Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C.

179 A.3d 1093

MEYER, DARRAGH, BUCKLER, BEBENEK & ECK, P.L.L.C., Appellant

v.LAW FIRM OF MALONE MIDDLEMAN, P.C., and Candace A. Eazor and Richard Eazor, as Executors of the Estate of Richard A. Eazor, Appellees

Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C., Appellant

v.Law Firm of Malone Middleman, P.C. and Candace A. Eazor and Richard Eazor as Executors of the Estate of Richard A. Eazor, Appellees

No. 6 WAP 2017

No. 7 WAP 2017

Supreme Court of Pennsylvania.

Argued: October 17, 2017

Decided: March 6, 2018

Scott Alden Millhouse, Esq., Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C., for Appellant.

Ray Fredric Middleman, Esq., Michael Patrick Pest, Esq., Eckert Seamans Cherin & Mellott, LLC, for Appellee.

Candace A. Eazor, Pro Se.

Richard Eazor, Pro Se.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE DOUGHERTY

This is the sequel to our decision in Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C. 635 Pa. 427, 137 A.3d 1247 (2016). We previously held predecessor counsel—Meyer, Darragh, Buckler, Bebenek & Eck (Meyer Darragh)—was not entitled to breach of contract damages against successor counsel—the Law Firm of Malone Middleman, P.C. (Malone Middleman), where a contract regarding counsel fees did not exist between the two firms. Id. at 1258. Subsequently, we granted discretionary review nunc pro tunc to determine whether Meyer Darragh is entitled to damages in quantum meruit against Malone Middleman, where the trial court initially held such damages are recoverable, but the Superior Court reversed. For the reasons set forth below, we reverse the Superior Court and remand to the trial court for reinstatement of its award of damages in quantum meruit to Meyer Darragh against Malone Middleman.

This matter arose from a wrongful death lawsuit filed by the Estate of Richard A. Eazor (the Eazor Estate) deriving from a motor vehicle accident (the Eazor Litigation). The Eazor Estate was represented by Attorney William Weiler, Jr., who entered his appearance in the matter on March 24, 2005. See Proposed Stipulated Facts at ¶ 6. On December 1, 2005, Attorney Weiler became associated with Meyer Darragh. Attorney Weiler brought the Eazor Litigation with him and Meyer Darragh attorneys worked on the Eazor Litigation for a total of 71.25 hours over a nineteen-month period. See id. at ¶¶ 4, 39, 40 & Exhibit D to Proposed Stipulated Facts. In May 2007, Attorney Weiler resigned from Meyer Darragh. At the time of Attorney Weiler's resignation, Meyer Darragh understood it would continue as lead counsel in the Eazor Litigation along with Attorney Weiler at his new firm. Written correspondence at the time of Attorney Weiler's separation from Meyer Darragh indicated that Meyer Darragh would receive two-thirds of the attorneys' fees arising out of the Eazor Litigation, and Attorney Weiler would retain one-third of the fees. See Proposed Stipulated Facts at ¶ 18 and Exhibit 7 to Proposed Stipulated Facts.

Upon departing from Meyer Darragh, Attorney Weiler became affiliated with Malone Middleman. See Proposed Stipulated Facts at ¶ 22. In correspondence dated June 18, 2007, the Eazor Estate informed Meyer Darragh that it was moving its file to Malone Middleman and discharging Meyer Darragh as counsel. See Exhibit 14 to Proposed Stipulated Facts. Upon being retained by the Eazor Estate, Malone Middleman entered into a contingency fee agreement with the Estate, noting representation would be provided in exchange for 33.3% of the net proceeds of settlement if the matter settled before suit was filed, and 40% of the net proceeds of settlement recovered if settlement occurred after the filing of suit. See Exhibit C to the Proposed Stipulated Facts. Thereafter, Meyer Darragh notified Malone Middleman that pursuant to its agreement with Attorney Weiler, it was entitled to two-thirds of the contingent fee earned from the Eazor Litigation. In response, Malone Middleman denied Meyer Darragh was entitled to two-thirds of any contingent fee, and "at best, ha[d] a quantum meruit claim for actual time expended." See Exhibit 18 to Proposed Stipulated Facts. Malone Middleman eventually settled the Eazor Litigation for $235,000, and received $67,000 in attorneys' fees, which it apparently accepted as payment in full. See Proposed Stipulated Facts at ¶ 45.¹

Meyer Darragh demanded from Malone Middleman two-thirds of the counsel fees generated by the settlement of the Eazor Litigation pursuant to its agreement with Attorney Weiler or, in the alternative, payment based on quantum meruit in the amount of $17,673.93 for the work it performed and costs it incurred. See Proposed Stipulated Facts at ¶ 51. Malone Middleman did not pay any portion of the fees it collected to Meyer Darragh.

In September 2010, Meyer Darragh filed suit for breach of contract against Malone Middleman and for damages in quantum meruit against Malone Middleman and the Eazor Estate.² See Amended Complaint. After a bench trial on stipulated facts, the trial court entered a verdict in the amount of $14,721.39 in favor of Meyer Darragh on its quantum meruit claim. The court denied relief on the breach of contract claim.

Both Meyer Darragh and Malone Middleman filed post-trial motions, which were denied, and both parties appealed to the Superior Court. In its Pa.R.A.P. 1925(a) opinion, the trial court first addressed Meyer Darragh's quantum meruit claim, noting Pennsylvania's jurisprudence regarding predecessor counsel's entitlement to a portion of a recovered contingent fee under a theory of quantum meruit against successor counsel, while inconsistent, does not prohibit such relief. See Trial Ct. slip. op. at 5. The court opined Meyer Darragh's work in the Eazor Litigation conferred benefits to Malone Middleman, and those benefits materialized into a settlement and receipt of a contingent fee of $67,000. See id. at 10. The court further noted cases where quantum meruit damages were denied involved contracts regarding the payment of fees to all counsel, and the terms of those contracts controlled in those disputes. See id. at 10–11, citing Ruby v. Abington Mem. Hosp. , 50 A.3d 128 (Pa. 2012) (agreement by partner of predecessor counsel's firm who later joined successor counsel's firm was enforceable to provide share of contingent fee to predecessor firm because underlying litigation was "unfinished business" of partners of predecessor firm); Mager v. Bultena , 797 A.2d 948, 954 & n.9 (Pa. Super. 2002) (agreement between client and successor counsel that client would indemnify successor counsel against any claim by predecessor counsel for share of contingent fee was enforceable and precluded quantum meruit claim against successor counsel); Fowkes v. Shoemaker , 443 Pa.Super. 343, 661 A.2d 877 (1995) (existence of contingent fee agreement between successor counsel and clients requiring clients to be responsible for attorney fee owed to predecessor counsel precluded quantum meruit claim against successor counsel). The court reasoned Meyer Darragh could succeed under a claim of quantum meruit only if the employment agreement between Attorney Weiler and Meyer Darragh was unenforceable against Malone Middleman. The court concluded Malone Middleman was not bound by the Weiler/Meyer Darragh agreement, and held Meyer Darragh was entitled to its share of fees on a theory of quantum meruit instead. See id. at 11. The court rejected Meyer Darragh's claim the amount of damages should be increased to $17,673.93, holding its $14,721.39 verdict was the correct reflection of the itemized bill submitted by Meyer Darragh excluding charges related to the fee dispute. See id. at 14.

The Superior Court first addressed Malone Middleman's challenge to the quantum meruit award, reversed the trial court's ruling on the issue, and held a predecessor law firm or attorney who is dismissed as counsel cannot maintain a claim in quantum meruit against a successor law firm who ultimately settles the case. Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C. , 95 A.3d 893, 897 (Pa. Super. 2014)( Meyer Darragh I ). The Superior Court further noted any such quantum meruit claim lies against the client, not predecessor counsel. Id. at 897–98, quoting Fowkes , 661 A.2d at 879 (citing Styer v. Hugo , 422 Pa.Super. 262, 619 A.2d 347 (1993), for proposition initial attorney may have quantum meruit claim against client and not successor attorney who settled case, and Mager , 797 A.2d at 958–59, for proposition predecessor counsel had no quantum meruit claim against anyone other than former client). The Superior Court specifically stated "[u]ntil our supreme court holds otherwise, we will not recognize a claim for quantum meruit by a former attorney against a subsequent attorney." Id. at 898. However, the Superior Court further held the contract between Attorney Weiler and Meyer Darragh was enforceable against Malone Middleman, and although a claim in quantum meruit cannot succeed where a valid contract applies, Meyer Darragh was entitled to recover two-thirds of the contingent fee from the Eazor Litigation under the contract. See id. at 899.³

Malone Middleman filed a petition for allowance of appeal, questioning the Superior Court's award of breach of contract damages when no contract existed between itself and Meyer Darragh, and we granted review. Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C. , 631 Pa. 452,113 A.3d 277 (2015).⁴ We reversed the Superior Court and held no contract existed between Meyer Darragh as predecessor counsel and Malone Middleman as successor counsel, and as Malone Middleman was not a party to Weiler's contract with Meyer Darragh, Malone Middleman was not liable for a breach of contract. Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C. , 635 Pa. 427, 137 A.3d 1247, 1258 (2016) ( Meyer Darragh II ), citing Electron Energy Corp. v. Short ,...