### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE July 10, 2002 Session
MITCH GRISSIM & A SSOCIATES v. BLUE CROSS & BLUE SHIELD OF TENNESSEE A Direct Appeal from the Chancery Court for Davidson County No. 98-2687-II The Honorable Carol L. McCoy, Chancellor

No. M2001-02170-COA-R3-CV - Filed Septem ber 17, 2002

This appeal involves a

suit by an attor ney agains ta forme

r client f or attorn ey fees al legedl

y due when the client terminated contingency fee contracts. The trial court denied plaintiff-attorney ’s motion for partial summary judgment and granted defe ndant-client’s motion for summary judgmen t, holding that the attorney wa s not entitled to recover fees for servicesprovided to the client pr ior to discharge. Plaintiff has appealed. We re verse and remand.

Tenn. R. App.P. 3; Ap peal as of Rig ht; Judgment of the C hancery C ourt Reversed and Remanded
W. F RANK C RAWFORD , P.J., W.S., delive red the o pinion of t

he court , in which A LAN E.H IGHERS , J. and H OLLY K IRB Y L ILLARD , J., joined.
Richard J. Braun and Patricia E. Crotwell of Nashville For Appellant, Mitch Grissim & Associa tes Patricia Head Moskal, Nashville, For Appellee, B lue Cross & Blue Shield of Tennessee
OPINION

In 1996, Defendant Blue Cross Blue Shield of Tennessee (“BCBST”), a hospital and medical services corporation engage d in the ma rketing and admin

istration of medic al benef

its plans, including insuranc e, reta

ined Plain tiff Mitch Grissim & Associat es (“Gr issim”), a sole prop rietorsh ip engaged in the practice of law in Nashville, Tennessee, to represent B CBST in assigned subrogation matters.
In the fall o f 1996, sh ortly after r etaining Grissim, B CBSTdecided to reduce the number of at to rn eys it retained for the handling of subroga tion matters i n the four major metropolitan areas of Tennessee, including Nashville. Under the new subroga tion management

strateg y, B CBSTplanned1 In her deposi tion f iled Apri l 20, 2001, Tena Roberson s tate d: “Bec ause t he parti es have b een un able to resolv e this issue, B CB ST canno t agree that the nu mbe r of files at issue is 152 .” -2- to retain a minimum of two, and no more than t hree, attorney s in each

of the me

tropolita n areas
. Through a written letter dated November 5, 1996, BCBST’s senior legal counsel, Tena Roberson, notified G rissim of

the change and that it was a potential candida te for one of the subrogation counsel positions in the Middle Tennessee region. Shortly after receipt of the November 5 letter , Grissim submitted a fee proposal to BCBST. On March 7, 1997, after reviewing the fee proposal

submitted b y G

rissim, BCBST se

nt Grissim a letter containi ng a pr

oposed a ttorney fee sch edule. U nder this proposal , any

party assigned to a subrogation file would be entitled to a percentag e of the total fee received. Recove ry was divided into four dollar amount stages, with the attorney entitled to varying

percentages of rec overy for the respective stages . The s lidi ng scal e prop osal a warded a highe r perce ntage of recovery for cases that went to trial and a lower percentag e for cases settled or mediated.
On March 18, 1997, Grissim submitted a written counter p r oposal to BCBST. Grissim’s counter proposal would amend the March 7 proposal to provide the assigned attorney an increased percen tage of the total fee on cases where litiga tion intervention was required, but where the ca se never reache d trial. In a letter dated April 30, 1997, BCBST rejected Grissim’s proposal and inquired as to whether Grissim would be willing t o accept the term s of the Ma rch 7 fe e schedu

le if selected as counse

l, and ask ed for a timely response . By

letter of May 7, 1997, G

rissim ag reed to the fee proposal, and by

letter dated May

20, 1997, BCBST informed Grissim that it had bee n selected to fill one of the subrogation counsel positions for the Middle Tennesse e region.
From May1997 until mid-1998, Grissim represente d BCBST in subrogation cases pursuant to the fee schedule set out in the March 7 letter. During this period, Grissim received pay ment from BCBST in accor dance w ith this fe e schedu le for a ll files in w

hich it netted a recovery

or settlement offer for BCB ST . In May of 1998, B CBST telephonedGrissim to d iscuss co ncerns B CBST had w ith regard to the services Grissim was providing. Specifically, B CBST expressed concern regar ding the conduct and perf ormance of one of

the assoc iate atto

rney s Grissim a ssi gned to BCBS T cases. BCBST al so voiced dissatisfaction with Mitch Grissim’s personal mishandling of a file, and Grissim’s allege d failure

to confir m BCBST’ s subrog ation inte rest in a case which resulted in a su bs ta nt ia l l os s o f r ec ov er y. Fina ll y, by letter dated June 19, 1998, BCB ST immediately terminated Grissim’s representationon all BCBST files. The letter detailed the reasons for terminating the relationship, which we need not relate, as Grissim concedes the termination was f or cause. Grissim returned an estimated 152 files to BCBST. 1 Alth ough Grissim contends that it provided various legal services on these f iles, it ha d ye t to secur e recov ery

or a settl ement of

fer on a ny o f them.
On September 3, 1998, Grissim brought an action against BCBST for breach of contract and alterna tively for recovery on quantum meruit. I

n Febru ary

of 2001, G

rissim and

BCBST fi led cros s-3-

motions for summary judgment on the issue of BCBST’s liability for a dditional attorneys’ fe es for services provided by Grissim on the unre solved cases. Finding that BCBST was not liable for additional attorne

ys’ fees for the cases where G rissim was unable to achieve a final resolution, the trial court granted BCBST’s motion for summary judgment. Subseq ue nt ly, the court denied Grissim’s motion for

partial s ummary

judgmen t and dismis s ed Grissim’s claims for breach of contract and consequential damages. Recog nizing that

Grissim was entitled to reimbursement for expense s incurred o n the unresolved files, the trial court granted Gr issim 30 days to submit an expense report to BCBST.
On June 11, 2001, Grissim filed a motion to alter or amend the prior order of the trial court granting BCBST’s mot ion for summary judgment. In support of this motion, Grissim submitted affida vits from atto

rney s Mitch Gr

issim and D avis Adkisson, and BCBST’s Answers to Grissim’s interrogatories regarding the status of seve ral subrogation

files. Grissim al so submitte d an exhibit detailing the number of hours dedicated by Grissim attorneys and staff to various BCBST files. On July 6, 2001, BCB ST filed a

motion to str

ike these affida vits. At a hearing held on August 15, 2001, the trial court

determined that its earlier order gra nting BCBST’s motion for summary judgment was nota final order. The trial court pr oceede d to enter

a final ju dgment, deny

ing Gris sim’s motion

to alter or amend and BCBST’s motion to strike, and dismissed the action. Grissim has appealed and presents the following issue for review as stated in its brief:
Whether the trial court erred in holding that Grissim was not entitled t o recov er for the legal services it had pr ovided to Blue Cross and Blue Shield of Tennessee?
A motion for

summary judgmen t should be granted when the movant demonstrates that there are no genu

ine issue s of mater

ial fact and that t he moving

party is entitled to a judgment as a matter of law. Tenn.R.Civ.P. 56.04. The party moving for summary judgment bears the burden of proving that its motion satisfied these requirements. See Downe n v. Allstate Ins. Co. , 811 S.W.2d 523, 524 (Tenn. 1991). On a motion for summary judg ment, the court must take the strongest legitimate view of the evide nce in fa vor of the nonmoving

party , allow all reason able inf erence s in favorof that pa rt y, and discard all countervailing evidence

. See Bai n v. We lls , 936 S.W.2d 618 (Tenn. 1997). Summary judgment is only appropr

iate when the facts and the legal c onclusion s drawn f rom the fa cts reasona bly permit only one conclusion. See Carv ell v. B otto ms , 900 S.W.2d 23, 26 (Tenn. 1995). Since only questions of law are involved, there is no presumption of correctness reg arding a trial court’s grant of

summary judgme

nt. See Bain, 936 S.W.2d at 622. Therefore, our review of the trial court’s grant

of summar

y ju dgment i s de novo on the record before this Court. See Warren v. Estate of Kirk , 954 S.W.2d 722, 723 (Tenn. 1997).
Insofar as the re

lationship between the plaintiff and defendant, there

is no mater

ial dispute of fact. Grissim’s complaint alleges that its acceptance of B CBST’s proposal in the March 7, 1997 letter constitute s a contr

act betw een the p arties, a nd that he

is entitl ed to recover pursuant to the-4-

terms thereof

. Alterna

tively , the comp laint see ks recov ery

on the bas is of quan

tum meruit

. BCBST’s answer

is replet e with denials that the March 7 l etter co nstituted a contract, but it sta

tes:
31. The only ag

reements for representation betwee n the parties were the individual agreements for repre sentation on eachclaim forwarded to Grissim by BCBST.
32. Grissim was an independent contractor of BCB ST as to each subrog ati on case for which he was retained to pr ovide legal representationand his re

present ation could be termin ated at a ny t ime by BCBST.
33. The term s of Gris si m’s representation of BCBST only provide for pay ment on cl aims reso l ved during Grissim’s representation; therefore, Grissim

is not entitled to recover

any portion of

pay ments receiv ed on any claims for w hich he may ha

ve been retained but which were not resolved during his repre sentation.

* * *
36. G ri ssim is not entitled to recover on his claim for quantum meruit. The terms of Gri ssi m’s representation of each claim on which he was r

etained as an inde

pendent c ontract

or speci fically provided that

Grissim would be paid only on those claims which he mediated or tried and on which an ultimate recovery was made.
Altho ugh the parties disagree on the technica lities of their relationship, it is clear that th e legal service s render

ed by Grissim to B CBST wer

e rende red on ea ch individ ual file refer red Gris sim, which, according to the affidavit of B CBST’s witness, Tena Roberson, were sent to Grissim to be handled on a case -by -case b asis. Thus , actual contracts between the parties would be the individual attorney-c lientrelationship established when each individual case was assig ned, refer rin g to the March 7 agreement

to establish the terms of compensation. On the other hand, if it is considered that the March 7 letter a

ccepte d by

Grissim co nstitutes a

contract, then, of

necessity, the contr

act must incl ud e the individual cases assigned on a “case- by-case ” basis. Thus, the contract, as to each individual case, is severable. “A contract is severable w he re each part is so independent of eac h other as to form a separate contract.” James Cable P artners, L. P. v. City of Jamestown , 81 8 S.W.2d 3 38, 344 (Tenn. Ct. App. 1991). Unlike “entire” contracts, a se verable contract ca

n b e partiall y rescinded or terminated, such partial termination not resulting in an in toto rescissi on of all parts of the contract. Id. As for the deci sion in this c ase, it is n ot neces sary to particularly decide between the two theories. The record reflects thateach as signed f ile involved a distinct subrogation issue regar

din g a specific client, and each file, of c ourse, had certain required perf ormances to be done on the part of

the attorney, whic

h could be different depending on the nature of the particular case. Grissim wa s compensated s eparately for each file and the assignments we re made for the-5-

particular cases. The assig

nment lett er ref erred t o the fee arrang ement se

t out in the March 7 letter. Therefore, considering all of the factors we ha ve before us, we have

a claim by

th e attorney f

or compensation due by virtue of, accord ing to his count, 152 separate assignments, under a conting ent fee contract.
In its March 7 l etter, BCBST defined the essential terms of the ag reement with sufficient s peci fi ci ty. The letter defined the recovery amounts and the accompany ing compensation percentages for ea

ch of the four stages of rec overy on the scale, and even provided an explanation as to how the

sliding s cale wouldbe applied in large cases. The le tter further specified that

Grissim would be r

esponsibl e for al l reasona ble costs of p ostage , local mil eage , and tele phone ca lls, while BCBST would reimburse for extraordinary expenses incurred. Grissim’s letter of May 7 constituted an acceptance of the terms of the March 7 letter, thereby

establishing a meeting of the minds with regards to the essential contract terms. On this basis, we find that the trial court correctly concluded that the conti ngenc y f

ee ag reemen t set fort h in BCBST’sMarch 7 l etter to Grissim pr

ovided fo r all of the es sential te

rms of the

agree ment and w as there

fore a b inding a

nd enfor ceable contract.
The contingency

fee contract between Grissim and BCBST does not explicitly state whether, and to what amou

nt, Grissi m is entitled to compensation for services rendered on files whe re it failed to obtain a recovery

or secure a settlement offer in favor of BCBST. BCBST contends that the trial court co rr ec tl y deni ed Grissi m recove ry on unreso lved cas es beca use the c ontract

clearly contemplatedthat Gris sim would on ly b e paid a contingency

fee for services in cases where it made a monetary recovery on be half of BCBST. Under

this theory, where

Grissim made no recovery , no fee was due, regar

dless of the time and energies expended on the respective case.
“It is well settled in Tennessee that a client has a right to discharg e his at t orney with or without cause, but upon discharge the attorney is entitled to just and adequate compensation for services rendered.” Adams v. Mellen , 618 S.W.2d 485, 488 (Tenn. Ct. App. 1981) (internal citations omitted). Where the attorney is discharged without cause, he or she is entitled to collect on the basis of quantum meruit or the contract price, whichever is g reater. Id

. In c ontrast, if the cli ent had c ause to terminat

e, reco very

for the a ttorney is governed by

the lesser of quantum

meruit or the contract price. Id

. at 488. See also Mc Gee v. M aynard , No. 01-A-01-9810-CV-00539, 1999 WL 824298, at *1 (Tenn. Ct. App. Aug. 12, 1999).
In this case, it is undisputed that Grissim was discharged for cause, a nd theref ore it i s not necessary to examine the validity of BCBST’s dec ision to terminate Grissim’s representation.
In finding that Gris sim was not

entitled t o recove r att or ne ys ’ fees on files where it did not secure a monetary r

ecovery or settlement offer, the court determined that there was a bind ing contract between G rissim and BCBST that pr ecluded consideration of quantum meruit. We disagree

. “A party who had a

contract at

one time may pursue a

quantum meruit recovery if the contract is no longer enforceable.” Castelli v. Lien , 910 S .W.2d 420, 428 (Tenn. Ct. App. 1995) (citations omitted). Although a

val id contract or contracts existed between the parties for ne arly thirteen-6-

months, BCBST validly terminate d the contracts on June 19, 1998. BCBST’s termination prevented Grissim from fully perfor

ming under the contracts and thereby rendered the contracts unenforc eable.
In Chambliss, Bahner & Craw ford v. Luther , 531 S.W.2d 108 (Tenn. Ct. App. 1975), a law firmbrought anaction a

gainst a former c lient to collect a fee for lega l services rendered. The client retained the law firm on a contingency fee basis, but discharged counsel prior to obtaining a binding settlement

agreement. Id . at 109. Soon after, the suit was settled and the firm immediately instituted an action to recover in quantum meruit for lega l services provided. Id . The court denied the firm recovery under a quantum meruit theory, instead a warding it recovery

in the amount of the contract price. The court’s decision was based on the fact that this was a unique case where the firm comp lete d a portion of the work for which it was hired and the re asonable value of the services provided was greater than the c ontract fee. Id

. at 110. However, in assessing the traditional right of a discharged attorney

to recover for performed ser vices, the court noted:
One who has been wrongfully deni ed or o therwise prevented from fully performing, i.e., earning the agreed compensation, may regard the contract as terminatedand seek judgment for the reasonable value of all the defendant received in the perfo rma nce of t he c ont rac t. In the case of goods sold and delivered, the theory is Quantum vale bat (as much as they we

re worth), and in that of work and services performed, Quantum meruit (as much as he deser ved).
Id

. BCBST’s termination of the contingency fee contract preven

ted Griss im from ea

rning f ull compensation under the contract and caused t he contr act to be come une

nforce able. On

this basis, Grissim is e

ntitled to s eek qua

ntum merui

t recove ry for its se rvices. Recovery under a t heory of quantu

m meruit is “base d on a leg ally

im pl ie d p ro mi se to pa y a reasona ble amount for goods or services rece ived,” and is there for e limited to the actual value of the goods or services received. Castelli v. Lien , 910 S.W.2d 420, 427 (Tenn. Ct. App. 1995) (citing Jo hn J . Heirigs Constr. Co. v. Exide , 709 S.W.2d 6 04, 601 (T enn. Ct. Ap p. 1986); Tennessee Farmers Mut. Ins. Co. v

. Pritchet t , 54 Tenn. App. 410, 417, 391 S.W.2d 671, 675 (1964)). In order to recove r unde r a theo ry of quant um mer uit, exis tence o f the f ollo wing c i rcumstances must be proven: (1) there must be no existing, enforceable contract between the parties

covering the same subject matter; (2) the part

y seeking r

ecover y mu st prove t

hat it prov

ided valu able goods a nd servic es; (3) the part

y to be charged

must have

receiv ed the g oods and s ervice s;-7- (4 ) the ci rcumstances must indicate that the parties involved in the tra nsaction should hav e reaso nably understo od that the

perso n providing the goo ds or ser

vices expected to be

compensa

ted; (5) the circumstances must also demonstrate that it would be unjust for the part y be nefit ti ng from the goods or services to re tain them without pa

yin g for th

em. 910 S.W.2d at 427 (internal citations omitted).
Under the fac ts of this case, we find that all fi ve circ umst ances c ould be pres ent. A ltho ugh the case as signmen

ts to Grissim created valid, enforceable contra cts, BCBST legally

terminated the contracts when it dis charg ed Grissi m on June 19, 1 998. Ther efore, there is no existing , enforc eable contract between the parties. Grissim has produced evidence, in the form of affid avits and

time logs , that it provided valuable services with regar d to the fi les to which it was assigned at the time of discharge. Immediately

upon discharge, Grissim returned the files to BCB ST and provided requested updates on the status of pending files to BCBST. A s discussed, the circumstances surrounding the formation of the contingency fee agreement indicate

that bothparties should have reasona bly understood that Grissim expected to be compensated for the services it provided on the unresolvedfiles. Finally, it wou ld be unjust t o allow B CBST to be

nefit fr om servic es Grissi m provided on appro ximately

152 files without pa

yin g for th

em. Recovery under quantum

meruit is not measured by the detriment to the plaintiff but by the benefit conferred on

the defendant. McGee v

. Maynard , No. 01-A -01- 9810- CV-0 0539, 1999 W L 824298, at

*2 (Tenn. Ct. App. Aug. 12, 1999) (citing Castelli v. Lien , 910 S.W.2d 420 ( Tenn. Ct. App. 1995)). DR 2-106 lists the factors on which a reasonable f ee can be based: (1) The time and labor required, t he novelt y a nd difficulty

of the questions involved, and the skill requisite to perform the legal service pr op er ly. (2) The likelihood , if appa rent tothe clien

t, that the acceptance of the particular e mploy me nt will preclude other employ ment by the lawyer. (3) The fee customarily charged in the locality

for s i milar legal service s. (4) The amount involved and the results obtained. (5) The time limitat ions imposed by the client or by the circumst ances. (6) The nature and length of the profess ional relationship

withthe client. (7) The experience, reput ation, and ability of the lawy er or lawyers per

forming the services. (8) Whether th

e fee is fixed or c ontinge

nt.-8-

Johnson v. Hunter , 1999 WL 1072562 (Tenn. Ct. App. 1999) (citing Sup. Ct. Rule, Code of Prof. Resp. DR 2-106; see also Co nnors v. Connors , 594 S.W.2d 672, 676-77 (Tenn. 1980) (citing DR 2-106)).
For the reasonsstated, w e rever se the or der of the trial c ourt and r emand the

case for further procee dings to deter

mine the p

recise determination of the number of cases assigned to plaintiff by defendant at the time of discharge, and the quantum meruit value of the services provided by plaintiff on said cases. Costs of the appeal are assessed a gainst the appellee, Blue Cross and Blue Shield of Tennessee.

__________________________________________ W. FRANK CR

AWFORD, PRESIDING JUDGE, W.S

.