James E. Brady, III v. Patrick B. Starke, and Patrick B. Starke, Attorney at Law, P.C. , 517 S.W.3d 28 ( 2017 )

In the
Missouri Court of Appeals
Western District
JAMES E. BRADY, III, )
)
Appellant, ) WD79291
)
v. ) OPINION FILED: February 7, 2017
)
PATRICK B. STARKE, AND )
PATRICK B. STARKE, ATTORNEY )
AT LAW, P.C., )
)
Respondents. )
Appeal from the Circuit Court of Jackson County, Missouri
The Honorable Sandra Midkiff, Judge
Before Special Division: Cynthia L. Martin, Presiding Judge, Gary D. Witt, Judge and
Zel M. Fischer, Special Judge
James Brady ("Brady") appeals from the entry of judgment in favor of Patrick Starke
("Starke") and Patrick B. Starke, Attorney at Law, P.C. ("Law Firm") on Brady's claim to
declare a fee-sharing agreement unenforceable, and on Starke's and Law Firm's
counterclaim for breach of contract. Because a valid and enforceable fee-sharing
agreement existed between the parties, we affirm.
Factual and Procedural Background1
Brady and Starke are licensed attorneys in Missouri. Starke has practiced law for
over thirty years, while Brady has been admitted to practice law since 2009. From
approximately May 2010 until July 2012, both attorneys operated out of the same office
building in Blue Springs, Missouri. Starke owns the building and rented office space to
Brady for Brady's own law practice, The Brady Law Firm, LLC.
A large, stand-alone sign sits in front of the office building near the property's
entrance from the road. The sign reads "Starke Law Offices," and lists the address and a
phone number. The phone number belongs to Starke. The door into the building reads
"Law Offices," and lists Starke's phone number. The names of other attorneys occupying
office space in the building are listed on the door underneath Starke's phone number. Each
attorney has the designation "Attorney at Law" below their name, but nothing indicates
that the listed attorneys are separate, unaffiliated law offices.2 This is the only public
entrance into the building.
Upon entering the office building, there is a single, shared reception area where a
paralegal, Melodie Chrisman ("Chrisman"), would greet clients and visitors for all the
attorneys. Chrisman greeted Brady's visitors the same as Starke's visitors. Chrisman
answered phone calls for all of the attorneys in the building, including Brady. It was not
1
Because Brady challenges whether substantial evidence supported the trial court's judgment, we "view the
evidence in the light most favorable to the judgment, defer to the trial court's credibility determinations, and accept
as true the evidence and inferences favorable to the judgments, disregarding all contrary evidence." Hunter v.
Moore, 486 S.W.3d 919, 925 (Mo. banc 2016).
2
Brady's name is not depicted on the door in the photograph presented to the trial court because he no
longer rents an office in the building. But it was explained that his name was listed on the door when he occupied
an office in the building.
2
uncommon for Brady's clients to call Starke's phone number--the one posted on the sign
and door--in order to contact Brady. As with visitors, Chrisman treated callers for Brady
the same as she treated callers for Starke.
The rental agreement between Starke and Brady was oral. Under the terms of the
agreement, Brady was to pay Starke $500 per month in rent, as well as postage and copying
expenses. In addition to his office space and the reception area, Brady enjoyed shared use
of Starke's kitchen, conference room, and other common areas.
Starke provided Brady with clerical forms, such as client intake forms and medical
authorizations. In fact, Chrisman testified that on one occasion, Brady used a provided
medical authorization form and listed "JAMES E. BRADY, III, ATTORNEY AT LAW"
in the first paragraph, but referred to "Starke Law Offices" in the paragraph relating to
authorization revocation.
Brady hoped that he would receive an overflow of Starke's business by having an
office in Starke's building. Starke also wanted to help Brady build his law practice. To
that end, Starke passed cases to Brady when he did not have time to pursue them or was
otherwise not interested in pursuing them. In such instances, Chrisman or other staff
members would call the client to say that Starke could not take their case but that he was
referring the case to "a young attorney here in our office." Chrisman testified that she
would explain to the client that "[i]f there's a problem, you know, let us know, you can call
us back; we just want to make sure that you're happy." Chrisman stated that "[t]hat's kind
of the way we addressed all of our clients."
3
In addition to the rental agreement, Brady and Starke orally agreed to split any
attorney's fees earned from the cases they referred to each other. The "generating attorney"
would be entitled to 25% of the total fee earned, with the remaining 75% going to the
primary attorney. Even after referring a case, however, Starke remained available and
responsible to the clients on those cases.
During the time that Brady maintained an office in Starke's building, Laura Ziegler
("Ziegler") came to Starke for representation on a personal injury case. Starke had
previously represented Ziegler on several other matters. After reviewing Ziegler's file,
Starke decided to have Brady take the lead on the case because Starke had a heavy caseload.
Starke met with Ziegler twice before passing the case off to Brady. Starke introduced
Ziegler to Brady while Ziegler was in Starke's office. Starke testified that he would have
told Ziegler that he was available, and to call him if there was a problem, because he almost
always said words to that effect when passing off a client. The trial court found this
testimony to be credible.
Brady and Starke discussed Ziegler's case numerous times. Brady sought and
received advice from Starke on how to proceed, particularly after the defendant failed to
timely answer Ziegler's petition. Starke advised Brady on default judgment proceedings.
Starke advised Brady to submit medical evidence at the default judgment hearing and to
seek $2 million in damages rather than $1 million. Starke recommended that Brady not
attempt to collect the default judgment until after a year passed.
In July 2012, Brady informed Starke that he was moving out of Starke's office space.
At this time, the attorneys signed a letter acknowledging and memorializing their pre-
4
existing oral agreement to split fees earned on certain cases 25%-75%. Specifically, the
letter stated that Brady would pay Starke 25% of the legal fees earned in two cases, Ziegler
and Byron Chaney ("Chaney"), "for [his] involvement." Additionally, Starke disclaimed
any interest he might have in the fees earned in a third case. The letter also mentioned rent
and expenses owed to Starke, but stated that they could be paid out of the fees earned in
the Chaney case. Both attorneys signed the letter. Brady later paid Starke for his portion
of the Chaney fees, including an amount for unpaid rent.
Brady and Starke continued discussing Ziegler's case after Brady moved out of
Starke's building. Brady shared information about the case with Starke and Starke
continued to offer advice to Brady about collecting the default judgment. Brady and Starke
met and discussed Ziegler's case on October 31, 2012, the eve of the one-year anniversary
of the default judgment. Their collaborative discussions about how best to proceed in
collecting the Ziegler judgment continued into the following year.
Brady advised Starke that there was a reasonable chance Ziegler's case would settle
at a mediation scheduled in April 2013. Ziegler's case did, in fact, settle as a result of the
mediation, generating an attorney's fee in the amount of $380,000. Based on the fee-
sharing agreement, Starke was entitled to $95,000 of this fee.
Brady initially held Starke's share of the Ziegler fee in his trust account, but later
distributed Starke's share of the fee to himself after filing a petition seeking a declaration
that the fee-sharing agreement was unenforceable. Starke and Law Firm filed a
counterclaim for breach of contract, quantum meruit, and unjust enrichment seeking to
recover Starke's share of the Ziegler fee.
5
The parties tried the case to the court, and requested findings of fact and conclusions
of law in accordance with Rule 73.01(c).3 The trial court's judgment included detailed
findings and conclusions, and found in favor of Starke and Law Firm on the counterclaim
for breach of contract and on Brady's request for a declaratory judgment. The trial court
awarded Starke $95,000 in damages, plus pre-judgment interest pursuant to section
408.020 from May 2, 2013.4 The trial court also awarded post-judgment interest pursuant
to section 408.040. Because Starke and Law Firm prevailed on the breach of contract
claim, their remaining counterclaims were denied.
This timely appeal followed.
Standard of Review
"On review of a court-tried case, an appellate court will affirm the circuit court's
judgment unless there is no substantial evidence to support it, it is against the weight of the
evidence, or it erroneously declares or applies the law." Ivie v. Smith, 439 S.W.3d 189,
198-99 (Mo. banc 2014).
When a claim of error presents a mixed question of law and fact, "the reviewing
court applies the same principles articulated above except that it is necessary to segregate
the parts of the issue that are dependent on factual determinations from those that are
dependent on legal determinations." Pearson v. Koster, 367 S.W.3d 36, 44 (Mo. banc
3
All Rule references are to Missouri Court Rules, Volume I -- State, 2016 unless otherwise noted.
4
In stating the pre-judgment interest awarded, the judgment reflects conflicting amounts. The judgment
writes out the amount as "Sixteen Thousand Seven Hundred One and Seventy Eight Cents," but states the amount
numerically as "$17,701.78." We do not resolve this discrepancy as it has not been raised as an issue on appeal.
6
2012). "Therefore, it is a matter of deferring to the fact-finder in its assessment of the facts
and then applying de novo review in determining how the law applies to those facts." Id.
Analysis
Brady raises a single point on appeal. Brady claims that it was error to enforce the
fee-sharing agreement with Starke because pursuant to Missouri Rules of Professional
Conduct, fee-sharing agreements between lawyers who are not in the same firm are not
enforceable absent compliance with Rule 4-1.5(e), and there was no substantial evidence
that he and Starke were members of the same firm or that the agreement otherwise
complied with Rule 4-1.5(e). We disagree.
Under the Missouri Rules of Professional Conduct, a fee-sharing agreement is
enforceable only if certain requirements are met. Rule 4-1.5(e) provides that:
A division of a 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
each lawyer assumes joint responsibility for the representation;
(2) the client agrees to the association and the agreement is confirmed in
writing; and
(3) the total fee is reasonable.
(Emphasis added). "[A]n agreement to share attorney fees that does not comply with Rule
4-1.5(e) is unenforceable." Law Offices of Gary Green, P.C. v. Morrissey, 210 S.W.3d
421, 425 (Mo. App. S.D. 2006) (quoting Neilson v. McCloskey, 186 S.W.3d 285, 287 (Mo.
App. E.D. 2005)). However, the requirements of Rule 4-1.5(e) do not apply when the
7
lawyers are in the same "firm." Welch v. Davis, 114 S.W.3d 285, 290 (Mo. App. W.D.
2003).
Rule 4-1.0(c) defines the terms "firm" and "law firm":
"Firm" or "law firm" denotes a lawyer or lawyers in a law partnership,
professional corporation, sole proprietorship or other association authorized
to practice law; or lawyers employed in a legal services organization or the
legal department of a corporation or other organization.
The second comment to Rule 4-1.0 further clarifies the terms:
Whether two or more lawyers constitute a firm within Rule 4-1.0(c) can
depend on the specific facts. For example, two practitioners who share
office space and occasionally consult or assist each other ordinarily would
not be regarded as constituting a firm. However, if they present themselves
to the public in any way that suggests that they are a firm or conduct
themselves as a firm, they should be regarded as a firm for purposes of the
Rules. The terms of any formal agreement between associated lawyers are
relevant in determining whether they are a firm, as is the fact that they have
mutual access to information concerning the clients they serve.
(Emphasis added); see also Welch, 114 S.W.3d at 290 (holding that two lawyers were in
the same firm for purposes of Rule 4-1.5(e)5 because "they held themselves out to their
clients and practiced together as a single, collective business entity").
Although Brady and Starke did not call themselves "partners" in the same law firm,
and instead had an agreement to share office space, the trial court found that they presented
themselves to the public in a way that suggested they were a firm. The trial court
specifically found that "to the general public, there was no visible way to distinguish
separate legal entities." Thus, the trial court found that Brady and Starke were in the same
5
Welch v. Davis, 114 S.W.3d 285 (Mo. App. W.D. 2003) examined a previous version of Rule 4-1.5(e), but
the subsequent changes to the Rule have been minor and do not affect our analysis. See Vance v. Griggs, 324
S.W.3d 471, 475 (Mo. App. W.D. 2010).
8
firm for purposes of Rule 4-1.5(e), and that Rule 4-1.5(e) did not apply to the fee-sharing
agreement between Brady and Starke.
Brady contends that there is no substantial evidence to support the trial court's
finding that he and Starke were members of the same firm for purposes of Rule 4-1.5(e)
because Starke made binding admissions to the contrary, because there was no evidence
that the parties ever held themselves out as a single legal business entity, and because the
evidence only showed that the attorneys were members of separate firms. "To prevail on
the substantial-evidence challenge, [Brady] must demonstrate that there is no evidence in
the record tending to prove a fact that is necessary to sustain the circuit court's judgment
as a matter of law." Ivie, 439 S.W.3d at 200. Brady has not sustained this burden.
First, Brady argues that admissions made by Starke in his answer bound Starke, and
precluded a finding that Brady and Starke were in the same firm for purposes of Rule 4-
1.5(e). Brady relies on Starke's admissions in his answer that he and Brady "were never
members of the same law firm," and that neither he nor Starke "represented to clients or
the public that [Brady] was a member of [Starke's] law firm."6
The trial court's finding that Brady and Starke presented themselves to the public in
a way that suggests that they were a firm is not precluded by Starke's admissions. Starke's
admissions in his answer, even presuming they bound Starke and the trial court,7 are not
6
In his Answer, Starke admitted Paragraphs 10, 20, and 21 of Brady's Petition, which stated, respectively,
that: (i) Brady and Starke "were never members of the same law firm," (ii) Starke "never represented to Clients or
the public that [Brady] was a member [Starke's] law firm," and (iii) Brady "never represented to Clients or the public
that [Brady] was a member of [Starke's] firm."
7
"A defendant is ordinarily bound by his answer and the position taken therein." Cohen v. Normand Property
Assocs., 498 S.W.3d 473, 481 (Mo. App. W.D. 2016) (quoting Peterson v. Medlock, 884 S.W.2d 679, 684 (Mo. App.
S.D. 1994)). "[A]n allegation of fact in an answer upon which the case is being tried is binding on the pleader and for
the purpose of the trial such party is precluded from maintaining a contrary or inconsistent position." Id. (quoting
9
inconsistent with the trial court's finding that Brady and Starke presented themselves to the
public in a way that suggested they were a firm. In fact, Starke's answer denied Paragraph
11 of Brady's petition which asserted that Brady and Starke "never made representations
or otherwise held themselves out to the public or to [c]lients as members of the same law
firm." (Emphasis added).
Second, Brady argues that no evidence supported the trial court's finding that Starke
and Brady held themselves out as a single, collective legal business entity or partnership.
Brady's contention is flawed. The trial court did not find that Starke and Brady held
themselves out as a single, collective legal business entity or partnership. And Brady cites
no authority for the proposition that such a finding was required for the trial court to
conclude, as it did, that Brady and Starke were in the same firm for purposes of Rule 4-
1.5(e). In fact, as the trial court observed, the definition of "law firm" set forth in Rule 4-
1.0(c) "envisions situations in which lawyers who are not 'partners' in the traditional sense
of the word can nonetheless be affiliated as a 'firm.'"
Third, Brady argues that no evidence supported the trial court's conclusion that
Brady and Starke held themselves out as a single firm, and instead the only evidence was
Wehrli v. Wabash R.R. Co., 315 S.W.2d 765, 773 (Mo. 1958)). But as to questions of law, the trial court is not bound
to a conceded position or precluded from making a contrary or inconsistent finding. Parr v. Breeden, 489 S.W.3d
774, 779 (Mo. banc 2016) ("Courts are not bound by stipulations or concessions as to questions of law."); Swift & Co.
v. Hocking Valley Ry. Co., 243 U.S. 281, 289 (1917) ("[T]he court cannot be controlled by agreement of counsel on a
subsidiary question of law."); Wells v. Covenant Mut. Ben. Ass'n, 29 S.W. 607, 609 (Mo. 1895) (holding that no valid
agreement could be made with respect to the sufficiency of a petition because that is a question of law); Aubuchon v.
Bender, 44 Mo. 560, 570 (1869) (determining a question of law "notwithstanding the inadvertent concession of
defendant's counsel").
"The rules of professional conduct have the force and effect of judicial decision. Accordingly, Rule 4-1.5
has the force and effect of law in Missouri." Vance, 324 S.W.3d at 475 (quoting Law Offices of Gary Green, P.C. v.
Morrissey, 210 S.W.3d 421, 425 (Mo. App. S.D. 2006)). Thus, the trial court was not bound by Starke's admissions
to the extent they address whether Brady and Starke constituted a "firm" or "law firm" for purposes of the Rules of
Professional Conduct, a question of law.
10
to the contrary. Brady highlights the evidence which could have supported the conclusion
that he and Starke were not in a single firm, and did not represent themselves to be in a
single firm, including that Brady merely rented office space from Starke; both had separate
listings in the local bar directory; both used individual office forms; Brady and Starke did
not advertise together and did not list each other on firm accounts or insurance; and both
had separate letterheads, websites, e-mail addresses, and business cards.
Brady's argument ignores our standard of review. Our Supreme Court has made
clear "that no contrary evidence need be considered on a substantial-evidence challenge."
Ivie, 439 S.W.3d at 200. Because we are determining whether substantial evidence
supports the trial court's judgment, we "must view the evidence in the light most favorable
to the judgment, defer to the trial court's credibility determinations, and accept as true the
evidence and inferences favorable to the judgment, disregarding all contrary evidence."
Hunter v. Moore, 486 S.W.3d 919, 925 (Mo. banc 2016). "In reaching its judgment the
trial court is free to believe any, all, or none of the evidence presented at trial." Id.
Here, the trial court made extensive findings of fact, pursuant to Rule 73.01(c). "In
addition, Rule 73.01(c) provides that 'all fact issues upon which no specific findings are
made shall be considered as having been found in accordance with the result reached.'"
Ivie, 439 S.W.3d at 200 (quoting In re J.A.R., 426 S.W.3d 624, 626 (Mo. banc 214)). The
trial court made numerous factual findings which constitute substantial evidence that
Starke and Brady operated in a manner that suggested to the public that they were a firm.
Substantial evidence is evidence that "has any tendency to prove or disprove any fact
11
necessary to sustain the trial court's judgment." Hunter, 486 S.W.3d at 925. None of the
trial court's specific factual findings are challenged by Brady on appeal.
Here, the trial court found that Brady and Starke shared space in an office building
where a single, stand-alone sign out front read "Starke Law Offices," with Starke's phone
number underneath. Clients arriving at the "Starke Law Offices" entered through a door
marked "Law Offices" that listed the occupying attorneys with no indication that they were
unaffiliated. The same phone number on the "Starke Law Offices" sign appeared on the
door to the building. A person calling that number would be greeted the same as any other
caller before being connected to the appropriate attorney. It was not unusual for Brady's
clients to use Starke's phone number to reach Brady. All visitors and clients used the same
reception area and were greeted by the same staff. Brady used Starke forms, including
medical authorization forms, and on at least one occasion, a medical authorization form
used by Brady referenced Starke's Law Firm.
In addition, the trial court found that Starke and Brady met with Ziegler together,
and that Starke told Ziegler that although Brady would be the primary attorney on her file,
Starke would be there to assist with the case. Starke testified that he always remained
available to referred clients in the event that the client had an issue with Brady, including
answering or returning client calls when clients could not get ahold of Brady. Chrisman
testified that her typical conversations with clients referred to Brady included a
representation that "[i]f there's a problem, you know, let us know, you can call us back; we
just want to make sure that you're happy." Some clients who had been referred to Brady
did, in fact, contact Starke after failing to reach Brady. The trial court specifically found
12
the testimony provided by Chrisman and Starke to be credible. We defer to the trial court's
credibility determinations. Hunter, 486 S.W.3d at 925.
Based on this evidence, the trial court found that "to the general public, there was
no visible way to distinguish separate legal entities." We therefore reject Brady's
contention that no substantial evidence supported the conclusion that Brady and Starke
presented themselves to the public in a way that suggested that they were a firm.
Because substantial evidence supports the trial court's conclusion that Brady and
Starke were in the same firm as contemplated by Rule 4-1.5(e), the trial court did not err
in concluding that Rule 4-1.5(e) did not apply to the fee-sharing agreement between Starke
and Brady.8 Given this conclusion, Brady's alternative argument--that no substantial
evidence established that the fee-sharing agreement met the requirements of Rule 4-1.5(e)
applicable when lawyers are not in the same firm--is rendered moot and need not be
addressed.
Brady's point on appeal is denied.
8
We need not address the trial court's reliance on Beck v. Patton, 309 S.W.3d 436 (Mo. App. W.D. 2010),
for the alternative conclusion that regardless the impression presented to the public, Brady and Starke were in the
same firm for purposes of Rule 4-1.5(e) because they had an ad hoc partnership based on their agreement to refer
cases to one another in order to build one other's businesses; their agreement to share fees; their shared access to
client information and pleadings in connection with referred files; their practice of discussing strategies in pending
matters; and their substantial collaboration on referred files. Plainly, such evidence would be relevant to establish
shared responsibility for a referred matter, one of the three requirements for an enforceable fee-sharing agreement
where lawyers are not in the same firm. Rule 4-1.5(e). Whether the same evidence can suffice to establish that
lawyers are in the same firm, and thus beyond the scope of Rule 4-1.5(e), is an issue we need not resolve.
13
Conclusion
The trial court's judgment is affirmed.
__________________________________
Cynthia L. Martin, Judge
All concur
14