Opinion ID: 1060207
Heading Depth: 1
Heading Rank: 2

Heading: Cole v. Twiford

Text: On September 16, 1992, after the Lottery Department refused to disburse the proceeds of the winning ticket to Walter Cole, the Coles retained Russell E. Twiford of the North Carolina law firm of Twiford, Morrison, O'Neal and Vincent. With the Coles' consent, Twiford associated Peter G. Decker, Jr., and H. Joel Weintraub of the Norfolk, Virginia firm of Decker, Cardon, Thomas, Weintraub, Coureas and Huffman. Pursuant to a fee agreement signed by the Coles, Twiford and Decker were to divide evenly a contingent fee equal to one-third of 80 percent of the amount recovered, plus expenses (no fee was to be charged against the undisputed claim of Walter Cole to 20 percent of the lottery proceeds). By letter dated April 25, 1993, while the appeal of the Hughes Group was pending in the North Carolina Court of Appeals, the Coles dismissed Twiford and Decker. The letter gave no reason for the dismissal but requested a bill for services rendered and ended with the statement, [w]e wish to thank you for your services on our behalf. On April 26, 1993, the Coles retained Frank W. Ballance, Jr., of the North Carolina firm of Frank W. Ballance, Jr. and Associates, P.A. and, in a fee contract, agreed to pay him a contingent fee equal to 15 percent of 80 percent of the amount recovered, plus expenses. With the Coles' agreement, Ballance associated John H. Harmon of New Bern, North Carolina, and Henry L. Marsh, III, of the Richmond, Virginia firm of Hill, Tucker and Marsh. By letter dated July 5, 1993, the Coles dismissed Ballance and Marsh. Again, no reason was given for the dismissal but a bill for services rendered was requested and the letter ended with the statement, [w]e wish to thank you for your services on our behalf. The Coles then retained Bryan K. Selz of the law firm of Overbey, Hawkins and Selz of Rustburg, Virginia. Finally, the Coles replaced Selz with their present counsel, J. Nelson Happy of the law firm of Happy, Mulkey and Warley of Newport News, Virginia. Twiford, Decker, Ballance, Harmon, and Marsh filed applications in the trial court for the enforcement of attorneys' liens pursuant to Code §§ 54.1-3932 and -3933. [6] The attorneys asserted that they were terminated without cause and requested that the court determine their compensation and order the Lottery Department to pay their fees out of the Coles' share of the lottery proceeds should the Coles prevail on their claim for the proceeds. The Department objected to the applications on the grounds (1) that the lottery winnings were exempt under the doctrine of sovereign immunity from any claim by a person other than the prize winner, and (2) that Code § 58.1-4013(A)(ii) provides that lottery prize winnings are not assignable except that the prize to which the winner is entitled may be paid to a person pursuant to an appropriate judicial order. The Coles joined in the Department's objections and also denied that the attorneys were terminated without cause. Under date of December 15, 1994, the Office of the Attorney General submitted a letter to the court which stated as follows: [T]he Lottery does not object to the entry of an order directing it to pay the proceeds of the [winning] ticket into court for further distribution, but it vigorously objects to the lodging of a lien against those monies while they are still in the hands of the Director of the Lottery.... Ruling that the attorneys were discharged without cause, the trial court awarded compensation on the basis of quantum meruit in the amount of $850,000 to Twiford and Decker and $115,000 to Ballance, Harmon, and Marsh. The court granted the applications for the enforcement of attorneys' liens and ordered that the Department distribute the lottery prize payments to the clerk of the court for further distribution in accordance with the court's decrees. The court noted in its decrees that the Lottery does not object to the entry of an Order directing it, acting through its Director, to pay the proceeds of the prize, in annual installments as they become due and payable, to the Clerk of this Court for further distribution by the Court. The decrees ordered the clerk to distribute certain amounts from the annual installments to the attorneys until their judgments for attorneys' fees were satisfied. The second decree also provided that in accordance with the request of [the Coles], the Court further ORDERS and DIRECTS the Clerk of this Court to distribute to J. Nelson Happy, attorney for [the Coles], the sum of $110,000 in partial payment of attorney's fees due. On appeal, the Coles contend that the trial court erred in awarding any amount of attorneys' fees in this case because the evidence showed that both sets of attorneys were discharged for cause. However, the Coles have waived any objection they may have had to the trial court's determination that Twiford and Decker were discharged without cause. Rule 5:25. Twiford and Decker's application was heard separately from Ballance, Harmon, and Marsh's. At Twiford and Decker's application hearing, Leondas Cole, who acted as spokesman for the Coles, testified in response to a question from Twiford and Decker's counsel: As far as you guys earning the fee, I think you guys deserve to be paid for what you did, but I think that the price that you are asking is astronomical. More important, in closing argument, the Coles' counsel stated that he did not think for a minute that [Twiford and Decker] should walk out with zero from this case, and he requested the court to apply some reasonable hourly rate ... to some reasonable amount of time. In view of these unequivocal concessions, the Coles cannot ask this Court to hold that Twiford and Decker were dismissed for cause and, therefore, that they are entitled to no award of fees. With respect to Ballance, Harmon, and Marsh, Walter Cole was asked at their application hearing why he discharged Ballance. Cole said: Well, because he didn't do like I tell him to do.... I told him we are not going to settle. He told me he was going to the lottery to get the money, and he didn't do neither what I asked him to do. Hercules Cole testified that Ballance did not respond to telephone calls and did not provide the Coles with paperwork showing what actions counsel had taken. The first ground asserted by the Coles for their discharge of Ballance, concerning the subject of settlement, involves an article published in the Virginian-Pilot, a Norfolk newspaper, on May 21, 1993. In the article, Ballance was quoted as saying: `My goal is to sit the parties down and determine whether a reasonable settlement can be reached.... I'm not sure to what extent that's been done. They were all friends at one time and they're not getting any younger.' Walter Cole, Hercules Cole, and the latter's wife, Elsie Cole, testified that when the Coles initially met with Ballance in April 1993, Walter Cole told Ballance he did not want to settle the case. The Coles argue that Ballance's statement as quoted in the newspaper article was in direct violation of Walter Cole's instruction. Yet, the fee contract the Coles signed authorized Ballance to negotiate with those claiming an interest, such settlement or compromise as he may deem appropriate, subject however to [the Coles'] approval. The mere statement by Ballance of an intention to determine whether settlement could be reached, which is all the record discloses he ever said, is not a breach either of the contract or of Walter Cole's instruction. Indeed, we are inclined to agree with Ballance that this assertion by the Coles is totally frivolous. The second ground asserted by the Coles for their discharge of Ballance involves an alleged failure by Ballance to follow the Coles' instruction to obtain a court order releasing the uncontested portion of the prize (approximately $150,000 per year). The Coles say that after they retained their present counsel, J. Nelson Happy, it only took him from October 27, 1993, to January 12, 1994, to obtain the release of one-sixth of the lottery prize. The Coles complain that as a result of Ballance's failings, they lost the use of their funds and were denied interest on the money. Ballance testified that after reviewing the file following his employment in the case, he developed a plan for representing the Coles which consisted of filing a brief in the North Carolina Court of Appeals, attempting to secure the undisputed amount of the winnings, and proceeding to obtain the full $9 million for the Coles as soon as possible. Ballance said he informed [the Coles] that in [his] opinion [they] needed to proceed with the brief and hold other issues until after the brief had been filed and after the case had been argued [in the North Carolina Court of Appeals]. Ballance testified further that he asked [Marsh] to secure [the] release [of] the [uncontested] funds [from the Circuit Court of the City of Chesapeake]. After the appellate brief was filed, Marsh spoke to the trial judge who told Marsh that at the last hearing of the case, while Twiford and Decker were still representing the Coles, a request was made to release the uncontested amount of the award. The judge indicated to Marsh that the issue of releasing the undisputed funds was still before the court and would likely be taken up at the next hearing before the court. Marsh testified that the Coles terminated his services before he was able to file a motion to bring the matter before the court. We think the standard by which the timeliness of Ballance and Marsh's actions should be judged is set by the Coles' boast that it only took their present counsel from October 27, 1993, to January 12, 1994, or a total of 78 days, to secure the release of the undisputed funds. [7] Considering that Ballance and Marsh were only in this case a total of 71 days before their discharge, or seven days short of the Happy standard, we fail to see how the Coles can feel justified in disparaging the actions of Ballance and Marsh. Be that as it may, the testimony of Marsh is uncontradicted that he spoke to the trial judge about releasing the undisputed funds and that the Coles terminated his services before he was able to file a motion to bring the matter before the court. Had the Coles not taken such precipitous action, it is likely they would have received the undisputed money months earlier as a result of Marsh's efforts. With respect to the complaint of Hercules Cole that Ballance did not respond to telephone calls or provide documentation of the actions he had taken, Ballance testified that when the Coles retained him as counsel, he requested that the family choose one person to act as spokesman, and the family selected Leondas Cole. Ballance testified further that it was his policy to return telephone calls as soon as possible and, despite the agreement that Leondas serve as spokesman, anytime a Cole family member telephoned Ballance and was unable to reach him, he would make an effort to return the call. Ballance did not explain his alleged failure to provide documentation of his actions, but the Coles are unable to point to anything imposing upon him the duty to furnish such documentation. The trial court obviously found, as it had a right to find, that Ballance's explanation about the telephone calls was satisfactory and that the complaint about the lack of documentation was so petty as not to warrant serious attention. In determining what constitutes just cause for terminating a contract, this Court has stated as follows: The grounds upon which [a termination] is based must be reasonable, and there should not be an abuse of the conferred right. It must be a fair and honest cause or reason, regulated by good faith on the part of the party exercising the power. It limits the party to the exercise of good faith, based upon just and fair grounds as distinguished from an arbitrary power. Quick v. Southern Churchman Co., 171 Va. 403, 417, 199 S.E. 489, 494-95 (1938). Tested by these principles, the evidence amply supports the trial court's finding that Ballance and Marsh were terminated without just cause. The law is clear that when ... an attorney employed under a contingent fee contract is discharged without just cause and the client employs another attorney who effects a recovery, the discharged attorney is entitled to a fee based upon quantum meruit for services rendered prior to discharge and, as security for such fee, to the lien granted by Code § 54-70 [now Code § 54.1-3932]. Heinzman v. Fine, Fine, Legum & Fine, 217 Va. 958, 964, 234 S.E.2d 282, 286 (1977) (footnote omitted). This brings us to the question whether the trial court correctly determined the quantum meruit value of the services rendered by the two sets of attorneys involved in this appeal. In reviewing the record with respect to this question, we have identified several procedural problems concerning the arguments the Coles make on appeal, as follows. 1. The Coles argue that [t]he trial court's reliance on the rules which pertain to strictly contingent fees cases was misplaced because the fees were only partially contingent. However, this argument was not made in the trial court, and, furthermore, the Coles did not object to the trial court's finding that the legal work in dispute was to be performed on a contingency fee basis. Accordingly, we will not consider the argument. Rule 5:25. 2. The Coles also argue that in setting fees, the trial court should have considered the factor that unlike the typical personal injury case where contingent fees are applicable, this case does not present any issue of collectability of the judgment. But this argument was not made at the Twiford and Decker fee hearing, and we will not consider it now as it might have applied to Twiford and Decker. Rule 5:25. The argument was made at the Ballance, Harmon, and Marsh hearing, and the trial judge did in fact consider the factor. Therefore, the argument is moot. 3. The Coles further argue that the trial court should have denied [the attorneys'] application for fees or drastically discounted them from the amounts allowed because none of the North Carolina attorneys bothered to comply with Rule 2.6 of the North Carolina Rules of Professional Conduct. This Rule, the Coles say, requires [an attorney] to make reasonable efforts to advise the client of the existence of the North Carolina State Bar's program of nonbinding fee arbitration. The Coles did not make this argument, however, at the Twiford and Decker hearing, and we will not consider it now as it might have applied to Twiford and Decker. Rule 5:25. The Coles did raise the issue of Ballance's failure to comply with Rule 2.6. Marsh testified that he and Ballance offered to submit to nonbinding arbitration. Several weeks later, the Coles agreed to nonbinding arbitration provided it would not delay the proceedings in the trial court. But, by letter dated December 14, 1994, and again at the Ballance, Harmon, and Marsh fee hearing, the Coles stated they did not wish to proceed with nonbinding arbitration. Hence, the point has been waived. The only argument remaining for the Coles regarding the fee allowances is that the amounts awarded are excessive. The Coles maintain that the number of hours estimated by the discharged attorneys on their time sheets was shocking and that the case did not involve complex law or facts. According to reconstructed time sheets submitted by the attorneys, Decker's hours totalled 607.05, Twiford's 387.3, Ballance's 382, and Marsh's 73. In addition, testimony showed that Harmon worked in excess of 80 hours. When the Coles' counsel remarked at the Twiford and Decker hearing that the case was relatively simple, the trial judge responded by saying that he wished the case had been as simple for [him]. The Coles' counsel then agreed that the case was not all that simple, that it was a very complex problem. The trial judge remarked later that he could see right from the beginning... it was not a simple case, and [he] knew... it was going to take some time [and] a lot of work, that it was the kind of case that... needed full-time attention. At the Ballance, Harmon, and Marsh fee hearing, the trial judge noted that when these attorneys came into the case, a brief was due to be filed in the Court of Appeals of North Carolina within 22 days and that, at the time, Ballance, Harmon, and Marsh knew nothing at all about these complex legal issues. Yet, the judge said, they got the brief filed as quickly as it possibly could be done given the circumstances. The court also noted that the Coles' present counsel used the brief to successfully argue the case in the North Carolina Court of Appeals on behalf of [his] clients. County of Campbell v. Howard, 133 Va. 19, 112 S.E. 876 (1922), was cited to the trial court and is cited here as a catalog of the factors that should be considered in determining the quantum meruit value of attorneys' fees. In Howard, this Court listed the factors as follows: [T]he amount and character of the services rendered; the responsibility imposed; the labor, time and trouble involved; the character and importance of the matter in which the services are rendered; the amount of the money or the value of the property to be affected; the professional skill and experience called for; the character and standing in their profession of the attorneys; and whether or not the fee is absolute or contingent, it being a recognized rule that an attorney may properly charge a much larger fee where it is to be contingent than where it is not so. The result secured by the services of the attorney may likewise be considered; but merely as bearing upon the consideration of the efficiency with which they were rendered, and, in that way, upon their value on a quantum meruit, not from the standpoint of their value to the client. Id. at 51, 112 S.E. at 885. Accord Wood v. Carwile, 231 Va. 320, 324, 343 S.E.2d 346, 348 (1986). From the record, it is clear that the trial judge was fully conversant with the Howard factors and that he applied them carefully in determining the quantum meruit value of the services rendered to the Coles by the two sets of attorneys involved in this appeal. This determination was in the sound judicial discretion of the trial judge and, upon this record, we cannot say that he abused his discretion. See Perrow v. Payne, 203 Va. 17, 30, 121 S.E.2d 900, 909 (1961). Therefore, we will not disturb the determination. [8] The Coles' final contention is that the trial court erred in granting liens against lottery payments in favor of the discharged attorneys because the court lacked subject matter jurisdiction. First, the Coles say that the trial court lacked subject matter jurisdiction because [s]overeign immunity precludes subjecting funds held in the hands of a public official ... to attachment. The Coles liken an attorney's lien to an attachment and then argue that lottery prize winnings ... are, therefore, immune from attachment, including the attachment pursuant to the attempted assertion of an attorney's lien. The ready answer to this argument is that the Coles lack standing to assert the sovereign immunity of the Commonwealth. Only the Commonwealth may assert its immunity. Although the Lottery Department initially objected to the applications for fees on the ground that the lottery winnings were exempt under the doctrine of sovereign immunity, it later modified its position by stating it would not object to the entry of an order directing it to pay the proceeds of the [winning] ticket into court for further distribution. The Lottery Department also said it vigorously object[ed] to the lodging of a lien against those monies while they are still in the hands of the Director of the Lottery, but the trial court honored the objection by enforcing the attorneys' liens only after the lottery proceeds were in the hands of the clerk of the trial court. Next, the Coles argue that the trial court lacked subject matter jurisdiction because there is no provision in the State Lottery Law, Sec. 58.1-4000 et seq. for payment of State Lottery prize winnings to the prize winner's attorneys or former attorneys. Rather, the Coles say, Sec. 58.1-4013 provides that State Lottery prize winnings are not even assignable. [9] There are two answers to this argument. First, the trial court's order directing payment to the attorneys does not constitute an assignment. According to Black's Law Dictionary 119 (6th ed. 1990), an assignment is [t]he act of transferring to another all or part of one's property, interest, or rights. In other words, an assignment is a voluntary act, quite unlike a court order that directs the involuntary transfer of property, interest, or rights. Second, while § 58.1-4013 does provide that [n]o right of any person to a prize drawn shall be assignable, the section goes on to provide that the prize to which the winner is entitled may be paid to a person pursuant to an appropriate judicial order. We think this language clearly authorizes the order the trial court entered in this case. Finally, the Coles say that the trial court lacked subject matter jurisdiction to grant attorneys' liens to North Carolina lawyers who performed legal work outside Virginia. However, as will be observed by a reading of Code § 54.1-3932, note 6 supra,  any attorney [employed] to prosecute [a claim sounding in tort or in contract] shall have a lien upon the cause of action as security for his fees for any services rendered in relation to the cause of action or claim. (Emphasis added.) This language is broad and permits of no interpretation limiting the benefits of the statute to Virginia lawyers or to legal work performed in Virginia. Finding no reversible error in either Hughes v. Cole or Cole v. Twiford, we will affirm the judgments in both cases. Record No. 950520  Affirmed. Record No. 950513  Affirmed.