No. 52181-1-IThe Court of Appeals of Washington, Division One.
Filed: September 27, 2004 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 02-2-00865-8. Judgment or order under review. Date filed: 03/31/2003. Judge signing: Hon. Michael S. Spearman.
Counsel for Appellant(s), Michael Robert Caryl, Mikkelborg Broz Wells Fryer, 1001 4th Ave Ste 3600, Seattle, WA 98154-1115.
Philip Albert Talmadge, Talmadge Law Group PLLC, 18010 Southcenter Pkwy, Tukwila, WA 98188-4630.
Counsel for Respondent(s), Jeffrey Alan Smyth, Attorney at Law, 701 5th Ave Ste 7100, Seattle, WA 98104-7044.
APPELWICK, J.
Gordon Woodley represented Tom and Nancy Ellwein (the Ellweins) in a bad faith claim against their insurance company. When the insurance company made Woodley a material witness as to a preceding arbitration, he was obligated to withdraw as counsel. The respondents were substituted as counsel. The Ellweins prevailed on the bad faith claim and settled with the insurance company. Following a fee hearing, the trial court entered an attorney fee award against the insurance company. The award included amounts to Woodley and to the respondents. Woodley did not seek reconsideration or appellate review of the trial court’s division of fees following the fee hearing. Instead, he brought suit against the respondents based upon quantum meruit. The trial court granted the respondents’ motion for summary judgment and denied Woodley’s motion for reconsideration. We affirm.
FACTS
This case arises from an insurance bad faith claim made against Hartford Accident and Indemnity Company (`Hartford’). Gordon Woodley represented the Ellweins against Hartford following Nancy Ellwein’s injuries in a car accident in 1989.
After policy limits were obtained from the other driver, Woodley represented the Ellweins in arbitration against Hartford on their uninsured motorists (UIM) policy. Following arbitration, Woodley represented the Ellweins in a UIM bad faith claim against Hartford. Woodley and the Ellweins had a contingency fee agreement under which Woodley was to receive fifty percent of any recovery from Hartford.
Hartford requested that Woodley be a material witness to the prior settlement negotiations for the UIM bad faith litigation. Woodley at first declined to withdraw as counsel for the Ellweins. Consequently, the trial judge limited the evidence at trial to events that took place less than forty-five days before the UIM arbitration, thus excluding all evidence of settlement negotiations. The jury on the bad faith case hung, and the Ellweins elected to try the case again.
At the retrial, the trial judge granted Hartford’s motion to depose Woodley. Accordingly, Woodley withdrew as the Ellwein’s counsel. Woodley contacted Simeon Osborn (Osborn) at the Osborn Law Firm to represent the Ellweins. Osborn later associated Philip Arnold (Arnold). Osborn and Arnold entered into a contingency fee agreement with the Ellweins. Woodley was not a party to that agreement. Nor was there any other written fee sharing agreement between Woodley and Osborn and Arnold.
Osborn and Arnold added legal theories, including bad faith theories of misappropriation of an expert and commingling of the PIP file with the UIM defense file, to the theories already pleaded by Woodley. In 1998, the trial court dismissed the Ellwein’s renewed claims on summary judgment. In Ellwein v. Hartford Accident Indem. Co., 95 Wn. App. 419, 976 P.2d 138 (1999), this court on appeal affirmed the trial court’s summary judgment dismissal of the Ellwein’s claim. The Washington Supreme Court accepted review, however, and reversed. Ellwein v. Hartford Accident Indem. Co., 142 Wn.2d 766, 15 P.3d 640 (2001), overruled by Smith v. Safeco Ins. Co., 150 Wn.2d 478, 78 P.3d 1274
(2003). The court unanimously found that Hartford was liable for bad faith largely because it had manipulated testimony by the accident reconstruction expert originally hired on Ellwein’s behalf and had commingled the PIP file with the UIM file and defense. Ellwein, 142 Wn.2d 766.
Following the Supreme Court’s ruling, the Ellweins settled their case against Hartford. The issue of attorney fees and costs under Olympic Steamship was left for trial court determination.[1] The trial court ordered all counsel to the Ellwein’s bad faith claim, including Woodley and the respondents, to produce all fee agreements, oral and written, between themselves, as well as all fee agreements between themselves and the Ellweins.
Woodley’s declaration stated:
My fee agreement with the Ellweins for their bad faith case was as follows:
If successful, I would be paid for my time based upon my contingent hourly rate or the amount of attorney’s fees awarded by the court, whichever is greater.
Woodley requested an award of $250 per hour for 1017.3 hours of work. Woodley submitted extensive documentation detailing his hours. He did not submit any documentation mentioning a fee-splitting agreement with Osborn and/or Arnold, to the trial court. Woodley took no action against the Ellweins to collect the `greater’ contingency fee to which his fee agreement with the Ellweins ostensibly entitled him.
Following the fee hearing, which Woodley did not attend, the trial court awarded Woodley 64 hours at a discounted hourly rate of $185 per hour, a total of $11,840.00. The trial court awarded $27,223.13 in fees to Osborn; $21,033.25 in fees to Susan Machler, one of Osborn’s associates; and $116,955.25 in fees to Arnold. The trial court allowed Osborn and Arnold to claim $250 per hour, and discounted their hours by 55 percent for unsuccessful theories and poor time record keeping, but permitted them a multiplier of twice the lodestar.[2] In addition to the amount awarded to them by the trial court, Osborn and Arnold also collected fees under their contingent fee agreement with the Ellweins.
Woodley sought neither reconsideration nor appellate review of the trial court’s evaluation of the reasonableness of fees in that case, and the judgment became final. After the fee hearing, Woodley asked Osborn and Arnold to split either their fees under their contingent agreement, or their court-awarded fees, with him. Osborn and Arnold refused to share their fees with Woodley. Woodley then served Osborn and Arnold a Notice of Lien for Attorney’s Fees, for $257,450.00. Woodley did not file the lien with the court. Upon the respondents’ motion, the trial court quashed the lien and ordered that fees be disbursed. On the same day as the hearing on the motion to quash the lien, Woodley filed a claim against Osborn and Arnold seeking fee division under quantum meruit and breach of implied contract theories.[3]
The trial court granted Osborn and Arnold’s motion for summary judgment and denied Woodley’s motion for reconsideration. Woodley appeals.
ANALYSIS I. Standard of Review
We review a grant of summary judgment de novo, engaging in the same inquiry as the trial court. Youngblood v. Schireman, 53 Wn. App. 95, 99, 765 P.2d 1312 (1988). Summary judgment is appropriate `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving part is entitled to a judgment as a matter of law.’ CR 56(c). `The facts and all reasonable inferences therefrom must be considered in the light most favorable to the nonmoving party.’ Nivens v. 7-11 Hoagy’s Corner, 133 Wn.2d 192, 197-98, 943 P.2d 286 (1997).
A motion for reconsideration is `addressed to the sound discretion of the trial court whose judgment will not be reversed absent a showing of manifest abuse.’ Perry v. Hamilton, 51 Wn. App. 936, 938, 756 P.2d 150
(1988). `A trial court abuses its discretion when it exercises it in a manifestly unreasonable manner or bases it upon untenable grounds or reasons.’ Wagner Dev., Inc. v. Fid. Deposit Co. of Maryland, 95 Wn. App. 896, 906, 977 P.2d 639 (1999).
II. Quantum Meruit
Woodley seeks to recover fees based on his former representation of the Ellweins in their bad faith claim against Hartford. He asserts that he was entitled to a portion of fees the trial court awarded to the respondents based on quantum meruit.
An attorney who withdraws from a case for good cause or whose withdrawal is otherwise justified may seek recovery of fees on a quantum meruit basis. Ausler v. Ramsey, 73 Wn. App. 231, 235, 868 P.2d 877
(1994).
Quantum meruit, a Latin phrase meaning `as much as he deserves,’ is `based on the premise that one who uses and enjoys the labor and materials of another should not be unjustly enriched thereby.’ Ausler, 73 Wn. App. at 236. It is an equitable remedy arising on occasions when a contract between two parties has failed. Ausler, 73 Wn. App. at 232. When an attorney withdraws or is discharged from a contingent fee representation he may not recover on the contract. Ross v. Scannell, 97 Wn.2d 598, 647 P.2d 1004 (1982); Barr v. Day, 124 Wn.2d 318, 329, 879 P.2d 912 (1994).
`Because no breach occurs, a discharged attorney may not sue on a contingent fee agreement, but must sue in quantum meruit arising out of the contract for the reasonable value of the services rendered through the date of discharge.’ Fetty v. Wenger, 110 Wn. App. 598, 600, n. 4, 36 P.3d 1123 (2002) (citing Kimball v. Pub. Util. Dist. No. 1 of Douglas County, 64 Wn.2d 252, 257, 391 P.2d 205 (1964)).
Quantum meruit thus is an equitable remedy arising on occasions where a contract between an attorney and a former client has failed; it is implicit that following the failure of a contingency fee agreement, quantum meruit provides for recovery by an attorney only from a client. Unlike Barr and Krein v. Nordstrom, 80 Wn. App. 306, 908 P.2d 889
(1995), the client was not a party to this fee litigation. Woodley’s claim against Osborn and Arnold for a portion of the contingent fee on a quantum meruit basis must fail because Osborn and Arnold are not Woodley’s former clients.
III. Collateral Estoppel
Woodley also asserts that the trial court erred in concluding that collateral estoppel bars his recovery from Osborn and Arnold.
Collateral estoppel promotes the policy of finality by preventing relitigation of an issue on which all parties have had a full and fair opportunity to present a case. Estate of Tolson, 89 Wn. App. 21, 34, 947 P.2d 1242 (1997); Pederson v. Potter, 103 Wn. App. 62, 69, 11 P.3d 833 (2000), review denied, 143 Wn.2d 1006 (2001). Collateral estoppel applies when: (1) the issue decided in the prior adjudication is identical with the one presented in the second, (2) the prior adjudication ended in a final judgment on the merits, (3) the party against whom the plea is asserted was a party or in privity with a party to the prior adjudication, and (4) application of the doctrine will not work an injustice. Pederson, 103 Wn. App. at 69 (citing Hanson v. City of Snohomish, 121 Wn.2d 552, (1993). Osborn and Arnold have the burden of proving each of the elements of collateral estoppel. McDaniels v. Carlson, 108 Wn.2d 299, 303, 738 P.2d 254 (1987); State v. Vasquez, 148 Wn.2d 303, 308, 59 P.3d 648 (2002). Woodley asserts that the first, third, and fourth elements of collateral estoppel were unmet.
Woodley argues that the first element of estoppel was not met because the trial judge `was not asked, and had no reason, to apportion the contingent fee earned by the attorneys from the Ellweins.[4] He reasons that the issues here are not identical to those before the court at the fee hearing because here he requested the trial court to `evaluate the respective shares of the attorneys to the overall fee received from the Ellweins.’
Woodley is correct that collateral estoppel does not bar his request to apportion the contingent fee. Woodley’s claim on the contingent fee failed as a matter of law for the reasons analyzed in the preceding section. The collateral estoppel issue is analyzed here only with respect to the fees awarded by the trial court under the claims against Hartford.
Woodley maintains that under Barr, the first requirement for collateral estoppel was not met. Barr, 124 Wn.2d 318. Because the contingent fee was not before the trial court, only the Olympic Steamship claim remains. That issue is identical to the issue here. Further, Barr is distinguishable.
In Barr, a couple, Lewis and Ella Barr, hired an attorney to negotiate a settlement in a personal injury suit following Lewis Barr’s injuries at work. Barr, 124 Wn.2d at 321-22. The Barrs signed a contingent fee agreement under which the attorney was to receive `between 25 and 30 percent of any settlement, depending on how near to trial the settlement was reached.’ Barr, 124 Wn.2d at 322. Ella Barr later discharged the attorney, although he continued to associate with the attorney hired to replace him. Barr, 124 Wn.2d at 322. The second attorney hired by the Barrs had no contingent fee agreement with them. The defendants in the Barrs’ suit agreed to settle with the Barrs for $1,079,493.27. Barr, 124 Wn.2d at 322. Under the circumstances of the case, the court was required to approve the settlement and the attorney fee award. Barr, 124 Wn.2d at 323. Following a hearing which included testimony by Ella Barr, the trial court approved both the settlement and the attorney fee award as reasonable. Barr, 124 Wn.2d at 323.
Ella Barr later filed suit alleging, among other claims, that both attorneys had breached their contract by charging excess fees. Barr, 124 Wn.2d at 323-24. The attorneys objected, arguing that `Barr was collaterally estopped from challenging the reasonableness of the attorney fee award’ because the trial court had determined their fees to be reasonable when it approved the Barr’s tort settlement. Barr, 124 Wn.2d at 324.
On review, the Supreme Court held that Barr was not collaterally estopped because the first and fourth requirements for collateral estoppel were not met. Agreeing with the Court of Appeals’ analysis, the Supreme Court explained that the issue of `[w]hether the attorneys made a full and fair disclosure to the Barrs on all matters relating to the fees’ was not identical to `whether the proposed settlement as a whole, including attorney fees, was reasonable’. Barr, 124 Wn.2d at 325. Thus, the first requirement for collateral estoppel, the same issue, was not met in Barr. In this case, there is no question that a full and fair disclosure of `all matters relating to fees’ was before Judge Learned; thus, Barr does not support Woodley’s assertion that the first requirement for collateral estoppel is not met.
Woodley also asserts that the third requirement of collateral estoppel, that an individual be a party to or in privity with a party to the prior adjudication, is not met because here, the parties are not identical. To support this proposition he states that `he did not have the opportunity to be heard by the [trial] judge, [in the fee hearing] and he was not represented by Osborn, Arnold, or any other attorney in that proceeding, [and] [h]e lacked standing to even appeal Judge Learned’s decision.’ Woodley’s claims are unfounded. The trial court considered the written materials he submitted to document his claim. He provides no evidence, nor legal basis, for his claim that he was not permitted to attend the fee hearing. Neither does he provide a legal authority for his claim that he lacked standing to appeal the trial court’s decision.
In Hackler v. Hackler, 37 Wn. App. 791, 795, 683 P.2d 241, review denied, 102 Wn.2d 1021 (1984), the court found that a person who was a witness in an action, `fully acquainted with its character and object and interested in its results, is estopped by the judgment [in that case] as fully as if he had been a party.’ Hackler, 37 Wn. App. at 795. Similarly, in Garcia v. Wilson, 63 Wn. App. 516, 521, 820 P.2d 964
(1991), the court found that a witness in one case with an investment in its result was estopped from asserting a position in another action, contrary to the position she had taken as a witness in the first action. Garcia, 63 Wn. App. at 521.
Notwithstanding the dissimilarity in the fact patterns in Hackler and Garcia, both cases support the trial court’s conclusion that the third requirement of collateral estoppel was met. Woodley was a witness with a vested interest in the outcome of the Olympic Steamship fee hearing before the trial court. Woodley’s contention that he was not an interested party in that case is contravened by the fact that he submitted affidavits and documentation to the trial court for the fee hearing and was awarded fees. As one awarded fees by a final order of the trial court he had standing to appeal the order. Further, he was `fully acquainted’ with the fee hearing and was invested in its result. Hackler and Garcia both support a finding that the third requirement for collateral estoppel is met.
Finally, Woodley asserts that under Barr, the fourth element of collateral estoppel is not met because its application would work an injustice. In Barr, the court noted that the fourth requirement was not met because, although Ella Barr had approved the settlement, including attorney fees, if she had `agreed to the settlement and urged its approval based on attorney misfeasance or nonfeasance, it is not unjust to permit her to rectify her error.’ Barr, 124 Wn.2d at 326. The Supreme Court’s analysis of the fourth collateral estoppel requirement in Barr, unfairness, was based largely on the disparity between the attorney’s sophisticated knowledge of legal matters and the Barr’s relative lack of sophistication (the court noted that Ella Barr had only an eighth grade education). Barr, 124 Wn.2d at 326. Woodley cannot claim that his lack of sophistication creates a similar disparity in this case. He did not appear at the hearing, but relied on his documentary submission. He did not appeal. These were his choices. Unfairness does not bar application of collateral estoppel in this case.
Accordingly, the trial court did not err in granting Osborn and Arnold summary judgment.
Affirmed.
ELLINGTON and COLEMAN, JJ., concur.