Banks v. United States ( 2020 )

In the United States Court of Federal Claims
No. 16-1633L
(Filed: April 6, 2020)
NOT FOR PUBLICATION
******************
WILLIAM O BANKS, et al.,
Rails-to-trails; Fifth Amendment
Plaintiffs, takings; Motion to Intervene by
former law firm; RCFC 24; Duty of
v. Loyalty; Former law firm’s interests
are adequately represented.
THE UNITED STATES,
Defendant.
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ORDER
Pending in this rails-to-trials takings action is a motion to intervene
brought by the law firm of Arent Fox, which previously represented the
plaintiffs. The plaintiffs are now split in their representation between two
different attorneys, formerly of Arent Fox. The firm seeks to intervene under
Rule 24 to “protect its property interest in its fees and expenses incurred in
successfully representing the plaintiffs.” Mot. to Intervene 1 (ECF No. 89).
Defendant opposes the motion; the plaintiffs do not. The motion is fully
briefed, and oral argument was held telephonically on April 1, 2020. As
announced at the conclusion, because Arent Fox’s interests are adequately
represented without intervention, the motion is denied.
Liability for the taking was determined in our opinion of May 17,
2018. Banks v. United States, 138 Fed. Cl. 141 (2018). The parties have
since undertaken an effort to settle the matter. They have represented to the
court in periodic status reports that they have reached agreement on the value
of the property taken. All that remains is to reach agreement on the amount
of attorney fees and costs to be included in the settlement amount.1
1
The Uniform Relocation Assistance and Real Property Acquisition Polices
Act (“URA”) mandates that the court award, or the Attorney General include
Resolution of that issue has reportedly been delayed, at least according to
defendant, by the representation issues arising from the change of firm and,
for two of the plaintiffs, change of attorney of record.2 On January 15, 2020,
Arent Fox filed a notice of Attorney’s Lien (ECF No. 85) against any
recovery by plaintiffs or award of fees and costs in order to protect its right
to payment for legal services previously rendered. Arent Fox now expresses
concern that Ms. Brinton may compromise her client’s award of fees to
incentivize settlement and more quickly get her clients paid. Thus the present
motion.
Arent Fox has no such concern with Mr. Hearne because they have
agreed previously that he would represent Arent Fox’s interest in recovering
the fees owed to it for the work performed by attorneys at that firm. And, as
the firm cites in its papers, Mr. Hearne owes a continuing duty of loyalty
“’with regards to matters arising and events occurring before the partner’s
disassociation.’” Diamond v. Hogan Lovells US LLP, No. 18-SP-218, 2020
WL 717809, at*10 (D.C. Feb. 13, 2020) (quoting D.C. Code § 29-606.3
(2013)).
Arent Fox argues that intervention is proper because it has a vested
property interest in the award to plaintiffs under DC law. The obligation to
pay for work performed was contingent on winning the case. If the plaintiffs
recovered, Arent Fox was to be paid the larger of 1) a percentage of the
ultimate recovery or 2) the amount awarded by the court for fees and
expenses. Because its being paid was contingent on the plaintiffs receiving
an award or settlement, Arent Fox argues that it has a property interest in any
judgment or settlement achieved by the plaintiffs.
in a settlement, for taking of property by a Federal agency, “such sum as will
. . . reimburse such plaintiff for his reasonable costs, disbursements, and
expenses, including reasonable attorney, appraisal, and engineering fees,
actually incurred because of such proceeding.” 42 U.S.C. § 4654(c) (2012).
2
By order of April 26, 2019, we granted the motion on behalf of the plaintiff,
Mr. Banks, to substitute Ms. Brinton as his counsel. We denied a separate
motion as to the plaintiff, Mr. Carney, because the ownership his parcel is
alleged to be joint with his ex-wife and co-plaintiff, Dixie Flynn. Ms. Flynn
remains represented by Mr. Hearne. A third plaintiff, Mr. Oliva, has since
switched counsel to Ms. Brinton as well.
2
All of the present parties aver that they share the same interest in
coming to resolution and getting the plaintiff landowners paid. The
government shares that goal because interest is running on the underlying
value of the taken property. Defendant opposes the intervention, however,
because it feels it is being dragged into another collateral dispute between
former and current counsel. It argues that the firm fails to satisfy the
requirements of Rule 24 and points out that the firm neither cited which
provision it was moving under (either mandatory or permissive intervention)
nor attached a proposed pleading as required by the rule.
Rule 24 of the Rules of the United States Court of Federal Claims
(“RCFC”) states in section (a) that the court must permit intervention “on [a]
timely motion” brought by anyone who “claims an interest relating to the
property or transaction that is the subject of the action, and is so situated that
disposing of the action may as a practical matter impair or impede the
movant’s ability to protect its interest, unless existing parties adequately
represent that interest.” RCFC 24(a) (2019). Permissive intervention is
proper when the person or entity seeking intervention “has a claim or defense
that shares with the main action a common question of law or fact.” Id. §
(b)(1)(B). Plainly the law firm does not share a claim or defense with the
plaintiffs or the government that has a common question of law or fact. It
neither owns any property alleged to have been taken nor has participated in
the taking of it.
The law firm thus must show that it has “an interest relating to the
property or transaction that is the subject of the action” and that the
disposition of the matter without its input may prevent it from protecting that
interest. RCFC 24(a). The firm cites several DC cases for the proposition
that a contingency fee arrangement creates a property interest for the attorney
in a monetary judgment. See, e.g., Cont’l Cas. Co. v. Kelly, 106 F.2d 841,
843-44 (D.C. Cir. 1939); Kellog v. Winchell, 273 F. 745, 747-48 (D.C. Cir.
1921). Because Ms. Brinton owes it no duty of loyalty or care, the firm
believes this property interest may be compromised to its detriment by her
clients.
We find that Arent Fox has established a property interest resulting
from its fee arrangement with its former clients. The law is clear enough on
that point. We note, however, that none of the cases on which it relies have
then applied RCFC 24 and come to the conclusion that counsel may intervene
to protect that interest in the Court of Federal Claims. We need not reach
3
that question, however, because we believe it is unnecessary for Arent Fox
to intervene in this action because its interests are adequately protected.
Mr. Hearne owes a duty of loyalty and care to Arent Fox as a former
partner in the law firm, organized as a partnership under DC law, to ensure
that the firm be able to collect fees for work performed while Mr. Hearne
was still a partner there, which we note is presumably the bulk of the hours
expended (prior to the court’s liability determination). D.C. Code §§ 29-
604.7(b), 606.3(b)(3). Ms. Brinton, although owing no duty of loyalty under
partnership law, represents the interests of her clients in not breaching their
agreement to pay Arent Fox for the work it performed. Any compromise that
would seriously impair the firm’s ability to be adequately reimbursed for its
work would likely open the plaintiffs to liability for breach of contract or
liability to reimburse the firm in quantum meruit. We have no doubt, as
buttressed by Ms. Brinton’s representations at oral argument, that she will
zealously and with care represent her clients so as to avoid that possibility.3
We thus conclude that the “existing parties adequately represent
[Arent Fox’s] interest” in getting paid for its work on the case. RCFC
(a)(2). Accordingly, the motion to intervene (ECF No. 89) is denied. The
parties are directed to file a joint status report regarding their efforts to settle
this matter on or before May 1, 2020.
s/ Eric G. Bruggink
ERIC G. BRUIGGINK
Senior Judge
3
And we note, although she thought it unnecessary, Ms. Brinton and her
clients did not oppose intervention by Arent Fox, which indicates to the court
that they have no interest in settling to the detriment of her former employer.
4