This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
IN COURT OF APPEALS
Roger C. Alderson,
Daniel M. Homolka, et al.,
Hennepin County District Court
File No. CT 03-1283
Robert M. Smith,
Kay Nord Hunt, Barry A. O’Neil, Valerie Sims, Lommen, Abdo, Cole, King & Stageberg, P.A., 2000 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellants)
Considered and decided by Kalitowski, Presiding Judge; Halbrooks, Judge; and Ross, Judge.
This case concerns a contest between attorneys over fees in a personal-injury action that settled for over $3.4 million. On appeal from a judgment finding attorney Daniel Homolka and his law firm liable to attorney Roger Alderson on a quantum-meruit basis for failing to pay Alderson for services he performed for Homolka, Homolka argues that rule 1.5(e) of the Minnesota Rules of Professional Conduct bars the recovery and that the district court erred by overvaluing Alderson’s services, by denying his motion to dismiss him as an improper party, and by finding his law firm liable. By notice of review, Alderson challenges the district court’s entry of summary judgment on his breach-of-contract claim, limitation of prejudgment interest, and denial of his motion to amend his complaint. Because we find that the record and law support the district court’s findings and conclusions, we affirm.
August 1998, Alderson learned of a motorcycle accident from his friend Sandra
Harrison, who lived in
Three days after the accident, Thomas’s father retained Homolka and signed a contingency-fee agreement under which Homolka would receive one-third of any amount recovered because of the accident, plus expenses. The agreement did not mention Alderson. Alderson testified that Homolka asked him whether he wanted to be named and he replied, “We have done this before. I will leave it up to you. It’s your call.” Homolka, however, testified that Alderson insisted they exclude his name because the Thomases would otherwise refuse to sign the agreement.
the days following the accident Alderson photographed the accident site and
Thomas’s injuries, and he transported Thomas’s motorcycle from
October 1998, Alderson returned to
Between October 1998 and November 1999, Alderson and Homolka spoke weekly on average. According to Alderson, they regularly discussed the Thomas case, including confidential information about Thomas’s medical condition. Homolka asked Alderson to complete additional research on loss of consortium and then on harassment when a woman sought access to Thomas in December 1998.
other law firms became part of Thomas’s affairs as the case developed. Homolka associated with another
October 1999, lawyers deposed
Alderson continued to conduct legal research in November 1999, andHomolka told him that the parties were moving toward a settlement. But after this conversation, communications between Homolka and Alderson decreased. Alderson was concerned and called Homolka in early December 1999 to ask how the settlement was progressing.
This conversation was the last time they spoke. Alderson testified that the conversation was brief, and that Homolka gave “sketchy” answers and appeared to want to end the call quickly. Homolka told Alderson that the Thomases did not want Alderson working on the case, and then said he had to take another call but would call Alderson back. He never called.
days after this conversation, Goff & Goff petitioned a
The present litigation began in December 2002 when Alderson served a complaint on Homolka and his law firm, alleging claims based on breach of contract and quantum meruit. Homolka moved the district court to dismiss the case for lack of subject-matter jurisdiction and for failure to state a claim, or alternatively, to enter summary judgment in his favor. The district court denied the motion. In November 2004, Homolka again moved for summary judgment and Alderson moved to amend his complaint to allege fraud and punitive damages. The district court granted Homolka’s motion in part and dismissed Alderson’s breach-of-contract claim, holding that because Thomas’s parents did not consent to fee-splitting with Alderson, the claimed contract was unenforceable. The court, however, denied summary judgment on the quantum-meruit claim and also denied Alderson’s motion to amend.
After a three-day bench trial in June 2005, Homolka moved the court to dismiss him as an improper party. In September 2005, the district court found that Alderson was entitled to about $101,511 for his work on the case, plus prejudgment interest. The court held that Homolka waived his improper-party defense and denied his motion. The court also held Homolka and his law firm jointly and severally liable to Alderson. The district court later issued amended findings and limited the amount of prejudgment interest. The court denied Alderson’s request for reconsideration of its prejudgment-interest findings. This appeal follows.
D E C I S I O N
Homolka argues that allowing Alderson to recover on a quantum-meruit basis violates rule 1.5(e) of the Minnesota Rules of Professional Conduct, that the court overvalued Alderson’s services, and that the court erred by denying his motion to dismiss and finding he and his firm jointly and severally liable to Alderson. By notice of review, Alderson challenges the district court’s dismissal of his breach-of-contract claim, limitation of prejudgment interest, and denial of his motion to amend his complaint.
appeal from a judgment following a bench trial, we review whether the district
court’s findings are clearly erroneous and whether the court erred as a matter
of law. Birch Publ’ns, Inc. v. RMZ of St. Cloud, Inc., 683 N.W.2d 869, 872
(Minn. App. 2004), review denied (
first address Homolka’s contention that allowing Alderson to recover any amount
on a quantum-meruit basis would violate rule 1.5(e) of the Minnesota Rules of
Professional Conduct and Alderson’s parry, which urges that rule 1.5(e) permits
recovery on his breach-of-contract claim and that the district court erred by
dismissing it. These competing
assertions concerning application of rule 1.5(e) implicate the supreme court’s
interpretation of the rule and its effect on fee-splitting arrangements, as
held by Christensen v. Eggen, 577
N.W.2d 221, 225 (
[a] division of a fee between lawyers who are not in the same firm may be made only if (1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation; (2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and (3) the total fee is reasonable.
urges that Christensen is limited by
its facts to cases where a referring attorney performs no work on the referred
But Christensen does not suggest
that limitation, and it instead articulates a bright-line rule. After
argues that Alderson’s attempt to recover on a quantum-meruit basis must fail
for the same reasons. We conclude
otherwise. Quantum meruit is an equitable
doctrine that allows a party to recover when the party has conferred a benefit
to another without reasonable compensation.
Busch v. Model Corp., 708
N.W.2d 546, 551 (
next consider Homolka’s dispute over the value of Alderson’s services. Quantum meruit allows recovery when a person benefited
from another’s services and retaining the benefit without compensation is
unjust. Ylijarvi v. Brockphaler, 213
opined that Alderson should be paid as a nonlawyer and receive between $10,000
and $20,000. Alderson testified that his
services were worth more than $250,000.
The district court found Alderson entitled to $101,511.23. This amount comprises $100,000 for his
services and $1,511.23 for expenses he incurred. The court assessed the hours Alderson claimed
to have spent performing various tasks for Homolka, including discussing the
case with Homolka on a weekly basis, completing legal research, conducting the
inventory, and preparing
Homolka argues that he derived no benefit from Alderson’s services because Homolka never actually used any of Alderson’s work product in the litigation. Homolka notes that he hired other investigators and an accident reconstructionist and asserts that Alderson’s photographs were worthless. But, at the time of Alderson’s work, Homolka had not hired anyone else and he specifically asked Alderson to take the pictures. Alderson testified that photographing the accident scene was particularly an urgent matter because the construction crew was resealing the highway and presented a potential threat to preserving evidence. And many of Alderson’s actions were undertaken early in the case when it was unclear how it would proceed. Although the work product was not used in the litigation, the evidence did not require the district court to agree that the services were worthless.
Homolka also asserts that the inventory and some of Alderson’s research related to the probate and harassment matters rather than the personal-injury action. He notes that Goff & Goff was hired independent of the personal-injury matter. But the record supports the district court’s finding that additional work was “part and parcel” of the same action. Goff & Goff submitted the petition to approve the settlement for the personal-injury case. Homolka acknowledged that Alderson prepared a draft letter on the harassment issue to beput on Homolka’s letterhead. He does not explain why, if the various other Thomas affairs were not somewhat intertwined with the personal-injury representation, he would have asked Alderson to complete these tasks. Homolka asked Alderson to perform this work. Homolka’s testimony supports the district court’s conclusion that the peripheral services were offered as “part and parcel” to satisfying the clients with Homolka’s representation in the central personal-injury case. When asked why he would devote time to matters outside the scope of the personal-injury claim, Homolka responded, “as part of the service for my client in a case of this nature, I try to service them properly. [This side issue] still needed to be attended to for them.” Further, Alderson’s action is against Homolka and his law firm, and while this case originated with Alderson’s assistance in securing Homolka’s representation in the personal-injury case, Alderson seeks compensation for all of the services he provided to Homolka. The district court’s finding that Homolka benefited is not clearly erroneous.
In valuing Alderson’s services, the district court considered the amount of time Alderson spent, his usual hourly rate, his out-of-pocket expenses, and the amount recovered in the Thomas case. As he argued to the district court, Homolka asserts that the majority of the district court’s valuation is simply an improper finder’s fee. See Minn. R. Prof. Conduct 7.2(b) (generally prohibiting lawyer from giving “anything of value to a person for recommending the lawyer’s services”).
The argument on these facts presents a close question. We acknowledge that the district court originally referred to the “value in recognizing and obtaining a case” in making the award. But when challenged, the court clarified that it did not intend to include any amount as a finder’s fee. We agree with Homolka that if the district court’s award were a finder’s fee designed to compensate for the value in securing the case, reversal would be appropriate. Notwithstanding the district court’s original characterization, however, we credit its later clarification and we conclude that the court appropriately based its finding on quantum meruit.
recovery rests on the value of one party’s services and the benefit conferred
to the other party. Essential to our
conclusion, Alderson completed other work not reflected in the court’s preliminary
$29,200 calculation. He drove immediately
also affirm the district court’s determination regarding interest. When a court enters judgment for recovery of
money, the judgment includes interest unless otherwise provided by contract or
law. Minn. Stat. § 549.09, subd. 1 (2006). A statutory method exists for calculating
prejudgment interest when a party makes a written settlement offer. If the prevailing party’s offer is closer to
the final judgment entered than the opposing party’s offer, the prevailing
party receives interest from the commencement of the action to the time of recovery.
The district court initially ordered prejudgment interest on the entire judgment beginning April 12, 2000, when Homolka received attorney fees. The court later limited the accrual of interest to the period from December 26, 2002, to September 30, 2005, and allowed interest only on $30,000. The record supports the district court’s amendment. Alderson served his complaint on December 26, 2002. On September 30, 2005, Homolka offered to settle for $30,000. Alderson rejected the offer and did not make a counter demand. Alderson’s offer was therefore $0. See Trapp v. Hancuh, 587 N.W.2d 61, 65 (Minn. App. 1998) (noting that statute does not require party to respond to offer and that “[w]hen a plaintiff prevails on a claim, a defendant’s offer that is closer to the award than a plaintiff's offer, if any, terminates the accrual of the prejudgment interest”). Because Homolka’s offer of $30,000 was closer to the amount recovered, interest may accrue on the $30,000 from December 26, 2002, to September 30, 2005.
Alderson asserts that he is entitled to prejudgment interest, on a common-law basis, from the time his cause of action accrued because damages were reasonably ascertainable to Homolka. But the district court expressly declined to find that the damages were reasonably ascertainable. Alderson’s argument that this court should infer the finding on appeal is therefore without support.
The district court found Homolka and his law firm jointly and severally liable. Homolka contends that the court erred by denying his motion to dismiss him as an improper party and by holding his firm liable. We discern no error by the district court.
defendant’s assertion that he is an improper party to an action is an
affirmative defense. Buysse v. Baumann-Furrie & Co., 428
N.W.2d 419, 426 n.7 (Minn. App. 1988), rev’d
and remanded on other grounds, 448 N.W.2d 865 (Minn. 1989). Failure to plead an affirmative defense waives
the defense. Minn. R. Civ. P. 8.03
(requiring party to plead affirmative defense); Bradley v. First Nat’l Bank, 711 N.W.2d 121, 128 (
addition to his argument that he should not be personally liable to Alderson,
Homolka argues that the district court improperly found his law firm liable. Piercing the corporate veil is equitable in
nature. Roepke v. Western Nat’l Mut. Ins. Co., 302 N.W.2d 350, 352 (
challenges the district court’s denial of his motion to amend his complaint to
allege fraud and punitive damages. A
party may amend a pleading once as a matter of course before a responsive
pleading is served, but only by leave of the court or by consent of the
opposing party after service of a responsive pleading.
district court did not abuse its discretion by denying Alderson’s motion. We recognize that the record suggests some
evidence of fraud, but the late timing of Alderson’s attempt to plead the cause
of action supports the district court’s decision. On appeal, Alderson cites trial testimony to
support his fraud claim. But the trial
occurred almost six months after the district court denied his motion, and our
review is limited to the time at which the motion was made. See
Wall v. Fairview Hosp. & Healthcare Servs., 584 N.W.2d 395, 404 (
waited nearly two-and-one-half years to bring his motion to amend, and he then alleged
the same damages on this new claim as he stated for his quantum-meruit claim:
uncompensated work. Although tort and
contractprovide separate causes of
action, a party may recover under both theories only on proof that the damages
under each cause of action are separate and distinct. Brooks
v. Doherty, Rumble & Butler, 481 N.W.2d 120, 128 (