Case Title: Villa v. Heilmann

Citation: 162 Vt. 543, 649 A.2d 543

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1994-09-09T00:00:00Z

Document:
VILLA_V_HEILMANN.92-372; 162 Vt. 543; 649 A.2d 543


[Filed 09-Sep-1994]

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-372


 James G. Villa                               Supreme Court

                                              On Appeal from
      v.                                      Chittenden Superior Court

 Thomas F. Heilmann                           January Term, 1994



 Alden T. Bryan, J.

 Francis X. Murray and William F. Ellis of McNeil & Murray, Burlington, for
   plaintiff-appellant

 Michael B. Clapp of Dinse, Erdmann & Clapp, Burlington, for defendant-
    appellee



 PRESENT:  Gibson, Dooley, Morse and Johnson, JJ., and Peck, J. (Ret.),
           Specially Assigned




      JOHNSON, J.     Plaintiff James Villa, an attorney who sued former law
 partner Thomas Heilmann for breach of contract when defendant refused to
 split the contingency fee he received in a case that was pending at the time
 the parties ended their law practice together, appeals from a jury verdict
 in favor of defendant.  We affirm.
      Most of the relevant facts are not in dispute.  In 1977, prior to the
 time the parties became partners, defendant was retained by Greenmoss
 Builders to represent its interests in a defamation action against a company
 that issued an erroneous credit report.  In August 1979, the parties formed

 

 a law firm known as Villa & Heilmann, P.C.  While a partner at the firm,
 defendant tried Greenmoss to a jury, which returned a verdict in favor of
 his client in the amount of $350,000.  The trial judge, however, set aside
 the verdict and ordered a new trial.  The case was pending before this Court
 in June 1982 when the parties decided to end their relationship as law
 partners.  On June 1, 1982, the parties signed the following agreement,
 hereinafter referred to as the Greenmoss agreement:
                                  AGREEMENT

        THIS AGREEMENT is between VILLA & HEILMANN, a Professional
      Corporation, and JAMES G. VILLA and THOMAS F. HEILMANN, both
      individuals.

        In light of the fact that both James G. Villa and Thomas F.
      Heilmann will no longer be employed by the law firm of Villa &
      Heilmann; and that the case of Greenmoss Builders, Inc. vs. Dun &
      Bradstreet, presently on appeal, is a complex and difficult
      lawsuit best handled by the two individuals rather than the law
      firm of Villa & Heilmann; the three parties agree herein as
      follows:

        1. Any fee paid in the case of Greenmoss Builders, Inc. vs. Dun
      & Bradstreet shall be paid to Villa & Heilmann.

        2. The proceeds shall be divided as follows:

             a) A fee, as already agreed, shall be paid to the law firm of
        Valsangiacomo & Detora.

             b) All costs and disbursements shall be paid to the party
        who incurred them.

             c) The remainder of the fee shall be split equally between
        James G. Villa and Thomas F. Heilmann.

 Other than offering occasional advice, plaintiff did not work on Greenmoss
 prior to the Greenmoss agreement, and did not work on the case at any time
 following the agreement.
      After June 1982, the parties, plaintiff's wife, and two other people
 continued to be involved together in a real estate partnership known as 231

 

 Maple Street Partnership.  By the summer of 1984, relations between the
 parties had become strained.  In August 1984, plaintiff and his wife
 purchased the partnership interests of defendant and the other partners.
 Defendant conveyed his interest in the partnership for cash and a general
 release from all suits, debts, or contracts arising from matters preceding
 the date of the release.  The general release did not refer to the Greenmoss
 agreement or the Greenmoss case, which was still in the appellate process.
      In 1983, this Court reinstated the jury verdict in Greenmoss.
 Following two arguments before the United States Supreme Court, the case
 came to a final resolution in 1985, with Greenmoss Builders receiving a jury
 verdict plus interest, a total of $572,845.  In accordance with defendant's
 contingency fee agreement, he was paid $213,641 for his services.  Shortly
 thereafter, plaintiff requested fifty percent of that fee pursuant to the
 Greenmoss agreement.  Defendant refused to pay, citing among other things,
 the general release plaintiff had signed in August 1984.  Plaintiff
 asserted that the general release was never intended to extend beyond
 matters involving the real estate partnership.
      In 1988, plaintiff filed a complaint against defendant for breach of
 contract for failing to pay him his share of the Greenmoss fee.  The case
 was tried before a jury.  At the conclusion of the presentation of evidence,
 the court read its instructions and provided the jury with a set of eight
 interrogatories.  The first two interrogatories read as follows:

           1.  Was the Greenmoss agreement one to settle accounts
               between the plaintiff and the defendant upon their
               departure from the firm of Villa & Heilmann, P.C.?

           2.  Was the Greenmoss agreement one for the division of
               fees for work that the plaintiff and the defendant
               might perform on the case in the future and for
               which they would be paid?

 

 The jury was instructed to render a verdict for defendant if it answered no
 to question one and yes to question two.  Based on its negative response to
 the first question and its affirmative response to the second question, the
 jury rendered a verdict for defendant without answering the last six inter-
 rogatories.
      On appeal, plaintiff argues that the trial court erred by (1)
 instructing the jury on defendant's claim that the Greenmoss agreement
 improperly split fees between unassociated attorneys, in violation of DR 2-
 107 of the Code of Professional Responsibility; (2) refusing to instruct the
 jury that consideration for the Greenmoss agreement existed as a matter of
 law; (3) excluding expert testimony on custom and practice relating to
 attorney partnerships; (4) excluding expert testimony and failing to
 instruct the jury on the fiduciary duties that existed between the parties;
 and (5) directing a verdict in favor of defendant on plaintiff's fraud
 claim.
      The first issue raised by plaintiff concerns DR 2-107, which provides
 that a lawyer is not permitted to divide a fee for legal services with
 another lawyer who is not his or her partner or associate, unless (1) the
 client consents after full disclosure, (2) the division is made in pro-
 portion to the services rendered, and (3) the total fee does not clearly
 exceed reasonable compensation for all legal services rendered.  This
 disciplinary rule does not prohibit, however, "payment to a former partner
 or associate pursuant to a separation or retirement agreement."  DR 2-
 107(B).
      Following the close of evidence in the case, defendant sought a
 directed verdict, arguing that the Greenmoss agreement violated DR 2-107

 

 because it provided for the splitting of fees for legal services performed
 by two attorneys who were no longer associated with each other.  The court
 denied the motion, pointing out that plaintiff claimed the Greenmoss agree-
 ment represented a distribution of assets pursuant to the parties' termina-
 tion of their association with the law firm, not an agreement regarding
 compensation for future work to be done on the Greenmoss case.  The court
 indicated it would instruct the jury on this point as follows:

             If you determine that this contract was for work that
           they would both be doing in the future then Mr. Villa is
           not entitled to enforce paragraph 2(c) because at the
           time the contract was written the parties overlooked the
           Canon of Ethics which says that lawyers unassociated
           together cannot share a client's fee except according
           to the value of the time that each has contributed to
           the case.  Under paragraph 2(c), Mr Villa cannot enforce
           payment in excess of the value of the time he spent on
           the case.  As it turned out that Mr. Villa did not spend
           any time on the Greenmoss case after he signed the
           contract and left the old firm, he cannot claim any part
           of the fee from Mr. Heilmann.

      Plaintiff objected to this instruction at the charge conference,
 arguing that defendant had waived any claim of illegality under DR 2-107 by
 failing to raise it as an affirmative defense in his pleadings.  Plaintiff
 pointed out that the court had excluded proffered testimony from his expert
 that the Greenmoss agreement did not violate DR 2-107 because it was part of
 a separation agreement.  He requested that the court either omit the
 instruction or, in the alternative, instruct the jury further that DR 2-
 107's prohibition against splitting fees does not apply to separation
 agreements.  The court responded that plaintiff did not need the latter
 instruction because its charge on the potential ethics violation was
 relevant only if the jury found that the Greenmoss agreement was a contract

 

 for future services rather than a separation agreement to settle accounts.
 The court then instructed the jury as indicated above.
      We conclude that any error in the challenged instruction is harmless.
 See V.R.C.P. 61 (errors that do not affect substantial rights of parties
 shall be disregarded); Turgeon v. Schneider, 150 Vt. 268, 276,