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Paddick v. Butt

United States District Court, E.D. Pennsylvania

June 18, 2018




         Before the Court is Sandra Thompson Esq.'s ("Thompson") Motion to Stay execution of our order of May 24, 2018 pending appeal and Motion to approve a supersedeas bond of $116, 000. (Doc. 370.)[1] Ryan Paddick, Esq. ("Paddick"), movant and former counsel, Shenecqua Butt ("Butt), and Ellen Brown ("Brown") (formerly Bronson) have responded to this motion, but Theresa Howard ("Howard") has not. (Docs. 371, 374 & 378.) Thompson has filed a reply. (Doc, 375.)

         Thompson's appeal deals with two of our orders, each of which were accompanied by a memorandum opinion. She first appeals our April 27, 2018 order regarding Paddick's charging lien, where we determined that he had established an entitlement to a fee in the amount of $54, 562.73. (Docs. 357.) She also appeals our May 24, 2018 order where we directed that Paddick's award be paid from Thompson's fee, rather than from Butt, Howard, and Brown (collectively "the clients"). (Docs. 369.) She now asks the Court to impose a stay of this order. Should we grant the stay, she asks that we approve a supersedeas bond of $116, 000, which would be sufficient to cover Paddick's award with interest whether taken from her fee or from her client's share of the settlement fund.

         In resolving this question, we turn to Judge Ambro's opinion in In re Revel AC, Inc., where he sets out the Supreme Court's four factor test which instructs that we must consider:

(1) whether the appellant has made a strong showing of the likelihood of success on the merits;

(2) will the appellant suffer irreparable injury absent a stay;

(3) would a stay substantially harm other parties with an interest in the litigation; and

(4) whether a stay is in the public interest.

In re Revel AC, Inc., 802 F.3d 558, 565 (3d Cir. 2015) (citing Republic of Phil. v. Westinghouse Electric Corp., 949 F.2d 653, 658 (3d. Cir. 1991); see also Hilton v. Braunskill, 481 U.S. 770, 776 (1987).

         In Revel, the Court stated that "the first two factors are the most critical, [and that] if 'the chance of success on the merits [is only] better than negligible' and the 'possibility of irreparable injury' is low, a stay movant's request fails." 802 F.3d at 570 (citing Nken v. Holder, 556 U.S. 418, 434 (2009)). As we strongly believe that Thompson cannot make out more than a "significantly better than negligible" likelihood of success on the merits, we are bound by this case law to deny her stay.

         I. Likelihood of success on the merits

         Thompson has failed to convince us that she has made a strong showing of a likelihood of success on the merits. To satisfy the first factor, she must show that that her chance of winning on the merits is "significantly better than uegligible but not greater than 50%." Revel, 802 F.3d at 568, 571. Judge Ambro explained that this standard is met "if there is a reasonable chance, or probability of winning" and states that "while it is not enough that the chance of success on the merits be better than negligible, the likelihood of winning on appeal need not be more likely than not." Id. at 568-69 (internal citations omitted.) Thompson contends that she has a strong likelihood of success on appeal for several reasons. We do not agree.

         Thompson first argues that our "finding that only the subsequent counsel is liable to any former counsel's charging lien is contrary to established Pennsylvania law." (Doc. 375 at 4.) We never said any such thing. Rather, as set out in our April 27, 2018 opinion, we noted that Paddick's claim was articulated as one "on the settlement proceeds obtained by respondents." (Doc. 306.) We were guided by the seminal case of Recht v. Urban Redevelopment Auth, which established the right of an attorney to assert a charging lien on the fund created as a result of a judgment, or here, a settlement. 168 A.2d 134 (Pa. 1961).

         Thompson also contends that the recent Pennsylvania Supreme Court case Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C., 179 A.3d 1093 (Pa. 2018) created a new rule in March 6, 2018 (after Paddick's lien was filed) that a former attorney may pursue a lien directly against a subsequent attorney. This is not how we construe Paddick's claim, but even if it is so construed, we supported our determination with factual findings that the work done by Paddick clearly brought benefit to Thompson. As Meyer, Darragh teaches, "where the facts demonstrated unjust enrichment" as here, "predecessor counsel may recover damages in quantum meruit against successor counsel in a contingency fee dispute." 179 A.3d at 1104-05. Thompson's argument is not in fact supported by Meyer, Darragh.

         Following the assertion of Paddick's "Motion for Recognition and Enforcement of the Lien" in November 2017 (Doc. 306), Thompson and her clients entered into an agreement that they would not contest her taking the full 35% of her contingency fee agreement and in exchange she would continue to represent them in opposing Paddick's claim without further charge. She asserted that she did not have a continuing responsibility to represent her clients as they defended the fund against Paddick's lien and that she could have withdrawn from the case leaving them without counsel. (Doc. 375 at 4-5.)

         As we articulated in our May 24, 2018 opinion, Thompson would have had to request our permission to withdraw her representation pursuant to Local R. Civ. P. 5.1, which provides that "[a]n attorney's appearance may not be withdrawn except by leave of court, unless another attorney of this court shall at the same time enter an appearance for the same party." We would likely not have permitted her to withdraw. (Doc. 368 at 6.) While this specific issue was not squarely before us, we found that Thompson was on notice of Paddick's asserted lien at the time she entered her appearance in May 2015, and that she did or should have appreciated that Paddick would assert that he "wanted to preserve the time [he] had invested in the case, " which he did within her first week on the case. (Doc. 368 at 4-5; Doc. 339 at 10.) As such, we conclude that she took the risk of Paddick successfully asserting the lien when she accepted the representation. We also note that the contingency fee agreement she entered referred to her representation "up to and including Eastern District of Pennsylvania, " which would encompass the lien dispute. (Lien hearing Ex. R-13.) We are unwilling to accept Thompson's proposition that she should have been able to collect her full fee and withdraw when liens are asserted, leaving her clients unrepresented.[2]

         Thompson also makes a number of vague assertions regarding our factual findings and discussion of equitable considerations, even stating that the appellate court is "likely to weigh the evidence differently." (Doc. 375 at 5.) She gives no specific references to the particular factual findings or conclusions she contests. We conducted four days of hearings, three on the lien dispute and one on the issue of where Paddick's award would come from. We obtained testimony from all interested parties, and wrote two lengthy memorandum opinions addressing the issues raised in those proceedings. Of note, we found that Thompson did not properly consider the issue of whether her interests conflicted with the interests of her clients. As the case was decided on equitable principles, we are given "considerable discretion, " and understanding that our factual findings will be reviewed for clear error. Fed. R. C. P. 52(a)(6); Devon IT, Inc. v. IBM Corp., No. CIV .A. 10-2899, 2013 ...

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