Brown & Welsh, P.C. v. Midstate Medical Center f/k/a
CV000598528S
SUPERIOR COURT OF CONNECTICUT, JUDICIAL DISTRICT OF HARTFORD AT HARTFORD
2003 Conn. Super. LEXIS 3610
December 30, 2003, Decided
January 2, 2004, Filed
MEMORANDUM OF DECISION
The plaintiff Brown & Welsh n1 is a law firm which for many years represented
the defendant hospital and its predecessors in collections matters. In May 1998,
the hospital discharged the firm and requested return of files, including those
currently pending in various stages of the proceedings. The firm did return the
files. No agreement was reached as to how or, it seems, whether to compensate
the firm for work done in the returned files. The firm brought this action to
recover attorney fees. The waters are muddied somewhat by the nature of
collections work: typically, collections practices involve large numbers of
relatively low value cases, the recovery rate can be low and piecemeal, and the
time gap from judgment to recovery can be extended. Specific problems arising in
this case and their resolutions will be discussed in context.
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n1 The firm has undergone a number of permutations over the years.
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As suggested above, the firm handled at least some of the collections work of
the defendant and its predecessor hospitals for decades. In early 1998, a
purported class action, Rivera v. Veterans Memorial Medical Center, was filed
against the hospital. This action claimed that the hospital was improperly
pursuing collections actions against a class of claimants in workers'
compensation cases. See, e.g., Rivera v. Veterans Memorial Medical Center, 1998
Ct.Sup. 9108 (decision regarding certifying a class); Rivera v. Veterans
Memorial Medical Center, 262 Conn. 730, 818 A.2d 731 (2003) (decision reversing
subsequent dismissal of the class). The plaintiff firm has been impleaded into
the Rivera action by the hospital for indemnification. There has been, so far as
I am aware, no resolution on the merits regarding the Rivera claims.
Concerned about the pending class action, the hospital and its attorneys met
with Thomas Welsh, a principal in the plaintiff firm. On May 1, 1998, the
hospital, through outside counsel, prepared and sent a letter to the firm
terminating the firm's services. The letter requested return of the files and
offered reasonable compensation for the work involved in returning the files.
Within a month the firm returned 2,188 files in various stages of litigation,
including, presumably, some not yet in litigation and a number of post-judgment
files. The firm also forwarded to the hospital or to successor counsel checks
which it continued to receive from time to time, and the firm made some
overtures to arrange for the payment of its expenses in forwarding the files and
for its attorney fees it claimed in regard to the forwarded files. There was
virtually no response to the firm's overtures. The hospital ultimately forwarded
to successor collections counsel, David Fordiani, approximately two thirds of
the files which had been returned to it by the plaintiff firm. Fordiani has
proceeded with collection work in many, but by no means all, of the files. The
bank, in responses to requests for information in the discovery process,
indicated that it has recovered, as of the time discovery was answered,
approximately $410,000 in the returned files. n2
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n2 The hospital had a policy of not foreclosing judgment liens on real estate;
rather, the hospital waits to satisfy its judgment until a transfer of the
property occurs.
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The complaint comprises two counts. The first count alleges a breach of
contract, the second alleges quantum meruit. Although there are splits among
jurisdictions around the country; see, e.g., Annot., 23 A.L.R.5th 241;
Connecticut has adopted the rule that where a client discharges an attorney, the
latter may recover only in quantum meruit. Cole v. Myers, 128 Conn. 223, 21 A.2d
396 (1941). Principles of quantum meruit limit the attorney's recovery in a
pending contingency matter to the reasonable value of the services provided by
the attorney prior to the discharge. Id.
Both parties appear to agree that principles of quantum meruit apply; they
differ markedly as to what amount of recovery thus results. Some brief
introductory comments as to what principles I did not apply might be in order.
First, the defendant stressed that the plaintiff firm was dismissed for cause,
because of the Rivera litigation. There is, as the plaintiff points out, no
pleading to that effect. Perhaps equally importantly, there was no evidence
presented at trial to provide any substance to the claim. The plaintiffs'
allegations in Rivera are reasonably discernable, as is the hospital's concern.
There was no evidence presented, however, as to what the plaintiff firm did
improperly in the handling of any of the hospital's litigation. Finally, the
hospital appears to take the position in its arguments that quantum meruit is
the proper method of recovery: if the plaintiff firm had breached its duty,
there may well be no recovery. For these reasons, then, I do not believe that
the defendant's assertion that the dismissal was "for cause" matters to the
outcome.
Second, the plaintiff firm has introduced a mass of statistics regarding the
files that it once possessed which were then turned over to the defendant; it
also presented a rather detailed statistical analysis of fees for the past
several years in the body of work for the hospital. I will analyze some of these
statistics to arrive at what I believe to be a reasonable approximation of the
value of services rendered. I am not considering as the measure of damages the
actual fees generated by the bulk of files, however, because there is no
recovery for the contract price. Third, the defendant hospital makes much of the
lack of evidence as to value provided to any particular file. No individual
files were offered into evidence; indeed, the actual files had been returned
and, as noted above, many of the files were subsequently distributed to the
successor attorney. The plaintiff firm, in turn, claims that it was hobbled, in
a way, by the failure of the hospital to comply with discovery requests
regarding the files. n3 I recognize that in most sorts of litigation one would
anticipate, in an action for recovery in quantum meruit, evidence of specific
work done, with standard time records, in order to determine the reasonable
value of the services rendered, and indeed the task would be relatively simple,
at least conceptually, were that the case here. I also recognize, however, that
the circumstances are different: the evidence presented was that the firm kept
time records by several broad categories of cases but not by the individual
case. There was no evidence that the firm anticipated the discharge, and thus
should have been on notice to prepare more detailed records. The choice, then,
is whether to try to estimate, albeit imprecisely, the reasonable value of
services, or to conclude that because precise records were not kept, no recovery
at all is appropriate. n4
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n3 The case was presented as a hearing in damages, because of the defendant's
default for failure to comply with discovery requests. Because the case turns on
the reasonable value of services rendered, rather than a liability issue, and
because no other defenses are germane, the default makes little practical
difference.
n4 There are two lines of considerations that might lead to the conclusion that
no recovery is possible in the circumstances. One is a general proposition, not
at all preposterous, that there was no specific evidence of value as to any
specific file, and thus there simply is insufficient proof. I believe, however,
that there is some evidence of value provided to a group of cases.
A second set of considerations appears in cases involving attorneys fees which
may be awarded in actions such as civil rights claims and in other claims where,
typically, individual claimants may be seen to act as "private attorneys
general" in the enforcement of values deemed important by the legislature. Some,
but not all, jurisdictions require specific, contemporaneous time-keeping
records in order to recover attorneys fees in these circumstances. See, e.g.,
New York Association for Retarded Children v. Carey, 711 F.2d 1136, 1148 (2d
Cir. 1983); but see Ackerman v. Western Electric Co., Inc., 643 F. Supp. 836
(N.D. Cal. 1986); see generally Annot., 56 A.L.R.5th 1.
I believe that the considerations are considerably different in such categories
of cases, for a variety of reasons, including the stark fact that those
attorneys fees are sought to be awarded against strangers to the attorney-client
relationship.
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In the circumstances, the statistics provided by the plaintiff firm, the
accuracy of which statistics are not specifically challenged, provide some
evidence, though general, of the quantity of unreimbursed services provided.
Some inferences have to be made, both from the statistical evidence presented
and from evidence about the nature of the firm's collections work for the
hospital. Exhibit 6 provides summaries, compiled from massive time records
contemporaneously kept by category of case, of time spent in the categories of
the hospital's work from 1993 until approximately mid-May 1998, when the firm
learned that its services were terminated. For the 1998 calendar year, it had
expended 879.85 hours at an average rate of $81.40, for a total value of
services rendered to files, irrespective of contract amount, of $71,619.75. I
find that that value is not disproportionate to the factors traditionally
considered in cases such as Johnson v. Georgia Highway Express, 488 F.2d 714
(5th Cir. 1974). n5 In light of the lag time between the performance of work and
actual recovery, I find that a six-month lag time is conservative: that is,
there are probably more otherwise uncompensated hours of work performed on files
older than six months than compensated hours performed on files newer than six
months. Nonetheless, because the plaintiff did not produce evidence of specific
work performed in specific files, it is appropriate to take a conservative
approach and I rather broadly conclude that it is fair to consider six months as
the cutoff. If services valued at $71,619.75 were performed in four and a half
months, then the average monthly value was $15,915.50, and the six-month value
would be $95,493.00. I find the amount of $95,493, then, to be the value of
uncompensated services provided by the plaintiff law firm.
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n5 Johnson is generally cited as the seminal case discussing attorney fees in
civil rights sorts of cases. The general rule is to compute the "lodestar"
number by multiplying hours times hourly rate, then considering adjusting for
factors such as difficulty, loss of other employment, contingency fee
arrangement, and such. The plaintiff has candidly stated that most of the
Johnson factors do not compel an upward adjustment of the lodestar, and the
statistical hourly rate is low enough that I do not consider a downward
adjustment appropriate. I have considered, however, the issue of the Johnson
adjustments.
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The final issue is whether the plaintiff firm ought to be paid for its services
in organizing and "boxing up" the files for transmission. Evidence was presented
regarding the time and expense involved. The defendant has argued that, although
the hospital agreed to pay for a reasonable cost, the amount claimed is not
reasonable. The hospital also claims that the complaint does not include this
allegation.
It is correct that there is no such allegation in the complaint, so I can make
no award for this item. I strongly suggest to the parties that they resolve the
issue among themselves, as it ought not to be difficult. Otherwise, judgment may
enter for the plaintiff in the amount of $95,493.00; additional claims are
denied.
Beach, J.