Opinion ID: 2444758
Heading Depth: 1
Heading Rank: 3

Heading: McCLEAN v. PASSER

Text: In this declaratory judgment action McClean alleged the execution of a contingent fee contract on June 10, 1966, alleged the claims being asserted thereunder by Passer, asserted that there was a controversy as to whom, if anyone, McClean was indebted to under said contract and asked the court to declare the rights and duties of Passer under said contract. In his answer Passer asked that he be awarded a judgment of $4,208.33. In answers to McClean's request for admissions, Passer denied a proposed admission that he was not entitled to any sums from McClean under the contingent fee contract and denied a proposed admission that McClean was not indebted to him for any services rendered. Thus, in both his answer and in his responses to requests for admissions, Passer asserted that McClean was indebted to him for an attorney's fee. The case came on for trial before a jury. After the jury panel had been sworn, counsel for Passer, in proceedings in chambers, indicated to the court that Passer was not seeking monetary relief from McClean and he would not seek a judgment against her in the future. However, after considerable colloquy between counsel and the court the attorney for Passer said: I believe for the record, it should be made clear that I did not say that Miss McClean was not legally indebted to Mr. Passer. I said that Mr. Passer does not look to Miss McClean for any monies arising out of any contractual relationship he has ever had with Miss McClean. I did not state on behalf of my client that she is not legally obligated under that particular contract. Subsequently, the court entered this judgment memorandum: COUNT I On the basis of the Defendant's statement made in open court on the record, which the Court interprets as a covenant on his part not to sue the plaintiff on the alleged contract, without finding whether the plaintiff may or may not be legally obligated under the contract, on the basis of his covenant not to sue, finds that plaintiff is not indebted to the defendant on the contract because there is a solemn covenant not to sue. Since the defendant could have, and has, in the Court's opinion, and the record will demonstrate, has made a covenant not to sue plaintiff, plaintiff has no obligationthere is nothing to declare for the Court as far as any obligation or not of the plaintiff to the defendant or defendant to the plaintiff. COUNT IIPlaintiff voluntarily dismisses Count II with prejudice. [3] Dated 6-11-75 FILED June 11, 1975 /s/ Robert A. Meyers Judge McClean filed a motion to amend the judgment and for a new trial which the court overruled. McClean then appealed and now takes the position that under the pleadings there is a justiciable controversy which the court should have decided. She argues that she has funds from her personal injury settlement and that Passer has claimed an interest therein to the extent of $4,203.33. She points out that Shirkey is in possession of the questioned funds and that she is entitled to that money if Passer has no right to it. That question, she argues, should be resolved. We conclude that McClean is entitled to have her declaratory judgment action decided. The trial court expressly avoided deciding the issue by holding that the verbal statement by counsel for Passer amounted to a covenant not to sue. A covenant not to sue is nothing but a contract, and should be so construed. 66 Am. Jur.2d 679. See also 76 C.J.S. Release § 3, p. 630. A covenant not to sue requires a consideration for such promise. Since there was no such consideration, there was no binding covenant not to sue. Counsel's statement did not resolve the issue raised by McClean's petition, nor did the judgment entered decide the issues. Accordingly, the judgment is reversed and remanded. MORGAN, C. J., BARDGETT, J., and SIMEONE, Special Judge, concur. DONNELLY, J., dissents in separate dissenting opinion filed. RENDLEN, J., dissents and concurs in separate dissenting opinion of DONNELLY, J. SEILER, J., dissents in separate dissenting opinion filed and concurs in separate dissenting opinion of DONNELLY, J. WELLIVER, J., not participating because not a member of the Court when cause was submitted. DONNELLY, Judge, dissenting. The principal opinion holds that a verdict should be entered for defendant on Count I. Its basis for this holding is that Passer's letter of June 10, 1966 did not fulfill the requirements of § 484.140 for a notice to defendant of the attorney's lien because it failed to advise that he had a contingent fee contract for 50% of the recovery. In so doing, the principal opinion ignores the ultimate and determinative fact on the question of notice: the repeated acknowledgment by U.S.F.&G. of Passer's lien. I respectfully dissent. SEILER, Judge, dissenting. I concur with Judge Donnelly in his dissent, agreeing that USF&G had notice of Passer's lien. I respectfully add that this case was tried, by all parties, on the theory that both USF&G and Mr. Shirkey had, by their conduct, treated Passer as having a valid and subsisting lien. The whole object of what USF&G and Shirkey did was to avoid having to include Passer in the settlement despite his lien. There is no evidence, as far as I can determine, to support the proposition that either USF&G or Shirkey ever questioned Passer's lien on the ground that Passer's lien letter failed to state what his percentage was. In fact, as the principal opinion notes, USF&G's attorney expressly acknowledged the existence of the lien in his letter of September 3, 1970 to Shirkey. The trial judge, in pre-trial rulings in chambers prior to impaneling the jury, characterized the claim that the lien letter was not sufficient as an afterthought. The trial judge stated as follows: I think this also tells the parties, as these documents will show, was such that everybody assumed that he did have a lien. In much of the dealings between the plaintiff and the insurance company, between the plaintiff and defendant Shirkey, and between Shirkey and the insurance company, nobody ever questioned whether or not he had a valid lien. This apparently, that the letter wasn't sufficient, is an afterthought. I think certainly with all the dealings that there were among the three entities here involved, the plaintiff and two defendants, that it would be grossly unfair at this stage to say, `Well, we decided that your letter wasn't sufficient.' I feel quite sure that the plaintiff would be protected against such a conclusion or such a result by some equitable principle, such as estoppel or laches. . . . [T]he refusal to honor the plaintiff's lien had nothing to do, even in the final analysishad nothing to do with whether he stipulated the percentage. . . . The insurance company did it because they could save four thousand dollars on the judgment, and because they got Mr. Shirkey's indemnity. . . . They were awarethe documents show that they were aware, that they hesitated to go ahead with it, and when Shirkey said, `I will indemnify you,' they said, `That is okay. That solves our problem.' . . . They didn't refuse to honor it because of the insufficiency of the notice. . . . They didn't care what the percentage was. They simply weren't going to acknowledge it, and, so, they are not in position to claim that they didn't have adequate notice. There was no objection to the court's ruling by counsel for USF&G. The only objection made by counsel for defendant Shirkey was not on the ground that Passer had failed to file a reply pleading waiver or estoppel. The objection was that the court's remarks assumed that Passer had a valid contract, which counsel said was highly disputed. It seems to me, therefore, that Passer is entitled to assert in this court that the defendants are estopped from asserting or have waived any claim that the lien letter was insufficient on the ground now contended. Certainly defendants, under the record before us, were in no way mislead or prejudiced by Passer's failure to plead waiver and estoppel in a reply. I would apply rule 55.33(b), which provides: [w]hen issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. In fact, rule 55.33(b) provides further that amendments of the pleadings to conform to the evidence in such instances may be made at any time, even after judgment, but even if not done, such failure shall not affect the result of the trial of such issues. I would affirm the judgment on Count I, and then would deal with Count III on the merits.