Joseph Cerroni v. Jacqueline Nadine Douglas, Guardian of the estate of S.D.

COURT OF APPEALS OF VIRGINIA
Present: Judges Humphreys, Huff and AtLee
UNPUBLISHED
Argued at Leesburg, Virginia
JOSEPH A. CERRONI
MEMORANDUM OPINION* BY
v. Record No. 0389-22-4 JUDGE GLEN A. HUFF
JANUARY 10, 2023
JACQUELINE NADINE DOUGLAS, GUARDIAN
OF THE ESTATE OF S.D., AN
UNEMANCIPATED MINOR
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Robert J. Smith, Judge
Joseph A. Cerroni, pro se.
Lisa M. Campo (Kimberley Ann Murphy; Hale Ball Carlson
Baumgartner Murphy, PLC, on brief), for appellee.
Joseph A. Cerroni (“appellant”) appeals an order from the Fairfax County Circuit Court
(the “circuit court”) authorizing payment of attorney fees in an amount contrary to the
contingency fee agreement between appellant and his client, Ms. Jacqueline Douglas
(“appellee”).1 As explained below, this Court finds the circuit court lacked subject matter
jurisdiction over appellant’s fee application. Therefore, this Court reverses the circuit court’s
order and dismisses the case.
*
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
1
The circuit court case arose out of appellant’s filing of an attorney fee application.
Appellant still represented Ms. Douglas at that time, although the attorney-client relationship has
since been terminated. The circuit court’s order authorizing payment of attorney fees, from
which appellant appeals, was recorded under the following case name and number: “In re:
Guardianship of [S.D.], an unemancipated minor”; FI-2021-0001688.
I. BACKGROUND
In February 2019, Tamiru Woldesemaet Adisu (“Mr. Adisu”) died intestate and his
daughter, Lydia T. Adisu (“Ms. Adisu”), qualified as the administrator of his estate in the
probate division of the circuit court. Appellee subsequently sought to have her minor daughter,
S.D., declared an heir of Mr. Adisu’s estate. Originally, appellee was represented by Clifford M.
Cohen (“Mr. Cohen”), an attorney licensed in Washington, D.C.
Mr. Cohen “determined that [appellee] had a viable case and that there was sufficient
equity in the real estate [of Mr. Adisu] to make the case worth pursuing.” After first attempting
to resolve the matter “without engaging outside counsel and without going to court,” Mr. Cohen
contacted appellant—an attorney licensed in Virginia—about joining the case. Both appellant
and Mr. Cohen discussed with appellee the different options for proceeding with the case. They
agreed that the total legal fee would not exceed the $3,000 retainer fee appellee had already paid
to Mr. Cohen so long as appellant could resolve the matter “quickly without objection from
Ms. Adisu.”
In response, Ms. Adisu “decided to dispute [S.D.]’s right as heir to [Mr. Adisu’s] estate”
and hired her own counsel. As a result, Mr. Cohen advised appellee that, because “a court
hearing would be required and admissible DNA evidence would be necessary,” any future legal
work would require appellee to pay the attorneys on an hourly basis. Appellee told Mr. Cohen
that “she did not have the money to pay an hourly fee and was considering dropping the matter.”
Appellant then suggested a compromise: a contingency fee agreement in which the fee “would
be based on the value of any property recovered” on behalf of S.D.
Appellee asked appellant whether he would accept a 33.3% contingency fee instead of
40%, but appellant advised her that he could not accept less than 40% “because of the difficulty
of the case.” Appellee agreed to the 40% fee and signed a representation agreement—containing
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the contingency fee arrangement—with appellant and Mr. Cohen in June 2020. The terms of the
contingency fee arrangement provided that appellant and Mr. Cohen would receive “40% of the
value of any portion of the Estate of [Mr. Adisu] . . . recovered for the benefit of [S.D.].”
The representation agreement also included an explanatory note as to the “significant
legal work” expected by appellant and Mr. Cohen, including “a hearing to declare [S.D.] an heir
of the Estate” followed by liquidation of the estate. The agreement further stated:
[t]he liquidation process may require substantial time because the
assets of the Estate are real property. During the liquidation
process disputes may arise between the parties and additional
hearings and legal work may be required. The parties
acknowledge that a contingency fee of 40% is fair and reasonable
in these circumstances.
As a result of appellant’s and Mr. Cohen’s efforts, the circuit court issued an order on
May 20, 2021, in which it declared S.D. as Mr. Adisu’s daughter and his “heir at law” to his
estate. Accordingly, S.D. was awarded $254,209.67 in proceeds from Mr. Adisu’s life insurance
policy and appellant “took action to have [appellee] declared as Guardian” of S.D.’s property.
Those funds are currently held in Mr. Cohen’s escrow account.
On November 12, 2021, appellant filed an attorney fee application (the “fee application”)
in the circuit court “seeking court approval for Guardian to pay a contingency fee to Counsel
based on the life insurance proceeds recovered.”2 Appellee did not object to the fee application.
At a hearing on this matter before the circuit court, appellant stated that his purpose in filing the
application was “to have this issue of reasonableness of the attorney fee decided in advance. . . .
We thought it was better to do this in advance . . . to make it easier for our client so [she]
wouldn’t have problems down the road.”
2
Although the heading of the fee application states that it was filed by both appellant and
Mr. Cohen, as joint counsel for appellee, only appellant signed the application and Mr. Cohen
never appeared in the circuit court on this matter.
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On January 19, 2022, the commissioner of accounts for the circuit court, Anne M.
Heishman (“Ms. Heishman”), filed a preliminary response to appellant’s fee application, in
which she requested the court refer the matter to her office for a hearing. The circuit court
granted that request on January 21, 2022, and referred the case to Ms. Heishman “for hearing and
report.” Ms. Heishman conducted a hearing on January 25, 2022, and subsequently filed a report
of her findings and recommendations, which the circuit court adopted when it issued an order
“authorizing payment of attorneys’ fees from minor’s estate” on February 11, 2022 (“February
2022 order”).3
In the February 2022 order, based on the recommendations in Ms. Heishman’s report, the
circuit court reduced the 40% contingency fee to only “25% of the life insurance proceeds
currently held in the escrow account of Mr. Cohen.” This alteration of the parties’ contract was
based solely on the Commissioner’s opinion—after she weighed the twelve factors enumerated
by the Fifth Circuit in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974),
for determining the reasonableness of attorney fees in federal court—that a 40% fee was
unreasonable, in part because “a customary fee in a case involving representation of a minor is
25% to 33.3%.”
The circuit court then directed appellant and Mr. Cohen to “immediately disburse the
remaining life insurance proceeds, in an amount estimated to be $186,678.67,” to appellee.
Finally, the circuit court ordered that the reduced 25% contingency fee would “cover[] the
remaining work” that appellant and Mr. Cohen “are to complete for [appellee] as stated in the
parties’ Representation Agreement, including that the Estate of [S.D.] receives its share of the
real property owned by decedent [Mr. Adisu] at his death.”
3
The record on appeal does not contain a transcript of the hearing conducted by
Ms. Heishman on January 25, 2022, but it does include a copy of her subsequent report filed with
the circuit court on February 7, 2022.
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Appellant appended several written objections to the February 2022 order and filed a
motion for reconsideration or clarification on February 17, 2022. The circuit court denied
appellant’s motion by written order on March 2, 2022. Appellant then filed a notice of appeal on
March 7, 2022. On March 19, 2022, appellant filed a motion to withdraw as appellee’s counsel
because appellee “voiced her dissatisfaction with the representation and wishes to engage other
counsel.” The circuit court granted that motion on April 29, 2022.
This appeal followed.
II. ANALYSIS
Appellant brings five assignments of error on appeal, challenging the circuit court’s
handling of his fee application and the terms contained in the court’s February 2022 order.
Specifically, appellant takes issue with the circuit court’s reduction of the contingent fee amount
from 40% to 25%, as well as the court’s instruction that appellant complete the remaining work
for appellee as stated in the representation agreement for no additional fee award. He also
asserts the circuit court erred in ordering him to immediately disburse the remaining 75% of the
life insurance proceeds to appellee because he had no control over those funds being held in
Mr. Cohen’s escrow account.
This Court, however, reaches none of those claims because the circuit court’s order was
void ab initio. Because the circuit court lacked jurisdiction over appellant’s fee application, the
February 2022 order is a nullity and neither party is bound to its terms.4 Accordingly, this Court
reverses and dismisses the case.
4
Nor may appellant undertake any further work on appellee’s case since they dissolved
the attorney-client relationship.
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Standard of Review
Whether a circuit court has jurisdiction over a particular matter is a question of law that
this Court reviews de novo review on appeal. See Reaves v. Tucker, 67 Va. App. 719, 727
(2017). “Jurisdiction . . . is the power to adjudicate a case upon the merits and dispose of it as
justice may require.” Pure Presbyterian Church of Washington v. Grace of God Presbyterian
Church, 296 Va. 42, 49 (2018) (quoting Shelton v. Sydnor, 126 Va. 625, 629 (1920)). “In order
for a court to have the authority to adjudicate a particular case upon the merits,” it must possess
subject matter jurisdiction. Id. (quoting Farant Inv. Corp. v. Francis, 138 Va. 417, 427-28
(1923)).
“Subject matter jurisdiction is the authority vested in a court by constitution or statue to
adjudicate certain categories of disputes.” Smith v. Commonwealth, 281 Va. 464, 467 (2011)
(emphasis added) (citation omitted). The Supreme Court of Virginia has repeatedly recognized
that subject matter jurisdiction “can only be acquired by virtue of the Constitution or of some
statute. Neither the consent of the parties, nor waiver, nor acquiescence can confer it.” Pure
Presbyterian, 296 Va. at 49 (quoting Humphreys v. Commonwealth, 186 Va. 765, 772 (1947)).
“Once a court determines that it lacks subject matter jurisdiction, ‘the only function
remaining to the court is that of announcing the fact and dismissing the cause.’” Id. at 50
(quoting Ex Parte McCardle, 74 U.S. (7 Wall) 506, 514 (1868).5 Any other “judgment on the
merits made without subject matter jurisdiction is null and void.” Id. (quoting Morrison v.
Bestler, 239 Va. 166, 170 (1990)); see also Cilwa v. Commonwealth, 298 Va. 259, 266 (2019)
(“In the eyes of the law, such an order is not merely an erroneous order—it is no order at all.”).
Consequently, an order rendered void ab initio “can be [challenged] at any time in the
5
This Court continues to acknowledge that a court “always has jurisdiction to determine
whether it has subject matter jurisdiction.” Pure Presbyterian, 296 Va. at 50 (quoting Morrison
v. Bestler, 239 Va. 166, 170 (1990)).
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proceedings, even for the first time on appeal by the court sua sponte.” Porter v.
Commonwealth, 276 Va. 203, 228 (2008) (quoting Morrison, 239 Va. at 170); see also Pure
Presbyterian, 296 Va. at 50 (“[T]he want of such jurisdiction of the trial court will be noticed by
this court ex mero motu [on its own motion].” (second alteration in original) (quoting
Humphreys, 186 Va. at 772-73)); Smith, 281 Va. at 467 (“Without this type of jurisdiction a
court’s action is a nullity and is subject to challenge at any time.”).
The Circuit Court Lacked Jurisdiction Over Appellant’s Fee Application
At the outset, this Court finds there is no constitutional or statutory provision that grants
the circuit court jurisdiction over appellant’s unusual case.
To begin, appellant filed his fee application based on the erroneous belief that the circuit
court was required to: (1) pre-authorize payment of attorney fees if they are to be distributed
from a minor’s estate, and (2) conduct a reasonableness analysis of the attorney fees before
authorizing their payment. Appellant points to In re: Abrams v. Abrams, 605 F.3d 238, 243 (4th
Cir. 2010) (quoting Dean v. Holiday Inns, Inc., 860 F.2d 670, 673 (6th Cir. 1988)), in support of
the proposition that the circuit court was authorized, and indeed required, to conduct an
independent investigation “as to the fairness and reasonableness of a fee to be charged against a
minor’s estate or interest.”.
In Abrams, the Fourth Circuit held that a federal “district court does possess discretion in
approving fee awards, particularly when its power to protect minors or the disabled is involved,”
but that the district court abuses its discretion in doing so when it “improperly appl[ies] the
standards we have established for determining whether an attorney’s fee is reasonable.” Id. at
240. As to the question of reasonableness, Abrams directed district courts to “look at the twelve
factors first set forth in Johnson, 488 F.2d 714,” which the Fourth Circuit adopted in Barber v.
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Kimbrell’s, Inc., 577 F.2d 216 (4th Cir. 1978), and Allen v. United States, 606 F.2d 432 (4th Cir.
1979). 605 F.3d at 244.
As both parties ultimately acknowledged at oral argument, the holdings in Abrams and
Johnson are not binding upon Virginia courts. And neither the legislature nor the courts in
Virginia have chosen to adopt those federal provisions. Indeed, Virginia courts continue to rely
on “the multi-factor test . . . articulated in a number of cases,” which includes a non-exhaustive
list of seven different factors, rather than the twelve factors required by Johnson. Portsmouth
2175 Elmhurst, LLC v. City of Portsmouth, 298 Va. 310, 333 (2020). But here, the circuit court
lacked jurisdiction to even reach a reasonableness inquiry.
Although Abrams expresses a noble sentiment—that a federal district court’s judicial role
of protecting those before it includes “ascertaining whether attorney fee agreements involving
minors or incompetents are reasonable”— the Fourth Circuit’s holdings do not confer the same
jurisdiction to Virginia state courts. 605 F.3d at 243. Nor do any of the statutory provisions in
Title 64.2—governing a guardian’s reporting requirements for disbursement of funds from a
minor’s estate—permit appellant to bring an undisputed fee application directly before the circuit
court. See e.g., Phillips v. Rohrbaugh, 300 Va. 289, 305-08 (2021); Wood v. Martin, 299 Va.
238, 251 n.8 (2020). Although this Court has found no decision of a Virginia court addressing
the particular circumstances presented here, other Virginia cases involving attorney fees are
informative for how to deal with appellant’s unique situation. This Court concludes, therefore,
that the jurisdiction of Virginia’s circuit courts to review attorney fees requires the existence of a
dispute, such that the courts can provide a remedy.
Here, no dispute over the legal fees sought accompanied appellant’s fee application.
Rather, appellant filed the application on behalf of appellee, whom he was still representing at
the time, because he believed Abrams required the circuit court to authorize appellee’s payment
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of the legal fees from the funds in S.D.’s estate. As noted above, that belief was incorrect.6
Moreover, appellee did not object to the fee application nor did she contest in court the
enforceability of the contingency fee agreement or the reasonableness of the agreed-upon 40%.
Indeed, it was only after the circuit court entered the February 2022 order and appellant filed his
notice of appeal in this Court that appellee took an adverse position to appellant and terminated
her attorney-client relationship with him.
At oral argument, appellant admitted that he filed the fee application as a precautionary
measure to protect appellee from any possible future disputes with the commissioner of accounts
regarding the proper use of S.D.’s funds. See Code §§ 64.2-1200 to -1222, -1300, -1913
(governing the duties of guardians, such as periodic reporting to the commissioner of accounts of
all distributions made from a minor’s estate). The circuit court, however, has no jurisdiction
over such speculative matters where no current dispute exists and the anticipated future dispute
may never arise. In fact, Title 64 bars this type of broad review by a circuit court and instead
requires a guardian to report all completed disbursements from a minor’s account directly to the
commissioner of accounts.
Consequently, the circuit court lacked subject matter jurisdiction over appellant’s fee
application where there was no current dispute and thus no basis for awarding attorney fees, let
alone rewriting the terms of the existing representation agreement. This limitation is evidenced
by the Supreme Court’s discussion in Lambert v. Sea Oats Condominium Association, Inc., 293
6
This Court also notes that appellant, Mr. Cohen, and appellee entered into the
contingency fee agreement as part of a broader representation agreement amongst themselves.
At that time, appellee had not been appointed guardian of S.D. for any legal representation
matters. Although appellee was presumably acting on behalf of S.D., the contract is only
binding on the actual parties to the agreement: appellant, Mr. Cohen, and appellee. Thus,
appellant may seek to enforce the terms of the agreement only against appellee (or Mr. Cohen).
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Va. 245, 255 n.3 (2017), of the different types of attorney fees cases handled in Virginia state
courts:
While Seyfarth, Shaw [v. Lake Fairfax Seven Ltd. Partnership, 253
Va. 93, 94-95 (1997),] was a case where a law firm sought to
recover its fees from a client that refused to pay its bill, not a case
about awarding attorney’s fees to a prevailing party, the question
in both types of cases is whether the amount sought is reasonable.
Compare [id.] at 96 (holding that “[a]n attorney who seeks to
recover legal fees from a present or former client must establish
. . . that the fees charges to the client are reasonable”) with RF&P
Corp. v. Little, 247 Va. 309, 322 (1994) (noting that “in all cases
where attorney’s fees are recoverable pursuant to statute,” the fees
sought must be reasonable) and Mullins v. Richlands Nat’l Bank,
241 Va. 447 (1991) (holding that where a contract “provided for
attorney’s fees, but did not fix the amount,” the fees sought must
also be reasonable).
The common element among these cases is the existence of an active dispute, whether
between an attorney and a client refusing to pay his bill or between the prevailing and losing
parties in a post-litigation fee-shifting situation. Appellant’s case, however, does not fit into
those categories. Nor does it raise any other type of dispute over the legal fees. Thus, the circuit
court had no authority to consider appellant’s untimely fee application.
III. CONCLUSION
In the absence of any constitutional or statutory authority to the contrary, the circuit court
lacked subject matter jurisdiction to consider appellant’s fee application under the specific
circumstances presented here. Therefore, the February 2022 order is void ab initio.
Accordingly, this Court reverses and dismisses the case.
Reversed and dismissed.
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