Girards v. Klein Frank, P.C.

Decision Date05 February 2016
Docket NumberNo. 3:13-cv-2695-BN,3:13-cv-2695-BN
PartiesJAMES E. GIRARDS, ET AL., Plaintiffs, v. KLEIN FRANK, P.C., Defendant.
CourtU.S. District Court — Northern District of Texas
MEMORANDUM OPINION AND ORDER

This is an attorneys' fees dispute arising out of a personal injury lawsuit. Local counsel for the plaintiff in that lawsuit was terminated by the plaintiff's lead counsel and now sues the lead counsel, seeking to recover part of the attorneys' fees to be recovered by the plaintiff's attorneys following a settlement.

Following a bench trial, and for the reasons that follow,1 the Court finds for Defendant Klein Frank, P.C. on the claims of Plaintiffs James E. Girards and JamesE. Girards, P.C. d/b/a The Girards Law Firm for declaratory judgment and breach of contract and finds for Defendant Klein Frank, P.C., in part, on its counterclaim against James E. Girards and James E. Girards, P.C. d/b/a The Girards Law Firm, and the Court finds in favor of Plaintiffs James E. Girards and James E. Girards, P.C. d/b/a The Girards Law Firm on their alternative request for a recovery under quantum meruit.

Background
I. The Underlying Litigation

David Dawson filed suit in Texas state court in Dallas County in a matter styled Dawson v. Fluor, et al. Beth Klein, a shareholder in Klein Frank, P.C., was Dawson's lead counsel in that lawsuit.

In early October 2010, after terminating Miller, Curtis, & Weisbrod, LLP as local counsel for Dawson, Klein Frank, P.C. ("Defendant" or "Klein Frank"), through Beth Klein ("Klein"), contacted Plaintiffs James E. Girards ("Girards") and James E. Girards P.C. d/b/a The Girards Law Firm (the "Girards Firm"; collectively with Girards, "Plaintiffs") for the purpose of hiring them to act as local counsel for Dawson in the Dawson lawsuit. Girards and Klein spoke over the phone, after which, on or about October 5, 2010, Klein sent a letter to Dawson notifying him that the Girards Firm would be working with Klein Frank on his case and serving primarily as local counsel. See Plaintiffs' Exhibit ("PX") 1.

At the end of September 30, 2011, Klein Frank terminated Plaintiffs as counsel for Dawson in the Dawson lawsuit. See Defendant's Exhibit ("DX") 580.

Thereafter, Klein Frank retained attorney Marquette Wolf with Ted Lyon & Associates in late 2011 to serve as additional counsel in the Dawson lawsuit. The lawsuit was eventually tried before a jury, and the trial resulted in a significant verdict for Dawson.

In November 2014, while the judgment was on appeal, Dawson settled his claims against Fluor for a confidential amount.

II. The Instant Action

Plaintiffs filed this action seeking a declaration that they are entitled to 15 percent of the attorneys' fees recovered in the Dawson lawsuit under their fee-sharing agreement with Klein Frank or, in the alternative, to the fair value of services rendered under quantum meruit. See Dkt. No. 1-3 at ¶ 15.

On July 16, 2014, the Court entered a Memorandum Opinion and Order denying Defendant's Motion for Summary Judgment. See Dkt. No. 76; Miller Weisbrod, LLP v. Klein Frank PC, No. 3:13-cv-2695-B, 2014 WL 3512994 (N.D. Tex. July 16, 2014). The Court held that the fee-sharing agreement between Klein Frank and the Girards Firm was verbal; that "the fact that the fee-sharing arrangement was verbal did not, as a matter of law, render it unenforceable under Texas law or the Texas and Colorado rules of professional conduct"; and that the verbal "fee-sharing agreement may otherwise be enforced to the extent that it contains all essential terms." Dkt. No. 76 at 27, 28; Klein Frank, 2014 WL 3512994, at *14. The Court also "determine[d] that [Plaintiffs'] interpretation of the fee-sharing agreement allowing them to recover a portion of the attorney's fees regardless of whether they performed any work isunconscionable as a matter of law," but the Court "question[ed] whether Girards's testimony can be subjected to such a strained reading, as he generally only testifies to what terms the fee-sharing agreement did not contain rather than the terms it did contain." Id. at 26 n.8, 27-28; Klein Frank, 2014 WL 3512994, at *13 n.8, *14. The Court also concluded that the letter that Klein sent to Dawson "in order to obtain consent contains the essential terms required by [Texas Disciplinary Rule of Professional Conduct]1.04(f)(2)" and that Dawson consented to the fee-sharing agreement. Id. at 19 n.7, 21, 27; Klein Frank, 2014 WL 3512994, at *9 n.7, *10, *14.

III. The Bench Trial

On June 15-16, 2015, the parties presented testimony for the Court's consideration during a bench trial. Girards, Klein, Deb Junek, Marquette Wolf, and Jim Flegle testified live at trial, and the Court observed their demeanor. Clay Miller's testimony was received by deposition.

The Court's Final Pretrial Order sets out the parties' claims and defenses and, under Federal Rule of Civil Procedure 16(d), "controls the course of the action unless the court modifies it." See Dkt. No. 153.

Plaintiffs assert three causes of action against Defendant: (1) a request for declaratory judgment that Plaintiffs are entitled to 15 percent of the attorneys' fees recovered in the Dawson case; (2) a claim for breach of contract based on Klein Frank's failure to pay the agreed-upon fee to Girards under the verbal fee-sharing agreement; and (3) a request, in the alternative, for recovery of the fair and reasonable value of the services provided in the Dawson case under quantum meruit.

Defendant, in turn, asserts a counterclaim against Plaintiffs and seeks a declaratory judgment that: (a) Plaintiffs failed to perform their contractual duties in their representation of David Dawson; (b) Klein Frank had a duty to terminate Plaintiffs under the circumstances; (c) Klein Frank had the right to terminate Plaintiffs under the circumstances; (d) Klein Frank was justified in terminating Plaintiffs; (e) Klein Frank terminated Plaintiffs for cause for the reasons specified by Defendant; (f) Because Plaintiffs failed to perform under the agreement, or alternatively, were terminated for cause, they are entitled to no fee in the Dawson case; and (g) Defendant is entitled to reasonable attorneys' fees and expenses to the extent allowed as further relief under 28 U.S.C. §§ 2201 and 2202.

Legal Standards and Analysis

Plaintiffs bear the burden of proof and persuasion on the issues of contract formation, meeting of the minds on contract terms, and performance by Plaintiffs, on their claim of breach of contract by Defendant, and on quantum meruit. See Jourdan v. Schenker Int'l, Inc., 275 F. App'x 371, 374-75 (5th Cir. 2008); Celmer v. McGarry, 412 S.W.3d 691, 700 (Tex. App. - Dallas 2013, pet. denied); Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). If Plaintiff proves a meeting of the minds as required for an enforceable contract, Defendant then bears the burden of proof and persuasion to show the agreement was justifiably terminated or that the 15 percent fee sought by Plaintiffs is unconscionable under the circumstances. See generally Hoover Slovacek LLP v. Walton, 206 S.W.3d 557, 561-62 (Tex. 2006); Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004) (per curiam). To theextent that Defendant seeks affirmative declarations, it bears the same burdens. See In re Rollings, 451 F. App'x 340, 345-46 & n.4 (5th Cir. 2011).

As a preliminary matter, the Court's findings and conclusions do not rely on - and, based on the Court's analysis, it was not necessary for the Court to consider - the specific testimony of Clay Miller and Girards to which Defendant has objected, see Dkt. No. 157; Dkt. No. 159 at 36-37, and accordingly the Court need not rule on those objections. Put another way, while the Court does not sustain the objections to this testimony, including on relevance grounds in the context of this bench trial, the Court did not find the testimony to be germane to deciding the issues resolved below, including whether there as a meeting of the minds between Klein Frank and Plaintiffs as to the scope of work to be done and compensation to be paid under the verbal fee-sharing agreement.

Further, the amount of the settlement of the Dawson lawsuit is confidential, but the Court's findings and conclusions obviate the need to discuss the amount of the settlement, the total amount of attorneys' fees, or the amount of the portion of the fees that Plaintiffs seek.

I. The Verbal Fee-Sharing Agreement Is Not Enforceable.

In its Memorandum Opinion and Order denying Defendant's Motion for Summary Judgment, the Court did not consider or determine whether the parties had reached a meeting of the minds on every essential element of the fee-sharing agreement and left open for trial a determination whether the verbal fee-sharingagreement in fact "contains all essential terms" and is therefore enforceable. Dkt. No. 76 at 28; Klein Frank, 2014 WL 3512994, at *14.

Under Texas law - which both parties agree should be applied to the verbal fee-sharing agreement here - "a binding contract requires (1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party's consent to the terms; and (5) execution and delivery of the contract with intent that it be mutual and binding." Coffel v. Stryker Corp., 284 F.3d 625, 640 n.17 (5th Cir. 2002) (internal quotation marks omitted). "[T]he requisite elements of both written and oral contracts are the same and must be present for a contract to be binding." Taj Al Khairat Ltd. v. Swiftships Shipbuilders, L.L.C., ___ F. App'x ___, No. 15-30195, 2015 WL 8018547, at *3 (5th Cir. Dec. 4, 2015) (internal quotation marks omitted).

The existence of a valid, enforceable contract is an essential element of a breach of contract claim. See Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009). To be enforceable, a contract must address all of its essential and material terms with "a reasonable degree of certainty and...

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