Opinion
No. 04-0532.
March 31, 2005.
Appeal from the Iowa District Court for Benton County, Kristin L. Hibbs, Judge.
John Dieter appeals the district court's ruling in favor of the Estate of Morris Eckhart in an action relating to an attorney fee agreement. AFFIRMED.
William Vernon of Moyer Bergman, P.L.C., Cedar Rapids, for appellant.
Patrick Roby and Robert M. Hogg of Elderkin Pirine, P.L.C., Cedar Rapids, for appellee.
Heard by Vogel, P.J., and Mahan and Vaitheswaran, JJ.
This appeal involves a dispute over attorney fees. The district court ruled in favor of the attorney's estate. We affirm.
I. Background Facts and Proceedings
Attorney Morris Eckhart represented John Dieter in a suit arising from an explosion that badly injured Dieter. The case was settled in 1985.
Once the settlement was reached, Dieter and Eckhart executed a written attorney fee agreement. Under the agreement, Eckhart was to receive a total of $314,000, to be deducted from immediate and future settlement proceeds. The payment schedule was as follows: "$75,000 on the date of execution of an agreement to settle the claims and lawsuit against Thomas Denner; $50,000 on December 5, 1991; $50,000 on December 5, 1996; $65,000 on December 5, 2001."
In 1990, a portion of the settlement agreement seemed in jeopardy. Executive Life Insurance Company, an entity that issued an annuity to fund part of the settlement, began experiencing financial difficulties. The company was eventually taken over by the California Insurance Commissioner. Dieter and Eckhart discussed reducing Eckhart's fee if Dieter's annuity payments were reduced. Those payments were indeed reduced by 41.8%, but not until mid-2000. Eckhart died in April 2001.
In 1991, payments were reduced by nineteen percent, but those payments were later restored.
Dieter did not pay Eckhart the $65,000 in attorney fees due on December 5, 2001. Instead, Dieter filed a claim against Eckhart's estate to collect what he contended were excess attorney fees of $25,745 paid to Eckhart. The estate counterclaimed for the unpaid attorney fees of $65,000 due on December 5, 2001. Following a bench trial, the district court ruled against Dieter and in favor of the estate on its counterclaim. Dieter moved for enlarged findings and conclusions. The motion was overruled and Dieter appealed.
II. Breach of Contract
Of the several causes of action Dieter raised, the only one at issue on appeal is his breach-of-contract claim. With respect to that claim, the district court ruled:
The Court finds no basis to relieve Mr. Dieter of his contractual obligation to pay Morris Eckhart's estate the money he owed Morris Eckhart. Their fee contract, by its terms, set out a schedule of payments to be made over time with the last payment to be the December 2001 payment. The contract included the entire agreement. It was not modified. Mr. Dieter did not pay the amount due in 2001. It is still owed to the estate. It should be paid.
Dieter primarily challenges the court's finding that the attorney fee contract was not modified. See Chapman's Golf Ctr. v. Chapman, 524 N.W.2d 422, 426 (Iowa 1994). He contends Eckhart agreed to reduce his total fee of $314,000 "by whatever percentage Dieter's annuity payments were reduced." The estate counters that "Eckhart did not agree to modify his attorney fee contract with Dieter, at least in the manner claimed by Dieter." The parties agree that the court's fact finding on this issue binds us if supported by substantial evidence. See In re Estate of Crabtree, 550 N.W.2d 168, 170 (Iowa 1996) (citing In re Estate of Voelker, 252 N.W.2d 400, 402 (Iowa 1977)).
Although Dieter initially contended our review is de novo, he agreed at oral argument that we are bound by the district court's fact findings if they are supported by substantial evidence.
The record contains that quantum of evidence. When Executive Life Insurance Company began experiencing problems, Dieter was informed that his annuity payments would be reduced by nineteen percent. Dieter wrote to Eckhart about the December 1991 fee payment of $50,000. He agreed to pay the fee, but told Eckhart he "may owe" Dieter if the settlement was "restructured." Later, he wrote that "[i]t would only be right that 19% of it be put in escrow" pending correction of the error or completion of the agreement. Eckhart had no obligation to accept the proposed reduction. Nevertheless, Eckhart responded as follows:
I am hopeful that you will continue to be paid 100 percent of your monthly annuity payments pursuant to the structured Settlement Agreement. If your payments are reduced by 19 percent or any other percentage, I will agree to hold the same percentage of the December check for $50,000 in escrow until full payments are resumed to you.
He later wrote,
The plan which the California Insurance Commissioner has recommended to the Court for approval provides for payment of 81% of the sums due under annuity contracts. . . .
Pursuant to our previous discussions, I will place 19% of the $50,000 due December 5, 1991 in a special trust account for your benefit. The 19% equals $9,500. You will receive the interest on such sum for so long as it is held in trust.
The sums held in trust will not be paid to me for fees until a plan is approved by the Court which will provide for payment of 100% of the sums due to you under the Executive Life Insurance Company annuity. If the Court approves a plan which will provide payments of less than 100%, my fee will be reduced accordingly.
In July 1992, Eckhart obtained information that led him to believe Dieter's annuity would be paid in full. He removed the escrowed funds and paid them to himself, remitting to Dieter the interest on those funds. As Eckhart predicted, the nineteen percent reduction took effect briefly, but the payments were later retroactively "restored to 100%." In the end, Dieter received full annuity payments for fifteen years following his execution of the settlement and fee agreements.
Based on this evidence, a reasonable fact-finder could have found that Eckhart only agreed to reduce the $50,000 payment due in December 1991 rather than the entire fee of $314,000. A reasonable fact-finder could have further found that the agreement was contingent on a corresponding reduction of Dieter's annuity payments by nineteen percent, a reduction that did not materialize. See Whalen v. Connelly, 545 N.W.2d 284, 293 (Iowa 1996) ("[A]n agreement to agree is not a contract."). Finally, a reasonable fact-finder could have found that the 1985 fee contract remained in effect as to all fees paid and all fees due. In other words, the contract was not modified.
We recognize that one of Eckhart's letters, quoted above contains the following language: "If the Court approves a plan which will provide payments of less that 100%, my fee will be reduced accordingly." While this language could signify an intent to reduce the entire fee, a fact-finder was not required to make this inference. From the context in which this statement was made, the fact-finder reasonably could have inferred that the proposed reduction related only to the December 1991 fee payment.
As for Dieter's trial testimony that the reduction related to the entire fee payment, we must view this testimony with caution, as Eckhart was not available to rebut it. See In re Estate of Nicolaus, 366 N.W.2d 562, 569 (Iowa 1985) (stating "claimed conversations with a person since deceased should be scrutinized with care, for the very practical reason that the decedent is unable to relate his version or perhaps testify as to the nonexistence at all of such a conversation"). In addition, the district court was in the best position to judge this testimony, and the court rejected it. See Capitol Sav. Loan Ass'n v. First Fin. Sav. Loan Ass'n, 364 N.W.2d 267, 271 (Iowa Ct.App. 1984) (stating "factual disputes depending heavily on the credibility of witnesses are best resolved by the trial court which has a better opportunity to evaluate credibility").
We conclude there was substantial evidence to support the court's finding that the fee agreement was not modified. In light of that conclusion, we find it unnecessary to address Dieter's argument concerning whether the modification needed to be in writing and attached to the original fee agreement.
We do wish to comment on Dieter's alternate contention that the estate is not entitled to the final $65,000 fee payment because "Eckhart did not complete the legal services that he agreed to perform, namely to collect any shortfall in Dieter's annuity payments." Eckhart's fee was consideration for his representation in the lawsuit and payment of "expenses on behalf of [Dieter] in the investigation and preparation of said claims and said lawsuit." Eckhart's performance was complete in 1985 when the lawsuit ended and the settlement agreement was executed. Eckhart agreed to perform additional services to collect the settlement and did so at no cost to Dieter. The fact that he died before completing this pro bono work does not entitle Dieter to a reduction of fees already incurred. See Scott v. Simons, 181 Iowa 1037, 1048, 165 N.W. 161, 164 (Iowa 1917) (stating one party cannot "reap the fruits of the bargain" and then "repudiate the performance of the obligation to pay into which he had entered. Such a course would, under the contract, be advantageous only to one of the contracting parties, and cannot lawfully be upheld.").