Court Opinion

ID: 4107746
Source: CourtListenerOpinion
Date Created: 2016-12-15 20:01:18.036174+00
Date Added: 2024-06-11T12:25:16.891120
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 15-2028

LAW OFFICES OF JOHN L. JULIANO, P.C.,

                Plaintiff - Appellant,

           v.

JOHN W. JENSEN; JENSEN LAW, P.A., d/b/a Jensen Law Group,

                Defendants - Appellees.

Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. Catherine C. Eagles,
District Judge. (1:15-cv-00288-CCE-JEP)

Argued:   October 25, 2016                 Decided:   December 15, 2016

Before TRAXLER, KEENAN, and WYNN, Circuit Judges.

Affirmed by unpublished opinion.        Judge Keenan wrote         the
opinion, in which Judge Traxler and Judge Wynn joined.

ARGUED: Steven B. Epstein, POYNER SPRUILL LLP, Raleigh, North
Carolina, for Appellant.   Jonathan Arthur Berkelhammer, ELLIS &
WINTERS LLP, Greensboro, North Carolina; Robert Ellis Zaytoun,
ZAYTOUN LAW FIRM, PLLC, Raleigh, North Carolina, for Appellees.
ON BRIEF: Andrew H. Erteschik, POYNER SPRUILL LLP, Raleigh,
North Carolina, for Appellant.    Matthew D. Ballew, ZAYTOUN LAW
FIRM, PLLC, Raleigh, North Carolina, for Appellees.

Unpublished opinions are not binding precedent in this circuit.
BARBARA MILANO KEENAN, Circuit Judge:

       The Law Offices of John L. Juliano, P.C. (Juliano), 1 a New

York law firm, filed this diversity action seeking payment of

one    third      of   attorneys’    fees    recovered      in    a   North    Carolina

personal injury lawsuit conducted by the defendants, attorney

John       W.   Jensen    (Jensen)   and    his    law   firm,    Jensen      Law   Group

(Jensen Law).          Although Juliano was not directly involved in the

North Carolina litigation, he asserts that he is entitled on

equitable grounds to a portion of Jensen’s fees, based on a fee-

sharing agreement he reached with Jensen’s former law firm.

       The district court concluded that Juliano had failed to

state a claim for unjust enrichment, and had not attempted to

plead a separate quantum meruit claim.                     Accordingly, the court

dismissed the complaint under Federal Rule of Civil Procedure

12(b)(6).          Upon    our   review,    we    affirm    the   district      court’s

judgment.

                                            I.

       In 2007, Howard Hazlett, who is not a party to this case,

retained        Juliano     to   represent        him    after    Hazlett      suffered

       1
       Although the only plaintiff in this case is                     the corporate
entity Law Offices of John L. Juliano, P.C.,                           for ease of
reference we refer to both the law firm and                            its founding
attorney, John Juliano, as “Juliano” throughout the                    opinion.

                                            2
injuries      in    a    watercraft    accident     that    occurred     in   North

Carolina. 2        Juliano filed a personal injury action in New York

state     court     on   Hazlett’s    behalf,   which      later   was   dismissed

without prejudice (the New York case).

      In October 2008, after the New York case was dismissed,

Juliano referred Hazlett’s case to the North Carolina law firm

of Jensen McGrath Podgorny (JMP), of which defendant Jensen was

a partner.         Hazlett and JMP entered into a written contingency

fee agreement (the 2008 agreement) under which JMP would receive

a certain portion of any total amount that Hazlett recovered.

The   2008    agreement     also     included   a   “fee    division     schedule,”

which provided that one third of the fee collected by JMP would

be paid to Juliano.          Although JMP filed a personal injury action

on Hazlett’s behalf in North Carolina state court (the first

North Carolina case), that case was dismissed without prejudice

in April 2010.

      In September 2010, Jensen resigned from JMP and formed a

new law firm, Jensen Law.             At that time, Hazlett elected to have

      2Because the district court dismissed the complaint under
Rule 12(b)(6), we recount the facts as alleged in the complaint.
See Harbourt v. PPE Casino Resorts Md., LLC, 820 F.3d 655, 658
(4th Cir. 2016).   We also may consider documents attached to a
motion to dismiss that were “integral to and explicitly relied
on in the complaint.”       Am. Chiropractic Ass’n v. Trigon
Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) (citation
omitted).

                                          3
his case remain with Jensen’s former law firm, now named McGrath

Podgorny, P.A.

     In March 2011, McGrath Podgorny filed a second personal

injury action on Hazlett’s behalf in North Carolina state court

(the second North Carolina case).                   While this case was pending,

attorney McGrath resigned from McGrath Podgorny.                           In July 2012,

Podgorny,      the    only    remaining       partner,       withdrew      as    Hazlett’s

counsel    from      the    second    North       Carolina   case.         Prior      to   his

withdrawal,     however,       Podgorny       contacted      Jensen,       who   indicated

that he and Jensen Law would be willing to assume representation

of Hazlett in the pending case.

     Hazlett, after having proceeded pro se in the second North

Carolina    case      for    about    three       weeks,     ultimately       executed      a

written    contingency        fee    agreement       with    Jensen     Law      in   August

2012.     In that agreement, Hazlett expressly stated that he was

revoking all prior contracts governing attorney representation

and fees.      In contrast to the 2008 agreement between Hazlett and

JMP, the new agreement between Hazlett and Jensen Law did not

include    a    fee     division      schedule       allocating       to    Juliano        any

portion of the attorneys’ fees recovered from the lawsuit.

     During       the      course    of   Jensen’s     work    on     Hazlett’s        case,

Juliano’s only contact with Jensen consisted of two letters, in

which Juliano advised Jensen that Hazlett owed Juliano $2,000

                                              4
for certain expenses incurred in the New York case.                       Jensen

eventually paid Juliano this amount.

     Hazlett’s claim in the second North Carolina case proceeded

to a jury trial, which lasted about one month.               In August 2013,

the state court entered judgment on the jury’s verdict in favor

of Hazlett for about $5.7 million.             As a result, Jensen Law

collected    a    forty    percent    contingency   fee     of   almost    $2.3

million.     Juliano learned of the judgment in July 2014, nearly

one year after the verdict was entered, and contacted Jensen

requesting       payment   of   one    third   of   the    attorneys’      fees

recovered.       Juliano asserted that he was entitled to this sum

based on the 2008 agreement.          Jensen refused Juliano’s request.

     Juliano later filed the present action in federal district

court, alleging a single claim entitled “unjust enrichment and

imposition of constructive trust or equitable lien.”                  In his

claim, Juliano sought one third of the attorneys’ fees recovered

by Jensen and Jensen Law in the second North Carolina case.                  The

district court held that Juliano had failed to state a claim of

unjust enrichment because he had not conferred, and Jensen had

not accepted, any benefit regarding Jensen’s representation of

Hazlett in the second North Carolina case. 3              The district court

     3 The district court held in the alternative that the
complaint could be dismissed on the ground that Juliano had
failed to comply with Rule 1.5(e) of the North Carolina Rules of
(Continued)
                                        5
also rejected Juliano’s assertion that his complaint included a

claim for recovery in quantum meruit.                    The court accordingly

dismissed     the   complaint       in    its    entirety,     and    this   appeal

followed.

                                          II.

      Juliano argues that the district court erred in dismissing

his     complaint       under     Rule     12(b)(6).           Although      Juliano

acknowledges that he has not alleged a “garden-variety unjust

enrichment claim,” he nonetheless seeks to “invoke the equitable

powers of the court to impose a constructive trust” on a portion

of    Jensen’s    fees.         Juliano    effectively     seeks      an   equitable

transfer     of   the   fee-sharing       obligations     of   JMP    onto   Jensen,

arguing that: (1) Jensen was aware of the 2008 agreement between

Hazlett and JMP; and (2) Hazlett would not have retained Jensen

in the second North Carolina case if Juliano had not initially

referred Hazlett’s case to JMP in 2008.                    Accordingly, Juliano

contends that his complaint states a claim of unjust enrichment

based   on   Jensen’s     retention       of    the   entire   $2.3    million   fee

Professional Conduct, which governs fee-sharing arrangements
between attorneys.   Because we agree with the court’s primary
conclusion that Juliano has failed to state a claim, we do not
address this additional rationale.

                                           6
collected in the second North Carolina case.              We disagree with

Juliano’s arguments. 4

     We review de novo the district court’s dismissal of the

complaint under Rule 12(b)(6), accepting Juliano’s well-pleaded

allegations as true and drawing all reasonable inferences in his

favor.   See Belmora LLC v. Bayer Consumer Care AG, 819 F.3d 697,

705 (4th Cir. 2016).      To state a claim for unjust enrichment

under North Carolina law, a plaintiff must allege that: (1) one

party conferred a benefit upon the other party; (2) the benefit

was not “conferred officiously, that is it must not be conferred

by an interference in the affairs of the other party in a manner

that is not justified in the circumstances”; (3) the benefit was

not gratuitous; (4) the benefit was measureable; and (5) the

defendant   consciously   accepted       the   benefit.     JPMorgan   Chase

Bank, N.A. v. Browning, 750 S.E.2d 555, 559 (N.C. Ct. App. 2013)

(emphasis and citation omitted).          Thus, the mere fact that one

party was enriched at the expense of another, without more, does

not amount to a claim of unjust enrichment.               Butler v. Butler,

     4 We observe that despite language in the complaint clearly
asserting a claim for unjust enrichment, counsel for Juliano
appeared at oral argument to abandon this claim, and instead
argued exclusively that the court should impose a constructive
trust on one third of Jensen’s fees.      As we discuss further
below, both theories fail for the same reason, namely, that
Juliano has not alleged facts showing that it would be
inequitable for Jensen to retain the entirety of the fees
recovered.

                                     7
768 S.E.2d 332, 336 (N.C. Ct. App. 2015) (citing Watson Elec.

Constr. Co. v. Summit Cos., LLC, 587 S.E.2d 87, 92 (N.C. Ct.

App. 2003)).      Instead, a benefit must have been conferred on the

defendant “under circumstances which give rise to a legal or

equitable obligation on the part of the defendant to account for

the benefit[] received.”       Id. at 336-37 (citation omitted).

       The Supreme Court of North Carolina also has explained that

a constructive trust

       is a duty, or relationship, imposed by courts of
       equity to prevent the unjust enrichment of the holder
       of title to, or of an interest in, property which such
       holder acquired through fraud, breach of duty or some
       other circumstance making it inequitable for him to
       retain it against the claim of the beneficiary of the
       constructive trust.

Variety    Wholesalers,    Inc.   v.    Salem    Logistics      Traffic   Servs.,

LLC,    723   S.E.2d    744,   751     (N.C.    2012)    (citation     omitted).

Although      “actual   wrongdoing,      such    as     fraud    or   breach   of

fiduciary duty” is not required to impose a constructive trust,

a   plaintiff     nevertheless       must      allege    that    it   would    be

inequitable for the defendant to retain the funds in question,

or that the defendant “acquired the funds in an unconscientious

manner.”      Houston v. Tillman, 760 S.E.2d 18, 21-22 (N.C. Ct.

App. 2014) (citing Variety Wholesalers, 723 S.E.2d at 751-52).

       Here, however, Juliano has not alleged that Jensen engaged

in any “unconscientious” conduct or other questionable activity

in his representation of Hazlett.                The facts alleged in his

                                        8
complaint also do not identify any inequity that would result

from Jensen’s retention of the entire attorneys’ fee award, but

merely point to the circumstance that Juliano “brought” the case

to JMP in 2008 when Jensen was a partner in that firm.                                        And,

notably, Juliano has not alleged any facts suggesting that he

assisted        Jensen      in        representing                Hazlett       or     otherwise

participated in the trial of the case.

     We    therefore       agree      with        the      district       court’s     conclusion

that the facts alleged by Juliano do not support a claim for

unjust enrichment, and do not identify an inequitable result

justifying imposition of a constructive trust.                               Juliano has not

alleged any relationship with Jensen or Jensen Law that would

support     imposition           of     a     fee-sharing                obligation.           Any

relationship between Juliano and Jensen based on Jensen’s prior

membership      in   JMP   is    too     attenuated              to   support    an    equitable

basis for recovery of the fees at issue.                                 Jensen had left JMP

nearly    two    years     before      Hazlett          eventually         retained     him    for

representation in the second North Carolina case.                                    During that

interim period, Hazlett had been represented by McGrath Podgorny

until     briefly     proceeding            pro       se        before    retaining      Jensen.

Moreover,       Juliano    did     not      enter          an    appearance      on    Hazlett’s

behalf in either of the North Carolina cases, nor did Juliano

refer Hazlett’s case to Jensen or Jensen Law while Hazlett was

acting pro se in the second North Carolina case.

                                                  9
     Significantly, as noted above, Juliano did not provide any

assistance      during      Jensen’s      litigation         of   the     second     North

Carolina case.           In fact, Juliano was unaware that the case had

resulted in a jury verdict in Hazlett’s favor until nearly a

year after the trial had concluded.                       And, as we have observed,

Juliano’s only communication with Jensen during the period of

Jensen’s representation related to Juliano’s request for payment

of expenses incurred in the former New York case.                          Given these

facts and circumstances, Juliano has failed to provide a factual

basis to support his allegation that it would be inequitable for

Jensen to retain the attorneys’ fees he earned exclusively by

virtue of his work under his fee agreement with Hazlett. 5

     Finally,       we    disagree      with     Juliano’s     contention        that   the

substance      of   his    complaint     also       stated    a   claim    for     quantum

meruit,     apart        from     his   claim       for     unjust   enrichment         and

constructive trust.             Although Juliano is correct that he was not

obliged   to    use      “magic    words”      in   his    complaint    identifying       a

specific legal theory of recovery, he nevertheless was required

in his pleading to give the defendants “fair notice” of the

nature of his claims.              See Stevenson v. City of Seat Pleasant,

     5  Although the district court dismissed the unjust
enrichment claim on the ground that Juliano did not confer a
benefit on Jensen, we may affirm the court’s Rule 12(b)(6)
dismissal on any basis supported by the record. See Greenhouse
v. MCG Capital Corp., 392 F.3d 650, 660 (4th Cir. 2004).

                                            10
743   F.3d   411,   418,   420   (4th    Cir.    2014)   (citations   omitted);

McCleary-Evans v. Md. Dep’t of Transp., 780 F.3d 582, 585 (4th

Cir. 2015) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007)); see also Hartmann v. Cal. Dep’t of Corrs. & Rehab., 707

F.3d 1114, 1122 (9th Cir. 2013).               Juliano’s complaint, however,

fails to contain any language placing Jensen on “fair notice”

that Juliano was seeking reimbursement in quantum meruit for

services rendered in the New York case, and does not identify

any work Juliano had performed that would entitle him to recover

the attorneys’ fees requested in his complaint.               Accordingly, we

hold that the district court properly rejected Juliano’s attempt

to argue a claim of quantum meruit that was not pleaded in his

complaint.

                                        III.

      For these reasons, we affirm the district court’s judgment.

                                                                       AFFIRMED

                                         11