Elder v. Metropolitan Freight Carriers, Inc.

• Decision Date: 24 June 1976
• Docket Number: No. 75-2424,75-2424
• Citation: 543 F.2d 513
• Parties: Laryssa ELDER, Individually, and as Administratrix of the Goods, Chattels and Credits of Alfred Elder, Deceased, Appellant, v. METROPOLITAN FREIGHT CARRIERS, INC., et al., Appellees. . Submitted Under Third Circuit Rule 12(6)
• Court: U.S. Court of Appeals — Third Circuit

Page 513

543 F.2d 513

Laryssa ELDER, Individually, and as Administratrix of the Goods, Chattels and Credits of Alfred Elder Deceased, Appellant, v. METROPOLITAN FREIGHT CARRIERS, INC., et al., Appellees.

No. 75-2424.

United States Court of Appeals Third Circuit.

Submitted Under Third Circuit Rule 12(6) June 24, 1976.

Decided Sept. 16, 1976.

Lawrence M. Kenney, Schechter, Schechter & Wishod, Smithtown, N. Y., for appellant.

Stevens & Mathias, Newark, N. J., for appellees.

Before ADAMS, HUNTER and WEIS, Circuit Judges.

OPINION OF THE COURT

WEIS, Circuit Judge.

This appeal challenges a district court's authority to enforce its rule regulating contingent fees in tort actions. We hold that its premature order of dismissal in a wrongful death action did not deprive the court of power to enforce compliance with its fee schedule. Nor was it required to accede to a fee higher than allowed by the rule but approved by a state court which had no jurisdiction over the negligence case. Accordingly, we affirm.

On October 3, 1972 a truck owned by defendant Metropolitan Freight Carriers, Inc. crossed the center line of a highway in New Jersey and collided head-on with the station wagon in which Alfred Elder was a passenger. Elder was killed in the collision, leaving as survivors a widow and three minor children.

The Surrogate's Court for Suffolk County, New York, where Elder had been domiciled and where his family continued to reside, issued restricted letters of administration to the widow. Mrs. Elder was authorized to institute a wrongful death action but not to settle the case without the Surrogate's approval. She retained the Smithtown, New York law firm of Schechter, Schechter & Wilshod, the appellant in fact, to prosecute the wrongful death action on a one-third contingent fee basis. That firm engaged Robert C. Minion of Garden City, New York, as trial counsel.

Mr. Minion determined that the suit should be brought in the United States District Court for New Jersey. Under the rules of that court, Kenneth Grossman, a member of the New Jersey bar, was retained to act as "docket" counsel. Later, Robert McKeever was substituted for Mr. Grossman.

After some routine discovery, the case was called for pretrial conference before a United States Magistrate in January, 1975. Through his efforts, the parties agreed upon a settlement of $300,000.00. At the conference they discussed the necessity of approval by the Surrogate's Court and the magistrate suggested that the defendant's insurance carrier might prefer an order of the district court to pay the money. ¹ Defense counsel sent a letter to Mr. Minion, confirming the settlement and concluding:

"I shall await word from you with respect to proceedings before the Surrogate of Suffolk County where I believe plaintiff is domiciled. I believe that his findings will at least have to be incorporated in the Order of Dismissal if a separate hearing is not required. I am checking on this and will advise you."

On March 18, 1975 the district judge signed an order which read:

"It appearing that it has been reported to the court that the above-entitled action has been settled;

"It is, on this 18th day of March, 1975

"ORDERED that this action is hereby dismissed, without costs and without prejudice to the right, upon good cause shown within 60 days, to reopen the action if the settlement is not consummated."

On April 3, 1975 defense counsel wrote to the magistrate stating:

"Because of the nature of the action, a suit for wrongful death, and the existence of children, who suffered a pecuniary loss, the matter presently awaits a determination of the Surrogate of Suffolk County, New York, where the decedent's family resides, the manner of distribution. It was my understanding that when an Order is issued by the Surrogate, it would be reviewed and incorporated in an Order of the United States District Court directing payment and entering a dismissal.

"Since the matter was conferenced with you on several occasions and you are most familiar with it, I am writing to you with a copy to Judge Stern asking that the Court maintain an open file on it until the Order of the Surrogate's Court is issued and may then be reviewed by this Court and incorporated in a final Order."

On May 12, 1975, Mr. McKeever, plaintiff's New Jersey counsel, wrote to the district judge reporting the proceedings before the Surrogate and stated:

"On March 18, 1975, the (district) Court entered an order, upon settlement, dismissing the captioned case without prejudice to the right, upon good cause shown within 60 days, to reopen the action if settlement is not consummated. Since the 60-day period will expire on May 17, next, as a precaution, this is to request that the Court extend the aforesaid time period sufficiently to allow for completion of the proceedings before the New York Surrogate. May I suggest another 30 days which should be ample time for the consummation of all matters regarding the settlement." (emphasis supplied)

On May 14, 1975 the district judge signed an order extending the period for reopening for an additional thirty days.

Two weeks later plaintiff's counsel sent to the defendants' lawyers copies of the Surrogate's order providing for distribution among the widow and children and setting counsel fees substantially in excess of the amount allowable under the New Jersey Rule. ² For some reason not disclosed by the record, defense counsel did not present the Surrogate's order to the district judge until the first week of July. The court scheduled a conference of counsel for July 28, 1975 and, at that time, questioned the authority of the Surrogate to fix counsel fees for a matter pending in New Jersey.

At one point counsel for the plaintiff suggested that, since the time set in the order of March 18, 1975 had expired, the case stood dismissed and the court had no jurisdiction to question the fee. Subsequently, however, the same lawyer said: "Now it is before your Honor on the merits. I would respectfully suggest that it is New York law that controls." The court asked for the defendant's position, and counsel replied:

"I ask this Court to resolve the question of the payment of the amounts of money and their allocation."

The Court:

"I cannot technically do it. I will tell you why. The matter has been dismissed here. I cannot, I think, sua sponte, reopen. If the defendant wants to move to reopen that may be something else."

Later the judge stated:

"I may be wrong. I think if the matter is dismissed, it is dismissed. I am not asserting more jurisdiction than I have. It may be immaterial to you whether I sign the order or not. If so, you are free to walk out of here so far as this litigation is concerned. No farther than that, for I have other thoughts. I'll tell you right now: If you want to brief the question, fine. I'll make a decision on it. That decision will bind you, however, for you will have at that point submitted to the jurisdiction of this court whether this matter whatever the status of this matter is which is utterly unclear. . . . ."

Plaintiff's counsel agreed, later filed a brief, and argued the matter. Before that hearing adjourned, however, the court asked the defense attorney to comment. He responded that he had no position with respect to how the funds should be distributed. The court then suggested that, being a member of the New Jersey bar, defense counsel might be guilty of improper conduct if he paid money to settle a case in a manner which would violate the court's rules.

At a hearing on October 8, 1975, plaintiff's lawyers contested the jurisdiction of the court as well as the question of conflict of laws. By agreement of the parties at the conclusion of the hearing, the funds not under dispute were to be distributed to the parties and the lawyers, leaving for disposition only the question of the disputed counsel fees.

This appeal is before the court ex parte on the briefs filed by plaintiff's counsel. The defendant has disclaimed any interest in the amount of fees to be awarded the lawyers, ³ and Mrs. Elder has declined to file a brief despite proper notification by plaintiff's lawyers of the conflict of interest. ⁴

Appellant contends that the submission of a proposed order to the district court by defense counsel was gratuitous and unnecessary. However, it is clear the parties contemplated that the settlement would be consummated only after approval by both the Surrogate and the district court. The correspondence between counsel and the statement of Mr. Minion to the court on July 28, 1975 permit no other finding.

The problem of whether jurisdiction continued to exist over the case after the ninety days fixed in the dismissal order was created in part by the court's own errors. ⁵ The form order of March 18, 1975, which ostensibly terminated the matter on the court's docket, did not express the intent of the parties. Their understanding was that the district court would enter an order specifying how the settlement funds were to be distributed. The letter sent by defense counsel on May 3, 1975 to the magistrate, with a copy to the district judge, requested that the file be kept open for that purpose and should have alerted the court to the errors in its dismissal order.

When the court extended the time for reopening an additional thirty days, it is understandable that counsel, expecting the procedures to be completed before that expiration date, felt no need to press for a correction of the dismissal order. Apparently because of a busy trial schedule of counsel on both sides or a failure of communication between them as to which of the lawyers would perform the task, no extension of the June 18 deadline was requested.

At the hearing on July 28, 1975, defense counsel specifically requested a ruling from the court on allocation. At that point the court had the power to consider the request as a motion under Fed.R.Civ.P. 60(b) to open the dismissal because of...