Walker v. Gribble

• Citation: 689 N.W.2d 104
• Decision Date: 10 November 2004
• Docket Number: No. 03-1380.,03-1380.
• Parties: Pamela J. WALKER, Appellant, v. Charles E. GRIBBLE, Appellee, and Gribble & Prager, P.C., Intervenor-Appellee.
• Court: Iowa Supreme Court

689 N.W.2d 104

Pamela J. WALKER, Appellant, v. Charles E. GRIBBLE, Appellee, and Gribble & Prager, P.C., Intervenor-Appellee.

No. 03-1380.

Supreme Court of Iowa.

November 10, 2004.

Mark D. Sherinian of Sherinian & Walker, P.C., Des Moines, for appellant.

Mark J. Wiedenfeld and Joseph P. McLaughlin of Wiedenfeld & McLaughlin, L.L.P., Des Moines, for appellees.

STREIT, Justice.

Breaking up is hard to do. Eight years after signing a settlement agreement that broke up their law firm, two lawyers are still fighting over how to divide the proceeds from four potentially lucrative cases they took long ago on a contingency-fee basis. In essence, one of the lawyers claims she violated the Iowa Code of Professional Responsibility for Lawyers when she signed the agreement and for this reason asks us to void it so she can recover a larger share of the proceeds. Because we find the agreement does not run afoul of the Code, we decline to interfere with the parties' bargain. Therefore, we affirm the district court's order granting the defendant's motion for summary judgment.

I. Facts and Prior Proceedings

As viewed in a light most favorable to the plaintiff, Pamela Walker, the facts are as follows:

Pamela Walker (f/k/a Pamela Prager) and Charles Gribble are lawyers in the Des Moines area. In 1994, several individuals asked Gribble if he would represent them in a lawsuit (Raper) against the State of Iowa for alleged overtime-pay violations. Walker — who was working for Gribble as an independent contractor — researched the issues, prepared the complaint, and consulted with the plaintiffs. Gribble performed little work on the case.

In the summer of 1994, Whitfield & Eddy, a Des Moines law firm, took in Gribble as a shareholder and Walker as an associate. While at Whitfield & Eddy, Walker continued to work on Raper. A plaintiff in another overtime-pay case (Varnum) also contacted Walker while at Whitfield & Eddy. Because Walker could not attend the initial consultation she had arranged, Gribble held the first meeting with the clients and signed the fee agreement. Walker performed all subsequent work on Varnum.

In 1995, Gribble and Walker left Whitfield & Eddy and formed a partnership in a new firm, Gribble & Prager ("the firm"). Under the terms of their partnership, the two agreed to split their income seventy percent to Gribble and thirty percent to Walker. Whereas Gribble contributed $7000 to the capitalization of the firm, Walker contributed $3000, which she borrowed from Gribble. Gribble also loaned the firm $130,000.

During the time Gribble and Walker were practicing together at the firm, plaintiffs in two other overtime-pay cases (Phillips and Kennedy) contacted Walker. Although the parties admit the clients in Raper, Varnum, Phillips, and Kennedy (collectively referred to as "the overtime-pay cases") were clients of the firm, Gribble, the majority shareholder, did little or no work on them.

In early 1996, a disagreement between Gribble and Walker over Gribble's handling of the overtime-pay cases erupted. Walker complained Gribble had not done any work on them and was unwilling to get involved. Walker packed up her belongings, marched out of the firm, and took Gribble's long-time secretary with her.

The parties resolved their disagreements through mediation. Both parties were represented by counsel. During mediation, Gribble insisted he remain involved in the overtime-pay cases; Walker wanted Gribble to submit the matter for client consideration. After meeting with Walker and Gribble, the clients decided they wanted Walker to represent them. See Phil Watson, P.C. v. Peterson, 650 N.W.2d 562, 565 n. 1 (Iowa 2002)

("[C]lients do not `belong' to [a] firm or its individual members; clients are free to choose their own attorney....").

The mediation culminated in a "settlement agreement" signed in July 1996 by Gribble, Walker, and the firm. The agreement resolved a number of hotly contested issues. First and foremost, the parties formally agreed to end their partnership. Gribble forgave a personal loan to Walker in the amount of $1750. The parties promised to stop making derogatory comments about one another and to release and forever discharge each other from all claims they might have against one another.

The parties agreed to split all fees they might earn in the overtime-pay cases as follows: in Varnum, Phillips, and Kennedy, fees would "be divided proportionately based on the number of hours spent by [the firm], prior to the resignation of [Walker] and the number of hours spent by [Walker] and her associated attorneys after the termination." The parties agreed the firm would receive a minimum of thirty-five percent and a maximum of fifty-five percent of any fee earned after the payment of expenses; Walker would control the remainder. In Raper, the parties agreed the firm would receive a fixed forty-five percent of any fee earned; Walker would retain the remaining fifty-five percent. Of the firm's earnings on all the overtime-pay cases, it was further agreed that seventy percent would be given to Gribble and thirty percent to Walker in accordance with their respective shares in the partnership.

Gribble formally withdrew his representation in the overtime-pay cases after the settlement agreement was signed. The Secretary of State administratively dissolved the firm in September 1996.

At the time Walker signed the settlement agreement, she believed little work remained on the overtime-pay cases. She was wrong. Additional plaintiffs and claims were added to all four cases and other issues developed resulting in protracted litigation, including three appeals to this court. See Raper v. State, 688 N.W.2d 29 (Iowa 2004)

; Kennedy v. State, 688 N.W.2d 473 (Iowa 2004); Anthony v. State, 632 N.W.2d 897 (Iowa 2001),

cert. denied, 534 U.S. 1129, 122 S.Ct. 1068, 151 L.Ed.2d 971 (2002).¹ (For example, Walker claims she worked over 3000 hours on Raper — 2500 after she physically left the firm — whereas Gribble worked only eleven hours.) The parties subsequently agreed the firm should only receive the minimum percentage (thirty-five percent) under their agreement in Varnum, Phillips, and Kennedy.

Varnum and Phillips settled, and a substantial amount of attorney fees were earned. Pursuant to the terms of the settlement agreement, Walker received sixty-five percent of the total after expenses; the remaining amount was placed in escrow pending the outcome of this appeal. If the terms of the settlement agreement are enforced, Gribble will receive seventy percent of the remaining thirty-five percent; Walker will take the rest. The precise amount of attorney fees in Kennedy and Raper is not yet known.

Walker filed a petition for a declaratory ruling in the district court asking the court to void the terms of the deal. Walker claimed the parties' contract was unenforceable because it ran afoul of two provisions of the Iowa Code of Professional Responsibility for Lawyers.

Gribble counterclaimed. Gribble asked the court to declare the agreement valid and enforceable. The firm intervened on Gribble's behalf and counterclaimed. The district court granted the counterclaimants' motion for summary judgment, and Walker appealed.

II. Standard of Review

Our review of a grant of a motion for summary judgment is for the correction of errors at law. Delaney v. Int'l Union UAW Local No. 94, 675 N.W.2d 832, 834 (Iowa 2004). Summary judgment is appropriate only if the record shows no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3); see, e.g., Lloyd v. Drake Univ., 686 N.W.2d 225, 228 (Iowa 2004)

; Coralville Hotel Assocs., L.C. v. City of Coralville, 684 N.W.2d 245, 247 (Iowa 2004). A factual issue is material when "the dispute is over facts that might affect the outcome of the suit, given the applicable law." Fouts ex rel. Jensen v. Mason, 592 N.W.2d 33, 35 (Iowa 1999) (citation omitted).

The moving party bears the burden of showing the nonexistence of an issue of fact, and when determining whether such an issue exists we view the record in a light most favorable to the nonmoving party. Estate of Harris v. Papa John's Pizza, 679 N.W.2d 673, 677 (Iowa 2004); Coralville Hotel Assocs.,684 N.W.2d at 247. In other words, we will indulge in every legitimate inference that the evidence will bear in an effort to ascertain the existence of a fact question. Lloyd, 686 N.W.2d at 228. A fact question is generated if reasonable minds can differ on how the issue should be resolved. See McIlravy v. N. River Ins. Co., 653 N.W.2d 323, 328 (Iowa 2002).

III. The Merits: The Validity of the Settlement Agreement

As indicated, Walker's primary complaint is that the district court erred in not finding the settlement agreement void insofar as it allegedly ran afoul of the Iowa Code of Professional Responsibility for Lawyers.

In Wright v. Scott, we expounded upon the wisdom, nature, and guiding principles of settlement agreements:

The law favors settlement of controversies. A settlement agreement is essentially contractual in nature. The typical settlement resolves uncertain claims and defenses, and the settlement obviates the necessity of further legal proceedings between the settling parties. We have long held that voluntary settlements of legal disputes should be encouraged, with the terms of settlements not inordinately scrutinized.

410 N.W.2d 247, 249-50 (Iowa 1987) (citations omitted); see also Shirley v. Pothast, 508 N.W.2d 712, 715 (Iowa 1993)

. In contingency-fee cases, settlement agreements generally benefit clients, insofar as they "simply seek[] to obviate time-consuming squabbles that formerly arose when [a lawyer's] entitlement to [a] fair share of any fee generated by a departing client's file was determined on a quantum meruit basis." McCroskey, Feldman, Cochrane & Brock, P.C. v. Waters, 197 Mich.App. 282, 494 N.W.2d 826, 828 (1992); accord Phil Watson, 650 N.W.2d at...