Court Opinion

ID: 3018512
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:19:18.087317+00
Date Added: 2024-06-11T11:47:10.034218
License: Public Domain

___________

                                No. 96-2208
                                 ___________

Joel Hyatt; Bill Brooks; and         *
Roger Crombie, doing business        *
as Hyatt Legal Services              *
                                     *
           Plaintiff - Appellants*
                                     *   Appeal from the United States
     v.                              *   District Court for the Western
                                     *   District of Missouri.
Gary Robb, general partner; and      *
Anita Robb, general partner,         *
doing business as Robb and Robb      *
                                     *
           Defendants - Appellees*

                                ___________

                   Submitted: February 10, 1997

                       Filed: May 21, 1997
                               ___________

Before BOWMAN and WOLLMAN, Circuit Judges, and BOGUE,* District Judge.
                               ___________

BOGUE, Senior District Judge.

     In 1988, eight year old Nicole Adams was admitted to Children’s Mercy
Hospital in Kansas City Missouri for routine skin graft surgery.    During
the procedure, Nicole was given an excessive

     *The HONORABLE ANDREW W. BOGUE, United States District
     Judge for the District of South Dakota, sitting by
     designation.
amount of saline solution which ultimately caused her to suffer permanent
blindness and brain damage.      On Nicole’s behalf, her mother, Julia Adams,
filed suit to recover for Nicole’s injuries.           At the completion of all
their litigation, Nicole and Julia Adams recovered roughly seven million
dollars from the various defendants.

     The present case arises out of the Adams litigation and is an action
to recover the balance due pursuant to an alleged fee sharing agreement
between plaintiffs, Hyatt Legal Services (Hyatt), and defendants, Anita and
Gary Robb (Robb).   At the close of all evidence, Hyatt moved for judgment
as a matter of law.       The trial court1 denied plaintiff’s motion and
submitted the case to the jury, which returned a unanimous verdict in favor
of the Robbs.   We affirm.

                                       I.

     Hyatt Legal Services is a general practice law firm with offices in
several cities.     Hyatt specializes in handling fairly routine matters
(e.g., wills, deeds, and uncontested divorce) on a volume basis for
discounted fees.    Hyatt is generally not equipped to handle sophisticated
significant plaintiff’s cases (e.g., medical malpractice and personal
injury).   Occasionally, however, clients come to Hyatt with sophisticated
claims.    To accommodate these clients, Hyatt has set up referral and fee
sharing    arrangements   with   law   firms   which   specialize   in   handling
sophisticated claims.     Typically under these arrangements, if a client
enters into a contingent fee agreement with Hyatt, and Hyatt believes the
client should be referred to a specialty firm, the

     1
      The Honorable John T. Maughmer, Chief U.S. Magistrate
Judge.

                                       -2-
client is so referred.      If the specialty firm then accepts the case, it
shares any contingent fee with Hyatt in accordance with the existing
referral and fee sharing agreement.

        Defendant Robb & Robb is a law firm in Kansas City which specializes
in handling sophisticated medical malpractice and personal injury cases.
Hyatt       alleges that Hyatt and Robb entered into a standing referral
arrangement for the handling of those sophisticated claims in Robb’s area
of expertise which were initially obtained by the Hyatt firm.   In 1986, the
Robbs received a letter from Hyatt’s then managing partner, William Brooks,
detailing the terms of this alleged standing agreement.2    Hyatt maintains
that this letter created the fee sharing contract between Hyatt and Robb.
According to the agreement, Hyatt argues, once Hyatt referred a client to
Robb, and Robb accepted representation,

        2
         Brooks’ letter to Robb states in relevant part:

              When the [Hyatt] attorney determines that a case should
        be co-counseled, he or she will prepare a co-counsel
        memorandum . . . and send the memo, plus the file, to you.
        Once you have received the file please do the following:
        . . .

        2. If you determine, after speaking with the client and
           reviewing the file, not to take the case, then
           communicate this decision in writing to the client and
           send a copy . . . to me. . . .

        3. If you decide to co-counsel the case, copy further
           information . . . only to the client and the [Hyatt
           attorney of record] and not to me.

        4. At the conclusion of each case, prepare a final
           accounting. Send any checks for . . . [Hyatt’s] share
           of the fee . . . to the [attorney of record] along with
           a copy of the final accounting. Send a copy of the
           checks and the final accounting to me.

                                     -3-
Hyatt’s performance was complete.    Expenses were to be advanced by Robb,
but if there was no recovery, Hyatt would reimburse Robb for 50 percent of
the unrecouped expenses.   In the event of a recovery on a referred case,
however, Hyatt would then be entitled to a share of the contingent fee in
an amount not to exceed 16.67 percent of the total recovery.3      Although
Robb never signed this “contract,” the parties operated under some referral
and fee sharing arrangement in 36 cases over a period of six years,
apparently without incident.   At trial, Hyatt argued the standing agreement
largely governed all of its referrals to Robb.     Robb, on the other hand,
argued that before the Brooks letter, Robb had dealt exclusively with
Jeanine   Hassler, Hyatt’s regional partner at the time.         Anita Robb
testified Hassler and Robb agreed that in medical malpractice and personal
injury cases the parties would negotiate referral fees on a case-by-case
basis.    Anita Robb further testified that Hassler told her to disregard
Brooks’ letter.     She also testified that Hyatt’s successive regional
partners, Ray Rousch and John Feely, also followed the case-by-case fee
arrangement originally entered into by Hassler and Robb.         John Feely
testified that as regional partner, he had authority to negotiate fees on
behalf of Hyatt and that on exceptional cases, Feely and Robb negotiated
fees notwithstanding any alleged agreement.

     In April 1988, Julia Adams and her sister Lexter Adams consulted with
William Czarlinsky, a lawyer at one of Hyatt’s Kansas City offices, to
discuss certain issues relative to Nicole’s

     3
      The Brooks letter also included the following provision:
“[Hyatt] and [Robb] will share the fee derived from all cases
equally, i.e., 50/50.” Hyatt maintains this portion of the
agreement was subsequently amended by the parties so that Hyatt’s
share of the fee would not exceed 16.67 percent of the total
recovery.

                                    -4-
injuries sustained at Children’s Mercy Hospital.                  Although there was
conflicting evidence as to the reason, it is undisputed that Czarlinsky
closed the Adams file after performing         some legal work for Julia and her
daughter.     Several months later, Czarlinsky received an unsolicited
settlement    offer   from   trial   attorney      Kirk   Goza,   on    behalf   of   the
individuals responsible for Nicole Adams’ injuries.

     On March 7, 1989, shortly after he received the unsolicited offer
from Goza, Czarlinsky went to Julia Adams’ home intent on signing Ms. Adams
to a Hyatt contingent fee agreement.          Mr. Czarlinsky testified at trial
that his meeting with Ms. Adams was civil and professional and that Ms.
Adams signed the contingent fee agreement without incident.                Lexter Adams
testified, however, that she was at Julia’s home when Czarlinsky arrived,
and that Czarlinsky attempted to convince her sister to accept Goza’s offer
despite that Julia indicated the settlement offer was woefully low and she
would not settle the case.4          Lexter testified the encounter between
Czarlinsky and Julia escalated into a heated argument over the settlement
offer which ended in Julia firing Czarlinsky and Hyatt Legal Services and
demanding that Czarlinsky leave her house immediately.
     John Feely was Hyatt’s regional partner in charge of the Kansas City
offices,    and   Czarlinsky’s   superior     at   the    time   the   meeting   between
Czarlinsky and Julia Adams occurred.        Czarlinsky testified Ms. Adams signed
the contingent fee agreement with Hyatt and that her malpractice claim was
then summarily referred to Anita Robb for prosecution.                 Feely testified,
however, that at a luncheon with the Robbs, he learned from Anita Robb that
Czarlinsky was possibly prosecuting Ms. Adams’ case on his own, contrary
to Hyatt

     4
      Julia Adams died before this case was brought to trial.

                                        -5-
policy.     Feely also testified that when he learned of the altercation
between Czarlinsky and Adams he questioned Czarlinsky about the matter and
Czarlinsky did not reply, giving Feely the impression that Czarlinsky had
indeed tried to force a settlement on Adams and was thrown out of her
house.    Feely further testified he angrily ordered Czarlinsky to give the
Adams file to Anita Robb.    Both Feely and Anita Robb testified Feely told
Robb that Hyatt would not demand any part of a fee recovered in the Adams
case.    Rather, in light of Czarlinsky’s actions at Ms. Adams house, Feely
asked Robb to “bail” Hyatt out and take the Adams case outright.

        In any event, Robb did take the Adams case and successfully recovered
several million dollars for their clients.               Throughout the course of
settlement    proceedings   with   some    of    the   defendants,   Feely   sent   the
following letter to Robb on behalf of Hyatt:
“Please be advised that on behalf of Hyatt Legal Services and attorney,
Will Czarlinsky, there are no claims or liens for attorneys’ services or
expenses pertaining to the matter of Nicole Adams v. The Children’s Mercy
Hospital . . . .”    Hyatt maintains this letter was sent at the request of
Kirk Goza merely to facilitate settlement with the settling defendants.
Anita Robb testified, however, that she also requested the letter as a
confirmation of Feely’s assurance to her that Hyatt would not make a claim
for any fees recovered in the case.             Similarly, Feely testified that he
believed Hyatt was either not retained by Ms. Adams or was fired within
minutes and the letter was intended to show that Hyatt indeed had no liens
or claims for fees in the Adams case.             Despite Feely’s assurances, Robb
paid Hyatt nearly $400,000 in referral fees out of the contingent fee
earned from the settlement with the settling defendants - seemingly in
accordance

                                          -6-
with the supposed referral agreement between the parties.5             Anita Robb
explained at trial, however, that Robb advanced these fees to prevent a
suit against Robb by Hyatt in the future.       Ms. Robb also testified that
Robb had agreed to indemnify Ms. Adams in the event that Hyatt made claims
for fees against her or Nicole in the future and that the payments were an
attempt to avoid that situation.     Moreover, she indicated these payments
were also in part to cultivate the ongoing business relationship that Robb
and Hyatt enjoyed.

     At the close of all the evidence, Hyatt moved for a judgment as a
matter of law6 on grounds that the evidence established the existence of
a unilateral contract between the parties which Hyatt had fully performed,
and the only contractual breach occurred in the non-payment by Robb,
thereby entitling Hyatt to judgment as a matter of law.      Hyatt’s motion was
denied.

     Although   Hyatt   asserts   several   claims   of   error   on   appeal,    it
maintains the trial court made only one fundamental error in the handling
of the case.   Specifically, that alleged error was the failure of the trial
court to recognize the contract between Hyatt and Robb as a unilateral
contract and grant Hyatt’s motion for judgment as a matter of law.               All
other errors, Hyatt argues, are

     5
      The Adams case eventually went to trial against the
remaining non-settling defendants. Hyatt filed the instant
action claiming an entitlement to approximately $800,000 more in
contingency fees based on the judgment entered against those
defendants.
     6
      Hyatt called its motion a motion for directed verdict, but
we will treat it as a motion for judgment as a matter of law
because a motion for judgment as a matter of law now encompasses
all motions for a directed verdict or for judgment
notwithstanding the verdict. Fed.R.Civ.P. 50 (commentary).

                                     -7-
natural consequences which flow from the improper categorization of the
status of the parties in the first instance.

                                   II.

     We review the trial court’s denial of a motion for judgment as a
matter of law de novo using the same standards as the trial court. Smith
v. World Ins. Co., 38 F.3d 1456, 1460 (8th Cir. 1994)(citations omitted).
A motion for judgment as a matter of law presents a legal question to the
trial court and this court on review: whether there is sufficient evidence
to support a jury verdict. Id.    We view the evidence in the light most
favorable to the prevailing party and must not engage in weighing or
evaluation of the evidence or consider questions of credibility. Id.
Judgment as a matter of law is appropriate only when all of the evidence
points one way and is susceptible of no reasonable inference sustaining the
position of the non-moving party. Id.

                                   III.

     We do not agree that, as a matter of law, the evidence established
there was a unilateral contract between the parties which Hyatt had
performed.   A unilateral contract, under Missouri law, is “a contract in
which performance is based on the wish, will, or pleasure of one of the
parties.” Klamen v. Genuine Parts Co., 848 S.W.2d 38, 40 (Mo. App.
1993)(citation omitted).   “The ‘classic’ unilateral contract is one in
which one party promises to pay another party for services or a product
which the other party may supply at his discretion.” Id.

     A unilateral contract, by its very nature, is one where only one of
     the parties makes a promise; and the consideration for such a promise
     is not another promise, but performance. . . .

                                        -8-
     A unilateral contract becomes enforceable upon performance, and the
     promisee is then entitled to his full bargain.

Garrity v. A.I. Processors, 850 S.W.2d 413, 417 (Mo. App. 1993)(citing
Garret v. American Family Mutual Ins. Co., 520 S.W.2d 102 (Mo. App. 1974).

     Hyatt maintains the evidence was undisputed that Hyatt and Robb had
a “standing agreement” (evidenced by the Brooks letter) whereby Robb
offered a promise in exchange for performance by Hyatt.       Specifically,
Hyatt argues, Robb offered to pay Hyatt 16.67 percent of any contingent fee
derived from any acceptable case referred by Hyatt (the promise by Robb).
Hyatt argues it then accepted the offer and made the contract enforceable
by referring the Adams case to Robb (the performance by Hyatt).    Assuming
the parties did indeed enter into the standing agreement alleged by Hyatt,
Hyatt nevertheless distorts the terms of that agreement.
     Hyatt’s unilateral contract theory, presumes an offer by Robb and an
acceptance by performance at the “wish, will, or pleasure” of Hyatt.    The
Court, however, does not agree with Hyatt’s characterization of the Brooks
letter.   As the language of Mr. Brooks’ letter suggests, any referral by
Hyatt is an offer to co-counsel on the case being referred.      Once Hyatt
determines a case is appropriate for referral and so refers the case to
Robb for possible co-counseling, the parties have not, as Hyatt contends,
created an enforceable contract.   Rather, Robb in its discretion can either
accept or reject the offer.   Only in the event that Robb accepts Hyatt’s
offer to co-counsel, is Robb then bound to share a portion of any
contingent fee recovered in the case with Hyatt.     A review of the trial
transcript reveals no testimony supporting Hyatt’s position that Robb
approached Hyatt with an offer to share fees if Hyatt would only refer
personal injury or medical malpractice cases to Robb.    Moreover, although
the Brooks letter is

                                    -9-
some evidence of a referral agreement between the parties, it is not
dispositive of the issue, and it does not evidence a unilateral contract.

        As the trial court noted, Robb does not deny that the parties were
operating under some form of referral and fee sharing agreement.      Nor is
there much dispute that the Adams case was referred to Robb by Hyatt.   What
was in dispute at the close of all the evidence were the terms upon which
the Adams case was referred to Robb.      Both sides actively and thoroughly
litigated their cases at trial.     Hyatt put on evidence to support its
theory that the Adams case was acquired and referred to Robb without
incident pursuant to an existing unilateral agreement which Hyatt fully
performed and Robb partially performed by remitting 16.67 percent of the
settlement fees to Hyatt.   Robb, on the other hand, presented evidence to
support its theory that fees on referred cases were negotiated on a case-
by-case basis notwithstanding Mr. Brooks’ 1986 letter to Robb.    Robb also
presented evidence that Hyatt was fired by the client and that Hyatt
thereafter asked Robb to “bail” Hyatt out.     Robb presented evidence that
Hyatt intended to claim no fees from the Adams case and that the partial
payment to Hyatt was merely to protect Ms. Adams and Robb from potential
suit, and to preserve the ongoing business relationship between Hyatt and
Robb.

                                    IV.
        Given the conflicting evidence in this case we cannot say, as a
matter of law, that all of the evidence points in favor of Hyatt’s theory
of the case and is susceptible of no reasonable inference sustaining Robb’s
position. Smith, 38 F.3d at 1460.   The existence and terms of any referral
and fee sharing agreement were highly contested issues properly determined
by the jury.    Judgment

                                    -10-
as a matter of law was properly denied upon Hyatt’s position that it had
substantially performed its part of a unilateral contract and was therefore
entitled to the full benefit of its bargain.

     We have reviewed Hyatt’s remaining asserted points of error and find
they are either meritless, or moot insofar as they are premised upon the
assumption of a valid enforceable unilateral contract.    Affirmed.

     A true copy.

           Attest:

                 CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                   -11-