# FILED Ap ril 7, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COURT OF AP PEALS OF

TENNESSEE, WESTE RN SECTION AT JACKS ON

_______________________________________________________ ) WILLIAM P. NEWTON, ) Shelby County Chancery

Court ) No. 95025-3 R.D. Plaintiff

/Appella nt. ) ) VS. ) C. A. NO. 02A01-9604-CH-00086 ) JAMES S. COX, ) ) Defendant/Appellee. ) )

______________________________________________________________________________ From the Chancer y Court of Shelby

County at Memphis
. Honorable Joe C. Morris, Sp. Chancellor
James F. Schaeffer, Jr. , Memphis, Tennessee Attorney for Plain tiff/App ellant.

Russell Fowler , Memphis, Tennessee Attorney for D efendant/Appellee.

OPINI ON FIL

ED: AFFI RMED AS M ODIFIED AND REMA NDED

FARMER, J.
CRAWFORD, P.J., W.S. : (Concur s) LILLARD, J. : (Concur s)1 Attorneys’ fees . -- Compensation for reasonable attorney s’ fees in the event an

employment contract exists between the claimant and his attorney on a contingent fee arrang ement sha

ll be awa rded to th e claima nt’s attor ney in a malpr

actice action in an amount

to be determined by

the court on the basis of time and effort devoted to the litigation by the claimant’s attorney , complexity of the claim and other per tinent matters in connection therewith, not to exceed thirty-three a nd one third percent (33 1/3%) of all damag es awarded to the claimant
. Plaintiff

William P. Newton appe als the trial court’s order a

warding him a $28,125 judgment against his former attorney , Defendant/Appellee James S. Cox, butdenyin g Newton’s claim for prejudgment

interest. Newton’s claim arose out of Cox’s retention of a contingency

fee in excess of the maximum permitted by statute. We affirm the judgment entered

in favor of Newton, but with certain modifications hereinafter set forth.

Cox previously repr

esented Newton and Newton’s former wife in a medical
m alpractice action. I

n the comp laint file d by

Cox, Newton

sought $ 3 million in d amage s for his injuries, and Newton’s wife sought $1 million for her loss of consortium. The malpractice action subseque ntly settled in June 1985 fo

r $225,00 0. Per the

parties’ fee con

tract, Co x retained

one-half of the settlement proceeds, or $112,500, and the Newtons rec eived $112,500.

Shortly after the settlement, Newton and his wife were divorced. In the final divorce decree, Newton w as awar ded the $1 12,500 in

settlement proceeds as his separate property , with the exception of $15,000 which the divorce court awarded to the wife as compensation for her loss of consorti um. During the divorce proceedi ngs, Newton learned that the fee c ontract’s provision giving Cox a fifty per

cent (50%) cont

ing ency fe

e violated Tennessee Code Annotated Sec. 29-26-120 (1980), 1 which limit

ed conti ngen cy fee s in medical malpractice cases to one-third, or 33 a %. Co ns eq ue nt ly, Newton brought the present action to recove r the $37,500 in excess fees retained by Cox.

Ini ti al ly, the trial court ruled that section29-26-120 was unconstitutional on various grounds and, thus, refuse d to invalid ate the f ee contr act. ThisCourt aff

irmed, c it in g alter

nate grounds and finding it unn ecessa ry to address Cox’s constitutional challenges to the statute. Newton v. Cox , No. 02A01-9202-CH-00041, 1992 WL 220189 (Tenn. App. Sept. 14, 1992).On appeal, however, the Supreme Court of Tennessee revers ed this Court’s decision. Upholding the constitutionality of section 29-26-120, the cour t held that the fee contract providing for a 50% contingency

fee was voidable as against public policy
. Newton v. Cox , 878 S.W.2d 105 (Tenn.), cert. denied , 115 S. Ct. 189 (1994).

On remand from the Supreme Court’s decision, the trial court awarded New ton a judgment for the excess feeretained by Cox. Instead of awarding Ne wton the full $37,500, however, the trial court reduced Newton’s recove ry by one-fourth, to $28,125, based on Cox’s argument that one-fourth of the excess fee rightfully belonged to Newton’s former wife, w ho was also a

party to the fee contract. The trial court denied Ne wton’s request for prejudgment interest, and this appe al followed.

On appeal, Newton c ontends th at the tri al court erred i n reducing the ju dgment t o $28,125 and, further, in deny ing Newton’s claim for prejudgment inter est. We agree

that the trial court erred in permitting Cox to retain one-fourth of the $37,500 excess contingency fee based on the court’s ruling that this share represented the interest of Newton’s former wi fe. The Supreme Court’s decision in Newton v. Cox , 878 S.W.2d 105 (Tenn.), cert. denied , 115 S. Ct. 189 (1994), confirmed

that Newton had the right to void the

fee con tract en tered in to by the parties. Id . at 112. Where a party to a c ontract elects to treat the contract as voidable, the party

still mayseek recovery under equitabl e princi

ples, such as the e quitable remedy of

rescission or

the quasi-contractual theory of unjust enrichment. Vance v . Schulder , 54 7 S.W.2d 927, 931 (Ten n. 1977); see also SKS Communications, Inc . v. Glo be C omm unicatio ns, Inc. , No. 03A0 1-94 05-CH -001 76, 19 94 WL 589576, at *5 (Tenn. App. Oct. 21, 1994).

Under the doctrine of unjust enrichment, “liability can be created where

one person receives a benef

it at the e xpense of a

nother a nd it is unjus t or inequ

itable fo r him to re

tain this benefit.” Jaffe v. Bolton , 817 S.W.2d 19, 26 (Tenn. App. 1991). We conclude that, regardless of any speculative interest that Newton’s former spouse may have had in the settlemen t proceeds , it would be inequitable to permit Cox to retain the benefit of the fee which he c ollected in excess of the statutory maximum. Accordingly , we agree with Newton that he was entitled to the full $37,500 in ex ce ss fe es so ug ht , a nd we mo di fy t he ju dg me nt ac co rd in gl y.2 The rationale for this rule is that an appellate court dec ision reversing the trial court’s

judgment merely

“is doing what should have been done in the first instance.” Gotten v. Gotten , 748 S.W.2d 430, 431 (Tenn. App. 1987).

Cox insists that Newton’s former wife nev er elected to void the contract as to her and, thus, that Cox should be permitted to retain the wife’s portion of the fee . We note, however , that in the divorce proceedings, Newton wa s awarded all but a small portion of

the settlement proceeds as his separate property . Newton v. Cox , 1992 WL 220189, at *2. At this juncture , theref ore, it is questiona ble whether

Newton’ s former

wife hasany

remaining inter

est in the s ettlemen

t procee ds. Moreover, we believe the critical question in this case to be who, as between Cox and Newton, should be entitled to the excess fee. Viewing the matter in this light, we r emain convince d that equity require s awarding the funds to Newton.

We decline, however, to disturb the trial court’s ruling deny ing Newton’s claim for prejudgment

interest. The award of prejudgme ntinterest is within the trial court’s discretion. In re Estate of Cooper , 689 S.W.2d 870, 872 (Tenn. App. 1985). Where the amount of the defendant’s obligation is certain and not disputed on reasonable grounds, the trial court “may a

llow prejudgment interest in accordance with principles of equity .” Mitchell v . Mitchell , 876 S.W.2d 830, 832 (Tenn. 1994).

Alth ough the amount of Cox’s obligation, i.e. , the excess contingency fee retained,
was a lw ays cer

tain in this case, we cannot conclude that Cox’s dispute of this obligation was unreasonable. Two courts, including the t rial court and this Court, initially ruled in favor of Cox when he dispute d his legal obligation to pay the excess fee to Newton. Accordingly , the trial court
on remand did not abuse its disc retion in d

eny ing Newton’s request for

prejudgment inter

est.

Neverth eless, inasmuch as a decision of the appellate court reversing the trial c ourt’s judgment is given retroactive effect to the dat e of the o rigina l judgme nt, 2 we conclude that Newton is entitle d to post-judgment interest at the statutory rate from the date of the original judg ment entered in this case. See Gotten v. Gotten , 748 S.W.2d 430, 431 (Tenn. A pp. 1987) ; Ace Indus. v. Mastercraft

Boat Co. , No. 02A01-931 1-CH-0 0249, 1995 WL 256758, at *5 (Tenn. App. May 3, 1995), perm. app. dismissed (Tenn. Oct. 2, 1995); T.C.A. §§ 47-14-121, -122 (1988); T.R.A.P. 41.As modified, the trial court’s judgmen

t is affirmed. This cause is remanded for the entry of a judgment consistent

with this op inion, sai d judgment to include post-judgment interest as mandatedby statute. Costs of this appeal are taxed to Appellee Cox, for which execution may issue if ne ce ss ar y.

_______________________________ FAR MER , J.

______________________________ CRAWFORD, P.J., W.S. (Conc urs)

______________________________ LI LL ARD, J. (Conc

urs)