Opinion ID: 2977989
Heading Depth: 1
Heading Rank: 6

Heading: conti’s dispute with sommers schwartz

Text: Conti also challenges the district court’s prior decision to permit her former counsel in this action, Sommers Schwartz PC, to withdraw and yet still file a lien against any damages she may 8 In concluding that Conti fails to make her prima facie case, the dissent relies heavily on Pannucci’s testimony that Conti did not perform the same tasks as he did as Director of New Model Launch. See Dissenting Op. at 12-13. Conti, however, directly challenges that testimony, and in fact identifies a number of additional tasks that she was required to perform. Conti also points out that, unlike Pannucci, she did not have the benefit of two direct reports in running the New Model Launch department. While we agree that Pannucci’s testimony is relevant to Conti’s claim, and that a jury eventually could find it persuasive, it would be improper at this stage to credit Pannucci’s testimony over Conti’s. Again, as the non-moving party, Conti is entitled to have us read the evidence in the light most favorable to her position. - 28 - No. 08-1301 Conti v. American Axle recover in this action. In 2004, Conti retained the Sommers Schwartz firm to pursue her claims against AAM. Attorney Joseph Golden (“Golden”) served as lead counsel on Conti’s case. After acting as lead counsel for over 2 years, Golden resigned and left the firm effective February 14, 2007. Shortly thereafter, on April 4, 2007, Sommers Schwartz advised Conti via e-mail that it intended to withdraw as counsel, noting that the “sticking point” in continuing the relationship was “the question of [Conti’s] responsibility for ongoing anticipated file costs.” J.A. 1031. Conti responded via letter on April 5, 2007 that she did not consent or agree to the firm’s proposal to withdraw as counsel, and advising the firm that she intended to invoke her rights under the Retainer Agreement should the firm seek to withdraw.9 J.A. 984-85. Over Conti’s objection, Sommers Schwartz filed a motion to withdraw alleging a complete “breakdown” in the attorney-client relationship. J.A. 1066-70. Although Sommers Schwartz’s motion advised the court that it had attempted to contact defense counsel, it did not inform the court that Conti had objected to its proposal to withdraw and it did not mention Conti’s letter of April 5, 2007. And although Sommers Schwartz’s motion advised the court that Golden continued to serve 9 In the Retainer Agreement entered into between Conti and Sommers Schwartz, J.A. 107376, the parties agreed that the “Firm shall retain a lien on any and all property provided to the Firm by Client to pursue his/her claims, including all personal papers, investigations paid for by Client and documents. . . . This lien shall remain in effect until all fees, expenses and court costs owing to the Firm are paid in full.” J.A. 1074. However, the Retainer Agreement also provided that the “Firm shall not substitute Client representation and/or their roles without Client consent. If representation and/or roles change without Client consent, this Agreement becomes null and void, and the Client will not [be] liable for any of the Firm’s expenses, court costs and/or fees. All liens will be cancelled and recorded by the Firm and all Client property including investigations and studies will be returned to the Client.” J.A. 1075. - 29 - No. 08-1301 Conti v. American Axle as counsel for Conti, Golden filed a motion to withdraw as counsel on April 24, 2007. Conti did not file a response to the motion. On April 30, 2007, after the expiration of the time period for filing a response and after Golden filed his motion to withdraw, the court entered a “stipulated” order permitting Sommers Schwartz to withdraw as counsel. Although so titled, Conti plainly had not “stipulated” to the order. A week later, on May 8, 2007, Golden, despite having already filed his own motion to withdraw, filed a belated motion on Conti’s behalf opposing the court’s order. J.A. 968-78. After Conti obtained replacement counsel, Sommers Schwartz asserted a lien for its costs and attorney fees against any damages Conti may recover in this action.10 On May 31, 2007, Conti’s new counsel filed a motion for declaratory judgment arguing that Sommers Schwartz was precluded under Paragraph 13 of the Retainer Agreement from asserting a lien for its outstanding costs because it withdrew from the case without Conti’s consent. Sommers Schwartz’s response argued that Conti’s “failure to file an objection to Sommers Schwartz’s withdrawal motion represents her consent (or at a minimum her abandonment of any objection) to the relief ordered by this Court.” J.A. 1048. Sommers Schwartz also argued that Paragraph 13 was void as a matter of public policy. On June 25, 2007, the magistrate judge held a hearing on the issue. At the hearing, the magistrate judge expressly acknowledged that the “stipulated” order was entered in error “based on what [the court] saw as an unobjected to order.” J.A. 2593. Despite acknowledging this error, the magistrate judge nevertheless entered a written order approving the lien as to all costs incurred up 10 In its papers to this Court, Sommers Schwartz claims only that it is entitled to costs, expressly disavowing its claim regarding attorney fees. - 30 - No. 08-1301 Conti v. American Axle until Sommers Schwartz withdrew as counsel. J.A. 1099. Critically, however, the order expressly set aside the issue of attorney fees for resolution at a later date. J.A. 1099. The order also rejected Conti’s objections under Paragraph 13, finding that that provision “is void as a matter of Michigan public policy.” J.A. 1103. On Conti’s appeal, the district court approved the magistrate judge’s order, agreeing with Sommers Schwartz that Paragraph 13 of the Retainer Agreement did not apply because Conti had failed to object to the motion to withdraw. Critical to that ruling was the court’s determination that Conti “was represented by counsel when Sommers Schwartz filed its motion to withdraw.” J.A. 1263. Significantly, however, the court did not address any issues related to the magistrate judge’s determination that Paragraph 13 is void as a matter of public policy. Rather, the court determined only that, because Conti failed to file timely objections to Sommers Schwartz’s motion to withdraw, Paragraph 13 of the Retainer Agreement did not apply because Sommers Schwartz did not withdraw “without the consent” of Conti. J.A. 1263. Jurisdictional Considerations Prior to oral argument, this Court requested that the parties submit supplemental briefs regarding this dispute addressing “both the finality of the magistrate judge’s order and the timeliness of the notice of appeal,” referring the parties to our decision in Gnesys, Inc. v. Greene, 437 F.3d 482 (6th Cir. 2005).11 The question underlying that request was whether Conti’s appeal from the district 11 Although our request was directed generally to the counsel for all parties, the only parties with an actual interest in this dispute are Conti and Sommers Schwartz; American Axle has no stake in the outcome of this dispute. Accordingly, we strike the brief submitted by American Axle for lack of standing. - 31 - No. 08-1301 Conti v. American Axle court’s July 27, 2007 order is untimely because, although it was filed within 30 days of the district court’s order granting AAM summary judgment, it was filed several months after the court entered its order on this distinct issue. After consideration, we conclude that we have jurisdiction to consider Conti’s appeal from the district court’s order denying her motion for declaratory judgment. Under 28 U.S.C. § 1291, this Court has jurisdiction to consider appeals “from all final decisions of the district courts of the United States.” In determining whether a decision is “final” for purposes of § 1291, the Supreme Court has instructed that we consider whether the decision “ends the litigation on the merits and leaves the court nothing to do but execute the judgment.” Catlin v. United States, 324 U.S. 229, 233 (1945). “When an action presents more than one claim for relief . . . the court may direct entry of a final judgment as to one or more, but fewer than all, claims . . . only if the court expressly determines that there is no just reason for delay.” Fed. R. Civ. P. 54(b) (emphasis added). “Otherwise, any order . . . that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.” Id. (emphasis added). In this case, the magistrate judge’s June 27, 2007 order denying Conti’s motion for declaratory judgment did not finally resolve the issue of Sommers Schwartz’s entitlement to attorney fees. In fact, that order expressly “stayed” the issue of fees “in order to permit Ms. Conti to obtain new counsel and present any affidavit regarding the effect of [Sommers Schwartz’s] lien on the representation.” J.A. 1099. Because a magistrate judge’s order is not subject to appeal under § 1291, Conti appropriately appealed that order to the district court. See United States v. Walters, 638 - 32 - No. 08-1301 Conti v. American Axle F.2d 947, 949-50 (6th Cir. 1981) (“Direct appeals from the magistrate judge’s findings are correctly denied, because only final orders of the district court are appealable pursuant to 29 U.S.C. [§] 1291.”). On July 27, 2007, the district court affirmed the magistrate judge’s resolution of the matter, also setting aside resolution of the dispute over attorney’s fees. J.A. 1263 (“Magistrate Judge Morgan is not in error in her decision to consider the issue of attorney fees at a later date.”). Because that order did not resolve all issues relating to that dispute, it is not a “final” order subject to appeal under § 1291. Our prior decision in Gnesys is not to the contrary. In that case, we held that a notice of appeal was untimely because it was filed almost a year after the district court entered an order finding defendant in contempt and awarding plaintiff damages, even though it was filed within 30 days of the court’s entry of an order resolving disputed attorney fees that related to the previously entered damages award. Gnesys, 437 F.3d at 485. Relying on Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988), we concluded that the claim for fees was “not part of the merits of the action,” and thus held that the dispute over fees did not preclude the order awarding of damages from effectively rendering a final decision. Gnesys, 437 F.3d at 486-87. In this case, however, the facts are almost completely reversed. Rather than resolving the merits first and the fee dispute later, the court resolved Conti’s dispute with Sommers Schwartz as to costs first, prior to granting American Axle’s summary judgment motion. Because the district court had yet to enter an order resolving the merits of the action, the holding of Gnesys is inapposite. While Gnesys instructs that the dispute between Conti and Sommers Schwartz regarding costs and - 33 - No. 08-1301 Conti v. American Axle fees is separate from the merits of the underlying action, the fact that such an outstanding dispute does not toll the time for filing an appeal from an order that fully resolves the merits of the action simply does not speak to whether the resolution of that dispute constitutes a separate final order for purposes of § 1291. Nor was the district court’s July 27, 2007 order subject to appeal under the collateral order doctrine. Although 28 U.S.C. § 1291 vests the Courts of Appeals with jurisdiction over appeals only from “final decisions” of the district courts, “a decision ‘final’ within the meaning of § 1291 does not necessarily mean the last order possible to be made in a case.” Gillespie v. United States Steel Corp., 379 U.S. 148, 152 (1964). A decision also is appealable if it falls within “that small class [of orders] which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546 (1949). That “small class” of decisions includes orders granting or denying a claimed right that “cannot be effectively vindicated after the trial has occurred.” Mitchell v. Forsyth, 472 U.S. 511, 525 (1985). The requirements for bringing an appeal under Cohen’s collateral order doctrine “have been distilled down to three conditions: that an order ‘[1] conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, and [3] be effectively unreviewable on appeal from a final judgment.’” Will v. Hallock, 546 U.S. 345, 349 (2006) (quoting Puerto Rico Aqueduct and Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144 (1993)). - 34 - No. 08-1301 Conti v. American Axle The district court’s order thus was not subject to collateral appeal because it did not “conclusively determine” the dispute in question inasmuch as it specifically left the issue of attorney fees unresolved. Moreover, as Gnesys demonstrates, disputes as to costs and fees, although collateral to the underlying dispute, can still be “effectively vindicated after the trial has occurred.” Merits Analysis This Court reviews the district court’s decision to permit an attorney to withdraw for an abuse of discretion. United States v. Chambers, 441 F.3d 438, 446 (6th Cir. 2006). “A district court abuses its discretion when it relies on clearly erroneous findings of fact, improperly applies the law, or uses an erroneous legal standard.” Tucker v. City of Fairfield, 398 F.3d 457, 461 (6th Cir. 2005). This abuse of discretion standard applies even where a motion seeking substitute counsel is untimely. See United States v. Williams, 176 F.3d 301, 314 (6th Cir. 1999). This Court reviews the district court’s conclusions of law de novo. United States v. Foster, 376 F.3d 577, 583 (6th Cir. 2004). Conti opposed the lien asserted by Sommers Schwartz based on Paragraph 13 of the Retainer Agreement. Rejecting that argument, the district court concluded that that provision did not apply because Conti failed to object to Sommers Schwartz’s motion to withdraw. Critical to that ruling was the court’s finding that Conti was represented by counsel when Sommers Schwartz moved to withdraw. After reviewing the record, we now conclude that the district court’s conclusion was an abuse of discretion. In permitting the Sommers Schwartz firm to withdraw as counsel, the district court and magistrate judge made several procedural errors and findings that are contrary to the record. Perhaps most notably, the magistrate judge entered a “stipulated” order granting the firm’s motion to - 35 - No. 08-1301 Conti v. American Axle withdraw despite the fact that Conti had not acknowledged in any way her consent to the motion. From the record, it is apparent that Conti bears no responsibility for this oversight. Despite receiving a letter from Conti unequivocally opposing its threat to withdraw as her counsel, Sommers Schwartz nevertheless failed to inform the court of Conti’s position, failed to attach her letter, and submitted a proposed “stipulated” order. As a result, the magistrate judge entered that order completely unaware of Conti’s position, acknowledging as much at the hearing on this issue. Although this mistake was brought to the district court’s attention, the district court nevertheless affirmed the magistrate judge’s order on the grounds that Conti failed to timely oppose the motion to withdraw. Apparently, the court concluded that Conti was not prejudiced by this oversight because she was represented by counsel at the time and therefore remained free to oppose Sommers Schwartz’s motion and correct the omission. But we have serious doubts about that conclusion. Although Golden was acting as lead counsel on Conti’s case, he was her attorney only by virtue of the retainer agreement she signed with Sommers Schwartz, which Sommers Schwartz’s motion effectively was seeking to terminate. Moreover, Golden also submitted his own motion to withdraw prior to the magistrate judge entering its order granting Sommers Schwartz’s motion. Because the district court overlooked these errors, we find its decision to be an abuse of discretion. Accordingly, we vacate that judgment and remand to the district court for further consideration of the merits of Conti’s claims under Paragraph 13 of the Retainer Agreement.