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


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  •      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 R. 47.5, the court has determined that this opinion should not
    be published and is not precedent except under the limited circumstances set forth in 5TH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.
    2
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    No. 15-30249
    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 3
    52–53.
    4
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    350–51. We review the magistrate judge’s legal determinations de novo. See
    
    Brown, 740 F.3d at 3
    50.
    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 3
    58 (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
    5
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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 3
    52 (“[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).
    6
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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
    7
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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 3
    52. 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 3
    58.
    AFFIRMED.
    9