Riley v. Giombi, No. 2006AP801 (Wis. App. 5/15/2007)

• Decision Date: 15 May 2007
• Docket Number: No. 2006AP802.,No. 2006AP801.,2006AP801.,2006AP802.
• Court: Wisconsin Court of Appeals
• Parties: Genet Riley, Plaintiff-Appellant, v. Kyle Giombi, Defendant, Cannon and Dunphy, S.C., Third Party-Intervenor-Respondent. Josephine M. Lacap, Plaintiff-Appellant, First Health Group Corp., a Foreign Corporation, Involuntary-Plaintiff, v. Society Insurance, a Mutual Company, a Wisconsin Insurance Corporation, Metropolitan Associates Limited Partnership, a Wisconsin Limited Partnership, and Southgate Apartments, Defendants, Cannon & Dunphy, S.C., Third Party-Intervenor-Respondent.

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Genet Riley, Plaintiff-Appellant, v. Kyle Giombi, Defendant, Cannon and Dunphy, S.C., Third Party-Intervenor-Respondent.

Josephine M. Lacap, Plaintiff-Appellant, First Health Group Corp., a Foreign Corporation, Involuntary-Plaintiff, v. Society Insurance, a Mutual Company, a Wisconsin Insurance Corporation, Metropolitan Associates Limited Partnership, a Wisconsin Limited Partnership, and Southgate Apartments, Defendants, Cannon & Dunphy, S.C., Third Party-Intervenor-Respondent.

No. 2006AP801.

No. 2006AP802.

Court of Appeals of Wisconsin, District I.

Opinion Filed: May 15, 2007.

APPEAL from an order of the circuit court for Milwaukee County: CLARE L. FIORENZA, Judge. Affirmed.

APPEAL from an order of the circuit court for Milwaukee County: CHRISTOPHER R. FOLEY, Judge. Affirmed.

Before Fine, Curley and Kessler, JJ.

¶ 1 KESSLER, J

Attorney James J. Gende, trial counsel for Genet Riley and Josephine M. Lacap, appeals from: (1) trial court orders in their cases which allowed Cannon & Dunphy, S.C. to intervene; and (2) summary judgment in favor of Cannon & Dunphy enforcing an attorney lien on settlement proceeds in both Riley's and Lacap's cases, including allocation of the fees from those cases between Gende and Cannon & Dunphy according to the terms of Gende's Separation Agreement with Cannon & Dunphy. Because we conclude that the trial courts properly exercised discretion in allowing Cannon & Dunphy to intervene, and properly granted summary judgment in each instance, we affirm.

¶ 2 We note that in both of these cases, the Retainer Contracts Riley and Lacap first signed with Cannon & Dunphy, and the Employment Contract and Separation Agreement between Cannon & Dunphy and Gende, are identical to those involved in the consolidated cases of other prior Cannon & Dunphy clients later represented by Gende. The real dispute here, as in our prior decision, Markwardt v. Zurich American Insurance Co., 2006 WI App 200, 296 Wis. 2d 512, 724 N.W.2d 669, is between Gende and Cannon & Dunphy, his former employer. The named clients here, as in Markwardt, have no economic or other discernable interest in the outcome of this proceeding.

I. BACKGROUND

A. Introductory information

¶ 3 We have previously described in detail the nature of Gende's contracts with Cannon & Dunphy during the time he was employed by that firm. See id., ¶¶1-7. We see no reason to repeat that description here.

¶ 4 Gende has challenged the validity of the Separation Agreement in a separate action venued in Waukesha County. The trial court upheld the Agreement. Gende's appeal is now pending in District II before the Wisconsin Court of Appeals (Gende v. Cannon & Dunphy, S.C., No. 2006AP1323).

¶ 5 While Gende was employed by Cannon & Dunphy, Riley and Lacap each signed a Retainer Contract in which they retained "Cannon & Dunphy, S.C.," not Gende, to handle specified personal injury claims. With the exception of the name of the client, the date, and the description of the injury, the Retainer Contracts signed by both Riley and Lacap are identical to the Retainer Contract previously discussed in detail in Markwardt, 296 Wis. 2d 512, ¶¶12-16. Our previous analysis is equally applicable here and need not be repeated. When Gende left Cannon & Dunphy, Riley and Lacap did also and signed a new Retainer Contract with Gende. As in Markwardt, there is no evidence that either of these clients discharged Cannon & Dunphy for cause. We discuss each client's case separately.

B. Riley personal injury case

¶ 6 Riley was injured in an automobile accident on January 22, 2003. On November 21, 2003, Riley signed a Retainer Contract with Cannon & Dunphy. After Gende left Cannon & Dunphy, Riley signed a new Retainer Contract with Gende Law Offices, S.C. Cannon & Dunphy transferred Riley's file to Gende and on May 26, 2004, notified the insurer, Badger Mutual Insurance Company, that it maintained a lien on any settlement proceeds relating to the January 22, 2003 accident between Riley and Badger Mutual's insured, and requested that Cannon & Dunphy be named on any settlement check.

¶ 7 On April 14, 2005, Riley, through her counsel Gende, settled with Badger Mutual for $50,000. On May 10, 2005, Gende asked Cannon & Dunphy whether they intended to assert a lien against the settlement proceeds, and if so, in what amount and to provide supporting documentation. On May 18, 2005, Cannon & Dunphy hand-delivered to Gende its assertion of its lien pursuant to WIS. STAT. § 757.36 (2005-06).¹

¶ 8 After learning that Cannon & Dunphy intended to enforce its attorney lien, on June 23, 2005, Gende filed a complaint on Riley's behalf against Kyle Giombi, the individual who was driving the automobile which caused Riley's injury underlying the present action. On August 2, 2005, Giombi answered, denying all the allegations and asserting that he was subject to a pending Chapter 7 Bankruptcy proceeding. On September 14, 2005, Cannon & Dunphy moved to intervene "to protect, enforce and recover its share of attorney fees and costs out of the settlement and any other recovery in this case." Gende (in Riley's name)² filed an answer and asserted what were described as affirmative defenses to Cannon & Dunphy's motion to intervene. In addition, Gende moved to strike Cannon & Dunphy's pleadings. Cannon & Dunphy responded with a motion to strike Gende's answer and affirmative defenses. The trial court granted Cannon & Dunphy's motion to intervene on October 28, 2005.

¶ 9 At a hearing on December 19, 2005, the trial court denied Gende's motion to consolidate this case with Gende v. Cannon & Dunphy, S.C., No. 2006AP1323, and awarded Cannon & Dunphy its portion of fees and costs from the settlement proceeds according to the terms of the Separation Agreement. Gende moved for reconsideration, which the trial court denied. This appeal followed.³

C. Lacap personal injury case

¶ 10 On January 5, 2001, Lacap was injured when she slipped and fell. On May 5, 2001, she signed a Retainer Contract with Cannon & Dunphy. On December 4, 2003, Lacap filed a complaint against the owner and insurer, Society Insurance, of the location where she fell. Cannon & Dunphy, on behalf of Lacap, made a settlement offer of $200,000 on February 10, 2004. After Gende left Cannon & Dunphy, Lacap signed a new Retainer Contract with Gende Law Offices. Cannon & Dunphy transferred Lacap's file to Gende and on May 14, 2004, notified Society Insurance of its lien on any settlement proceeds relating to Lacap's January 5, 2001 fall. The letter specifically noted that "[w]e have reached an agreement with Mr. Gende and do not anticipate the need to place Cannon & Dunphy's name on any checks you might issue." On October 6, 2005, Society Insurance informed the trial court that the parties had settled the matter. A subsequent dispute between Gende and Cannon & Dunphy about apportionment of the costs and fees between them resulted in Society Insurance paying the disputed amount into the clerk of court's office.

¶ 11 The Lacap matter was settled for $100,000. Cannon & Dunphy and Gende agreed that the total amount of fees from the settlement would be thirty percent (a reduction from the thirty-three and one-third percent contingency fee agreed to by Lacap in both her Retainer Contract with Cannon & Dunphy and her subsequent Retainer Contract with Gende). Cannon & Dunphy's counsel informed the court in writing on November 8, 2005, about the fee dispute regarding the settlement funds in the Lacap matter and about Cannon & Dunphy's intent to move to intervene. On November 9, 2005, the trial court signed a stipulation (between Lacap and the insurance company) and an order for dismissal of the matter with prejudice. Cannon & Dunphy filed its motion to intervene "to protect, enforce and recover its share of attorney fees and costs out of the settlement of this case" on November 15, 2005.

¶ 12 Thereafter, Gende opposed Cannon & Dunphy's motion to intervene, moved to consolidate this action with his then-pending appeal, Gende v. Cannon & Dunphy, S.C., No. 2006AP1323, and moved to strike Cannon & Dunphy's motion for summary judgment as untimely. At a hearing on November 28, 2005, the trial court sua sponte reopened the case, granted Cannon & Dunphy's motion to intervene, denied Gende's motions to consolidate and to strike, and ordered that, pursuant to the Separation Agreement, Cannon & Dunphy receive eighty percent of the settlement proceeds which were allocated to attorney fees (total fees of $30,000) and Cannon & Dunphy's costs ($1,585.97) also be paid. The costs were described and documented in the affidavit of Attorney William M. Cannon. Gende moved for reconsideration, which the trial court denied. This appeal followed.⁴

II. ANALYSIS

A. Intervention as a matter of right

¶ 13 "Intervention is `[t]he entry into a lawsuit by a third party who, despite not being named a party to the action, has a personal stake in the outcome.'" Olivarez v. Unitrin Prop. & Cas. Ins. Co., 2006 WI App 189, ¶11, 296 Wis. 2d 337, 723 N.W.2d 131 (quoting City of Madison v. WERC, 2000 WI 39, ¶11 n.7, 234 Wis. 2d 550, 610 N.W.2d 94). "The effect of intervention is to make the intervenor a full participant in the lawsuit." Id.

¶ 14 The first question we must decide is whether the trial court erred in permitting Cannon & Dunphy to intervene in these actions as a matter of right. Intervention as of right is governed by WIS. STAT. § 803.09,⁵ and has been interpreted by our supreme court as creating a four-part, conjunctive test, consisting of:

(1) timely application for intervention; (2) an interest relating to the property or transaction which is the subject of the action; (3) that the disposition of the action may as a practical matter impair or impede the proposed intervenor's ability to protect that interest; and (4) that the proposed intervenor's interest is not adequately represented by existing parties.

Olivarez, 296 Wis. 2d 337, ¶12. All elements must...