Richard D. Tucker er al. v. Daniel G. LIlley Troubh Heisler, P.A. v. Daniel G. Lilley Law Offices, P.A. , 2015 ME 36 ( 2015 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2015 ME 36
Docket: Cum-13-584; Cum-13-594
Argued: September 4, 2014
Decided: March 24, 2015
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ.*
RICHARD D. TUCKER et al.
v.
DANIEL G. LILLEY et al.
*****
TROUBH HEISLER, P.A.
v.
DANIEL G. LILLEY LAW OFFICES, P.A. et al.
MEAD, J.
[¶1] In these related cases, all parties are practicing Maine attorneys or
Maine law firms. In both matters, (1) complaints, cross-claims, and counterclaims
were filed in the Superior Court (Cumberland County, Wheeler, J.) asserting
various theories of entitlement to all or part of a $1.24 million attorney fee
generated in a civil judgment in another matter; (2) the court denied the motion of
Daniel G. Lilley and Daniel G. Lilley Law Offices, P.A., to consolidate the matters
for trial; and (3) the court proceeded to dispose of the cases through summary
*
Silver, J., sat at oral argument and participated in the initial conference but retired before this
opinion was adopted.
2
judgment on some claims, and dismissal or severance of others. Because we
conclude that, with one exception, the court erred in denying the motion to
consolidate the claims, we vacate the judgments except for that single claim and
remand for further proceedings.
I. BACKGROUND
A. Tucker v. Lilley et al.
[¶2] The summary judgment record in Tucker v. Lilley et al. supports the
following facts. Richard D. Tucker, John P. Flynn III, and Daniel G. Lilley are
practicing Maine attorneys. In 2005, Paula Braley (now DeKeyser) met with
Tucker to discuss a potential lawsuit following the death of her husband at Eastern
Maine Medical Center. Tucker obtained medical records and investigated the
claim. In 2006 he consulted with Flynn, then a member of the law firm of Troubh
Heisler, P.A. (Troubh), concerning the possibility of Flynn becoming lead counsel
in the case, which Flynn ultimately agreed to do.
[¶3] Tucker and Flynn stated by affidavit or in deposition that at a
September 27, 2006, meeting with Braley and her brother at Tucker’s office,
Braley agreed to a fee-sharing arrangement between Tucker and Flynn that would
keep both attorneys involved in her case for the same total fee. The attorneys
stated that their agreement was for Tucker to receive 25% of any contingent fee
earned in return for his referral and continued involvement in the case. Braley
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executed an affidavit that does not reference the 25% figure, but states that she
consented to the fee-sharing arrangement and that she signed a contingent fee
agreement with Flynn. Lilley disputes the existence of the contingent fee
agreement because neither an original nor a copy bearing the parties’ signatures
has been produced in this litigation.
[¶4] In 2009, Flynn left Troubh to join Daniel G. Lilley Law Offices, P.A.
(LLO). Braley elected to have Flynn continue as her attorney following the move
and signed a contingent fee agreement with LLO. In June 2011, while Flynn was
working for LLO, Braley’s case went to trial with Flynn acting as her sole trial
counsel, resulting in a large jury verdict for Braley.
[¶5] Flynn left LLO in July 2011 to open his own practice. Braley again
followed Flynn and signed a new contingent fee agreement with him that provided
for a 40% contingent fee. In April 2012, the Superior Court granted a petition
brought by Braley and Flynn for approval of the agreed-upon 40% attorney fee.
See 24 M.R.S. § 2961(3) (2014). Through an agreement among Tucker, Flynn,
Lilley, and Troubh, $1,240,000 in attorney fees was deposited in an escrow
account pending the outcome of this and related cases. Relevant to this case,
Tucker asserts that he is entitled to 25% of the escrowed amount, or $310,000, and
Flynn concurs. Lilley asserts that his firm is entitled to the entire $1.24 million.
4
[¶6] In February 2012, Tucker filed a complaint against Lilley, LLO, and
Flynn, seeking either a declaration that he is owed 25% of any contingent fee
received in the Braley matter or a judgment for that amount. Lilley moved to
consolidate the complaint with several other cases involving disputes over the
division of attorney fees resulting from Flynn’s representation of Braley and other
clients; the court denied the motion after a hearing. Lilley then moved for
summary judgment, as did Tucker. In July 2013, the court entered a decision
denying Lilley’s motion and granting Tucker summary judgment against Flynn,
Lilley, and LLO in the amount of $310,000 plus interest. Following Flynn’s
voluntary dismissal of his cross-claims against Lilley, the court entered a final
judgment pursuant to M.R. Civ. P. 54(b)(1).
B. Troubh Heisler, P.A. v. Lilley Law Offices, P.A. et al.
[¶7] Troubh’s complaint against LLO also arises from Flynn’s
representation of Braley, and it concerns the same $1.24 million in attorney fees
held in escrow. When Flynn left Troubh to join LLO, he negotiated a separation
agreement (SA) with Troubh containing terms concerning the return of his share of
the firm’s capital. The SA was signed by Flynn and Troubh. Separately, Troubh,
Flynn, and LLO negotiated a memorandum of agreement (MOA), signed by those
three parties, concerning referral fees due Troubh in Flynn’s cases that moved with
5
him to LLO. The MOA lists a 20% fee in the Braley case. The SA explicitly
incorporates the MOA; the MOA, however, is silent as to the SA.
[¶8] Following the Braley judgment, Troubh asserts that, pursuant to the
MOA, it is entitled to 20% of the total attorney fees in escrow; LLO asserts that it
is entitled to the entire amount; and Flynn, contending that Troubh breached the
SA by failing to return his full capital share and thereby nullified the MOA, asserts
that Troubh is owed nothing, or, alternatively, is owed 20% of the escrowed fees
remaining after Tucker takes 25%.
[¶9] In March 2012, Troubh filed a complaint against LLO and Flynn
alleging breach of contract and seeking a judgment against them jointly and
severally for 20% of $1.24 million ($248,000). LLO’s answer included a
cross-claim against Flynn, asserting that Flynn was obligated to pay any fee due
Troubh. Flynn’s answer included a similar cross-claim against LLO, and also
included a counterclaim against Troubh, asserting in part that Troubh had
fraudulently induced Flynn to agree to the MOA by promising him that he would
be paid his full capital share upon leaving the firm. LLO again moved to
consolidate the complaint with several other cases involving the division of
attorney fees awarded in Flynn’s cases, including Tucker’s claim to 25% of the
Braley fee; Flynn agreed to consolidation and Troubh objected to it. Following a
hearing, the motion was denied.
6
[¶10] Troubh moved for summary judgment and to sever Flynn’s
counterclaim. LLO cross-moved for summary judgment. After hearing, the court
entered an order (1) granting Troubh summary judgment for $248,000 against LLO
and Flynn, jointly and severally, together with interest and costs; (2) denying LLO
summary judgment; (3) dismissing Flynn’s cross-claim against Lilley; and
(4) severing and setting for trial Flynn’s counterclaim against Troubh.
II. DISCUSSION
A. Tucker’s Claim Against Flynn
[¶11] The standard of review on a grant of summary judgment is well
established:
Summary judgment is properly granted if the record reflects
that there is no genuine issue of material fact and the movant is
entitled to a judgment as a matter of law. We review de novo
whether, on a motion for summary judgment, a dispute of material
facts exists and whether the entry of a summary judgment was proper
as a matter of law. For purposes of this review, we consider the
evidence in the light most favorable to . . . the party against whom
judgment has been entered.
A fact is material if it has the potential to affect the outcome of
the suit, and a genuine issue of material fact exists when a fact-finder
must choose between competing versions of the truth, even if one
party’s version appears more credible or persuasive. The nonmoving
party is given the full benefit of all favorable inferences that may be
drawn from the facts presented.
Angell v. Hallee, 2014 ME 72, ¶¶ 16-17, 92 A.3d 1154 (citations and quotation
marks omitted).
7
[¶12] Here, Flynn answered Tucker’s complaint by admitting that several
years before Flynn joined LLO, “Tucker had an enforceable contractual
relationship with Flynn . . . under which Tucker was to receive 25% of any
contingent fee earned in the Braley matter.” This aspect of Flynn’s answer to the
complaint by itself establishes these facts as to Flynn. See M.R. Civ. P. 8(d).
Additionally, Flynn later averred that he “agreed to a 25% fee share of the fees
recovered to attorney Tucker because, in part, [Tucker] would remain involved in
the litigation.” Braley’s affidavit confirmed her understanding that Flynn and
Tucker would divide any contingent fee earned. The Superior Court correctly
found that as to Flynn there was no material dispute of fact concerning the
existence and provisions of the agreement because there is no dispute as to its
evolution or terms among the three parties who created it. Lilley had no personal
knowledge from which to deny that the agreement existed, and in fact he did not,
instead denying that he was “aware” of any agreement. See M.R. Civ. P. 56(e)
(requiring that “affidavits shall be made on personal knowledge”).
[¶13] The 2006 fee-splitting agreement was a fully established contract
among Braley, Tucker, and Flynn well before Flynn went to LLO. The fact that
Flynn brought his client with him when he joined LLO does not extinguish that
contract as it pertains to Tucker, nor is its validity determined by whether Lilley or
any other third party was aware of it. Lilley’s lack of awareness might well be an
8
issue in separate litigation between Lilley and Flynn in determining who ultimately
pays Tucker’s fee, but it is irrelevant to the question of whether the agreement that
Tucker was due a fee existed and, if so, its terms. For these reasons, we affirm the
court’s entry of summary judgment on Tucker’s claim against Flynn.
B. Tucker’s Claim Against Lilley and LLO
[¶14] The same result does not follow concerning Tucker’s separate claim
against Lilley and LLO, however, because, notwithstanding the established
fee-sharing agreement between Tucker and Flynn, a genuine dispute of material
fact remains concerning (1) whether, when Flynn joined LLO, Lilley also agreed to
pay Tucker a fee, and (2) if he did agree, whether he agreed to a 25% fee or a
lesser amount. The unresolved factual disputes are illustrated by a letter that
Flynn, after beginning work at LLO, sent Tucker, confirming that Tucker would be
entitled to 25% of any fee Flynn received in the Braley matter, and a contrasting
email that Flynn sent Lilley, which discussed the preexisting fee-division
arrangements in Flynn’s cases and advised Lilley that “in a couple of instances
there is also a referral fee to an outside attorney who referred the case to me in the
beginning. In other words, an additional 20% fee . . . [in] Braley . . . .” Although
Tucker was entitled to his judgment against Flynn, the contrasting letter to Tucker
and email to Lilley that Flynn sent generates a genuine issue of material fact that
precludes entry of summary judgment against Lilley.
9
[¶15] Because resolving these disputes will require a fact-finder “to choose
between competing versions of the truth at trial,” McClare v. Rocha, 2014 ME 4,
¶ 10, 86 A.3d 22 (quotation marks omitted), the court erred in entering summary
judgment on Tucker’s claim against Lilley and LLO.
C. Consolidation
[¶16] By rule, “[w]hen actions involving a common question of law or fact
are pending before the court . . . it may order all the actions consolidated . . . .”
M.R. Civ. P. 42(a). “[T]he power to order consolidation is within the [c]ourt’s
discretion.” Maietta v. Int’l Harvester Co., 496 A.2d 286, 291 (Me. 1985).
Although this standard of review is deferential, it does not give a trial court
unfettered discretion to separate cases, or parts of cases, when closely-related
claims, counterclaims, and cross-claims among the parties directly affect what any
particular party may eventually be awarded and which party will be required to pay
those awards.
[¶17] Here, in its summary judgment order, the court adjudicated several of
the interrelated contract claims, yet several important claims and issues in the two
cases remain unresolved. They include (1) whether Lilley (as opposed to Flynn)
owes Tucker no fee, as Lilley claims; 25%, as Tucker and Flynn claim; or 20%, as
Flynn’s email to Lilley states; (2) whether Flynn’s claim that Troubh breached the
SA and thereby nullified its entitlement to a fee under the MOA will be successful,
10
with the potential result that Troubh is owed nothing; and (3) whatever the fees due
Tucker and Troubh may prove to be, which party has to pay them as between
Flynn and LLO.1 We conclude that, with the exception of Tucker’s claim against
Flynn, these disputes must be resolved in one consolidated action before a single
fact-finder, and therefore it was an abuse of discretion for the court to decide some
claims, but not others, in piecemeal fashion.2 See Bank of Me. v. Peterson,
2014 ME 155, ¶ 8, 107 A.3d 1122 (stating that review of an exercise of discretion
includes an assessment of “whether the court’s weighing of the applicable facts
and choices was within the bounds of reasonableness”). Lilley’s motions to
consolidate should have been granted. To that end, we vacate the remaining
judgments and dispositions in these two cases.
[¶18] Finally, to the extent that the court’s judgment against Flynn may
suggest that Tucker is entitled to immediate payment from the attorney fees held in
escrow, we make clear that these actions are not in rem proceedings against the
money held in escrow. Rather, they are disputes arising from a series of contracts
that may—or may not—be related to each other. The escrowed proceeds may—or
may not—be sufficient to satisfy any liabilities created by the judgments to be
1
Although not directly related to these appeals, we note that separate litigation between Flynn and
Lilley is currently on appeal to this Court as Daniel G. Lilley Law Office, P.A. v. Flynn, Cum-14-333.
2
Because they are not before us, we do not decide whether other cases cited in Lilley’s motion not
involving the Braley matter should also be consolidated.
11
entered in these actions. Accordingly, our opinion should not be construed to
suggest that the aggregation of judgments that may result from these actions is
limited to the amount of attorney fees now held in escrow. Similarly, whatever
other avenues Tucker may have to collect on the judgment against Flynn, any
distribution of the escrowed funds, which may or may not prove to include the
amount that Flynn owes Tucker, must await resolution of the consolidated cases.
The entry is:
Summary judgment on Tucker’s complaint against
Flynn affirmed. All other judgments and
dispositions of claims vacated. Remanded with
instructions to grant the motions to consolidate and
for further proceedings.
On the briefs:
Walter F. McKee, Esq., and Matthew D. Morgan, Esq., McKee
Billings, LLC, P.A., Augusta, for appellants Daniel G. Lilley
and Daniel G. Lilley Law Offices, P.A.
Mark V. Franco, Esq., and Jason P. Donovan, Esq., Thompson
& Bowie, LLP, Portland, for appellant John P. Flynn III
Julian L. Sweet, Esq., Berman & Simmons, P.A., Lewiston, for
appellee Richard D. Tucker
Gerald F. Petruccelli, Esq., Petruccelli, Martin & Haddow,
LLP, Portland, for appellee Troubh Heisler, P.A.
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At oral argument:
Walter F. McKee, Esq., for appellants Daniel G. Lilley and
Daniel G. Lilley Law Offices, P.A.
Mark V. Franco, Esq., for appellant John P. Flynn III
Julian L. Sweet, Esq., for appellee Richard Tucker
Gerald F. Petruccelli, Esq., for appellee Troubh Heisler, P.A.
Cumberland County Superior Court docket numbers CV-2012-75 and 103
FOR CLERK REFERENCE ONLY