Court Opinion

ID: 9673300
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:09:43.532018+00
Date Added: 2024-06-11T18:16:21.295775
License: Public Domain

Robert H. Dudley, Justice, concurring on direct appeal; dissenting on cross-appeal. The limited facts stated in the majority opinion, while correct, do not give a reader a complete understanding of the essential factual underpinning of this case—that the attorneys were discharged with just cause and that their services were of little value to the client. The complete facts are as follows. Richard Courson had been turkey hunting at a private hunting club on Tom Steele Island on the Mississippi River. He was walking back to the clubhouse when a poacher, Thomas Averett, apparently mistook him for a turkey and shot him in the face with a load of number six steel shot from thirty-two steps away. Ninety-seven of the shot went into Courson’s upper torso, face, and brain. As a result, even after four surgical procedures on his left eye and two procedures on his right eye costing over $30,000, he lost the sight in the left eye, incurred a thirty percent loss of vision in the right, and suffers from other less severe injuries. After Averett shot Courson, he saw that Courson was severely wounded, and fled the scene. Six or seven hours later, a game warden caught Averett and Averett confessed to what he had done. Later, Courson hired Sam Pope of Crossett as his attorney to file a civil suit against Averett. Courson was subsequently referred to Robert J. Brown of the law firm of Crockett and Brown in Little Rock. Courson talked to Brown, decided to hire him, and amicably discharged Pope. Pope’s employment has no further materiality. Courson entered into a written contract with Brown’s firm, Crockett and Brown, by which the firm was to represent him in his civil suit. In the contract, Crockett and Brown agreed to be paid an hourly rate that would amount to a maximum of $ 15,000, plus 10 percent of any recovery in excess of $30,000. Courson paid a $7,500 retaining fee. Crockett and Brown filed suit for Courson against Averett on November 13, 1989, a little over seven months after being employed. Even though Averett shot Courson, ran away, and left Courson to die, Crockett and Brown failed to pray for punitive damages. The law firm did not inspect Averett’s insurance policy to see if it covered punitive damages and did not investigate Averett’s personal net worth. The law firm failed to conduct any research on the question of exclusion of punitive damages in insurance policies. The law firm did take depositions and, on February 27, 1990, eleven months after being employed, made demand on Averett’s insurance company for the $300,000 limit of his policy. On January 17,1991, the insurance company made an offer of $100,000. Robert J. Brown attempted to pressure Courson into accepting the offer even though the law firm had no economic analysis of Courson’s loss of future earnings and did not know the amount of future medical expenses. Courson testified that he knew that he faced as much as another $20,000 in medical bills just to remove the shot still in him, and, in addition, he knew that additional eye surgery was necessary. Courson testified that Brown told him: “Goddamn it, you’re not gambling with your money anymore, you’re gambling with my money.” Courson knew another attorney who had retired after twenty-one years with a different insurance company and asked that attorney to evaluate his case. After conferring with this retired attorney, Courson told Brown that he would not settle his case of clear liability for less than $300,000. Crockett and Brown never attempted to help Courson obtain social security benefits. Instead, Brown advised Courson to get into rehabilitative counseling, get a job, and try to find an oral surgeon and a neurologist in the Little Rock area. Courson failed to pay the hourly charges and costs that he had agreed to pay to the law firm. They amounted to almost $10,000 over and above the amount paid as a retainer. Brown and an associate talked to Courson about his failure to pay the amount that he owed, and they also discussed entering into a new agreement. The law firm wanted to change the hourly contract to a one-third contingent fee agreement. Courson testified that he was without funds and felt the law firm was trying to coerce him into a contract that was more advantageous to the firm. Two weeks later Courson told the associate: “I think you’re screwing me.” The insurance company offered the law firm a structured settlement totaling $150,000. Courson testified that the settlement offer had not been disclosed to him when the associate called and asked if he had signed the new contingent fee agreement. Courson testified that he told the associate that he had signed the new agreement and put it in the mail. In fact, he had not done so, and never did. According to Courson, it was only after he said that he had signed the new agreement that Brown advised him of the new structured settlement offer. Courson refused the offer and fired Crockett and Brown. Courson then hired the law firm of Wilson, Engstrom, Corum and Dudley, in Little Rock, and John Richard Byrd, in Hamburg. The Wilson firm and Byrd commenced representation of Courson and asked the Crockett and Brown firm for Courson’s file. Crockett and Brown refused to give the file to the Wilson firm. After various motions were filed in the trial court, the Crockett and Brown firm was removed as counsel of record, and the Wilson firm and Byrd were substituted. The trial court ordered Crockett and Brown to give the Courson file to the Wilson firm, but Crockett and Brown did not do so. The Wilson firm arranged for examinations of Courson and obtained medical evaluations. The Wilson firm obtained the insurance policy and determined that punitive damages were covered. The complaint was amended to ask for punitive damages. After the Wilson firm obtained all of the necessary medical documentation and developed the appropriate economic data, a demand was made for the policy limits. The case was settled for $300,000. The settlement proceeds were placed in the registry of the court because Crockett and Brown claimed a lien on the proceeds. This appeal involves the amount of Crockett and Brown’s fee. The foregoing facts are set out in such detail to show the two critical factors: that Courson discharged Crockett and Brown “with cause,” and that while Crockett and Brown may have devoted many hours to this case, Courson received little, if any, benefit from those hours of work. Thus, we have the real issue of when an attorney is discharged with cause should his fee be based primarily on the hours worked and costs expended by the attorney, or should it be based on the amount of benefit to the client? In the trial court Crockett and Brown argued that they were entitled to the specified hourly rate plus the contingent fee of ten percent as set out in their contract of employment. Courson contended he owed Crockett and Brown nothing because he discharged them with just cause. The trial court ruled that Courson discharged Crockett and Brown with “just cause” and that, pursuant to Ark. Code Ann. § 16-22-303 (Supp. 1991), Crockett and Brown was entitled to a “reasonable” attorney’s fee in the amount of $15,000 and costs incurred of $2,541.27, and Courson was entitled to a set-off for the $7,500 already paid. On direct appeal, the Crockett and Brown firm makes three assignments of error. I agree with the majority opinion that we cannot reach any of their arguments because of procedural errors and, accordingly, concur with the majority opinion in affirming the trial court on the direct appeal. On cross-appeal, Courson contends that the trial court erred in awarding to Crockett and Brown a reasonable fee based upon the amount of work done by the law firm, plus costs. This is the real issue in this case. The trial court ruled that Crockett and Brown was entitled to such a fee pursuant to Ark. Code Ann. §16-22-303 (Supp. 1991). The majority opinion affirms that ruling. I dissent. Discharge of Attorney Attorney-client contracts contain an implied provision that the client may discharge the attorney at any time, either with or without cause. Sikes v. Segars, 266 Ark. 654, 587 S.W.2d 554 (1979). [T] here can be no doubt of the right of a client to discharge an attorney who fails to prosecute the cause with reasonable diligence, for that is clearly the measure of an attorney’s duty to his client. Any other rule would require a client to retain an attorney who was neglecting the cause and failing to proceed with proper diligence. Johnson v. Missouri Pac. R.R. Co., 149 Ark. 418, 427, 233 S.W. 699, 702 (1921). Because a client may always terminate the contract, a breach of contract action by an attorney for wrongful discharge does not really exist. See Henry, Walden & Davis v. Goodman, 294 Ark. 25, 741 S.W.2d 233 (1987). Discharge Without Just Cause In Henry, Walden & Davis v. Goodman, a law firm was hired by the client for a contingent consideration of one-third of any recovery. That law firm was discharged without just cause. A second law firm was employed, also for a contingent consideration of one-third of any recovery. The second firm obtained a judgment for $ 100,000, and it was paid afeeof$33,333. The first firm filed suit to collect another one-third from the proceeds of the judgment. The trial court refused to award the first firm one-third, but did award a reasonable fee to it based upon the amount of work done by that firm. We affirmed and stated that it would “be an injustice to the client to hold him liable for both contingency fees for exercising that fundamental right [to terminate the contract at any time].” We said, “an underlying assumption of this proposition is that the contingency has not been effected prior to discharge.” Id. at 31, 741 S.W.2d at 236. That reasoning is in accord with the majority of jurisdictions. See Annotation, Limitation to Quantum Meruit Recovery, Where Attorney Employed Linder Contingent Fee Contract Is Discharged Without Cause, 92 A.L.R. 3d 690 (1979). The General Assembly enacted an attorney’s compensation law in 1989 and expressly stated that the purpose of the act was to modify the effect of Henry, Walden & Davis v. Goodman, and to entitle attorneys to collect the full amount provided in the contract. Act 293 of 1989, codified as Ark. Code Ann. §§ 16-22-301 to -304 (Supp. 1991). The material part of the 1989 act, Ark. Code Ann. § 16-22-302, provides: “The compensation of an attorney at law, solicitor, or counselor for his services is governed by the agreement, expressed or implied, which is not restrained by law.” (Emphasis added.) We need not resolve the question of whether the legislative branch can regulate compensation of attorneys because the statute was obviously intended to apply to situations in which the client discharged the attorney without just cause. Such is not the case now before us; this case involves discharge with just cause. Even the majority opinion tacitly agrees that the statute does not govern, for it holds that when an attorney is discharged for just cause the amount of compensation is not governed by the agreement, as set out in the statute, but rather is to be based upon the theory of quantum meruit. Dismissal With Just Cause The case before us involves dismissal with just cause. In Beaumont v. J.H. Hamlen & Sons, 190 Ark. 630, 632, 81 S.W.2d 24, 25 (1935), we wrote: “The law is well settled in this and most other jurisdictions that, if an attorney . . . commits a material breach of his contract of employment, he thereby forfeits all right to compensation.” The reasoning of the opinion was that a client employs the attorney to perform the entire contract, and when the entire contract is not performed, the attorney forfeits the stipulated compensation. Id. at 632, 81 S.W.2d at 25. As a result of the above language, cross-appellant Courson argues that the Crockett and Brown firm is not entitled to any fee whatsoever. At first blush, the argument seems to have merit. However, the case was written before our cases held that a client his an implied right to terminate a contract at any time, and that does not amount to a breach of contract. Thus, the case at bar is essentially a matter of first impression for this court. The majority opinion holds that Crockett and Brown is entitled to compensation based upon quantum meruit, and the standard for that award is based on the amount of time and expense devoted to the case by the attorney. That is not the correct standard for this type of case. As set out in Johns v. Klecan, 556 N.E.2d 689 (Ill. App. 1990), the rationale underlying the doctrine of quantum meruit in this type of case is that the client who benefits from the attorney’s services should be required to pay the reasonable value of those services to the attorney. It is a doctrine designed to prevent the unjust enrichment of the client. An example of this is found in Phelps v. Elgin, Joliet & Eastern Ry., 217 N.E.2d 519 (Ill. App. 1966), where the attorney was discharged for cause and under the established law was entitled to recover under the doctrine of quantum meruit. The trial court ruled that under the theory of quantum meruit the attorney was not entitled to a fee, and the appellate court affirmed stating: “Nothing of value has been recovered by reason of any act done or suit brought by the respondents. On the basis of this record, we must conclude, as did the trial judge, that the respondents are not entitled to recover any fees.” Id. at 523. It did not matter how much time the attorney devoted to the case because the client did not unjustly benefit. The same reasoning should be applied to this case. Crockett and Brown may have devoted many hours to building the file, but they refused to turn that file over to the Wilson firm, and the work product in that file was of no value to the client in the settlement of his case. Crockett and Brown was discharged with just cause, and is entitled to a fee only for those services that were of benefit to the client, and, on cross-appeal, this case should be reversed for a determination of that amount, if any. The rule has been stated as follows: It has been held that a lawyer who unjustifiably terminates his employment, or gives the client cause to discharge him prior to completion of the services for which he was engaged, can recover against the client only the amount by which his services have benefited the client, who, in the absence of recovery by the attorney, would be unjustly enriched by such services. 7 Am. Jur. 2d Attorneys at Law § 299 (1980). Under the majority opinion a lawyer might commit some act that is inimical to the best interest of his client, but he would still be paid a windfall as compensation for his time expended in committing that act. Suppose that an attorney was representing a plaintiff against an insurance company, but failed to disclose to the client that also he was representing the insurance company in the same case, and the client eventually found out about the conflict of interest and discharged the attorney “with just cause.” See Miller v. Solomon, 199 N.E.2d 660 (Ill. App. 1964). Under the rationale of majority opinion the attorney could collect for all the work he had done in the client’s name, regardless of whether it was of benefit to the client. The majority opinion will lead to windfalls for attorneys who are discharged with just cause because it fails to recognize that the basis for quantum meruit in this type of case is to prevent the unjust enrichment of the client. Many of the cases cited in the majority opinion offer no support for the opinion. The majority opinion cites the case of Covington v. Rhodes, 247 S.E.2d 305 (N.C. 1978), as supporting its position. However, that case involved an attorney who had “performed in a reasonably professional manner,” and the court discussed discharge in terms of being “without cause.” The majority opinion cites Sohn v. Brockington, 371 So.2d 1089 (Fla. Dist. Ct. App. 1979), but, again, that case was one in which the attorney was discharged “without cause.” The majority opinion also cites In Re Estate of Poli, 338 A.2d 888 (N.J. Co. Ct. 1975), but, in that case, even though the client contended that the attorney was discharged with cause, the court discussed the case in terms of discharge “without cause.” The case of Fracasse v. Brent, 494 P.2d 9 (Cal. 1972), also involved discharge of the attorney “without cause.” In that case, the Supreme Court of California said that the attorney had been discharged “without cause” and was entitled to receive the value of his services up to the time he was discharged. While the discussion about cases involving discharge “with cause” is dicta, the opinion does allude to a different standard for the fee when an attorney is discharged “with cause,” as follows: Amicus contends that there will be substantial difficulty in ascertaining the amount of recovery under a quantum meruit theory. The same difficulty—if such it be—is also present, however, in cases in which an attorney has been discharged with “cause” and yet such difficulty does not appear to have been insurmountable. Id. at 13. In summary, the majority opinion provides a windfall to attorneys who are discharged with just cause. It allows them to recover “reasonable fees” based primarily on the amount of time expended by the attorney, regardless of whether the work benefitted the client. Such a standard is not in comport with the rationale for quantum meruit in this type case. The holding should be that when an attorney is discharged with just cause, he might recover on the basis of quantum meruit for the amount that his services has enriched the client. Accordingly, I dissent on cross-appeal. Newbern, J., joins in this concurrence and dissent. APRIL 26, 1993 C. Richard Crockett, for appellant. Wilson, Engstrom, Corum & Dudley, by: William R. Wilson, Jr. and John R. Byrd, and Gary D. Corum for appellee.