Opinion
FSTCV095012543S
08-12-2016
Rucci, Burnham, Carta, Carello & Reilly, LLP v. Jonathan Stuart et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
David R. Tobin, Judge
The plaintiff law firm brought this action against its former clients, brothers Jonathan Stuart and Dr. William Stuart, to collect legal fees which the firm claims are due them for legal services rendered to the defendants between 2000 and 2003 and related disbursements. In the complaint, the plaintiff also claims to be owed interest and costs of collection.
THE PLEADINGS
In its amended complaint dated April 30, 2015 (#138.00), the plaintiff alleged two counts against each of the defendants. The first and second counts allege that Jonathan Stuart and William Stuart respectively breached a contract to pay the plaintiff for legal fees and disbursements. The third and fourth counts allege that the defendants owe the plaintiff for the reasonable value of the legal services and expenses provided to them under the theory of quantum meruit.
In their answer dated September 12, 2015 (#142.00), the defendants deny the essential allegations of the complaint and assert seven special defenses. One, statute of limitations on contract claims under General Statutes § 52-576(a). Two, statute of limitations on oral contract claims under General Statutes § 52-581(a). Three, laches and statute of limitations (statute not specified) against equitable claims. Four, accord and satisfaction as to all claims (no facts alleged). Five, payment as to all claims (no facts alleged). Six, plaintiff's claim to interest at 18% is barred by statute (statute not specified), laches and unclean hands (no facts alleged). Seven, set off based on claim that under the agreement between the parties, the plaintiff could not collect for legal services rendered by any attorneys or paralegals not named in the retainer agreement.
DISCUSSION
The legal services at issue were rendered to the defendants in connection with their efforts to have their brother, Kenneth Stuart, Jr., removed as executor of the estate of their late father, Kenneth Stuart, Sr., and to have him account for estate funds which he diverted to his own use and benefit. The underlying litigation in Superior Court was commenced by another law firm on behalf of the defendants in 1994. In 2000, that case was assigned for trial. However the defendants' counsel was not prepared for trial and the defendants decided to seek other representation.
On August 21, 2000, the defendants met with attorney Mark Carta, a member of the plaintiff law firm, at his office to discuss the case. On August 30, 2000, Carta sent the defendants a retainer letter (Ex. 1) along with a firm profile detailing the background and experience of the partners and associates of the plaintiff law firm (Ex. 2). In the retainer letter, Carta advised the defendants that he would be picking up the defendants' file from their former counsel that afternoon. He further advised the defendants that he and attorney Sandra Akoury, an associate in his office, would be responsible for the matter and informed the defendants that a retainer in the amount of $30,000 would be required. The letter stated that Carta's billing rate was $260 per hour while Akoury's was $160 per hour. The letter did not advise the defendants of the rates which might be billed to them for work performed by any other attorneys or paralegal professionals employed by the plaintiff nor did the letter inform the defendants that Carta's rate and Akoury's rate might be subject to increases during the term of the representation.
The retainer letter also informed the defendants that: " Our normal practice is to bill monthly for time and expenses incurred. Interest in the amount of 1.5% per month or 18% per year is charged on any outstanding balance due more than thirty days." Carta testified that although the defendants were often delinquent in their payments, he did not impose interest charges during the term of the plaintiff's representation of the defendants. Finally, the retainer letter advised the defendants that: " Delinquent clients are responsible for payment of all costs and expenses including reasonable attorneys fees incurred in the collection of disbursements or fees."
Carta testified that the defendants had initially agreed to the $30,000 retainer, but then negotiated to change the arrangement to a $10,000 escrow payment which would be replenished periodically. That change in the agreement between the parties was memorialized in a letter Carta sent to the defendants on September 12, 2000. (Ex. 39.)
The plaintiff's initial invoice to the defendants was dated September 6, 2000 and covered fees and disbursements during the period of August 18, 2000 to August 31, 2000. (Ex. 3.) The fees were billed at the hourly rates set forth in the retainer letter and totaled $3,782; the disbursements totaled $93.49 and the total invoice amounted to $3,875.49.
The plaintiff's invoices for the period from September 1, 2000 through August 1, 2003 were received into evidence as Exhibit 4. Carta testified that Exhibits 3 and 4 detail the charges of the plaintiff for work on the case brought by the defendants against Kenneth Stuart, Jr. in connection with the estate of the defendants' father. In addition, the plaintiff submitted additional invoices to the defendants for a second action successfully initiated by the plaintiff on behalf of the defendants to obtain an injunction preventing the sale of a number of Norman Rockwell paintings owned by the defendants' father. The invoices for the injunction action cover the period of September 6, 2001 to March 7, 2002. (Ex. 5.)
After the litigation was concluded, the Rockwell paintings were eventually sold for a net price of nearly $60 million. (Ex. 23.)
Carta presented a billing history for the defendants covering all the invoices included in Exhibits 3, 4 and 5. (Ex. 6.) That document reflected that from the initial engagement in August 2000 to August 1, 2003, the plaintiff billed the defendants $569,491.50 for legal fees and $29,463.39 in disbursements. The document also reflected that the plaintiff " wrote off" $10,000 in legal fees in March 2002. Carta also presented a payment history based on the payments received from the defendants and the invoices to which such payment was applied. (Ex. 7.) That document reflects that the defendants paid the plaintiff a total of $386,329.83. Carta also prepared a " Chronology of Delinquent Payments" for the period from August 7, 2002 to August 1, 2003. (Ex. 8.) That document reflects as of December 5, 2002, the defendants had an outstanding balance due the plaintiff of $61,829.84. The parties reached an agreement that the plaintiff would accept $50,000 for payment in full of the balance due and the defendants agreed to keep their account current. In accordance with that agreement the defendants made the $50,000 payment to the plaintiff and the plaintiff credited the defendants' account for the remaining $11,829.84. As of December 31, 2002, the defendants were current in their payments to the plaintiff.
Carta testified that he had written off a total of $21,829.84 in billed fees. In addition, he claimed that he had provided the defendants with discounts by not including in their monthly bills certain time which he, in his discretion, felt was not properly billable to the defendants.
Carta testified that the plaintiff had increased his hourly billing rate at the end of 2000 from $260 an hour to $275. Carta's rate was further increased from $275 to $300 an hour on August 1, 2001. At the same time Attorney Akoury's rate was increased from $160 an hour to $175 an hour. Carta claimed to have informed the defendants of each of the rate increases. However, the only written evidence of the increased charges were the invoices from which the hourly rates could be determined by dividing the charges shown on each entry by the hours or fraction of hours spent by the attorney whose time was being billed.
The defendants complained about the increased hourly rates in a letter to Carta dated March 11, 2002. After discussing the defendants' concerns, the parties reached an agreement: 1) that Carta would reduce his hourly rate to $280 an hour; 2) that Akoury's rate would be $175 an hour; and 3) that the defendants would renew their agreement to pay all invoices promptly and in full. These agreements were set forth in an April 11, 2002 letter from Carta to the defendants. (Ex. 133.) In that same letter, Carta reminded the defendants of their outstanding and overdue balance totaling $23,717.87.
On December 2, 2002, Carta wrote a lengthy and significant letter to William Stuart which reads as follows:
In your letter of November 14, 2002 you requested a written response. Although I believe the series of letters from our office to Bernard Green that resulted in his resignation was the response you most sought, there are several issues you have raised in your correspondence over the past several months that need to be addressed.
First, in your letter of September 24, 2002, you questioned the degree to which we were prepared for the hearing on the Motion for Contempt before Judge Wolven. Among other things, you proposed that I provide you with your questions in advance of any rescheduled hearing on this motion. Conspicuous by its absence from your letter is the fact that I discussed your questions with you prior to the hearing before Judge Wolven and provided you with a detailed, written outline of your questions that you acknowledged receiving two days (albeit over a weekend ) prior to the hearing. Significantly, we had set aside time the morning before the hearing to review this outline and any additional questions. You not only showed-up late to this meeting, but when you arrived you informed me that you had not taken the time to read the outline.
Throughout this litigation both you and Jonathan have made productive suggestions and have provided significant aid in the prosecution of your claims against your brother. However, we have not always received the cooperation promised, and on several occasions you have insisted on pursuing a tack I believed to be ill-advised. For example, despite numerous promises and the passage of many months, we still have not been able to consult either Dr. Rosen or Dr. Zucker as you insisted on speaking with these fellow professionals first. At this juncture, I think it is imperative that we disclose all of our expert witnesses, and that I speak with Rosen and Zucker to preview their possible testimony. Any further delay in contacting these two doctors is jeopardizing our claim that your father was incompetent at the time he executed the Stuart & Sons's partnership agreement.
As we discussed in some detail in our last telephone conversation, I am also strongly opposed to proceeding with your deposition as an expert witness. Once we made the determination that we are going to call independent medical experts, there is no upside, and only a potential downside, to your being deposed. Once again you were adamant that your deposition go forward and that you be unrepresented at this deposition. In my nearly 25 years as a trial attorney, I have never known an expert to be deposed without the aid of representation and think that your role as a plaintiff in this case only makes your representation all the more critical. Any attempt to reduce a part of this case to a battle of wits between you and Slavitt, in my considered judgment, is misguided. Further, your justification for pursuing this deposition, primarily to run-up Ken's legal fees and to make life difficult for Slavitt, is objectionable. That is not how I practice law. I would hope that you would respect the fact that I am unwilling to have clients dictate my ethical decisions in the same way I believe you would resist having patients dictate how you practice medicine.
Finally, in a number of your letters you indicated a lack of confidence in the representation you have received and a desire to unleash on Slavitt the same level of wanton aggression to which he has subjected you. While I understand these feelings, I long ago committed to a thoughtful, measured style of litigation that I find to be infinitely more productive. I believe the results we have achieved in this case thus far are a testament to the wisdom of my approach. Nevertheless, to the extent that you are not satisfied with the representation you are receiving, I invite you to consider whether there is someone else in whom you may have more confidence and whose tactics are more consonant with the approach you want taken in this lawsuit. Although I want to litigate your claims to a conclusion and would be disappointed if you pulled your file, that is certainly your right.
Finally, I note that it has been over 60 days since we have received a payment. I again urge you to abide by your promise to keep your account current in consideration for which promise I agreed to reduce my standard billing rate. At the risk of being repetitive, while I wish to litigate your claims to a conclusion, you need to bring your account current and pay your future bills in a timely manner.(Ex. 143.)
The December 2, 2002 letter is significant for several reasons. First, it establishes that the defendants, despite prior promises, were not keeping their payments to the plaintiff current. Second, Kenneth, Jr.'s counsel, Attorney Slavitt, was defending his client with aggressive tactics which Dr. Stuart, at least, was urging Carta to emulate. Third, Carta viewed expert testimony to establish Kenneth Stuart, Sr.'s lack of capacity as crucial to undoing the arrangements orchestrated by Kenneth, Jr. in the last years of Kenneth, Sr.'s life, however, Dr. Stuart would not permit Carta to consult with the experts until he had spoken with them first. Fourth, Dr. Stuart failed to prepare for a hearing on a motion for contempt and blamed Carta for his less than satisfactory performance even though Dr. Stuart had failed to even read the preparatory material which Carta had sent him before the hearing. Fifth, Dr. Stuart was insisting on being named as an expert witness (apparently regarding his father's lack of mental capacity) and to appear at a deposition without counsel, despite Carta's warning as to the negative consequences of such actions.
Carta testified that Attorney Slavitt fought relentlessly to avoid having Kenneth, Jr. deposed and engaged in other dilatory tactics. The plaintiff was required to exert considerable time and effort to meet these ethically questionable tactics. The resulting charges made the defendants angry.
Although the defendants had agreed to keep their account current in return for the plaintiff accepting $50,000 to settle the defendants' outstanding balance of $61,829.84, the defendants failed to keep their account current. The invoice for services and disbursements for the month of December 2002, dated January 3, 2003 in the amount of $19,145.51 was not paid until March 19, 2003. The invoice for work and disbursements during January 2003 in the amount of $24,636.41, dated February 6, 2003 was not paid until April 21, 2003. The invoice for February 2003, dated March 4, 2003 in the amount of $32,728.84 was not paid until June 16, 2003. As of that date the defendants had an outstanding balance of $159,419.66 in unpaid fees and disbursements. (Ex. 8.)
At various times during the plaintiff's representation of the defendants, Carta, responding to the defendants' requests, provided them with estimates of the remaining costs to try their action against Kenneth, Jr. to conclusion. The initial estimate was sent to the defendants on October 3, 2000 and assumed that the actual trial of the case would take approximately four days. (Exs. 126, 128.) The estimate for attorneys fees alone was $152,540 assuming that there would be a mediation session. As of that date, the defendants had incurred fees and disbursements of $26,810.90. (Ex. 6.) However, at that time the case did not involve the action to enjoin the sale of the Rockwell paintings or additional claims subsequently asserted against Kenneth, Jr. and related parties. On March 22, 2002 Carta wrote to the defendants explaining in detail the actions taken in Superior Court and in Probate Court as well as the additional and previously unanticipated work required to prevent Kenneth, Jr. from selling the Rockwell paintings. (Ex. 131.)
On February 28, 2003, Carta prepared an estimate of future (unbilled) attorneys fees required to complete the litigation against Kenneth, Jr. The estimate was broken down by month for the period from March 2003 to June 2003 and included all anticipated fees, including those for the preparation of a post-trial brief. The total estimate, which did not include disbursements or expert's fees, was $321,500. (Ex. 146.) Carta testified that this estimate may not have been provided to the defendants.
Nevertheless, on March 11, 2003 Carta wrote a letter to the defendants, responding to their request for a fee cap by offering to settle the then outstanding balance (consisting of the bills rendered on January 3, 2003, February 6, 2003 and March 4, 2003) of $76,501.76 for an immediate payment of $70,000. In that letter, Carta stated that he had provided the defendants with the February 28, 2003 estimate which, upon review he found to be incorrect due to an arithmetic error. He advised the defendants that the plaintiff would be willing to cap its fee for the work outlined in the estimate and the work involved in calling a second medical expert at $275,000 subject to the following conditions: First, the defendants would be required to keep all payments of expert fees and " other fees" current; Second, the $275,000 would need to be paid in four monthly installments commencing April 2003; and Third, a mechanism would be agreed upon to allow the plaintiff to recover the actual time charges at non-discounted rates, if the trial should result in a judgment in excess of $1.5 million. In closing, Carta offered to arbitrate any fees disputes which the parties could not resolve before the Connecticut Bar Association. (Ex. 148.) There was no evidence that the defendants responded to the March 11, 2003 letter.
The actual total of the component estimates in the February 28, 2003 estimate is $283,000, rather than $321,500. A revised copy of the estimate with the correct total was received in evidence as Exhibit 147.
On April 7, 2003, Carta sent a letter to the defendants forwarding the plaintiff's invoice for the month of March 2003. (Ex. 151.) The invoice in the total amount of $60,029.97 included legal services in the amount of $57,128. (Ex. 4.) Carta's letter did not address the discrepancy between these charges and the $41,500 estimate for legal fees for the month of March 2003 which was included in Exhibits 146 and 147.
On May 2, 2003, Carta sent a letter to the defendants forwarding the plaintiff's invoice for the month of April 2003. (Ex. 153.) The invoice in the total amount of $70,217.87 included legal services in the amount of $68,269.50. (Ex. 4.) The fees for the month of April 2003 had been estimated at $71,500 in Exhibits 146 and 147. In his letter Carta notes that he is also including a " Remittance Copy" in the total outstanding amount of $162,976.68.
On May 6, 2003, Carta wrote to the defendants providing a comprehensive review of the status of the case and recommendations concerning trial strategy and trial preparation. (Ex. 154.) The letter read as follows:
Sam [Attorney Akoury] and I are (sic) been continuing to move your lawsuit forward. The purpose of this letter is to review several recent developments and to share with you our schedule to prepare for trial by September 16, 2003. In addition, I am seeking your thoughts on the idea of scheduling a " mock trial" of your testimony in late August.
As hoped, once we were able to have the case transferred to the Complex Litigation Docket and assigned to a single judge, there has been real progress. Not only has Judge Adams denied the defendants' attempt to bifurcate the trial, but he overruled their joint objection to our Third Revised Complaint which added two new parties and several legal claims. Judge Adams has also kept Slavitt's feet to the fire on document production with the result that John Dempsey finally has sufficient financial records on which to base a comprehensive report of Ken's nefarious conduct. We have also had encouraging meetings with Dr. Rosen and Dr. Novelly, and believe we can establish that your father was suffering from dementia not only on and after his July 1992 Norwalk Hospital admission, but prior to that time when he purportedly authorized Ken to purchase Hurlbutt Street. Most recently, after the better part of four days, we completed Ken's deposition. Despite his attempts at obfuscation, we now have a good understanding of the tale he intends to try to sell at trial. In the process, we also authenticated all of the financial records Ken previously produced and obtained written authorizations to obtain important documents from John Hirschauser, Peter Curran, Sotheby's and Bill Morse.
Much additional work remains. To that end we have prepared a schedule of key tasks with accompanying deadlines to assure that we are fully prepared for the trial on September 16, 2003. I have incorporated into this letter the most recent iteration of this schedule for your review and comment. The tasks completed in March have been deleted, but those completed within the last 30 days are still reflected on the schedule that follows. [Incorporated into the letter was a four and a half-page " Schedule of Trial Preparation." ]
You will have noted above that I am proposing to conduct a " mock trial" of your testimony in the end of August. After spending the better part of 4 days across the table listening to Ken weave his tale, it has become increasingly apparent that it is critical that we set out the real facts in a concise and understandable presentation, before he attempts to confuse things with his smoke and mirrors. At one level our explanation is straight-forward, however, in order to appreciate fully the level of Ken's deception, there is an incredible level of factual detail that we need to present to Judge Adams. After considerable reflection, I think it would be worthwhile to conduct a " mock trial" of your testimony in which we refine the actual presentation of the evidence with another lawyer performing Slavitt's role and at least one objective listener to provide us with feedback on the extent to which we are making our points clearly. Prior to that time, I will provide you with written outlines of your direct examination and a list of potential areas of cross examination and will need to spend time with you refining these outlines face-to-face. After you have had an opportunity to discuss this idea, please let me know whether you agree that it is a worthwhile step.
I appreciate fully that this is a great deal of work and that the expense is significant. I would note, however, that in our meeting with John Dempsey on May 1st he has suggested that the recovery from Ken based upon his testimony alone should be in excess of $2.0 million. Of course, in addition to this, we will be seeking recovery of John's accounting fees, your costs, and damages for Ken's unwarranted fees and mismanagement through Tom Hynes.
I am available any day this week if you would like to schedule a conference call to discuss this further.(Ex. 154.)
On May 13, 2003, Carta wrote to the defendants regarding the outstanding balance due the firm. (Ex. 155.) In that letter, he informed the defendants that the plaintiff was rejecting the defendants' proposal to pay the balance off at the rate of $20,000 per month. Carta relayed to the defendants a counter-proposal essentially requiring them to pay all new invoices promptly and to pay the outstanding balance with additional payments of between $30,000 and $35,000 a month. In the letter Carta advised the defendants that he estimated the May invoice would be approximately $26,000. The actual amount of the May invoice was $29,171.82 which included charges for legal fees in the amount of $27,353.50. (Ex. 4.) The previous estimates for May had been $72,500. (Exs. 147, 148.)
On June 18, 2003 Carta wrote to the defendants providing them with an estimate of the remaining legal fees as of June 5, 2003 in the amount of $306,200. (Ex. 157.) Carta testified that the enclosure to that letter was a version of a document dated June 6, 2003 entitled " Estimate of Future Work (Revision of June 13, 2003)." (Ex. 180.) That document reflects estimates of $10,200 and $54,500 to complete work originally planned to have been completed in the months of March and April 2003 respectively. The estimate for May remained at $72,500 although the May invoice had already been presented to the defendants. The document states that of the prior estimate of $321,500 in attorneys fees to complete the litigation, $224,500 remained to be performed, including the trial itself and the post-trial brief. The document further lists additional work in the amount of $72,000 including an addition of ten days of trial (now increased to an estimated total of twenty trial days) for which charges of $47,500 were anticipated. The balance of the increase included estimated charges for preparation of requests for admissions and answering the special defenses of a new defendant cited into the case.
Carta's letter pointed out that the $306,200 estimate was in addition to the approximately $160,000 in unpaid fees. It stated that Carta was open to a suggestion made by William Stuart at a June 12 meeting to cap the fees " in the $500,000 range in exchange for a current lump sum payment with the understanding that the difference between the fee cap and your lump sum payment will be recovered by us only to the extent that we subsequently recover on your behalf costs, attorneys fees, punitive damages or treble damages. I am also looking for your suggestion on a fair 'kicker' that would compensate us for the risk inherent in the above arrangement." (Ex. 157.) The defendants responded to Carta's June 18, 2003 letter by fax on June 21, 2003. That fax was not introduced in evidence.
On July 2, 2003, Attorney Carta wrote to the defendants in response to the June 21, 2003 fax. Carta's letter states that the " fax provides little comfort that you are working in good faith" to resolve the defendants' past due debt to the plaintiff and leaves little doubt that the defendants' June 21, 2003 fax was not a positive response to Carta's June 18, 2003 letter. In his July 2, 2003 letter, Carta points out that when his firm took over the case against Kenneth Stuart, Jr., the defendants' claim against their brother was in the $300,000 to $500,000 range and virtually no discovery had been conducted. Moreover the defendants faced the possibility that Kenneth, Jr. would sell the Rockwell paintings and dissipate the proceeds. Carta claimed that as a result of the plaintiff's efforts, the defendants had " a documented claim of misappropriated and wasted assets of over $3.54 million supported by a forensic expert and an injunction barring the sale of the Rockwells." Carta also claimed to " have uncovered additional acts of fraud that occurred after we took over your lawsuit . . . and have significantly expanded the scope of your claims and the parties you are pursuing." In closing, Carta addressed the plaintiff's position regarding the delinquent fees:
Given your expression of dissatisfaction we are obligated to either resolve our fee issues immediately or withdraw our representation of you. Our continued representation must be on the basis of confidence and trust that runs both ways.
Personally, I refuse to continue to chase you for your fees or to work " on the come." My partners are unwilling to continue financing your lawsuit, and no part of our retainer agreement requires us to do so. To the contrary, as you know, I earlier agreed to discount my standard hourly rate in exchange for Jonathan and your explicit agreement to stay current with your bills.
Please call me with your decision before the fourth of July. (Ex. 159.)
After not receiving a response to his July 2, 2003 letter from the defendants, Carta wrote to the defendants on July 24, 2003:
In the past 10 days I have placed over 5 phone calls to you which have gone unreturned. In addition, to date you have not responded to my letter of July 2, 2003 or otherwise come back with a constructive proposal for payment of your account. I understand your frustration with the expenses you have incurred in this lawsuit. We are committed to work with you towards a mutually satisfactory resolution of your existing account. Notwithstanding the admittedly strong language of our July 2, 2003 letter, we are also willing to explore solutions as to how we can budget for our anticipated future fees, consistent with your financial ability. To that end we have tried several times to make specific good faith proposals on how we might proceed. We remain open to any good faith proposal you may proffer.
Your claims against your brother Ken have come a long way since we took on the responsibility of your representation. I would very much like to bring this case to a successful conclusion. However, I fear that the recent total breakdown in communications may evidence an incurable deterioration of our attorney-client relationship. If you and Jonathan feel that our relationship has deteriorated to a point that you no longer wish us as your counsel, then I need to know immediately so your file can be transitioned to new counsel in sufficient time for September's trial. If, on the other hand, you want our continued representation, it is critical that we re-open and maintain good communications. If I am to continue to effectively represent you I must be able to rely on you to return my phone calls.
I value you as a client and am willing to work with you to resolve our differences over fees. We are flexible in our approach and again suggest that a face-to-face meeting may go a long way to re-build the relationship and efficiently bridge our differences.
Please let me hear from you by July 31st. (Ex. 161.)
The defendants did not respond to Carta's letter until July 29, 2003 when William Stuart sent Carta a fax explaining that he had:
not returned your approximately five phone calls or spoken with you since receiving [the July 2, 2003] communication, which I considered imprudent and inappropriate.
Over the last approximate year and a half, we had paid your firm more than three hundred thousand dollars, which was approximately twice the original estimate of what your total fees were to have been. In my opinion and the opinion of several of your brothers, whom I have consulted with, you were stepping over a legal, ethical line by threatening withdrawal at a time when we were obviously most vulnerable.
The breakdown in trust precipitated by your July 2, 2003 communication has caused deterioration in the attorney-client relationship, such that Jonathan and myself no longer want you to represent us.
I will notify you within a few days which attorney to send our file to. I'm disheartened that what appeared at the onset to be a fluent relationship has turned into such a total mismatch. (Ex. 21.)
After receipt of the July 29, 2003 fax, Carta had all of the defendants' files placed in Sandra Akoury's office awaiting further instructions from the defendants. (Ex. 163.) On August 19, 2003 William Stuart sent a letter by fax to Carta advising him that " [Attorney] Paul Pacifico is currently representing us" and requesting that the defendants' files be sent to Pacifico. The letter also included the following:
Please advise which specific documents in our file you are placing a lien on, which should only include documents, which have allegedly not been paid for.
At this time to avoid potential confusion or misinterpretation, I am interested in communicating with you only in writing. I have also requested that Paul Pacifico and Sandra Akoury have no discussion with you regarding Stuart v. Stuart, and am formally requesting you not to discuss Stuart v. Stuart with anybody whatsoever, including Paul Pacifico and Sandra Akoury, such that there is no possibility of violating Attorney-Client privileges.
It is my dim hope that our differences can be somehow resolved without further litigation. (Ex. 164.)
Carta testified that at some point prior to the August 19, 2003 letter from William Stuart, Sandra Akoury informed him that she had an opportunity to continue to work on the defendants' case. While Carta was clear that at that time Akoury ceased to be employed as an associate attorney by the plaintiff, he was uncertain whether Akoury's employment with the plaintiff was terminated by her resignation or at the plaintiff's initiative.
Carta responded to William's letter the next day, August 20, 2003, with a fax letter offering to deliver the defendants' entire file " upon either payment of the outstanding fees and disbursements owed to our firm, or other mutually satisfactory resolution of your account." (Ex. 165.) Carta advised the defendants that the plaintiff was asserting a lien on the entire file. He agreed to accede to the requests that all future communications be in writing and that he refrain from contacting Attorneys Pacifico and Akoury. Carta offered to compromise the plaintiff's claim against the defendants, which then totaled $184,043 for a payment of $156,437. (Ex. 165.) Carta testified that he believed that his firm's responsibility to the defendants did not end until August 28, 2003 when Attorney Akoury entered her appearance in the litigation against Kenneth Stuart, Jr. in lieu of the plaintiff's appearance.
When the defendants failed to respond to his August 20, 2003 letter, Carta wrote to them again by fax letter on September 9, 2003. (Ex. 166.) In that letter Carta offered to submit the fee dispute to binding arbitration through the Bar Association's fee arbitration procedures. Carta also offered the alternative of private mediation. There was no evidence that the defendants responded to those offers.
On September 26, 2003, Carta sent a certified letter to Attorney Pacifico giving him formal notice of the plaintiff's claim to be entitled to a common-law charging lien on any property recovered by the defendants. (Ex. 167.) The defendants were mailed copies of the letter. Carta testified that attorney Pacifico did not acknowledge receipt of the September 26, 2003 letter. He further testified that the plaintiff had not received any portion of the recovery which the defendants had been awarded in the suit they brought against Kenneth Stuart, Jr.
In connection with the Stuart v. Stuart trial, Carta prepared an affidavit at the request of Attorney Pacifico concerning the fees which the plaintiff had charged the defendants. (Ex. 174.) The affidavit was presented to the Superior Court (Adams, J.) in connection with the defendants' application for an award of attorneys fees. Carta's affidavit summarized the work done by the plaintiff on behalf of the defendants and reviewed each invoice and the total time billed. Paragraph 30 of the affidavit listed the total billed by the plaintiff for fees and disbursement as $567,530.72. Paragraph 32 of the affidavit showed that: 1) Carta spent 690.1 hours on the file and billed $184,123.49; 2) Akoury spent 1, 943 hours on the file and billed $321,075.51; 3) Other attorneys and paralegal professionals spent 238.10 hours on the file and billed $33,348; 4) the total bill for fees of all attorneys and paralegals amounted to $538,547. Paragraph 38 of the affidavit reflected the plaintiff's claim to be owed $184,043.46 for billed, but unpaid, invoices for fees and disbursements.
Carta testified that the total of $184,043.46 did not include an invoice in the total amount of $6,289.50 dated August 1, 2003 which included fees and disbursements between July 1, 2003 and July 28, 2003. Carta testified that he believed that he had sent the invoice to the defendants, but did not have a copy of a transmittal letter in his files. Carta admitted that he did not realize that the August 1, 2003 invoice was not included in the plaintiff's claim until the trial began. With the inclusion of the August 1, 2003 invoice, the plaintiff's total claim for fees and disbursements totals $190,795.22.
Attorneys Pacifico and Akoury represented the defendants in a trial before the Superior Court which lasted twenty-five days and resulted in an award of damages in favor of the defendants and against Kenneth Stuart, Jr. and others in the amount of $2.4 million on June 28, 2004. Stuart v. Stuart, 297 Conn. 26, 33, 996 A.2d 259 (2010), and (Ex. 172). In a subsequent hearing regarding legal fees, the trial court found that attorney Pacifico was paid $350 an hour for a total of $123,855 in legal fees and that attorney Akoury was paid a flat fee of $60,000 representing approximately $213 an hour for her time (assuming her hours were the same as attorney Pacifico's). (Stuart v. Stuart, Superior Court, judicial district of Stamford/Norwalk, complex litigation docket No. X08CV 02 193031, (February 10, 2005, Adams, J.).) (Ex. 172.)
On August 10, 2007, the plaintiff retained attorney Michael G. Clear to collect the legal fees which the firm claimed were owed to it by the defendants. (Ex. 37.) However, due to a sudden deterioration in attorney Clear's health, the case against the defendants was not commenced until 2009.
The plaintiff called attorney James Robertson as an expert witness to testify as to the reasonableness of the plaintiff's fees. Robertson, a 1970 graduate of the University of Connecticut School of Law, practices law in Waterbury and Stamford with the firm of Carmody, Torrence, Sandak and Hennessey. He is also a former judge of the Superior Court. The plaintiff's disclosure of Robertson as an expert witness was received in evidence as Exhibit 38. In preparation for rendering his opinion he reviewed Carta's fee affidavit (Ex. 174), the decisions of the trial court, the Appellate Court and the Supreme Court in the case of Stuart v. Stuart, the pleadings in that case, the correspondence, the rates charged by each of the plaintiff's attorneys and their respective experience, the engagement letter (Ex. 1) and the invoices (Exs. 3 and 4). He noted that in his February 10, 2005 decision, Judge Taggart Adams found that the total billed by the plaintiff for fees and disbursements ($538,547.00) was reasonable.
Judge Adams' understanding of the total billed by the plaintiff was based on Carta's affidavit (Ex. 174) which did not include the August 1, 2003 invoice.
In reaching his opinion as to the reasonableness of the fees, Robertson found the following to be significant: 1) the opinion of Judge Adams; 2) the fact that the defendants were sophisticated clients; 3) the fees were somewhat lower than the average rates being charged in lower Fairfield County at the time the services were rendered; and 4) the twelve factors enumerated in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) for the award of attorneys fees. Those factors were approved of by the Appellate Court in Steiger v. J.S. Builders, Inc., 39 Conn.App. 32, 38, 663 A.2d 432 (1995). The twelve factors are: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal services properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee for similar work in the community; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount of time involved and the results obtained; (9) the experience, reputation and ability of the attorneys; (10) the " undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.
Robertson testified that, in his opinion, the case was a complicated and difficult one; that the time spent by the plaintiff was reasonable; that the rates charged by the plaintiff were reasonable when compared with other Fairfield County law firms; and that the agreement to adjust hourly rates reached after the defendants had complained about being charged hourly rates in excess of those set forth in the retainer agreement was reasonable.
On cross examination, Robertson testified that it was reasonable for the plaintiff to bill the defendants for time spent reviewing their case prior to the retainer letter, once the defendants had engaged the plaintiff as their counsel. The defendants' counsel presented Robertson with a letter dated August 29, 2002 from Carta to Attorney Bernard Green regarding an attempt to bill legal fees at a rate in excess of those set forth in a retainer letter. In that letter Carta states: " An attorney may not bill at a rate higher than quoted in the retainer agreement." (Ex. 139.)
Attorney Green's firm was involved in some fashion in litigation entitled Stuart & Sons, L.P. v. Curtis Publishing concerning ownership of the Rockwell paintings. The increased billing rates in question were those charged by the firm of Berger, Stern & Webb.
Robertson further testified that, in his opinion, the plaintiff's representation of the defendants did not cease until August 28, 2003 when substitute counsel entered an appearance in lieu of the plaintiff's appearance.
On behalf of the defendants, Dr. William Stuart testified that when he and his brother Jonathan learned that Kenneth, Jr. was wrongfully taking money from Kenneth, Sr.'s estate, they unsuccessfully tried to have the probate court remove him as executor. Thereafter, Kenneth, Jr. continued to abuse his position of trust. Kenneth, Jr. had set up a limited partnership with Kenneth, Sr. and himself as the sole general partners. Substantially all of Kenneth, Sr.'s assets were placed in the limited partnership. The defendants tried to negotiate with Kenneth, Jr., but he would not change his ways. The defendants retained the firm of Cohen & Wolf to bring an action against Kenneth, Jr. In that action they claimed that Kenneth, Jr. exerted undue influence on their father in setting up the limited partnership and that the evidence would demonstrate that he lacked the mental capacity at that time to understand what he was doing. Dr. Stuart testified that the evidence established that Kenneth, Jr. had at least twenty-five bank accounts, however, none of them were in his own name.
Several years after commencing the suit against Kenneth, Jr., the attorney handling the case left Cohen & Wolf and the defendants decided to seek other representation. In 2000, they interviewed Carta and decided to retain the plaintiff as their new counsel. They arranged to have the file, which was not large, transferred from Cohen & Wolf to the plaintiff. Dr. Stuart knew that in order to establish their claims regarding their father's capacity at the time the limited partnership was established, they would need expert medical testimony.
Dr. Stuart explained how his father had come into possession of the Norman Rockwell paintings. Kenneth, Sr. was the art editor of the Saturday Evening Post and in that capacity had the responsibility for the covers of that magazine. Norman Rockwell was commissioned to paint many of those covers. At one point the managing editor of Saturday Evening Post complained to Kenneth, Sr. about the amount of storage space being used to store paintings used on already published covers and directed him to return them to the artists or to otherwise get rid of them. In response to that directive, Kenneth, Sr. contacted Norman Rockwell who knew him well after working with him for many years. When asked about his wishes concerning the paintings, Rockwell responded, " Take any ones you want and send the rest to me." Kenneth, Sr. selected seven paintings and returned the rest to Rockwell as directed. Three of the paintings selected by Kenneth, Sr. were major works of art which were subsequently sold at auction for prices totaling nearly $60 million. (Ex. 23.) Those paintings were apparently on loan to the Norman Rockwell Museum in Stockbridge, Massachusetts at the time of Kenneth, Sr.'s death. The other four were minor works. Ultimately, each of the three Stuart brothers received one of the minor works and the last one is unaccounted for.
There was a federal lawsuit against the Stuart family filed by Curtis Publishing Company, which had published the Saturday Evening Post, claiming that it was the rightful owner of the Rockwell paintings. Eventually, the Stuarts were able to obtain summary judgment in that case in 2013, allowing the major Rockwell paintings to be sold at auction.
Dr. Stuart testified that in October 2000, he obtained an initial estimate of an additional $152,000 to complete the litigation against Kenneth, Jr. He denied that he had been notified by the plaintiff as to the increases in Carta's and Akoury's billing rates. He acknowledged that after he discussed his disapproval of the rate increases with Carta, they reached an agreement to limit Carta's future fees to a discounted rate. (Ex. 133.) He also acknowledged the agreement he reached with Carta to bring the defendants' account with the plaintiff to a zero balance at the end of 2002 and to remain current in return for a discounted settlement of the amount outstanding.
Dr. Stuart expressed his displeasure with the estimates he was receiving from the plaintiffs in early 2003 for the costs to complete the trial. He was particularly angry that after providing an estimate of $41,500 for the month of March 2003, the actual invoice was $60,029.97. He felt that he and his brother were being " jacked" by the plaintiff and that they were being " reeled in" by the firm.
Dr. Stuart testified that he could not find any copies of his correspondence with Carta and was unable to provide the court with the letters and faxes to which Carta was responding throughout the term of the plaintiff's representation of the defendants. He testified that after receiving Carta's letter of June 18, 2003, offering to cap the plaintiff's fees, he was sure that he contacted Carta, but did not testify further as to their conversation.
Dr. Stuart testified that after receiving Carta's July 2, 2003 letter (Ex. 159) he did not want to have anything more to do with Carta. He did not respond to Carta's July 2, 2003 letter or to Carta's July 24, 2003 letter (Ex. 161) or accept his phone calls because he was engaged in seeking other counsel. It was not until July 29, 2003 that Carta was advised that the defendants were terminating the firm as their counsel. (Ex. 21.) However, the plaintiff was not advised of the identity of replacement counsel until August 19, 2003, when Carta was notified that Attorneys Pacifico and Akoury had been retained by the defendants. (Ex. 164.)
Dr. Stuart testified that he did not receive the August 1, 2003 invoice from the plaintiff. He acknowledged, however, that all prior invoices had been addressed to defendant, Jonathan Stuart. (Exs. 3 and 4.)
Dr. Stuart testified that he did not accept the offers to compromise or arbitrate the plaintiff's claims set forth in Carta's letters of August 20, 2003 (Ex. 165) and September 9, 2003. (Ex. 166.) However, it was not until June 15, 2004 that he advised Carta that the defendants had " no intention of paying your firm any more money, and will take whatever steps are necessary to avoid doing so." (Ex. 169.)
Dr. Stuart testified that he had asked for the defendants' files after terminating the plaintiff's engagement, but the plaintiff refused to release the file without either being paid or having its lien recognized by successor counsel. He felt that the July 2, 2003 letter demanding payment making arrangements for payment prior to trial was extortion. In response to the court's questioning Dr. Stuart stated that he believed that he had informed Carta sometime in the spring or early summer of 2003, that the defendants had no intention of paying the plaintiff any additional amounts for fees and disbursements. However, he could not account for the fact that Carta's letters to the defendants never referred to a refusal to pay, but instead only addressed the defendants' failure to pay.
Jonathan Stuart testified that he did not recall having received the August 1, 2003 invoice from the plaintiff.
The defendants did not call further witnesses.
After the conclusion of the evidence the court discussed the issues of the case with counsel and ordered the filing of post-trial briefs by June 17, 2016 with reply briefs to be filed by July 1, 2016. The court subsequently granted motions to ultimately extend the time for filing post-trial briefs and reply briefs to July 1, 2016 and July 15, 2016 respectively.
THE ISSUES
As noted above, in many instances the defendants' special defenses failed to allege facts establishing the defense and the plaintiff failed to request revisions to require the defendants to plead such facts. As a consequence, during the trial, the significance of certain evidence was not altogether clear. In their post-trial and reply briefs the parties provided the court with their respective understandings of the issues and the evidence.
For its part, the plaintiff regards the case as nothing more than a collection matter. The plaintiff rendered legal services to and advanced disbursements for the benefit of the defendants pursuant to an agreement and is entitled to be paid in accordance with the agreement in the amount of its unpaid bills and interest, as agreed upon, at a rate of 18% per year.
On the other hand, the defendants argue that the plaintiff's claim is barred by the six-year statute of limitations in General Statutes § 52-576(a). If that special defense is unavailing the defendants claim that: 1) plaintiff is not entitled to collect on the invoice covering services rendered during the month of July 2003 because that invoice was never presented to them; 2) the plaintiff's violations of Rule 1.5(a) of the Rules of Professional Conduct preclude the plaintiff from recovering fees; 3) the plaintiff's fees were unreasonable because they exceeded fee estimates given to the defendants during the course of representation; and 4) the plaintiff's claim for interest is barred by laches and/or estoppel. In addition to the defenses set forth in their briefs, the defendants also claim that any insufficiencies in their special defenses were waived by the plaintiff by failing to file a motion to strike.
In the defendants' view, the relationship between the parties is governed by two separate retainer agreements, a modification of the first retainer agreement, and the fee estimates provided by the plaintiff to the defendant at various times, which the defendants describe as " budgets." The plaintiff's position is that there was a single retainer agreement which was modified by the parties during the course of the representation. The plaintiff agrees that the fee estimates have evidentiary value, but do not regard them as " budgets" or as documents having contractual significance.
THE AGREEMENT(S) AT ISSUE
The August 30, 2000 retainer letter prepared by Attorney Carta (Ex. 1), quoted his hourly billing rate at $260 and that of Attorney Akoury at $160. It called for a $30,000 retainer, informed the defendants that they would be billed monthly and that interest at the rate of 1.5% a month could be charged on balances not paid within thirty days. The agreement also provided that the defendants would be responsible for attorneys fees and other costs of collecting unpaid balances.
The retainer agreement was modified by Carta's letter to the defendants dated September 12, 2000 which agreed to the defendants' request to lower the required retainer to $10,000. (Ex. 39.)
On April 11, 2002, Carta wrote to the defendants memorializing the agreements they had reached at a meeting held on April 10, 2002 which was held to discuss the defendants' concerns regarding several increases in billing rates which had been implemented by the plaintiff after December 31, 2000. The four terms agreed to were: 1) Carta would reduce his hourly rate to $280 an hour effective April 9, 2002; 2) Akoury's time would be billed at her standard rate of $175 an hour; and 3) that the defendants would renew their agreement to pay all invoices promptly and in full. (Ex. 133.) The defendants characterize the April 11, 2002 letter as a " Second Retainer Agreement" in their brief.
In Exhibit 133, Carta acknowledges that Akoury's rate was not discussed at the April 10, 2002 meeting. There was no evidence that the defendants had any issues with regard to Akoury's rate.
In their reply brief, the defendants claim that because the April 11, 2002 letter does not include references to either interest on unpaid balances or the plaintiff's right to the costs of collection, including attorneys fees, those provisions no longer formed part of the agreement between the plaintiff and the defendants. Neither defendant testified that there had been a meeting of the minds with respect to those issues either in the spring of 2002 or at any other time. It is not surprising that no correspondence or discussions regarding those topics were introduced into evidence. The issues between the parties, at that time, were limited to the plaintiff's concerns regarding the failure of the defendants to pay its invoices as promised and the defendants' complaint that they had not been informed of or authorized increases in billing rates. It is clear that Ex. 133 only covered the three matters discussed in the letter, and modified, rather than replaced the original retainer agreement (Ex. 1) as previously modified by the plaintiff's agreement to accept a lower retainer (Ex. 39). " To form a valid and binding contract in Connecticut, there must be a mutual understanding of the terms that are definite and certain between parties." (Internal quotation marks omitted.) Senco, Inc. v. Fox-Rich Textiles, Inc., 75 Conn.App. 442, 445, 816 A.2d 654, cert. denied, 263 Conn. 916, 821 A.2d 770 (2003). The court finds that the evidence clearly establishes that the retainer agreement, as modified by the subsequent agreements of the parties, still included the original provisions regarding interest and costs of collection.
Both defendants testified as to their dissatisfaction with the increases in the plaintiff's estimates of the projected costs to prepare for trial, complete the trial and prepare post-trial briefs. However, neither of them testified that they regarded any of the estimates as contractual agreements by the plaintiff to limit its fees and disbursements to the amount of the estimate.
The court concludes that the contract between the parties is set forth in Exhibits 1, 39 and 133 and that other documentary evidence, while relevant to the performance of the contract by the parties, does not form part of the contract itself.
DEFENDANTS' FIRST SPECIAL DEFENSE--STATUTE OF LIMITATIONS GENERAL STATUTES § 52-576(a)
In their first special defense, the defendants claim: " To the extent that this Court determines that a valid, written agreement was in place, Plaintiff's claims are barred by Conn. Gen. Stat. § 52-576(a)."
In relevant part, General Statutes § 52-576(a) provides: " No action for an account, or on any simple or implied contract, or any contract in writing, shall be brought but within six years after the right of action accrues . . ." The state marshal's return indicates that both defendants were constructively served with process on July 27, 2009 when service was made on the Secretary of the State pursuant to General Statutes § 52-59b. Thereafter, in accordance with the requirements of subsection (c) of that statute, the state marshal mailed copies of the process to the defendants on July 28, 2009. The state marshal's supplemental return, dated September 8, 2009, includes return receipts evidencing the delivery of the process which the state marshal mailed to the defendants. The receipt for the process mailed to William Stuart bears his signature and the date " 8/4." (Ex. 42.)
In their briefs, the defendants claim that the plaintiff's " right of action" accrued on June 30, 2003 and that the action should have been commenced by the plaintiff no later than June 30, 2009. The defendants claim that the evidence supports a finding that the plaintiff's representation of the defendants ceased on June 30, 2003 " according to the invoices generated and the Affidavit of Attorney Carta."
In its reply brief, the plaintiff asserts that by failing to plead facts supporting their first special defense the defendants waived the right to assert such a defense. Although the plaintiff failed to move to strike the first special defense, the plaintiff now invites the court, in effect, to strike that defense because no facts were asserted to support the defense. The court declines the plaintiff's invitation and will consider the defense on its merits.
In order to agree with the defendants' position on their first special defense, the court would have to ignore the fact that when the defendants terminated the engagement of the plaintiff, they purportedly did so because of the tenor of Carta's letter to them of July 2, 2003. (Ex. 159.) That fact was firmly established by William Stuart's letter to Carta of July 29, 2003 (Ex. 21) as well as by William Stuart's testimony at trial. Moreover, until July 29, 2003, the defendants were aware that the plaintiff was still awaiting their response to Exhibit 159 and, if an agreement could be reached regarding fees, were prepared to represent the defendants at the upcoming trial. Further, while, as June 30, 2003, the defendants had received the plaintiff's invoices for fees and disbursements for the months of March, April and May, they had not yet been billed for services and disbursements after May 31, 2003.
The invoices for March, April and May 2003 were rendered on April 7, May 2 and June 3, respectively and were, under the terms of the retainer agreement, requiring payment within thirty days, past due The invoice for June 2003 was rendered on July 9, 2003 and, accordingly, was not past due until August 9, 2003.
The language of Exhibit 21 does not establish that the defendants had terminated the plaintiff's responsibility to them as of July 29, 2003. In that letter William Stuart states: " Jonathan and myself no longer want you to represent us. I will notify you within a few days which attorney to send our file to." The language of the letter did not expressly terminate the representation immediately and can not reasonably have been read to suggest that the plaintiff's responsibilities to defendants were at an end prior to the retention of replacement counsel. It was not until August 19, 2003 that William Stuart advised Carta that Attorney Paul Pacifico was currently representing both defendants and requested that the defendants' files be sent to Pacifico. (Ex. 164.) In that letter, William Stuart, for the first time instructed Carta that the plaintiff was to refrain from discussing the case. It was not until August 28, 2003, when Attorney Akoury entered her appearance in lieu of that of the plaintiff, that Attorney Carta regarded his firm's representation of the defendants to have concluded. The plaintiff's expert witness, Attorney James Robertson, agreed with Carta that the plaintiff's representation of the defendants did not end until August 28, 2003.
In Mitchell v. Guardian Systems, Inc., 72 Conn.App. 158, 804 A.2d 1004, cert. denied, 262 Conn. 903, 810 A.2d 269 (2002), the Appellate Court upheld the decision of the trial court to accept a referee's report which found that the statute of limitations on an attorney's claim for unpaid fees did not begin to run until the day after the court granted the attorney's motion to withdraw his appearance on the client's behalf. Similarly, the evidence in this case establishes that the plaintiff's professional responsibilities to the defendants did not cease until substitute counsel had entered her appearance in lieu that of the plaintiff on August 28, 2003. The court finds that the plaintiff's cause of action accrued as of that date and that the statute of limitations did not run until six years thereafter.
Moreover, General Statutes § 52-593a(a) provides, in relevant part: " [A] cause or right of action shall not be lost because of the passage of time limited by law within which the action may be brought, if the process to be served is personally delivered to a state marshal, constable or other proper officer within such time and the process is served, as provided by law, within thirty days of the delivery." The plaintiff's summons and complaint are dated July 22, 2009. The state marshal's return demonstrates that he had personal possession of the process on July 27, 2009, the date he made service on the Secretary of the State. The state marshal's return establishes that service of process was completed within thirty days of his receipt of the process. The court concludes that even if the date of William Stuart's July 29, 2003 letter to Carta is controlling (the earliest date on which the defendants reasonably claim that the plaintiff's cause of action had accrued), the process was timely served.
General Statutes § 52-593a(b) provides: " In any such case, the officer making service shall endorse under oath on such officer's return the date of delivery of the process to such officer for service in accordance with this section." Neither the state marshal's return or supplemental return state the date on which process was delivered to the marshal. " Our appellate courts have not spoken on the extent to which a plaintiff must comply strictly with the provisions of Section 52-593a(b). The superior court opinions on this issue vary. The majority permit a plaintiff to cure an otherwise defective return of service with either affidavits establishing the date of delivery or by filing an amended return of process to include that information. Others have required strict compliance with the provisions at the time the service is made." (Citations omitted.) Gianetti v. Connecticut Newspapers Publishing Co., Inc., Superior Court, judicial district of Fairfield, Nos. CV 06 5003578S & CV 07 5012114S, (November 30, 2010, Dooley, J.). In Gianetti, the state marshal served the defendant after the expiration of the statute of limitations and the plaintiff did not provide the court with evidence as to the date process was delivered to the state marshal. In this case, where the fact that the process was in hands of the state marshal no later than July 27, 2009, it would be absurd to deny the plaintiff the benefit of General Statues § 52-593a(a) simply because the state marshal's return did not strictly follow the directives of § 52-593a(b). General Statutes § 1-2z mandates that, in interpreting and applying statutes, courts must avoid constructions which yield " absurd or unworkable results."
In order to determine the merits of the defendants' statute of limitations defense it is not necessary for the court to determine the issues presented by the plaintiff's invoice for services and disbursements for the month of July 2003. That invoice, #27188, dated August 1, 2003, totals $6,751.76 and includes services rendered between July 1, 2003 and July 28, 2003 in the amount of $6,289.50 and disbursements of $462.26. (Exs. 4 and 181.)
The court finds the defendants' special defense based on the statute of limitations to be without merit.
INVOICE #27188, DATED AUGUST 1, 2003.
In their post-trial briefs the defendants claim that any recovery awarded to the plaintiff cannot include the $6,751.76 because that invoice " was never presented to the defendants." The evidence establishes that, after the Attorneys Pacifico and Akoury had received a favorable decision in the defendants' case against their brother Kenneth, Jr. and related parties, a hearing was held to determine the amount of attorneys fees to be awarded to the defendants. In connection with that hearing, Attorney Carta prepared an affidavit which was submitted to the court. (Ex. 174.) Paragraph 30 of that affidavit recited that: " From September 2000 through and including July 2003 [the plaintiff] rendered bills to the [defendants] on a monthly basis." A list of invoices followed, with the first invoice being #14710, dated September 6, 2000 and the last being invoice #26974, dated July 9, 2003. The total of the invoices was $567,530.72. The affidavit addresses various billing rates, credits and adjustments to the fees billed by the plaintiff. In paragraph 38, Carta states that the total balance due is $184,043.46. The total does not include any amount attributable to invoice #27188. The affidavit does not address that invoice nor does it refer to any services or disbursements billed after the July 9, 2003 invoice, which included charges through and including June 30, 2003.
In their post-trial brief defendants correctly point out that Carta's affidavit has evidentiary value to prove that the plaintiff's claim for unpaid fees and disbursement is $184,043.46 rather than $190,795.76. In its post-trial brief, the plaintiff states that " in an effort to simplify the proceedings [it] is willing to adjust the balance due from the Stuarts by the amount of the August invoice and therefore is seeking the sum of $184,043.46 rather than $190,795.76. However, this adjustment of its claim is without prejudice to [plaintiff's] other positions and is in no way a waiver of the undisputed fact that [the plaintiff] performed the work detailed [on invoice #27188]."
The court finds that the plaintiff has waived the right to collect the $6,751.76 shown on invoice #27188 and that, accordingly, the plaintiff's maximum claim, exclusive of interest and costs of collection, is $184,043.46.
CLAIMED VIOLATIONS OF THE RULES OF PROFESSIONAL CONDUCT
A. Charges for Paralegal Professionals and Attorneys other than Carta and Akoury
The defendants did not plead a special defense asserting that the plaintiff violated the Rules of Professional Conduct and that, as a matter of law, are thereby barred from collecting further fees from the defendants. However, in a " Claim of Set Off" included in their answer, the defendants allege that under the terms of the engagement letter, which only quoted billing rates for Attorneys Carta and Akoury, the plaintiff is precluded from collecting any charges for time spent on their behalf by paralegal staff or attorneys other than Carta and Akoury.
Neither of the defendants testified that they were misled by the terms of engagement letter with respect to the identity of the attorneys and paralegal professionals on plaintiff's staff who might be called upon to assist in the representation of the defendants from time to time. Exhibit 2, which contained biographical information of the partners and associates of the plaintiff firm was given to the defendants at the same time as the engagement letter. The defendants produced no evidence that, at any time during the time the plaintiff represented them they had complained about the entries on the invoices which clearly demonstrated that they were being billed for time spent on their case by paralegal professionals and attorneys other than Carta and Akoury.
B. Increases in Billing Rates
Despite the narrow focus of their claim for set off, in their post-trial briefs the defendants broaden their allegations of ethical violations to include a claim that the plaintiff violated Rule 1.5(b) of the Rules of Professional Conduct by increasing the hourly rates charged by Attorneys Carta and Akoury without first notifying the defendants of the increase. In relevant part, that rule provides:
(b) The scope of the representation, the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client in writing before the fees or expenses to be billed at higher rates are actually incurred . (Emphasis added.)
The evidence does not establish that the plaintiff provided notice to the defendants of the increases in the billing rates of Attorneys Carta and Akoury which took place in 2001 and 2002. The defendants reason that the plaintiff's violation of Rule 1.5(b) precludes them from collecting any further fees from the defendants. The court finds this argument to be unpersuasive for two reasons.
First, the language relied on by the defendants did not become effective until January 1, 2007, more than three years after the plaintiff had ceased to represent the defendants. See Connecticut Practice Book 2006 and 2007 editions.
Second, the defendants, after discovering and being fully informed of the rate increases reached a compromise with the plaintiff and accepted the plaintiff's undertaking to limit the billing rates for future work to be done to a below market rate. In agreeing to accept the benefits of that compromise, which froze attorney Carta's fees at a below market rate for the duration of the representation, the defendants settled their dispute with the plaintiff regarding the purported violation of Rule 1.5(b), received valuable consideration in the form of the agreement to freeze attorney Carta's billing rate, and waived their right to assert the violation as a defense to their contractual obligations.
Moreover, as noted below, the court finds violations of the Rules of Professional Conduct do not, ipso facto, create a presumption that a legal duty has been breached or that the attorney is precluded from collecting otherwise payable fees and disbursements.
C. Unreasonableness of Fees under Rules 1.5 and 1.15
In their post-trial briefs, the defendants further assert that the plaintiff violated Rule 1.5(a) by charging unreasonable fees and Rule 1.15 in some unspecified manner. In support of their claim that the fees were unreasonable, the defendants invite the court to disregard the expert testimony of Attorneys Carta and Robertson that the fees billed were reasonable. On cross examination, Attorney Robertson declined to opine on questions as to whether the plaintiff had violated the Rules of Professional Conduct by asserting a charging lien on the defendants' file. He stated that, although he had read the pleadings he was not aware that there was any issue in the case with respect to the plaintiff's wrongful assertion of a charging lien. The defendants invite the court to conclude that because the plaintiff's expert had not considered an ethical issue which the defendants failed to plead as a defense, that the expert completely ignored the plaintiff's ethical responsibilities under the Rules of Professional Conduct and, accordingly reject all of his testimony. The court finds that it is clear that in testifying as to the reasonableness of the plaintiff's fees, Attorney Robertson was directly addressing the plaintiff's compliance with the requirements of Rule 1.5 and finds no reason to reject his testimony.
The defendants further claim that the plaintiff's fees were unreasonable because they exceeded estimates provided to them by the plaintiff. In support of that claim, the defendants rely on the former commentary to Rule 1.5 which stated in relevant part: " In a new client-lawyer relationship . . . an understanding as to the fee should be promptly established. It is sufficient, for example, to state that the basic rate is an hourly charge or a fixed amount or an estimated amount. When developments occur during the representation that render an earlier estimate substantially inaccurate, a revised estimate should be promptly provided to the client."
Prior to 2007, the first sentence of Rule 1.5(a) stated: " A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following: [a list of eight factors followed]." Effective January 1, 2007 the first two sentences of Rule 1.5(a) were amended to state: " A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following: [the eight factors listed are identical to those set forth in the pre-2007 Practice Book]."
At the same time the language of Rule 1.5(b) was revised. Before 2007 that rule read, in relevant part: " When the lawyer has not regularly represented the client, the basis or rate of the fee, whether and to what extent the client will be responsible for any court costs and expenses of litigation, and the scope of the matter to be undertaken shall be communicated to the client, in writing, before or within a reasonable time after commencing the representation."
After the revision Rule 1.5(b) provided: " The scope of the representation, the basis or rate of the fees and expenses for which the client will be responsible, shall be communicated to the client, in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client in writing before the fees or expenses to be billed at higher rates are actually incurred."
The commentary to the 2007 version of Rule 1.5 no longer made any reference to fee agreements based on estimates or to the duty of the lawyer to advise the client as to when such estimates become substantially inaccurate.
The court finds that the retainer agreement prepared by the plaintiff did not base the plaintiff's fees on an estimate of the fees to be charged. The fees quoted were based on time and hourly rates only. The evidence shows that the plaintiff provided the defendants with estimates of costs to complete the litigation at various times throughout the representation. It is clear that none of the estimates were contractual agreements to limit the fees to the amount of the estimate. Toward the end of the plaintiff's representation of the defendants, the plaintiff, on several occasions, offered to cap its fees in return for, either the defendants' firm commitment to payments of outstanding invoices, or the possibility of a " kicker" in the event extraordinary results were achieved. (Exs. 148 and 157.) Those offers were not accepted by the defendants.
In their post-trial brief, the defendants do not claim that the evidence shows that the plaintiff agreed, at any time, to place a cap on its fees. Nevertheless, the defendants claim that the fees charged were unreasonable because they exceeded estimates which were provided to the defendants from time to time. In the spring of 2003, at the defendants' request the plaintiff prepared a month-by-month estimate of the fees required to complete pre-trial preparations, try the case and file post-trial briefs. (Exs. 146 and 147.) In their post-trial brief, the defendants complain that plaintiff's statement for the month of March 2003 exceeded the estimate by $18,000. The defendants characterize those charges as " unreasonable given it is was nearly 1/3 more than the estimate communicated to Defendants only days prior."
The plaintiff's invoice for the month of March 2003 was, in fact, $60,029.97 while the estimate provided the defendants in late February and early March was $41,500. However, the plaintiff's estimate was for legal fees only and did not include disbursements. The actual difference between the estimate ($41,500) and the invoice ($57,128) was less than $16,000. Moreover, the defendants failed to point out that the invoices for the months of April and May were less than the amount of the operative estimate. The estimate for April 2003 was $71,500 while the invoice reflected charges for legal fees of $68,269.50. The estimate for May 2003 was $72,500 while the invoice for that month showed charges for legal fees of $27,353.50. For the three months--March 1, 2003 to May 31, 2003--the plaintiff's estimate for legal fees totaled $185,500, while the amount invoiced to the defendant totaled $152,751. The court finds the defendants' assertion that the plaintiff's fees were unreasonable simply because the amount billed for a single month exceeded an estimate to be untenable.
The court agrees with the plaintiff's expert witness, Attorney James Robertson, and finds that the evidence demonstrates that under all the relevant circumstances, the legal fees charged by the plaintiff were reasonable under the standards set forth in Johnson v. Georgia Highway Express, Inc., supra and Steiger v. J.S. Builders, Inc., supra .
The court further finds that the defendants have not produced any evidence of a violation of Rule 1.15.
D. Would the Violations of the Rules of Professional Conduct Claimed by the Defendants Bar the Plaintiff from Enforcing the Retainer Agreement?
In support of their claim that any violation of the Rules of Professional Conduct voids the defendants' obligation to pay legal fees to the plaintiff, the defendants rely on two superior court cases. In Disciplinary Counsel v. Smigelski, Superior Court, judicial district of New Britain, docket No. CV 08 4019323, (August 31, 2009, Pittman, J.), the trial court was considering the presentment of an attorney who had been retained by the son of a decedent acting as executor of his father's estate in connection with a claim against his father's widow to recover real estate which the decedent had transferred to her, allegedly as the result of the exercise of undue influence. Prior counsel had been able to negotiate an agreement to have the widow quit claim her interests to the adult children in return for a payment, however, the negotiations broke down as to whether the payment would be $25,000, as offered by the children, or $45,000, as demanded by the widow. Thereupon, the executor engaged the defendant as his counsel. The defendant prepared a retainer agreement naming the executor in both his fiduciary capacity and individually as the client and stated the fee to be " based on an hourly charge of $225.00 per hour or it will contingent upon recovery of benefits and shall be ONE-THIRD of the gross judgment or settlement, which ever amount is greater." The agreement also provided for a $5,000 retainer. The court found that the agreement was not governed by General Statutes § 52-251c which is limited to suits to recover personal injuries, wrongful death or property damages and, accordingly was not invalid. However, the court found that the agreement created a situation where the benefit to the attorney could outweigh the benefits to the client. The court also noted that the retainer agreement was not suitable for a case in which the relief sought was essentially equitable. Eventually the parties agreed to a settlement under which the widow would quit claim the real estate to the estate in return for a payment of $35,000 (the midpoint between the parties' prior positions).
The property was sold by the estate to a family member for $170,000, however, in connection with obtaining mortgage financing, the actual fair market value was determined to be $212,500. The defendant handled the closing which resulted in net proceeds of $155,300.82. The defendant paid himself legal fees in excess of $70,000 based on his interpretation of the retainer letter. The probate court approved a fee for the defendant of $15,000 plus $1,000 in costs, however, the defendant refused to return any portion of the fee which the probate court had found to be excessive. The court held that the fee was unreasonable in violation of Rule 1.5 and that the defendant was aware of that fact when he paid himself the fee. The court found that by paying himself the unreasonable fee from the proceeds of the sale, the defendant had violated Rule 1.15 by failing to safeguard the client's funds. The court ordered the defendant's suspension from the practice of law for one year and three months and conditioned his reinstatement on placing the sum of $54,833.33 in escrow or providing other security in that amount. The court made it clear that it was only addressing the issues arising out of the defendant's presentment and did not find that the defendant's egregious professional misconduct prevented him from receiving any fees.
The difference between the fee retained by the defendant and the fee approved by the probate court.
The second case relied on by the defendants is DeSarbo & Reichert, P.C. v. Cardow, Superior Court, judicial district of New Haven, docket No. CV 94 0360368 (December 5, 1996, Hodgson, J.) [18 Conn.L.Rptr. 301, ]. In that case, the defendant met with the plaintiff, an attorney, at the office of a life insurance company. The life insurance company had arranged for free consultations with attorneys, including the plaintiff, in connection with a sales presentation made to promote life insurance as an estate planning tool. The plaintiff recommended that the defendant have him prepare a new will and related trust documents and quoted him a fee of $2,500. The plaintiff prepared the recommended documents and sued the defendant when he refused to pay his fee. The attorney did not send a retainer letter and the defendant was under the impression that he had not agreed to anything. The documents which the plaintiff had prepared were never delivered to the defendant who proceeded to have counsel of his own choice prepare his estate plan. In his complaint the attorney alleged that he had met with the defendant at his office and had delivered the documents he had prepared to the defendant. The court found these pleadings to be false and to be sufficient to support a finding of a CUTPA violation against the plaintiff. The court stated: " This court does not reach the issue whether conduct that is unethical under the Rules of Professional Conduct supports a CUTPA claim, and specifically this court does not rule that the failure to put a fee arrangement in writing as set forth in Rule 1.5(b) of those rules renders the fee unrecoverable."
The purpose of the Rules of Professional Conduct is clearly stated in the " Scope" of the Rules. In relevant part, that section provides: " Failure to comply with an obligation or prohibition imposed by a Rule is the basis for invoking the disciplinary process . . . Violation of a Rule should not give rise to a cause of action nor should it create any presumption that a legal duty has been breached. The Rules are designed to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability." Practice Book-2000 edition.
The Scope of the Rules set forth in the current edition of the Practice Book are not materially different with regard to using the Rules as a basis for civil liability.
There appears to be a split of authority on the question of whether a violation of Rule 1.5 by an attorney bars the attorney from recovering fees from the client. In Law Offices of Norman J. Voog, LLC v. Heinecke, Superior Court, judicial district of Danbury, docket No. CV 08 5003818 S, (January 28, 2009, Shaban, J.), the court found that despite the mandate of Rule 1.5(b) that retainer agreements be reduced to writing, the plaintiff had represented the defendant in a collection matter in the absence of a written agreement. The court noted that " [m]ost Superior Court cases hold that Rule 1.5(b) is mandatory and violation of it precludes an attorney from recovering fees" and found that " it would violate public policy for the plaintiff to recover fees based upon an agreement which violates the Rules of Professional Conduct." The earliest case relied on by the court was Freccia & Plotkin v. Castro, Superior Court, judicial district of Stamford/Norwalk, docket No. CV 96 015137 S (September 9, 1996), D'Andrea, J.) [17 Conn.L.Rptr. 555, ].
In O'Connor v. Norman, U.S. Dist. Court, D.Conn., 2011 WL 219666, (Kravitz, J.), the court considered the question of whether an attorney could collect for services rendered to a client in the absence of a written agreement complying with Rule 1.5(b). The court noted the existence of decisions of Connecticut Superior Courts, including Law Offices of Norman J. Voog, LLC, supra, holding that public policy prevents an attorney from collecting fees in the absence of a written agreement. The court noted that in Freccia & Plotkin, supra, the trial court did not, in fact, hold " that attorney fee agreements in violation of Rule 1.5(b) or (c) were per se unenforceable . . . [i]nstead, [the court] in that case merely held that the attorney plaintiff failed to meet its burden of proving the damages it claimed--$7,473.75 in fees plus $1,037.19 in expenses--and instead awarded fees based on the defendants' concession that they agreed to pay a flat fee of $4,000." The district court also noted that " neither the Connecticut Supreme Court nor the Appellate Court has ever held--nor even suggested--that attorney fee agreements are unenforceable if they violate Rule 1.5(b) or Rule 1.5(c). The district court further noted that General Statutes § 52-251c provides:
In any claim or civil action to recover damages resulting from personal injury, wrongful death or damage to property occurring on or after October 1, 1987, the attorney and the claimant may provide by contract, which contract shall comply with all applicable rules of professional conduct governing attorneys adopted by the judges of the Superior Court, that the fee for the attorney shall be paid contingent upon and as a percentage of: (1) Damages awarded and received by the claimant, or (2) the settlement amount received pursuant to a settlement agreement.
The court noted that in Silver v. Jacobs, 43 Conn.App. 184, 682 A.2d 551 (1996), the Appellate Court held that General Statutes § 52-251c prohibits an attorney from recovering under an unwritten contingency fee agreement and strongly suggested that the attorney could not recover under claims based on unjust enrichment or quantum meruit. The district court reasoned that by incorporating the requirements of the Rules of Professional Conduct into the requirements of General Statutes § 52-251c the legislature recognized that those rules were not already enforceable as substantive law, otherwise § 52-251c would be " completely superfluous." The court further noted that in Gagne v. Vaccaro, 255 Conn. 390, 403, 766 A.2d 416 (2001), the Connecticut Supreme Court issued " a strongly-worded warning . . . that the Connecticut Rules of Professional Conduct do not create or alter substantive legal obligations."
In Parnoff v. Yuille, 139 Conn.App. 147, 172, 57 A.3d 349 (2012), cert. denied, 307 Conn. 956, 59 A.3d 1192 (2013), the Appellate Court held that a contingency fee agreement providing for a higher fee than permitted under § 52-251c " imposed no legal obligations on [the defendant]." Subsequently, the Appellate Court held that under such circumstances the attorney could not recover fees on the basis of quantum meruit. Parnoff v. Yuille, 163 Conn.App. 273, 278, 136 A.3d 48, cert. denied, 321 Conn. 902, 138 A.3d 280 (2016).
In Ankerman v. Mancuso, 79 Conn.App. 480, 486, 830 A.2d 388 (2003), aff'd 271 Conn. 772, 860 A.2d 244 (2004), the Appellate Court held that concept that the Rules of Professional Conduct cannot form the basis of a cause of action logically extends to special defenses.
The court finds that the evidence does not demonstrate that the plaintiff violated the Rules of Professional Conduct as claimed by the defendants. Even if the evidence supported a finding of one or more such violations, the court agrees with the reasoning of the District Court in O'Connor, supra, and Appellate Court in Ankerman, supra, and finds that such violations would not preclude the plaintiffs from recovering fees in accordance with the retainer agreement.
FINDINGS
The court finds that the plaintiff has established the existence of a valid and enforceable contract with both defendants and that, pursuant to the terms of that contract the defendants are indebted to the plaintiff in the principal amount of $184,043.46. Accordingly, the court finds the issues for the plaintiff and against the defendants on the first and second counts of the plaintiff's complaint. In view of the above findings, it is not necessary to address the plaintiff's alternative theory of recovery (quantum meruit) set forth in the third and fourth counts.
INTEREST
In its complaint the plaintiff claims interest pursuant to the terms of its contract with the defendants at an annual rate of 18%. In their post-trial brief, the defendants claim that the plaintiff's claim for interest is barred by either laches or estoppel. The defendants correctly point out that the defense of laches requires not only inexcusable delay but also prejudice to the non-delaying party. They also point out that the elements of estoppel require proof of a statement or action designed to induce reliance and a change of position based on reliance. However the defendants fail to identify either prejudice caused to the defendants by the plaintiff's delay, excusable or otherwise, in asserting their claims against the defendants, or any detrimental reliance by the defendants on any statement made by the plaintiff. Simply claiming that the defendants believed that the plaintiff had abandoned their debt does not form a basis for either a claim of prejudice or detrimental reliance.
As noted above, the plaintiff waived any claims for legal services or disbursements set forth in invoice #27188 and limited its claim to $184,043.46, the total of the four prior invoices. The defendants asserted in their sixth special defense that the 18% interest rate claimed by the plaintiff was prohibited by statute. However, they failed to identify the statute, as required by Practice Book § 10-3(a). In their post-trial briefs the defendants failed to brief any claims of statutory violations, thereby abandoning their sixth special defense.
The final invoice for which the plaintiff is seeking to recover damages is dated July 9, 2003 and became overdue thirty-one days later. Nevertheless the plaintiff is seeking interest starting as of September 1, 2003. Although the defendants seek to avoid any payments of interest, they have not suggested that a later date is more appropriate. The court finds that the plaintiff is entitled to interest at the rate of 18% per year on the unpaid legal fees or $33,127.82 per year. As of September 1, 2016 the total interest amounts to $430,661.70.
LEGAL FEES AND OTHER COSTS OF COLLECTION
The court has found that the agreement between the parties imposed on the defendants the obligation to pay " all costs and expenses including reasonable attorneys fees incurred in the collection of disbursements or fees." If the parties are unable to agree on the amount of attorneys fees to which the plaintiff is entitled, the plaintiff may file a motion pursuant to Practice Book § 11-21 addressing that issue. Finally, the court finds that the plaintiff is entitled to costs.