Wirth v. Wade

JERZY WIRTH, Cross-claim Plaintiff, v. STEPHEN WADE, et al., Cross-claim Defendants

No. 2:12-cv-296-JHR

UNITED STATES DISTRICT COURT DISTRICT OF MAINE

Dated: October 28, 2013

FINDINGS OF FACT AND CONCLUSIONS OF LAW¹

The remaining parties in this interpleader action, Jerzy Wirth and Stephen Wade and his law firm, Skelton Taintor & Abbott, each claim the entire amount of $205,233.27 that has been deposited with the court. Trial was held before me on August 23, 2013, and the parties submitted proposed findings of fact and conclusions of law simultaneously on September 20, 2013. ECF Nos. 86 & 87. A joint stipulation of facts was filed on August 9, 2013, in advance of trial. ECF No. 78. I now make the following findings of fact and conclusions of law.

I. Findings of Fact

1. Stephen B. Wade, Esq., and the law firm of Skelton Taintor & Abbott represented Geoff Hasler and MyFreeMedicine.com, on a contingency fee basis, in a lawsuit seeking damages of up to $25,000,000.00, involving claims under civil RICO and breach of contract, filed in this court on October 23, 2008, and assigned the docket number 2:08-cv-362-JAW (the "MFM case"). Joint Stipulation of Facts ("Joint Stipulation") (ECF No. 78) ¶ 1.2. The written fee agreement between Geoff Hasler and Skelton Taintor & Abbott, which was signed on or around January 30, 2008, included the following language:

Skelton, Taintor & Abbott will be entitled to part of proceeds of any settlement o[f] action to pay the lawyer's fees and expenses and has an attorney's lien to enforce this agreement.

Exhibit 64 ¶ 3.

3. Geoff Hasler sought funding in connection with this litigation and contracted with Airborn/Jerzy Wirth for such funding. Joint Stipulation ¶ 2.

4. Jerzy Wirth and Airborn LLC recorded in Maine, on January 16, 2013, a UCC-1 filing against the $205,233.27 deposited in this court in this interpleader action based on a promissory note and agreement dated August 28, 2009. Id. ¶ 3.

5. During the term of Stephen B. Wade's representation of Geoff Hasler, Jerzy Wirth advanced Geoff Hasler approximately $93,000.00. Id. ¶ 4.

6. With the permission of Geoff Hasler, Stephen B. Wade participated in a telephone conference for approximately 45 minutes with Jerzy Wirth and Mr. Wirth's associate, Joseph Funk, before Jerzy Wirth and Geoff Hasler entered into the funding agreement. Id. ¶ 6.

7. On or about August 13, 2010, in the MFM case, this court dismissed the RICO counts, leaving active only the breach of contract claim. Id. ¶ 7.

8. In January 2011, Stephen Wade determined that the Maine Rules of Professional Conduct required that he and his law firm withdraw from representing Geoff Hasler and MyFreeMedicine.com. Testimony of Stephen B. Wade. On January 25, 2011, Stephen B. Wade and Skelton Taintor & Abbott filed an ex parte motion to withdraw as counsel for Geoff Hasler and MyFreeMedicine.com in the MFM case, which was granted on January 26, 2011, following a telephone conference, Joint Stipulation ¶ 8, and over Geoff Hasler's objection. Testimony ofStephen B. Wade. Jerzy Wirth did not ask Geoff Hasler to waive the attorney-client privilege to allow Wirth to discuss with Stephen Wade the reasons for his withdrawal. Testimony of Jerzy Wirth.

9. Geoff Hasler and Stephen Wade entered into an agreement, confirmed by letter dated January 14, 2011, that stated, in relevant part, that new prospective counsel Joseph Groff would agree to honor the attorney fee lien of Stephen Wade and his law firm, in an amount based on the fair value of the services that they had already provided. Exhibit 32.

10. Geoff Hasler and MyFreeMedicine.com then retained Joseph Groff, Esq., of Jensen Baird Gardner & Henry. Joint Stipulation ¶ 9.

11. Joseph Groff, Esq., began representing Geoff Hasler and MyFreeMedicine.com, on an hourly basis, in January of 2011, and entered an appearance in the MFM case on February 23, 2011. Id. ¶¶ 10-11. Joseph Groff signed an "Acknowledgment and Agreement" related to the funding agreement between Geoff Hasler and Jerzy Wirth which included Joseph Groff's agreement to "pay Airborn all due monies from any settlement or verdict of the above-referenced Case according to the terms of this same Agreement, subject to a lien by Stephen P. [sic] Wade, prior Attorney for this case representing Geoff H. Hasler and MyFreeMedicine.com LLC." Exhibit 12.

12. Over a period of approximately one year, Jerzy Wirth paid invoices issued by Joseph Groff and his law firm in the amount of approximately $157,000.00. Joint Stipulations ¶ 12.

13. Geoff Hasler and Jerzy Wirth maintained their funding agreement through amendments. Id. The promissory note between Jerzy Wirth and Geoff Hasler provided that the loan would be repaid "after first paying a previously agreed upon 35% (Thirty Five per cent) of said settlementto Plaintiff's Attorney, together with any other contracted miscellaneous fees to the Attorney(s)[.]" Exhibit 1 at 1.

14. An amendment to the funding agreement dated November 13, 2010, states, in relevant part: "[I]f the Plaintiffs pay their attorney, currently Steve Wade and his Law Firm, the existing 35% commission" certain other steps will take place. Exhibit 10.

15. In December 2011, the MFM case was settled for $430,000.00. Joint Stipulation ¶ 13. The stipulation of dismissal was filed on January 17, 2012. Id. Settlement negotiations in the MFM case were going on during the time Stephen Wade moved to withdraw. Testimony of Jerzy Wirth.

16. Attorney Groff escrowed $205,233.27 of the settlement, based on the claim of Stephen Wade and his law firm for attorney fees. Joint Stipulation ¶ 14. At the time of Joseph Groff's entry into the MFM case, he and Stephen Wade discussed the possibility that the value of the services that Stephen Wade had provided would diminish the longer the case remained unresolved. Testimony of Joseph Groff.

17. In February 2012, Jerzy Wirth authorized Jensen Baird Gardner & Henry to release $180,000.00 from the settlement monies to Geoff Hasler, who represented that he would use the money to purchase certain stock options. Testimony of Jerzy Wirth; Exhibit 28. Geoff Hasler signed a promissory note in favor of Jerzy Wirth for $180.000.00. Exhibits 27 & 28.

18. In the spring of 2012, Geoff Hasler and MyFreeMedicine.com demanded fee arbitration with the Fee Arbitration Commission of the Maine Board of Bar Overseers. Exhibit 35. The matter was heard on July 19, 2012, in Augusta, Maine. Id.

19. On August 15, 2012, the panel of the Fee Arbitration Commission that had held the hearing issued an award in favor of Stephen Wade against Geoff Hasler in the amount of $205,233.27.

Joint Stipulation ¶ 15. The Maine Superior Court (Kennebec County), upon petition by Skelton Taintor & Abbott, entered a judgment in favor of Stephen Wade against Geoff Hasler in the amount of $205, 233.27, on December 26, 2012. Id.

20. The Maine Superior Court also entered an order of attachment and attachment on trustee process on September 10, 2012, in the amount of the award, and trustee process was served on Jensen Baird Gardner & Henry on September 12, 2012. Exhibits 36 & 38.

21. Pursuant to a written agreement dated September 18, 2012, Jensen Baird Gardner & Henry released to Jerzy Wirth and Airborn all of the remaining settlement proceeds, $54,890.73. Testimony of Jerzy Wirth and Joseph Groff; Exhibit 31.

22. Skelton Taintor & Abbott filed a UCC financing statement in connection with the state-court judgment on June 4, 2013. Joint Stipulation ¶ 16.

23. On November 9, 2012, the Superior Court of the State of Delaware in and for New Castle County entered judgment in favor of Jerzy Wirth against Geoff Hasler in the amount of $428,750.00. Id ¶ 18. This judgment was recorded in Maine on January 14, 2013. Id. ¶ 19.

24. On September 12, 2012, Geoff Hasler executed a release disclaiming and waiving any rights to the $205,233.27 from the MFM settlement then in escrow. Id. ¶ 20.

25. Jerzy Wirth also provided Geoff Hasler with money for his personal expenses during the MFM litigation. Testimony of Jerzy Wirth. He advanced a total of approximately $301,676.00 to Geoff Hasler. Joint Stipulation ¶ 21.

26. Jensen Baird Gardner & Henry, by complaint for interpleader, initiated the current litigation. Id. ¶ 22. The $205,233.27 has been deposited with the court. Id.

II. Conclusions of Law

A. Standing

The cross-claim defendants first contend that Wirth lacks standing to make a claim on the interpleader funds because he cannot attack the contract between Hasler and the defendants, to which he was not a party. Skelton, Taintor & Abbott's Proposed Findings of Fact and Conclusions of Law ("Defendants' Brief") (ECF No. 86) at 13-14. I do not understand Wirth to be suing for breach of the contract between the defendants and Hasler. It is true that he asserts repeatedly that Wade "abandoned" that contract, but he does not contend in his post-trial brief that the act of "abandoning" is a breach for which he, a non-party to the contract, can recover.

Devine v. Roche Biomedical Labs., 659 A.2d 868 (Me. 1995), the only case cited by the defendants in this regard, does not require or even support a finding that Wirth lacks standing in this case. That case merely addresses the viability of a third-party-beneficiary claim, which Wirth has not made here. It is not necessary that Wirth establish a breach of the contract between Hasler and the defendants in order to recover the deposited funds. He has standing to pursue those funds.

B. Waiver

The defendants next argue that Wirth waived any claim to the remaining monies in the escrow that is now in the possession of the court when he entered into the agreement allowing Hasler access to $180,000.00 of the settlement monies and by signing a release in return for the payment to him by Jensen Baird Gardner & Henry of $54,890.73 from the settlement funds. Defendants' Brief at 14-16.

Taking the latter argument first, Wirth's release to Jensen Baird Gardner & Henry admittedly does not contain any reference to Wirth's...