Skeens v. Miller

• Decision Date: 01 September 1992
• Docket Number: No. 61,61
• Citation: 628 A.2d 185,331 Md. 331
• Parties: Edward John SKEENS v. Helen Martha MILLER. ,
• Court: Maryland Court of Appeals

Page 331

331 Md. 331

628 A.2d 185

Edward John SKEENS v. Helen Martha MILLER.

No. 61, Sept. Term, 1992.

Court of Appeals of Maryland.

July 27, 1993.

Edward John Skeens, Suitland, on brief, for petitioner.

Raymond M. Hertz, Greenbelt, on brief, for respondent.

Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, McAULIFFE, CHASANOW, KARWACKI and ROBERT M. BELL, JJ.

KARWACKI, Judge.

We issued a writ of certiorari in this case to determine at what time an attorney, who is retained on a contingent fee agreement and who is discharged without cause by the client prior to the occurrence of the contingency, may recover for the reasonable value of the services performed prior to discharge.

I.

On June 28, 1989, respondent, Helen Martha Miller, retained petitioner, Edward John Skeens, to represent her in a personal injury claim arising out of an automobile accident that had occurred several days earlier. Their written agreement embodied a typical contingent fee arrangement by which Skeens was to be paid thirty-three and one-third percent of any amount recovered by Miller, whether by way of lawsuit or settlement. It also provided that in the event no recovery was made, or a lawsuit proved unsuccessful, Skeens was not entitled to any fee. Their agreement was silent as to any compensation due Skeens in the event that he was discharged by Miller prior to occurrence of the contingency.

Some fifteen months after retaining Skeens, Miller sent a letter to Skeens, discharging him as her attorney, and requesting that her file be forwarded to another attorney together with a bill for any costs incurred on her behalf. By a letter dated November 19, 1990, Skeens wrote Miller informing her that he was delivering her file to her new attorney that day and that he expected to be paid the reasonable value of the work he had performed for her. Skeens enclosed an itemized statement of his services, totaling more than eighteen hours of work. Skeens asserted that the reasonable value of those services, at an hourly rate of $150.00, was $2,740.00. ¹ Skeens informed Miller that he expected to be paid immediately regardless of whether she ever recovered on her claim. Skeens stated that, if she lacked the money to pay him immediately, he would accept an assignment of her settlement proceeds from the insurance carrier allegedly obligated to satisfy her personal injury claim.

After failing to receive either an assignment of settlement proceeds or any money from Miller, Skeens filed suit on January 11, 1991, against Miller in the District Court of Maryland, sitting in Prince George's County, for $2,740.00. In his complaint, Skeens alleged that he was discharged without cause, and based his claim solely on quantum meruit.

When the case was called for trial on June 19, 1991, Judge Thurman H. Rhodes granted Miller's motion to dismiss the complaint without prejudice. The trial court reasoned that the claim for quantum meruit was premature until there was a recovery in Miller's underlying personal injury action.

Skeens appealed to the Circuit Court for Prince George's County. In an opinion an order, Judge Larnzell Martin, Jr. affirmed the judgment of the District Court, reasoning that Skeens's claim for quantum meruit would arise only upon the successful occurrence of the contingency stated in the attorney-client agreement.

Skeens then appealed to the Court of Special Appeals which in turn transferred the action to this Court. ² We subsequently granted Skeens's petition for a writ of certiorari.

II.

It is well settled that the authority of an attorney to act for a client is revocable at the will of the client. Palmer v. Brown, 184 Md. 309, 316, 40 A.2d 514, 517 (1945); Boyd v. Johnson, 145 Md. 385, 389, 125 A. 697, 698-99 (1924); Western Union Tel. Co. v. Semmes, 73 Md. 9, 18, 20 A. 127, 128 (1890); F. MacKinnon, Contingent Fees for Legal Services 77 (1964); S. Speiser, Attorneys' Fees §§ 4.24, 4.32 (1973 & Supp.1991); C. Wolfram, Modern Legal Ethics § 9.5.2 (1986). The client's power to discharge the attorney is an implied term of the retainer contract. Vogelhut v. Kandel, 308 Md. 183, 192, 517 A.2d 1092, 1097 (1986) (Rodowsky, J., concurring); Martin v. Camp, 219 N.Y. 170, 174, 114 N.E. 46, 48, reh'g denied, 219 N.Y. 627, 114 N.E. 1072 (1916), modified on other grounds, 220 N.Y. 653, 115 N.E. 1044 (1917); S. Speiser, supra, § 4:24, at 172. This right is deemed necessary in view of the confidential nature of the relationship between attorney and client and the evil that would be engendered by friction or distrust. Martin, 219 N.Y. at 173-74, 114 N.E. at 48; F. MacKinnon, supra, at 77; S. Speiser, supra, § 4:24, at 172.

Because the client's power to end the relationship is an implied term of the retainer contract, the modern rule is that if the client terminates the representation, with or without cause, the client does not breach the retainer contract, and thus, the attorney is not entitled to recover on the contract. Vogelhut, 308 Md. at 192, 517 A.2d at 1097 (Rodowsky, J., concurring); C. Wolfram, supra, § 9.5.2, at 546; Hillman, Law Firms and Their Partners: The Law and Ethics of Grabbing and Leaving, 67 Tex.L.Rev. 1, 17 (1988); Note, Attorney-Client--Attorney's Right to Compensation When Discharged Without Cause From a Contingent Fee Contract--Covington v. Rhodes, 15 Wake Forest L.Rev. 677, 677-78 (1979). If the client discharges the attorney for cause, the prevailing rule is that the attorney may not recover any compensation. Attorney Grievance Comm'n v. Korotki, 318 Md. 646, 669, 569 A.2d 1224, 1235-36 (1990); Vogelhut, 308 Md. at 192, 517 A.2d at 1097 (Rodowsky, J., concurring); F. MacKinnon, supra, at 77-78; S. Speiser,supra, § 4:37, at 189-90. Nevertheless, if the representation is terminated either by the client without cause or by the attorney with justification, the attorney is entitled to be compensated for the reasonable value of the legal services rendered prior to termination. Korotki, 318 Md. at 670, 569 A.2d at 1236; Vogelhut, 308 Md. at 192, 517 A.2d at 1097 (Rodowsky, J., concurring); Palmer, 184 Md. at 316, 40 A.2d at 517; Boyd, 145 Md. at 389-90, 125 A. at 699; Western Union Tel. Co., 73 Md. at 20-21, 20 A. at 128; S. Speiser, supra, 4:36, at 73-74 (Supp.1991); C. Wolfram, supra, § 9.5.2, at 546; Hillman, supra, at 17; Note, supra, at 677-78.

Because the trial court dismissed this case for failure of the petitioner's complaint to state a claim upon which relief could be granted, we assume the truth of all relevant and material facts that are well pleaded and all inferences which can reasonably be drawn from those pleadings. Figueiredo-Torres v. Nickel, 321 Md. 642, 647, 584 A.2d 69, 72 (1991); Sharrow v. State Farm Mut. Auto. Ins. Co., 306 Md. 754, 768, 511 A.2d 492, 499-500 (1986). Therefore, for purposes of the instant appeal we consider Miller to have terminated Skeens's representation without cause.

III.

Although courts generally agree that an attorney discharged without cause is entitled to be compensated for the reasonable value of legal services rendered prior to discharge, there is no clear consensus on the issue which we have never squarely addressed and which is the subject of the instant case. Namely, where an attorney has been retained on a contingent fee agreement and has been discharged without cause prior to the occurrence of the contingency, thereby entitling the attorney to be compensated for the reasonable value of the legal services rendered prior to discharge, when does his cause of action accrue. ³

Other courts that have addressed this issue follow one of two schools of thought referred to as the "California rule" and the "New York rule." Courts following the California rule hold "that the cause of action to recover compensation for services rendered prior to the revocation of a contingent fee contract does not accrue until the occurrence of the stated contingency." Fracasse v. Brent, 6 Cal.3d 784, 792, 494 P.2d 9, 15, 100 Cal.Rptr. 385, 390-91 (1972); see also Rosenberg v. Levin, 409 So.2d 1016, 1022 (Fla.1982); Plaza Shoe Store, Inc. v. Hermel, Inc., 636 S.W.2d 53, 59-60 (Mo.1982); Clerk of Superior Court v. Guilford Builders Supply Co., Inc., 87 N.C.App. 386, 390, 361 S.E.2d 115, 118 (1987), cert. denied, 321 N.C. 471, 364 S.E.2d 918 (1988); First Nat'l Bank & Trust Co. v. Bassett, 183 Okl. 592, 595, 83 P.2d 837, 840 (1938). Under that rule, it follows that the discharged attorney will be denied compensation in the event recovery is not obtained in the case which was being handled under a contingent fee agreement. Fracasse, 6 Cal.3d at 792, 494 P.2d at 14, 100 Cal.Rptr. at 390; Rosenberg, 409 So.2d 1022; Plaza Shoe Store, Inc., 636 S.W.2d at 59; Clerk of Superior Court, 87 N.C.App. at 390, 361 S.E.2d at 118.

The Supreme Court of California adopted its rule for two reasons.

"First, one of the significant factors in determining the reasonableness of an attorney's fee is 'the amount involved and the result obtained.' It is apparent that any determination of the 'amount involved' is, at best, highly speculative until the matter has finally been resolved. Second, and perhaps more significantly, we believe it would be improper to burden the client with an absolute obligation to pay his former attorney regardless of the outcome of the litigation. The client may and often is very likely to be a person of limited means for whom the contingent fee arrangement offers the only hope of establishing a legal claim. Having determined that he no longer has the trust and confidence in his attorney necessary to sustain that unique relationship, he should not be held to have incurred an absolute obligation to compensate his former attorney."

6 Cal.3d at 792, 494 P.2d at 14, 100 Cal.Rptr. at 390. Courts following the California rule have amplified the reasons for deferring the accrual of the cause of action until the occurrence of the contingency. Courts have stated that such a rule furthers the...