Court Opinion

ID: 9838423
Source: CourtListenerOpinion
Date Created: 2023-09-06 14:05:14.3692+00
Date Added: 2024-06-11T18:05:20.562679
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                     FOURTH DISTRICT

     PERLMAN, BAJANDAS, YEVOLI & ALBRIGHT, P.L.,
                     Appellant,

                            v.

             ATLAS HOLDING CORPORATION,
                       Appellee,

                      No. 4D22-1827

              _______________________________

                   KATIE PHANG, P.A.,
                       Appellant,

                            v.

             ATLAS HOLDING CORPORATION,
                       Appellee,

                      No. 4D22-2048

              _______________________________

ATLAS HOLDING CORPORATION, JACK T. KEISER AND PAMELA
KEISER, AS TRUSTEES OF THE KEISER FAMILY LIVING TRUST
      DATED JANUARY 16, 2013, and JACK T. KEISER,
                      Appellants,

                            v.

                     TD BANK N.A.,
                       Appellee,

               Nos. 4D22-2060 & 4D22-2223

              _______________________________

                   [September 6, 2023]
  Consolidated appeals and Petition for Writ of Prohibition to the Circuit
Court for the Seventeenth Judicial Circuit, Broward County; Carlos A.
Rodriguez, Judge; L.T. Case No. CACE17-007675 (14).

    Elliot B. Kula and W. Aaron Daniel of Kula & Associates, P.A., Miami,
for appellant Perlman, Bajandas, Yevoli, & Albright, P.L.

  Douglas F. Eaton of Eaton & Wolk, P.L., Miami, for appellant Katie
Phang, P.A.

   Matthew P. Leto and Charles P. Gourlis of Leto Law Firm, Miami, and
Raoul G. Cantero of White & Case LLP, Miami, for appellants Atlas Holding
Corporation, Jack T. Keiser, and Jack T. Keiser and Pamela Keiser, as
Trustees of the Keiser Family Living Trust Dated January 16, 2013.

  Bruce S. Rogow, Cedar Mountain, North Carolina, and Tara A.
Campion, Boca Raton, of Bruce S. Rogow, P.A., and William R. Scherer of
Conrad & Scherer LLP, Fort Lauderdale, for appellee Conrad & Scherer
LLP.

CONNER, J.

    Appellee Conrad & Scherer LLP (“former counsel”) initially represented
Appellants Atlas Holding Corporation, Jack T. Keiser, individually, and
Jack T. Keiser and Pamela Keiser, as Trustees of the Keiser Family Living
Trust Dated January 16, 2013 (collectively, “the clients”), as plaintiffs in a
lawsuit. During the underlying suit, the clients discharged former counsel
and hired Appellants Perlman, Bajandas, Yevoli & Albright, P.L. (“PBYA”)
and Katie Phang, P.A. (collectively, “successor counsel”). Former counsel
filed a charging lien in the underlying suit and sought to enforce it after
successor counsel settled the case.         This opinion addresses four
consolidated appeals, all challenging the final judgment enforcing the
charging lien. 1

   We affirm without discussion on the arguments raised by the clients in
case numbers 4D22-2060 and 4D22-2223, challenging the fee award to
former counsel. We agree with successor counsel, however, that the trial
court erred in ordering successor counsel to disgorge fee payments. Thus,
we reverse and remand in case numbers 4D22-1827 and 4D22-2048 for

1 We previously issued orders consolidating the appeals for record and panel
purposes. By virtue of the consolidation orders, case number 4D22-2223 was
converted from a petition proceeding to an appeal. Because all four appeals arise
out of the same final judgment, we issue one opinion to address all four appeals.

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revision of the final judgment consistent with this opinion.

                                  Background

The Underlying Lawsuit

   The clients engaged former counsel to file the underlying lawsuit on a
contingency fee basis. The engagement agreement provided that if the
case settled after a motion to dismiss was denied but before summary
judgment, former counsel would be entitled to 23% of the settlement. This
applied even if the clients switched counsel.

   After the engagement agreement was signed, former counsel filed suit
against the defendants. Throughout its representation, former counsel
incurred approximately 2,254.35 hours of work.

    In September 2019, the clients sent former counsel a termination letter
listing perceived shortcomings in its representation. The letter stated,
however, that when the case settled, the clients would still pay former
counsel’s fees and costs. Former counsel filed a charging lien.

   The clients then hired successor counsel pursuant to another
contingency fee agreement. Eighteen months later, the parties settled the
underlying suit for a confidential amount payable to the clients.

Resolution of Former Counsel’s Charging Lien

   Once successor counsel received the settlement funds, former counsel
sought to enforce its charging lien against the clients, asserting an amount
due. By an agreed order, the trial court permitted successor counsel to
disburse all settlement funds “in excess of the amount claimed by [former
counsel] pursuant to its charging lien” but did not specify the dollar
amount or percentage of the settlement to be withheld in escrow.2
Successor counsel then withdrew from the case and the clients hired new
counsel to litigate the charging lien. The charging lien matter was
eventually set for trial.

   During the charging lien nonjury trial, former counsel argued it was
terminated “without cause” and was responsible for the majority of the
work done in moving the case forward. Former counsel argued it was

2 Although not contractually required, successor counsel agreed to reduce its fees

by $250,000 and to hold that amount in PBYA’s trust account to reimburse the
clients for legal expenses the clients incurred in the charging lien litigation.

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entitled to its 23% contingency fee or, at least, to the value of its services
(approximately $725,000 to $745,000).

    The clients argued former counsel was terminated “for cause” and was
not entitled to any portion of the settlement because nothing former
counsel did contributed to the eventual settlement. The clients also
asserted, somewhat inconsistently, that “[n]obody’s disputing” that certain
of former counsel’s actions “definitely . . . help[ed] the case,” and that the
trial court should “give them credit for that.” The clients maintained,
however, that former counsel could not prove its work contributed to the
settlement.

   Successor counsel was not involved in the charging lien nonjury trial
as a party and was not represented in those proceedings.

    After making credibility determinations and weighing testimony, the
trial court found former counsel, not successor counsel, responsible for
most of the legal work that led to the settlement. The trial court also found
former counsel had shown the charging lien was valid and rejected the
clients’ arguments to the contrary. The trial court then evaluated the
appropriate amount due to former counsel under the charging lien. It
found, upon weighing the totality of the circumstances, that former
counsel was entitled to a sum certain 3 in fees and costs.

   The trial court also raised concerns over successor counsel’s treatment
of the settlement proceeds (despite the prior agreed order approving
distribution of the settlement funds). It found the 23% contingency fee
was a combined cap on fees for both former and successor counsel, and
successor counsel had acted improperly in distributing the funds:

      The Court has asked several times . . . [for an] explanation as
      to why the client’s funds are being held in trust to pay [former
      counsel’s] lien and not the 23% attorney fees so the Court
      could make the decision as to the amount of the lien such that
      the client is not charged more than the maximum contractual
      rate of 23%. The total attorney fee amount paid by the client
      to all the lawyers is limited by the maximum amount
      allowed in the client’s Contingency Fee Agreement. . . .
      [Successor counsel] has not answered the question as to how
      the total attorney fees can exceed the contractual rate.

3 The specific monetary amounts are not discussed in this opinion as they pertain

to the confidential settlement figure, which is maintained as confidential by order
of this Court.

                                        4
    The trial court subsequently issued a detailed final judgment, ruling in
favor of former counsel and chiding successor counsel for its distribution
of the settlement proceeds. The trial court made the following findings:

       [Former counsel] notified [the clients] [as to] the amount of its
       Charging Lien . . . plus costs subject to adjustment. . . .
       PBYA[4] held [that amount] plus costs in trust [as client funds]
       pending the outcome of this Charging Lien action. . . .

       The remainder of the settlement funds were disbursed to [the
       clients] and [successor counsel]. [Successor counsel] received
       23% of the settlement funds . . . . [Successor counsel] reduced
       its contingent fee by $250,000 to be used by [the clients] to
       defend against [former counsel]’s Charging Lien.

       [The clients] received the remainder of the settlement funds
       less the amount held in trust by PBYA for [former counsel]’s
       Charging Lien, thus [successor counsel] penalized the client
       for discharging [former counsel] and hiring [successor
       counsel]. [Successor counsel] also placed the burden and cost
       of defending [former counsel’s] lien on [the clients] [when it]
       withdrew as counsel . . . before the hearing on [former
       counsel’s] lien.

   The trial court accordingly ordered the disbursement of fees to
successor counsel be “corrected” and redeposited in PBYA’s trust account.
Once the funds were redeposited, the trial court ordered the clients be paid
a full 77% of the settlement funds. Of the remaining 23%, former counsel
was to be paid a specific sum. 5 Lastly, the trial court ordered successor
counsel to send both retainer agreements to The Florida Bar for it to
determine compliance with Bar rules.

    The clients and successor counsel gave notice of appeal.

                               Appellate Analysis

4 While both PBYA and Katie Phang, P.A. have claims here, the funds were held

in PBYA’s trust account.

5  The net effect of the order was that successor counsel received a specific,
reduced sum for its services, plus any money remaining from the $250,000
reserved to reimburse the clients for the legal fees and costs of the charging lien
litigation.

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   As we said above, we affirm without discussion on the arguments raised
by the clients in their appeals of the fee award to former counsel. We
therefore turn to successor counsel’s appeals.

   “A party’s entitlement to attorneys’ fees is reviewed de novo.” Mineo
Salcedo Law Firm, P.A. v. Cesard, 333 So. 3d 222, 227 (Fla. 4th DCA 2022)
(quoting De La Riva v. Chavez, 303 So. 3d 955, 958 (Fla. 4th DCA 2020)).
In contrast, “[a] trial court’s calculation of reasonable attorney’s fees is
reviewed for an abuse of discretion.” Nationstar Mortg. LLC v. Faramarz,
331 So. 3d 738, 745 (Fla. 4th DCA 2021).

   Successor counsel argues the trial court committed fundamental error
by entering a judgment against successor counsel as a nonparty and
depriving it of due process. We agree.

   Entry of “a judgment against a nonparty is fundamental error.”
Corredor v. Nichols, 342 So. 3d 793, 794-95 (Fla. 3d DCA 2022) (quoting
Norville v. BellSouth Advert. & Publ’g Corp., 664 So. 2d 16, 16 (Fla. 3d DCA
1995)). A denial of due process likewise “constitutes fundamental error
that may be raised for the first time on appeal.” Chiu v. Wells Fargo Bank,
N.A., 242 So. 3d 461, 464 (Fla. 3d DCA 2018).

   Successor counsel was not a party at any point during the charging lien
proceedings. The fact that it previously appeared as counsel of record for
the clients in the underlying litigation does not change successor counsel’s
status as a nonparty. See Corredor, 342 So. 3d at 795 (reversing judgment
awarding fees directly to attorney and holding counsel of record was “not
a party to the underlying suit despite being the court appointed counsel
for the receiver”); see also State Farm Mut. Auto. Ins. Co. v. Best Med.
Treatments, Inc., 354 So. 3d 612, 614 (Fla. 3d DCA 2023) (holding statute
authorizing award of attorney’s fees to a prevailing insured or beneficiary
requires fees to be paid directly to insured or beneficiary, not to nonparty
counsel). As successor counsel was not named or otherwise joined as a
party in the charging lien action, the trial court could not directly order
successor counsel to disgorge fees in favor of former counsel.

    Former counsel contends on appeal that the trial court was exercising
its sanction power in ordering disgorgement. See Levin, Middlebrooks,
Mabie, Thomas, Mayes & Mitchell, P.A. v. U.S. Fire Ins. Co., 639 So. 2d 606,
608-09 (Fla. 1994) (“[A] trial judge has the inherent power to do those
things necessary to enforce its orders, to conduct its business in a proper
manner, and to protect the court from acts obstructing the administration
of justice.”). But if the trial court was indeed attempting to exercise its

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inherent authority, it did so in violation of successor counsel’s due process
rights. Successor counsel was not a party participant, did not appear as
a party, was not represented in the proceedings, and had no notice that
the trial court was considering entering an order for disgorgement of funds.

   “As to the forfeiture or disgorgement of funds, an attorney is entitled to
the same reasonable notice and opportunity to be heard, even if he or she
is merely holding those funds as a retainer for legal services not yet
rendered.” Weissman v. Braman, 132 So. 3d 327, 330 (Fla. 4th DCA 2014).
In Weissman, a law firm representing the husband in an action for
dissolution of marriage was ordered to disgorge assets the firm was holding
for payment of the husband’s attorney’s fees, as part of the resolution of
the wife’s motion for temporary attorney’s fees and costs. Id. We held that
the law firm received inadequate notice and opportunity to be heard to
satisfy due process:

      [T]he wife’s motion did not suggest a need or intent to examine
      the reasonableness of the fees charged to the husband by the
      Firm. . . . [T]he Firm had no reason to believe that the trial
      court’s proceedings . . . could result in a disgorgement of
      funds that the Firm was holding, or that the trial court would
      inquire into the appropriateness of [its] fees . . . . Because the
      Firm was not granted sufficient notice, its right to be heard
      was substantially hindered in that it was not given the
      opportunity to gather or present supporting evidence.

Id. at 330-31 (footnote omitted).

   The present case is comparable to Weissman. Nothing in the motion to
enforce the charging lien suggested the payment to successor counsel was
at issue, nor did former counsel seek sanctions during the trial.
Accordingly, because successor counsel was not provided with sufficient
notice that its fee payment was at issue, much less subject to
disgorgement, its right to be heard was substantially hindered.

   We also agree with successor counsel that the trial court misconstrued
the law in ruling that the total fee, divided between both firms, could not
exceed 23%. “The proper basis for awarding attorney’s fees to discharged
attorneys and their successors is as follows: Discharged attorneys hired
under a contingent fee contract are entitled to recover quantum meruit for
their services, limited by the maximum fee allowable under the [the
discharged attorney’s] fee agreement.” Lubell v. Martinez, 901 So. 2d 951,
952-53 (Fla. 3d DCA 2005). “A substituted attorney, however, is entitled
to the full contingent fee provided for in the contract.” Id. at 953 (citing

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Adams v. Fisher, 390 So. 2d 1248, 1251 (Fla. 1st DCA 1980)). A charging
lien cannot attach to an attorney’s fee judgment which is based on work
another law firm did. Law Offs. of David H. Zoberg, P.A. v. Rosen, 684 So.
2d 828, 829 (Fla. 3d DCA 1996).

   “This rule ensures the client the right to discharge an attorney at any
time with or without cause, while at the same time making a client
responsible for his or her actions.” Lubell, 901 So. 2d at 953. As the First
District noted in Adams, “[a] client may end up paying 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[,]”
but that “a client could contract to pay [the] second attorney a contingent
fee less the fee due first attorney.” Adams, 390 So. 2d at 1251.

   In Jones & Granger v. Johnson, 788 So. 2d 381 (Fla. 1st DCA 2001), the
First District explicitly rejected the position taken by the trial court. There,
a former law firm sought to recover its fees via charging lien after the
successor firm settled the case. Id. at 382. Dissatisfied with its quantum
meruit award, the former firm appealed, arguing “that the trial court
should have divided the 25% contingent fee between it and [the successor
firm] in proportion to the services each provided in obtaining the
settlement[.]” Id. at 383. The First District disagreed, holding that the
former firm had no claim against the contingent fee owed to the successor
firm, but was simply entitled to a fee based upon quantum meruit. Id.
The First District explicitly found its opinion to be consistent with
Rosenberg v. Levin, 409 So. 2d 1016 (Fla. 1982), noting that Rosenberg
only addressed former counsel’s recovery and did not set a ceiling for
successor counsel as well. Jones & Granger, 788 So. 2d at 383-84. The
First District also found that Afrazeh v. Miami Elevator Co. of America, 769
So. 2d 399, 402 (Fla. 3d DCA 2000), was distinguishable because in that
case, the client explicitly contracted with counsel to split the contingency
fee with former counsel. Jones & Granger, 788 So. 2d at 384.

   Former counsel cites Afrazeh as support for the trial court’s division of
fees. But in this case, as in Jones & Granger, there is no evidence that
either firm agreed to split the contingency fee. In the absence of an
agreement to split successor counsel’s contingency fee, the trial court
could not reduce successor counsel’s fee to allocate it to former counsel.

   Accordingly, the trial court erred as a matter of law in holding the total
fee amount was limited by the maximum amount allowed under either
contingency fee agreement. The trial court likewise erred in holding
successor counsel “improperly burdened [the client] with the cost of
defending the lien.”

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                                Conclusion

    Based on the foregoing, the final judgment is affirmed as to the rulings
pertaining to the award of fees to former counsel under its charging lien.
It is reversed as to the disgorgement of fees and costs paid to successor
counsel, and remanded for entry of a revised final judgment consistent
with the foregoing.

   On remand, the trial court shall remove all mention of successor
counsel’s disgorgement of fees and costs, as well as any adjudication of
successor counsel’s right to fees. This opinion does not disturb the trial
court’s determination of former counsel’s entitlement to fees and costs, or
the amount due to former counsel from the settlement funds. Nor does
this opinion disturb the clients’ liability to former counsel for any fees or
costs associated with pursuing the charging lien. This opinion also does
not disturb any agreement between the clients and successor counsel to
reimburse the clients for fees and costs the clients incurred in defending
against the charging lien.

   Affirmed in part, reversed in part, and remanded with instructions.

KLINGENSMITH, C.J., and FORST, J., concur.

                            *        *         *

   Not final until disposition of timely filed motion for rehearing.

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