STATE OF MINNESOTA
IN COURT OF APPEALS
John August Hunt, et al.,
Chamberlain, Neaton & Johnson, et al.,
Kabanuk Diversified Investment, Inc.,
d/b/a Tropix Beach Club; et al.,
Filed July 28, 1998
Hennepin County District Court
File No. PI95017324
Scott A. Johnson, Johnson Law Group, 10801 Wayzata Boulevard, Suite 120, Minnetonka, MN 55305 (for respondents)
Considered and decided by Peterson, Presiding Judge, Amundson, Judge, and Shumaker, Judge.
One week before his personal injury case settled, plaintiff John A. Hunt fired his attorney, respondent Scott A. Johnson, and retained another attorney, appellant Jesse Gant, III. Gant challenges the district court's allocation of the majority of the contingent fee to Johnson. We affirm.
Johnson was the CNJ partner primarily responsible for Hunt's case from August 1995 to May 1997. On May 2, 1997, Hunt sent a letter to Johnson firing him and CNJ and informing Johnson that Hunt had retained Gant to represent him. Hunt agreed to retain Gant on a one-third contingency fee basis. In an affidavit, Hunt stated that he fired CNJ because he felt that Johnson did not pursue his wishes. Gant claims that he sent letters dated May 2, 1997, to Johnson and to Joel Muscoplat, the attorney for the defendant, informing them that Hunt had retained his services. Johnson received this letter, but Muscoplat denied receiving it.
On May 9, 1997, Muscoplat prepared a settlement letter to Johnson. This letter was not typed or mailed until May 13, 1997. On May 14, 1997, Johnson received Muscoplat's letter, which offered to settle Hunt's case for $50,000 (the applicable insurance policy limit). Also on May 14, 1997, Gant sent a messenger to pick up Hunt's file from Johnson. Other than Gant's claim that he sent Muscoplat a letter on May 2, there is no evidence of any communication between Gant and Muscoplat between May 2 and May 14. On May 15, 1997, Johnson sent Muscoplat's settlement proposal to Gant and informed Gant that Johnson would assert a claim for the full one-third contingency fee if Hunt settled for $50,000.
On May 21, 1997, Gant faxed a letter to Muscoplat informing him that Gant was now legal counsel for Hunt. The letter stated, "If you have not already been informed, please be advised that I am new legal counsel for John Hunt * * *." The district court found that the wording of the May 21 letter was "inconsistent with Gant's claim that he informed Muscoplat of his representation of Hunt on May 2, 1997."
On May 23, 1997, Gant and Muscoplat participated in mediation, and the matter settled on May 28, 1997, for $51,000. Gant negotiated for the extra $1,000. In an affidavit, Muscoplat stated that his $50,000 settlement offer was based solely on Johnson's work and preparation and that he did not learn that Hunt had discharged Johnson until after he mailed the letter offering to settle.
Johnson filed an attorney's lien and moved for an order allocating attorney fees. Johnson submitted an expense report based on an hourly rate totaling $10,468.29, but requested $16,500, one-third of Hunt's settlement less $500 for Gant's representation. The district court analyzed the case under Ashford v. Interstate Trucking Corp. of Am., 524 N.W.2d 500 (Minn. App. 1994), and In re L-tryptophan Cases, 518 N.W.2d 616 (Minn. App. 1994), and concluded that
CNJ is entitled to almost the entire contingent fee. CNJ invested significantly more time and money into the case. Moreover, CNJ's efforts produced the offer of $50,000, while Gant's efforts produced the additional $1,000 of Hunt's $51,000 settlement. Therefore, for the reasons stated above this Court finds that CNJ is entitled to $16,000.00 of the contingent fee plus its $844.79 of costs and that Gant is entitled to the remaining balance of the contingent fee.
The reasonable value of attorney fees is a question of fact, and the district court's findings must be upheld on appeal unless clearly erroneous. Amerman v. Lakeland Dev. Corp., 295 Minn. 536, 537, 203 N.W.2d 400, 400-401 (1973). But "what method to use to calculate the amount of an attorney's lien is a question of law subject to de novo review." Ashford v. Interstate Trucking Corp. of Am., 524 N.W.2d 500, 502 (Minn. App. 1994).
The following factors should be considered when dividing a contingency fee between an attorney who withdraws or is discharged and the replacement attorney:
(1) the length of time each firm spent on the case;
(2) the proportion of funds invested by each firm;
(3) the quality of representation;
(4) the result of each firm's efforts;
(5) the viability of the claim at transfer;
(6) the amount of recovery realized.
Id. at 503.
In examining the first factor, the district court found that Johnson spent 57.7 hours during more than one and two-thirds years working on the case, and Gant spent an undocumented 10 hours during less than one month. Regarding the second factor, the court found that CNJ incurred $844.79 in out-of-pocket expenses, and Gant failed to inform the court of any costs he had incurred. Discussing the third and fourth factors, the court stated:
Johnson's efforts resulted in the $50,000 offer for settlement because Muscoplat's letter containing the $50,000 settlement offer was prepared, typed and mailed before Muscoplat knew of Gant's retainer and before Gant had even received Hunt's file from CNJ.
The court also found that Muscoplat "stated that he felt that Johnson handled Hunt's lawsuit with the highest degree of professionalism and skill." Regarding the fifth factor, the court stated that "Hunt's claim was obviously very viable when it transferred from CNJ to Gant" because Johnson's work resulted in a $50,000 settlement offer. These findings are supported by evidence in the record.
Gant claims that Ashford is not applicable because it involved an attorney who withdrew from a case, rather than being discharged by the client for not pursuing his wishes. But the Ashford factors apply to both withdrawals and discharges. See id. (discussing concept of quantum meruit in both withdrawal and discharge cases). The fact that Hunt fired CNJ does not mean that Johnson is not entitled to be paid for the results he obtained - a $50,000 settlement offer.
Gant seems to argue that because he represented Hunt when Muscoplat made the settlement offer, the district court erred in awarding Johnson $16,000 in attorney fees. But Gant cites no authority supporting this contention. Gant also argues that the district court erred in determining that Johnson did not act unethically and fraudulently in his billing of Hunt. But the record does not demonstrate that Johnson ever sent Hunt a bill.
II. Attorney Fees on Appeal
In his brief, Johnson requests $2,000 in attorney fees on appeal, citing to Minn. Stat. § 549.21, subd. 2 (1996). This statute has been repealed and replaced by Minn. Stat. § 549.211 (Supp. 1997), effective August 1, 1997. Arguing for fees on appeal in a brief without submitting a separate motion does not comply with the new statute. See Minn. Stat. § 549.211, subd. 4(a) (a "motion for sanctions under this section must be made separately from other motions or requests and describe the specific conduct alleged to violate subdivision 2"). Because Johnson has not submitted a motion that complies with the statute, we will not address his request for attorney fees.