In re the Motion of Franke

KRAUSER, C.J. The principal issue before us is whether an attorney may file an interlocutory appeal when his motion to withdraw as counsel has been denied. The attorney is Frederick R. ⁶⁸¹ Franke, Jr. Franke was retained by Raymon K. Nelson, M.D. (“Raymon”), to represent Raymon in his capacity as the trustee of the Trust of his late brother, Ralph L. Nelson, M.D. (“Ralph, Sr.”).

The beneficiaries of the Trust are Ralph, Sr.’s wife, Myra Nelson (“Myra”), and his son, Ralph L. Nelson, Jr. (“Ralph, Jr.”). When Myra filed a petition in the Circuit Court for Anne Arundel County, seeking, among other things, the appointment of a co-trustee, because Raymon had purportedly mismanaged the Trust, Raymon hired Franke to represent him in this matter. After paying Franke a retainer and, later, as the case progressed, additional legal fees, Raymon reimbursed himself, with funds from the Trust, relying on provisions of the Trust Agreement that purportedly permitted him to do so. 1 After discovery had advanced, Myra, together with Ralph, Jr., who had been added as a party, amended what had become their joint petition to demand that Raymon be removed as trustee, that a trustee be appointed in Raymon’s place, and that he be required to pay damages for misappropriation of Trust funds. Granting that request in part, the circuit court removed Raymon as trustee, replacing him with an interim trustee.

By that time, Raymon owed Franke more than $120,000 in legal fees. Unable to draw funds from the Trust, as a result of his removal as trustee, Raymon made no further payments to Franke though Franke continued to represent him in this matter. ⁶⁸² About two months before trial, Franke notified Raymon that, largely because of Raymoris failure to pay any pending or projected legal fees and costs, he intended to file a motion to withdraw as Raymoris counsel. The motion was first granted by one judge and then denied by another. From the ultimate denial of that motion, Franke noted this appeal, claiming that, in refusing to grant his motion to withdraw, the court had abused its discretion and that, under the collateral order doctrine, that ruling was an appealable order.

Then, pending the resolution of this appeal, at the request of Franke and with no opposition from Myra and Ralph, Jr., the circuit court stayed these proceedings indefinitely. Because we hold that the circuit court’s order rejecting Franke’s request to withdraw is appealable under the collateral order doctrine and that the circuit court abused its discretion in so ruling, we vacate the circuit court’s order and direct that court to grant Franke’s request to withdraw as counsel for Raymon, Background When, in 2004, Ralph, Sr., discovered that he was suffering from a rare and lethal form of cancer, he established, with the assistance of counsel, a trust (the “Trust”) to receive the assets of his estate for the benefit of his wife, Myra, and his son, Ralph, Jr. He named as co-trustees his brother, Raymon, and himself. But, following the death of Ralph, Sr., later that year, Raymon became the sole trustee of the Trust. Between 2005 and the spring of 2008, relations between the decedent’s wife and brother deteriorated, because of, among other things, Raymoris substantial delays in, or perhaps avoidance of, communicating essential information regarding the financial condition of the Trust, to her.

It was not until January 2008, Myra claims, that Raymon provided her with an accounting of the Trust for 2005. That accounting stated that the Trust had a balance of $2,556,702.09, as of the beginning of that year. Four months later, pressed by Myra to proride further information, Raymon supplied her with an accounting of the Trust’s assets for 2006, but not for 2007. Then, as a ⁶⁸³ result of an additional document provided by Raymon, Myra learned that the Trust’s assets had declined in value from $2,556,702.09 to approximately $1,610,000 as of June 2008, a loss of $946,702.

Suspecting that Raymon was misappropriating Trust funds, Myra filed a petition in the Anne Arundel County circuit court, requesting that the circuit court assume jurisdiction over the Trust; order an accounting of the Trust’s assets; prohibit Raymon “from spending any Trust funds for any purpose” other than to provide a monthly allowance to Myra; require Raymon to show cause why he should not be removed as trustee; and appoint a co-trustee. Several weeks later, Raymon hired Franke to represent him, paying him a $10,000 retainer, and later, as the case progressed, at least $24,437.39 in additional legal fees. Raymon then reimbursed himself, for the fees he had paid Franke, with funds from the Trust. 2 A second amended petition, filed by Myra and Ralph, Jr., requested that the court immediately remove Raymon as trustee and appoint, in his place, Myra’s cousin “or some other suitable individual” as trustee, as well as a demand for damages of $1,500,000 for fraudulent misappropriation and intentional dissipation of Trust funds. Four months later, Myra and Ralph, Jr., filed a motion for a preliminary injunction, requesting that Raymon be enjoined from reimbursing himself with monies from the Trust.

Judge Pamela L. North, who had been specially assigned to the case, removed Raymon as trustee and appointed, in his stead, Myra’s cousin as interim trustee. Trial on the remaining claims, relating to Raymon’s purported misappropriation of Trust assets, was scheduled for February 2, 2010. Two months before that date, Franke sent a ⁶⁸⁴ letter to Raymon, notifying him of Franke’s intent to file a motion to withdraw as his counsel. Almost two weeks after that, Franke filed a motion to withdraw his appearance, hand-delivering a courtesy copy to Judge North.

In that motion, Franke stated that he was owed more than $120,000 in legal fees; that he had, nonetheless, continued representing Raymon “because of the potential prejudice” that might have occurred “with discovery still outstanding and with a hearing set for a Motion for a Preliminary Injunction”; that “since the ruling on thé Preliminary Injunction,” he had “overseen the turnover of trustee responsibilities” to the interim trustee and had “undertaken efforts to settle the matter” to no avail; that he had served Raymon with notice, as required by the Maryland rules; and that trial was scheduled “two months from the notice of intention to withdraw.” There were, he suggested, “other reasons for the withdrawal” and that those reasons had “created a conflict making continued representation problematic.” Raymon opposed the motion, contending that “at this late stage in the matter, having completed discovery and other trial preparation work,” and with trial to begin in five weeks, he “would likely sustain irreparable harm and an unfair trial if Counsel were to withdraw.” Any conflicts between himself and Franke were, he claimed, “financially based.” Although the instant case had been specially assigned to Judge North, Franke’s motion was, for some unknown reason, presented to a different circuit court judge: Judge Paul A. Hackner. After Judge Hackner granted the motion, the Clerk of the Circuit Court sent notice to Raymon, advising him that his “failure to have new counsel enter his appearance” within fifteen days after service of the notice “shall not be grounds for postponing any further proceedings, concerning the case.” But, seven days later, Judge Hackner “withdrew” his order, stating that, because the case had been specially assigned to Judge North, it was she, not he, who should have been given the withdrawal motion to decide. The effect of this ruling was to re-instate Franke’s representation of Raymon, leaving his ⁶⁸⁵ motion to withdraw still pending. Then, Judge North denied the motion, without elaboration.

After noting an appeal from that ruling, Franke filed a motion in the circuit court to stay proceedings pending that appeal. In their response to that motion, Myra and Ralph, Jr., stated that they were “not opposed” to a stay, and Judge North thereafter granted that motion, staying all proceedings in this matter. Discussion I. We begin by addressing an issue of first impression in Maryland, that is, whether we may consider, under the collateral order doctrine, an interlocutory appeal from the denial of an attorney’s motion to withdraw, as counsel, in a civil case. Although the “exercise of appellate jurisdiction in Maryland is normally dependent upon a final judgment rendered by the trial court,” Washington Suburban Sanitary Comm’n v. Bowen, 410 Md. 287, 294 , 978 A.2d 678 (2009), there are “three exceptions” to that rule: “appeals from interlocutory orders specifically allowed by statute; immediate appeals permitted under Maryland Rule 2-602;[ 3 ] and appeals from interlocutory rulings allowed under the common law collateral order doctrine.” Salvagno v. Frew, 388 Md. 605, 615 , 881 A.2d 660 (2005).

Because, as Franke concedes, this appeal is neither allowed by statute nor permitted by Rule 2-602, we look, as he does, to the collateral order doctrine, in determining the appealability of the lower court’s ruling. For an order to fall within that exception: (1) it must conclusively determine the disputed question; (2) it must resolve an important issue; (3) it must be completely separate from the merits of the action; and (4) it must be effectively unreviewable on appeal from a final judgment. Addison v. State, 173 Md.App. 138, 154 , 917 A.2d 1200 (2007). Because there are no Maryland appellate decisions that specifically consider the appealability of a trial court’s order ⁶⁸⁶ denying an attorney’s motion to withdraw in a civil case, we turn, for assistance, to the decisions of those federal and state courts that have.

When we do, we find that nearly all of the courts which have decided this issue, federal and state, have held that orders denying an attorney’s request to withdraw fall within the collateral order doctrine. See, e.g., Brandon v. Blech, 560 F.3d 536, 537 (6th Cir.2009) (concluding that, because an “order compelling an attorney to continue work without compensation” “conclusively” determines the disputed question, “is unrelated to the merits, cannot be rectified after a final judgment, and may impose significant hardship,” it “is just the sort of order the [collateral order] doctrine contemplates”); Rivera-Domenech v. Calvesbert Law Offices PSC, 402 F.3d 246, 249 (1st Cir.2005) (per curiam) (observing that “[a]t the time of the entry of the denial of the motion to withdraw, there was interlocutory jurisdiction to take an appeal to this court”); Fid. Nat’l Title Ins. Co. of New York v. Intercounty Nat’l Title Ins.

Co., 310 F.3d 537 (7th Cir.2002) (holding that an order denying an attorney’s request to withdraw satisfies the collateral order doctrine); Whiting v. Lacara, 187 F.3d 317 (2d Cir.1999) (per curiam) (holding that an order denying an attorney’s request to withdraw satisfies the collateral order doctrine); Galloway v. Clay, 861 A.2d 30 (D.C.2004) (holding that an order denying an attorney’s request to withdraw satisfies the collateral order doctrine); Silva v. Perkins Mach. Co., 622 A.2d 443, 444 (R.I.1993) (per curiam) (holding “that the order denying [attorney’s] motion to withdraw possesses the requisite degree of finality” and that it should be reviewed “immediately to avoid imminent hardship to the attorney”). Two of those cases—Whiting v. Lacara, 187 F.3d 317 , and Fidelity National Title Insurance Company of New York v. Intercounty National Title Insurance Company, 310 F.3d 537—provide a particularly helpful and comprehensive analysis of this issue and therefore merit elaboration. In Whiting v. Lacara, the first of the two cases, a former police officer, Whiting, brought a civil rights action, in federal district court, against his former employer, the Old Brookville Police Depart ⁶⁸⁷ ment, and other local entities and individuals, after his employment with that department was, in his view, wrongfully terminated Id. at 318 .

After retaining, then discharging his first counsel, Whiting’s second counsel withdrew from the case, with Whiting’s consent, after a jury had been selected, and that resulted in the discharge of the jury. Whiting eventually hired Garrett R. Lacara to represent him. Id. at 319 . But, less than two weeks before trial, Lacara filed a motion to withdraw as counsel.

Attached to his motion was an affidavit in which Lacara averred, as grounds for his motion, that Whiting had “failed to follow legal advice,” had not kept adequate contact with his office, had demanded that Lacara re-litigate issues that had already been decided, and had “demanded publicity against legal advice.” Id. In fact, relations between attorney and client had become so strained that, according to Lacara, Whiting had entered his office on one occasion and, without permission, had begun “rifflfing]” through Lacara’s in-box. Id. When asked to leave, Whiting refused until Lacara called “911.” After denying these allegations, Whiting stated that he would agree to an order permitting Lacara to withdraw, provided that all of the fees that he had paid Lacara were refunded.

That was not necessary because the district court denied Lacara’s motion outright. Challenging that ruling, Lacara filed an appeal, as well as a motion requesting an “emergency stay” of the district court’s order. Id. The Second Circuit granted the stay but denied Lacara’s “request for relief on the merits at that time,” whereupon Lacara renewed his motion to withdraw in the district court.

Id. When that court rejected, once more, his request to withdraw, Lacara noted his second appeal. That appeal was then consolidated, for review, with his previous appeal. The Second Circuit found that the order denying “Lacara’s motion to withdraw as counsel satisfie[d] each of the ... requirements” of the collateral order exception, pointing out that it “ ‘conclusively determine^] the disputed question,’ ” ⁶⁸⁸ that is, whether counsel will “ ‘continue his representation,’ ” id. at 320 (quoting Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 375-76 , 101 S.Ct. 669 , 66 L.Ed.2d 571 (1981)); that it presented “an issue completely separate from the merits of the underlying action,” id.; and that, once a final judgment had been entered, the harm to Lacara “w[ould] be complete, and no relief c[ould] be obtained on appeal.” Id.

It hardly needs to be said that the order before us possesses the same features as the order which the Second Circuit found to be an appealable collateral order. We now turn to the second of the two cases: Fidelity National Title Insurance Company of New York v. Intercounty National Title Insurance Company, supra, 310 F.3d 537 . But, before we begin our review of that case, we note that there is one other reason why it is particularly deserving of our attention and that is because of its thoughtful and swift disposal of any inclination to equate an order denying withdrawal to a nonappealable order disqualifying counsel. Fidelity National Title filed suit, in federal district court, alleging that the named corporate and individual defendants had wrongfully diverted $20 million from real estate escrow accounts under their control.

Five of those defendants—three corporations and the two individuals, who controlled those corporate entities—retained the law firm of Myron M. Cherry & Associates, LLC, to represent them. As the case progressed, they repeatedly failed to pay their legal bills, eventually owing the Cherry law firm approximately $470,000 in legal fees and expenses. That led the Cherry law firm to move, on two separate occasions, to -withdraw its representation. But, each time, its motion was denied.

When the last of the two motions was denied, the law firm appealed. Id. at 539 . In considering whether it had jurisdiction over that appeal, the Seventh Circuit acknowledged that the Supreme Court had held that neither an order disqualifying a lawyer, Richardson-Merrell Inc. v. Koller, 472 U.S. 424 , 105 S.Ct. 2757 , 86 ⁶⁸⁹ L.Ed.2d 340 (1985), nor an order declining to do so, Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368 , 101 S.Ct. 669 , 66 L.Ed.2d 571 (1981), was appealable. 3 While conceding a “superficial” similarity between orders denying motions to disqualify and motions to withdraw, it avowed a “vital difference”: “[IJncorrect decisions about disqualification may justify reversal at the end of the case, while an incorrect decision forcing an unpaid lawyer to continue providing services never would supply a reason to reverse the final judgment.” 310 F.3d at 539 . Then, observing that, “[bjecause an order compelling a lawyer to work without prospect of compensation is unrelated to the merits of the dispute, cannot be rectified at the end of the case, and has a potential to cause significant hardship,” the Seventh Circuit, relying upon the Second Circuit’s decision in Whiting, supra, stated that it was joining that circuit in holding that an order denying a motion to withdraw “is immediately appealable as a collateral order.” Id.

Because we find persuasive the reasoning of Whiting and Fidelity—showing that an order denying an attorney’s motion to withdraw satisfies all of the criteria of the collateral order doctrine and therefore should be treated as an appealable collateral order—we hold that Franke’s interlocutory appeal falls within