Hauptman, O'Brien v. Turco

• Decision Date: 13 July 2007
• Docket Number: No. S-05-928.,S-05-928.
• Citation: 273 Neb. 924,735 N.W.2d 368
• Parties: HAUPTMAN, O'BRIEN, WOLF & LATHROP, P.C., appellee, v. Louis J. TURCO, Jr., and Lucia Turco, appellants.
• Court: Nebraska Supreme Court

735 N.W.2d 368

273 Neb. 924

HAUPTMAN, O'BRIEN, WOLF & LATHROP, P.C., appellee, v. Louis J. TURCO, Jr., and Lucia Turco, appellants.

No. S-05-928.

Supreme Court of Nebraska.

July 13, 2007.

Jeff T. Courtney, Omaha, for appellants.

Terry M. Anderson and Melany S. Chesterman, of Hauptman, O'Brien, Wolf & Lathrop, P.C., Omaha, for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

STEPHAN, J.

Louis J. Turco, Jr., engaged the law firm of Hauptman, O'Brien, Wolf & Lathrop, P.C., to represent his minor daughter, Lucia Turco, with respect to her personal injuries and the death of her unborn child resulting from a motor vehicle accident. Louis executed a contingent fee agreement with the firm. After receiving a settlement offer, but before accepting it, Louis advised the firm that he was terminating its services. The firm then brought this action to enforce an attorney lien against Louis and Lucia (collectively the Turcos) in an amount computed in accordance with the contingent fee agreement. The Turcos asserted various defenses, including a claim that the amount of the fee was unreasonable. The district court for Douglas County granted the firm's motion for summary judgment, and the Turcos appealed. Because the record does not afford a sufficient basis for determining the reasonableness of the claimed fee, we conclude that there are genuine issues of material fact which preclude summary judgment and therefore reverse, and remand for further proceedings.

BACKGROUND

On June 20, 2004, Lucia was a passenger in an automobile involved in an accident with another vehicle. Lucia was a minor at the time of the accident and was 31 weeks' pregnant. She suffered a broken femur and the loss of her unborn child. She was hospitalized for 6 days.

Several days after the accident, Louis contacted the law firm on Lucia's behalf and met with an attorney from the firm. During the meeting, he explained that Lucia had been a passenger in an automobile which was struck by a drunk driver and that her unborn child had died as a result. Louis did not employ the law firm at this initial meeting, but he did leave the office with a brochure and a copy of the firm's contingent fee agreement.

On July 8, 2004, Louis, his wife, and Lucia again met with attorneys from the law firm. During this meeting, the parties discussed Lucia's injuries, responsibility for medical bills, issues relating to the possible wrongful death claim, and the length of time it would take to resolve the matters. The details and particulars of the accident and Lucia's injuries were related to the law firm. From the attorneys' comments, Louis understood that "it would be a lot of work to get the insurance companies to pay the claim" and that the firm would not consider settling for 6 to 8 months because of uncertainty as to the extent of Lucia's injuries and the resulting medical bills. The contingent fee agreement was explained during this meeting, and Louis signed it.

The agreement provided that the firm's fee would be "thirty-three and one-third percent (33 1/3%) of the gross amount recovered either by judgment or by settlement . . . calculated independently of any costs or bills owed by client." It included an acknowledgment that the fee was "dependent upon the out-come of client's claim" and that the firm had explained that the case "could be handled at an attorney's regular hourly rate, plus expenses, payable monthly as billed, but client prefers that this matter be handled on a contingent fee basis." The agreement also included the following provision:

In the event of termination of attorney's representation, attorney shall have a lien for fees and expenses, which lien will be imposed upon any sums recovered by, for, or on behalf of client. For purposes of computing the contingency fee to which attorney is entitled, the 33 1/3 percentage shall be computed based upon the last settlement offer received by attorney from defendant's representatives. If no such settlement offer has been tendered, attorney shall be allowed fees in an amount equal to his/her standard hourly rate for the hours expended, as well as the hourly rate of paralegal and other support staff utilized on client's behalf.

Members of the firm explained to the Turcos that this provision was necessary to protect it from clients who would terminate its services in order to avoid payment of a fee.

On August 9, 2004, an attorney from the firm telephoned Louis' wife and informed her that the liability insurance carrier for the driver of the other vehicle involved in the accident had offered to settle for its policy limits. The attorney told her that the next step would be to pursue underinsured coverage. Neither Louis nor his wife told the attorney that they would accept the settlement offer, which was in the amount of $194,000.

Following a court hearing in September 2004, Louis became dissatisfied with the firm. On September 14, he delivered a letter to the law firm terminating its services. Although he was aware of the provision of the contingent fee agreement specifying the fee payable upon termination, he felt that the law firm had expended little time and effort and that the fee of 33 1/3 percent of the settlement offer was excessive for the amount of work done.

After the firm tried unsuccessfully to resolve the dispute regarding the fee, it served notice of an attorney lien on the attorney representing the party which had made the settlement offer. The notice stated that the lien was in the amount of $64,600 and represented fees owed pursuant to the contingent fee agreement signed by Louis. New counsel retained by Louis subsequently advised the firm that while Louis agreed that it was entitled to be compensated for the "reasonable value of services provided up to the time of [the firm's] termination" and reimbursed for expenses incurred, the amount of the claimed lien was excessive.

The law firm subsequently brought this action against the Turcos, generally alleging breach of contract. In their answer, the Turcos alleged that terms of the contingent fee agreement were unconscionable, that the execution of the agreement was fraudulently induced, and that the amount of the fee claimed by the firm was "unreasonable and excessive." The firm filed a motion for summary judgment, as did the Turcos. The district court granted the law firm's motion and denied that filed by the Turcos. The Turcos perfected this appeal, which we moved to our docket on our own motion pursuant to our statutory authority to regulate the caseloads of the appellate courts of this state.¹

ASSIGNMENTS OF ERROR

The Turcos assign, restated, that the district court erred in granting the law firm's motion for summary judgment because (1) there are genuine issues of material fact as to whether the fee is excessive for the amount of work actually performed, (2) the law firm failed to present evidence that the terms of the fee agreement were reasonable, and (3) there are genuine issues of material fact as to whether the law firm made fraudulent representations that the Turcos relied upon to their detriment.

STANDARD OF REVIEW

Summary judgment is proper when the pleadings and evidence admitted at the hearing disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.² In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.³

ANALYSIS

The party moving for summary judgment has the burden to show that no genuine issue of material fact exists and must produce sufficient evidence to demonstrate that it is entitled to judgment as a matter of law.⁴ The evidence offered by the law firm in support of its motion for summary judgment included the contingent fee agreement and notice of attorney lien, the deposition of Louis, and the termination letter Louis delivered to the firm. These latter documents reflect Louis' dissatisfaction with the firm's services and his reasons for claiming that the amount of the fee was unreasonable. The law firm also offered the affidavit of an attorney who opined that the contingent fee agreement utilized in this case "is a reasonable fee agreement and is not excessive" and that the firm was experienced and enjoyed an "outstanding reputation" in the legal, insurance, and medical communities. However, this affidavit does not address the reasonableness of the fee itself.

The firm contends that the reasonableness of its claimed fee is not at issue. In its brief, the firm argues that it has not claimed that the fee is owed "only because [it] is reasonable."⁵ Instead, it argues that the fee computed in accordance with the contingent fee agreement "is owed because [the Turcos] agreed to pay that specific amount."⁶ It further argues that whether that amount "has been shown to be `reasonable' is not relevant" to its claim for breach of contract.⁷ In support of this argument, the firm relies in part upon Mecham v. Colby,⁸ which it cites for the proposition that written, unambiguous fee agreements between attorney and client are enforceable where the agreement contains a set or identifiable amount of the fee owed to the attorney.

In Mecham, we affirmed a summary judgment in favor of an attorney who had negotiated a settlement on behalf of a client involved in a complex dispute relating to an estate's inherited shares of corporate stock. After the settlement was consummated, the attorney billed the client in the amount of $2,000 and the client approved the statement in writing. The client later refused to pay the fee. We held that the client's written approval of the billing statement constituted a contract enforceable by the attorney, notwithstanding...