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Schwartz v. United States

decided: July 26, 1967.


McLaughlin, Hastie and Seitz, Circuit Judges.

Author: Mclaughlin



This appeal is from the allowance by the District Court of appellee's motion to fix counsel fees and costs for his services in successfully prosecuting appellant's claim against the United States under the Tort Claims Act (28 U.S.C.A. § 2671 et seq.) for personal injuries resulting from the negligence of Veterans Administration physicians.

The tort suit was started by appellant in 1957. It came on for trial to the Court on March 2, 1964. The testimony was concluded March 20, 1964. On June 17, 1964 the opinion of trial Judge Freedman, D.C., 230 F. Supp. 536, was filed together with his order finding the defendant negligent, plaintiff free from contributory negligence and assessing the damages for the plaintiff in the sum of $725,000.

Mr. Julien represented the then plaintiff throughout the trial and the enormous preparation thereof. He originally agreed to a ten percent contingency fee. In January 1964, he advised appellant that he was doing far more work than had been contemplated in the original arrangement and suggested that he should receive fifteen percent. Appellant objected to this and the parties agreed to twelve and one-half percent as the contingency fee. Appellant is an attorney whose main participation in the trial was as a witness. His office associate, Mr. Hoffman, a lawyer at that time for about a year who had no trial experience, sat at the counsel table, took notes and otherwise was of assistance. Appellant was extremely pleased at the outstanding result. Even during the present dispute appellant, called as a witness by Mr. Julien, admitted that "The action was tried very well by you."

After judgment was entered on the verdict the Government appealed. A cross appeal was filed on behalf of Mr. Schwartz. The latter was based on the theory that the Government was not entitled to an $80,000 credit for disability payments to plaintiff as a veteran. While the Government was in the course of perfecting its appeal, it started settlement negotiations with Mr. Julien. $325,000 was offered and refused. Hubert Crean, Esq., one of the two Government trial attorneys, testifying in this proceeding as to Mr. Julien's attitude regarding settlement, said "The conversations I recall were at least in the early stages and up until the very last part of the negotiations, you [Julien] were against settlement * * * You said we ought to pay the $725,000." The Government made a final offer of $525,000 which Mr. Schwartz accepted and concerning which Mr. Julien testified Mr. Schwartz commented "This is wonderful. I am delighted."

The next day Mr. Julien, using a Government form, drafted a settlement stipulation which included his 12 1/2% fee. According to Mr. Julien, Mr. Schwartz said to him "Don't put in twelve and a half percent. Put in ten percent. We will take care of that two and a half percent some other way." Mr. Julien refused. He suggested that the trial Court fix the fees. Mr. Julien testified that Mr. Schwartz replied "Unless you leave out the provision with respect to attorneys fees you are off the case. That will complicate things." After that Mr. Julien sent his client and Mr. Hoffman letters "urging each of them to take no action without me." The next day, September 25, 1964, Mr. Schwartz himself signed the settlement stipulation agreeing to the $525,000. There was no provision for the protection of Mr. Julien's fee but the stipulation did cover the Veterans Administration disability payments to Mr. Schwartz. The stipulation outlined the identical settlement which had been obtained for Mr. Schwartz by his attorney, Mr. Julien.

In November 1964 Mr. Julien filed his motion in the District Court to have his fee fixed. The reason the motion was not heard by Judge Freedman was because meanwhile he had been elevated to the Third Circuit Court of Appeals. The motion was transferred to Judge Joseph S. Lord who attended to the preliminary steps. Mr. Schwartz requested that testimony be taken and sometime later through his then attorney asked that Judge Lord disqualify himself. Judge Lord had been United States Attorney for the Eastern District of Pennsylvania during some part of the existence of the negligence action. He had nothing to do with the Schwartz litigation and the Government attorney told the Court that "* * * the Government does not have any interest in this dispute." Nevertheless Judge Lord, in view of the request, did withdraw. The motion was then assigned to Judge Kirkpatrick. The testimony which had been taken before Judge Lord, by stipulation was made part of the record before Judge Kirkpatrick. At the hearing before the latter, Mr. Schwartz did not testify in his own behalf and did not call any witnesses.

The trial Judge found as a fact that the 12 1/2% contingent fee agreement was made between the parties on January 12, 1965. He held that "The agreement was fairly arrived at without fraud, coercion or duress and 12 1/2% was a reasonable figure under the circumstances." He concluded that "Julien properly, completely and skillfully performed his duties on behalf of his client." As to Hoffman, the Court found that there was no agreement by Julien employing him or to share his fees with him. The Court allowed interest to Mr. Julien from September 28, 1964 to July 18, 1966 when this phase of the litigation was concluded in the District Court. Earlier the Court had denied Schwartz and Hoffman motions alleging it had no jurisdiction to pass upon the petition for fees.

Appellant asserts that he has been deprived of his right to a trial by jury of what he calls "a fee dispute with his attorney." He would dispose of 28 U.S.C.A. § 2678 titled "Attorney fees; penalty" as having no application here. He offers nothing of merit in support of that position.

The statute is clear. It explicitly governs the issue in this appeal. Title 28 is concerned with "Judiciary and Judicial Procedure". Part V thereof is captioned "Procedure". Part VI deals with "Particular Proceedings". Chapter 171 thereof is captioned "Tort Claims Procedure". Under it appears the total law governing tort claims against the United States, inter alia the Schwartz claim.

The pertinent section reads:

"§ 2678. Attorney fees; ...

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