Court Opinion

ID: 4109984
Source: CourtListenerOpinion
Date Created: 2016-12-22 08:07:26.153007+00
Date Added: 2024-06-11T13:03:31.630065
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

WILLIAM J. WADDELL,                                                  UNPUBLISHED
                                                                     December 20, 2016
               Plaintiff-Appellant,

v                                                                    No. 328926
                                                                     Kent Circuit Court
JOHN D. TALLMAN and JOHN D. TALLMAN                                  LC No. 15-002530-CB
PLC,

               Defendants-Appellees.

Before: WILDER, P.J., and MURPHY and O’BRIEN, JJ.

PER CURIAM.

        Plaintiff, an attorney, referred a client to defendants for purposes of pursuing a legal
malpractice action, and after extensive litigation, including a trial, defendants procured a sizeable
settlement in the malpractice suit while the case was pending on appeal. Subsequently, plaintiff
filed the instant action against defendants, claiming a $135,000 referral fee. In plaintiff’s
complaint, he alleged the existence and breach of an implied contract in law and unjust
enrichment. In plaintiff’s response brief to defendants’ motion for summary disposition and in
plaintiff’s brief in support of his own motion for partial summary disposition, it becomes evident
that plaintiff was claiming a contract implied in fact, along with unjust enrichment. The trial
court granted summary disposition in favor of defendants, ruling that entitlement to a referral fee
under the Michigan Rules of Professional Conduct (MRPC), particularly MRPC 1.5(e), requires
an agreement between the attorneys, that here there was no evidence of an agreement or contract
because there was no meeting of the minds with respect to an essential term, i.e., the amount of
any referral fee, and that plaintiff did not do enough to merit the demanded referral fee such that
the theory of unjust enrichment would allow recovery. We affirm the summary dismissal of
plaintiff’s unjust enrichment claim, but reverse the dismissal of plaintiff’s claim premised on a
contract implied in fact.1

1
  The trial court effectively analyzed causes of action sounding in breach of an express contract
and unjust enrichment, but plaintiff never truly pursued an express contract claim. Rather,
plaintiff clearly argued in favor of a contract implied in fact, as well as presenting a claim of
unjust enrichment, which, as explained below, is an equitable claim based on the fiction of a

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        Viewing the evidence in a light most favorable to plaintiff,2 there was documentary
evidence that plaintiff referred the client to defendant John D. Tallman (Tallman), that the client
was aware of and did not object to the participation of the parties relative to splitting a fee, that
Tallman was generally agreeable to the payment of a referral fee, that the parties agreed to await
the conclusion of the legal malpractice litigation to determine a referral fee up to one-third of
one-third the recovery on contemplation of the circumstances of any recovery and Tallman’s
efforts and costs, and that no agreement regarding the amount of any referral fee was ever
reached before or after conclusion of the malpractice suit. On appeal, plaintiff contends that
“[t]he natural interpretation of the circumstances is that the parties had a contract for a referral
fee with an indefinite price term; such a contract is enforceable with the law implying a

contract implied in law. We acknowledge that plaintiff’s complaint is inartfully and clumsily
drafted with respect to his theories of recovery, confusing a contract implied in law with a
contract implied in fact. However, when the complaint is read in context and considering the
nature of plaintiff’s overall arguments, he indeed was pursuing, in part, a claim that relied on a
contract implied in fact. See Lawrence v Ingham Co Health Dep’t Family Planning/Pre-Natal
Clinic, 160 Mich. App. 420, 422 n 1; 408 NW2d 461 (1987) (“Although plaintiffs plead contract
implied in law, we interpret their claims as breach of a contract implied in fact.”).
2
  This Court reviews de novo a trial court’s decision on a motion for summary disposition.
Loweke v Ann Arbor Ceiling & Partition Co, LLC, 489 Mich. 157, 162; 809 NW2d 553 (2011).
Generally, the issue whether a party has been unjustly enriched is a question of fact; “[h]owever,
whether a claim for unjust enrichment can be maintained is a question of law, which we review
de novo[,]” as is also the case with respect to a court’s dispositional ruling on an equitable
matter. Morris Pumps v Centerline Piping, 273 Mich. App. 187, 193; 729 NW2d 898 (2006). In
Pioneer State Mut Ins Co v Dells, 301 Mich. App. 368, 377; 836 NW2d 257 (2013), this Court
recited the controlling principles regarding a motion for summary disposition under MCR
2.116(C)(10):

               In general, MCR 2.116(C)(10) provides for summary disposition when
       there is no genuine issue regarding any material fact and the moving party is
       entitled to judgment or partial judgment as a matter of law. A motion brought
       under MCR 2.116(C)(10) tests the factual support for a party's claim. A trial court
       may grant a motion for summary disposition under MCR 2.116(C)(10) if the
       pleadings, affidavits, and other documentary evidence, when viewed in a light
       most favorable to the nonmovant, show that there is no genuine issue with respect
       to any material fact. A genuine issue of material fact exists when the record,
       giving the benefit of reasonable doubt to the opposing party, leaves open an issue
       upon which reasonable minds might differ. The trial court is not permitted to
       assess credibility, weigh the evidence, or resolve factual disputes, and if material
       evidence conflicts, it is not appropriate to grant a motion for summary disposition
       under MCR 2.116(C)(10). A court may only consider substantively admissible
       evidence actually proffered relative to a motion for summary disposition under
       MCR 2.116(C)(10). [Citations and quotation marks omitted.]

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reasonable sum.” Plaintiff proceeds to argue that there was a contract implied in fact, along with
maintaining the existence of a contract implied in law. He asserts that there is a viable claim for
unjust enrichment.

        MRPC 1.5(e) provides that “[a] division of a fee between lawyers who are not in the
same firm may be made only if . . . the client is advised of and does not object to the
participation of all the lawyers involved . . . and . . . the total fee is reasonable.” The Comment
to MRPC 1.5 states that “[p]aragraph (e) permits the lawyers to divide a fee on agreement
between the participating lawyers if the client is advised and does not object.” (Emphasis
added.) Even without the Comment, it is plain that MRPC 1.5(e) contemplates some type of an
agreement between attorneys regarding the division of a fee.3 This Court has looked to the
language in MRPC 1.5(e) in resolving litigation disputes over referral fees. Morris & Doherty,
PC v Lockwood, 259 Mich. App. 38, 45; 672 NW2d 884 (2003).

        Again, plaintiff is not claiming breach of an express agreement or contract, relying
instead on an implied-contract theory – in law and/or in fact. In Detroit v City of Highland Park,
326 Mich. 78, 100; 39 NW2d 325 (1949), our Supreme Court explained:

               “There are two kinds of implied contracts: One implied in fact, and the
       other implied in law. The first does not exist unless the minds of the parties meet,
       by reason of words or conduct. The second is quasi or constructive, and does not
       require a meeting of minds, but is imposed by fiction of law, to enable justice to
       be accomplished, even in case no contract was intended.” [Citation omitted.]

        “A contract implied in law is not a contract at all but an obligation imposed by law to do
justice even though it is clear that no promise was ever made or intended[,]” and “[a] contract
may be implied in law where there is a receipt of a benefit by a defendant from a plaintiff and
retention of the benefit is inequitable, absent reasonable compensation.” In re McKim Estate,
238 Mich. App. 453, 457; 606 NW2d 30 (1999) (citation and quotation marks omitted; emphasis
added). A cause of action based on a contract implied in law is commonly referred to as a claim
for unjust enrichment. Barber v SMH (US), Inc, 202 Mich. App. 366, 375; 509 NW2d 791 (1994)
(the law operates to imply a contract in order to prevent unjust enrichment). “The elements of a
claim for unjust enrichment are: (1) receipt of a benefit by the defendant from the plaintiff and
(2) an inequity resulting to plaintiff because of the retention of the benefit by defendant.” Id.
“[A] contract will be implied only if there is no express contract covering the same subject
matter.” Id.

       We are not prepared to recognize a claim for unjust enrichment, i.e., a contract implied in
law, in the context of a referral fee as encompassed by MRPC 1.5(e). As indicated earlier,

3
 “The fee arrangement between the lawyers who divide a fee under MRPC 1.5(e) is a matter of
contract between the lawyers.” State Bar of Michigan Ethics Opinion RI-234 (May 10, 1995).
Although ethics opinions are not binding on us, they may be viewed as instructive. Barkley v
Detroit, 204 Mich. App. 194, 202; 514 NW2d 242 (1994).

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MRPC 1.5(e) envisions an agreement between attorneys, and a claim for unjust enrichment can
only be pursued successfully when there is no express agreement or contract. Allowing plaintiff
to proceed with an unjust enrichment claim would undermine MRPC 1.5(e), potentially opening
the floodgates to viable claims for referral fees absent any interaction, relationship,
communications, or agreement between a referring attorney and the recipient of the referral. We
therefore affirm the summary dismissal of plaintiff’s claim for unjust enrichment.

        Next, a contract implied in fact arises “when services are performed by one who at the
time expects compensation from another who expects at the time to pay therefor.” McKim
Estate, 238 Mich. App. at 458 (citation and quotation marks omitted). “The issue is a question of
fact to be resolved through the consideration of all the circumstances, including the type of
services rendered, the duration of the services, the closeness of the relationship of the parties, and
the express expectations of the parties.” Id. (citation and quotation marks omitted). A contract
implied in fact results “from the intention of the parties as expressed by their conduct and
language.” In re Mazurkiewicz’s Estate, 328 Mich. 120, 123; 43 NW2d 86 (1950). “Such a
contract arises from the acceptance of beneficial services for which compensation would
ordinarily have been paid.” Id.

        As opposed to a claim of unjust enrichment, an action predicated on a contract implied in
fact has actual contractual underpinnings, and recognizing the theory in the context of an action
for a referral fee would not offend MRPC 1.5(e). Here, there was evidence, sufficient to survive
summary disposition, showing that Tallman had generally agreed to pay plaintiff a referral fee.
In answers to requests to admit, plaintiff stated, “John Tallman agreed to pay what was
determined to be reasonable up to one-third of one-third as a Referral Fee.” And in plaintiff’s
affidavit, he averred:

       4. After I was advised that [the client] followed my advice and had met with
       John Tallman . . . and that he had retained John Tallman, John Tallman and I had
       several conversations during which we discussed the fact that I was the lawyer
       who referred [the client] and the case . . . to him and that I was entitled to a
       referral fee for doing so.

       5. During our several telephone conversations regarding the status of the . . .
       [referred] case[,] we discussed the amount of [the] fee I would be entitled to in the
       event that the “case” was successful, and we agreed that the normal or “customary
       fee” for referral of a contingent fee case was “a third of a third.” We from time to
       time also discussed waiting until the case was concluded, at which time we would
       both know the result and could determine whether there was any reason for me to
       agree to accept less than the “customary third of a third.”

        Although it is true that there was ultimately no agreement concerning the amount of the
referral fee, in a case entailing a contract implied in fact, the trier of fact may award reasonable
compensation. In Mazurkiewicz’s Estate, a claimant in probate court had performed various
services and duties for the decedent during the decedent’s lifetime but was never fully
compensated, and the claimant filed an action against the decedent’s estate based on a contract
implied in fact. Mazurkiewicz’s Estate, 328 Mich. at 122-123. Our Supreme Court held that the

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testimony was sufficient “to support the jury’s finding of an agreement implied in fact.” Id. at
123. The Court further ruled:

               The record is silent concerning the wages that were to be paid. In such a
       situation the law presumes that reasonable wages were contemplated, and the jury
       was so instructed. [Id. at 123-124.]

       We also note the following passage in Miller v Stevens, 224 Mich. 626, 631-632; 195 N.W.
481 (1923), which we find instructive, and which undermines some of the points made by our
colleague in her concurrence-dissent:

               Plaintiff's claim is based on an implied contract. He admits he made no
       claim for compensation until after the services were rendered. A contract is
       implied where the intention as to it is not manifested by direct or explicit words
       between the parties, but is to be gathered by implication or proper deduction from
       the conduct of the parties, language used, or things done by them, or other
       pertinent circumstances attending the transaction. Where there is no express
       contract a contract may be implied in fact, where one engages or accepts
       beneficial services of another for which compensation is customarily made and
       naturally anticipated, and, although there be no express stipulation between the
       parties for wages or price, the law implies an understanding or intent to pay the
       value of the services rendered. [Emphasis added.]

        The defendant in Miller had contended that the services at issue were gratuitous and that
compensation was a mere afterthought by the plaintiff, given that no mention of anticipated
compensation had been made by the plaintiff “when his services were offered, accepted, and
rendered[.]” Id. at 632. The plaintiff had testified that “he expected compensation for his
services, which were rendered for defendant [and] accepted by him . . . .” Id. Our Supreme
Court held that the “[p]laintiff's testimony, taken at its strongest, raised an issue of fact for the
jury upon the allegations in his declaration” and that the trial court acted properly in “submitting
the issues of gratuitous service and implied contract under fair and proper instructions.” Id. at
633.

        Accordingly, assuming that plaintiff satisfies his burden at trial and convinces the trier of
fact that there was a relevant referral by plaintiff and that Tallman agreed by his words or
conduct to pay plaintiff a referral fee, the trier of fact may determine the amount of the referral
fee to award plaintiff on the basis of reasonableness under the totality of the circumstances, up to
one-third of one-third the recovery in the underlying legal malpractice action. Thus, we reverse
the summary dismissal of plaintiff’s claim that relied on a contract implied in fact.

        Finally, we must take issue with a couple of propositions made in the concurrence-
dissent. First, contrary to the claim made by our colleague, we have not referenced, nor do we
place any reliance on, Tallman’s offer to settle the referral fee dispute. Second, in the
concurrence-dissent, it is asserted that the client did not appear to be aware of any fee agreement
between the parties. Assuming such knowledge is required under MRPC 1.5(e), the client
averred, in one of his affidavits, that plaintiff advised him that, should the client hire Tallman to

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handle his legal claim, plaintiff would receive a referral fee. This averment was adequate to
create an issue of fact on the matter.

        Affirmed in part with respect to the claim of unjust enrichment, reversed in part in regard
to the claim of a contract implied in fact, and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction. Neither side having fully prevailed on appeal, we
decline to award taxable costs under MCR 7.219.

                                                            /s/ Kurtis T. Wilder
                                                            /s/ William B. Murphy

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