Law Offices of John L. Juliano, P.C. v. Jensen

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2028
LAW OFFICES OF JOHN L. JULIANO, P.C.,
Plaintiff - Appellant,
v.
JOHN W. JENSEN; JENSEN LAW, P.A., d/b/a Jensen Law Group,
Defendants - Appellees.
Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. Catherine C. Eagles,
District Judge. (1:15-cv-00288-CCE-JEP)
Argued: October 25, 2016 Decided: December 15, 2016
Before TRAXLER, KEENAN, and WYNN, Circuit Judges.
Affirmed by unpublished opinion. Judge Keenan wrote the
opinion, in which Judge Traxler and Judge Wynn joined.
ARGUED: Steven B. Epstein, POYNER SPRUILL LLP, Raleigh, North
Carolina, for Appellant. Jonathan Arthur Berkelhammer, ELLIS &
WINTERS LLP, Greensboro, North Carolina; Robert Ellis Zaytoun,
ZAYTOUN LAW FIRM, PLLC, Raleigh, North Carolina, for Appellees.
ON BRIEF: Andrew H. Erteschik, POYNER SPRUILL LLP, Raleigh,
North Carolina, for Appellant. Matthew D. Ballew, ZAYTOUN LAW
FIRM, PLLC, Raleigh, North Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
BARBARA MILANO KEENAN, Circuit Judge:
The Law Offices of John L. Juliano, P.C. (Juliano), 1 a New
York law firm, filed this diversity action seeking payment of
one third of attorneys’ fees recovered in a North Carolina
personal injury lawsuit conducted by the defendants, attorney
John W. Jensen (Jensen) and his law firm, Jensen Law Group
(Jensen Law). Although Juliano was not directly involved in the
North Carolina litigation, he asserts that he is entitled on
equitable grounds to a portion of Jensen’s fees, based on a fee-
sharing agreement he reached with Jensen’s former law firm.
The district court concluded that Juliano had failed to
state a claim for unjust enrichment, and had not attempted to
plead a separate quantum meruit claim. Accordingly, the court
dismissed the complaint under Federal Rule of Civil Procedure
12(b)(6). Upon our review, we affirm the district court’s
judgment.
I.
In 2007, Howard Hazlett, who is not a party to this case,
retained Juliano to represent him after Hazlett suffered
1
Although the only plaintiff in this case is the corporate
entity Law Offices of John L. Juliano, P.C., for ease of
reference we refer to both the law firm and its founding
attorney, John Juliano, as “Juliano” throughout the opinion.
2
injuries in a watercraft accident that occurred in North
Carolina. 2 Juliano filed a personal injury action in New York
state court on Hazlett’s behalf, which later was dismissed
without prejudice (the New York case).
In October 2008, after the New York case was dismissed,
Juliano referred Hazlett’s case to the North Carolina law firm
of Jensen McGrath Podgorny (JMP), of which defendant Jensen was
a partner. Hazlett and JMP entered into a written contingency
fee agreement (the 2008 agreement) under which JMP would receive
a certain portion of any total amount that Hazlett recovered.
The 2008 agreement also included a “fee division schedule,”
which provided that one third of the fee collected by JMP would
be paid to Juliano. Although JMP filed a personal injury action
on Hazlett’s behalf in North Carolina state court (the first
North Carolina case), that case was dismissed without prejudice
in April 2010.
In September 2010, Jensen resigned from JMP and formed a
new law firm, Jensen Law. At that time, Hazlett elected to have
2Because the district court dismissed the complaint under
Rule 12(b)(6), we recount the facts as alleged in the complaint.
See Harbourt v. PPE Casino Resorts Md., LLC, 820 F.3d 655, 658
(4th Cir. 2016). We also may consider documents attached to a
motion to dismiss that were “integral to and explicitly relied
on in the complaint.” Am. Chiropractic Ass’n v. Trigon
Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) (citation
omitted).
3
his case remain with Jensen’s former law firm, now named McGrath
Podgorny, P.A.
In March 2011, McGrath Podgorny filed a second personal
injury action on Hazlett’s behalf in North Carolina state court
(the second North Carolina case). While this case was pending,
attorney McGrath resigned from McGrath Podgorny. In July 2012,
Podgorny, the only remaining partner, withdrew as Hazlett’s
counsel from the second North Carolina case. Prior to his
withdrawal, however, Podgorny contacted Jensen, who indicated
that he and Jensen Law would be willing to assume representation
of Hazlett in the pending case.
Hazlett, after having proceeded pro se in the second North
Carolina case for about three weeks, ultimately executed a
written contingency fee agreement with Jensen Law in August
2012. In that agreement, Hazlett expressly stated that he was
revoking all prior contracts governing attorney representation
and fees. In contrast to the 2008 agreement between Hazlett and
JMP, the new agreement between Hazlett and Jensen Law did not
include a fee division schedule allocating to Juliano any
portion of the attorneys’ fees recovered from the lawsuit.
During the course of Jensen’s work on Hazlett’s case,
Juliano’s only contact with Jensen consisted of two letters, in
which Juliano advised Jensen that Hazlett owed Juliano $2,000
4
for certain expenses incurred in the New York case. Jensen
eventually paid Juliano this amount.
Hazlett’s claim in the second North Carolina case proceeded
to a jury trial, which lasted about one month. In August 2013,
the state court entered judgment on the jury’s verdict in favor
of Hazlett for about $5.7 million. As a result, Jensen Law
collected a forty percent contingency fee of almost $2.3
million. Juliano learned of the judgment in July 2014, nearly
one year after the verdict was entered, and contacted Jensen
requesting payment of one third of the attorneys’ fees
recovered. Juliano asserted that he was entitled to this sum
based on the 2008 agreement. Jensen refused Juliano’s request.
Juliano later filed the present action in federal district
court, alleging a single claim entitled “unjust enrichment and
imposition of constructive trust or equitable lien.” In his
claim, Juliano sought one third of the attorneys’ fees recovered
by Jensen and Jensen Law in the second North Carolina case. The
district court held that Juliano had failed to state a claim of
unjust enrichment because he had not conferred, and Jensen had
not accepted, any benefit regarding Jensen’s representation of
Hazlett in the second North Carolina case. 3 The district court
3 The district court held in the alternative that the
complaint could be dismissed on the ground that Juliano had
failed to comply with Rule 1.5(e) of the North Carolina Rules of
(Continued)
5
also rejected Juliano’s assertion that his complaint included a
claim for recovery in quantum meruit. The court accordingly
dismissed the complaint in its entirety, and this appeal
followed.
II.
Juliano argues that the district court erred in dismissing
his complaint under Rule 12(b)(6). Although Juliano
acknowledges that he has not alleged a “garden-variety unjust
enrichment claim,” he nonetheless seeks to “invoke the equitable
powers of the court to impose a constructive trust” on a portion
of Jensen’s fees. Juliano effectively seeks an equitable
transfer of the fee-sharing obligations of JMP onto Jensen,
arguing that: (1) Jensen was aware of the 2008 agreement between
Hazlett and JMP; and (2) Hazlett would not have retained Jensen
in the second North Carolina case if Juliano had not initially
referred Hazlett’s case to JMP in 2008. Accordingly, Juliano
contends that his complaint states a claim of unjust enrichment
based on Jensen’s retention of the entire $2.3 million fee
Professional Conduct, which governs fee-sharing arrangements
between attorneys. Because we agree with the court’s primary
conclusion that Juliano has failed to state a claim, we do not
address this additional rationale.
6
collected in the second North Carolina case. We disagree with
Juliano’s arguments. 4
We review de novo the district court’s dismissal of the
complaint under Rule 12(b)(6), accepting Juliano’s well-pleaded
allegations as true and drawing all reasonable inferences in his
favor. See Belmora LLC v. Bayer Consumer Care AG, 819 F.3d 697,
705 (4th Cir. 2016). To state a claim for unjust enrichment
under North Carolina law, a plaintiff must allege that: (1) one
party conferred a benefit upon the other party; (2) the benefit
was not “conferred officiously, that is it must not be conferred
by an interference in the affairs of the other party in a manner
that is not justified in the circumstances”; (3) the benefit was
not gratuitous; (4) the benefit was measureable; and (5) the
defendant consciously accepted the benefit. JPMorgan Chase
Bank, N.A. v. Browning, 750 S.E.2d 555, 559 (N.C. Ct. App. 2013)
(emphasis and citation omitted). Thus, the mere fact that one
party was enriched at the expense of another, without more, does
not amount to a claim of unjust enrichment. Butler v. Butler,
4 We observe that despite language in the complaint clearly
asserting a claim for unjust enrichment, counsel for Juliano
appeared at oral argument to abandon this claim, and instead
argued exclusively that the court should impose a constructive
trust on one third of Jensen’s fees. As we discuss further
below, both theories fail for the same reason, namely, that
Juliano has not alleged facts showing that it would be
inequitable for Jensen to retain the entirety of the fees
recovered.
7
768 S.E.2d 332, 336 (N.C. Ct. App. 2015) (citing Watson Elec.
Constr. Co. v. Summit Cos., LLC, 587 S.E.2d 87, 92 (N.C. Ct.
App. 2003)). Instead, a benefit must have been conferred on the
defendant “under circumstances which give rise to a legal or
equitable obligation on the part of the defendant to account for
the benefit[] received.” Id. at 336-37 (citation omitted).
The Supreme Court of North Carolina also has explained that
a constructive trust
is a duty, or relationship, imposed by courts of
equity to prevent the unjust enrichment of the holder
of title to, or of an interest in, property which such
holder acquired through fraud, breach of duty or some
other circumstance making it inequitable for him to
retain it against the claim of the beneficiary of the
constructive trust.
Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs.,
LLC, 723 S.E.2d 744, 751 (N.C. 2012) (citation omitted).
Although “actual wrongdoing, such as fraud or breach of
fiduciary duty” is not required to impose a constructive trust,
a plaintiff nevertheless must allege that it would be
inequitable for the defendant to retain the funds in question,
or that the defendant “acquired the funds in an unconscientious
manner.” Houston v. Tillman, 760 S.E.2d 18, 21-22 (N.C. Ct.
App. 2014) (citing Variety Wholesalers, 723 S.E.2d at 751-52).
Here, however, Juliano has not alleged that Jensen engaged
in any “unconscientious” conduct or other questionable activity
in his representation of Hazlett. The facts alleged in his
8
complaint also do not identify any inequity that would result
from Jensen’s retention of the entire attorneys’ fee award, but
merely point to the circumstance that Juliano “brought” the case
to JMP in 2008 when Jensen was a partner in that firm. And,
notably, Juliano has not alleged any facts suggesting that he
assisted Jensen in representing Hazlett or otherwise
participated in the trial of the case.
We therefore agree with the district court’s conclusion
that the facts alleged by Juliano do not support a claim for
unjust enrichment, and do not identify an inequitable result
justifying imposition of a constructive trust. Juliano has not
alleged any relationship with Jensen or Jensen Law that would
support imposition of a fee-sharing obligation. Any
relationship between Juliano and Jensen based on Jensen’s prior
membership in JMP is too attenuated to support an equitable
basis for recovery of the fees at issue. Jensen had left JMP
nearly two years before Hazlett eventually retained him for
representation in the second North Carolina case. During that
interim period, Hazlett had been represented by McGrath Podgorny
until briefly proceeding pro se before retaining Jensen.
Moreover, Juliano did not enter an appearance on Hazlett’s
behalf in either of the North Carolina cases, nor did Juliano
refer Hazlett’s case to Jensen or Jensen Law while Hazlett was
acting pro se in the second North Carolina case.
9
Significantly, as noted above, Juliano did not provide any
assistance during Jensen’s litigation of the second North
Carolina case. In fact, Juliano was unaware that the case had
resulted in a jury verdict in Hazlett’s favor until nearly a
year after the trial had concluded. And, as we have observed,
Juliano’s only communication with Jensen during the period of
Jensen’s representation related to Juliano’s request for payment
of expenses incurred in the former New York case. Given these
facts and circumstances, Juliano has failed to provide a factual
basis to support his allegation that it would be inequitable for
Jensen to retain the attorneys’ fees he earned exclusively by
virtue of his work under his fee agreement with Hazlett. 5
Finally, we disagree with Juliano’s contention that the
substance of his complaint also stated a claim for quantum
meruit, apart from his claim for unjust enrichment and
constructive trust. Although Juliano is correct that he was not
obliged to use “magic words” in his complaint identifying a
specific legal theory of recovery, he nevertheless was required
in his pleading to give the defendants “fair notice” of the
nature of his claims. See Stevenson v. City of Seat Pleasant,
5 Although the district court dismissed the unjust
enrichment claim on the ground that Juliano did not confer a
benefit on Jensen, we may affirm the court’s Rule 12(b)(6)
dismissal on any basis supported by the record. See Greenhouse
v. MCG Capital Corp., 392 F.3d 650, 660 (4th Cir. 2004).
10
743 F.3d 411, 418, 420 (4th Cir. 2014) (citations omitted);
McCleary-Evans v. Md. Dep’t of Transp., 780 F.3d 582, 585 (4th
Cir. 2015) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)); see also Hartmann v. Cal. Dep’t of Corrs. & Rehab., 707
F.3d 1114, 1122 (9th Cir. 2013). Juliano’s complaint, however,
fails to contain any language placing Jensen on “fair notice”
that Juliano was seeking reimbursement in quantum meruit for
services rendered in the New York case, and does not identify
any work Juliano had performed that would entitle him to recover
the attorneys’ fees requested in his complaint. Accordingly, we
hold that the district court properly rejected Juliano’s attempt
to argue a claim of quantum meruit that was not pleaded in his
complaint.
III.
For these reasons, we affirm the district court’s judgment.
AFFIRMED
11