Telecom Italia S.P.A v. L-3 Communications , 335 F. App'x 770 ( 2009 )

FILED
United States Court of Appeals
Tenth Circuit
June 29, 2009
UNITED STATES COURT OF APPEALSElisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
TELECOM ITALIA S.P.A.,
an Italian corporation,
Plaintiff - Counter Defendant- No. 07-4085
Appellant,
(D.C. No. 2:03-CV-00641-DS)
v.
(D. Utah)
L-3 COMMUNICATIONS
CORPORATION, a Delaware corporation;
L-3 COMMUNICATIONS SYSTEMS-
WEST, a division or wholly owned
subsidiary of L-3 Communications
Corporation,
Defendants - Counter Claimants -
Appellees.
ORDER AND JUDGMENT*
Before LUCERO and EBEL, Circuit Judges, and FRIZZELL,** District Judge.
The initial questions presented in this appeal are: (1) whether an attorney who no
longer represents a potential appellant may obtain a prejudgment writ of attachment in the
* This order and judgment is not binding precedent except under the doctrines of
law of the case, res judicata and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. 32.1 and 10th Cir. R. 32.1.
** The Honorable Gregory K. Frizzell, United States District Judge for the
Northern District of Oklahoma, sitting by designation.
former client’s chose in action and file a notice of appeal; and (2) if not, whether Telecom
Italia subsequently ratified the previously unauthorized appeal. We answer both questions
in the negative and dismiss the appeal.
I. BACKGROUND
In July of 2003, Telecom Italia S.p.A., an Italian corporation, sued L-3
Communications Corporation and L-3 Communications Systems-West for breach of contract
and unjust enrichment in the United States District Court for the District of Utah. The L-3
defendants counterclaimed for breach of contract. The parties filed cross motions for
summary judgment, which the district court denied in August, 2005.
On November 16, 2005, Telecom Italia’s attorneys at the time, from the firm of Snell
& Wilmer, LLP, filed a motion to withdraw as counsel based on irreconcilable differences.
At a status conference held that day, movants requested the district court set a new pretrial
schedule to allow Telecom Italia to find new counsel. On November 22, 2005, Snell &
Wilmer filed a Notice of Attorney Lien in the amount of $46,416.17 for the balance of
compensation due from Telecom Italia. On November 29, 2005, the district court granted
the motion to withdraw.
On January 11, 2006, Mr. Donald Winder appeared at a status conference and advised
the district court that Telecom Italia had not yet retained his services. The court reset the
status conference to January 24, 2006. Counsel for the parties appeared on January 24th and
submitted an Amended Attorneys’ Planning Meeting Report and an Amended Scheduling
Order to the Court. Donald J. Winder and David J. Weissman of the firm of Winder &
-2-
Haslam, P.C. signed the documents as attorneys for plaintiff Telecom Italia. On March 3,
2006, Winder, Weissman, and the Winder & Haslam firm filed a Motion for Approval to
Withdraw as Counsel of Record, citing material and irreconcilable differences and stating
that “Telecom Italia has failed to honor its obligations to Winder & Haslam in this matter.”
On March 7, 2006, the district court granted the motion to withdraw.
On June 5, 2006, Winder & Haslam entered a new appearance in the case. Mr.
Winder and Winder & Haslam continued to represent Telecom Italia through the non-jury
trial and post-trial briefing. On March 7, 2007, the district court entered its findings of fact
and conclusions of law and granted judgment in favor of L-3 on Telecom Italia’s claims and
in favor of Telecom Italia on L-3's counterclaim.
The deadline for filing a notice of appeal of the judgment was April 6, 2007. That
same day, Winder & Haslam filed a complaint in the Third Judicial District Court in and for
Salt Lake County, Utah, against Telecom Italia, asserting claims for breach of contract and
unjust enrichment in the amount of $50,968.66. In its Complaint, Winder & Haslam stated
that it “no longer represents Telecom Italia for the claims and defenses relating to L3
Communications, or in any other legal matters.” The firm admitted that Telecom Italia,
“through its Italian counsel, informed Winder & Haslam ‘you should not spend any time on
this.’” However, Winder & Haslam was “aware of no other assets of the [sic] Telecom Italia
in the United States other than the chose in action against L3 Communications.” The firm
filed a Motion for Ex Parte Prejudgment Writ of Attachment and alleged in its Complaint
that “Winder & Haslam will suffer significant and irreparable injury should an ex parte
-3-
prejudgment Writ of Attachment not issue, which would allow the deadline to appeal to pass
and Telecom Italia’s chose in action to lose all value.” The state district court granted an ex
parte prejudgment writ of attachment giving Winder & Haslam “possession and control of
the chose in action” at 2:30 p.m. on April 6, 2007. Ten minutes later, Winder & Haslam filed
a Notice of Appeal in federal court as attorneys for Telecom Italia.
One week prior to oral argument, Winder & Haslam filed a Notice signed by Donald
J. Winder for Winder & Haslam, and Claudio Coggiatti, counsel in Rome for Telecom Italia.
The Notice states:
Comes now the undersigned counsel and hereby represent to this
Court the dispute between Winder & Haslam, P.C. and Telecom
Italia, S.p.A. has been settled and compromised and Winder &
Haslam, P.C. is authorized to represent the interests of Telecom
Italia, S.p.A. in this appeal as its counsel.
L-3 argues that the Notice underscores the fact that Winder & Haslam was not authorized to
pursue the appeal in the first instance, and that any later agreement does not cure the prior
defect. Winder & Haslam replies that it acted properly in obtaining a prejudgment writ of
attachment, and, moreover, Telecom Italia has now ratified the acts of its attorney in
pursuing the appeal.
II. DISCUSSION
It has long been the law of this circuit that an attorney employed to engage in
litigation has no right to prosecute an appeal. Hawkeye-Security Ins. Co. v. Indemnity Ins.
Co., 260 F.2d 361, 363 (10th Cir. 1958). An attorney’s “recommendations with respect to
an appeal are entitled to consideration, but whether an appeal shall be taken is a question for
-4-
determination by the principal.” Id. At least three other circuits agree. The Second Circuit
holds that, without authorization of the client, an attorney lacks standing to prosecute an
appeal. Soliman v. Ebasco Services Inc., 822 F.2d 320, 323 (2d Cir. 1987). The Sixth
Circuit has stated the general rule “that an attorney cannot, on his own motion, appeal from
a judgment or decree injuriously affecting the interest of his client without said client’s
consent.” Brown v. Grand Trunk Western R.R. Co., 124 F.2d 1016, 1016 (6th Cir. 1941).
The Eighth Circuit has held that nonparty attorneys may not appeal, and their clients may not
be made appellants against their will. First Iowa Hydro Elec. Coop. v. Iowa-Illinois Gas and
Elec. Co., 245 F.2d 630, 631 (8th Cir. 1957); see also In re Leaf Tobacco Bd. of Trade of
N.Y., 222 U.S. 578, 581 (1911) (“One who is not a party to a record and judgment is not
entitled to appeal therefrom.”).
The attorneys for Winder & Haslam admitted in sworn filings – which they filed with
the Utah state court before they filed notice of the federal appeal – that they no longer
represented Telecom Italia and that Telecom Italia’s Italian counsel had advised them not to
spend any time on the appeal. They do not contend they had independent authority (other
than the prejudgment writ of attachment) to appeal the judgment against Telecom Italia.
Neither do they argue that their contract of employment operated to transfer or assign a
sufficient interest in the subject matter of the suit that they might prosecute the appeal,
notwithstanding the refusal of the client. Rather, they argue they had a property right under
Utah law to prosecute the appeal by reason of the prejudgment writ of attachment obtained
in state court.
-5-
In Utah, a legal cause of action is a “chose in action” which “may ordinarily be
acquired by a creditor through attachment and execution.” Snow, Nuffer, Engstrom & Drake
v. Tanasse, 980 P.2d 208, 210 (Utah 1999); Applied Med. Technologies, Inc. v. Eames, 44
P.3d 699, 701 (Utah 2002). In Tanasse, a law firm obtained a default judgment against a
former client in the firm’s action to collect on a promissory note for attorney fees. The client
then sued the firm for legal malpractice. The firm sought to recover on its default judgment
by executing on the client’s interest in the legal malpractice action, which it purchased for
$10,000 at a sheriff’s sale. The Utah Supreme Court concluded that a legal malpractice
action is subject to execution and can generally be purchased by a judgment creditor, but held
that the law firm’s purchase of the legal malpractice action was against the public policy of
Utah because: (1) the purchase denied the client the right to a trial on his legal malpractice
claim; and (2) the appropriate value of the legal malpractice claim would never be fairly
determined. Tanasse, 980 P.2d at 210. The Utah Supreme Court recognized that allowing
lawyers and law firms to execute on legal malpractice actions pending against them might
significantly undermine the public trust in the legal profession and compromise the
attorney/client relationship. Id. at 212.
A lawyer’s acquisition by prejudgment attachment of a former client’s cause of action
in order to allow the lawyer to appeal an adverse decision for the purpose of pursuing the
lawyer’s interest in collecting attorney fees creates at least two problems. First, it has the
obvious effect of denying the former client its right to decide not to appeal. Second, it has
the effect of generating appeals in which a primary incentive is the satisfaction of accrued
-6-
attorney fees owed to attorneys who have proceeded at their own risk in the trial court
without payment of fees. Allowing lawyers and law firms to obtain prejudgment writs of
attachment in actions on which they have worked would undermine the public trust in the
legal profession and compromise the attorney/client relationship.
Because Utah has not directly addressed the precise issue of Utah property law
presented here, we must predict how Utah’s highest court would rule. FDIC v. Schuchmann,
235 F.3d 1217, 1225 (10th Cir. 2000). In doing so, we are “free to consider all resources
available, including decisions of [Utah] courts . . . .” Id. (citing Wood v. Eli Lilly & Co., 38
F.3d 510, 512 (10th Cir. 1994)). Based upon our reading of the Utah Supreme Court’s
decision in Tanasse, we predict that the Utah Supreme Court would not permit a lawyer to
obtain a prejudgment writ of attachment in the former client’s cause of action in order to file
an unauthorized notice of appeal.1 Accordingly, Winder & Haslam had no right to prosecute
this appeal, under either the law of this circuit or Utah property law.
Finally, Winder & Haslam argues that “Telecom Italia has fully ratified the acts of its
attorney in pursuing this appeal.” In support, it cites Bivans v. Utah Lake Land, Water &
Power Co., 174 P. 1126 (Utah 1918), which stands in part for the proposition that the act of
an agent in excess of his authority may be ratified by the principal. Id. at 1131-32. Here,
however, Winder & Haslam did not act as Telecom Italia’s agent or attorney when it filed
1
Here, Winder & Haslam proceeded under a Writ of Attachment. We do not
address in this Order and Judgment whether Winder & Haslam would have had sufficient
authority to initiate the appeal without the consent of Telecom Italia had it first executed a
Writ of Execution against Telecom Italia's cause of action.
-7-
the federal Notice of Appeal. Instead, it admittedly operated in its own self-interest, having
just presented a sworn affidavit that it “no longer represents Telecom Italia [in the federal
case],” and having just obtained “possession and control of the chose in action against L3
Communications Corporation . . . arising out of, or relating to, the matter of Telecom Italia
v. L3 Corp., et al, No. 2:03CV00641DS (D. Utah filed July 21, 2003),” as set forth in the
Prejudgment Writ of Attachment secured immediately prior to filing the Notice of Appeal.
In short, neither Bivans, nor Advanced Restoration, L.L.C. v. Priskos, 126 P.3d 786, 794
(Utah Ct. App. 2005), cited for the proposition that ratification of an agent’s acts relates back
to the time the unauthorized act occurred, support ratification in this case, since the
unauthorized former attorneys were not acting as agents or attorneys for Telecom Italia.2
2
Although not raised in the briefs, the Restatement (Second) of Agency provides,
at Section 85, that an act is subject to ratification if the one doing the act purports to
perform it as the servant of another. While Winder & Haslam acted in its own self-
interest in obtaining the writ of attachment (and stated in its reply that it had withdrawn as
counsel before obtaining the writ of attachment), the federal docket indicates the firm
purported to act as attorney for Telecom Italia when it filed the Notice of Appeal.
According to the Restatement (Second) of Agency, at Section 90, “[i]f an act to be
effective in creating a right against another or to deprive him of a right must be performed
before a specific time, an affirmance is not effective against the other unless made before
such time.” Comment (a) states, in pertinent part, “[t]he bringing of an action, or of an
appeal, by a purported agent can not be ratified after the cause of action or right to appeal
has been terminated by lapse of time.” The Supreme Court applied this rule in FEC v.
NRA Political Victory Fund, 513 U.S. 88 (1994). In NRA, the Court concluded that the
Solicitor General’s attempted ratification of the Federal Election Commission’s
unauthorized timely filing of a writ of certiorari did not relate back to the unauthorized
filing because the period for filing a petition had expired. Relying on Section 90, the
Supreme Court recognized “it is essential that the party ratifying should be able not
merely to do the act ratified at the time the act was done, but also at the time the
ratification was made.” Id. at 98 (quoting Cook v. Tullis, 85 U.S. 332, 338 (1873)). In
NRA, the Solicitor General’s attempted ratification came too late to be effective.
Similarly, Telecom Italia’s attempted authorization came too late to ratify the Notice of
-8-
When an appeal is brought without a client’s authorization and over the express
statement not to spend any more time on the case, an award of sanctions for frivolous appeal
is appropriate. Soliman, 822 F.2d at 323. However, because this appeal was brought
pursuant to an arguable extension of Utah property law, we decline to consider it frivolous.
III. CONCLUSION
The appeal is dismissed.
ENTERED FOR THE COURT
Gregory K. Frizzell
District Judge
Appeal.
-9-