Court Opinion

ID: 2747601
Source: CourtListenerOpinion
Date Created: 2014-11-03 17:04:28.654015+00
Date Added: 2024-06-11T12:45:44.684275
License: Public Domain

STATE OF MINNESOTA
                                  IN COURT OF APPEALS
                                        A13-2225

                  In Re Petition for Distribution of Attorney’s Fees between
                    Stowman Law Firm, P.A., and Lori Peterson Law Firm,
                   formerly doing business as Lori Peterson and Associates.

                                   Filed November 3, 2014
                                          Affirmed
                                         Kirk, Judge

                                Otter Tail County District Court
                                    File No. 56-CV-12-167

David L. Stowman, Stowman Law Firm, P.A., Detroit Lakes, Minnesota (for appellant
Stowman Law Firm, P.A.)

Zenas Baer, Zenas Baer Law Office, Hawley, Minnesota (for respondent Lori Peterson
Law Firm)

         Considered and decided by Kirk, Presiding Judge; Hudson, Judge; and Stauber,

Judge.

                                        SYLLABUS

         A client’s refusal to accept a settlement offer, on its own, is not a justifiable reason

for an attorney to withdraw from representation in a contingent-fee case; thus, an attorney

who withdraws solely for that reason is not entitled to recover attorney fees on the basis

of quantum meruit.
                                      OPINION

KIRK, Judge

       Appellant Stowman Law Firm, P.A., challenges the district court’s denial of its

petition for distribution of contingent attorney fees paid to respondent Lori Peterson Law

Firm from a settlement that Lori Peterson Law Firm obtained for Stowman Law Firm’s

former client. Stowman Law Firm argues that the district court: (1) erred by determining

that it was not entitled to quantum meruit recovery of a portion of the contingent fee

because it did not establish a “good cause” basis for withdrawal from representation;

(2) was bound at trial by the law cited in the order denying summary judgment; and

(3) abused its discretion by denying its motion for a new trial. We affirm.

                                         FACTS

       In July 2007, Stowman Law Firm entered into a contingent-fee agreement with

C.D. to represent her in a medical-malpractice claim against her former physician. For

over two years, attorney Jeffrey Stowman investigated and developed evidence to support

a malpractice claim, but he did not file a complaint or conduct any formal discovery.

Stowman incurred approximately $8,272.69 in out-of-pocket expenses while he

developed the claim.

       In December 2009, Stowman represented C.D. in mediation, but the parties did not

reach an agreement. The next day, the mediator notified Stowman that C.D.’s former

physician was willing to offer C.D. $100,000, provided that her acceptance of that

amount would settle the claim. Stowman advised C.D. to accept the offer, but C.D.

declined to do so. On January 4, 2010, Stowman notified C.D. that Stowman Law Firm

                                            2
was withdrawing from her representation. In a letter to C.D. dated January 5, Stowman

explained that he did not think he could obtain a better result than the $100,000

settlement offer if he continued to represent her.

       In May 2010, Lori Peterson Law Firm assumed representation of C.D. After a

second mediation, attorney Lori Peterson negotiated a settlement of $200,000, which

included a 40% attorney fee. In February 2011, C.D., Peterson, and Stowman Law Firm

signed a distribution agreement to place 40% of the settlement proceeds into Lori

Peterson Law Firm’s trust account until they resolved the dispute over the proceeds.

       The parties did not resolve the dispute, and Stowman Law Firm petitioned the

district court for distribution of the contingent fee in January 2012. Lori Peterson Law

Firm moved for summary judgment. The district court denied the motion, finding that

there were genuine issues of material fact.

       In April 2013, the district court held a bifurcated court trial that was limited to the

issue of whether Stowman Law Firm rightfully withdrew from representation of C.D. so

as to maintain its claim for attorney fees.          Following the trial, the district court

determined that Stowman Law Firm “failed to establish a ‘good cause’ basis for

withdrawal from representation to support a quantum [meruit] recovery of a portion of

the contingent attorney fee received by [Lori Peterson Law Firm].” The district court

awarded Stowman Law Firm $8,272.69 in expenses.

       Stowman Law Firm moved for amended findings, judgment notwithstanding the

findings and conclusions, or a new trial. After a hearing, the district court granted the

motion for amended findings in part, but denied the other motions. This appeal follows.

                                              3
                                        ISSUES

      I.     Did the district court err by determining that Stowman Law Firm was not

entitled to quantum meruit recovery of a portion of the contingent fee?

      II.    Was the district court bound at trial by the law cited in its order denying

summary judgment?

      III.   Did the district court abuse its discretion by denying Stowman Law Firm’s

motion for a new trial?

                                      ANALYSIS

      On appeal from judgment following a court trial, this court reviews whether the

district court’s findings were clearly erroneous and whether the district court erred as a

matter of law. Birch Publ’ns, Inc. v. RMZ of St. Cloud, Inc., 683 N.W.2d 869, 872

(Minn. App. 2004), review denied (Minn. Oct. 19, 2004). A finding is clearly erroneous

if we are “left with the definite and firm conviction that a mistake has been made.” Minn.

Pub. Interest Research Grp. v. White Bear Rod & Gun Club, 257 N.W.2d 762, 783

(Minn. 1977). We review issues of law de novo. Frost-Benco Elec. Ass’n v. Minn. Pub.

Utils. Comm’n, 358 N.W.2d 639, 642 (Minn. 1984).

I.    The district court did not err by determining that Stowman Law Firm was
      not entitled to quantum meruit recovery of a portion of the contingent fee.

      Stowman Law Firm argues that the district court erred by determining that it was

not entitled to quantum meruit recovery of a portion of the contingent attorney fee for

representing C.D. because it did not establish a “good cause” basis for its withdrawal of

representation. In reaching that conclusion, the district court considered two Minnesota

                                            4
cases. See Ashford v. Interstate Trucking Corp. of Am., 524 N.W.2d 500 (Minn. App.

1994); Stall v. First Nat’l Bank of Buhl, 375 N.W.2d 841 (Minn. App. 1985). But

because the district court determined that neither case was directly on point, it looked to

several foreign cases for guidance. Relying on those foreign cases, the district court

determined that Stowman Law Firm could not recover attorney fees on the basis of

quantum meruit. On appeal, Stowman Law Firm argues that the district court erred by

applying the standard of law outlined in the foreign cases rather than the standard

required under Minnesota law.

       A.     Minnesota caselaw.

       In Stall, an attorney represented a bank in two collection matters on a contingent-

fee basis. 375 N.W.2d at 843. The attorney had a dispute with the bank about his

contingent fee in one of the matters. Id. at 843-44. Because of that dispute, the attorney

decided that he could not continue to represent the bank in the other matter, and he

submitted his bill to the bank on an hourly basis for that matter. Id. at 844. The attorney

brought an action against the bank to recover the fees. Id. The district court found that

the attorney was not entitled to any fees for either matter, in part because of the attorney’s

decision that he could not represent the bank in the second matter. Id. at 844-45.

       On appeal, this court concluded that the attorney’s withdrawal from representing

the bank in the second case was not “unjustified,” and thus he could maintain an action in

quantum meruit. Id. at 846. In reaching that conclusion, this court stated that “[a]n

attorney on a contingent fee arrangement who is discharged by his client is entitled to

compensation for the reasonable value of his services, based on quantum meruit, not on

                                              5
the contingent fee contract.” Id. at 845. This court further stated that “[a]lthough no

Minnesota case has decided the issue, the same rationale applies when the attorney

rightfully withdraws from the representation.” Id. at 846. This court cited two foreign

cases in support of that statement: Ambrose v. Detroit Edison Co., 237 N.W.2d 520

(Mich. Ct. App. 1975), and In re Spellman, 164 N.Y.S.2d 182 (N.Y. App. Div. 1957). Id.

       In Ambrose, the Michigan Court of Appeals held that the district court properly

imposed an attorney’s lien because it concluded that the client’s “total failure to

cooperate” was “sufficient ‘good cause’ to allow an attorney to discontinue representing

his client and to recover for his services.” 237 N.W.2d at 522-23. The court of appeals

stated that the client’s “total failure to cooperate” included, among other things, “a total

lack of communication” between the client and his attorneys, the client’s refusal to elect

payment options despite his attorneys’ advice that he was legally obligated to do so, and

the client’s refusal “to accept a settlement offer, which embodied virtually all of the relief

he demanded in his complaint, without stating coherent reasons for doing so.” Id. at 523.

In Spellman, which was an attorney disciplinary proceeding, the New York Supreme

Court, Appellate Division, considered several incidents involving the attorney who was

the subject of the proceeding. 164 N.Y.S.2d at 183-84. In one of the incidents, the court

noted that the attorney could “have asserted a right to withdraw from the litigation

because of a claimed lack of co-operation. In the event of such a withdrawal or in the

event of abandonment of the action by his clients, he might then have asserted a right to

compensation on the basis of quantum meruit.” Id. at 184 (emphasis omitted).

                                              6
       In Ashford, the second Minnesota case that the district court discussed, a law firm

withdrew from representing a client after repeated failed attempts to get the client to sign

forms and warnings to the client that failure to sign would result in withdrawal. 524
N.W.2d at 502. The law firm filed an attorney’s lien against the client. Id. The client

hired another law firm to pursue her claim and moved to discharge the attorney’s lien. Id.

The district court denied the motion because it found that the first law firm “had

justifiably withdrawn from representation, and therefore had the right to impose a lien.”

Id. After the client’s claim settled, the district court held a hearing to determine the

amount of the attorney’s lien. Id. The district court awarded the first law firm its

expenses and, based on the theory of quantum meruit, it awarded each firm half of the

one-third contingency fee. Id.

       On appeal, this court relied on Stall, stating that “[a]n attorney continues to be

entitled to compensation for the reasonable value of his or her services after the attorney

rightfully withdraws from representation.” Id. This court concluded that evidence in the

record supported the district court’s finding that the law firm’s withdrawal was justified

and “the attorney-client relationship had broken down,” but it did not discuss what the

evidence in the record included. Id. This court concluded that the district court did not

err by denying the client’s motion to discharge the attorney’s lien. Id.

       Although Stall held that an attorney who is hired on a contingent-fee basis is

entitled to recover attorney fees based on the theory of quantum meruit if he “rightfully”

or “justifiably” withdraws from representation, 375 N.W.2d at 846, and Ashford followed

that holding, neither case describes what constitutes “rightful” or “justifiable”

                                             7
withdrawal. And there are no other Minnesota cases that elaborate on what constitutes

“rightful” or “justifiable” withdrawal. Thus, it was not improper for the district court to

look to foreign caselaw for guidance. See Mahowald v. Minn. Gas Co., 344 N.W.2d 856,

861 (Minn. 1984) (stating that foreign caselaw is not binding in Minnesota, but has

persuasive value).

       B.     Foreign caselaw.

       In general, many courts throughout the United States have concluded that an

attorney who withdraws from representation of a client in a contingent-fee case for a

“justifiable” reason is entitled to compensation for services rendered. See George L.

Blum, Annotation, Circumstances Under Which Attorney Retains Right to Compensation

Notwithstanding Voluntary Withdrawal From Case, 53 A.L.R. 5th 287, 303-04 (1997).

But those courts have differed regarding what constitutes a “justifiable” reason based on

each court’s analysis of the facts and circumstances of each case. See id.; see also

Augustson v. Linea Aerea Nacional-Chile S.A., 76 F.3d 658, 663 (5th Cir. 1996)

(“Whether just cause exists depends on the facts and circumstances of each case.”).

       In cases where an attorney alleges that withdrawal was due to the client’s failure to

cooperate, courts have examined the specific facts that allegedly establish a failure to

cooperate before determining whether withdrawal was justified. See Joseph Brenner

Assocs., Inc. v. Starmaker Entm’t, Inc., 82 F.3d 55, 57 (2d Cir. 1996) (concluding that

attorney was no longer able to represent client effectively and request to withdraw was

appropriate where client insisted on having son participate in the case over attorney’s

objections, client’s son hired an attorney to represent his interests and client’s attorney

                                             8
refused to work with son’s attorney, and client stopped paying attorney); Ausler v.

Ramsey, 868 P.2d 877, 881-82 (Wash. Ct. App. 1994) (concluding that attorney was not

pushed out of the case due to client’s failure to cooperate when attorney alleged only one

instance of client not replying to a letter and record demonstrated that attorney and client

disagreed over value of suit and whether it should be arbitrated or tried).

       Several courts have held that a complete breakdown of the attorney-client

relationship justified an attorney’s withdrawal.     See, e.g., Leoris & Cohen, P.C. v.

McNiece, 589 N.E.2d 1060, 1064-65 (Ill. App. Ct. 1992) (reversing grant of summary

judgment to the defendants and remanding for determination of whether the attorney-

client relationship suffered a complete breakdown); Ambrose, 237 N.W.2d at 522-23

(concluding that evidence in the record supported the trial court’s finding that the

attorney had good cause to withdraw where the client exhibited a “total failure to

cooperate”).

       In numerous other cases, courts have concluded that a client’s failure to accept a

settlement offer, on its own, did not justify an attorney’s withdrawal. See Augustson, 76
F.3d at 663 (“Both parties agree, and the cases are in almost universal agreement, that

failure of the client to accept a settlement offer does not constitute just cause for a

withdrawing attorney to collect fees.”); Hardison v. Weinshel, 450 F. Supp. 721, 722-23

(E.D. Wis. 1978) (concluding that attorney’s withdrawal after client refused settlement

offer was unjustifiable); In re Estate of Falco, 188 Cal. App. 3d 1004, 1018 (Cal. Ct.

App. 1987) (concluding that because “[a] client’s right to reject settlement is absolute,”

his or her “exercise of [that] right cannot constitute cause for the purpose of awarding

                                             9
attorneys’ fees”); Ambrose, 237 N.W.2d at 523-24 (“The refusal to settle by a client can

never be sufficient grounds to constitute ‘good cause’ for an attorney to withdraw, but, as

here, may be so irrational as to constitute one factor in evaluating his cooperation with his

attorney.” (emphasis omitted)); Ausler, 868 P.2d at 881 (stating that a client’s refusal to

settle does not justify an attorney’s withdrawal from a contingency-fee case).

       C.      Application to this case.

       Stowman Law Firm argues that it had good cause to withdraw from C.D.’s

representation because there was a complete breakdown of the attorney-client

relationship. Stowman Law Firm argues that C.D. was a difficult client and did not

follow Stowman’s legal advice. Among other things, Stowman Law Firm claims she

refused to settle or follow Stowman’s negotiation recommendations. Stowman Law Firm

further contends that the fact it withdrew from representation in accordance with the

Minnesota Rules of Professional Conduct establishes that its withdrawal was rightful or

justifiable.

       The district court found that Stowman Law Firm withdrew from C.D.’s

representation because of C.D.’s refusal to accept the $100,000 settlement offer and the

firm’s belief that it could not obtain a better recovery at trial.       The district court

concluded that Stowman Law Firm’s withdrawal on that basis was not justified, and thus

it could not recover under the theory of quantum meruit. The district court made several

findings about the relationship between Stowman and C.D., including that C.D. “at times

proved to be difficult,” did not always understand legal and evidentiary issues, and

struggled to accept Stowman’s recommendations about the valuation of her claim. But

                                             10
the district court also found that C.D. did not refuse Stowman’s “reasonable and

necessary requests” or demand that Stowman engage in improper or unethical behavior,

and C.D. “had confidence in . . . Stowman’s ability and his loyalty to her.” The district

court specifically rejected Stowman Law Firm’s claims that its withdrawal was based on

C.D.’s difficulty as a client and her insistence that Stowman Law Firm take unethical

action because it found that the additional allegations were not supported by the evidence.

       The record supports the district court’s finding that Stowman Law Firm withdrew

because C.D. refused to accept the settlement offer. In Stowman’s withdrawal letter to

C.D., he specifically stated that he was withdrawing from her representation because he

did not believe he could obtain a better result than the $100,000 offer. Stowman testified

at trial about difficulties in his relationship with C.D. during her representation, including

that: they disagreed over the amount of damages C.D. would be willing to settle for; their

relationship deteriorated during the representation; he did not feel that C.D. trusted him;

and C.D. did not immediately produce her medical records when he asked her to do so.1

But C.D. testified that Stowman told her he was withdrawing from representation because

she was unwilling to settle the case. She also testified that she trusted Stowman and, at

the time of the mediation, she believed that she and Stowman were in agreement about

the amount of damages she was requesting. C.D.’s sister, who was present during many

of C.D.’s meetings with Stowman, testified that she was satisfied with Stowman’s

representation of C.D. and C.D. and Stowman were in agreement about damages at the

1
  We also note that Stowman’s counsel, who is also an attorney at Stowman Law Firm,
notified the district court during the trial that C.D. had recently filed a complaint against
him and Stowman with the Minnesota Lawyers Professional Responsibility Board.

                                             11
time of mediation.      And Stowman acknowledged during his testimony that his

relationship with C.D. was always “cordial and polite.” On this record, we cannot

conclude that the district court’s finding was clearly erroneous.

       We recognize that it may be difficult for an attorney to set forth all of the reasons

for his or her decision to withdraw from representation of a client in a withdrawal letter to

the client. We particularly note the difficulty of ensuring a complete record of the

reasons for withdrawal in a case like this one where the attorney cannot establish a record

in district court for his withdrawal because a complaint was never filed. We therefore

emphasize the importance of an attorney setting forth all of the reasons for withdrawal in

his or her withdrawal letter to support entitlement to quantum meruit recovery. To do so,

an attorney may need to be very candid in describing any issues with the client.

       Because the district court’s finding that Stowman Law Firm withdrew because

C.D. rejected the settlement offer is not clearly erroneous, we conclude that Stowman

Law Firm’s reason for withdrawal was not justifiable and, thus, it is not entitled to

receive attorney fees based on the theory of quantum meruit. We are persuaded by the

numerous cases from foreign jurisdictions that provide that refusal to settle is not a

justifiable ground for an attorney to withdraw from a contingency-fee case because it is

generally the client’s right to reject settlement. See Augustson, 76 F.3d at 663; Hardison,
450 F. Supp. at 722-23; Falco, 188 Cal. App. 3d at 1018; Ambrose, 237 N.W.2d at 523-

24; Ausler, 868 P.2d at 881. This viewpoint is consistent with Minn. R. Prof. Conduct

1.2(a), which specifically provides that “[a] lawyer shall abide by a client’s decision

whether to settle a matter.”

                                             12
       Further, even if the record supported Stowman Law Firm’s claim that there were

several other factors leading to its withdrawal from C.D.’s representation, we would

conclude that those factors do not rise to the level of good cause to withdraw. As

previously discussed, several foreign jurisdictions have concluded that a complete

breakdown of the attorney-client relationship justified an attorney’s withdrawal from a

contingency-fee case. See Ambrose, 237 N.W.2d at 523; Leoris & Cohen, 589 N.E.2d at

1064-65. In fact, this court in Stall relied on Ambrose, in which the Michigan Court of

Appeals concluded that the client’s “total failure to cooperate” was “sufficient ‘good

cause’ to allow an attorney to discontinue representing his client and to recover for his

services.” Stall, 375 N.W.2d at 846; Ambrose, 237 N.W.2d at 523. And, in Ashford, this

court concluded that evidence in the record supported the district court’s finding that “the

attorney-client relationship had broken down.” 524 N.W.2d at 502. Here, there is no

evidence in the record that C.D.’s relationship with Stowman Law Firm had completely

broken down.

       Finally, we are unpersuaded by Stowman Law Firm’s argument that its withdrawal

is justified because it withdrew in accordance with the rules of professional conduct.

This court held in Ashford that evidence in the record supported the district court’s

finding that the attorney’s withdrawal was justified because he satisfied several

paragraphs of Minn. R. Prof. Conduct 1.16(b), and because it was “clear that the

attorney-client relationship had broken down.” 524 N.W.2d at 502. But this court did

not explain what specific conduct met those requirements and, importantly, this court

                                            13
never stated that the attorney’s withdrawal was justified because it met those

requirements. See id.

       Augustson, a Texas case decided by the Fifth Circuit, provides some guidance.

See 76 F.3d at 663-65. In that case, the court rejected the law firm’s argument that cause

to withdraw with permission under Tex. Disciplinary R. Prof. Conduct 1.15 necessarily

implies cause to receive compensation. Id. The court observed that the objectives of a

hearing on cause to withdraw under the rules of professional conduct are different from

the objectives of a hearing regarding attorney fees, and, therefore, there are circumstances

where a court could allow an attorney to withdraw but not to recover a fee. Id. at 664.

The language of the Texas rule at issue in Augustson and the Minnesota rule under which

Stowman Law Firm withdrew are similar. Tex. Disciplinary R. Prof. Conduct 1.15(b)(1)

provides that “a lawyer shall not withdraw from representing a client unless . . .

withdrawal can be accomplished without material adverse effect on the interests of the

client.” Minn. R. Prof. Conduct 1.16(b)(1) provides that “a lawyer may withdraw from

representing a client if . . . withdrawal can be accomplished without material adverse

effect on the interests of the client.” Because we are persuaded by the Fifth Circuit’s

reasoning in Augustson, we conclude that Stowman Law Firm is not entitled to attorney

fees based on the theory of quantum meruit simply because its withdrawal was

permissible under Minn. R. Prof. Conduct 1.16(b).

       Clearly, the Stowman Law Firm invested a significant amount of time and effort in

developing C.D.’s claim, and we acknowledge that the result is likely inequitable. We

again emphasize that when withdrawing from representation in a contingent-fee case, an

                                            14
attorney must make a record with the court or in writing to the client that clearly sets

forth the reasons for withdrawal. We are bound by the district court’s finding that

Stowman Law Firm withdrew from C.D.’s representation due to C.D.’s refusal to accept

the settlement offer because it is not clearly erroneous, and we find no error in the district

court’s application of the law. Accordingly, we conclude that the district court did not err

by determining that Stowman Law Firm was not entitled to quantum meruit recovery of a

portion of the contingent fee.

II.    The district court was not bound at trial by the law cited in its order denying
       summary judgment.

       Stowman Law Firm argues that the district court erred by failing to follow the law

it set forth in a pretrial order. Under Minn. R. Civ. P. 16.05, “[a]fter any conference held

pursuant to this rule, an order shall be entered reciting the action taken. This order shall

control the subsequent course of the action and shall be modified only to prevent manifest

injustice.” Minn. R. Civ. P. 16.03 describes the subjects that the parties may address at

the pretrial conference, including “the formulation and simplification of the issues,

including the elimination of frivolous claims or defenses,” “the control and scheduling of

discovery,” “settlement,” and “the disposition of pending motions.”

       Stowman Law Firm first argues that the district court erred by sua sponte changing

the standard of law which it applied to determine whether Stowman Law Firm’s

withdrawal was justified. We disagree. The district court issued the pretrial order that

Stowman Law Firm references following a hearing addressing the motions that the

parties raised prior to the trial, including Lori Peterson Law Firm’s motion for summary

                                             15
judgment and Stowman Law Firm’s motions in limine. In the order, the district court

denied Lori Peterson Law Firm’s motion for summary judgment because it determined

that there were genuine issues of material fact for trial. The district court first found that

there was a genuine issue of material fact as to whether Stowman Law Firm rightfully

withdrew from representing C.D. In reaching that decision, the district court considered

this court’s decision in Ashford. The district court also found that, even if Stowman Law

Firm did not rightfully withdraw from representation, a genuine issue of material fact

existed as to whether the distribution agreement that C.D., Peterson, and Stowman Law

Firm entered into constituted an acceptance of rightful withdrawal. Finally, the district

court determined that, if Stowman Law Firm was entitled to quantum meruit recovery of

attorney fees, there would be a genuine issue of material fact regarding how much it was

entitled to recover. The district court’s order makes clear that it was addressing the

motions it had before it, not setting forth the standard of law to be applied at the trial.

       Stowman Law Firm also argues that the district court erred when it reversed its

pretrial ruling that the distribution agreement that C.D., Peterson, and Stowman Law

Firm signed was unambiguous. In its order denying summary judgment, the district court

stated that “the language of the distribution agreement is ambiguous and the terms of

which are genuine issues of material fact that are appropriate for determination at trial.”

In its order following the trial, the district court found that the agreement that C.D.,

Peterson, and Stowman Law Firm signed “contains no acknowledgement or concession

by Lori Peterson that the Stowman Law Firm, P.A. is entitled to any fee, nor does it

contain a waiver of fee by Jeffrey Stowman.” The district court further found that “[t]he

                                              16
agreement clearly provides that the issue of entitlement to attorney’s fees between

[Stowman Law Firm] and [Lori Peterson Law Firm] is reserved. In that regard the

agreement is unambiguous.”

       In its order denying summary judgment, the district court considered only whether

there were genuine issues of material fact for trial. The district court did not make any

final conclusions about the distribution agreement or any findings of fact. Instead, the

district court simply determined that the case should be set for trial. The district court did

not err by reaching a different conclusion about the distribution agreement after hearing

testimony and reviewing all of the evidence in the record.

III.   The district court did not abuse its discretion by denying Stowman Law
       Firm’s motion for a new trial.

       The district court may grant a new trial based on “[m]aterial evidence newly

discovered, which with reasonable diligence could not have been found and produced at

the trial.” Minn. R. Civ. P. 59.01. “The decision to grant a new trial generally lies within

the sound discretion of the district court and will not be disturbed absent a clear abuse of

that discretion.” Dostal v. Curran, 679 N.W.2d 192, 194 (Minn. App. 2004), review

denied (Minn. July 20, 2004). If the district court decides a motion for a new trial

because of an error of law, this court applies a de novo standard of review. Id.

       Stowman Law Firm argues that the district court abused its discretion by denying

its motion for a new trial based on newly discovered material. It contends that it did not

learn of the existence of the written settlement agreement until after trial, and the

                                             17
agreement could not have been found earlier because Lori Peterson Law Firm did not

produce it.

       The district court denied Stowman Law Firm’s motion for a new trial, stating that

it had “no reason to believe that the actual written settlement entered between the client

and the doctor is of relevance to the allocation of attorney fees.” The district court also

found that Stowman Law Firm should have known it existed and that the agreement

could have been subject to discovery or a motion to compel discovery.

       It is unclear how the written settlement agreement is relevant to whether or not

Stowman Law Firm is entitled to recover attorney fees based on the theory of quantum

meruit. The issues in this case focus on the events that led to Stowman Law Firm’s

decision to withdraw from C.D.’s representation, and the settlement in this case was not

reached until several months after Stowman Law Firm withdrew from representation.

Moreover, it is uncontested that Stowman Law Firm knew that C.D. reached a settlement

with her former physician, and therefore it could have discovered with reasonable

diligence that the parties signed a written settlement agreement. Therefore, we conclude

that the district court did not abuse its discretion by denying Stowman Law Firm’s

motion for a new trial.

                                     DECISION

       Because we conclude that the district court did not err by determining that

Stowman Law Firm was not entitled to quantum meruit recovery of a portion of the

contingent fee, was not bound at trial by the law cited in its order denying summary

                                            18
judgment, and did not abuse its discretion by denying Stowman Law Firm’s motion for a

new trial, we affirm the judgment.

      Affirmed.

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