Markwardt v. Zurich American Ins. Co.

Decision Date12 September 2006
Docket NumberNo. 2005AP1856.,No. 2004AP3236.,No. 2005AP2543.,No. 2005AP1857.,No. 2005AP1292.,2004AP3236.,2005AP1292.,2005AP1856.,2005AP1857.,2005AP2543.
Citation724 N.W.2d 669,2006 WI App 200
PartiesJeanett MARKWARDT and George Markwardt, Plaintiffs-Appellants,<SMALL><SUP>†</SUP></SMALL> Tommy Thompson, Secretary of Department of Health & Human Services, and Humana Insurance Company, A Wisconsin Insurance Corporation, Involuntary-Plaintiffs, v. ZURICH AMERICAN INSURANCE COMPANY, a Foreign Insurance Corporation, Nahop Partners, L.P., A Foreign Limited Partnership, and Radisson Hotel Milwaukee Airport, Defendants, Cannon & Dunphy, S.C., Third Party-Intervenor-Respondent. Evelyn Rodriguez, Plaintiff-Appellant, Motorola, Inc., Involuntary-Plaintiff, v. Allstate Insurance Company, A Foreign Insurance Corporation, and Jennifer Nagode, Defendants, Cannon & Dunphy, S.C., Intervenor-Respondent. Lori A. Tucek, Plaintiff-Appellant, Managed Health Services, a Wisconsin Insurance Corporation, and Travelers Property Casualty Insurance Company, A Domestic Insurance Company, Involuntary-Plaintiffs, v. State Farm Mutual Automobile Insurance Company, a Foreign Insurance Corporation, and Edna M. North, Defendants, v. Cannon & Dunphy, S.C., Third Party-Intervenor-Respondent. Pamela D. Draskovich, Plaintiff-Appellant, UnitedHealthCare of Wisconsin, Inc., A Wisconsin Corporation, and American Family Mutual Insurance Company, a Wisconsin Insurance Corporation, Involuntary-Plaintiffs, v. Kristin R. McCauley and State Farm Mutual Automobile Insurance Company, A Foreign Insurance Corporation, Defendants, Cannon & Dunphy, S.C., Intervenor-Respondent.
CourtWisconsin Court of Appeals

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of James J. Gende II of Gende Law Offices, S.C. of Waukesha and Robert E. Barnes of Law Office of Robert G. Bernhoft of Milwaukee.

On behalf of the third-party-intervenor-respondent, the cause was submitted on the brief of Terry E. Johnson of Peterson, Johnson & Murray, S.C. of Milwaukee.

Before FINE, CURLEY and KESSLER, JJ.

¶ 1 KESSLER, J

Because each trial judge assigned to one of these cases properly determined that Cannon & Dunphy, S.C. had a valid attorney lien, and based on undisputed material facts determined that attorney fees and costs requested by Cannon & Dunphy, S.C. were reasonable, we affirm. In each case, the award of reasonable attorney fees and costs was consistent with a Retainer Contract signed by each client with Cannon & Dunphy, S.C., and was consistent with the Separation Agreement between Cannon & Dunphy, S.C. and James Gende, who became successor counsel when he ceased to be a Cannon & Dunphy, S.C. employee. Gende objected to all awards to Cannon & Dunphy, S.C., claiming that they did not sufficiently document the claimed costs, and claiming that the fee allocation to which he agreed in his Separation Agreement was unenforceable because the Separation Agreement was contrary to public policy. We disagree and therefore affirm.

Background

¶ 2 When Attorney James Gende ("Gende") was employed by Cannon & Dunphy, S.C. ("the firm" or "Cannon & Dunphy") in May 2000, he entered into an Employment Agreement with the firm. He agreed therein, among other things, that:

all clients assigned to him are clients of the law firm of the Corporation and are not the clients of the Employee. All fees generated on such client cases assigned to the Employee are the property of the Corporation regardless of when the fees are generated, or whether the Employee is still employed by the Corporation when the fees are generated.

The Employment Agreement also contained provisions for allocation of client fees in the event Gende left the firm and the client elected to discharge the firm and retain Gende. Each of the plaintiffs named in this appeal signed a Retainer Contract in which they retained "Cannon & Dunphy, S.C.," not Gende, to handle specified personal injury claims. The Employment Agreement specified that, as to the firm clients who elected to retain Gende if he left the firm, costs advanced by the firm up to the date of his departure would be repaid by Gende, and Gende would receive fees from any recovery relating to those clients based on a defined hourly rate for work he performed after leaving the firm. Gende specifically agreed that the termination provisions in the Employment Agreement were "fair and equitable."

¶ 3 Approximately four years later, Gende and the firm negotiated a Separation Agreement which Gende signed on April 8, 2004. In the Separation Agreement, Gende again agreed that the Employment Agreement "is fair and all of its terms are valid and binding" and he further agreed "not to initiate a challenge, in any forum, as to the validity of said agreement." In addition, Gende released Cannon & Dunphy "from any and all claims, actions, causes of action, contracts, lawsuits, demands, damages, injuries, costs, interest, judgment and compensation, whether known or unknown from the beginning of time to the date of execution of this agreement." Under this release provision of the Separation Agreement, Cannon & Dunphy agreed to not "initiate[] any cause of action against [Gende] in any forum" and if it did, Gende's release of Cannon & Dunphy in said paragraph would be "null and void."2

¶ 4 Under the terms of the Separation Agreement, Gende obtained more favorable terms than are contained in the Employment Agreement with respect to allocating fees from existing clients of the firm who retained him after he left. According to the Employment Agreement, Gende would be paid for work on Cannon & Dunphy former client cases on a formula of post-departure hours worked multiplied by Gende's hourly rate based on his salary at Cannon & Dunphy. Under the Separation Agreement, for all but one case, Gende would keep twenty percent of the fee recovered. As to one case venued in Illinois, he was to keep twenty-five percent of the fee. Instead of the Employment Agreement obligation of immediate repayment of costs advanced by Cannon & Dunphy, the Separation Agreement allowed Gende to delay reimbursement of those costs until the particular case was concluded.

¶ 5 The plaintiffs in this appeal all chose to follow Gende to his own law firm. We find no evidence that any client terminated the Retainer Contract with Cannon & Dunphy for cause. Gende did not honor his obligations under the Separation Agreement when he did not voluntarily pay Cannon & Dunphy their share of the fees or reimburse the costs they had advanced when the various cases were concluded. In all but one of these cases, the record shows that Cannon & Dunphy filed motions to intervene3 and to assert its contractual attorney lien after the case had been settled and dismissed.

¶ 6 After ending his employment with Cannon & Dunphy, Gende twice sued the firm in Waukesha County. The first case (2004CV2587) was dismissed for failure to properly commence the action. A Decision and Order on April 26, 2006, dismissing the second case (2005CV1529) indicates that Gende sought a declaratory judgment that the Separation Agreement and the Employment Agreement are void as against public policy and unenforceable. The trial court granted Cannon & Dunphy's motion for summary judgment and dismissed the case. That case has been appealed, but is not presently before this court.

¶ 7 Also after leaving Cannon & Dunphy, Gende complained to the Office of Lawyer Regulation ("OLR") about the method Cannon & Dunphy used to calculate some costs charged to clients. His complaint to the OLR involved the same unit method of charging costs to clients that Gende alleged before the trial court invalidates each client's Retainer Contract—and hence defeats the lien for fees.4 The OLR disagreed and concluded:

Judge Foley ruled that the fees asserted by Cannon & Dunphy S.C. are reasonable. We agree with Judge Foley's decision.

While all fees must be reasonable, the Supreme Court Rules do not include a mandate for an attorney to calculate for a client the per-unit actual cost of nominal, fair expenses prior to or upon termination of the representation. There is insufficient evidence to support an allegation of ethical misconduct.

Gende sought review of the initial OLR decision, and the Director of the OLR advised:

I have determined that there is not a sufficient basis to proceed. I agree with Judge Foley that the costs charged in this matter are reasonable. The information you have provided is insufficient to support potential violations of Wisconsin Supreme Court Rules regarding communication as they relate to fees and costs.

¶ 8 All of the trial judges awarded Cannon & Dunphy summary judgment which affirmed the validity of their liens, found costs and attorney fees reasonable, and ordered that costs advanced and Retainer Contract attorney fees be paid from the proceeds of the recovery consistent with the Separation Agreement.5 Each trial court declined to consider Gende's claims that the Employment Contract and the Separation Agreement were invalid, concluding either that they were irrelevant to the lien validity or that those issues were before another court. Gende appealed.

Standard of Review

¶ 9 "We review an order for summary judgment de novo, applying the same standards as the trial court." Piaskoski & Assocs. v. Ricciardi, 2004 WI App 152, ¶ 6, 275 Wis.2d 650, 686 N.W.2d 675. "Summary judgment is proper when the pleadings, answers, admissions and affidavits show no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Id. "We will reverse a decision granting summary judgment if the trial court incorrectly decided legal issues or if material facts are in dispute." Id. "Even if certain facts are in dispute, the dispute will not prevent the granting of summary judgment if the facts at issue are `not material to the legal issue on which summary judgment is sought.'" Id. (citation...

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