Simburg, Ketter v. Olshan, 43646-5-1.

• Decision Date: 08 November 1999
• Docket Number: No. 43646-5-1.,43646-5-1.
• Citation: 988 P.2d 467,97 Wash.App. 901
• Court: Washington Court of Appeals
• Parties: SIMBURG, KETTER, SHEPPARD & PURDY, L.L.P., Respondents, v. Morton E. OLSHAN and Sylvia Olshan, husband and wife, individually and their marital community, Olshan Enterprises, Inc., and Nation-wide Sports Publications, Inc., Appellants.

988 P.2d 467

97 Wash.App. 901

SIMBURG, KETTER, SHEPPARD & PURDY, L.L.P., Respondents, v. Morton E. OLSHAN and Sylvia Olshan, husband and wife, individually and their marital community, Olshan Enterprises, Inc., and Nation-wide Sports Publications, Inc., Appellants.

No. 43646-5-1.

Court of Appeals of Washington, Division 1.

November 8, 1999.

Publication Ordered November 15, 1999.

Howard Pruzan, Miracle Pruzan Pruzan & Baker, Seattle, for Appellants.

Robert Baronsky, Seattle, for Respondents.

WEBSTER, J.

Respondent law firm sued Appellants for unpaid attorney fees claiming they entered into an accord. Appellants appeal the summary judgment order granting unpaid attorney fees to Respondent. They claim they did not enter into the accord with full revelation as required between attorney and client. We agree. Therefore, we reverse the grant of summary judgment.

FACTS

On March 6, 1991, Mort Olshan sent a letter and a $1,000 check as a retainer to Melvyn Simburg for representation in defending a lawsuit filed against him, his wife, and his companies, Olshan Enterprises, Inc. and Nation-Wide Sports Publications, Inc. ("Appellants"). In his retainer letter, Olshan acknowledged the possibility of having the lawsuit dismissed for lack of jurisdiction, presumably because he resided in California. (A former consultant to Olshan, who worked for nine years in Washington, brought the lawsuit in King County Superior Court.) On April 22, 1991, Simburg filed a motion to dismiss the complaint for lack of personal jurisdiction and defective service of process. Judge Richard S. Martinez denied the motion to dismiss at a motions hearing on May 1, 1991. The next day, Simburg wrote to Olshan:

While this is not the result we expected, the Court [sic] left open the possibility that the suit might be dismissed on a motion for forum non conveniens (or "inconvenient forum"), but would consider doing so only in a separate motion. Also after preliminary discovery we could renew our Motion to Dismiss for Lack of Jurisdiction if the discovery facts will support the motion.

Clerk's Papers ("CP") at 369.

After much pre-trial activity, Simburg made one more motion to dismiss for lack of personal jurisdiction that Judge George A. Finkle denied without prejudice. Upon hearing the judge's oral decision on jurisdiction, Simburg addressed the court:

Your Honor, before we turn to the next issue, the Court does have discretion in a situation like this to allow the defendants to have their expenses of attending trial in Washington defrayed somewhat by the plaintiffs, and we'd [sic] request that the plaintiffs pay defendant's [sic] expenses attending trial and bringing witnesses to trial.

CP at 409-410. Judge Finkle did not preclude Simburg's suggestion on costs but said he probably would consider it if the defendants prevailed at trial. CP at 410.

The defendants did not prevail at the three-week jury trial in November 1992. Simburg, however, obtained a directed verdict dismissing Olshan and his wife, personally, but not his companies. Following post-trial motions, Simburg filed a notice of appeal on behalf of Olshan's companies. The case never reached the Court of Appeals because Olshan's companies settled at $230,000.

In May 1993, Olshan received his final bill from Simburg with an outstanding fee balance of $163,861.46 including costs. At the time of settlement, Simburg says his firm already had received about $200,000 in fees plus costs ($50,000) over the course of the two-year litigation. On June 1, 1993, Olshan wrote to Simburg: "I would appreciate your combing through our invoices to double-check where time and charges might be reappraised." CP at 30.

A little over a week later, on June 10, 1993, Simburg wrote back acknowledging the high amount of time spent but said the statements "fairly reflect" the work done. CP at 36. Simburg claimed that since the court denied the motion to dismiss for lack of jurisdiction, there were additional expenses because witnesses and documents were in California while the trial took place in Washington. CP at 37. He explained the rest of the billing statements:

Approximately $50,000 of the total charges represented disbursements that were out-of-pocket costs, not legal fees. Those disbursements included depositions, expert witness fees, travel and communications, and trial preparation materials. These costs also were kept as low as possible, including using discounted air fares and inexpensive hotels or my brother's house in Los Angeles. In addition, we also found it most efficient to use Gay Gerl, a contract paralegal. Over $40,000 of the legal fees were for her services.

CP at 37. And, as a "courtesy," he offered to reduce the then remaining balance (about $153,861) by $20,000. CP at 38.

Olshan replied, acknowledging "the long hours" Simburg and his firm worked on his case and how frustrated he was about not being able to afford to settle the debt. CP at 40-1. He said he had opened a line of credit with his bank and did not give Christmas bonuses to his employees—both for the first time. CP at 41. He gave Simburg two options: 1) He could pay the Simburg firm $75,000 within 60 days to settle the debt; or 2) he could issue a note for the entire balance due (about $153,862) with monthly payments of $2,000 or more, when possible. CP at 41. Two weeks later, Simburg accepted the second option and added nearly a $24,000 reduction in the promissory note he drafted for an even balance of $130,000. CP at 43-6.

Simburg's subsequent letter a month later reveals that the promissory note he drafted upset Olshan by including a 12 percent interest rate and an acceleration clause. CP at 45, 48. In the subsequent letter, dated July 27, 1993, Simburg agreed to Olshan's original proposal for paying the full balance over time: "As we discussed, you will be paying off the $153,862 with payments of $2,000 a month or more." CP at 48. This time, there was no promissory note attached to the letter, nor interest charged to the payments. CP at 48.

On July 30, 1993, Olshan wrote back: "I appreciate your memo confirming our arrangement to pay off the balance." CP at 50. The record is silent for 18 months. Presumably, he paid $2,000 per month during that period.

Olshan then wrote to Simburg on March 13, 1995, complaining about the case having been tried in Washington along with his resulting legal expenses and demanded that they settle the debt after he paid a total of $300,000 to Simburg's firm. CP at 52. Simburg wrote back a week later empathizing with him but reminding him of the "no interest payment plan" as well as the $14,500 reduction made in November 1993 and then offered an additional 15% discount if Olshan paid in full by June 30, 1995. CP at 54-5. Olshan promptly replied, insisting on $300,000 as the total in fees to Simburg. CP at 57-8. After an exchange of a few more letters, they both refused to compromise.

In July 1997, Simburg's firm ("Respondent") filed suit in King County Superior Court. On October 18, 1998, Judge Jeffrey M. Ramsdell granted summary judgment in favor of Simburg's firm and awarded the principal balance due in the amount of $102,893.50 plus interest and taxable costs.

STANDARD OF REVIEW

Under CR 56, a grant of summary judgment is proper only when there is no genuine issue as to any material fact. In reviewing a summary judgment order, the appellate court evaluates the matter de novo and considers the facts submitted and all reasonable inferences from those facts in the light most favorable to the nonmoving party. See Wilson v. Steinbach, 98 Wash.2d 434, 437, 656 P.2d 1030 (1982). Affidavits must be made on personal knowledge and must set forth facts evidentiary in nature. See Grimwood v. University of Puget Sound, Inc., 110 Wash.2d 355, 359, 753 P.2d 517 (1988). Ultimate facts, conclusions of fact, or conclusory statements of fact are insufficient to raise a question of fact. See id. at 359-60, 753 P.2d 517.

DISCUSSION

I. Full Revelation

Appellants claim that Respondent law firm did not make a full revelation of its billing practices before entering into an accord on unpaid fees. An accord and satisfaction requires (1) a bona fide dispute; (2) an agreement to settle that dispute; and (3) performance of that agreement. See Perez v. Pappas, 98 Wash.2d 835, 843, 659 P.2d 475 (1983) (en banc). In addition, when a fiduciary claims accord and satisfaction with a principal, there is a fourth requirement: Evidence of an express agreement made upon full revelation. See id.; Ward v. Richards & Rossano, Inc., P.S., 51 Wash.App. 423, 429, 754 P.2d 120 (1988); Gleason v. Metropolitan Mortgage Co., 15 Wash.App. 481, 498, 551 P.2d 147 (1976).

In Perez, an attorney and client orally agreed to a 35 percent contingent fee in a personal injury suit. 98 Wash.2d at 837,659 P.2d 475. Upon a favorable structured settlement, the attorney failed to submit to his client a full accounting that reduced the settlement to a present cash value figure. See id. at 838, 659 P.2d 475. The attorney and client agreed that, rather than 35 percent, the attorney would take $350,000 and pay all fees due the client's former lawyers who worked on the case. See id. About six months later, another attorney referred the client to an economist who calculated that the attorney's fee substantially exceeded 35 percent of the actual present cash value of the settlement. See id. The attorney agreed to pay $37,500 plus interest to the client based on calculations arrived at between his economist and the client's economist after some compromises. See id. No written document evidenced this agreement, but the client did accept the money. See id. at 839, 659 P.2d 475. Also, the trial judge found believable the attorney's testimony that the client was satisfied with the agreement and found not credible the client's testimony that he was never happy with the fee. See id. The Washington Supreme Court noted that it was not until five months...