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Ronald L. Huber; William J. Airgood; Anthony Defabbo; John Dinio v. Robert G. Taylor


December 5, 2011


The opinion of the court was delivered by: Chief Magistrate Judge Lisa Pupo Lenihan

ECF No. 436



As noted repeatedly in this Court‟s previous Opinions, the claims presently remaining in this 2002 action relate to Defendants‟ representation of the eight (8) above-named Plaintiffs (the "Named Plaintiffs") in consolidated individual personal injury actions for exposure to asbestos, in the State Court of Mississippi (the "Mississippi Asbestos Exposure Consolidated Litigation" or "Mississippi AECL"). More specifically, "Plaintiffs maintain, under the express law of the case as set forth by the Court of Appeals, a claim for breach of fiduciary duty under Texas law, by which they may be entitled, despite having incurred no actual injury, to disgorgement of all or some portion of the attorney fees paid by the Named Plaintiffs . . . . And with evidence sufficient to raise a question of intentional breach of fiduciary duty, Plaintiffs might also be entitled to punitive damages under Texas law." See September 29, 2011 Opinion on Motions for Class Certification and Partial Summary Judgment (denying Plaintiffs‟ Motion for Class Certification and granting Defendant‟s Motion for Partial Summary Judgment) (the "September Opinion").*fn1 Plaintiffs‟ claims turn on allegations that Defendants breached their Texas law fiduciary duty (by failing to adequately disclose material information, including, e.g., co-counsel arrangements and/or settlement information, to Mississippi AECL participants residing in Pennsylvania, Ohio and Indiana (the "Northern Clients"); allocating settlement funds disproportionately owing to conflicting fee incentives; and/or failing a duty of candor/disclosure by imposing excessive charges).

The Court‟s September Opinion explained at length its bases for granting partial summary judgment. See September Opinion; see also Defendants‟ Joint Memorandum of Law in Opposition to Plaintiffs‟ Motion to Amend ("Defendants‟ November Memorandum").

Presently pending is Plaintiffs‟ October, 2011captioned "Motion to Amend the Judgment", which is essentially a Motion for Certification for Interlocutory Appeal of this Court‟s grant of Defendants‟ Motion for Partial Summary Judgment, asserted under 28 U.S.C. ' 1292(b).*fn2

Said Motion will, for reasons set forth below, be denied.


Under 28 U.S.C. ' 1292(b), the Court may certify an Order for interlocutory appeal where it concludes that it Ainvolves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.@ The circumstances must meet each of these three (3) conditions. And the party seeking certification has the burden of establishing that exceptional circumstances warrant departure from the general policy against piecemeal litigation and in favor of postponing appellate review until after the entry of final judgment. See, e.g., Vaughn v. Flowserve Corp., 2006 WL 3231417 (D.N.J. Nov. 8, 2006); see also Harris v. Kellogg, Brown & Root Services, Inc., 2009 WL 1248060 (W.D. Pa. Apr. 30, 2009) ("Certification pursuant to section 1292(b) should be granted "sparingly‟ and only when [all] three conditions are met.").


Plaintiffs seek interlocutory appeal to the Third Circuit under 28 U.S.C. ' 1292(b), on what they characterize as this Court‟s fundamental errors in the following "controlling questions of law": (A) whether the parole evidence rule applies to interpretation of a contract in the context of a breach of fiduciary claim; (B) whether Defendant Pritchard was Plaintiffs‟ attorney; and (C) whether there is sufficient evidence for a reasonable jury to conclude that Defendant Taylor satisfied his fiduciary duties to Plaintiffs in attempting to withdraw from representation." Plaintiffs‟ Motion to Amend the Judgment at 2.*fn3

A. Inapplicability of Parole Evidence Rule

The September Opinion granted partial summary judgment on Plaintiffs‟ claim that Defendants breached a Texas law fiduciary duty because settlement funds were allocated on the basis of conflicting fee incentives that disfavored Northern clients. In doing so, it set forth the factual evidence identified by the parties.*fn4 It then addressed Plaintiffs‟ assertion that under the Agreement on Fees, Taylor‟s 95-97% fee in the Northern clients‟ cases, like his fee in the Southern clients‟ cases, was subject to a 50% fee share to Pritchard and Weathers. After observing that "the question raised by Plaintiffs is whether Defendant counsel allocating settlement funds had an expectation of retaining a greater portion of the underlying fee in Southern cases", the Opinion concluded that "the understanding of the parties to the fee-sharing agreements and the parties' practice pursuant to those agreements is certainly material to determining that expectation" and "a contested interpretation of the language that runs contrary to all evidence of the parties' understandings and course of performance is insufficient to raise a triable issue as to any purported conflicting interest." September Opinion at 19 (emphasis added).

As noted in the September Opinion and canvassed in Defendants‟ Joint Reply Brief in Further Support at 11-13, the cases cited by Plaintiffs in their supportive Memoranda were and remain factually and legally inapposite. Plaintiffs‟ assertion, in their Memorandum of Law in Support of Motion to Amend at 2, that this Court "[held] that the parole evidence rule does not apply when interpreting an unambiguous contract unless the plaintiff asserts a breach of contract claim"*fn5 is, in light of the actual language of the Opinion, simply incorrect. To the contrary, the Court rejected Plaintiffs‟ contention that the parole evidence rule could be invoked (a) by a third party with neither contractual nor beneficiary relationship to the contract to (b) preclude the contracting parties‟ evidence of mutually-agreed intent and course of conduct over several years where (c) that third-party wished the Court to interpret the contract to have had some other meaning and (d) said party had introduced, despite nine (9) years of litigation, not one iota of evidence that the contract had been interpreted or implemented in a manner potentially giving rise to the improper settlement allocations alleged. See September Opinion. As the September Opinion indicates, interpretation of the Fee Agreement is simply not at issue. Rather, the allegation of conflicting incentives raised by Plaintiffs turns on the expectation of receipt of fees -- an issue as to which the Defendants‟ actual conduct is clearly more relevant than a theoretical interpretation of contract language. The Court, accordingly, looked to evidence of the contracting parties‟ intent and practices. *fn6 Compare In re Unisys Corp. Retiree Med. Benfit ERISA Litig., 57 F.3d 1255 (3d Cir. 1995) (interpretation of contract where breach of fiduciary duty claim turned on employer‟s failure to apply terms of ERISA benefit plan).*fn7

B. Absence of Evidence of Discriminatory Settlement Allocations Owing to Conflict of Interest

As reiterated above, the grant of partial summary judgment on Plaintiffs‟ "conflicting fee incentive" theory was premised on Plaintiffs‟ failure to make out evidence of discriminatory settlement allocations owing to/attributable to a conflict of interest. The Court made no holding as to "whether Defendant Pritchard was Plaintiffs‟ attorney" nor was any such holding requisite to the Court‟s Opinion, for reasons self-evident therein. See September Opinion at 17-19 and nn. 22-23. As Defendants observe, Plaintiffs appear to have made this question up out of whole cloth.

The Court further notes that:

(1) On its face, whether or not Pritchard was Plaintiffs‟ attorney is not a question of law. The existence of an attorney-client relationship is at best a mixed question of law and fact, and normally would be predominantly a factual question.

(2) Plaintiffs‟ status as clients of Pritchard would not be controlling, as grant of summary judgment on their claim for disgorgement for breach of fiduciary duty arising from disproportionate settlement allocations attributable to conflicting fee incentives, as against Pritchard, would remain appropriate in view of Pritchard‟s non-determination of settlement allocations and non-receipt of fees, rendering any disgorgement claim nugatory.

(3) Rather than pointing to any evidence suggesting that Plaintiffs were Pritchard‟s clients, Plaintiffs‟ attempt to make much of the Third Circuit‟s general observations, in Huber I that there was "no question that defendant attorneys owed Plaintiffs fiduciary duty" as "all attorneys in a co-counsel relationship individually owe each . . . client the duty of loyalty". See Plaintiffs‟ Memorandum of Law in Support at 2 (quoting Huber v. Taylor, 469 F.3d 67, 82 (3d Cir. 2006). But that statement, properly considered in context, clearly does not address the factual issues regarding Pritchard in particular, and the Circuit did not have before it, e.g., the undisputed testimony that Pritchard never expected nor received any funds from Plaintiffs‟ cases. The Circuit‟s generic statement cannot, therefore, be transmuted into a declaration of a rule of law.

In that the September Opinion premised its conclusions on the factual evidence before it, and on relevant precedent and holdings, Plaintiffs‟ mischaracterizations and/or misunderstandings of those facts and that case law do not alter this Court=s analysis. There remains, therefore, only Plaintiffs‟ third asserted error of law:

C. Adequacy of Notice of Withdrawal by Local and Affiliated Counsel Following Suit by Plaintiffs

Finally, as to this issue, the September Opinion concluded that Local Counsels‟ correspondence adequately and appropriately provided notice to their Plaintiff clients of their withdrawal, and that of affiliated counsel, from representation in the asbestos litigation. As the Opinion observes, Plaintiffs had elected, through other counsel, to initiate litigation against Defendants alleging various misconduct (including professional malpractice, breach of fiduciary duty, fraud, and conversion) in such representation. As Plaintiffs, and not Defendants, initiated termination of any attorney-client relationship, the cases cited in Plaintiffs‟ supporting memoranda are again largely inapposite. *fn8 In addition, the existence of a triable question as to whether Taylor satisfied his notification duties clearly turns on an evidentiary analysis -- indeed, Plaintiffs phrase it as such -- and is, therefore, quintessentially not a question of law potentially appropriate for interlocutory appeal.

The Court reiterates that Plaintiffs must have been well aware that their decision to bring suit against Taylor made his continued representation of them untenable. They were then given express, unambiguous, facially-intelligible notice of withdrawal by their local counsel - i.e., by their principal contact counsel and direct-relationship counsel - on behalf of all co-counsel.*fn9

Plaintiffs‟ present protestation that they did not understand this communication (curiously couched as an "admission") is belied by the fact that they were represented by counsel who were intimately involved in questions concerning Plaintiffs‟ attorney-client relationship with Defendants.*fn10 In any event, there is no authority suggesting that Taylor had an obligation to convey any particular subjective understanding on the part of Plaintiffs. The Court found that reasonable minds could not differ as to the legal sufficiency of Taylor‟s notice, and Plaintiffs‟ avowed failure to understand what was plainly conveyed does not alter that determination.

D. Improbability of Material Advancement of Ultimate Resolution

As Plaintiffs have not met the first two prongs of the three conditions precedent to cert9ifying an order for interlocutory appear, it will not go into depth on the third condition. The Court does observe, however, that Plaintiffs‟ contention that resolution of any of the above asserted issues would materially advance the ultimate resolution of their action is speculative at best. The questions to be tried in the remaining claims differ from those dismissed. And in view of the contentious history of this litigation, it is reasonably likely that -- absent newly "serious" consideration of their positions*fn11 and a change in conduct -- the disappointed party will seek appeal after trial even if these issues were reviewed. Accordingly, Plaintiffs‟ request would give rise to precisely the sort of piecemeal appeal that the final judgment rule is designed to guard against.*fn12


As Plaintiffs present no "controlling question of law" as to which there is "substantial ground for difference of opinion", it will be ordered that Plaintiffs‟ Motion to Amend the Judgment be denied.

Lisa Pupo Lenihan United States Chief Magistrate Judge

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