Kennedy v. Clausing

• Decision Date: 26 September 1968
• Docket Number: No. 38394,38394
• Citation: 74 Wn.2d 483,445 P.2d 637
• Court: Washington Supreme Court
• Parties: Robert T. KENNEDY, Respondent, v. V. D. CLAUSING and Celo Clausing, his wife, Appellants.

Page 483

74 Wn.2d 483

445 P.2d 637

Robert T. KENNEDY, Respondent, v. V. D. CLAUSING and Celo Clausing, his wife, Appellants.

No. 38394.

Supreme Court of Washington, En Banc.

Sept. 26, 1968.

Jarvis, Kelleher, Allen, Skellenger & Bovy, Richard Kelleher, Aiken, St. Louis & Siljeg, Charles E. Siljeg, Seattle, for appellants.

Mucklestone & Mucklestone, John P. Mucklestone, Seattle, for respondent.

HUNTER, Judge.

This is an appeal from a jury verdict and judgment entered in favor of the plaintiff (respondent), an attorney, in an action to recover legal fees from the defendant V. D. Clausing, an osteopathic physician, and his marital community (appellants), who will be referred to as the doctor or the defendant.

The plaintiff predicated his claims upon two verbal contingent fee contracts entered into between the plaintiff and the defendant during the course of their attorney-client relationship. Alternatively, the plaintiff sought judgment for the reasonable value of his services. The doctor admitted that legal services had been performed for his marital community by the plaintiff, denied the existence and validity of any contingent fee agreements, and alleged payment in full, or willingness to pay, any reasonable balance found due.

In June, 1960, the defendant doctor engaged the services of the plaintiff to prevent an alleged building and zoning violation by property owners adjacent to the defendant's medical clinic. Whether the plaintiff was to be compensated upon an hourly rate for his services is in dispute. Considerable time and effort were expended by the plaintiff in processing the claimed violation through two administrative agencies and in initiating proceedings for judicial review of adverse administrative rulings. A substantial fee accrued when calculated on a straight time, hourly basis. Following the first administrative hearing, the plaintiff billed the defendant in the amount of $652.50. The defendant then paid $500 and subsequent credits were allowed. The plaintiff contended the billing was for the first administrative hearing only, whereas the defendant contended the amounts paid and credited against the account fully and reasonably compensated the plaintiff for all work involved in the building and zoning violation matter. Whether all steps taken by the plaintiff were authorized by the defendant, legally prudent, or productive of a satisfactory result are the source of conflicting viewpoints under the evidence.

In the meantime, the defendant, who was a sports car enthusiast had become financially involved in an automotive repair business partnership. He soon became dissatisfied with the business. At the outset of this venture and periodically thereafter he consulted with and sought the advice and assistance of the plaintiff. Finally, in April, 1961, and while the building and zoning violation matter was still in progress, the defendant asked the plaintiff to dissolve the partnership or otherwise extricate him from the business. Again, the way in which the plaintiff was to be compensated is in dispute. The plaintiff asserts that an hourly rate of $25 was agreed upon. The defendant, however, testified that $250 was the fee initially agreed upon, which together with additional credits against the account adequately compensated the plaintiff for his services. The partnership matter was complicated and in processing it to successful conclusion the plaintiff instituted three justice court actions and one superior court action, and otherwise devoted substantial time to the matter. The evidence is conflicting as to whether all of plaintiff's time, activities, and proceedings were reasonably necessary to the end result.

The plaintiff alleges that by January, 1962, there had accumulated, calculating upon an hourly straight time basis, a total of approximately $7,000 in unpaid fees for both the zoning violation and the partnership matters, neither of which had yet been concluded. The defendant maintains that he was not aware of this computation of fees. Nevertheless, at this time, the defendant discussed with the plaintiff and an associate a further matter. This involved a potentially profitable sale of approximately 4 1/2 acres of land owner by the defendant in West Seattle. The testimony indicates that the defendant had acquired the property for approximately.$19,000 and had been offered $102,000 for it. It appeared, however, that any sale at a substantially increased value depended upon rezoning the property from residential to business or commercial use. Prior efforts by the defendant to rezone his property had proved unsuccessful, and attorneys who the defendant contacted had refused to undertake the rezoning matter without a fixed fee contract. The plaintiff indicated that he might evolve a legal theory under which the desired rezoning could be accomplished. The defendant was interested and enlisted the plaintiff's services. From this point on the testimony is in conflict. According to the plaintiff's evidence, the defendant chided him regarding fixed fee arrangements, following which the plaintiff indicated he would undertake the rezoning project on a contingent fee basis, with his fee to be one-third of the enhanced value of the property if the rezoning was accomplished. The plaintiff's evidence then indicates that the defendant suggested that the contingent fee be 50 per cent of the enhanced value, provided the arrangement included the conclusion of all work yet to be done on the prior zoning and partnership matters together with the satisfaction of all fees involved. The plaintiff testified that he reluctantly, and at the defendant's urging, accepted this arrangement. (There is an inconsistency between the plaintiff's pleadings, the pretrial order, and his evidence as to the precise basis upon which the 50 per cent contingent fee was to be calculated. However, the trial court submitted the issue of the existence of this contingent fee contract to the jury on the basis of the fee being equal to 50 per cent of the increased value of the property after rezoning.) The defendant, on the other hand, denied that any discussion or arrangement relative to contingent fees took place. Instead, he asserts he understood that the plaintiff would proceed with the work and submit a bill for a reasonable sum when the services were concluded. He also maintains that the alleged contingent fee arrangement is unrealistic, unreasonable, and exorbitant considering the professional services involved.

The plaintiff promptly prepared a petition for rezoning the West Seattle property, collected data in support of the petition, and processed it through the city planning commission and the city council. The petition was denied. Thereafter, in early 1963, the defendant, who was then recovering from a nervous breakdown suffered in November, 1962, prepared and presented a second petition to the city planning commission without the plaintiff's knowledge. This petition was denied by the planning commission and review was scheduled before the city council in March, 1963. Shortly before the review was to be heard, the defendant, still undergoing psychiatric treatment for his nervous condition, requested the plaintiff's assistance. At about this time, according to the plaintiff, the contingent fee arrangement was again discussed and reaffirmed. The plaintiff obtained a continuance of the scheduled review hearing and, working with other interested persons, aided in collecting and assembling data to support a rezoning. The material was presented to the city council on May 8, 1963, and the rezoning was granted. Thereafter, the plaintiff maintained that he was entitled to his contingent fee. The jury, as above indicated, found in favor of the plaintiff on this issue in the sum of $47,250, inherently including appropriate allowances for credits against the amount.

Meanwhile, during the latter part of 1961 and the early part of 1962, the defendant had reorganized and revitalized his automotive repair business. He acquired a new partner, a business associate, and a controlling share in a corporate structure. The business seemingly prospered until November 1962, when internal dispute and distrust erupted. The defendant immediately recruited the plaintiff's services and was then hospitalized for the nervous breakdown mentioned above.

The plaintiff, working with the defendant's brother, devoted substantial time during November and December, 1962, and the early part of 1963, to salvaging the defendant's interest and investment in the business. A lawsuit was commenced in furtherance of this objective. It is agreed that the plaintiff initially undertook the work for a fee to be calculated upon an hourly basis; however, the hourly rate is in dispute and the reasonableness of the time expended is challenged. By March, 1963, and despite various credits to the account, a considerable fee had accrued when computed on an hourly basis. The financial picture of the defunct business, from the standpoint of recouping the defendant's investment, was still not free of doubt, although the physical plant had been leased to another operator in January, 1963. Likewise, the lawsuit, which had engendered a cross complaint against the defendant, was unresolved although a favorable settlement was pending. Why the lawsuit had not been earlier settled and whether the defendant was fully advised of the settlement negotiations are the subject of conflict in the evidence.

On or about March 15, 1963, following a consultation with his psychiatrist, the defendant advised the plaintiff that his mental health required that he forego business interests and responsibilities outside of his medical practice. He then stated he would give the plaintiff the remaining partnership and corporate interests in the automotive repair business if the plaintiff would assume all liabilities in connection with the business. The plaintiff testified that in response, he i...