Jr., Esq., to participate in the investigation and evaluation of the Nostro medical malpractice claim. Mr. Crockett is a partner in Crockett & Myers, Ltd., a professional corporation engaged in the practice of law in Nevada.

This action arises from a dispute between Plaintiffs/Counterdefendants Crockett & Myers, Ltd., and J.R. Crockett, Jr., H sq., (collectively "Crockett"), and Defendants/Counterclaimants Napier, Fitzgerald & Kirby, L.L.P., and Brian P. Fitzgerald, Esq., (collectively "Fitzgerald"), regarding the division of contingent attorneys' fees recovered as a result of the Nostro litigation.

Fitzgerald alleges that sometime in June 2001, Crockett and Fitzgerald agreed that Crockett would represent Nostro at a contingency rate of 33 1/3% as opposed to Crockett's usual 40% rate. Additionally, Crockett and Fitzgerald agreed that Fitzgerald would act as co-counsel on the case, and Crockett and Fitzgerald would split equally all attorneys' fees. The Second Amended Counterclaim also asserts Crockett orally agreed to pay Fitzgerald a referral fee of 50% of the recovered fees. (Second Am. Countercl. [Doc. # 36] at ¶ 11.)

On August 13, 2001, Crockett, Fitzgerald, and Nostro signed an Attorney Retainer Agreement drafted by Crockett. (Pls.' Compl., Ex. 1.) Under the Retainer Agreement, the two law firms assumed joint responsibility for handling Nostro's and the estate's medical malpractice claims. Additionally, the Retainer Agreement provided that Nostro would be responsible for all costs the attorneys advanced, with costs deducted after the contingency fee had been calculated. (Id.) The attorneys agreed to split equally advanced costs during the course of the litigation. (Id.) The Retainer Agreement contained the following provision:

All matters of policy, including but not limited to preparation and presentation of this claim, litigation, costs, possible settlement, trial and/or appeal, if the same shall arise, shall be determined jointly by the CLIENT and ATTORNEYS as reasonable as possible within the professional discretion of ATTORNEYS and within the Canons of Ethics.

(Id. (emphasis omitted).) Fitzgerald claims that his firm subsequently provided legal advice and service on the case, including gathering pertinent medical records, and researching various theories of liability. In July 2002, Crockett submitted the Nostro case to the then-existing Nevada Medical Legal Screening Panel, and on January 3, 2003, filed a complaint on behalf of Nostro Nevada State Court.

Prior to June 2003, Nostro called Crockett about Fitzgerald's request that Nostro pay a share of the costs. (Second Am. Countercl. at ¶ 22.) During this call, Crockett advised Nostro "it was their policy not to go after a client for court costs and expenses," and that Nostro could fire Fitzgerald. (Id. at ¶ 23.) Crockett did not involve Fitzgerald in the discussion on costs. (Id. at ¶ 24.) On June 25, 2003, Wende Nostro sent a letter to Fitzgerald advising him that he and his law firm were discharged from any further representation on Nostro's behalf. (Pls.' Compl., Ex. 3.) Over a year later, Crockett negotiated a settlement of the Nostro case, and in accord with the Retainer Agreement, collected one-third of the settlement proceeds as contingent attorneys' fees.

By letter dated October 28, 2004, Crockett informed Fitzgerald of the settlement and further advised Fitzgerald that because Nostro had terminated Fitzgerald's representation before the settlement was reached, Fitzgerald was entitled only to quantum meruit compensation for the time he had worked on the matter. (Pls.' Compl., Ex. 6.) In response, Fitzgerald demanded payment of 50% of the recovered attorneys' fees under the Retainer Agreement, which Crockett has refused to pay.

On May 24, 2005, Crockett filed a Complaint in the Eighth Judicial District Court in and for the County of Clark, State of Nevada, seeking a declaration that Fitzgerald is entitled only to "a quantum meruit recovery for the hours they worked early on in the Nostro case ..." and for a monetary judgment to Fitzgerald consistent with a quantum meruit award. (Notice of Removal [Doc. # 1], Compl.) On July 20, 2005, Fitzgerald removed Crockett's action to this Court (Doc. # 1), and on July 27, 2005, filed an Answer and Counterclaim (Doc. # 3, # 4) alleging counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, declaratory relief, and constructive trust. Crockett moved to dismiss the counterclaims, asserting Fitzgerald had no rights under the Retainer Agreement because Nostro had fired him, and that any alleged oral agreement for referral fees was unenforceable because it violated attorney ethics rules. The Court granted in part and denied in part the motion, ruling that because Nostro terminated the Retainer Agreement, Fitzgerald had no contractual right to enforce the fifty-fifty fee split under that Agreement. The Court permitted Fitzgerald to amend his Counterclaims to include specific allegations supporting the alleged oral referral fee arrangement, and suggested that because Nevada has not addressed the legality of referral fee agreements between attorneys, the Court was inclined to certify certain questions to the Nevada Supreme Court.

Defendants subsequently amended the Counterclaim to include allegations regarding the alleged oral referral fee agreement between himself and Crockett. (Defs.' Am. Answer & Countercl. [Doc. # 19].) In response to Plaintiffs' motion to dismiss the Amended Counterclaims (Doc. # 25), the Court ruled Nevada would enforce the alleged oral agreement between the two attorneys even if it violated Nevada public policy. (Order [Doc. # 35] dated April 20, 2006.) The Court further granted Defendants leave to amend the Counterclaim a second time. (Id.) Defendants filed Defendants' Second Amended Answer and Counterclaim (Doc. # 36), alleging breach of oral contract (count one); breach of the written Retainer Agreement (count two); tortious interference with contractual relations (count three); breach of the implied covenant of good faith and fair dealing (count four); joint venture (count five); unjust enrichment (count six); breach of fiduciary duty (count seven); declaratory relief (count eight); and constructive trust (count nine). Crockett now moves to dismiss counts one through seven and count nine, asserting various defects in each of these causes of action.

II. LEGAL STANDARD

In considering a motion to dismiss, "all well-pleaded allegations of material fact are taken as true and construed in a light most favorable to the non-moving party." Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir.1998) (citation omitted). However, the Court does not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations in the plaintiffs complaint. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir.1994). There is a strong presumption against dismissing an action for failure to state a claim. See Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir.1997) (citation omitted). The issue is not whether Plaintiff ultimately will prevail, but whether he may offer evidence in support of his claims. See id. at 249 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). Consequently, the Court may not grant a motion to dismiss for failure to state a claim "unless it appears beyond doubt that the Plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Hicks v. Small, 69 F.3d 967, 969 (9th Cir.1995).

The liberal rules of notice pleading set forth in the Federal Rules of Civil Procedure do not require a plaintiff to set out in detail the facts supporting his claim. See Yamaguchi...