Phelps Steel, Inc. v. Von Deak

• Decision Date: 06 August 1987
• Citation: 24 Mass.App.Ct. 592,511 N.E.2d 42
• Parties: PHELPS STEEL, INC. v. Andrew VON DEAK et al. 1
• Court: Appeals Court of Massachusetts

Page 42

511 N.E.2d 42

24 Mass.App.Ct. 592

PHELPS STEEL, INC. v. Andrew VON DEAK et al. ¹

Appeals Court of Massachusetts Hampden.

Argued March 9, 1987.

Decided Aug. 6, 1987.

Prescott C. Sook, Albany, N.Y., for plaintiff.

H. Gregory Williams and Ronald S. Smith, Springfield, for Cain, Hibbard, Myers & Cook.

Before Greaney, C.J., and Cutter and Kass, JJ.

KASS, Justice.

What we have here is the assertion of an attorney's lien under G.L. c. 221, § 50, following rupture of the attorney-client relationship. We affirm a judgment awarding a lien of $108,000 in favor of Cain, Hibbard, Myers & Cook (hereafter "CHMC"), a professional corporation. ²

CHMC had acted as counsel for Phelps Steel, Inc. (Phelps), a fabricator and erector of structural steel, in a construction contract dispute with Pyramid Company of Holyoke (Pyramid) (see note 1). That case had gone well for Phelps, resulting in a judgment in its favor of $286,651. Between the time of a master's report, which was, by any measure, a triumph for Phelps, and the report's adoption, the relationship between Phelps and CHMC soured. Phelps found fault, among other matters, with CHMC's decision not to file objections to the master's report (that report had resolved the major issues in favor of Phelps), the manner in which CHMC was keeping Phelps informed, the amount of lawyers' time spent, and the decision to order daily transcript. One week prior to a scheduled hearing before the master to consider Pyramid's objections to the master's report, CHMC protested what it saw as "attacks on [its] personal integrity and professional competence." It asked for a written vote of confidence from Phelps dispelling CHMC's perception. Failing that, CHMC said, it would report to the master that it was not authorized to proceed on Phelps' behalf. Far from giving CHMC comfort, Phelps responded with complaints about "blackmail" and "abandonment." Phelps also informed CHMC that it had engaged a replacement.

1. CHMC's Entitlement to an Attorney's Lien. Relying on White v. Harlow, 5 Gray 463, 466 (1855), Phelps argues that the withdrawal of a lawyer from the cause forfeits the attorney's lien. Even if that were a correct statement of the law, it would leave open the question whether CHMC left the case upon its initiative or was pushed. The same master who had heard the underlying construction contract dispute held hearings (on order of the court) on the fee and attorney's lien controversies. In substance, the master found that CHMC had been placed in a position where it was bound to withdraw, i.e., it was pushed.

The applicable principle regarding waiver of an attorney's lien by withdrawal is not nearly so broad as Phelps states it. White v. Harlow, 5 Gray at 466, assumes that the withdrawal of the lawyer in that case was "wholly voluntary." Whether withdrawal works a waiver of the attorney's lien depends on whether the attorney had good cause to withdraw. Thus if, for example, withdrawal occurs because of a breakdown in the lawyer-client relationship, illness of the lawyer, or development of an unforeseen, and reasonably not foreseeable, conflict of interest the attorney's lien remains intact. Powers v. Manning, 154 Mass. 370, 375-377, 28 N.E. 290 (1891). Pearlmutter v. Alexander, 97 Cal.App.3d Supp. 16, 19-20, 158 Cal.Rptr. 762 (1979). Ambrose v. Detroit Edison Co., 65 Mich.App. 484, 488, 237 N.W.2d 520 (1975). See also Schwartz v. Jones, 58 Misc.2d 998, 999, 297 N.Y.S.2d 275 (N.Y.Sup.Ct.1969); Midvale Motors, Inc. v. Saunders, 21 Utah 2d 181, 182-183, 442 P.2d 938 (1968). Breakdown of the lawyer-client relationship serves as good cause for withdrawal, without waiver of the attorney's lien. See In the Matter of M.E. v. S.G., 124 Misc.2d 851, 851-853, 478 N.Y.S.2d 539 (N.Y.Fam.Ct.1984). Cf. National Sales & Serv. Co. v. Superior Court of Maricopa County, 136 Ariz. 544, 545-547, 667 P.2d 738 (1983). The lawyer-client relationship is founded on trust and confidentiality. When those foundations deteriorate, it is not only impractical to persist in the relationship, it diminishes the integrity of the bar to do so. Salem Realty Co. v. Matera, 10 Mass.App.Ct. 571, 575, 410 N.E.2d 716 (1980), S.C., 384 Mass. 803, 426 N.E.2d 1160 (1981). See also Ambrose v. Detroit Edison Co., 65 Mich.App. at 488-489, 237 N.W.2d 520; In re Dunn, 205 N.Y. 398, 402, 98 N.E. 914 (1912).

It is also a factor in favor of CHMC that it had rendered substantially all the services required to obtain a favorable result for Phelps at the trial level. Thus, even if CHMC's withdrawal from the case had not been provoked by Phelps, there was, assuming some good cause for withdrawal, a solid basis for the statutory lien, which attaches "[f]rom the authorized commencement of an action." G.L. c. 221, § 50. See In re Hoy's Claim, 93 F.Supp. 265, 266 (D.Mass.1950). Cf. Newton Housing Authy. v. Cumberland Constr. Co., 5 Mass.App.Ct. 1, 8-10, 358 N.E.2d 474 (1977). See also Salem Realty Co. v. Matera, 384 Mass. at 804, 426 N.E.2d 1160.

2. Reasonableness of the Fee. Initially, Phelps had engaged CHMC on a time-charge basis. After commencement of the litigation, Phelps found the cost of maintaining the action burdensome and asked to go on a contingent fee basis. Client and lawyer entered into a written contingent fee agreement on October 8, 1983. See S.J.C. Rule 3:05, as amended, 382 Mass. 762-765 (1981). The master regarded the contingent fee as abrogated by the departure of CHMC from ...