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Howard & Bowie v. Cloutier & Briggs
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2000 ME 148
Docket: Lin-99-436
Argued: April 4, 2000
Decided: July 27, 2000
Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and
CALKINS, JJ.
HOWARD & BOWIE, P.A.
v.
DONALD AND LINDA COLLINS
v.
HOWARD & BOWIE, P.A.
************
HOWARD & BOWIE, P.A.
v.
CLOUTIER & BRIGGS, P.A.
CLIFFORD, J.
[¶1] The law firm of Cloutier & Briggs, P.A. appeals from a judgment
entered in the Superior Court (Lincoln County, Brennan, J.) in favor of the
law firm of Howard & Bowie, P.A., determining that Cloutier & Briggs had
been unjustly enriched by retaining the entire contingency fee from the
proceeds of a settlement reached in a case in which Howard & Bowie had
been the original attorneys of record for the plaintiffs, and had been
discharged by the clients after completing some work on the case. Cloutier
& Briggs contends that the trial court erred in determining that Howard &
Bowie was entitled to any award for unjust enrichment and that, in any
event, the clean hands doctrine should have been applied to reduce any such
award. Howard & Bowie argues that the recovery awarded in this case is
supported by the theories of unjust enrichment and, alternatively, quantum
meruit. Howard & Bowie also cross appeals, contending that the trial court
undervalued Howard & Bowie's unjust enrichment award. Concluding that
Howard & Bowie was not entitled to recovery in unjust enrichment or in
quantum meruit, we vacate the judgment.
[¶2] On August 31, 1990, Donald and Linda Collins suffered personal
injuries in an automobile accident. They retained Clayton Howard and the
law firm of Howard & Bowie to represent them, eventually executing a fee
agreement which contained the following language:
Compensation on the foregoing contingency shall be on the basis
of 33 1/3 percent (33 1/3%) of the amount collected. . . . [I]n
the event that the Client shall discharge the Attorney or
otherwise prevent the Attorney from performing under this
Agreement without good cause prior to the conclusion of the
case, then in that event, the Attorney shall receive the same
contingent fee from any amount collected by the Client
subsequent to the discharge.
[¶3] On behalf of the Collinses, Howard brought a personal injury
lawsuit in the Superior Court. He negotiated with opposing counsel and, in
April of 1993, received an offer of settlement in the amount of $225,000.
The case did not settle, however, and it was placed on the trial list for May
of 1993.
[¶4] The Collinses grew dissatisfied with Howard's handling of the
case. As the case neared trial, the Collinses learned that Howard had not
contacted any of the witnesses to inform them of the upcoming trial. They
met with Donald Briggs, an attorney with Cloutier & Briggs. Briggs told the
Collinses that Cloutier & Briggs would not get involved in the case until the
Collinses had tried to work things out with Howard.
[¶5] Briggs encouraged the Collinses to meet with Howard to
discuss their misgivings. The Collinses agreed and met with Howard, but
the Collinses remained dissatisfied. They returned to Cloutier & Briggs,
agreed to retain that law firm as counsel, and executed a fee agreement. In
addition to the written agreement, Cloutier & Briggs orally promised the
Collinses that they would only be responsible for paying one fee, and if it was
later determined that the Collinses owed Howard & Bowie a fee for the
services it had provided, Cloutier & Briggs agreed to pay that fee.
[¶6] Howard testified that when he learned that the Collinses had
hired Cloutier & Briggs, he was concerned that Cloutier & Briggs would not
honor Howard & Bowie's original fee agreement with the Collinses. In May
of 1993, seeking to enforce the fee agreement, Howard & Bowie prepared
and filed a complaint against the Collinses, CV-93-46, seeking judgment in
an amount equal to one-third of the $275,000 settlement offer that Howard
& Bowie claimed it had secured on behalf of the Collinses. Howard & Bowie
later amended the complaint against the Collinses, adding a claim based on
quantum meruit. Howard & Bowie unsuccessfully attempted to attach the
proceeds of any settlement reached in the Collinses' personal injury case.
[¶7] The Collinses counterclaimed against Howard & Bowie on
theories of malicious prosecution and intentional and negligent infliction of
emotional distress.
[¶8] In January of 1994, the Collinses, through Cloutier & Briggs,
settled their personal injury action for $360,000, and Cloutier & Briggs
retained their contingency fee from the proceeds of that settlement. In
December of 1994, Howard & Bowie filed a complaint against Cloutier &
Briggs in the Superior Court, CV-94-107, seeking, on unjust enrichment
grounds, an equitable share of the fee received by Cloutier & Briggs. Howard
& Bowie later added a claim based on quantum meruit.
[¶9] The two cases were consolidated for trial. Prior to trial,
however, the parties agreed to submit to mediation. A settlement of the
issues raised in CV-93-46, Howard & Bowie's action against the Collinses,
resulted from the mediation. The settlement agreement called for Howard
& Bowie to pay the Collinses $58,000 to settle the Collinses' counterclaims.
In return, the Collinses assigned to Howard & Bowie "any and all rights" the
Collinses had "as against Cloutier & Briggs . . . to be indemnified as against
all attorneys fees owed or claimed to be owed" by the Collinses to Howard &
Bowie.
[¶10] Although a settlement was reached in CV-93-46, a final
judgment was not entered by the court in that case until after a trial on the
merits in Howard & Bowie v. Cloutier & Briggs, CV-94-107, in which
mediation had failed to produce a settlement. At that time and in
accordance with the settlement agreement, the trial court entered a
dismissal without prejudice in the action brought by Howard & Bowie against
the Collinses.
[¶11] At the trial in Howard & Bowie v. Cloutier & Briggs, Jeffrey
Edwards, attorney for the defendants in the Collinses' personal injury action,
testified that prior to Howard & Bowie's discharge in that action, the firm
had participated in "a series of depositions" and that "[d]iscovery was
essentially complete." Edwards also testified that liability to the defendants
was "locked in" and that he had offered $225,000 to settle the case.
[¶12] The trial court concluded that Howard & Bowie was "entitled
to recovery in this case under the theory of unjust enrichment" based on its
findings that Howard & Bowie had undertaken significant discovery and that
"Mr. Howard did a reasonably competent job in preparing the case for trial."
In determining the amount of the recovery, the court first found that
Cloutier & Briggs had been unjustly enriched by $1916.10, the amount of
out-of-pocket costs incurred by Howard & Bowie in representing the
Collinses. The court then reasoned that although Howard & Bowie had
"undertaken all the pretrial preparation," it had also been "relieved of the
duties of organizing and prosecuting a trial and the risk of an unsuccessful
result." Accordingly, the court determined that Howard & Bowie was
entitled to 50% of the contingent fee it would have earned if the Collinses
had chosen to accept the settlement offer of $225,000 that had been
received prior to Howard & Bowie's discharge.{1} This appeal and cross-
appeal followed.
I.
[¶13] We agree with Cloutier & Briggs's contention that Howard &
Bowie is not entitled to recover on its unjust enrichment claim. To establish
a claim for unjust enrichment, a party must prove (1) that it conferred a
benefit on the other party; (2) that the other party had "appreciation or
knowledge of the benefit;" and (3) that the "acceptance or retention of the
benefit was under such circumstances as to make it inequitable for it to
retain the benefit without payment of its value." See June Roberts Agency v.
Venture Properties, 676 A.2d 46, 49 (Me. 1996). The trial court's factual
findings on these elements are reviewed for clear error. See Aladdin Elec.
Assocs. v. Town of Old Orchard Beach, 645 A.2d 1142, 1144 (Me. 1994).
[¶14] "[T]he most significant element of the doctrine [of unjust
enrichment] is whether the enrichment of the defendant is unjust." Styer v.
Hugo, 619 A.2d 347, 350 (Pa. Super. Ct. 1993). A successor attorney will
almost always retain some benefit from the work of the predecessor
attorney. Retention of that benefit, however, will rarely be unjust because
the predecessor attorney can and should protect his or her right to be
compensated by the client. Id. at 350. Although we need not decide under
what circumstances retention of the benefit by the successor attorney may
be unjust, see, e.g., Galanis v. Lyons & Truitt, 715 N.E.2d 858, 863
(Ind. 1999) (holding that where a successor attorney fails to inform the
client of the client's duty to pay the predecessor attorney, "the successor
assumes the obligation to pay the first lawyer's fee out of his or her
contingent fee"), no such circumstances exist here.
[¶15] There is no evidence that Cloutier & Briggs did anything to
interfere with the Collinses' relationship with Howard & Bowie. To the
contrary, Attorney Briggs initially advised the Collinses to work out their
differences with Howard & Bowie, and Cloutier & Briggs refused to
represent the Collinses until they attempted to reconcile with Howard &
Bowie. Moreover, Cloutier & Briggs informed the Collinses of their potential
liability to Howard & Bowie and also agreed to indemnify the Collinses in any
action by Howard & Bowie for attorney fees. Finally, Howard & Bowie had
ample opportunity to secure a share of the fee in the action it filed against
the Collinses and later voluntarily dismissed. In the circumstances of this
case, unjust enrichment does not entitle Howard & Bowie to recover from
Cloutier & Briggs.
II.
[¶16] Howard & Bowie also contends that it is entitled to recover
from Cloutier & Briggs in quantum meruit, and it advances two theories to
support such a recovery. First, Howard & Bowie asserts the firm's right to
recover directly from Cloutier & Briggs. Second, Howard & Bowie asserts
the firm's right to recover by standing in the shoes of the Collinses and
enforcing the terms of the indemnity agreement. It contends that the trial
court erred in implicitly rejecting those claims. We disagree.
[¶17] "A valid claim in quantum meruit requires: 'that (1) services
were rendered to the defendant by the plaintiff; (2) with the knowledge and
consent of the defendant; and (3) under circumstances that make it
reasonable for the plaintiff to expect payment.'" Paffhausen v. Balano, 1998
ME 47, ¶ 8, 708 A.2d 269, 271 (quoting Bowden v. Grindle, 651 A.2d 347,
351 (Me. 1994)). Quantum meruit recovery rests on a contract that is
"'inferred from the conduct of the parties.'" See id. ¶ 6, 708 A.2d at 271
(quoting United States ex rel. Modern Elec., Inc. v. Ideal Elec. Sec. Co., 81
F.3d 240, 246 (D.C. Cir. 1996)). Consequently, a party claiming the
existence of an implied contract must demonstrate "a reasonable
expectation . . . to receive compensation for [its] services and a 'concurrent
intention' of the other party to compensate [it]." See id. ¶ 9, 708 A.2d at
272 (quoting Estate of White, 521 A.2d 1180, 1183 (Me. 1987)).
[¶18] Howard & Bowie performed its legal services for the Collinses
before Cloutier & Briggs became involved in the case, so it could have had no
reasonable expectation that Cloutier & Briggs would compensate the firm for
those services. Likewise, Cloutier & Briggs could have had no concurrent
intention to compensate Howard & Bowie for those services. Accordingly,
Howard & Bowie is not entitled to quantum meruit recovery directly from
Cloutier & Briggs.{2}
[¶19] Moreover, contrary to the additional contention of Howard &
Bowie, the rights assigned to it by the Collinses do not permit Howard &
Bowie to assert a quantum meruit claim directly against Cloutier & Briggs.
Howard & Bowie's argument misconceives the nature of those rights.{3}
[¶20] Howard & Bowie brought a quantum meruit claim against the
Collinses in CV-93-46, one of the cases consolidated in the present action.
Before trial, however, the parties agreed to settle the case, and pursuant to
that agreement, Howard & Bowie obtained from the Collinses the Collinses'
right to have Cloutier & Briggs indemnify them for "all attorneys fees owed
or claimed to be owed" to Howard & Bowie. The agreement, however, does
not establish any liability for attorney fees and does not require the Collinses
to pay anything to Howard & Bowie. Indeed, pursuant to the agreement,
Howard & Bowie's claim for attorney fees against the Collinses was
dismissed without prejudice.
[¶21] The assignment, rather than giving Howard & Bowie the right
to bring its quantum meruit claim directly against Cloutier & Briggs, merely
allows Howard & Bowie to enforce the terms of the indemnity agreement.
Howard & Bowie, however, cannot recover pursuant to the indemnity
agreement because "[t]here must be proof of damage actually suffered . . . to
enable one to maintain an action upon a contract of indemnity." Hussey v.
Collins, 30 Me. 190, 192 (1849) (holding that even where judgment had
been rendered against the indemnitees, the indemnitees could not recover
from the indemnitor without proof that the indemnitees had actually "paid
any thing on account of that suit"); see also Peerless Div., Lear Siegler, Inc.,
v. United States Special Hydraulic Cylinders Corp., 1999 ME 189, ¶ 14,
742 A.2d 906, 910 (determining that Arkansas law, which requires that
"'[t]here must be loss, not merely liability, before indemnity is due,'"
reflects "settled indemnification law") (quoting Larson Machine, Inc. v.
Wallace, 600 S.W.2d 1, 13 (Ark. 1980)).
[¶22] There is no evidence that the Collinses suffered any actual
loss. There has been no allegation that Cloutier & Briggs failed to provide
for the Collinses' defense in their case against Howard & Bowie, nor have
the Collinses paid any money to Howard & Bowie on its claim for attorney
fees. Accordingly, Howard & Bowie is not entitled to recover from Cloutier
& Briggs by virtue of its status as assignee of the Collinses' right to
indemnity.
[¶23] Because we conclude that Howard & Bowie is not entitled to
any recovery, we do not address the arguments raised in the cross appeal
with respect to the amount the court awarded to Howard & Bowie.
The entry is:
Judgment vacated. Remanded to the Superior
Court for entry of a judgment in favor of Cloutier
& Briggs.Attorneys for plaintiffs:
James M. Bowie, Esq., (orally)
Lisa Fitzgibbon Bendetson
Thompson & Bowie
P O Box 4630
Portland, ME 04112
Attorneys for defendants:
Philip P. Mancini, Esq., (orally)
Cloutier & Briggs, P.A.
247 Commercial Street
Rockport, ME 04856-5964
FOOTNOTES******************************** {1} . The court entered judgment
for Howard & Bowie in the amount of $39,416.10. {2} . Howard & Bowie
mistakenly relies on Galanis v. Lyons & Truitt, 715 N.E.2d 858 (Ind.
1999) to support its argument that it is entitled to recover directly from
Cloutier & Briggs in quantum meruit. In Galanis, the court allowed a
predecessor attorney to recover directly from a successor attorney. See
id. at 864. In its opinion, the court used the terms quantum meruit and
unjust enrichment to describe the legal theory on which it relied. A reading
of the opinion, however, reveals that the court articulated a legal standard
that, in Maine, sounds only in unjust enrichment. Though other jurisdictions
have not always carefully defined the difference between unjust enrichment
and quantum meruit, see Candace S. Kovacic, A Proposal to Simplify Quantum
Meruit Litigation, 35 Am. U. L. Rev. 547, 553-62 (1986) (surveying numerous
jurisdictions and noting that the definition of each term can have different
meanings in different jurisdictions and that the terms are often used interchangeably),
we have attempted to identify those differences and their practical effects,
see Paffhausen v. Balano, 1998 ME 47, ¶ 6, 708 A.2d at 271; see also
A.F.A.B., Inc. v. Town of Old Orchard Beach, 639 A.2d 103, 105 n.3 (Me.
1994); Danforth v. Ruotolo, 650 A.2d 1334, 1335 (Me. 1994). Quantum meruit
recovery under Maine law requires that the parties have a concurrent expectation
that the services were being rendered in exchange for compensation. See
Paffhausen v. Balano, 1998 ME 47, ¶ 9, 708 A.2d at 272. In Galanis,
however, the court did not impose such a requirement. Moreover, the Galanis
court concluded that the measure of recovery in the case was "the value
conferred on the client, not the effort expended by the lawyer." See
Galanis v. Lyons & Truitt, 715 N.E.2d at 862. In Maine, it is unjust
enrichment recovery that is calculated by "the value of the benefit
retained." See Paffhausen v. Balano, 1998 ME 47, ¶ 6, 708 A.2d
at 271. Quantum meruit recovery, on the other hand, focuses on "the
value of the services provided by the plaintiff." See id. ¶ 7,
708 A.2d at 271. Accordingly, under Maine law, Galanis provides little support
for allowing a predecessor attorney to recover directly from a successor
attorney in quantum meruit. {3} . Because neither party questions the scope
or enforceability of the oral indemnity agreement, we do not address those
issues on appeal.
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