Law Offices of Jeffrey Sherbow, PC v. Fieger & Fieger, PC

• Citation: 930 N.W.2d 416,326 Mich.App. 684
• Decision Date: 15 January 2019
• Docket Number: No. 338997,338997
• Parties: LAW OFFICES OF JEFFREY SHERBOW, PC, Plaintiff-Appellant/Cross-Appellee, v. FIEGER & FIEGER, PC, Doing Business as Fieger, Fieger, Kenney & Harrington, PC, Defendant-Appellee/Cross-Appellant.
• Court: Court of Appeal of Michigan (US)

326 Mich.App. 684

930 N.W.2d 416

LAW OFFICES OF JEFFREY SHERBOW, PC, Plaintiff-Appellant/Cross-Appellee,

v.FIEGER & FIEGER, PC, Doing Business as Fieger, Fieger, Kenney & Harrington, PC, Defendant-Appellee/Cross-Appellant.

No. 338997

Court of Appeals of Michigan.

Submitted December 11, 2018, at Detroit.

Decided January 15, 2019, at 9:00 a.m.

Gregory M. Janks, Auburn Hills, and James G. Gross, PLC (by James G. Gross, Detroit) for the Law Offices of Jeffrey Sherbow, PC.

Fieger, Fieger, Kenney & Harrington, PC (by Geoffrey N. Fieger, Southfield, and Sima G. Patel) for Fieger & Fieger, PC.

Before: Murray, C.J., and Shapiro and Riordan, JJ.

Riordan, J.

In this contract dispute regarding a referral fee between two law firms, plaintiff appeals as of right and defendant cross-appeals as of right the trial court's entry of judgment after a jury trial. Defendant's cross-appeal is of the trial court's previous order denying defendant's motion for summary disposition. We affirm in part, reverse in part, vacate in part, and remand for further proceedings consistent with this opinion.

I. BACKGROUND FACTS AND PROCEDURAL HISTORY

In the years preceding 2012, Jeffrey Sherbow, an attorney and the sole proprietor of plaintiff, had a working relationship with Charles Rice, who ran a business in Detroit. During the early morning hours of July 13, 2012, Charles was in a fatal automobile accident in Ohio. The other passengers in the vehicle at the time of the accident—Mervie Rice, Dorothy Dixon, and Philip Hill—were seriously injured. Dixon was taken to an Ohio hospital and placed in a medically induced coma.

When Dion Rice, Charles and Dixon's son, was informed of the accident, he called Charles's business associate, requesting Sherbow's contact information for legal advice. Over the course of the following days, Sherbow and Dion had several conversations via telephone and eventually agreed to meet at Charles's home, where Dion was staying. During that same time period, Sherbow also had several conversations with Jeffrey Danzig, who is an attorney and at the time was a named partner at defendant firm, and commenced the process of referring the personal injury and no-fault cases of Dixon, Mervie, Hill, and Charles's estate to defendant. Danzig agreed that, for Sherbow's referral, Sherbow would be paid ? of any contingent fee that defendant ultimately earned from the cases.

Sherbow testified that he told Dion, when they met at Charles's house, that he was not equipped to deal with such serious cases, being a sole practitioner, but that he had a friend at defendant to whom he could refer the case. Sherbow said Dion was receptive to the suggestion and assisted Sherbow in reaching out to the other clients. Dion testified that at the time of the meeting, he and his family had already decided to retain defendant. In either event, Sherbow, Dion, and Danzig set up a meeting for July 26, 2012, at defendant's office. Mervie also was present at the meeting. According to Sherbow, Hill originally was supposed to attend the meeting but could not make it, and Dixon was still in a medically induced coma in Ohio.

At the July 26, 2012 meeting, Mervie and Dion signed retainer agreements with defendant. Dion agreed to defendant's representation of Dixon and Charles's estate. While those retainer agreements did not reflect any referral agreement that defendant had with plaintiff, Danzig and Sherbow testified that Danzig informed Mervie and Dion of the agreement and that those two did not object. Mervie and Dion testified that they did not believe they were informed and could not remember everything that was said during the meeting but that if they had been informed, they would have objected. Mervie further testified that she decided to retain defendant after seeing a commercial on television and called defendant's office without being referred. Danzig later met with Hill and Dixon, at which time, according to Danzig, he informed them of the referral fee that plaintiff would be paid and that Hill and Dixon did not object. Like Dion and Mervie, Hill and Dixon testified that they did not believe they were informed of the referral agreement and could not remember the entire conversation with Danzig but that if they had been informed, they would have objected.

Danzig sent two letters to Sherbow, one on August 2, 2012, and the second on August 15, 2012, reciting that defendant had "accepted the above-captioned matters on referral from you and your office and are hereby acknowledging your one-third referral fee in these matters." Because the cases were being tried in Ohio, defendant sought the assistance of an Ohio law firm.

When the Ohio firm demanded 20% of the contingent fee earned in the case, Sherbow agreed to have his referral fee lowered to 20% as well. Danzig memorialized that new agreement in a letter dated January 2, 2014, which specifically noted that Sherbow was to receive 20% of the contingent fee for his referral of the cases.

Eventually, defendant was successful in its representation of the clients, obtaining an award of $10,225,000, out of which a contingent fee of $3,408,333.34 was paid to defendant. When defendant refused to pay 20% of that fee, or $681,666.67, to Sherbow, plaintiff brought the instant litigation, asserting a claim of breach of contract. Defendant moved for summary disposition three separate times, arguing, among other things, that the referral-fee contract violated MRPC 1.5(e), and thus was unenforceable, and that Danzig did not have the authority to bind defendant to a contract with plaintiff. With respect to a violation of MRPC 1.5(e), defendant provided evidence from Dion, Mervie, Dixon, and Hill that they were not aware of the referral-fee agreement and that even if they had been aware of it, they would have objected. Plaintiff countered with evidence from Sherbow and Danzig that the clients were informed and did not object. Further, plaintiff argued that Danzig had the apparent authority to bind defendant because Danzig was a named partner, appeared on the firm's letterhead, and was the head of defendant's intake department. The trial court agreed with plaintiff and denied the motions for summary disposition.

The case then proceeded to trial, largely focused on the issues of whether Danzig had the actual or apparent authority to bind defendant to the referral-fee contract and, if so, whether the contract violated MRPC 1.5(e) and thus was unenforceable as a matter of public policy. After three days of testimony, the trial court, over plaintiff's repeated objections, instructed the jury that plaintiff had to prove by a preponderance of the evidence that MRPC 1.5(e) had not been violated and that, in order for plaintiff to be entitled to judgment, Sherbow had to have had attorney-client relationships with Dion on behalf of Charles's estate, Mervie, Dixon, and Hill at the time of the referral. The verdict form, to which plaintiff also objected, asked the jury to answer two questions with respect to each client: "Were any of the following clients of Jeffrey Sherbow," and "[i]f yes to any part of 1, did Plaintiff refer one, some, or all of the following personal injury cases to Defendant?" The verdict form then had a third, general question: "If yes to any parts of 1 and 2, did Jeffrey Danzig have actual or apparent authority to bind Fieger Firm?"

The jury answered that Sherbow had an attorney-client relationship with Dion on behalf of Charles's estate and actually referred that case to defendant. The jury found the opposite for the other three clients. As for the third question, the jury determined that Danzig did have the actual or apparent authority to bind defendant to a contract. Thus, the trial court entered judgment in favor of plaintiff with respect to the contingent fee earned for Charles's estate, awarding plaintiff $93,333.33, and for no cause of action for the remaining three claims. Plaintiff moved for judgment notwithstanding the verdict (JNOV) with respect to the fees arising from Dixon's case, arguing that Dion acted on behalf of both Charles's estate and Dixon while she was in the coma. The trial court denied that motion. This appeal followed.

II. SUMMARY DISPOSITION

Defendant argues that the trial court should have granted its motion for summary disposition. We disagree.

A. STANDARD OF REVIEW

"This Court ... reviews de novo decisions on motions for summary disposition brought under MCR 2.116(C)(10)." Pace v. Edel-Harrelson , 499 Mich. 1, 5, 878 N.W.2d 784 (2016). A motion for summary disposition pursuant to MCR 2.116(C)(10) "tests the factual sufficiency of the complaint ...." Joseph v. Auto Club Ins. Ass’n , 491 Mich. 200, 206, 815 N.W.2d 412 (2012). "In evaluating a motion for summary disposition brought under this subsection, a trial court considers affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties, MCR 2.116(G)(5), in the light most favorable to the party opposing the motion." Maiden v. Rozwood , 461 Mich. 109, 120, 597 N.W.2d 817 (1999). Summary disposition is proper when there is no "genuine issue regarding any material fact." Id . "A reviewing court may not employ a standard citing the mere possibility that the claim might be supported by evidence produced at trial. A mere promise is insufficient under our court rules." Id. at 121, 597 N.W.2d 817. Similarly, a trial court's "construction of the rules of professional conduct" is a legal issue that this Court reviews de novo. Grievance Administrator v. Fieger , 476 Mich. 231, 240, 719 N.W.2d 123 (2006). A trial court's decision regarding the existence of a contract is a question of law that we review de novo. Kloian v. Domino's Pizza, LLC , 273 Mich. App. 449, 452, 733 N.W.2d 766 (2006). "When there is a disputed question of agency, if there is any testimony, either direct or inferential, tending to establish it, it becomes a question of fact...."

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