Adkin Plumbing & Heating Supply Co. v. Harwell , 135 N.H. 465 ( 1992 )

Brock, C.J.

The plaintiff, Adkin Plumbing & Heating Supply Co., Inc. (Adkin), retained the services of the defendant attorney, Tyler P. Harwell, on a contingent fee basis. Dissatisfied with Harwell as its attorney, Adkin discharged the defendant and subsequently filed a malpractice action. Harwell counterclaimed for breach of contract and wrongful discharge. The Superior Court (Gray, J.) granted the plaintiff’s motion to dismiss the defendant’s counterclaim, which he now appeals. We reverse.

Accepting the defendant’s version of the facts as true, as we must on an appeal of a motion to dismiss, Hartman v. Town of Hooksett, 125 N.H. 34, 35, 480 A.2d 12, 13 (1984), we note the following events took place. In October 1985, Adkin retained Attorney Harwell pursuant to a contingent fee agreement to collect a past due account from Kenneth LeRoy. Harwell performed various legal services for the plaintiff, but never actually collected any money on the debt. In early 1987, Harwell was discharged, without cause, as Adkin’s counsel. To date, Adkin has received no money from LeRoy on the past due account.

In a style, mercifully, rarely seen by this court, the defendant has presented the issue of whether an attorney may recover on a contingent fee agreement when he is discharged without cause prior to the disposition of the case and the contingency never occurs. Although the defendant has listed numerous issues in his brief, the majority of which are without merit, we address only those questions necessary to decide this appeal.

The first issue before the court is whether an attorney may sue a client for breach of contract if the client discharges the attorney without cause. The defendant answers affirmatively, apparently relying on language in Markarian v. Bartis, 89 N.H. 370, 372, 199 A. 573, 575 (1938), which states that “[cjontracts for attorneys’ services stand on the same ground and are governed by the same rules as other similar contracts for services.” While the quotation is accurate, a close reading of the case reveals that it does not support the defendant’s proposition that he should be able to recover on the contract.

In Markarian, the client and his attorney, Markarian, entered into an agreement in champerty, whereby the attorney would advance the legal expenses for the client and would be reimbursed out of the funds recovered. Markarian was discharged prior to the completion of the case, and, while it is clear that the client benefited from Markarian’s services, it is unclear whether the agreed upon contingency actually occurred. Markarian brought suit for services rendered and money expended on the client’s behalf. In rendering our decision, we first noted the changing attitude toward contracts in champerty and determined that such contracts no longer constituted a violation of public policy. We concluded that “the agreement as to the plaintiff's compensation for services in the suit for contribution, if made, was not illegal.” Markarian, 89 N.H. at 375, 199 A. at 577. However, because the focus of the case was on the question of whether contingent fee agreements were valid, the issue of whether an attorney could recover damages for breach of contract was never examined.

It is well established that an individual may discharge his attorney, either with or without cause, at any time. Wells v. Hatch, 43 N.H. 246, 247 (1861); Fracasse v. Brent, 6 Cal. 3d 784, 790, 494 P.2d 9, 13, 100 Cal. Rptr. 385, 389 (1972); Warner v. Basten, 118 Ill. App. 2d 419, 434-35, 255 N.E.2d 72, 80 (1969); Jacobson v. Sassower, 66 N.Y.2d 991, 993, 489 N.E.2d 1283, 1284, 499 N.Y.S.2d 381, 382 (1985).

“That the client may at any time for any reason or without any reason discharge his attorney is a firmly established rule which springs from the personal and confidential nature of the relation which such a contract of employment calls into existence. If the client has the right to terminate the relationship of attorney and client at any time without cause, it follows as a corollary that the client cannot be compelled to pay damages for exercising a right which is an implied condition of the contract.”

Martin v. Camp, 219 N.Y. 170, 174, 114 N.E. 46, 48 (1916) (citation omitted), order amended, 220 N.Y. 653, 115 N.E. 1044 (1917); see also Fracasse, 6 Cal. 3d at 791, 494 P.2d at 13, 100 Cal. Rptr. at 389. We agree with this rationale and reemphasize the fact that a client may terminate the relationship with his or her attorney at any time and for any reason. Therefore, the defendant’s claim for damages for breach of contract was properly dismissed.

However, our ruling prohibiting a discharged attorney from recovering on the contract does not necessarily mean that the attorney’s services will go for naught. The clear majority of states that allow a client to discharge his attorney at any time for any reason, also accept the rule that the attorney, when discharged without cause, may recover the reasonable value of his services in quantum meruit. Markarian v. Bartis, 89 N.H. at 375, 199 A. at 577; Salem Realty Co. v. Matera, 10 Mass. App. 571, 575-76, 410 N.E.2d 716, 719 (1980), modified and aff’d, 384 Mass. 803, 426 N.E.2d 1160 (1981); Garrett v. Garrett, 140 Ariz. 564, 567, 683 P.2d 1166, 1169 (1983); Empro Corp. v. Scottland Hotels, Inc., 449 N.W.2d 734, 737 (Minn. App. 1990); Hopkins v. Steele, 164 Ga. App. 527, 528, 297 S.E.2d 528, 529 (1982); Heinzman v. Fine, Fine, Legum & Fine, 217 Va. 958, 964, 234 S.E.2d 282, 286 (1977). In general, under a claim for quantum meruit, attorneys who are discharged without cause may recover the fair and reasonable value of their services. There is a slight twist to this rule, however, in contingent fee cases. One school of thought allows the discharged attorney to bring a claim for the value of his services at the time the client terminates the attorney’s services, see, e.g., Martin v. Camp, 219 N.Y. at 177, 114 N.E. at 49; Zimmerman v. Kallimopoulou, 290 N.Y.S.2d 270, 272-73 (N.Y. City Civ. Ct. 1967) (“attorney’s right to compensation cannot be made to depend upon the success or failure of another member of the bar”), whereas other courts allow recovery only if the contingency in fact occurs. See, e.g., Fracasse, 6 Cal. 3d at 792, 494 P.2d at 14, 100 Cal. Rptr. at 390; Plaza Shoe Store, Inc. v. Hermel, Inc., 636 S.W.2d 53, 60 (Mo. 1982); Rosenberg v. Levin, 409 So. 2d 1016, 1022 (Fla. 1982).

In the casé before us, the trial court granted the plaintiff’s motion to dismiss on the grounds that the contingency never occurred; that is, Adkin never collected any money from LeRoy. We believe the better rule is stated in the New York cases, and hold that the cause of action accrues upon the termination of the attorney’s services without cause, not upon the happening of the contingency. Therefore, since the defendant has alleged sufficient facts in his counterclaim to indicate that he performed work for the client and was discharged without cause, he has stated a claim upon which relief may be granted. Accordingly, the trial court’s order is reversed and the case is remanded for further proceedings consistent with this opinion.

Reversed and remanded.

THAYER, J., dissented; the others concurred.