Kravis v. Smith Marine, Inc.
| Decision Date | 30 January 1975 |
| Docket Number | No. 46476,46476 |
| Citation | 60 Ill.2d 141,324 N.E.2d 417 |
| Parties | Allen B. KRAVIS, Adm'r, Appellee, v. SMITH MARINE, INC., et al. Appeal of Melvin J. COLE. |
| Court | Illinois Supreme Court |
Frank J. Mackey, Jr., and Sidney Z. Karasik, Chicago, for appellants.
Alexander Polikoff, Chicago, for appellee.
Irwin J. Askow, Richard J. Cochran, and Thomas P. Luning, Chicago, for amicus curiae Chicago Council of Lawyers.
Louis G. Davidson, Frederick W. Allen, Peoria, and John D. Hayes, Chicago, for amicus curiae Illinois Trial Lawyers Association.
Plaintiff, Allen B. Kravis, as the administrator of the estate of Doris L. Kravis, and as father and next friend of Mark Kravis, a minor, filed a personal injury and wrongful death action. In connection with the settlement of this action, plaintiff filed a motion pursuant to Rule 14.23(g) of the circuit court of Cook County, which provided that in the settlement of personal injury or wrongful death actions the judge who tries the case or presides at settlement negotiations shall determine the value of the legal services rendered. Plaintiff's motion sought a determination that attorney Lawrence Kotin was entitled to remuneration for the legal services rendered in the personal injury and wrongful death action, and that attorney Melvin Cole was not entitled to any remuneration. Following a hearing on the motion, the trial court entered a judgment in favor of Kotin and Cole, fixing a fee of 25% For all amounts recovered or to be recovered through negotiations. This fee could be increased to 33 1/3% In the event of unforeseen obstacles or trials which could result from litigation that was still pending. This fee was to be divided equally between the attorneys, as indicated by their agreement in this regard. The appellate court, in pertinent part, reversed and remanded, finding that Cole was entitled only to such compensation as he may assert on a Quantum meruit basis, since he had breached his fiduciary responsibility to Kravis by not informing him of his 'fee-splitting' agreements with Kotin and with a previous attorney. (Kravis v. Smith Marine, Inc., 15 Ill.App.3d 494, 304 N.E.2d 720.) We granted Cole's petition for leave to appeal.
Kravis's wife and four-year-old son were involved in a boating accident in August 1966. Mrs. Kravis died as a result of the accident, and the son was severely and permanently injured. Kravis either sought legal assistance from Cole, a family friend and a distant relative of Mrs. Kravis, or accepted Cole's offer of help. It would appear that Cole initially performed many uncompensated services primarily involving probate matters on behalf of Kravis and his son.
Shortly after the accident, Cole suggested to Dravis that the personal injury suit would be difficult and that it would be advisable to retain an attorney who was a trial specialist. Cole and Kravis then considered five or six attorneys as possible candidates and selected John Kennelly. Cole met with Kennelly, who consented to take the case, and they agreed to divide whatever fee was received with Cole taking two thirds and Kennelly one third. A conference was held on October 1, 1966, among Cole, Kravis and Kennelly, at which Kravis retained Kennelly, though no written contract was signed. Kravis stated that he assumed Kennelly would charge whatever 'would be proper.'
Kennelly and Cole then proceeded with commencement of the personal injury and wrongful death action. A complaint was filed against six defendants as a result of the boating accident, and it was subsequently amended to include two additional defendants. Kennelly and Cole both signed the complaint and the amendment thereto as attorneys for Kravis.
In January 1968, Kennelly decided to withdraw from the case since he was becoming increasingly involved in aviation accident litigation and was limiting his practice. Cole attempted to induce Kennelly to remain in the case by offering an equal division of the fee, but Kennelly stated in a letter written to Cole that he would not consider remaining for less than two thirds of the fee. A personal meeting requested by Cole did not occur, and Kennelly formally withdrew in April 1968, requesting only reimbursement for his expenditures. Cole then recommended Lawrence Kotin as a replacement. Kotin had been approved by Kennelly. A motion for a substitution of attorneys was prepared by Cole and signed by Kravis, who said that he had 'checked out' Kotin. Cole and Kravis met with Kotin at his office and Kotin dictated the following contract which Kravis signed:
'CONTRACT
I hereby employ LAWRENCE L. KOTIN and MELVIN J. COLE as my attorneys to represent me in a claim for damages against persons responsible for injuries sustained by my son, MARK, a minor, and for the death of my wife, DORIS, in a motor boat accident which occurred on August 30, 1966 in a channel on the chain of lakes near Fox Lake in the State of Illinois. I agree to pay them the statutory fee, subject to the approval by the appropriate court, in connection with both claims and, in addition thereto, to reimburse my said attorneys for any and all costs incurred necessary to the prosecution and preparation of this said lawsuit or settlement.
Administrator and Individually
Address 8539 Springfield Ave.
We, LAWRENCE L. KOTIN and MELVIN J. COLE, agree to render services for the said statutory fee and to make no charges if no recovery is made by way of suit or settlement.
Lawrence L. Kotin'
Kotin, who had previously agreed with Cole that they would divide equally any fees received, accepted responsibility for the case and did the majority of the work. He dealt more directly with Kravis than had Kennelly, but he did, at times, consult with Cole. Kotin signed and swore to pleadings that bore Cole's name and sometimes his signature as co-counsel. Additionally, Cole attended some discovery hearings and a pretrial conference.
In May 1970, a $100,000 recovery was received from one of the defendants in the personal injury case in exchange for a covenant not to sue. Kravis, who is an accountant, met with Kotin to approve the disbursement petition which contained the following entry:
'Lawrence L. Kotin and Melvin J. Cole, attorneys' fees for legal services as to this settlement and distribution, 25% Of $99,000 * * * $24,750.00.'
A few days after he had signed the petition, Kravis complained to Kotin of the payment to Cole. Kotin explained that Cole was to receive 50% Of the fee. Kravis stated that he had never been told of this and asked how it could be changed. Kotin suggested that Kravis speak with Cole. Cole admitted he was to receive 50% Of the fee and said that this was the customary procedure. Cole further admitted that his original arrangement with Kennelly would have allowed him to obtain two thirds of the fee. Kravis responded that had he known of either arrangement he would not have approved and would have retained an attorney on his own. Cole stated that the same total fee would have been charged by any attorney. Kravis refuted this, saying that he had learned many attorneys would have charged less if no forwarding fee were to be paid. Cole discounted the truth of this, but said that they would talk the matter over at a later time.
Following the disbursement order in June 1970, over which Kravis made no objections, Cole received $12,375. The following October Kravis called Cole, at which time Cole offered to limit his share of any further recoveries to 12 1/2% Regardless of whether they resulted from trials, but Kravis answered that Cole had already received more money than he was entitled to and that Cole had violated ethical legal standards in accepting the money. Kravis stated that he no longer wanted him involved in the case, and that if Cole, who had no right to any fee, would agree to forego any attempt to obtain additional remuneration, he would not make an issue of it. Cole refused and in November 1970 Kravis wrote Cole formally discharging him from the case and threatening to complain to the courts, the bar association, and the newspapers if Cole continued to claim 50% Of the total attorneys' fees. The record indicates that a second settlement was subsequently reached with other defendants for $15,000, and a judgment was entered against another defendant for $315,000. Kravis then engaged present counsel to file a motion pursuant to Rule 14.23(g) of the circuit court of Cook County.
Kravis maintains that Cole breached his fiduciary relationship by not informing him of the 'fee-splitting' arrangements with Kennelly and with Kotin. The appellate court relied primarily upon Cole's failure to disclose his arrangement with Kennelly in reaching its decision that Cole was entitled to reimbursement only for the...
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