Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Paddick v. Butt

United States District Court, E.D. Pennsylvania

May 24, 2018

RYAN M. PADDICK Movant
v.
SHENECQUA BUTT; THERESA HOWARD; and. ELLEN BRONSON, a/k/a ELLEN BROWN Respondents RYAN M. PADDICK Movant
v.
THERESA HOWARD Respondent

          MEMORANDUM AND OPINION

          DAVID R. STRAWBRIDGE UNITED STATES MAGISTRATE JUDGE.

         Before the Court is the issue of whether a fee award in quantum meruit to a terminated attorney should be taken from the fee of the successor attorney, or whether the clients should be made to pay successor attorney's full fee in addition to the fees of the terminated attorney. This issue arose after we awarded terminated attorney Ryan Paddick, Esq.'s (“Paddick”) $54, 562.73 when we received telephone calls from two of the three plaintiffs (respondents in the lien action) asking where the money to pay the award was to come from-their portion of the settlement proceeds or from the portion paid to current attorney Sandra Thompson, Esq.'s (“Thompson”). We had not addressed this issue in our original Memorandum Opinion resolving the lien issue.[1](Doc. 356.)[2]

         On May 3, 2018, following receipt of these calls, we issued an Order to Show Cause that Thompson tell us “why her clients should not be entitled to less than 65% of the settlement fund (less costs), and why the $54, 562.73 award granted to Mr. Paddick, who we determined substantially contributed to the creation of the settlement fund, should not be deducted from her portion of her contingency fee.” (Doc. 358.) She responded (Doc. 362) and we held a hearing on May 16, 2018.

         We have considered the lengthy history of this dispute, the obligations of the successor attorney, Thompson, as well as equitable considerations. As our analysis centers upon the actions (and inactions) of Thompson as Plaintiff's counsel, we set out the legal standards governed by the Pennsylvania Rules of Professional Conduct and relevant case law. We then analyze Thompson's actions as they relate to this question as the case progressed. We ultimately determine that Paddick's award must come from Thompson's fee.

         I. Legal responsibilities of counsel

         The Pennsylvania Rules of Professional Conduct require an attorney to “provide. . . a client with an informed understanding of the client's legal rights and obligations and explain… their practical implications” and to “act with commitment and dedication to the interests of the client and with zeal in advocacy upon the client's behalf.” (Pa. Prof. Conduct Rule 1.3 cmt, Preamble.)

         In so doing, counsel must be mindful of potential conflicts of interest. As to the lawyer-client relationship, a conflict of interest will exist if there is a “significant risk” that representation of a client would be “materially limited” by “a personal interest of the lawyer.” (Id. at Rule 1.7.) Under Rule 1.7(a) provides that “a conflict of interest exists if there is a significant risk that the lawyer's representation will be materially limited by the lawyer's own interest in the fee agreement. . . . [T]he lawyer may accept or continue the representation with the informed consent of each affected client.” (Id. at Rule 1.8 cmt.)

         The lawyer may continue to represent a client in spite of a conflict if the lawyer “reasonably believes that the lawyer will be able to provide competent and diligent representation to each affect client” and “each affected client gives informed consent.” (Id. at Rule 1.7(b).) Informed consent occurs when “consent by a [client] to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.” (Id. at Rule 1.0(e).)

         The common law also imposes fiduciary duties on attorneys in their dealings with their clients. See Maritrans GP Inc. v. Pepper, Hamilton & Scheetz, 602 A.2d 1277, 1283 (Pa. 1992) (“Our common law imposes on attorneys the status of fiduciaries vis a vis their clients; that is, attorneys are bound, at law, to perform their fiduciary duties properly. Failure to so perform gives rise to a cause of action. It is ‘actionable.'”) Attorneys who violate their duties to their clients may be ordered to forfeit or disgorge their fees. Id. at 1285-86 (“A fiduciary ... may not perfect his claim to compensation by insisting that although he had conflicting interests, he served his several masters equally well or that his primary loyalty was not weakened by the pull of his secondary one. Only strict adherence to these equitable principles can keep the standard of conduct for fiduciaries ‘at a level higher than that trodden by the crowd.'”) (citing Woods v. City Nat'l. Bank & Trust Co., 312 U.S. 262, 269 (1941) (quoting Justice Cardozo)).

         II. Analysis

         As the docket reflects, I have been involved in these matters since September 2013 when I presided over a settlement conference upon an order of reference from Judge Baylson. That conference did not result in a settlement, but I remained involved and upon a further order of reference, prepared a comprehensive Report and Recommendation on both Defendants' Motions for Summary Judgment. (Doc. 205.) On May 19, 2017, the parties consented to magistrate judge jurisdiction. (Doc. 232.) I set the cases for trial to commence on October 4, 2017. Prior to trial, I ruled on various pre-trial motions. (Docs. 302 & 303.)

         At the beginning of my involvement, all plaintiffs in the cases were represented by Paddick. In May 2015, however, Paddick was terminated by three of the plaintiffs Shenecqua Butt, Ellen Brown (previously Bronson), and Theresa Howard. They then hired Thompson as successor counsel. We will discuss what we see as the various instances which we believe should have given rise to the issue of a conflict of interest on Thompson's part.

         A. When signing of the contingency fee agreement in 2015

         Thompson entered into a contingency fee agreement (“CFA”) with her new clients that provided for a 35% contingency fee and limited representation “up to including Eastern District of Pennsylvania, does not include appeals to higher courts.” (Ex. R-13.)[3] She was aware of Paddick's involvement in the case when entering this agreement. The CFA stated in part that she “is substituting as counsel for Ryan Paddick, Esq., but she is not liable for anything Atty Paddick has done or has failed to do.” (Id.) On May 1, 2015, less than a week after she and her new clients signed the CFA, Thompson emailed Paddick noting that she “saw an email stating that you wanted to preserve the time you had invested in this case. I assume if Tanya Mitchell stays with you, then you can reap benefit from whatever time you ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.