Opinion ID: 597429
Heading Depth: 2
Heading Rank: 2

Heading: Morrissey's Fee Demands and Self-Help

Text: 9 Morrissey's first bill to Mar Oil, sent in January 1981 on behalf of himself and his advisors, was for fees totaling $75,000; Monzon complained that it was too high and declined to pay it without an elaboration as to actual time spent. No such statement was ever provided, and this bill was not paid. Later payments, totaling $61,000 in fees and $14,619.96 in disbursements, were made to Morrissey either as advances or pursuant to bills [f]or all services for stated periods. The last such bill submitted to Mar Oil by Morrissey stated that it was [f]or all services ... since April 1, 1982, and was dated January 26, 1983. Though the Fee Agreement had provided that a separate retainer was to be negotiated before the commencement of any litigation outside of Spain, no such separate agreement was ever negotiated or entered into. Based on the $61,000 billed and paid for Morrissey's services through January 26, 1983, and on expert testimony estimating that between October 27, 1980, and that date Morrissey had spent approximately 510 hours on Mar Oil's behalf, the trial court stated that [t]he fees billed and received by Morrissey of $61,000 through January 26, 1983 appeared to have been charged by defendant at an average rate of approximately $120 an hour. 782 F.Supp. at 906. 10 In mid-June 1983, at about the time of New Hampshire's settlement payment, Morrissey renewed his original request to be paid on a contingent-fee basis, and he named a fee of $960,000. He also claimed that he had provided 5,205 hours of service to Mar Oil. Monzon rejected Morrissey's request for several reasons. Mar Oil paid fees of only $126,250 to Healy & Baillie and the equivalent of $242,500 to its attorneys handling the Spain action for all of their respective services in connection with the underlying dispute; Morrissey's demand was wholly disproportionate, especially considering (a) that Healy & Baillie had done virtually all of the litigation work with respect to the New York action, and (b) that the work of the Spanish attorneys had constituted vital, if not major, reason for the ultimate settlement. Id. at 905. The trial court found that 11 there was never an agreement between plaintiff and defendant to a contingency arrangement whereby Morrissey would be paid a percentage of the ultimate recovery, if any, although Morrissey insists--among other things--that such a percentage agreement had been reached. Morrissey never submitted any such supporting document. 12 Id. The court also found that Monzon had no reason to believe that Morrissey had spent the claimed 5,205 hours on Mar Oil's behalf, and that even if Morrissey had spent that amount of time, the fee demanded would approach or exceed $200 an hour, to which Mar Oil had never agreed. Monzon demanded an accounting of Morrissey's time; Morrissey never provided one. Instead, in July 1983 Morrissey simply withdrew $960,000 from the Mar Oil escrow account, made an authorized payment of $34,324.62 to Healy & Baillie, and kept the remaining $925,675.38 for himself. 13 Morrissey testified at trial that he made that withdrawal because a few days after he made his fee demand, Monzon telephoned him from Spain and agreed that Mar Oil would pay him $960,000. Monzon denied this, and the trial court found that no such oral agreement was ever made, and that the withdrawals by the defendant for his personal benefit from the escrow account set up for the benefit of the plaintiff, were entirely unauthorized and unjustified as a measure of the fees due defendant. Id. at 906. 14 Mar Oil learned of the unauthorized withdrawal in November 1983 and repeatedly demanded that Morrissey return the money. The court found that, in response, Morrissey represented to Monzon that $925,675.38 remained intact pending resolution of the dispute over Morrissey's fee; it also found that these representations were false. 15 On February 2, 1984, Monzon met with Morrissey twice. At the first meeting, they discussed an accounting for Morrissey's authorized disbursements from the escrow account. They also discussed Morrissey's contention that he had worked more than 5,000 hours on Mar Oil's behalf. Morrissey promised that he would prepare an accounting with respect to undisputed disbursements and that in the near future he would also propose a compromise with respect to his fee. 16 The second meeting on February 2 was held briefly in mid-afternoon as Monzon, about to return to Madrid, was rushing to the airport. In this meeting, Morrissey presented Monzon with a two-page letter (the February 2 Letter) with attachment, accounting for deposits to and withdrawals from the Mar Oil escrow account. The first paragraph of the letter stated as follows: 17 In June of 1983 I received on your behalf checks in the amount of $8,000,000. and $60,000., with your instructions that these funds be deposited in an account at Morgan Guaranty Trust Company in New York. Accordingly, on June 8, 1983 I deposited $60,000. and on June 20, 1983 $8,000,000. in an Escrow Account at Morgan Guaranty. On July 8, 1983, Morgan Guaranty was sent notice to change the account from a Mar Oil Escrow Account to a Non-Resident Alien Account for your benefit which was accomplished on July 11, 1983. On July 11, 1983 I disbursed $960,000. from this account pursuant to your instructions to pay United States fees and costs including Francis X. Morrissey, Jr., Healy & Baillie, and other costs and disbursements, as set forth in the attached statement dated July 11, 1983. 18 The second paragraph of the letter began, Pursuant to your instructions to me received from time to time, I made the following disbursements from the Morgan account: and listed in tabular form eight disbursements. Morrissey's $925,675.38 payment to himself was not included in this list. The penultimate paragraph of the letter read as follows: 19 Please signify on behalf of yourself and Mar Oil, by signing and returning this letter, confirmation of your instructions and approval of the above actions by me, and agreement by yourself and Mar Oil to indemnify me and hold me harmless from and against any and all liability, loss, damages, costs and expenses, including United States or foreign tax claims, by reason of my having deposited these funds in the Morgan account and disbursed these funds pursuant to your instructions. This agreement to indemnify and hold me harmless shall include any claim made against me on account of services to you or Mar Oil asserted to have been rendered by others in connection with all matters rendered to you or your companies. 20 Morrissey, without calling attention to his self-payment, had Monzon, in haste, sign the document. 782 F.Supp. at 908. Morrissey neither gave Monzon a copy of the February 2 Letter at that time nor sent him one thereafter. 21 Monzon testified that he had never approved Morrissey's demand for more than $900,000 in fees, which he regarded as exorbitant, and that on February 2 he had not noticed anything in the document, or any attachment to it, that purported to approve that demand. At the rushed February 2 meeting, Morrissey pointed out to him release language on page 2 of the letter, explaining that Morrissey wanted protection against any tax liability for having been custodian of Mar Oil's settlement proceeds; but Morrissey did not point out anything on page 1; nor did he inform Monzon that anything in the letter or attachment indicated agreement to Morrissey's fee demand. The trial court credited this testimony and discredited contrary testimony by Morrissey, finding that Morrissey represented to Monzon that the document was a 22 routine release with respect to his disbursements from the Escrow Trust Account. Defendant did not ... point out to Sr. Mon[z]on or discuss with him the language in the February 2, 1984 paper that also purported to approve of defendant's demand for the additional fees. Nor did the defendant discuss with Sr. Mon[z]on the implications of how signing a letter recording that $925,675.38 (included in the $960,000) which was one of the withdrawals from the escrow account, was affected by the release clauses on the second page of the letter. Id. at 907-08. The court found that 23 Mon[z]on did not on February 2, 1984 or any other time, knowingly or intentionally, agree to compensate defendant in accordance with Morrissey's demand for a contingency fee, or quantum meruit fee, based on the global recovery, or approve of defendant's additional fee demand or withdrawal of $925,675.38. 24 Id. at 908; see also id. at 909 (The Court finds that the only agreement between the parties was that of October 31, 1980, calling for an agreed and reasonable compensation based on time-spent. (emphasis in original)). It concluded that Morrissey's February 2 Letter overreached the client and was a calculated breach of fiduciary duty in conception and in execution relative to the manner in which it was presented, explained and obtained and the actual withdrawals. Id. It termed Morrissey's actions in obtaining Monzon's signature unconscionable. Id. at 912. The court found that 25 [n]o services performed by the defendant remotely warranted a charge of $960,000 on a basis of time-spent; no services furnished by Morrissey remotely added up to 5205 hours of time spent. More, services performed by the defendant did not warrant a fee of $960,000 on a quantum meruit basis or on any basis. The defendant had already received $61,000 under the Retainer Letter over a period of three years and $14,619.96 in disbursements. There was no sum due to defendant which remotely warranted removal of the $925,675 and other withdrawals from the Escrow Account, unilaterally and without authority. 26 Id. at 909. 27 Monzon wrote Morrissey in April 1984, urging that Morrissey fulfill his February 2 promise to submit a compromise proposal with regard to his fee. Morrissey responded evasively and blandly, id. at 908, stating that  'it is simply not possible,'  id. (quoting Morrissey letter). Numerous efforts to persuade Morrissey to return the $925,675.38 proved unsuccessful, and indeed, despite repeated requests for documents, Morrissey refused even to provide Mar Oil with a copy of the February 2 Letter until 1986. Shortly after receiving that document, Mar Oil commenced the present action. 28