Flanders & Medeiros, Inc. v. Bogosian

• Decision Date: 01 August 1995
• Docket Number: No. 95-1023,95-1023
• Citation: 65 F.3d 198
• Parties: FLANDERS & MEDEIROS, INC., Plaintiff, Appellee, v. Elizabeth V. BOGOSIAN, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 198

65 F.3d 198

FLANDERS & MEDEIROS, INC., Plaintiff, Appellee, v. Elizabeth V. BOGOSIAN, Defendant, Appellant.

No. 95-1023.

United States Court of Appeals First Circuit.

Heard Aug. 1, 1995.

Decided Sept. 13, 1995.

Keven A. McKenna, Providence, RI, with whom Bruce Hodge, Harlingen, TX, was on brief, for appellant.

Matthew F. Medeiros and Erik Lund with whom Robert Karmen, Flanders & Medeiros Inc., Providence, RI, Cynthia C. Smith, and Posternak, Blankstein & Lund, Boston, MA, were on brief, for appellee.

Before TORRUELLA, Chief Judge, STAHL, Circuit Judge, and DOMINGUEZ, ^* District Judge.

STAHL, Circuit Judge.

This case arises from the representation of defendant-appellant Elizabeth Bogosian ("Bogosian") by plaintiff-appellee Flanders & Medeiros ("F & M") in hotly contested litigation involving family real-estate partnerships. After Bogosian failed to endorse over to F & M checks made payable to Bogosian by the defendant in the underlying litigation and delivered to F & M as her counsel, F & M sued Bogosian for breach of contract. Bogosian counterclaimed for malpractice and breach of the attorney-client contract. The district court awarded summary judgment to F & M on all claims. We now reverse the award of summary judgment on F & M's breach-of-contract claim, and affirm the district court's ruling on Bogosian's counterclaims.

I.

In November 1989, following the withdrawal of Bogosian's prior counsel from the underlying litigation, F & M, a Providence, Rhode Island, law firm, took over the representation of Bogosian, a citizen of Florida, in the ongoing lawsuits stemming from her involvement in a family real estate empire created by her and her two brothers, James H. Woloohojian and Harry Woloohojian (now deceased). Bogosian had few liquid assets at the time from which to pay her lawyers but stood to receive substantial amounts as a result of her lawsuits. In a letter sent to Bogosian on November 24, 1989 (the "November 24 letter"), and which Bogosian then signed indicating her agreement, F & M explained the terms of its representation. The firm would obtain a $25,000 retainer from Bogosian, to be deposited in an interest-bearing account; it would bill Bogosian each month at its lawyers' hourly rates, with each bill due and payable within ten days after receipt; and interest would accrue (at a local bank's prime rate) on bills outstanding for sixty days or more. The letter further stated:

We recognize that you may be unable to pay our monthly statements in full on an ongoing basis. To the extent that you are unable to pay those bills from other sources, you have agreed to apply your first proceeds out of the E & J receivership, the Woloohojian Realty Associates receivership and/or the federal court litigation, ¹ until all of our outstanding bills, including any accrued interest, are paid in full. Appended to this letter as Exhibit A is an Assignment that we would ask you to execute. That assignment gives us an interest in the proceeds of those court proceedings up to the amount of our bills. It is my understanding that you have reviewed this agreement with Ted Pliakas ² and have found it acceptable.

(emphasis added). The referenced assignment (the "assignment document") included the following language:

1. Assignee has agreed to represent Assignor in said actions at hourly rates set forth in a letter from Assignee to Assignor dated November 24, 1989.

2. Assignor anticipates that she will receive substantial sums in said actions (the "Recoveries"), out of which she expects and agrees to pay the legal fees and out-of-pocket expenses payable to Assignee.

3. To the extent that Assignor owes Assignee any money for out-of-pocket expenses and legal services rendered by Assignee in connection with said actions, Assignor hereby assigns to Assignee, effective as of the day and year first above written, that portion of the Recoveries which is necessary to pay all of Assignee's then unpaid bills. The remainder of the Recoveries shall be payable to Assignor.

4. In the event that there is a recovery in fewer than all of said actions, and Assignee is paid in full, and Assignor later incurs additional legal expense to Assignee which is not paid on a current basis, Assignee shall be paid such additional legal expense out of additional amounts, if any, recovered by Assignor in the remaining actions.

5. Nothing contained herein shall be construed so as to limit Assignee to payment of its legal expenses from amounts recovered by Assignor in said actions.

(emphasis added). Both parties signed the document. F & M filed an appropriate financing statement with the office of the Secretary of State, asserting F & M's rights as secured party to "[a]ll of Debtor's rights to the recoveries received by Debtor arising from" Bogosian's various lawsuits.

F & M represented Bogosian pursuant to the above terms in at least ten different matters between late 1989 and the end of 1992, with the bulk of its time devoted to the valuation litigation. In July 1990, the district court in that case ordered WRC (1) to grant Bogosian a $10 million mortgage on one of WRC's properties as security to guarantee eventual payment of her shares' value once that value had been determined, and (2) to provide Bogosian with "interim distribution" payments of an initial $100,000 plus $10,000 per month, to continue until the entry of a final judgment determining the fair value of her shares. ³

On December 23, 1992, without--so far as the record shows--any solicitation from either Bogosian or F & M, WRC delivered two checks to F & M made payable to Bogosian. ⁴ The checks, one for $900,000 and the other for $100,000, were accompanied by a letter stating the following:

Enclosed please find two (2) Woloohojian Realty Corp. ("WRC") checks totalling $1 Million Dollars payable to Elizabeth V. Bogosian. This sum represents a voluntary principal payment made by WRC on account of Mrs. Bogosian's former shareholder interest. This entire sum shall constitute an immediate credit toward any principal sums which may become due and owing to Mrs. Bogosian in the federal court proceeding on account of WRC's purchase of her shares and/or WRC's liquidation.

WRC, James Woloohojian and the Estate of Harry Woloohojian remain willing to negotiate a global settlement with Mrs. Bogosian which covers all of the substantive areas detailed in the offer of settlement dated September 30, 1992 which I sent to Mr. Prentiss. If Mrs. Bogosian is interested in a global settlement, kindly forward her written counterproposal on or before December 31, 1992. We are prepared to meet immediately thereafter to negotiate a final resolution.

Kindly acknowledge your receipt of this letter and the two checks by signing and returning the enclosed copy of this letter....

When WRC delivered the checks to F & M's offices, Bogosian owed the law firm $999,957 in accrued legal fees, expenses and interest. F & M contacted Bogosian's attorney (Pliakas) ⁵ and asked that Bogosian indorse the two checks over to F & M pursuant to their assignment agreement. Bogosian refused, and that same day faxed to F & M the following handwritten letter:

Please be advised that I do not accept nor do I authorize the acceptance of a check from Woloohojian Realty Corp. or any affiliates as partial payment of any kind for any purpose.

I have been advised, as your firm has represented to Judge Boyle, by Eustace T. Pliakas, Esq., my primary counsel, that a 355 division of the corporation would have no adverse tax consequences for me or WRC and that if his Honor Judge Boyle so decides as to effect that result that it would be very favorable to me.

As you know, WRC has purported that there will be major tax consequences for the liquidation of property in order to pay for my shares which sale Judge Boyle stated in the last hearing would "never happen."

If by some means, at the time of Judge Boyle's final decision, I am forced to take dollars instead of mortgageable property, I question whether or not such principal of tax effecting does not apply to me. [sic]

In any event I do not wish to prematurely determine Judge Boyle [sic] final [unreadable] decision. I will only accept, as I have requested you pursue, similar interim relief as I have received in the past to meet my on going obligations.

I will not in my present health or circumstances accept any coercive tactics or any actions taken which is directed to creating fear of retribution to myself or any members of my family.

WRC eventually dropped its requirement that Bogosian acknowledge in writing receipt of the checks (and possible acknowledgment that the checks were payments of principal rather than interest), but Bogosian still refused to indorse them. F & M and Pliakas discussed over the next couple of weeks whether the parties could share the money, ⁶ but no agreement was reached. Thus, on January 14, 1993, F & M initiated the present action in the district court, alleging that Bogosian had breached the assignment agreement by refusing to indorse the checks over to F & M. Bogosian denied the breach, arguing that the checks were not "proceeds" from the litigation because neither the court nor she had authorized such payment, and counterclaimed, alleging legal malpractice and breach of contract by F & M. Following discovery, both parties moved for summary judgment. The district court ruled that F & M was entitled to summary judgment on all claims, and Bogosian appealed.

II.

A. Standard of Review

We review a grant of summary judgment de novo, reading the record in the light most favorable to the nonmovant. See, e.g., Byrd v. Ronayne, 61 F.3d 1026 (1st Cir.1995). Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

B....