Haines & Assoc. v. Khalil, A. ( 2020 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
HAINES & ASSOCIATES, P.C. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
AHLAM KHALIL, M.D. :
:
Appellant : No. 651 EDA 2019
Appeal from the Order Entered January 14, 2019
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 02463 July Term, 2016
BEFORE: BOWES, J., SHOGAN, J., and STRASSBURGER, J.*
MEMORANDUM BY BOWES, J.: Filed: April 9, 2020
Ahlam Khalil, M.D. appeals from the order that denied her post-trial
motion and entered judgment for $46,233 against her and in favor of Haines
& Associates, P.C. (“Haines”) in this action for unpaid attorney fees. We
affirm.
In 2007, Dr. Khalil’s condominium was flooded. Protracted negotiations
with her insurance company as to property damage, other losses, and
allegations of bad faith resulted in her insurer offering to pay her $1.5 million
to settle all of her claims. However, the proposed settlement agreement
included an indemnification provision that Dr. Khalil refused to accept. In May
2015, Dr. Khalil retained Haines to negotiate the collateral terms of the
agreement with the insurance company to finalize the settlement.
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* Retired Senior Judge assigned to the Superior Court.
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Haines sent Dr. Khalil a written contingency fee agreement providing
that if it resolved the matter for her prior to the filing of a complaint, its fee
would be $400 per hour. The document further indicated that if Haines
obtained a recovery for her after a complaint was filed, its potential fees would
be capped at $20,000. If Haines was unable to secure any form of recovery,
Dr. Khalil would be responsible for no legal fees at all. See Amended
Complaint, 10/20/17, at Exhibit A. Dr. Khalil did not execute the agreement
as drafted, but rather hand-wrote in additional terms before signing and
returning it to Haines. Haines maintained that it did not accept the fee
arrangement as altered by Dr. Khalil, but it nonetheless continued its
representation of Dr. Khalil.
After nearly a year of negotiations, the insurance company persisted in
its refusal to omit the objectionable indemnification language, and it
threatened to withdraw the settlement offer completely if Dr. Khalil did not
promptly accept it. Haines strenuously advised Dr. Khalil to take the $1.5
million. When she refused, Haines unsuccessfully petitioned to have a
guardian appointed to make the decision on her behalf. Furious with her
attorney’s allegations that she was incompetent, Dr. Khalil fired Haines.
Haines submitted an invoice to Dr. Khalil detailing its out-of-pocket expenses
and 114.11 hours of billable work it had performed on her behalf. Overall,
Haines requested a total payment of $46,233. Dr. Khalil declined to pay.
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In July 2016, Haines filed a complaint alleging that it was entitled to
recover its costs and fees under the competing theories of breach of contract
or quantum meruit.1 The case ultimately proceeded to trial, at which Dr. Khalil
defended on the basis that the parties had a contingency fee arrangement,
and that because the contingency‒Haines’s resolution of her dispute with her
insurance company‒never occurred, she owed Haines no fees. The trial court
granted Dr. Khalil’s motion for a directed verdict as to the quantum meruit
claim, but the jury ultimately found for Haines on the breach of contract claim
and awarded $46,233. Dr. Khalil filed a timely post-trial motion and
accompanying memorandum of law. The trial court entered an order
establishing a briefing schedule, and the parties complied, although Dr. Khalil
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1 As our Supreme Court has explained:
An action in contract is distinct from one in quantum meruit as
demonstrated by the disparate measure of damages arising
therefrom. Damages in a quantum meruit action are limited to
the reasonable value of the services performed. Remedies for
breach of contract are designed to protect either a party's
expectation interest by attempting to put him in the position he
would have been had the contract been performed; his reliance
interest by attempting to put him in the position he would have
been had the contract not been made; or his restitution interest
by making the other party return the benefit received to the party
who conferred it.
Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of
Malone Middleman, P.C., 137 A.3d 1247, 1251 n.6 (Pa. 2016) (internal
citations omitted).
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filed her brief two days late. By order of January 14, 2019, the trial court
denied Dr. Khalil’s motion and entered judgment on the jury verdict.
Dr. Khalil filed a timely appeal to this Court, and both Dr. Khalil and the
trial court complied with Pa.R.A.P. 1925. Dr. Khalil presents one substantive
question for our review:2 “Did the lower court abuse its discretion when it
allowed Haines to introduce evidence of a $1.5 million settlement offer that
[Dr.] Khalil had previously rejected where the evidence was irrelevant, and in
any event, where its probative value was outweighed by its prejudicial effect?”
Dr. Khalil’s brief at 3.
We begin with a review of the applicable law.
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2 Dr. Khalil also questions the trial court’s position in its Pa.R.A.P. 1925(a)
opinion that she waived her issues and this Court should dismiss her appeal
because she filed her post-trial motion brief two days late. See Dr. Khalil’s
brief at 6; Trial Court Opinion, 4/9/19, at 4-5. We dismiss the trial court’s
suggestion out of hand. See, e.g., Carlos R. Leffler, Inc. v. Hutter, 696
A.2d 157, 166 (Pa.Super. 1997) (holding trial court abused its discretion in
finding issues waived where post-trial motion itself was filed a day late and
there was no allegation of prejudice; observing that “sanctions such as waiver
should be reserved for those instances in which indulgence of a late filing
actually works to prejudice the interests of the adverse party or the orderly
administration of justice”).
Additionally, Haines argues that Dr. Khalil has waived her appellate issues
because “there is no evidence in the as-filed appellate record that Dr. Khalil
requested a transcript of the trial.” Haines’s brief at 8. Our review of the
record reveals that the transcript must have been ordered prior to the appeal,
as a portion of the trial transcript was attached to Dr. Khalil’s post-trial motion
brief. See Post-Trial Motion Brief, 12/20/18, at Exhibit A. Further, the trial
transcripts were added to the certified record before this court on October 30,
2019. Thus, we do not lack the necessary record, and also decline to find
waiver on that basis.
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When presented with an appeal from the denial of a motion for a
new trial, our standard of review is whether the trial court
committed an error of law that controlled the outcome of the case
or committed an abuse of discretion. An abuse of discretion is not
merely an error of judgment; it must be shown that the law was
misapplied or overridden, or that the judgment exercised was
manifestly unreasonable or the result of bias, ill will, prejudice, or
partiality. Moreover, when a party requests a new trial based on
the trial court’s evidentiary rulings, such rulings must be shown to
have been erroneous and harmful to the complaining party. If the
evidentiary rulings in question did not affect the verdict, we will
not disturb the jury’s judgment.
Cummins v. Rosa, 846 A.2d 148, 150 (Pa.Super. 2004) (internal quotation
marks and citation omitted).
Evidence is relevant if “(a) it has any tendency to make a fact more or
less probable than it would be without the evidence; and (b) the fact is of
consequence in determining the action.” Pa.R.E. 401. “All relevant evidence
is admissible, except as otherwise provided by law. Evidence that is not
relevant is not admissible.” Pa.R.E. 402. Relevant evidence may be excluded
“if its probative value is outweighed by a danger of one or more of the
following: unfair prejudice, confusing the issues, misleading the jury, undue
delay, wasting time, or needlessly presenting cumulative evidence.” Pa.R.E.
403. “‘Unfair prejudice’ means a tendency to suggest decision on an improper
basis or to divert the jury’s attention away from its duty of weighing the
evidence impartially.” Id. at Comment. “The function of the trial court is to
balance the alleged prejudicial effect of the evidence against its probative
value and it is not for an appellate court to usurp that function.” Parr v. Ford
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Motor Co., 109 A.3d 682, 696 (Pa.Super. 2014) (internal quotation marks
and citations omitted).
Dr. Khalil contends that the dollar amount that the insurance company
had offered to settle her claims was irrelevant and inadmissible because it
had “nothing to do with any of [the] elements” of Haines’s causes of action.
Dr. Khalil’s brief at 9. The trial court disagreed, accepting Haines’s position
that, in this action for unpaid attorney fees, the amount at stake in the
representation “gave context for how zealously [Haines] worked for [Dr.
Khalil] and why [Haines] should be entitled to damages from [her] breach of
contract.” Trial Court Opinion, 4/9/19, at 13.
Dr. Khalil counters that even if the amount of the settlement offer was
relevant and was properly admitted to establish “the ‘context’ of Haines’s
representation,” it “was more prejudicial than probative.” Dr. Khalil’s brief at
10. She explains:
The issue in this case was whether [Dr.] Khalil should have
paid money to Haines in exchange for [its] performance that did
not result in a settlement. Since the amount of the settlement
offer was not the reason [Haines] was hired, this portion of the
“context” of [the] representation had little probative value. On
the other hand, the fact that [Dr.] Khalil rejected the $1.5 million
settlement offer was used to portray her as a greedy person who
was likely to shirk her responsibility to pay her lawyers. Indeed,
Haines repeatedly made the point that the amount supposedly far
exceeded [Dr.] Khalil’s actual damages. The truth of the matter
is that [Dr.] Khalil’s case never settled because Haines failed to
sufficiently negotiate the collateral terms [it] was engaged to
resolve. The jury lost sight of this fact because the $1.5 million
number was constantly referred to in an effort to paint [Dr.] Khalil
as unreasonable and greedy.
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Id. at 10-11 (citations omitted).
In response to Dr. Khalil’s contentions, Haines reiterates its relevance-
for-context position that the trial court adopted, suggesting that “it was
important for the jury to understand that Dr. Khalil’s matter was complex in
nature and that there was a lot at stake for all of the parties[.]” Haines’s brief
at 17. Haines further argues that there is no indication that Dr. Khalil was
prejudiced: “Dr. Khalil’s speculation about nefarious usage of the information
(to paint her as ‘greedy’) is unfounded” and that there is no indication “that
the facts influenced the jury in this way.” Id.
From our review of the record, it is clear that Haines did not merely
present the value of the settlement at issue to set the stage for the fact-finder,
but rather repeated to the jury ad nauseum that Dr. Khalil had been offered
$1.5 million dollars to settle her claims against the insurance company. See,
e.g., N.T. Trial, 11/7/18, at 81-92 (referencing “1.5 million dollars” thirteen
times over twelve pages of questioning). Further, we agree with Dr. Khalil
that the amount of money offered by the insurance company had little or no
probative value as to whether the parties had an agreement that Dr. Khalil
breached by refusing to pay Haines for its time. See, e.g., Meyer, Darragh,
Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman,
P.C., 137 A.3d 1247, 1258 (Pa. 2016) (indicating the elements of a cause of
action for breach of contract are “(1) the existence of a contract, including its
essential terms, (2) a breach of the contract; and, (3) resultant damages”).
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However, at the time Haines offered the evidence, it was proceeding in
the alternative on a quantum meruit theory. One element of such a claim is
that “it would be inequitable for defendant to retain the benefit [conferred by
the plaintiff and retained by the defendant] without payment of value.”
Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of
Malone Middleman, P.C., 179 A.3d 1093, 1102 (Pa. 2018) (internal
quotation marks omitted). “The application of the doctrine depends on the
particular factual circumstances of the case at issue. In determining if the
doctrine applies, our focus is not on the intention of the parties, but rather on
whether the defendant has been unjustly enriched.” Id. (internal quotation
marks omitted). As this Court has explained:
quantum meruit is an equitable action and principles of fairness
should prevail. Depending on the nature of the case, merely
multiplying the hourly rate by the number of hours worked may
be too narrow of an approach. . . . [D]eciding the reasonable
value of an attorney’s services requires the court to take into
consideration the particular circumstances of the case before it,
including the complexity of the litigation and the results achieved:
In the absence of a special agreement, an attorney is entitled to
be paid the reasonable value of his services. In addition to the
labor and time involved, other factors must be taken into
consideration, such as the character of services rendered, the
importance of the litigation, the skill necessary, the standing of
the attorney, the benefit derived from the services rendered and
the ability of the client to pay, as well as the amount of money
involved.
Angino & Rovner v. Jeffrey R. Lessin & Associates, 131 A.3d 502, 511
(Pa.Super. 2016) (citations and internal quotation marks omitted, emphasis
added).
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Therefore, the relation of the amount of fees sought by Haines to the
amount of the settlement it was seeking to secure for Dr. Khalil was indeed
relevant to the question of whether the equities warranted Dr. Khalil’s
payment of the requested $46,233 in fees. In other words, the amount of
money offered by the insurance company in its settlement provided valuable
context to the parties’ actions, which was indeed relevant to Haines’s claim
sounding in quantum meruit. Accordingly, we cannot conclude that the trial
court abused its discretion in allowing Haines to offer evidence of the amount
of money involved in the case. See id.
Moreover, Dr. Khalil has failed to demonstrate that the trial court abused
its discretion in declining to find the probative value of the evidence
outweighed by any danger of unfair prejudice. As discussed above, the
amount at issue was highly relevant to the equities in the case. Further, Dr.
Khalil had a full and fair opportunity to explain that the $1.5 million was
offered to resolve not only the property damage resulting from the flood of
her condominium, but also claims against the insurance company for its own
misdeeds. As such, any potential for confusion or prejudice was minimal.
Thus, the trial court’s ruling was within its discretion. Accord Hammons v.
Ethicon, Inc., 190 A.3d 1248, 1283 (Pa.Super. 2018), appeal granted on
other grounds, 206 A.3d 495 (Pa. 2019) (“[A]ll relevant evidence is meant to
prejudice a defendant, so exclusion is limited to evidence so prejudicial that it
would inflame the jury to make a decision based upon something other than
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the legal propositions relevant to the case. A trial court is not required to
sanitize the trial to eliminate all unpleasant facts from the jury’s consideration
where those facts form part of the history and natural development of the
events.” (cleaned up)).
In conclusion, Dr. Khalil has failed to establish that the trial court’s
evidentiary ruling was erroneous and harmful to her. Thus, no new trial is
warranted. See Cummins, supra at 150. We therefore affirm the order
denying her post-trial motion and entering judgment on the jury’s verdict.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/9/20
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