Meyer, Darragh, Buckler, Bebenek & Eck, P.L. L.C. v. Law Firm of Malone Middleman, P.C.

• Decision Date: 25 April 2016
• Docket Number: No. 9 WAP 2015,No. 8 WAP 2015 ,8 WAP 2015
• Citation: 137 A.3d 1247
• Court: Pennsylvania Supreme Court
• Parties: MEYER, DARRAGH, BUCKLER, BEBENEK & ECK, P.L.L.C. v. LAW FIRM OF MALONE MIDDLEMAN, P.C., and Candace A. Eazor and Richard Eazor, as Executors of the Estate of Richard A. Eazor Appeal of Law Firm of Malone Middleman, P.C. Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C., and Candace A. Eazor and Richard Eazor, as Executors of the Estate of Richard A. Eazor Appeal of Law Firm of Malone Middleman, P.C.

137 A.3d 1247

MEYER, DARRAGH, BUCKLER, BEBENEK & ECK, P.L.L.C.

v.LAW FIRM OF MALONE MIDDLEMAN, P.C., and Candace A. Eazor and Richard Eazor, as Executors of the Estate of Richard A. Eazor

Appeal of Law Firm of Malone Middleman, P.C.

Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C.

v.Law Firm of Malone Middleman, P.C., and Candace A. Eazor and Richard Eazor, as Executors of the Estate of Richard A. Eazor

Appeal of Law Firm of Malone Middleman, P.C.

No. 8 WAP 2015

No. 9 WAP 2015

Supreme Court of Pennsylvania.

Argued Oct. 6, 2015.

Resubmitted Jan. 20, 2016.

Decided April 25, 2016.

Paul S. Guarnieri, Esq., Malone Middleman, P.C., Wexford, for Malone Middleman, P.C.

Scott Alden Millhouse, Esq., Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C., Pittsburgh, for Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C.

Candace A. Eazor, Pro Se.

Richard Eazor, Pro Se.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, JJ.

OPINION

Justice BAER

.

This case presents a dispute between two law firms over attorney's fees earned in a wrongful death civil litigation settlement. We granted allocatur to examine the propriety of the Superior Court's holding that a law firm, which had formerly provided representation in the wrongful death action, was entitled to breach of contract damages against a successor law firm that ultimately obtained a settlement in the case when no contract existed between the two law firms. For the reasons that follow, we reverse.

The parties herein elected to have their case decided by a judge as a “Case Submitted on Stipulated Facts” pursuant to Pa.R.C.P. 1038.1

.¹ The stipulated facts establish that on October 6, 2002, Richard A. Eazor was killed and Lynn Sharp was injured in a single automobile accident in Clearfield County. Eazor's estate and Sharp sued each other, with Sharp contending that Eazor drove the vehicle when the accident occurred and Eazor's estate alleging that Sharp was the driver. Progressive Insurance Company, the liability carrier for Sharp, retained counsel to represent both parties as defendants in the respective actions, while Sentry Insurance, the carrier for Eazor, remained potentially liable for underinsured motorists' coverage payable to the person deemed to be the passenger in the vehicle.

Attorney William Weiler, Jr., entered his appearance on behalf of the Eazor estate on March 24, 2005. Later that year, on December 1, 2005, Attorney Weiler became associated with the law firm of Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C., (“Meyer Darragh”), and entered into a written employment agreement acknowledging that “[a]ny and all legal work performed by Weiler will be deemed work on behalf of the Firm.” See Employment Agreement dated November 18, 2005, at Paragraph 11, Exhibit 1 to Proposed Stipulated Facts. Attorney Weiler further agreed as follows:

All fees for legal services performed during the term of this Agreement by Weiler or on behalf of any client originated by Weiler shall be the property of the Firm, regardless of whether the fees are received by the Firm during the term of this Agreement or after the expiration or termination of it and regardless of whether Weiler originated the client or matter prior to the effective date of this Agreement.... The Firm will have the sole right to collect fees due to it and Weiler will cooperate in the Firm's collection efforts. Further, it is agreed that any and all files relating to legal work performed by Weiler or on behalf of clients originated by Weiler shall be the property of the Firm and/or the clients and Weiler shall not remove same from the premises of the Firm, absent written permission from the Firm or written instructions by the client.

Id., at Paragraph 12.

One of the cases that Attorney Weiler brought with him to Meyer Darragh was the Eazor estate litigation. Attorney Scott Millhouse of Meyer Darragh subsequently became primarily responsible for the case and drafted a proposed settlement agreement dated May 3, 2007, which was sent to all counsel, but was never signed.² Attorney Millhouse, Attorney Weiler, and other employees of Meyer Darragh worked on the case over the course of nineteen months for a total of 71.25 hours. See Proposed Stipulated Facts, Paragraphs 39, 40.

Without ever having become a partner of the firm, effective May 11, 2007, Attorney Weiler resigned from Meyer Darragh. Upon his departure, he agreed that Meyer Darragh would receive two-thirds of the attorney's fees arising from the Eazor estate litigation, and that he would retain one-third of the fees. In contravention of his employment agreement, however, Attorney Weiler later removed the Eazor estate litigation client file without Meyer Darragh's permission.

Attorney Weiler subsequently became affiliated with the law firm of Malone Middleman, P.C. (“Malone Middleman”).³ The Eazor estate thereafter decided to discharge Meyer Darragh and seek representation from Attorney Weiler and Malone Middleman, causing that firm to enter its appearance on May 20, 2007. Malone Middleman took over the case and entered into a contingency fee agreement with the Eazor estate, providing that the firm would represent the estate in exchange for one-third of the proceeds of any settlement reached before suit was filed. The contingent fee agreement did not address the payment of attorney's fees to Meyer Darragh. Further, Malone Middleman did not agree in writing or otherwise to protect the fee purportedly earned by Meyer Darragh.

On June 13, 2007, after discovering the change in representation, Meyer Darragh informed Malone Middleman that it was entitled to two-thirds of any attorney's fees generated from the Eazor estate litigation pursuant to its agreement with Attorney Weiler. Malone Middleman denied that it was bound by the agreement between Attorney Weiler and Meyer Darragh, noting that, at most, Meyer Darragh may have a quantum meruit claim for actual time expended performing legal services.⁴

Shortly before the commencement of trial and after performing a total of 343 hours of legal work on the case, Malone Middleman settled the Eazor estate litigation for $235,000, with Malone Middleman receiving $67,000 in attorney's fees. Meyer Darragh thereafter reiterated its claim of entitlement to two-thirds of that fee based upon its agreement with Attorney Weiler. Alternatively, in support of a claim in quantum meruit, Meyer Darragh also submitted to Malone Middleman an itemized bill for legal services, requesting $17,673.93 ($13,087.25 in fees, $895.10 in expenses, and $3,691.58 in advances to experts). Malone Middleman did not remit any portion of the attorney's fees recovered from the Eazor estate litigation to Meyer Darragh.

In September of 2010, Meyer Darragh commenced the instant action naming Malone Middleman and the Eazor estate as defendants. Attorney Weiler, who had since passed away, was not named in the action.⁵ The amended complaint asserted: (1) a claim against Malone Middleman for breach of contract; and, (2) a claim against both Malone Middleman and the Eazor estate for quantum meruit.⁶ Before the trial court, Meyer Darragh abandoned its quantum meruit claim against the Eazor estate, acknowledging that the estate had paid Malone Middleman in full for all attorney's fees charged.

As noted, the parties submitted stipulated facts and trial exhibits, and presented oral argument to the trial court regarding their respective legal positions. Ultimately, the trial court entered a verdict in favor of Meyer Darragh and against Malone Middleman on the quantum meruit claim in the amount of $14,721.39, and denied Meyer Darragh relief on the contract claim.⁷ Both parties filed motions for post-trial relief, which the trial court denied. The trial court also found in favor of the Eazor estate on the quantum meruit claim, recognizing that Meyer Darragh had failed to pursue that contention.

In post-trial motions, although not at issue in this appeal, Malone Middleman first contended that the trial court erred by granting quantum meruit relief because Pennsylvania law prohibits a predecessor attorney from making a quantum meruit claim against a successor attorney and, instead, permits the claim to be brought only against the client. In rejecting this contention, the trial court acknowledged that Pennsylvania case law was inconsistent on the issue, but concluded that the precedent could not be read as per se prohibiting predecessor attorneys from asserting quantum meruit claims against successor attorneys. Trial Court Opinion, Nov. 26, 2012, at 5. Rather, the trial court reasoned, the applicability of quantum meruit “depends on the unique factual circumstances of each case ... [with the] ... focus ... on whether the defendant has been unjustly enriched.” Id. at 10 (citing Styer v. Hugo, 422 Pa.Super. 262, 619 A.2d 347, 350 (1993)

).

The trial court concluded that Malone Middleman would be unjustly enriched by retention of the entire fee because Meyer Darragh conferred a benefit upon it by conducting depositions and establishing a settlement framework, which was realized when Malone Middleman obtained a settlement netting $67,000 in counsel fees. Id. The trial court found that it would be inequitable for Malone Middleman to retain that benefit without payment to Meyer Darragh, considering, inter alia, that Meyer Darragh allegedly cannot seek relief from the Eazor estate because the estate already paid all outstanding attorney's fees to Malone Middleman. Id.

In addressing the contract claim against Malone Middleman, which is the subject of this appeal, the trial court held that Attorney Weiler's agreement to pay Meyer Darragh two-thirds of the Eazor estate attorney fee was not binding on Malone Middleman. It noted that Meyer Darragh's breach of contract claim was premised entirely upon the Superior Court's decision in Ruby v. Abington Memorial Hospital, 50 A.3d 128 (Pa.Super.2012)

. The trial court interpreted Ruby as holding that a predecessor law firm was entitled to a share of the attorney's fees...