Salem Realty Co. v. Matera

• Decision Date: 29 September 1980
• Parties: SALEM REALTY COMPANY v. Francis V. MATERA.
• Court: Appeals Court of Massachusetts

Page 716

410 N.E.2d 716

10 Mass.App.Ct. 571

SALEM REALTY COMPANY v. Francis V. MATERA.

Appeals Court of Massachusetts, Essex.

Argued May 16, 1980.

Decided Sept. 29, 1980.

James T. Ronan, Salem, for plaintiff.

Thomas D. Burns, Boston, (James F. Kavanaugh, Jr., Boston, with him), for defendant.

Before GOODMAN, DREBEN and KASS, JJ.

KASS, Justice.

Salem Realty Co. (Realty) hired Francis V. Matera in 1969 on a contingent fee basis to represent it in connection with three land taking cases in Salem. In 1975, following a change in the identity of its controlling shareholders, Realty dismissed Mr. Matera while the three cases were still incomplete. The point in controversy is what Mr. Matera is entitled to receive in legal fees, having been barred by Realty from achieving the contingency contracted for, i. e ., a recovery from the taking authority.

The case originated on Realty's petition in the Supreme Judicial Court to discharge a contingent fee agreement. See S.J.C. Rule 3:14(6), 351 Mass. 797 (1967). Realty brought a motion for summary judgment in that court founded on the proposition that Mr. Matera was to receive no more than the $10,000 minimum provided for in the contingent fee agreement. That motion was denied, and the court transferred the case to the Superior Court under G.L. c. 211, § 4A. Prior to the transfer, Mr. Matera filed a counterclaim asking for compensation calculated by using the contingent fee agreement as a guide. Following depositions and other discovery, the case was referred to a master. Superior Court Rule 49(2) (1974).

We have the benefit of a thoughtful and detailed master's report, and we take our facts from the master's findings, which we accept unless clearly erroneous, Mass.R.Civ.P. 53(e)(2), 365 Mass. 820 (1974), mutually inconsistent, contradictory or vitiated in view of the controlling law. Covich v. Chambers, --- Mass.App. ---, --- ^a, 397 N.E.2d 1115 (1979).

Mr. Matera was first consulted by Realty, a corporation, in the latter part of 1968 when urban renewal takings by the Salem Redevelopment Authority, which had been in the wind, became imminent . All the stock in Realty was owned by a trust under the will of John A. Deery, who had died in 1954. Under the terms of the trust it was to end in 1974; thus it had five to six years to run in 1968. Realty had corporate counsel but selected Mr. Matera to assist it with its land taking cases because he was an eminent domain specialist of reputation. Three parcels appeared destined for acquisition: (a) the "A & P property" at 24-26 Federal Street and 9-11 Washington Street; (b) the "Woolworth property" at 198-206 Essex Street and 19-25 Church Street; and (c) a theater and parking lot at 180 Essex Street, 7-11 Church Street, and 7-23 St. Peter Street.

Discussions about compensation ensued, and in the interim, Mr. Matera worked without a specific fee arrangement. Mr. Matera advanced various fee formulae, and the parties settled on terms requiring a retainer of $10,000 to be credited against a fee of thirty-five percent of all sums recovered in excess of the taking authority's pro tanto payments. See G.L. c. 79, § 8A. Expenses of litigation, e. g., appraisers' fees, engineering reports, photographs and charts, were to be borne by the client. On July 29, 1969, Realty signed a fee agreement which conformed with the requirements of S.J.C. Rule 3:14, including a provision that the agreement was subject to that rule. Two of the trustees of the trust which owned the stock of Realty also signed the fee agreement on July 29, 1969, and the third trustee signed it November 3, 1969.

Rumblings of discontent about the fee agreement on the part of the beneficiaries of the trust developed at once and sputtered intermittently during 1969, 1970, 1973, 1974 and 1975. During the latter years the displeasure which the beneficiaries expressed concerned the slow progress of the cases more than the fee arrangement, although the latter issue still smouldered. Most of the opposition to the retention of Mr. Matera was raised by Gerald M . Shea, himself a lawyer in a large New York firm, who is a son of one of the beneficiaries.

In April, 1974, the case involving the A & P parcel came on for trial before a Superior Court judge sitting without jury, and Realty obtained a finding of damages that was $75,000 above the pro tanto award. The Salem Redevelopment Authority, displeased by that result, asked for a jury trial. G.L. c. 79, § 22, as appearing in St. 1973, c. 983, § 1. Negotiations to settle the case short of a second trial followed. Before their conclusion, Mr. Matera was discharged by Realty, whose stockholders now were the very persons who had earlier been the disgruntled beneficiaries of Deery's testamentary trust; that trust had terminated by its terms the previous year.

The master found no professional failure by Mr. Matera in connection with the eminent domain cases which might have justified a discharge for cause by Realty's new officers and stockholders, although he found that they "reasonably could have felt . . . (almost six years having elapsed since the takings) that other counsel might press the cases with more vigor and diligence." ¹ New counsel settled the A & P parcel case on February 15, 1977, without a second trial, and proceeded to try the other two cases jury-waived. The aggregate recovery above the pro tanto offers was $453,543, inclusive of interest (the master found the contingent fee agreement ambiguous as to whether interest was to be included in calculating the recovery over the pro-tanto).

The master concluded that Mr. Matera was not entitled to recover under the fee agreement, but was entitled to the fair value of the services rendered by him. Taking account of factors we shall discuss below, the master found the fair value of Mr. Matera's services in connection with the three properties to be $47,500 and recommended entry of judgment of $37,500 ($47,500 less the $10,000 retainer) with interest from March 24, 1976, the date of Mr. Matera's answer and counterclaim in the present case. A Superior Court judge adopted the master's report and entered judgment accordingly. Both sides appealed.

1. The status of the contingent fee agreement. ²

Contingent fees are, of course, lawful in Massachusetts, S.J.C. Rule 3:14, ³ and, indeed, are ordinary in eminent domain cases. MacKinnon, Contingent Fees for Legal Services 28 (1964). There is no dispute that the fee agreement between Mr. Matera and Realty complied with the requirements of rule 3:14, notably those which appear in paragraphs (4) and (5) of the rule. By the terms of the rule (see paragraph (6)), the "reasonableness of a contingent fee agreement shall be subject to review by a court . . . ." See Cameron v. Sullivan, 372 Mass. 128, 132, 360 N.E.2d 890 (1977); Snow v. Mikenas, 373 Mass. 809, 812-813, 370 N.E.2d 1001 (1977). In conferring this power to review the fairness of contingent fee agreements, rule 3:14 reinforces the general principle that lawyers' fees shall be reasonable, giving due weight to all the circumstances. See Cummings v. National Shawmut Bank, 284 Mass. 563, 568-569, 188 N.E. 489 (1933); First Nat'l Bank v. Brink, 372 Mass. 257, 264, 361 N.E.2d 406 (1977); DeSautels, petitioner, 1 Mass.App. 787, 794, 307 N.E.2d 576 (1974).

Apart from being subject to review, a facially valid contingent fee agreement does not insure the lawyer's employment until the case is completed. A client's right to change his lawyer at any time for any cause or no cause at all is inherent in the characteristics of trust and confidentiality in the lawyer-client relationship. See Walsh v. O'Neill, 350 Mass. 586, 590, 215 N.E.2d 915 (1966); Duggan v. Taunton, 360 Mass. 644, 649, 277 N.E.2d 268 (1971). MacKinnon, Contingent Fees for Legal Services 77. Speiser, Attorneys' Fees § 4:32 (1973). If it is bootless to make an opera singer sing, Lumley v. Wagner, 42 Eng.Rep. 687, 693 (1852), it makes still less sense in a civil case to require that a lawyer advocate and a client take advice once they have had a falling out. Not only is contractual yoking of lawyer and client impractical; it would diminish the integrity of the bar and undermine public confidence in it.

2. The appropriate measure of compensation.

In fact, Mr. Matera has never challenged the right of his client to change lawyers. But the right of a client so to do has not much value if the client is put at risk to pay the full contract price for services not rendered and to pay a second lawyer as well. Fracasse v. Brent, 6 Cal.3d 784, 789, 100 Cal.Rptr. 385, 494 P.2d 9 (1972). ⁴ That might well force a choice between adherence to a lawyer in whom the client has lost faith or the risk of double fees. For the discharged lawyer, therefore, recovery cannot be on the contingent fee contract, but for a reasonable fee on a quantum meruit basis. Id. at 791, 100 Cal.Rptr. 385, 494 P.2d 9. MacKinnon, Contingent Fees for Legal Services 77-80. Speiser, Attorneys' Fees § 4:36, at 187, and cases cited in n. 94.

Since the contingent fee agreement will not govern a discharged lawyer's compensation, we cannot agree with Realty's contention that Mr. Matera is entitled to no more than the minimum fee of $10,000 for which the agreement provides. Realty cannot have it both ways. It cannot abrogate...