July 28, 2011
PHILIP B. VINICK, ESQ., PLAINTIFF-APPELLANT,
PAUL A. FRIEDMAN, ESQ., BISCEGLIE & FRIEDMAN LLC, EPSTEIN BECKER & GREEN, P.C., AND BLANK ROME, LLP, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-6794-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 1, 2010 - Decided
Before Judges Gilroy, Ashrafi and Nugent.
Plaintiff Philip Vinick appeals from two December 21, 2009 orders that quashed a subpoena he had served on Travelers Casualty & Surety Company of America (Travelers), incorrectly designated in the order as St. Paul Travelers' Insurance Company, and dismissed his complaint against defendants Paul Friedman; Bisceglie & Friedman LLC; Epstein Becker & Green, P.C. (EBG); and Blank Rome LLP (collectively, the Friedman defendants). Plaintiff also appeals from a third order of that date that denied his motion seeking to compel the Friedman defendants to produce discovery. We affirm.
I. Plaintiff and Friedman are licensed New Jersey attorneys. During the relevant times complained of, Friedman practiced law as a member of the three defendant law firms: Bisceglie & Friedman LLC from 1996 to November 2005; EBG from November 2005 to September 2007; and Blank Rome LLP from September 2007 through the entry of the orders appealed from.
On August 19, 2009, plaintiff filed a complaint against the Friedman defendants seeking to collect a portion of the legal fees they had received for services rendered in defending Alan Funk in a consolidated action filed in the United States District Court. The complaint alleged causes of action sounding in breach of contract (count one); quantum meruit (count two); and unjust enrichment (count three).
In November 2009 the Friedman defendants filed motions pursuant to Rule 4:6-2(e) seeking not only to dismiss the complaint for plaintiff's failure to state a claim upon which relief could be granted, but also to quash a subpoena duces tecum that had been served upon Travelers seeking to compel the insurer to produce copies of Friedman's billing records. Plaintiff filed a cross-motion seeking to compel the Friedman defendants to produce the billing records. On December 18, 2009, the trial court entered three orders supported by an oral decision that: 1) granted Friedman, Bisceglie & Friedman, and Blank Rome's motion seeking to dismiss the complaint and to quash the subpoena plaintiff had served upon Travelers; 2) granted EBG's motion seeking to dismiss the complaint; and 3) denied plaintiff's motion seeking to compel discovery.
II. Because the trial court considered the extensive certifications of plaintiff and Friedman, together with exhibits attached in support of and in opposition to the parties' respective motions, we consider the court's granting of the motions to dismiss the complaint under the summary judgment standard of review. See R. 4:6-2 ("If . . . matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided by R. 4:46 . . . ."). Viewed most favorably to plaintiff, see R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), the motion record discloses the following.
Between 1974 and 2005, Friedman developed an expertise in the field of labor and employment law, specializing in ERISA*fn1 litigation. Although an experienced litigator, Friedman is not a certified trial attorney pursuant to Rule 1:39. Thus, Friedman may not divide or share a legal fee with a referring attorney pursuant to Rule 1:39-6(d).*fn2
In August 2004, Funk, then plaintiff's client, was named as a defendant, individually, and as an employer-trustee and fiduciary of the PACE Local I-300 Health Fund in the consolidated federal action, alleging he had breached his fiduciary duties under ERISA in administering the Fund. Matthew DiMinno was also named as a defendant in the federal action.
After plaintiff had undertaken Funk's representation in the federal action, plaintiff recommended that Friedman be engaged to also represent Funk in the lawsuit. In May 2005, Funk retained Friedman to represent him in the federal action, with plaintiff remaining as co-counsel of record. Funk executed a retainer agreement with Friedman under which Funk acknowledged personal liability for payment of Friedman's legal fees. Shortly thereafter, plaintiff introduced DiMinno and his personal attorney, Michael Farhi, to Friedman, anticipating that Friedman would undertake representation of DiMinno in the action. In so doing, plaintiff expected that "Funk's bills would be smaller because Funk and DiMinno would equally share the cost of Friedman's bills."
In the fall of 2005, plaintiff and Friedman learned of the existence of a fiduciary liability insurance policy maintained by the Local Health Fund with Travelers that insured the Fund's trustees against acts of negligence. In the fall of 2005, plaintiff, Farhi, and Friedman tendered Funk's and DiMinno's defenses in the federal action to Travelers under the insurance policy. On October 28, 2005, plaintiff, Farhi, and Friedman met with Travelers' counsel to discuss Travelers undertaking the defenses of Funk and DiMinno. At the meeting, Travelers agreed to defend Funk and DiMinno in the action commencing October 28, 2005; to engage Friedman and his then law firm, Bisceglie & Friedman, to represent Funk and DiMinno; to pay $275 of Friedman's $375 hourly rate; to pay plaintiff and Farhi for legal services rendered in defending Funk and DiMinno commencing September 30, 2005, when the defenses were tendered to Travelers through October 28, 2005, inclusive, but not for services rendered post-October 28, 2005. Pursuant to the terms of the agreement reached with Travelers, plaintiff sent Friedman a bill for legal services he rendered between September 30 and October 28, 2005, in the amount of $6,879.17 in anticipation that Friedman, in turn, would forward the bill to Travelers for payment.
According to plaintiff, in November 2005, knowing that Travelers would
only pay one law firm for services rendered on behalf of Funk after
October 28, 2005, he and Friedman entered into a verbal agreement to
divide legal fees Friedman received from Travelers and Funk for
services rendered in defending Funk in the federal action.*fn3
Plaintiff described the substance of the agreement in
paragraph No. 13 of the complaint as:
[P]laintiff would not maintain time records for the services plaintiff would render after October 28, 2005, and that, in exchange for the services plaintiff would render after October 28, 2005, Friedman would provide plaintiff with accountings of bills issued to and payments received from Funk and Travelers, and pay to plaintiff the lesser of one-third (1/3) of Friedman's total fee and the difference between the total amount Friedman billed and the total amount Travelers paid.
The federal action settled in mid-2009. Between November 2005 and settlement of the action, plaintiff rendered services to Funk in connection with the lawsuit including: "interacting with Funk on Friedman's behalf[;] accompanying Friedman to depositions, court conferences and motions[;] assisting Friedman in preparing discovery responses[;] reviewing all correspondence and pleadings[;] strategizing with Friedman[;] and finalizing the settlement." Following settlement, plaintiff demanded that the Friedman defendants pay him a portion of the legal fees they had received from Travelers and Funk pursuant to the verbal agreement. Plaintiff also sought from the Friedman defendants copies of Friedman's billing statements for legal services rendered in defending Funk and an accounting of the legal fees paid to the Friedman defendants by Travelers and Funk. In furtherance of that discovery, plaintiff served Travelers with a subpoena duces tecum to obtain copies of Friedman's billing records and of any records of payments made by Travelers to the Friedman defendants.
The trial court granted the Friedman defendants' motions seeking dismissal of plaintiff's complaint. As to the first count (breach of contract), the court reasoned in part that plaintiff could not prove his claim as a matter of law because the agreement was not in writing, and DiMinno had not consented to the agreement. In making that determination, the court noted that RPC 1.5 requires that a fee sharing agreement, which fails to "bear some proportionality to the services rendered by counsel," to be in writing and be consented to by the client. The court determined that DiMinno, although not originally plaintiff's client, was "affected" by the verbal agreement, and therefore, was required to consent, but did not. The court also concluded that the proportionality must be "evident from the inception [of the agreement]. . . . one cannot back into . . . proportionality at the end of the representation to determine whether or not there was [proportionality]. And in this case it's clear that in its inception there was no proportionality."
In dismissing the second count (quantum meruit), the court determined that plaintiff's services were rendered to Funk, not to the Friedman defendants. The court rejected plaintiff's argument that he was a "rainmaker" when he brought Funk to Friedman, determining that the argument only "highlight[ed] . . . why there can be no quantum meruit recovery here," because such actions "strike of a referral fee." The court concluded that to allow a quantum meruit recovery would "require . . . a wholesale ignoring of the rules that have been propagated to protect the client's interest."
Lastly, although the court did not expressly explain why it dismissed the third count of the complaint (unjust enrichment), we discern that the court impliedly did so for the same reasons that it granted dismissal of the quantum meruit count of the complaint. Because the court dismissed the complaint, it granted the Friedman defendants' motion to quash the subpoena plaintiff had served upon Travelers; and it denied plaintiff's motion seeking to compel an accounting of Friedman's billing records and monies paid on account thereof by Travelers and Funk as moot.
III. On appeal, plaintiff argues that the trial court erroneously dismissed his complaint as a matter of law and that the complaint sufficiently stated the three causes of action.
A trial court will grant summary judgment to the moving party "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); see also Brill, supra, 142 N.J. at 523. "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c).
On appeal, "the propriety of the trial court's order is a legal, not a factual, question." Pressler & Verniero, Current N.J. Court Rules, comment 3.2.1 on R. 2:10-2 (2011). We employ the same standard that governs trial courts in reviewing summary judgment orders. Block 268, LLC v. City of Hoboken Rent Leveling & Stabilization Bd., 401 N.J. Super. 563, 567 (App. Div. 2008).
A. Plaintiff argues the trial court erroneously dismissed his breach of contract claim for failure to comply with RPC 1.5. Plaintiff contends that the trial court erred "[i]n its analysis of RPC 1.5(e)(2) and (3)" by finding "that DiMinno was a client separate and distinct from Funk and that DiMinno had not been notified of the fee division agreement or consented in writing to plaintiff's participation." The Friedman defendants counter that even if the court erred in determining that it was necessary for plaintiff to obtain DiMinno's consent to the sharing of legal fees, plaintiff's breach of contract claim is barred pursuant to the RPC because any fee sharing agreement that is not in proportion to the work performed must be in writing, and here it was not. Because we agree with the Friedman defendants' argument, we need not decide whether the trial court correctly determined that DiMinno was required to have consented to the fee sharing agreement in writing.
RPC 1.5(e) governs fee sharing agreements between attorneys:
[A] division of fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer, or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; and
(2) the client is notified of the fee division; and
(3) the client consents to the participation of all the lawyers involved; and
(4) the total fee is reasonable.
Under the RPC, a fee agreement that provides for payment not in proportion to the work performed requires that the client and attorneys enter into a written agreement and that both attorneys assume joint responsibility for the representation. A failure to comply with RPC 1.5(e) forecloses the ability of an attorney to recover against another attorney under a breach of contract theory because "[the alleged agreement] was contrary to law." Goldberger, Seligsohn & Shinrod, P.A. v. Baumgarten, 378 N.J. Super. 244, 252 (App. Div. 2005).
Here, plaintiff's alleged oral fee sharing agreement, when purportedly entered into between plaintiff and Friedman, was not proportionate to the work to be performed because pursuant to the agreement plaintiff was entitled to recover approximately one-third of the fee regardless of how much work he performed on Funk's case. Therefore, the agreement was required to be in writing; signed by Funk, plaintiff, and Friedman; and both plaintiff and Friedman were required to assume joint responsibility for the action.
Plaintiff contends that notwithstanding his fee sharing agreement not being reduced to writing in accordance with RPC 1.5(e), he should be awarded a portion of the legal fees Travelers and Funk paid to the Friedman defendants if "the division described in the agreement between plaintiff and Friedman was [in fact] in proportion to the services performed by each lawyer." Not so.
RPC 1.5(e) requires that any non-written fee sharing agreement based on proportionality of services performed be agreed upon by the attorneys and client at the commencement of such legal services. The RPC does not contemplate an avoidance of its requirements by happenstance at the end of the services performed. Moreover, plaintiff only alleged in his complaint that the parties had entered into a disproportionate fee sharing agreement; it was when the non-existence of a written agreement became an issue that plaintiff attempted to argue for breach of a proportionate oral fee sharing agreement. There is no evidence that Funk ever agreed to a proportionate fee sharing agreement, and Funk's certification only states he orally consented to the disproportionate agreement.
B. Plaintiff argues that the trial court erred in dismissing his quantum meruit claim against the Friedman defendants. He asserts that he is entitled "to be compensated based upon the reasonable value of the services" rendered, even if the fee division agreement is not enforceable. We disagree.
"Quantum meruit is a form of quasi-contractual recovery and 'rests on the equitable principle that a person shall not be allowed to enrich himself [or herself] unjustly at the expense of another.'" Ibid. (quoting Weichert Co. Realtors v. Ryan, 128 N.J. 427, 437 (1992)). Simply stated, "[r]ecovery is permitted in quasi-contract because one party has conferred a benefit on the other, and in the circumstances, it would be unjust to deny recovery." Id. at 253. For a plaintiff to recover under that theory, he or she must prove: "1) that the services were performed in good faith, 2) the services were accepted by the person for whom they were rendered, 3) plaintiff reasonably expected compensation for performing the services, and 4) the value of the services is reasonable." Ibid.
Here, the trial court correctly rejected plaintiff's claim based on quantum meruit as a matter of law, determining that plaintiff only alleged that he performed legal services on behalf of Funk; there was no allegation that plaintiff performed legal services for the benefit of the Friedman defendants.
Because no legal services were accepted by the Friedman defendants, plaintiff's quantum meruit claim fails.*fn4
C. Lastly, plaintiff argues the trial court erroneously dismissed his claim based upon unjust enrichment. Plaintiff asserts the trial court failed to "specifically articulate a reason" in dismissing the claim.
Although we agree that it would have been better had the trial court expressly stated the reasons for dismissing defendants' unjust enrichment claim, we impliedly determine that it did so for the same reasons it dismissed plaintiff's quantum meruit claim. Both causes of action require that the plaintiff show that the defendant received a benefit from the plaintiff's services and that the defendant's retention of that benefit would have been unjust. Goldberger, supra, 378 N.J. Super. at 253; Cameco, Inc. v. Gedicke, 299 N.J. Super. 203, 218 (App. Div. 1997), aff'd, 157 N.J. 504 (1999).
Initially, we questioned whether the trial court correctly dismissed the unjust enrichment claim because plaintiff did allege in his complaint that he had submitted a statement to Friedman for legal services rendered by him between September 30, and October 28, 2005, in the amount of $6,879.17 with the understanding that Friedman would forward the bill to Travelers for payment, and payment had not yet been received. Thus, we questioned whether or not Friedman or one of his law firms may have unjustly received and retained those funds from Travelers. However, at time of oral argument, we were advised that plaintiff had received payment from Travelers, thus mooting the issue. Because the complaint does not allege that plaintiff sent the Friedman defendants any other statements for legal services rendered by plaintiff on behalf of Funk, we conclude that the trial court correctly dismissed the unjust enrichment claim.