Parnoff v. Yuille

LAURENCE PARNOFF v. DARCY YUILLE

AC 32545

COURT OF APPEALS OF THE STATE OF CONNECTICUT

Dated:Argued May 24, 2012

Officially released November 20, 2012

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(Appeal from Superior Court, judicial district of Fairfield, Hon. John P. Maiocco, Jr., judge trial referee [motion to intervene]; Tobin, J. [judgment].)

Thomas J. Weihing, with whom, on the brief, was John T. Bochanis, for the appellant-appellee (plaintiff).

Barbara L. Cox, for the appellee-appellant (named defendant).

Opinion

BISHOP, J. The issues raised in this appeal and cross appeal require us to assess whether an attorney who executes a contingency fee agreement with a client for payment of a fee greater than that prescribed by General Statutes § 52-251C,¹ commonly known as the "fee cap statute," may, nevertheless, recover against the client in a breach of contract action where the allowable damages are limited, by jury instruction, to the maximum allowed under the fee cap statute. The plaintiff, Laurence Parnoff, appeals from the judgment of the trial court rendered in part after a jury trial, in favor of the plaintiff as against the defendant Darcy Yuille.² On appeal, the plaintiff claims that: (1) § 52-251c does not apply to the claims he was retained to assert on behalf of the defendant; (2) the application of the limitations prescribed by § 52-251c to the facts of this case violates the federal constitution; (3) the contract could not be abrogated by the defendant after the plaintiff had fully performed; and (4) the court improperly failed to charge the jury on the issue of ratification of the contract by the defendant. In response, the defendant filed a cross appeal in which she claims that: (1) it was incorrect for the court to have submitted the contract claim to the jury because enforcement of the fee agreement at issue, even with an instruction limiting permissible damages, violates the public policy of § 52-251c; (2) in submitting the contract to the jury with an instruction limiting any damages to amounts allowable under the fee cap statute, the court impermissibly reformed the fee agreement under scrutiny; and (3) there was insufficient evidence to sustain the jury's award of punitive damages and prejudgment interest. We reverse the judgment of the trial court.

The jury could have reasonably found the following facts. On December 5, 1998, the plaintiff and the defendant entered into a contingent fee retainer agreement through which the defendant retained the plaintiff "to prosecute a claim for injuries and damages resulting" from Bridgeport Hospital's (hospital) allegedly bad faith handling of the defendant's workers' compensation claim. The fee agreement provided for a contingent fee of 40 percent "in place of an hourly charge of $240.00 for work performed." The percentage of recovery set forth in the fee agreement exceeds the cap set forth in the fee cap statute. By way of a complaint dated November 16, 1998, the plaintiff brought a claim against the hospital on behalf of the defendant.³ The claim contained three counts. The first count, for wrongful discharge, alleged, in essence, that the hospital had wrongfully terminated the employment of the defendant, a hospital nurse, as a retaliatory reaction to her workers' compensation claim and that, as a consequence, she had sustained financial damages and losses and also that she had sustained injury, including "theexacerbation of her medical condition . . . physical, mental and psychological stress . . . embarrassment and humiliation; and . . . emotional distress." The second count alleged that the hospital's conduct had been reckless and intentional and repeated the damages allegations of the first count. The third count set forth a claim based on the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., and also repeated the damages claims set forth in the first count. Subsequently, the parties to the action against the hospital agreed to submit the claims set forth in the first two counts to binding arbitration.⁴ The three person arbitration panel issued its decision on June 29, 2004, in which the panel found in favor of the hospital on count one of the complaint alleging wrongful discharge. As to the second count, alleging that the hospital had engaged in intentional and reckless conduct in response to Yuille's workers' compensation filing, the panel stated: "On Count Two of the complaint, we find in favor of [Yuille] and award damages in the amount of One Million Ninety Six Thousand Thirty Two and 93/ 100 ($1,096,032.93) Dollars." Thereafter, the plaintiff sent an invoice to the defendant in which he itemized his billing, indicating the gross settlement amount, allowable expenses, and an attorney's fee of $484,446.10 that represented 40 percent of the gross settlement proceeds. In response, the defendant returned the invoice to the plaintiff with a note as follows: "Dear Larry—The enclosed statement is acceptable with the exception of your legal fee. I authorize you to take $125,000 toward your legal fee. The remaining amount needs to be placed in an escrow account with both our names on the account until Laura Mooney's fee is paid and my objection to the 40 [percent] fee is resolved. Yours—Darcy Stevens Yuille."⁵

The record thereafter reflects an exchange of correspondence that did not bring a final resolution to the fee dispute.⁶ Having failed to reach an accord, the plaintiff, on March 9, 2005, filed a three count complaint against the defendant as follows. The first count sets forth a breach of contract claim based on the written fee agreement and the result achieved in binding arbitration. The second count, although captioned "unjust enrichment," sets forth a claim more properly viewed as one in quantum meruit, as it repeats the assertions of the first count and adds to them the statement that "[t]he reasonable value of the Plaintiff's services was $438,413.17."⁷ The third count, captioned "Bad Faith," repeats the essential allegations of the first count and adds to them the claim that the defendant's conduct was "intentional, willful, in bad faith and in reckless disregard of the injury, financial damage and emotional distress to the Plaintiff . . . ." Through this action, the plaintiff claimed money damages, attorney's fees, punitive damages, equitable relief, interest and costs. In response, the defendant filed an answer and two specialdefenses to all counts. In her first special defense, she alleged that the fee agreement was unenforceable as a matter of law because it violated the prescriptions of § 52-251c. In her second special defense, she alleged that the fee sought by the plaintiff was excessive and unconscionable. The plaintiff replied to the special defenses with a general denial of their allegations. Notably, the plaintiff did not allege, by way of reply, that the defendant had waived the protections of § 52-521c or that she had ratified the contract by her conduct subsequent to entering into it.

Following the evidentiary portion of the trial and argument by counsel, the court instructed the jury, inter alia, on the laws of contract and unjust enrichment. With respect to the contract claims set forth in the first and third counts, the court provided a standard instruction regarding the law of contract to include a discussion, generally, of the law relating to the existence and breach of contract and an overview of the law of damages for a breach of contract. With respect to the third count, based on an intentional or reckless breach, the court provided a general instruction on the law of punitive damages. Following its charge on the plaintiff's complaint, the court discussed the claim set forth in the defendant's first special defense that the contract violated the provisions of § 52-251c. In this part of its instruction, the court recited the fee limiting provisions of the statute. The court also instructed the jurors that the provisions of § 52-251c would be applicable in the event that they find that the plaintiff and the defendant had entered into a contract that was later breached by the defendant. In pertinent part, the court stated: "The action which the plaintiff brought on behalf of defendant Yuille included claims covered by the statute. Accordingly, the provisions of the statute apply to the contingent fee agreement between the plaintiff and defendant Yuille." Immediately thereafter, the court instructed the jury on the law of waiver, informing the jury that the law contemplated that a party could waive the protections of the fee cap statute and that,...