DEXTER & KILCOYNE, ESQS. VS. ANTHONY X. ARTURI, JR.,ESQ.(L-10660-15, BERGEN COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4862-15T1
DEXTER & KILCOYNE, ESQS.,
Plaintiffs-Appellants,
v.
ANTHONY X. ARTURI, JR., ESQ.
and ARTURI, D'ARGENIO, GUAGLARDI
& MELITI, LLP,
Defendants-Respondents.
___________________________________
Argued August 1, 2017 – Decided August 17, 2017
Before Judges Sabatino and O'Connor.
On appeal from Superior Court of New Jersey,
Law Division, Bergen County, Docket No. L-
10660-15.
Bruce H. Dexter argued the cause for
appellants (Dexter & Kilcoyne, attorneys; Mr.
Dexter, on the briefs).
Anthony X. Arturi, Jr., argued the cause for
respondents (Arturi, D'Argenio, Guaglardi &
Meliti, LLP, attorneys; Mr. Arturi, of counsel
and on the brief).
PER CURIAM
This appeal concerns a dispute over unpaid legal services
under circumstances in which a personal injury client was
represented on a contingent basis by two successive law firms.
After her first law firm performed certain pre-lawsuit work, the
client discharged that firm and retained a second law firm. The
second law firm filed suit and recovered a settlement for the
client, but declined to share any of the contingency fee with its
predecessor. The first law firm consequently sued the second law
firm for the reasonable value of the work it had performed. The
trial court dismissed on summary judgment the first law firm's
claim for fees, and this appeal ensued.
For the reasons that follow, we vacate the summary judgment
order, and remand for further proceedings in the trial court to
reconsider the first law firm's quantum meruit claims.
The pertinent sequence of events is relatively
straightforward and in many respects undisputed. In April 2010,
the client1 ingested a french fry that contained a fragment of
metal. After she began having pain and difficulty breathing, she
went to a local hospital. Doctors conducted emergency surgery to
remove the metal fragment, which had lodged in her esophagus and
pierced her lung.
After recovering from this mishap, the client consulted with
plaintiff, Dexter & Kilcoyne, Esqs. ("the first law firm"). She
1
We discern no necessity to mention the client's name in this
opinion.
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entered into a written retainer agreement with the firm to
represent her interests in connection with the french fry incident.
Among other things, the agreement specified that the client would
pay a contingent fee to be computed in accordance with the sliding
scale percentages set forth in Rule 1:21-7. As is customary, the
retainer agreement also recited that "[i]n the event there is no
recovery . . . the client shall not be obligated to pay the
[first] attorney for his services, but . . . shall reimburse the
attorney for all disbursements made . . . in connection with the
institution and prosecution of the claim."
After being retained, the first law firm performed several
initial steps in furtherance of the client's interests. Among
other things, between April 2010 and March 2011, the first law
firm obtained the client's medical and anesthesia records, spoke
with prospective expert witnesses, prepared a form of complaint,
conducted legal and Internet research, and exchanged
correspondence with the manufacturer of the defective french fry.
Perhaps most importantly, the first law firm obtained from the
hospital a key item of physical evidence, the metal fragment that
had been removed from the client in surgery, and sent the fragment
to a laboratory for analysis.
In March 2011, before any lawsuit was filed against the
manufacturer, the client notified the first law firm that she was
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terminating its services. About two weeks later, the first law
firm received a fax from defendants, Anthony X. Arturi, Jr., Esq.
and Arturi, D'Argenio, Guaglardi & Meliti, LLP ("the second law
firm"), asking for the client's file. The first law firm
accordingly transmitted the file as requested to the second law
firm, accompanied by a letter and a copy of a client invoice for
the services the first law firm had rendered.
The invoice reflected that the first law firm had devoted
29.05 hours of attorney time to the client's matter and had
incurred $245.75 in disbursements. The letter requested that the
second law firm promptly reimburse the first law firm for its
disbursements and "retain a copy of our statement in your file so
that we can be compensated for our time spent on this matter at
the conclusion of the case." The second law firm did not
acknowledge or respond to the first law firm's letter, based upon
an assumption that it owed no obligations to a law firm that the
client had discharged and which had not filed suit. Nor did the
second law firm pay the disbursements as requested.
After entering into its own contingent fee arrangement with
the client, the second law firm filed a personal injury action on
the client's behalf in federal court against the french fry
manufacturer. Following several years of litigating the case, the
second law firm negotiated a settlement for the client in 2013.
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The settlement was for a confidential sum not disclosed in this
appellate record. We were advised at oral argument on the appeal
that the second law firm collected a contingent fee of one-third
of the settlement amount, after deducting its own disbursements.
According to the first law firm, it made repeated inquiries
of the second law firm about the status of the client's matter but
received no response. Eventually, in November 2014, the second
law firm advised the first law firm that the client's matter had
settled, that the settlement terms were confidential, and that it
did not have a legal obligation to share any portion of the fee
or the client's recovery with the first law firm.
The first law firm claimed it was entitled to a lien on the
client's recovery, as well as recovery of the reasonable value of
the services it had provided. The second law firm disagreed,
which prompted the first law firm to attempt initially to gain
relief from the federal court. After the federal court apparently
indicated that the fee dispute was more appropriately resolved in
the Superior Court, the first law firm filed the present action
against the second law firm.
The second law firm moved for summary judgment, which the
trial court granted. In her written statement of reasons, the
motion judge observed that the second law firm had shown "an
apparent lack of professional courtesy" in failing to respond to
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the first law firm's March 2011 letter asserting a right to share
in an ultimate recovery of proceeds in the case. Nonetheless, the
judge also concluded, albeit with reluctance, that the controlling
law did not afford the first law firm any recourse.
We need not devote extended discussion to this unfortunate
situation. First, we agree with defendants and the trial court
that the first law firm had no basis to assert a lien on the
client's settlement proceeds. The governing statutory provision,
N.J.S.A. 2A:13-5, only allows a lien for compensation to be
asserted by an attorney in situations in which that attorney has
filed a complaint, third-party complaint, counterclaim, or other
pleading on the client's behalf. That did not occur here because
no such pleading had been filed by the first law firm by the time
the client terminated its services in March 2011.
The absence of a lien, however, does not end the analysis.
Our law has recognized a personal injury attorney's potential
entitlement to a quantum meruit recovery for the reasonable value
of services that he or she provided before litigation was brought
by a successor lawyer or the client, pro se. Frequently, and
ideally, the first law firm and the successor law firm(s) reach
an agreement for the ultimate allocation of the fee at the time
the client's file is transferred. However, there are instances,
as in this case, in which no such agreement is attained and the
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first law firm is left to the court's legal and equitable authority
to fashion a remedy.
The governing principles are aptly set forth in a leading New
Jersey treatise on attorney ethics:
When a client dismisses one attorney and hires
a second, the two often will have no agreement
on the division of fee, and so the LaMantia
analysis will come into play. See, e.g.,
Straubinger v. Schmitt, 348 N.J. Super. 494,
500, 505 (App. Div. 2002). See also Cohen v.
Radio-Electronics Officers, 146 N.J. 140, 162-
163 (1996), indicating that when an attorney
is dismissed after having done some work, the
"modern rule" is that the attorney may recover
the fair value of the services rendered before
the discharge, and that this rule applies to
contingent fee cases as to others.
[Kevin H. Michels, New Jersey Attorney Ethics
895 (2016).]
In LaMantia v. Durst, 234 N.J. Super. 534, 540-41 (App. Div.),
certif. denied, 118 N.J. 181 (1989), which is cited above by
Professor Michels, we set forth the following factors that guide
a quantum meruit valuation of the superseded attorney's services:
(1) the length of time each of the firms spent on the case relative
to the total time expended to conclude it; (2) the quality of
representation by each firm; (3) the viability of the claim at the
time of the file's transfer; (4) the amount of recovery realized
in the underlying lawsuit; and (5) any pre-existing partnership
agreements. Although the dispute in LaMantia arose in the context
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of a lawyer who left the first law firm and took the client's file
with him, the same principles of fair compensation logically apply
here. See also Ciecka v. Rosen, 908 F. Supp. 2d 545, 553 (D.N.J.
2012) (observing that under New Jersey law an attorney or law firm
may bring an action for quantum meruit against an unrelated
successor attorney or law firm for a portion of a contingency
fee); Goldberger & Shinrod v. Baumgarten, 378 N.J. Super. 244, 251
(App. Div. 2005) (recognizing similar quantum meruit principles).
The second law firm maintains that it should not be a
"guarantor" of the first law firm's fee, and that the legal work
performed by the first law firm was merely "incidental" and thus
non-compensable. The second law firm further argues that the
first law firm's sole remedy is against the client, who has already
paid the maximum fee allowed without court approval under the
sliding scale of Rule 1:21-7.
We are not persuaded by these arguments. The second law firm
was not being asked to "guarantee" the first law firm's fee;
indeed, if the contingent case resulted in no recovery, then
neither law firm would have earned a fee. The value of the first
law firm's efforts – including obtaining the metal fragment as a
critical piece of evidence – was not manifestly "incidental." The
resolution of the reasonable value of the services implicates
genuine issues of fact that should be resolved by the trial court
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on a plenary basis and not through summary judgment. Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Lastly,
to the extent that the former client is found to be a necessary
or indispensable party to the fee claim, she may be potentially
added to the remand proceedings in the trial court's discretion.
We therefore vacate the summary judgment order and remand for
the trial court's reconsideration of the first law firm's quantum
meruit claim. On remand, either plaintiff or defendant may
promptly file a motion for leave to add the client as a direct or
third-party defendant. The client may interpose any defense she
may wish to assert, including but not limited to laches and an
argument that she should not have to sustain any further reduction
of her recovery beyond the amount already deducted by the second
law firm, and that the two law firms instead must divide the
already-deducted fee between themselves.
Vacated and remanded. Before any further motions or pleadings
are filed in the Law Division, the trial court shall conduct a
case management conference within thirty days to plan the remand
proceedings. We do not retain jurisdiction.
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