Court Opinion

ID: 211146
Source: CourtListenerOpinion
Date Created: 2011-03-13 08:24:07+00
Date Added: 2024-06-11T12:15:54.838991
License: Public Domain

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
                   is not citable as precedent. It is a public record.

 United States Court of Appeals for the Federal Circuit
                                    05-1423,-1528

             STATE CONTRACTING & ENGINEERING CORPORATION,

                                               Plaintiff-Appellee,

                                          v.

       CONDOTTE AMERICA, INC. (formerly known as Recchi America, Inc.),
                 THE MURPHY CONSTRUCTION COMPANY,
      THE HARDAWAY COMPANY, HUBBARD CONSTRUCTION COMPANY,
                 BALFOUR BEATTY CONSTRUCTION, INC.,
                   COMMUNITY ASPHALT CORPORATION,
             and HANSON PIPE & PRODUCTS SOUTHEAST, INC.
           (formerly known as Joelson Concrete Pipe Company, Inc.),

                                               Defendants,

                                          v.

                             RICHARD S. ROSS, ESQ.,

                                                Movant-Appellant.

                          ___________________________

                          DECIDED: July 24, 2006
                          ___________________________

Before MAYER, BRYSON, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge BRYSON. Concurring-in-part and
dissenting-in-part opinion filed by Circuit Judge DYK.

BRYSON, Circuit Judge.
       This appeal arises from a dispute over attorney fees pursuant to a contingent fee

contract in a patent infringement case.       Attorney Richard S. Ross appeals from a

decision of the United States District Court for the Southern District of Florida in Case

No. 97-7014-CV that adjudicated his charging lien against State Contracting &

Engineering Corp., and also awarded State Contracting attorney fees for its defense

against Ross’s charging lien litigation. We affirm.

                                              I

       In the mid-1990s, State Contracting found itself in a patent infringement dispute

with the Florida Department of Transportation. State Contracting sought the advice of

attorney John H. Faro, who advised State Contracting to pursue litigation. In May 1997,

Faro drafted and signed an engagement letter, to which State Contracting subsequently

agreed. In the engagement letter, Faro proposed that Ross would serve as co-counsel

during the litigation. As for compensation, the letter provided that Ross and Faro

       are agreeable to the following arrangement:
       1) Reduced hourly billing fee of $100 per hour, plus expenses; plus
       2) A Contingent Fee, as set forth in the current Standard Florida Bar
       Contingent Fee Schedule, copy of Schedule and & [sic] Statement of
       Client Rights attached; less
       3) A Credit of all attorney fees billed and collected against recovery at the
       time of settlement, however, in no event would the amount of the net fee
       for representation be less than one third of the value of the settlement to
       your Company.

       In accordance with their oral agreement, Ross served as lead counsel. Faro

performed substantial support functions, including serving as second chair at trial. Faro

also handled daily operations during portions of the litigation.

05-1423,-1528                                2
      In 2003 Ross and Faro began to dispute the allocation of the total contingent fee.

Although Ross proposed at least two amended versions of the fee contract, neither Faro

nor State Contracting ever agreed to any of those proposed changes. In June 2003,

Ross issued State Contracting an ultimatum, saying that he refused to work with Faro

any longer.     Because Ross was serving as lead counsel for trial and appellate

proceedings in the case, and because trial and appellate deadlines were fast

approaching, State Contracting acquiesced in Ross’s demand and discharged Faro.

      In October 2003 State Contracting entered a global settlement with the Florida

Department of Transportation for a payment of $8 million. The settlement agreement

provided that the Department would list State Contracting’s patented design as a

permissible design for use by its contractors. The agreement further provided that if any

contractors chose to use the patented design, the contractor rather than the Department

would be liable for any royalty payments to State Contracting.

      Ross and Faro each filed a charging lien to recover their fees. Faro reached a

settlement with State Contracting.      That settlement provided for a payment of

$1,100,000 to Faro (which was in addition to $222,900 in hourly fees already paid to

him). Ross pursued his lien through a five-day hearing before a magistrate judge, who

determined that he was entitled to half of the total contingent fee provided for in the

engagement letter.     The total contingent fee under the engagement letter, the

magistrate judge found, was one third of $8 million.      Ross was therefore awarded

$1,094,483.34 (which was in addition to $238,850 in hourly fees already paid to him).

Subsequently, the court awarded approximately $250,000 to State Contracting for fees

that it incurred in defending against Ross’s claim under the charging lien.        Ross

05-1423,-1528                              3
appeals, challenging (1) the amount of his attorney fee award under the contingent fee

contract and (2) the award to State Contracting of the attorney fees it incurred in

defending against Ross’s charging lien litigation.

                                             II

       State Contracting argues that this court lacks jurisdiction over Ross’s appeal from

the district court’s decision on his charging lien. In State Contracting’s view, once the

underlying patent infringement claims were voluntarily dismissed with prejudice, the

district court’s jurisdiction over the suit was no longer premised on 28 U.S.C. § 1338,

and so any appeal in the case after the voluntary dismissal should be taken to the

Eleventh Circuit, not this court. We disagree. State Contracting’s argument is based on

a misreading of this court’s case law.

       A federal district court has supplemental jurisdiction under 28 U.S.C. § 1367 to

hear disputes related to charging liens that are filed against that court’s judgments.

See, e.g., Broughten v. Voss, 634 F.2d 880, 883 (5th Cir. 1981) (“If, upon withdrawal,

counsel is unable to secure payment for his services, the court may assume jurisdiction

over a claim based on a charging lien over the proceeds of the lawsuit.”); see also Itar-

Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 444, 448 (2d Cir.

1998). Thus, the district court properly exercised jurisdiction over Ross’s claim.

       As for appellate jurisdiction, 28 U.S.C. § 1295(a)(1) provides that this court has

jurisdiction over any appeal in a case from a district court in which the district court’s

jurisdiction “was based in whole or in part on section 1338.” Section 1338 gives district

courts exclusive jurisdiction “of any civil action arising under any Act of Congress

relating to patents.” The district court plainly had jurisdiction over the patent claims in

05-1423,-1528                                4
this case, having adjudicated the various patent claims until the case was ultimately

resolved through settlement.

       State Contracting argues that the district court lost jurisdiction under section 1338

when, as part of the settlement, the patent claims were dismissed with prejudice. State

Contracting bases its argument on this court’s decision in Nilssen v. Motorola, Inc., 203

F.3d 782 (Fed. Cir. 2000). According to State Contracting, that case stands for the

proposition that the “critical distinction” in determining whether section 1338 jurisdiction

survives after the dismissal of all the patent claims is whether the dismissal was

involuntary or voluntary. Although the dissenting judge in the Nilssen case advocated

that approach, the majority expressly rejected the proposition, noting that the

“voluntariness or involuntariness of a dismissal is not controlling.”       Id. at 784-85.

Rather, the relevant distinction is whether the patent claims are dismissed with or

without prejudice. If all the patent claims in a federal suit are dismissed with prejudice,

the district court’s jurisdiction over the entire case is still based in whole or in part on

section 1338. However, if all the patent claims are dismissed without prejudice, the

dismissal order is treated as an amendment to the original complaint, and because

jurisdiction is determined based on that “amended” complaint, the district court’s

jurisdiction is not considered to be based in whole or in part on section 1338. See id.

       Here, the patent issues were dismissed with prejudice pursuant to the 2003

settlement agreement. Thus, the district court continued to have jurisdiction of ancillary

matters under section 1338. This court therefore has jurisdiction over the appeal.

                                             III

05-1423,-1528                                5
       Ross’s first argument in this appeal is that the district court erred by refusing to

conduct de novo review of certain findings of fact made by the magistrate judge. Ross

objected to 28 of the magistrate judge’s 93 findings of fact. Pursuant to 28 U.S.C.

§ 636(b)(1), and subject to any local rules, a party may file with the district court

objections to a magistrate judge’s proposed findings. Magistrate Rule 4(b) of the Local

Rules of the Southern District of Florida requires such objections to “specifically identify

the portions of the proposed findings . . . to which objection is made, the specific basis

for such objections, and supporting legal authority.” That requirement “facilitates the

opportunity for district judges to spend more time on matters actually contested and

produces a result compatible with the purposes of the Magistrates Act.” Nettles v.

Wainwright, 677 F.2d 404, 410 (5th Cir. Unit B 1982). Thus, “[f]rivolous, conclusive, or

general objections need not be considered by the district court.” Marsden v. Moore, 847

F.2d 1536, 1548 (11th Cir. 1988).

       With respect to 18 of Ross’s objections, we agree with the district court that the

objections were conclusory and general, and therefore we conclude that the district

court was not required to entertain those objections. Four of Ross’s objections merely

assert that a particular finding was “contrary to the record evidence.”        See Ross’s

objections to ¶¶ 31, 39, 64, 82 of the magistrate judge’s findings. Another 14 of the

objections reference testimony or documentary evidence, but without specificity. See

Ross’s objections to ¶¶ 27, 28, 29, 46, 53, 57, 59, 60, 63, 66, 75, 87, 89, and 90 of the

magistrate judge’s findings.    For example, several of the objections assert that a

particular finding was “contrary to the evidence of record, including testimony of [certain

witnesses].” In some of those instances, the “certain witnesses” are as many as three

05-1423,-1528                                6
different witnesses, and the objections do not cite any specific portion of the witnesses’

testimony and do not discuss the testimony that supports the objections. The district

court did not scour the testimony from the five-day hearing before the magistrate judge

in order to determine whether any of that testimony supported Ross’s objections, and

we hold that the district court was not required to do so.

       Moreover, we see little merit to the 18 objections noted above, and we therefore

do not believe Ross was prejudiced by the district court’s refusal to consider them. For

instance, in ¶ 29 of the findings, the magistrate judge explained that Ross and Faro

initially agreed to share equally in the work and the fee. Ross objected to that finding as

contrary to the evidence. In his brief on appeal, however, Ross notes that he “had an

initial verbal understanding with Faro . . . that if he and Faro each contributed equally to

the representation, the contingency fee portion of the Agreement would be split.” Thus,

Ross does not seem to express any pertinent disagreement with the magistrate judge’s

finding.

       With respect to the remaining 10 objections, Ross at least pointed to some

specific evidentiary support for his objections. See Ross’s objections to ¶¶ 20, 30, 36,

38, 40, 55, 56, 62, 81, 93 of the magistrate judge’s findings. Yet even in those 10

instances, he has failed to explain what the proper findings should have been or how

the challenged findings affected the outcome of his case.              Nonetheless, State

Contracting has not shown that Magistrate Rule 4(b) demands that sort of detail, and for

that reason we assume for purposes of this appeal that the district court erred by

refusing to entertain those 10 objections. As we explain below, however, each of those

05-1423,-1528                                7
10 objections either lacks merit or is irrelevant to the outcome of this case. Therefore,

Ross was not prejudiced by the district court’s refusal to consider those objections.

       Five of the 10 objections do not provide any basis for rejecting the magistrate

judge’s findings. See Ross’s objections to ¶¶ 20, 30, 38, 56, 93 of the magistrate

judge’s findings. For instance, Ross objects to ¶ 20 of the magistrate judge’s findings

“to the extent the finding fails to include Rule 4-1.5 as part of the ‘Engagement Letter.’”

However, ¶ 20 acknowledges that the four-page attachment of the Florida Bar Rules

was part of the “contingency fee agreement,” and the magistrate judge’s other findings

of fact and conclusions of law confirm that the magistrate judge considered the

attachment to be part of the agreement.          Indeed, in his discussion of ¶ 56 of the

magistrate judge’s findings of fact, Ross notes that “there is no dispute that Rule 4-1.5 is

part of the contract.” Similarly, Ross objects to ¶ 93 of the magistrate judge’s findings

as “contrary to the record.” The portion of ¶ 93 to which Ross objects is the magistrate

judge’s statement that the parties “stipulated to the dismissal of Faro’s charging lien.”

The record, however, includes a joint stipulation to that effect, which was signed by

Ross. Ross has not provided the district court or this court with any explanation of why

that joint stipulation might have been ineffective, and we therefore see no basis on

which the district court could have sustained Ross’s objection.

       Three of Ross’s objections pertain to findings that had no bearing on the

magistrate judge’s disposition. See Ross’s objections to ¶¶ 55, 62, 81 of the magistrate

judge’s findings. For example, in ¶ 55 the magistrate judge simply recounts that at one

time during their joint representation Faro contended that he should be entitled to

between 45 and 55 percent of the contingency fee. Ross insists that that paragraph is

05-1423,-1528                                8
inconsistent with the magistrate judge’s findings that Ross and Faro verbally agreed to

split the contingency fee equally. Ross’s objection merely highlights the fact that the

magistrate judge did not rely on any of the findings in ¶ 55 to reach his conclusion in this

case. Rather, ¶ 55 is provided as background information to explain how the dispute

between Ross and Faro arose.

       The remaining two objections pertain to ¶¶ 36 and 40 of the magistrate judge’s

findings, and to the question whether the “value of the settlement” included revenue

from future royalty payments.      Although the district court stated that all of Ross’s

objections were legally insufficient, the court gave considerable attention to the

magistrate judge’s key findings, and with respect to whether “value of the settlement”

included revenue from future royalty payments, the court concluded that “the evidence

does not support Ross’s contention[s].”           Thus, the district court considered the

substance of Ross’s factual contentions in this regard and rejected his contentions as

unsupported by the evidence. Likewise, with respect to many of the other objections

mentioned above, the district court addressed the magistrate judge’s relevant findings of

fact and concluded that Ross’s contentions were not supported by the evidence. Thus,

any error in the district court’s refusal to expressly address Ross’s objections to the

magistrate judge’s findings of fact did not prejudice Ross because the court’s refusal did

not affect the outcome of this case.

                                             IV

       Most of Ross’s substantive challenges to the district court’s decision boil down to

a dispute as to the proper division of fees between Faro and Ross. Typically, such a

dispute is litigated between the lawyers, as the client has little interest in how the fee is

05-1423,-1528                                9
split among lawyers. See, e.g., Halberg v. Chanfrau, 613 So. 2d 600 (Fla. Dist. Ct. App.

1993); cf. Shupack v. Marcus, 606 So. 2d 466, 468-69 (Fla. Dist. Ct. App. 1992)

(Schwartz, C.J., dissenting from denial of motion for rehearing en banc) (“It is of

controlling significance that the clients’ interests are not involved at all in this case.

They have fully paid the contingency fee on the recovery, and no one, least of all the

appellant Shupack, claims anything more from them. . . . [T]he sole issue is whether

Shupack is entitled to any part of the fees already paid the other lawyers.”). A client’s

primary concern in a charging lien action is the total amount of the fee it must pay for

legal services, regardless of how participating lawyers choose to split that fee. Indeed,

State Contracting was never clearly informed as to how Faro and Ross would split the

contingent fee. After settling the patent infringement suit, State Contracting notified the

lawyers that it was prepared to pay the one-third contingent fee, and it presumed that

Ross and Faro would sort out the proper division of the fee. Ross’s arguments largely

overlook that fact. Rather, Ross argues that he is entitled to a much larger share of the

contingent fee, which would subject State Contracting to fees that would exceed its

contractual contingent fee obligation.     We conclude that the district court properly

rejected Ross’s arguments.

                                             A

       Ross first argues that he is entitled to 75 percent of the total contingent fee under

the engagement letter.     We disagree.     Four pages of the Florida Bar Rules were

attached to the engagement letter, and the engagement letter provided that Ross and

Faro agreed to a “Contingent Fee, as set forth in the current [attached Rules].” The

attached rules specify several fee splitting arrangements that are allowable and some

05-1423,-1528                               10
arrangements that are mandated under certain circumstances.                 Although the

engagement letter does not reference any of those specific provisions, Ross contends

that the engagement letter contemplates that the fee will be split according to Rule 4-

1.5(f)(4)(D).   That rule was among those attached to the engagement letter, and it

provides that “in an action or claim for personal injury or for property damages or for

death or loss of services resulting from personal injuries based upon tortious conduct of

another,” the lawyer assuming “primary responsibility” for the legal representation shall

receive a minimum of 75 percent of the total contingent fee.          As the district court

explained, however, State Contracting’s patent infringement suit is not based on

personal injury or property damage. It is better characterized as an action for “damages

arising in the commercial litigation context,” which is another type of suit referred to in

the rules. The comment to the rules specifically notes that Rule 4-1.5(f)(4) (i.e., the 75

percent requirement) does not apply to commercial litigation.

        We conclude that the contract does not provide the basis on which the fee was to

be split. The general reference in the engagement letter to the Florida Bar Rules does

not specify or incorporate by reference any particular division of fees between Ross and

Faro. By the terms of the contract, all that State Contracting agreed to was to pay one-

third of its recovery as a contingent fee for the legal services provided by Faro and

Ross.    Thus, the district court did not err by rejecting Ross’s assertion that the

engagement letter entitles him to 75 percent of the contingent fee.

                                            B

        Ross next argues that he is entitled to the entire contingent fee contemplated in

the engagement letter. In support of that argument, Ross points to Rosenberg v. Levin,

05-1423,-1528                               11
409 So. 2d 1016 (Fla. 1982), and Adams v. Fisher, 390 So. 2d 1248 (Fla. Dist. Ct. App.

1980). Ross reasons that under Rosenberg Faro is not entitled to recover any portion

of the contingent fee contemplated in Ross and Faro’s contract with State Contracting,

and that under Adams any fee paid to Faro does not affect Ross’s right to recover the

entire contingent fee under the contract.        Ross’s argument would subject State

Contracting to a total fee exceeding the contingent fee to which it agreed (i.e., State

Contracting would be required to pay Faro the reasonable value of his services, and it

would be required to pay Ross one-third of the value of its settlement). The decisions in

Rosenberg and Adams do not support that outcome.

      In Rosenberg, a lawyer contracted for a contingent fee but was discharged

before the occurrence of the contingency. The Supreme Court of Florida held that “a

lawyer discharged without cause is entitled to the reasonable value of his services on

the basis of quantum meruit, but recovery is limited to the maximum fee set in the

contract entered into for those services.” Rosenberg, 409 So. 2d at 1017. The court

was concerned that if a discharged attorney could recover his contractual contingent

fee, then a client who discharged his lawyer might be required to pay two contingent

fees—one to the discharged lawyer and one to a substituted lawyer. That result, the

court ruled, would be contrary to the “overriding need to allow clients freedom to

substitute attorneys without economic penalty.” Id. at 1021. Rosenberg did not address

the issue of compensation for a substituted attorney; in particular, it did not address the

situation in which two lawyers represent a client under a single fee agreement and one

of the lawyers is discharged while the case is pending.

05-1423,-1528                               12
      In Adams, a Florida court addressed the issue of compensation for a substituted

lawyer and concluded that when a client enters into a new contingent fee contract with a

substituted lawyer, that lawyer’s recovery is not necessarily offset by the quantum

meruit obligation the client owes to a discharged lawyer. Adams, 390 So. 2d at 1251.

Unless the substituted lawyer’s contract contemplates such an offset, the client is

required to pay “fees in excess of the original contingent fee, once to the discharged

attorney in quantum meruit and again to the substituted attorney on a new contingent

fee contract.” Id. Adams is critically distinguishable from the present case, however,

because in this case Ross and State Contracting did not enter into a new contingent fee

contract after Faro was discharged. Nor is there any evidence or suggestion by Ross

that there was a reformation of the original contingent-fee contract. Rather, based on

the evidence of record, the court found that after Faro’s discharge the parties continued

to operate under the original engagement letter. Under that contract, State Contracting

merely agreed to pay one-third of the value of its settlement in exchange for Faro’s and

Ross’s legal services. The engagement letter thus included any fees owed for Faro’s

services. We therefore reject Ross’s invitation to reform the contract to increase State

Contracting’s fee obligations beyond the amount to which it initially agreed. The district

court properly held that Ross’s right to recover must be offset by Faro’s recovery.

                                            C

      Ross argues that even if his recovery must be offset by Faro’s fee, Faro’s proper

fee is limited to the quantum meruit value of his services, which, according to Ross, is

less than the $1,315,900 Faro received when Faro settled his attorney fee claim with

05-1423,-1528                              13
State Contracting. Thus, Ross argues, he should be entitled to one-third of the value of

the settlement less the reasonable value of Faro’s services.

       The problem with that argument is that the magistrate judge found that Faro and

Ross agreed at the outset to split the contingent fee equally and never agreed to a

different proportional split of the fee.    Under the terms of his agreement, Ross is

therefore limited to a one-half share of the total contingent fee, as the district court held.

While there might be circumstances in which an attorney in Ross’s position could

reasonably seek a larger share of the contingency fee notwithstanding his initial

agreement to an even split of the fee—such as where his co-counsel abandoned the

joint venture or was discharged by the client on the client’s own initiative—this is not

such a case. To the contrary, the result for which Ross argues would be inappropriate

in this case because, as the magistrate judge found, Faro was discharged at Ross’s

insistence and would not have been discharged otherwise.              Moreover, Faro was

discharged in June 2003, after more than seven years of representing State Contracting

and less than four months before the global settlement was reached in October 2003.

As the magistrate judge observed, it would be inequitable under these circumstances to

allow Ross to force the client to discharge Faro, to use Faro’s discharge as a ground for

avoiding his agreement to split the fee equally with Faro, and then to claim a larger

share of the contingent fee for himself.

                                              D

       Finally, Ross argues that the “value of the settlement,” which was the basis for

the contingent fee contemplated in the engagement letter, includes—in addition to the

value of any cash settlement—the value of any future royalties stemming from the

05-1423,-1528                                14
patents in suit. Based on that interpretation, Ross calculates the value of the settlement

at nearly $16 million.   We disagree with Ross’s interpretation of the “value of the

settlement.”

       First, it is unclear whether Ross disputes the magistrate judge’s determination

that there is ambiguity in the phrase “value of the settlement.” His primary argument

seems to be that even if there is an ambiguity, the magistrate judge should have

resolved that ambiguity based on “well settled Florida contract law that provides that the

best evidence of a party’s contractual intent is the construction it puts on the agreement

through its conduct.” As explained above, Ross believes that Faro was entitled to no

more than 25 percent of the total contingent fee in this case. Thus, in Ross’s view,

State Contracting’s $1.3 million settlement with Faro shows that State Contracting

understood the total “value of the settlement” to be nearly $16 million.

       That argument is wholly unpersuasive. There is no evidence as to what led State

Contracting to settle Faro’s charging lien for the amount they agreed upon. There is no

reason to assume that the amount Faro was paid in the settlement was in any way

based on State Contracting’s understanding of the “value of the settlement,” and Ross

has not pointed to any evidence that Faro’s settlement was based on an assumption by

State Contracting that the contract limited Faro’s fee to 25 percent of the contingent fee.

       Ross also argues that the amended engagement letter supports his interpretation

of the “value of the settlement.” In 1998, Faro and Ross suggested that State Paving

Corp. (the previous owner of the patents in suit) should be joined as a plaintiff in the

infringement suit. As a result, the engagement letter was amended in March 1998 to

add State Paving Corp. as a client. The amended engagement letter notes that “the

05-1423,-1528                               15
parties have previously agreed to a formula for the division of net royalties, and other

net revenues realized by [State Contracting] from its exploitation and/or enforcement of

such rights (e.g., licensing).” Ross argues that the quoted statement refers to the fact

that the contingent fee included a percentage of future royalties.     The evidence of

record, however, shows that the statement refers to a compensation agreement

between State Contracting and State Paving Corp. There is no evidence that Ross and

State Contracting had “previously agreed to a formula for the division of net royalties,”

and there is ample evidence supporting the magistrate judge’s finding that that

language in the amended engagement letter referred to an agreement between State

Contracting and State Paving Corp.        Moreover, the amended engagement letter

provides that the “fee schedule set forth in the [original] Engagement Letter . . . shall

remain in effect and the parties herein reaffirm the acceptance thereof.” Thus, to the

extent Ross argues that the amended engagement letter modified the parties’ original

understanding of the meaning of the phrase “value of the settlement,” that provision in

the amended engagement letter expressly refutes his argument.

      Finally, to the extent Ross argues that the phrase “value of the settlement”

unambiguously includes future royalty payments, we disagree. A charging lien “will

attach only to the tangible fruits of the [legal] services” for which fees are sought.

Correa v. Christensen, 780 So. 2d 220 (Fla. Dist. Ct. App. 2001).         Future royalty

payments were not a tangible fruit of State Contracting’s settlement. In its settlement

agreement with State Contracting, the Florida Department of Transportation merely

agreed to list State Contracting’s patented design as an acceptable standard for its

contractors to use. The agreement provides that if any contractor chooses to use State

05-1423,-1528                              16
Contracting’s patented design, any royalty fees will be paid by that contractor, and not

by the Florida Department of Transportation.           Ross has provided no plausible

explanation as to how that clause in the settlement agreement amounts to a tangible

fruit of the litigation, or how one might value that benefit for purposes of awarding some

portion of the benefit as a contingent fee to Ross.

       Florida law provides that it is unjust to hold a client liable for additional attorney

fees based on a contract term that is ambiguous. Arabia v. Siedlecki, 789 So. 2d 380,

383 (Fla. Dist. Ct. App. 2001) (“An attorney must be clear and precise in explaining the

terms of a fee agreement. To the extent the contract is unclear, the agreement should

be construed against the attorney.”). Here, the evidence of record indicates that at the

time the engagement letter was executed, no one—not even Ross—contemplated that

the “value of the settlement” included future royalty payments. Indeed, Ross did not

propose his current interpretation of the phrase until after the litigation had ended, when

he commented to State Contracting that Faro had an “interesting take” on the “value of

the settlement” language in the engagement letter. Thus, we conclude that the district

court properly limited the value of the settlement to $8 million, which was the cash

settlement State Contracting received from the Florida Department of Transportation.

                                             V

       Finally, Ross contends that the district court erred by determining that State

Contracting was the prevailing party in Ross’s charging lien litigation and thus awarding

attorney fees to State Contracting for its defense of Ross’s claim. We affirm the district

court’s decision in that regard.

05-1423,-1528                                17
        The engagement letter contains a fee provision expressly allowing Ross and

Faro to recover attorney fees incurred as a result of any dispute pertaining to the

engagement letter’s fee arrangement.       Ross and State Contracting both moved for

attorney fees after the district court entered its final judgment in the charging lien

litigation.   The district court referred the motions to the magistrate judge, and

subsequently adopted the magistrate judge’s findings and recommendations on the

motions. The magistrate judge held that Florida law required that provision to be read

as granting a reciprocal right to recovery of such attorney fees. See, e.g., Ajax Paving

Indus. v. Hardaway Co., 824 So. 2d 1026, 1028 (Fla. Dist. Ct. App. 2002).              That

conclusion seems undisputed here. Florida courts treat such reciprocal provisions just

like any contract provision, and thus will enforce the clause (i.e., by determining that one

of the two parties prevailed) except in rare instances. In other words, the question is

more “who prevailed” rather than “did someone prevail.”

        Under Florida law, the prevailing party is the “party prevailing on the significant

issues in the litigation.” Moritz v. Hoyt Enter., Inc., 604 So. 2d 807, 810 (Fla. 1992).

Here, the magistrate judge determined that the significant issue in Ross’s charging lien

litigation was the dispute over the meaning of “value of the settlement.” Ross contends

that the significant issue was whether the engagement letter was an enforceable

contract. However, the magistrate judge held that State Contracting’s primary theory—

both before and during the charging lien litigation—was that the contract was

enforceable but that the value of the settlement was limited to the $8 million cash

settlement. We discern no abuse of discretion in that determination, or in the district

court’s decision to award attorney fees to State Contracting.

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       Ross also argues that any award of attorney fees against him should be shared

by Faro, since the court found that they were involved in a joint venture. We disagree.

Whether or not Ross and Faro were joint venturers or joint obligees, each pursued his

own charging lien, on his own behalf. Faro settled his claim with State Contracting, and

Ross pursued his through litigation. Thus, State Contracting’s attorney fees stemmed

from Ross’s efforts to enforce his own charging lien, not from efforts to enforce a

charging lien on behalf of any joint venturer with whom he would share his award.

       In sum, we affirm the judgment as to the charging lien, and we affirm the district

court’s award of attorney fees to State Contracting for its defense of Ross’s charging

lien claim. Each party shall bear its own costs for this appeal.

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                         NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
                           is not citable as precedent. It is a public record.

 United States Court of Appeals for the Federal Circuit
                                         05-1423, -1528

               STATE CONTRACTING & ENGINEERING CORPORATION,

                                                                  Plaintiff-Appellee,

                                                v.

          CONDOTTE AMERICA, INC. (formerly known as Recchi America, Inc.),
                     THE MURPHY CONSTRUCTION COMPANY,
         THE HARDAWAY COMPANY, HUBBARD CONSTRUCTION COMPANY,
                     BALFOUR BEATTY CONSTRUCTION, INC.,
                       COMMUNITY ASPHALT CORPORATION
                 and HANSON PIPE & PRODUCTS SOUTHEAST, INC.
               (formerly known as Joelson Concrete Pipe Company, Inc.)

                                                                  Defendants,

                                                v.

                                  RICHARD S. ROSS, ESQ.,

                                                                  Movant-Appellant.

DYK, Circuit Judge, concurring-in-part and dissenting-in-part.

       I join the generally well-reasoned majority opinion except for Parts IV.C and V,

from which I respectfully dissent. In part IV, the majority concludes that, even though

Faro was discharged, he was still entitled to recover from the client fifty percent of the

contingent fees under the original agreement with Ross, rather than the quantum meruit

value of his services. In turn, says the majority, Ross is only entitled to recover one-half

of the contingent fee.

       The Florida cases make clear that in an action against the client (State

Contracting) Faro, having been discharged by State Contracting without cause, was

entitled to recover only the quantum meruit value of his services. See Rosenberg v.
Levin, 409 So.2d 1016, 1017 (Fla. 1982); Adams v. Fisher, 390 So.2d 1248, 1250 (Fla.

Dist. Ct. App. 1980). It follows under the Florida cases that Ross, who continued the

work, was entitled to recover the remainder of the contingent fee in a suit against the

client. See Adams, 390 So. 2d at 1251 (finding that where the client discharged the

initial attorney, the second attorney was entitled to the contingent fee).

       In rejecting this approach, the majority relies on the agreement between Faro

and Ross to divide the contingent fee equally. I fail to see how that agreement can

change the result under the Florida cases. The Florida cases recognize that contingent

fee arrangements often fail to deal explicitly with the possibility that a retained counsel

may be discharged. See Rosenberg, 409 So.2d at 1017; Shupack v. Marcus, 606

So.2d 466, 467 (Fla. Dist. Ct. App. 1992); Adams, 390 So.2d at 1250. As noted, the

default rule in Florida is that when an attorney is discharged without cause, he is entitled

to recover only the quantum meruit value of his services in a suit against the client. I

see no reason why agreements among counsel as to the division of fees should be

governed by a different default rule, and the Florida cases do not suggest that they are.

Moreover, the rule adopted in the Florida cases makes eminent sense. For example,

here if Faro had been discharged one day after the agreement was reached and after

performing six hours of work under it, it would be unfair in the extreme that Faro should

nonetheless receive one-half of the contingent fee when Ross spent years of work

fulfilling the service obligations under the agreement with the client. The court in Adams

came to a similar conclusion where a client discharged his first attorney, with whom he

had a contingent fee agreement, and then hired a second attorney under a separate

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contingent fee agreement. 390 So. 2d at 1249-50. As to the first attorney’s fee, the

court held:

        Upon discharge, the attorney has no right to collect his contingent fee. His
        fee is to be determined on a quantum meruit basis. To allow the
        discharged attorney to collect his contingent fee would be inequitable. It
        might cause the client to pay an excessive fee without receiving the full
        benefits of counsel in violation of the Florida Code of Professional
        Responsibility DR 2-106(A).

Id. at 1250 (internal citation removed) (emphasis added).

        Significantly, Faro himself, in seeking dismissal of his charging lien pursuant to

the settlement with State Contracting, explicitly agreed that he would only have been

entitled to quantum meruit recovery.            Reply in Support of Faro’s Petition for

Disbursement of Settlement Sum from Court Registry (Doc. 503) at 2 (“Florida law

allows a discharged attorney on a contingency case to collect only quantum meruit

whereas an attorney employed under a contingency contract gets the full contracted

fee.”); id. at 4.

        The majority appears to agree that in some circumstances Ross would be

entitled to the contingent fee less Faro’s quantum meruit recovery, but suggests that

two circumstances here render that result inequitable, namely the advanced stage of

the litigation, and Ross’s effort to secure Faro’s discharge. I do not read the decision

below as resting on these grounds, nor do the Florida cases suggest that the result

should turn on such considerations. In any event, the facts here do not suggest that full

recovery by Ross is somehow unfair. While only four months work remained, the work

that Ross did without Faro’s assistance was substantial. After Faro was discharged,

Ross handled the appellate proceedings in the case, including an oral argument before

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this court. Ross was also responsible for preparing the case for trial, on the eve of

which, the client decided to settle.

       Moreover, the desire to terminate the relationship between Faro and Ross was

mutual; they simply found it impossible to work together. Here the magistrate judge

found that both Faro and Ross had attempted to persuade the client to discharge the

other. Faro, for example, privately met with the client to suggest a replacement for

Ross. When that attempt failed, Faro—without the client’s approval—sent Ross a letter

purporting to discharge Ross. For his part, Ross gave the client an ultimatum: the

client would have to either discharge Faro, Ross, or the both of them.             That Ross

ultimately prevailed in convincing the client to discharge Faro in this situation should

have no bearing on the allocation of fees. Under these circumstances, I see no basis

for denying recovery of the full contingent fee to Ross less whatever Faro’s quantum

meruit recover should have been (which amount may be significantly different from the

amount that State Contracting agreed to pay Faro in settlement).

       In summary, I respectfully dissent from Part IV.C. of the majority opinion. In my

view, Ross is entitled to the full contingent fee less any quantum meruit recovery to

which Faro was entitled. I would remand for a determination of the correct amount of

the fee award. As a result, I also dissent from Part V of the majority opinion, as I would

vacate the district court’s award of prevailing party fees to State Contracting.

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