MARK J. KAUFMAN, PA v. Howell, Milton & Liles
| Decision Date | 10 May 1991 |
| Docket Number | Bankruptcy No. 90-9033,Adm. No. 86-00195. |
| Citation | 127 BR 898 |
| Parties | MARK JAY KAUFMAN, P.A., Plaintiff, v. HOWELL, MILTON & LILES, P.A., Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Florida |
Lisa C. Cohen, Keystone Heights, Fla., for plaintiff.
Thomas M. Ervin, Jr., Tallahassee, Fla., for defendant.
ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
THIS MATTER came on for hearing on the cross-motions of the plaintiff, Mark Jay Kaufman, P.A. and the defendants, Howell, Milton & Liles, P.A. for summary judgment in this adversary proceeding. Having considered the evidence presented by way of affidavits and deposition transcripts, and having considered the memoranda of law filed by the parties and argument of counsel we find that there are no genuine disputes of material facts and that plaintiff in this action is entitled to judgment as a matter of law.
This case arises in connection with the Chapter 11 case of Mark Jay Kaufman, P.A. (Kaufman) who was a practicing attorney in Gainesville, Florida. Kaufman filed his voluntary petition for relief under Chapter 11, Title 11, United States Code, on November 5, 1986. The filing of the Chapter 11 was precipitated in large part by illness suffered by Mr. Kaufman which resulted in his inability to carry on his practice of law. At the time he filed Chapter 11, Kaufman's law firm was handling approximately 480 cases, practically all of which were personal injury or wrongful death cases. In order to manage this large case load while Kaufman was incapacitated, the court appointed an attorney, Rodney D. McGalliard, Esq. as a consultant to review all of the cases in which Kaufman was involved at that time. Part of McGalliard's duties included an evaluation of the pending cases and making decisions with regard to immediate settlement of such cases or their referral to other law firms for completion. In connection with those duties, Mr. McGalliard contacted defendant, a law firm located in Jacksonville, Florida with regard to transferring some 28 cases to that firm.
In connection with the transfer of the cases from Kaufman to the defendant firm, McGalliard prepared an agreement which provided that the two firms would split all fees generated in the referred cases on a 50-50 basis without the need for court approval of each and every settlement. The agreement was structured this way for several reasons. First of all, due to the large number of cases being referred to the defendant's firm and to other firms, significant problems and delays would occur should the attorneys have been required to seek court approval of the fee allocations in each and every case. Secondly, virtually all of the cases which were transferred to the defendant firm were in some stage of litigation and it was felt that the 50-50 split would give the appropriate consideration to the Kaufman firm for the work done in those cases.
The defendant firm and Kaufman executed the agreement. Thereafter Kaufman's attorneys prepared and circulated to all creditors of his Chapter 11 estate an application/notice of intent to transfer assets of the estate to Howell, Liles, Braddock and Milton. No objections were filed to the notice and on April 13, 1987, this court entered an order approving the agreement and authorizing the transfer of cases to the defendant law firm. A list of the specific cases transferred was attached to and made a part of the agreement.
Among the cases which were transferred by Kaufman to the defendant firm was that of Lori Bishop. However, Lori Bishop's name was inadvertently not included on the list of cases which was appended to the agreement. Following the execution of the agreement and transfer of the case files to the defendant firm, all cases on the list with the exception of that of Lori Bishop were settled and the fees distributed in accordance with the agreement, that is, 50% to each law firm. With respect to the Lori Bishop case, Robert Wilhelm, the partner of the defendant firm handling the cases referred from Kaufman successfully prosecuted and obtained a jury verdict in the amount of $4,000,000 against the State of Florida. However, due the sovereign immunity cap in the State of Florida, a judgment in the amount of $100,000 was obtained with a 25% attorney's fees cap. This $25,000 fee was split 50-50 with Kaufman in accordance with the agreement and consistent with all of the previous cases which had been settled. Thereafter, Mr. Wilhelm lobbied the Florida Legislature for a special claims bill on behalf of Lori Bishop and therein obtained $1,050,000 including a $262,500 attorney fee. The defendant law firm refused to pay to Kaufman the 50% gross fees called for in the agreement with respect to this recovery and this action followed.
In his complaint, plaintiff seeks a reformation of the contract so as to include Lori Bishop's name on the list of cases transferred and to specifically enforce the agreement or recover damages for its breach. Plaintiff further seeks to have defendant enjoined from making any distribution of the fees in dispute pending resolution of this action.
While in its answer to the complaint defendant denies that the Lori Bishop case was ever intended to be a part of the agreement transferring the cases, the deposition of Mr. Wilhelm makes it clear that on behalf of the defendant firm he understood at the time of the transfer of cases that Lori Bishop was to be one of the cases subject to agreement. Therefore there is no genuine issue as to that fact raised in this proceeding. The sole issue raised by the defendants is that the agreement itself is illegal and is therefore unenforceable. Therefore, they argue that the contract is not subject to reformation and it cannot be enforced by this court.
The central issue to this case is whether the contract between Kaufman and the defendant law firm is illegal and void as against public policy. In general, a court of equity may reform a contract to reflect the true agreement between the parties to the documents. Hardaway Timber Co. v. Hansford, 245 So.2d 911, 913 (Fla. 1st DCA 1971). However, when the proposed reformation would result in an invalid or illegal contract, the court will not reform the instrument since equity cannot accomplish an illegal act. Hedges v. Dixon County, 150 U.S. 182, 192, 14 S.Ct. 71, 74, 37 L.Ed 1044 (1983). The issue of whether a contract is valid must be determined by the law of the place where the contract is made, therefore the law of Florida applies in this case. Sturiano v. Brooks, 523 So.2d 1126 (Fla. 1988). Under Florida law, the right to contract is subject to the general rule that the agreement must be legal. Thomas v. Ratiner, 462 So.2d 1157, 1159 (Fla. 3rd DCA 1984), rev. den. 472 So.2d 1182 (Fla.1985). If a contract or bargain is criminal, tortious or otherwise opposed to public policy in its formation or in its performance, the contract or bargain is illegal and unenforceable. Citizens Bank and Trust Co. v. Mabry, 102 Fla. 1084, 136 So. 714 (Fla.1931).
In the instant case, defendants assert that the agreement which Kaufman seeks to reform and enforce violates the Florida Bar Code of Professional Responsibility. Defendants cites specifically to the Code of Responsibility Rule 4-1.5 which at the time the agreement was executed provided in pertinent part:
Florida Bar Code Prof.Resp., D.R. 4-1.5(E) promulgated in rules regulating the Florida Bar, 494 So.2d 977, 1030 (Fla.1986).
Plaintiff asserts that in this case the agreement does not satisfy the requirements of the Bar rule because it does not divide the fees in proportion to the work performed on the case, there being no dispute that Kaufman performed no more than 10% of work on the Lori Bishop case....
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