Fitzgibbon v. Carey

Decision Date07 December 1984
Citation688 P.2d 1367,70 Or.App. 127
PartiesEdward L. FITZGIBBON and James W. Morrell, Respondents, v. Henry A. CAREY, P.C., Appellant. A8101-00376; CA A28010.
CourtOregon Court of Appeals

Leslie M. Roberts, Portland, argued the cause for appellant. With her on the briefs was Kell, Alterman & Runstein, Portland.

Barnes H. Ellis, Portland, argued the cause for respondents. With him on the brief were Randolph C. Foster and John M. Volkman, Portland.

Before BUTTLER, P.J., and WARREN and ROSSMAN, JJ.

ROSSMAN, Judge.

This dispute is between lawyers over the division of an attorney fees award. Plaintiffs, a partnership, and defendant, a professional corporation, associated to represent the plaintiff in a class action and other related cases. The class action was successfully prosecuted and generated $869,000 in attorney fees. 1 Defendant refused to divide the fee equally with plaintiffs on the ground that they failed to do half of the work the cases required and that an equal division of the fee would violate DR 2-107. Plaintiffs seek to compel an equal division by this action for an accounting, alleging that they associated with defendant as joint venturers. Defendant denies the allegation of joint venture and, in addition, counterclaims for contract damages on the theory that plaintiffs failed to do half of the work as agreed. The trial court, in a well-considered opinion, concluded that the legal relationship between the parties was a joint venture and accordingly ordered an equal division of the fee. Defendant appeals. We affirm.

As an initial matter, the parties disagree over this court's scope of review. What elements are necessary and sufficient to constitute a joint venture is a question of law. Hayes v. Killinger, 235 Or. 465, 470, 385 P.2d 747 (1963). Whether the evidence shows that a joint venture existed between the parties is a question of fact, Pac. Gen. Contrs. v. Slate Const. Co., 196 Or. 608, 623, 251 P.2d 454 (1952), unless the relevant facts are not in dispute. Preston v. State Ind. Accident Com., 174 Or. 553, 567, 149 P.2d 957 (1944). Our review of the trial court's findings of fact in an action for an accounting between joint venturers is de novo. ORS 19.125(3).

There is no serious disagreement between the parties over what legally constitutes a joint venture. It is essentially a partnership that is formed for the purpose of pursuing a single business transaction and therefore, so far as it is applicable, the law of partnership governs joint ventures. Stone-Fox, Inc. v. Vandehey Development Co., 290 Or. 779, 783, 626 P.2d 1365 (1981); Hayes v. Killinger, supra, 235 Or. at 470-71, 385 P.2d 747; Preston v. State Ind. Accident Com., supra, 174 Or. at 561, 149 P.2d 957. Oregon has adopted the Uniform Partnership Act, ORS Chapter 68, where a "partnership" is defined as " * * * an association of two or more persons to carry on as co-owners a business for profit." ORS 68.110(1). "Business" includes pursuing a profession. ORS 68.020(2).

Whether express or implied, a joint venture agreement is a contract. As with other contracts, the intention of the parties is controlling. In this case, although there is no express contract between the parties, there is direct evidence of the parties' intent. Defendant wrote to plaintiffs on April 22, 1974:

"Dear Jim and Ed:

"I am sending you a copy of the notice of class action which we are today forwarding to Benj. Franklin Savings & Loan Assn.

"We have been working with Gerson Goldsmith's office on the bank cases on the basis of a 50-50 division of work and any fees which may be realized down the road. I suggest that we have a similar arrangement, that is, 50 per cent for your 'firm' and 50 per cent for our firm.

"I'll be glad to carry the laboring oar on the class action part. I'd appreciate it if you could prepare a draft of the complaint. I am enclosing a copy of a complaint which we recently filed for Bill Babcock against the Citizens Bank in Eugene. That complaint should readily adapt to the second cause of action.

"Since the classes are different, we might want to consider filing two separate actions.

"/S/ Henry A. Carey"

As far as it goes, the parties agree that this letter expresses the terms of their agreement. It reveals that the parties did associate to carry on a business, as that term is defined above, for profit. Whether they did so as joint venturers, or on some other basis, is also a matter of intent, Stone-Fox, Inc. v. Vandehey Development Co., supra, 290 Or. at 783, 626 P.2d 1365, citing Hayes v. Killinger, supra, 235 Or. at 470, 385 P.2d 747, and may be demonstrated by showing joint rights of control, joint liability for losses and a right to share the profits.

Defendant relies on Willis v. Crawford, 38 Or. 522, 63 [70 Or.App. 131] P. 985, 64 P. 866 (1901), for the proposition that the mere fact that attorneys associate on a fee for services basis does not make them joint venturers. Defendant is partly correct. Willis held that sharing fees earned on certain matters of joint representation, standing alone, is not sufficient to prove a joint venture; but as the court also observed: "It is elementary, however, that, when the parties have so intended, a partnership may be formed for a single transaction." 38 Or. at 529, 63 P. 985.

On the question of intent, a portion of defendant's testimony at trial is particularly revealing:

"Q. What was your understanding, when you started this project, as to who would make decisions of a strategic nature in the lawsuit?

"A. I don't recall any discussion.

"Q. What was your expectation?

"A. That it would be a shared thing, I guess. Without knowing what kind of decisions you are referring to, no lawyer can anticipate what you are asking for. It may be settlement, about costs.

"Q. Was it generally understood that anything of significance would be mutually discussed and agreed upon before it was done?

"A. I don't think that there was anything that formal. I don't want to testify about something I don't know.

"Q. Was that your expectation?

"A. I don't know what my expectation was at that time. The expectation, I guess I do know. It was that the relationship worked out very much the same way it had with Gerson Goldsmith, his office, Brad Littlefield.

"Q. Who makes decisions in the relationship you have with him?

"A. We made them together and sometimes had some fur flying in reaching a decision on a particular matter, but at least we planned them out and it was a joint thing.

"Q. And that was your expectation in this transaction?

"A. When I'm dealing with competent lawyers it always is, yes."

Defendant testified further:

"Q. Do you recall the first discussions and what transpired concerning the association with Mr. Fitzgibbon and Mr. Morrell in representing Derenco?

"A. I think this letter summarizes it. Fifty percent of the work. I compared it to the arrangement that I had with Gerson Goldsmith and Brad Littlefield. Ed was thoroughly familiar with that arrangement. That three-hundred-and-sixty-day-case which went to the United States Supreme Court in the banking field was a fairly prominent case and I had discussed that in some detail and Ed Fitzgibbon had been aware of it on kind of a step-by-step basis. So he knew of our working relationship and the way I was working with Gerson Goldsmith and Brad Littlefield and that was the same arrangement I was discussing here.

"I don't recall any specific discussion of costs one way or another, except that they would be shared. I assumed they were going to be shared."

This testimony reveals that defendant intended and expected there to be shared decision-making and shared costs; the letter of April 22 reveals that there was to be shared work and shared profits. 2 Although defendant complains that those expectations were not fully realized, it is the intent of the parties at the time the agreement was entered into that controls their legal relationship. Burnett v. Lemon et ux., 185 Or. 54, 64, 199 P.2d 910 (1949); Oshatz v. Goltz, 55 Or.App. 173, 176, 637 P.2d 628 (1981). The trial court did not err in finding a joint venture between the parties.

Without an agreement to the contrary, joint venturers share profits equally. Dean Vincent, Inc. v. Russell's Realty, Inc., 268 Or. 456, 465, 521 P.2d 334 (1974); see also Carson Admx. v. McMahan Admr., 215 Or. 38, 332 P.2d 84 (1958). 3 Defendant would have us read his letter of April 22 as a specific agreement to the contrary; that is, that each party would receive only that part of the fee proportional to the work each contributed. We think it more likely that neither party gave any thought to the possibility that one would do a disproportionate amount of work, let alone that either intended anything regarding its resolution if that problem arose. Defendant and at least one of the plaintiffs had been close friends, had jointly represented at least one other client and had each had occasion to represent the other in legal proceedings. We agree with the trial court, that

"[t]he intention of the original agreement was that the plaintiffs and defendant would each generally equally share the work and responsibility on the cases and that each would equally share attorney fees. Each of the parties embarked on their association in good faith."

Accordingly, we reject defendant's contention that there was a specific agreement to divide the fee in direct proportion to their respective labors.

Having thus determined that plaintiffs and defendant were engaged in a joint venture without a specific agreement to divide profits in a manner other than equally, plaintiffs are entitled to an equal division unless there are "exceptional circumstances." Dean Vincent, Inc. v. Russell's Realty, Inc., supra, 268 Or. at 468, 521 P.2d 334; Rayson v. Rush, 258 Or. 315, 329, 483 P.2d 73 (1971); McIver v. Norman, 187 Or. 516,...

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