David Corey v. Deepwater Specialists, Inc. ( 2015 )

Case: 15-30249 Document: 00513206199 Page: 1 Date Filed: 09/24/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 15-30249 September 24, 2015
Summary Calendar
Lyle W. Cayce
Clerk
DAVID COREY,
Plaintiff - Appellant
ARNOLD & ITKIN, L.L.P.,
Appellant
v.
SALVADOR M. BROCATO, III; LIONEL H. SUTTON, III,
Intervenors - Appellees
v.
DEEPWATER SPECIALISTS, INCORPORATED, ET AL
Defendants
Appeal from the United States District Court
for the Eastern District of Louisiana
U.S.D.C. No. 2:10-CV-3354
Before REAVLEY, SMITH, and HAYNES, Circuit Judges.
PER CURIAM:*
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 15-30249 Document: 00513206199 Page: 2 Date Filed: 09/24/2015
No. 15-30249
Arnold & Itkin, L.L.P. (“Arnold & Itkin”) appeals to this court from an
award of attorneys’ fees in quantum meruit to Salvador M. Brocato, III, and
Lionel H. Sutton, III (collectively, “Intervenors”). Intervenors originally
represented the plaintiff, David Corey, before the district court, but were
discharged for cause before the case concluded. Arnold & Itkin represented
Corey after he discharged Intervenors and ultimately reached a settlement
with the defendants for $2,187,500. Intervenors sued for a portion of the final
fee award, which totaled $875,000. A magistrate judge issued a final order and
judgment awarding Intervenors 20% of the fee in quantum meruit. Arnold &
Itkin timely appealed the award, claiming it violates Louisiana law and our
precedent because its effect was to award Intervenors a contingency fee even
though the magistrate judge found they had no contingency fee contract with
Corey. After carefully reviewing the record and relevant law, we conclude that
the magistrate judge did not clearly err in making the fee award to Intervenors
and AFFIRM the final judgment.
I.
This dispute arose between Intervenors and Arnold & Itkin, after both
groups of attorneys represented the plaintiff, David Corey, in his personal
injury lawsuit. Intervenors represented Corey in the lawsuit underlying this
dispute for two years, investigating his claim, filing a lawsuit, and performing
discovery. Intervenors attended and defended Corey’s deposition, although
they only spent twenty-five minutes beforehand preparing him for it. During
their representation, Intervenors did not take any depositions or formally hire
any experts, although they spoke with certain parties about providing expert
testimony in the case. Corey terminated Intervenors in September 2011, when
trial was set to take place in March 2012.
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The magistrate judge found Corey terminated Intervenors for cause
because Corey was “dissatisfied” with the “[l]ittle work” they had performed on
his case. This included failing to hire an investigator, inspect the platform on
which Corey was injured, hire experts, or thoroughly prepare Corey for his
deposition. 1 Weighing conflicting testimony, the magistrate judge found the
Intervenors did not have a fee agreement with Corey. After Corey terminated
the Intervenors, he retained Arnold & Itkin, which represented him for two
years and successfully obtained a settlement for $2,187,500. Intervenors
intervened in the suit, seeking a share in the $875,000 total available for
attorneys’ fees. Arnold & Itkin and Intervenors conducted discovery, deposed
Corey, and submitted briefing on the issue of attorneys’ fees. The magistrate
judge held an evidentiary hearing and considered the pre- and post-hearing
briefing and exhibits submitted by the attorneys, then issued an order and
final judgment awarding Intervenors 20% of the $875,000 in attorneys’ fees.
The magistrate judge found Intervenors were entitled to this amount in
quantum meruit, since they had no contingency fee agreement with Corey.
Arnold & Itkin timely appealed and now seeks to reverse or reduce this award.
II.
The district court had federal question jurisdiction over this case under
28 U.S.C. § 1331. Since the parties consented 2 to proceed to final judgment
1 Arnold & Itkin makes much of these findings regarding Intervenors’ deficiencies,
arguing they show the magistrate judge erred in awarding Intervenors any more than about
$8,750 in fees. We note that the magistrate judge listed these facts in explaining why he
credited Corey’s testimony that Corey discharged Intervenors for cause. It is evident from
the record that the magistrate judge considered the totality of Intervenors’ performance in
determining a reasonable fee, including other positive contributions also acknowledged by
the magistrate judge.
2 The district court found that, despite the absence of express written consent, the
parties consent to try this matter before the magistrate judge. The parties did not challenge
this finding in the district court or before this court.
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before a magistrate judge, we have jurisdiction over this appeal directly from
that final judgment. See 28 U.S.C. §§ 636(c), 1291.
Arnold & Itkin argues the magistrate judge erred in awarding
Intervenors 20% of the fee, claiming this award constitutes an illegal
contingency fee accorded to lawyers without a contingency fee agreement.
Arnold & Itkin contends that Intervenors are solely entitled to recover for the
work they performed based on calculations of their hourly work in quantum
meruit, which they assert would result in a much smaller award. Arnold &
Itkin also argues the magistrate judge erred by failing to reduce the final
award by some amount to account for Intervenors’ for-cause discharge. In the
alternative, Arnold & Itkin claims this court should exercise its power to grant
remittitur and reduce the award to $8,750 or less because they aver the current
award is “clearly excessive.”
We review the magistrate judge’s assessment of the value of Intervenors’
work and the corresponding fee award for clear error. See City of Alexandria
v. Brown, 740 F.3d 339, 352 (5th Cir. 2014). 3 Clear error review of a fee award
presents a “high barrier.” Id. “A finding is clearly erroneous if it is without
substantial evidence to support it, the court misinterpreted the effect of the
evidence, or this court is convinced that the findings are against the
preponderance of credible testimony.” Mumfrey v. CVS Pharmacy, Inc., 719
F.3d 392, 403 (5th Cir. 2013) (citation omitted); see also Brown, 740 F.3d at
3 Arnold & Itkin argues we should review the fee award de novo because the
magistrate judge purportedly used the wrong legal standards improperly awarded
Intervenors contingency fees. Since we conclude that the magistrate judge correctly applied
the proper factors in determining the value of Intervenors’ work, we reject this attempt “to
do an end-run around the high barrier presented by clear error review.” Brown, 740 F.3d at
352–53.
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350–51. We review the magistrate judge’s legal determinations de novo. See
Brown, 740 F.3d at 350.
First, Arnold & Itkin asserts that the magistrate judge erred by
awarding Intervenors fees formatted as a percentage of the total attorneys’
fees, rather than by multiplying a reasonable rate times Intervenors’ hourly
work on the case in quantum meruit. This argument is misplaced. Although
the magistrate judge awarded fees in percentage form rather than as a dollar
figure, it is clear from the record that the magistrate judge arrived at an
amount of reasonable fees using the set of factors considered by courts making
quantum meruit determinations under Louisiana law.
The Louisiana Supreme Court has instructed courts to consider factors
inspired by Rule 1.5(a) of the Louisiana Rules of Professional Conduct in
arriving at reasonable fee awards in quantum meruit. These include:
(1) the ultimate result obtained; (2) the responsibility incurred;
(3) the importance of the litigation; (4) amount of money involved;
(5) extent and character of the work performed; (6) legal
knowledge, attainment, and skill of the attorneys; (7) number of
appearances made; (8) intricacies of the facts involved; (9)
diligence and skill of counsel; and (10) the court's own knowledge.
Brown, 740 F.3d at 358 (quoting State, Dep’t of Transp. & Dev. v. Williamson,
597 So. 2d 439, 441 (La. 1992)); cf LA. R. OF PROF’L CONDUCT 1.5(a) (“Rule
1.5(a)”) (listing a similar set of factors); Fowler v. Jordan, 430 So. 2d 711, 715–
16 (La. Ct. App. 1983) (applying these factors to determine the value of an
attorney’s services in quantum meruit). Courts applying Louisiana law utilize
these factors to determine awards in quantum meruit when attorneys with
contingency fee agreements have been discharged. This applies when
attorneys are discharged either with or without cause, although courts must
reduce the award of an attorney discharged for cause according to the “nature
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and gravity of the cause which contributed to the dismissal.” O’Rourke v.
Cairns, 683 So. 2d 697, 703–04 (1996); Saucier v. Hayes Dairy Products, Inc.,
373 So. 2d 102, 118 (La. 1978), on reh’g (June 25, 1979); see also Sims v.
Selvage, 499 So. 2d 325, 329 (La. Ct. App. 1986); Turner v. Dr. X, 878 So. 2d
696, 697, 699 (La. Ct. App. 2004). Additionally, courts may consider these
“Saucier factors” in the quantum meruit analysis when seeking to determine
the reasonable value of the service provided by an attorney who operated
without a contingency fee agreement. See Brown, 740 F.3d at 352 (“[T]he
Saucier framework and quantum meruit analysis apply essentially the same
factors to determine the contributions a lawyer made to a particular case.”). 4
In this case, the magistrate judge found that Intervenors were
discharged for cause without a contingency fee agreement and are therefore
only entitled to recover in quantum meruit. 5 Noting the similarity between the
Saucier factors and the test utilized to arrive at a reasonable award in
quantum meruit, the magistrate judge acknowledged his responsibility to use
the Saucier factors, or the factors listed in Rule 1.5(a) of the Rules of
Professional Conduct, to determine a reasonable fee. The magistrate judge
proceeded to reject the argument Arnold & Itkin now makes before this court:
4 See also O’Rourke, 683 So. 2d at 702 (similar); In re Calm C’s Inc., 179 F. App'x 911,
913 (5th Cir. 2006) (affirming a district court’s fee award that had utilized the Saucier factors
to determine a reasonable fee in quantum meruit); see also Smith v. Westside Transit Lines,
Inc., 313 So. 2d 371, 378 (La. Ct. App. 1975) (observing that “[t]he phrase, quantum meruit,
means as much as he deserved,” which “encompasses far more than simply the hours spent
by the attorney” on the case and includes “the ultimate results obtained” and the value of the
attorney’s work); LA. R. PROF’L CONDUCT 1.5(a) (listing “[t]he factors to be considered in
determining the reasonableness of a fee”).
5 Intervenors do not challenge on appeal the magistrate judge’s findings that they
were discharged for cause and did not have a contingency fee agreement with Corey. We
deem these issues abandoned. See Brinkmann v. Dallas Cnty. Deputy Sheriff Abner, 813 F.2d
744, 748 (5th Cir. 1987).
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namely, that Intervenors deserve “none of the fee award,” or at least $5,000 or
less of that award,” because their work had little to no value to Corey.”
However, the magistrate judge also rejected Intervenors’ contention that they
should be awarded over $400,000, or more than half of the total fee.
Instead, “[u]nconvinced by either party,” the magistrate judge
enumerated Intervenors’ positive contributions and their value in advancing
the case to its successful conclusion. These included filing the lawsuit,
participating in discovery, including initial disclosures, discovering three
additional defendants through discovery and joining them to the suit, and
defending Corey at his deposition, all of which “advanced the lawsuit to some
degree.” Considering that work and comparing it to Arnold & Itkin’s
contribution, the magistrate judge found that Intervenors were entitled to 20%
of the total fee award.
Given this analysis and the magistrate judge’s acknowledgement of the
standards he properly used to determine a reasonable fee in quantum meruit,
we conclude the magistrate judge did not clearly err. Awarding the fee as a
percentage rather than as a dollar figure does not make it a contingency fee.
Here it appears more in the nature of a proxy for the value of the work
performed by Intervenors in the context of the entire case. We also conclude
that the magistrate judge did not commit an error of law in calculating the
award in quantum meruit according to the Saucier factors instead of listing the
hours worked by Intervenors and multiplying those hours by a reasonable local
rate. Arnold & Itkin relies on one of our unpublished decisions to support this
point of error, but that decision upheld an award calculated based both on
hours worked and the Saucier factors. See In re Calm C’s Inc., 179 F. App’x
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911, 913 (5th Cir. 2006) 6 (affirming a district court’s quantum meruit fee award
for an attorney without a contingency fee agreement who was terminated for
cause when the award was based on an analysis of the Saucier factors); see also
Fowler v. Jordan, 430 So. 2d 711, 715–16 (La. Ct. App. 1983) (“Quantum
meruit analysis cannot be reduced to the mere application of mathematical
formulas . . . .”); Smith v. Westside Transit Lines, Inc., 313 So. 2d 371, 378 (La.
Ct. App. 1975) (“[T]he number of hours spent by appellant on the case would
at best be a factor to be considered but does not alone determine the amount of
the fee.”).
We also find unconvincing Arnold & Itkin’s argument that the
magistrate judge committed an error of law by failing to discount the award
due to Intervenors’ for-cause discharge. Although the magistrate judge did not
enumerate by what amount he discounted the fee award on this ground, see
O’Rourke, 683 So. 2d at 703–04, he acknowledged his obligation to do so and
stated: “The Court considers the nature and gravity of the cause which
contributed to the dismissal and reduces by a percentage amount the portion
discharged counsel otherwise would receive after the Saucier allocation.” We
have declined to reverse or reduce fee awards, even when appellants argue
lower courts have applied “the wrong legal framework under Louisiana law,”
when the trial court did not clearly err in valuing attorneys’ services. Cf. id.
at 351–52. Intervenors have not shown the magistrate judge legally erred, and
simply cannot overcome the “high barrier” of clear error review. Brown, 740
F.3d at 352. We discern no clear error in the magistrate judge’s valuation of
Intervenors’ services or in the reasonableness of the fee awarded in this case.
6 Although Calm C’s is not “controlling precedent,” it “may be [cited as] persuasive
authority.” Ballard v. Burton, 444 F.3d 391, 401 n.7 (5th Cir. 2006) (citing 5TH CIR. R. 47.5.4).
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Finally, we decline Arnold & Itkin’s invitation to find the award “clearly
excessive” and reduce it to $8,750 or less. “Courts should not question the
propriety of a fee unless it is clearly excessive,” or “so grossly out of proportion
with the fees charged for similar services by other attorneys in the locale as to
constitute an unquestionable abuse of the attorney’s professional
responsibility to the public.” See Teche Bank & Trust Co. v. Willis, 631 So. 2d
644, 647 (La. Ct. App. 1994) (citation omitted) (considering the reasonableness
of a fee award pursuant to the factors in Rule 1.5(a)); see also Sosa v. M/V Lago
Izabal, 736 F.2d 1028, 1035 (5th Cir. 1984). In granting Intervenors 20% of
the total fee, the magistrate judge essentially considered and implicitly
rejected the argument Arnold & Itkin has made throughout this litigation, that
any fee over about $5,000 or $8,750 would be excessive. This determination is
not against the preponderance of the credible evidence, and we will not disturb
it. See Mumfrey, 719 F.3d at 403; Brown, 740 F.3d at 358.
AFFIRMED.
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