March 27, 2009
GEORGE L. FARMER, PLAINTIFF-APPELLANT,
THE ESTATE OF URMILABEN PATEL AND JAYESH PATEL, AS EXECUTOR FOR THE HEIRS AT LAW OF URMILABEN PATEL, AND AS EXECUTOR FOR THE ESTATE OF URMILABEN PATEL, AND PERSONALLY, MADHUKANTA PATEL, INDIRABEN PATEL, RAMANIAL PATEL, LIMCA PATEL JAVERI, RAJESH PATEL, AND RITA PATEL, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-3953-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 21, 2009
Before Judges Wefing, Parker and Yannotti.
Plaintiff appeals from a trial court order dismissing his complaint with prejudice. After reviewing the record in light of the contentions advanced on appeal, we affirm.
Plaintiff is an attorney admitted to the practice of law in New Jersey. He represented a physician, M. Hossein Tirgan, M.D., in connection with a business dispute. Dr. Tirgan had an oncology practice and was treating Urmilaben Patel for terminal cancer. Dr. Tirgan told her that she had a potential malpractice claim against a prior physician who, Dr. Tirgan said, had not diagnosed her condition promptly. Dr. Tirgan referred Ms. Patel to plaintiff, and on November 28, 2001, she signed a retainer agreement with plaintiff. Paragraph 3 of this retainer agreement provided as follows:
In addition to legal fees, you may be required to pay for expenses in connection with the institution and prosecution of your claim. Such expenses may include, among other things, expert's fees and expenses for other testimony or evidence, court costs, service fees, investigators' fees, deposition costs, cost of briefs, transcripts on appeal and photocopying, long distance telephone and postage expenses.
Plaintiff requested that Dr. Tirgan serve as an expert witness on behalf of Ms. Patel. Dr. Tirgan had agreed to serve as an expert witness for plaintiff in several other malpractice matters as well. The two men signed an agreement which made no provision for Dr. Tirgan's fee other than stating that he would be paid "for his services on an hourly basis for time expended for each case depending upon the complexity of the matters in the case." Plaintiff did not supervise or restrict the time that Dr. Tirgan spent reviewing these files, and the two men became embroiled in a dispute as to the fees each owed the other--plaintiff for handling the litigation for Dr. Tirgan, Dr. Tirgan for reviewing patient files and preparing reports. That dispute eventually resulted in litigation between the two which culminated in a judgment which set Dr. Tirgan's fees in the Patel malpractice action at $73,477.50.
Ms. Patel's condition deteriorated, and plaintiff arranged for a deposition de bene esse. Ms. Patel eventually died on March 10, 2002, before her matter could be tried. Ms. Patel executed a will several months before her death in which she divided her estate among her three sisters, her three children residing in India, and her niece. She named her brother-in-law, Jayesh Patel, as executor.
Plaintiff contends that he advised Ms. Patel's children following her death that he could not proceed with the litigation unless they agreed to be responsible for the costs. He maintains that they did agree, but the record does not contain a subsequent signed retainer agreement. Plaintiff conceded at oral argument that he never requested that Jayesh Patel, the executor of her estate, sign a retainer agreement following her death.
Plaintiff tried the malpractice matter to a conclusion, but the jury returned a verdict of no cause for action. Following the return of that verdict, plaintiff submitted invoices for the out-of-pocket expenses he had incurred in prosecuting the matter. He noted in those invoices that the amount owed Dr. Tirgan remained uncertain. Ms. Patel's sisters and their husbands paid plaintiff a total of $13,000. When the judgment was entered in Farmer v. Tirgan, setting Dr. Tirgan's fees at $73,477.50, plaintiff sent an invoice for that amount. When payment was not forthcoming, this suit resulted. Plaintiff named as defendants Ms. Patel's three sisters, Indiraben, Rita and Madhukanta, their husbands, Ramanial, Rajesh and Jayesh, and her niece, Limca.
In our judgment, the trial court correctly dismissed plaintiff's suit. We reach that conclusion for several reasons.
If an attorney enters a contingent fee arrangement with a client, but wants to protect himself from the risk of absorbing the expenses attendant to that suit if it proves unsuccessful, it is essential that the retainer agreement clearly specify that the client is to be responsible for those expenses no matter the outcome. Here, the retainer agreement did not meet that standard. It said no more than that the client "may be required to pay for expenses." At no point did the retainer agreement state explicitly who would be responsible for those costs in the event of an unsuccessful outcome.
Generally, in contingent fee matters, an attorney and a prospective client do not deal on an equal basis. The client has suffered an injury and is seeking redress. The client looks to the attorney for assistance in a time of stress. The attorney has a duty to ensure that the client clearly understands the potential consequences that can flow from signing the retainer agreement. An attorney has a fiduciary duty to make a full and complete disclosure to the client of all material facts. Grunwald v. Bronkesh, 131 N.J. 483, 494 (1993). Clearly, the potential liability to reimburse the attorney for such expenditures is a fact having material consequences to a client. Any ambiguity in the retainer agreement, such as exists in the retainer agreement before us, has to be construed against the attorney who prepared it.
In addition, following the death of Ms. Patel, plaintiff failed to obtain a new retainer agreement signed by her executor. Absent such an executed retainer agreement, plaintiff has no basis to proceed against these defendants. From a review of the deposition of Jayesh Patel that is included in the record, it is apparent that Mr. Patel has a limited command of the English language and had little or no concept of the potential consequences of continuing with the malpractice action plaintiff had commenced on behalf of Ms. Patel.
Finally, although it is not addressed on appeal, we are compelled to note one further aspect of this retainer agreement. Paragraph 4, after setting forth the correct computation of the contingent fee, in accordance with the provisions of Rule 1:21-7, contains the following language:
It is a possibility that your claim may settle for a compromised amount before trial or before final judgment. The option to settle is yours alone. We will make recommendations regarding settlement. If we recommend that you accept a settlement offer and you exercise your right to reject that offer, we have the right to change the above paragraph of this fee agreement to a flat fee (rather than a contingent fee) equal to One Third (1/3) of the recommended settlement offer. In the event that we change the terms of this agreement to a flat fee, you will be responsible for that fee, regardless of the outcome of the claim.
If, by this provision, plaintiff intended that a client would have to pay a fee of one-third of a rejected settlement if the case were tried to an unsuccessful verdict, we have grave doubts about whether that language complies with Rule 1:21-7. It would appear to place a penalty upon a client's right to decide whether to accept a compromised amount in settlement of a claim. An attorney's obligations to a client do not shift or lessen when a matter turns out not to be as profitable as first envisioned. Kriegsman v. Kriegsman, 150 N.J. Super. 474, 480 (App. Div. 1977).
The order under review is affirmed.
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