Post v. Bregman

DAVIS, Judge. Alan F. Post, Chartered, appeals from a grant of summary judgment by the Circuit Court for Montgomery County (Do ⁷⁴³ nohue, J.) in favor of Douglas M. Bregman, and Bregman, Berberí & Schwartz (appellees). The circuit court granted summary judgment on the grounds that appellant had breached a contract for the division of fees stemming from litigation in which both had participated. Appellant presents two questions for our review, which we restate as follows: I. Could a trial court reasonably find the terms of the fee-sharing contract ambiguous?

II

Do the Maryland Rules of Professional Conduct control the interpretation of fee-sharing contracts between attorneys? We answer both questions in the negative and affirm the circuit court. 1 FACTS In 1988, Stanley W. Taylor was diagnosed with chronic myelogenous leukemia. Upon learning that his condition may have been related to exposure to certain substances while a heavy equipment mechanic with the District of Columbia, he filed a claim for worker’s compensation benefits. His first counsel in the benefit litigation withdrew in 1989; in due course, Taylor contacted Bregman.

Bregman invited Post to meet with him and Taylor to discuss representation, although his motivation for doing so is disputed. 2 After this meeting, ⁷⁴⁴ appellant alone represented Taylor in his worker’s compensation claim, to a favorable result. The retainer agreement between appellant and Taylor, signed by Taylor on August 30, 1987, specifies that “Associate counsel may be employed at the discretion of and expense of Alan F. Post, Chartered without any increase in the attorneys’ fees to be paid by the client.” 3 At the same time, Taylor pursued a separate, third-party action against the manufacturers and suppliers of the products that allegedly caused his injury. Both appellant and appellees were listed as counsel of record during this litigation. This third-party action spawned the fee-sharing agreement between appellant and appellees that is the subject of this appeal.

Alan Post asserted, in an affidavit submitted to the circuit court, that Bregman expressed a “strong interest” in participating actively in the third-party litigation. According to Post, he advised Bregman that he lacked the resources to pursue properly Taylor’s claim. Appellees agreed to provide support and assistance, and advanced appellant $2,000 in February 1990. According to Post’s affidavit, appellees’ failure to provide any further financial support compelled appellant to hire other counsel, namely, Ronald Simon of Conner-ton, Ray & Simon.

From then until its later withdrawal, the Simon firm was lead counsel in the Taylor litigation. Appellant maintains that Simon, appellant, and Taylor “continued to develop” Taylor’s claim, while keeping appellees informed of developments. Appellees, appellant, and Conner-ton, Ray & Simon agreed to a fee-sharing arrangement, as evidenced by letters sent by appellant to both Bregman and Connerton, Ray & Simon. The letter to Bregman, sent on June 14,1990, included the following: You and I have discussed the active participation of Bregman, Berberí & Schwartz in this case.

I have discussed this with Ron Simon and we do feel that there will ⁷⁴⁵ certainly be opportunities for the use of manpower from your office to handle various pleadings, depositions, etc. Therefore, we have agreed that the firm of Bregman, Berbert & Schwartz will share in the recoveries to the extent of 25% of all fees recovered from the third party litigation. You will be called upon to contribute 25% of all out-of-pocket expenses and an appropriate allocation of the labors of litigation. Appellant also drafted a letter to Simon which read, in pertinent part: ... We have agreed that in the case of Stanley Taylor, the referring law firm of Bregman, Berbert & Schwartz will be entitled to 25% of the net fee recovery, provided that they meet their commitment of contributing 25% of costs as well as such litigation related tasks as shall be assigned to them.

The law firm of Post and Slattery and Connerton, Ray & Simon will share equally in the net remainder of the fees. Appellant asserts that the above letters show that the division of fees was premised upon appellees providing proportionate services. Appellees, however, claim that they sent a reply letter on June 21, 1990, which reads, again in pertinent part: Thank you for your letter dated June 14, 1990, in connection with the [Taylor case]. Your letter correctly states our understanding, subject to some clarification.

First, by way of clarification, our firm’s involvement in the third party actions is dependent upon direction from you or Ron Simon. We are excited about working the case with you, but we cannot do work until you delegate. If you do not ask us to do 25% of the work, nevertheless, our fee will still be 25%. Appellant denies receipt of this letter.

In September 1990, appellant filed three actions in the Superior Court of the District of Columbia, one of which was Taylor’s. The three actions were consolidated. Appellant ⁷⁴⁶ claims that during the period between December 1990 and April 1991, appellees provided the use of an associate’s time to assist appellant in the drafting “of some early discovery” and in obtaining the service addresses of additional defendants named in the amended complaint that appellant had filed. In April 1991, appellant alleges, appellees transferred the associate to other projects.

From that point on, continues appellant, appellees performed no further services in the Taylor litigation, and in fact advised appellant that it would not assume any further financial risk in the matter. In October 1991, Simon requested permission to withdraw; at that time, appellant explains, appellees renewed their offer of assistance and volunteered to provide replacement co-counsel. Appellant alleges that appellees never provided the name of any counsel, however, and in fact provided no assistance. Appellees agree that before Simon’s withdrawal, they had advanced $2,000 to appellant, in addition to miscellaneous out-of-pocket expenses, because appellant did not have the resources to cover the costs of litigation.

Appellees also direct us to the stipulation by the parties that appellees fully satisfied every request for services made of them, including, inter alia, interviewing clients, investigating, drafting discovery, attending a deposition, appearing in court, conducting legal research, and staying up to date on the case. Appellees argue that they had no duty under the contract to perform services or contribute funds until requested to do so. In fact, many of the services they performed, appellees assert, were done without being requested, and so were above and beyond what the fee-sharing agreement required of them. On several occasions, appellees argue, they called appellant specifically to inquire what else they could do, and were often told that nothing was required.

Furthermore, appellees argue, they continued in their role as counsél of record throughout the entire case, receiving pleadings and staying up to date. Appellees conclude by asserting that Taylor was aware both that appellees were co-counsel of record and that they would provide services on Taylor’s behalf, by virtue of appellees’ ⁷⁴⁷ listing as co-counsel on pleadings and court filings provided to Taylor during the litigation. Appellant does not dispute that appellees received all pleadings and filed documents; rather, appellant maintains that it was responsible for placing appellees on the service list, and that it did so merely as a professional courtesy. Appellant also argues that Taylor was unaware of appellees’ involvement in his case until December 1994, when appellant advised him of appellees’ claim for forty percent of the fees.

Appellant supplemented this claim with an affidavit sworn to this effect by Taylor. Simon’s withdrawal generated a cash flow problem for appellant, and by letter sent December 20, 1991, appellant notified appellees that the firm of Paulson; Nace, Norwind & Sellinger had agreed to become lead counsel for the Taylor litigation, and would fund all of the expenses and perform much of the labor. Consequently, Paulson, Nace insisted on two-thirds of the fees generated by the case, leaving one-third to be divided between the remaining firms. In the December 1991 letter, appellant suggested that it and appellees divide the one-third share between themselves on a 60/40 basis, favoring appellant.

Appellees agreed to this modification of the contract. A handwritten notation was also added to the letter, reading “Plus costs, Plus unpaid expenses,” which Alan Post and Douglas Bregman initialed. At the conclusion of litigation, appellees presented a demand for payment under the contract. Appellant filed the declaratory action in the circuit court and appellees counterclaimed for breach of contract damages.

The circuit court based its grant of summary judgment on five conclusions. First, it found that it had jurisdiction to rule on the counterclaim, a decision not challenged on appeal. Next, it decided that the pleading was unambiguous in setting forth, “without any ambiguity, what the contract is, how it was breached, and its claim for, in this case, liquidated damages.” The court decided that the December 20, 1991 letter comprised the contract, and then concluded that appellant breach ⁷⁴⁸ ed the contract, saying “there is no question of its existence, of who wrote it, of the fact that it was agreed to, and there is, of course, no question of the fact that the money has not been paid.” Finally, the court decided that the proper analytical posture to take in its approach to the case was to treat appellant’s claim for declaratory relief as a defense to the enforcement of the contract, and decided as a matter of law that a breach of an ethical rule is not a defense to a claim for breach of contract. Thus, reasoned the circuit court, appellant’s complaint for declaratory judgment was moot for lack of a controversy.

Appellant filed a timely appeal from the court’s judgment. STANDARD OF REVIEW Summary judgment is appropriate when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Md.Rule 2-501(e) (1996). The non-moving party gets the benefit of all favorable inferences that may reasonably be drawn from the facts.

King v. Bankerd, 303 Md. 98, 111 , 492 A.2d 608 (1985). If any fact, or any inference of fact, is in dispute, and that dispute would affect the outcome of the controversy, then summary judgment is inappropriate. Id. This standard is akin to a directed verdict; i.e., whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented.

Seaboard Surety Co. v. Richard F. Kline, Inc., 91 Md.App. 236, 244 , 603 A.2d 1357 (1992). Therefore, the mere existence of a scintilla of evidence in support of the plaintiffs claim is insufficient to avoid a grant of summary judgment. Id. at 244-45 , 603 A.2d 1357 . Moreover, summary judgment is proper even when facts are disputed, if their resolution is not material to the controversy.

Lynx, Inc. v. Ordnance Prods., Inc., 273 Md. 1, 8 , 327 A.2d 502 (1974). Because the circuit court decides issues of law, not fact, when granting summary judgment, the grant itself is a matter of law, to which an appellate court owes no deference. Our task, rather, is to examine whether ⁷⁴⁹ the court was legally correct. Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591 , 578 A.2d 1202 (1990).

LEGAL ANALYSIS I The circuit court flatly decided that the contract consisted only of the December 20, 1991 letter, which specified that the parties split 60/40 one-third of the recovery and give two-thirds to Paulson, Nace. In doing so, the court ascribed no importance to the June 1990 letter, which, appellant asserts, was also part of the contract. The December 1991 letter, says appellant, modified the June 1990 letter; it did not replace it. Together, appellant maintains, the two letters comprise the contract.

Appellees, for their part, assert no position regarding which of the letters comprise the contract. The circuit court erred in assuming no dispute as to which documents comprised the contract between appellant and appellees. Appellant had argued that the June 14, 1990 letter was the original agreement, which the December 20, 1991 letter modified. In an affidavit submitted to the court, Post stated: 7.

In June, 1990, after obtaining a promise from the Bregman firm that they would provide financial and professional support to my firm in proportion to a division of fees which would give them Twenty-five percent (25%) of the fees received, they were included in a fee agreement with my firm and Connerton, Ray & Simon. Appellees do not deny that the June 14, 1990 letter comprised part of the contract, but instead argue that the subsequent letter, sent a week later, modified an agreement which already existed. In his affidavit in support of summary judgment, Douglas Bregman stated, “Through written correspondence between Alan Post and myself, it was understood that Mr. Post was to delegate whatever work he desired my firm to do.” Furthermore, in their brief, appellees admit that the June 14, 1990 letter formed part of the contract. In our view, ⁷⁵⁰ this satisfies the rule that a party must allege evidentiary facts, rather than mere conclusions, in order to show a genuine dispute of fact.

Hill v. Lewis, 21 Md.App. 121, 131 , 318 A.2d 850 , cert. denied, 272 Md. 742 (1974). Our examination of the court’s analysis does not end there, however. Although appellant successfully alleged a disputed issue of fact in the court below, the dispute may not be material, and thus cause for reversing the circuit court. Because we review the motion for summary judgment for legal correctness after viewing all factual disputes in the light most favorable to the non-moving party, see Berkey v. Delia, 287 Md. 302, 326-27 , 413 A.2d 170 (1980), we will assume for the purposes of appeal that the parties intended the June 14, 1990 letter to remain part of the contract, as well as the December 20, 1991 letter.

We will further assume that, as it asserts, appellant never received the June 21, 1990 letter from appellees, which appellees claim they sent in order to clarify that they could contribute nothing until called upon to do so. With the foregoing assumptions in mind, we turn to an analysis of the meaning of the contract. Our paramount consideration is to divine the intent of the parties. See Heyda v. Heyda, 94 Md.App. 91, 98 , 615 A.2d 1218 (1992).

Construction of a contract is, in the first instance, a question of law for the court to resolve. Suburban Hospital v. Dwiggins, 324 Md. 294, 306 , 596 A.2d 1069 (1991). Interpreting contractual language is a two-step process. Admiral Builders Sav. & Loan Ass’n v. South River Landing, Inc., 66 Md.App. 124, 131 , 502 A.2d 1096 (1986).

The court must initially determine whether the contract is ambiguous. Id. In doing so, the court must analyze the language of the contract based on the plain meaning of the words used. Id. at 128 , 502 A.2d 1096 ; Pacific Indemnity Co. v. Interstate Fire & Casualty Co., 302 Md. 383, 389 , 488 A.2d 486 (1985); Shapiro v. Massengill, 105 Md.App. 743, 755 , 661 A.2d 202 , cert. denied, 341 Md. 28 , 668 A.2d 36 (1995). ‘Where the language of a contract is clear and unambiguous, there is no room for construction and [the court] ‘must presume that the parties meant what they expressed.’” Id. at 754 , 661 A.2d 202 (quoting Gen’l Motors ⁷⁵¹ Acceptance Corp. v. Daniels, 303 Md. 254, 261 , 492 A.2d 1306 (1985)).

In such cases, a court may not consider extrinsic evidence of the parties’ intent, but must confine its review to the language itself and consider what a reasonable person in the position of the parties would have thought it to mean. McIntyre v. Guild, 105 Md.App. 332, 355 , 659 A.2d 398 (1995). We review a court’s determination of ambiguity in a contract for clear error. Shapiro, 105 Md.App. at 755 , 661 A.2d 202 ; Admiral Builders, 66 Md.App. at 128-29 , 502 A.2d 1096 .

The circuit court, in the case sub judice, made no specific finding of ambiguity or of clarity with regard to what we assume on review to be the contract. Considering the meaning only of the December 20, 1991 letter, the court concluded that no material dispute of fact existed — that there was “no question of its existence, of who wrote it, of the fact that it was agreed to, and there is, of course, no question of the fact that the money has not been paid.” 4 Because the court was only concerned with the December 20, 1991 letter, we do not consider the court’s comments to address the actual contract, for purposes of our review. In fact, for purposes of our analysis, the court’s comments concerning the December 20, 1991 letter are largely irrelevant, because we assume for the purposes of our review that the contract consisted of both letters. As a general rule, an appellate court may not sustain a grant of summary judgment on a ground not ruled upon by the trial court, “if the alternative ground is one as to which the trial court had a discretion to deny summary judgment. ” Geisz v. Greater Baltimore Medical Center, 313 Md. 301 , 314 n. 5, 545 A.2d 658 (1988) (emphasis added).

This principle rests upon the rationale that to rule upon an issue not considered by the trial judge would “deprive the judge of discretion to deny or to defer until trial on the merits the ⁷⁵² entry of judgment on such issues,” id. (quoting Henley v. Prince George’s County, 305 Md. 320, 333 , 503 A.2d 1333 (1986)), and “is consonant with the rule that a trial judge has discretion to deny a motion for summary judgment so that a more complete factual record can be developed.” Maryland Casualty Co. v. Lorkovic, 100 Md.App. 333, 357 , 641 A.2d 924 (1994). Nevertheless, as the Court of Appeals in Geisz indicated, the principle rests equally upon the precondition that the trial court have discretion to deny summary judgment. Geisz, 313 Md. at 314, n. 5 , 545 A.2d 658 ; Maryland Casualty Co., 100 Md.App. at 357 , 641 A.2d 924 .

See also Md.Rule 2-501(e) (“The court shall enter judgment in favor or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law.”) (emphasis added). In Maryland Casualty Co., we affirmed the grant of summary judgment based upon a legal theory not relied upon by the trial court. In doing so, we noted that the portion of the record relevant to the alternate ground had been fully developed in the circuit court, and the trial memoranda for both sides presented detailed analyses of the relevant legal issue. Maryland Casualty Co., 100 Md.App. at 358 , 641 A.2d 924 .

Thus, we concluded, “the trial court had no ‘discretion to deny summary judgment’ on this ‘alternative ground,’ ” and we affirmed. Id. (quoting Three Garden Village Ltd. Partnership v. United States Fidelity & Guaranty Co., 318 Md. 98, 107-08 , 567 A.2d 85 (1989)). In the case sub judice, we are not faced with an “alternative ground,” at least in the sense of an alternative legal theory.

See Maryland Casualty Co., 100 Md.App. at 358 , 641 A.2d 924 (affirming grant of summary judgment on different legal theory altogether). We apply the same legal theory — contract ambiguity — while expanding our consideration of the underlying factual basis for affirmance to include facts advantageous to appellant, which were not considered by the circuit court. In other words, we adopt appellant’s argument as to what documents comprised the contract, an argument fully devel ⁷⁵³ oped in its Opposition to the Motion for Summary Judgment, in its brief to this Court, and in oral argument before this Court. See id.

(“... appellants’ trial memorandum and joint appellate brief present a detailed analysis of [the legal issue].”). 5 Adopting the composition of the contract asserted by appellant, however, we find no ambiguity; in fact, we would be constrained to hold any threshold determination of ambiguity in the contract (as asserted by appellant) to be clearly erroneous, based on the evidence produced in the circuit court. See Shapiro, 105 Md.App. at 755 , 661 A.2d 202 (appellate courts review a trial court’s threshold decision of ambiguity under the “clearly erroneous” standard of Md.Rule 8 — 131(c)). Furthermore, as appellant has made perfectly clear its argument as to the composition of the contract, and as further discovery would shed no light on what we perceive to be the unambiguous meaning of the plain language within, we see no merit in remanding on that basis. Simply put, the circuit court had no “discretion to deny summary judgment” even if it had adopted appellant’s composition of the contract.

Maryland Casualty Co., 100 Md.App. at 358 , 641 A.2d 924 . As we said in Donovan when faced with a similar situation: Moreover, based upon the unrefuted facts established by [appellee], the interlineation of Mrs. Donovan’s name was of no effect as a matter of law. Consequently, the trial court was without discretion to deny [summary judgment]. Donovan, 100 Md.App. at 418 n. 2, 641 A.2d 961 .

Here, as in Donovan, the change in the underlying factual situation, which we make for the purposes of our review, is of no effect as a matter of law, as we discuss infra. Therefore, we must affirm. ⁷⁵⁴ The relevant language in the June 14, 1990 letter affirms an agreement that appellees would receive twenty-five