United States District Court, E.D. Louisiana
REPORT AND RECOMMENDATION
DANIEL E. KNOWLES, III, Magistrate Judge.
On October 16, 2014, the Court held an evidentiary hearing on the claim-in-intervention of intervenors Salvador Brocato, III and Lionel H. Sutton, III ("intervenors"). After the evidentiary hearing, the Court took the matter under advisement and ordered the parties to file post-hearing memoranda no later than November 14, 2014. The parties have done so.
Also before the Court is a Transcript Redaction Request [Doc. #442] filed by plaintiff, for which the Court ordered supplemental briefing on the issue of the attorney-client privilege. The parties have now filed those briefs. Having reviewed the claim, the memoranda, the evidence presented at the hearing, and the case law, the Court rules as follows.
The facts of the underlying lawsuit are of no moment to this dispute. Relevant here is that intervenors, Brocato and Sutton, former counsel of plaintiff David Corey, seek their share of the attorneys' fees realized after plaintiff's settlement with the underlying defendants. There is no dispute as to the amount of the settlement: $2, 187, 500.00. Neither is there a dispute as to the amount of attorneys' fees realized: $875, 000.00. The only dispute is between intervenors and plaintiff's current counsel, Arnold & Itkin, L.L.P., as to what percentage of the attorneys' fees - if any - that each counsel receives. The Court will outline the parties' testimony related to their services for Corey in its analysis below. The United States Supreme Court and the Fifth Circuit have oft-repeated that a request for attorneys' fees should not spawn major ancillary litigation. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983); Associated Builders & Contractors of La., Inc. v. Orleans Parish School Bd., 919 F.2d 374, 379 (5th Cir.1990). At the outset, the Court will note that it is disappointed that the parties failed to heed this admonition.
II. Law and Analysis
I. Objections to the Sworn Statement of Leo Corey
As an initial matter, this Court must determine whether the sworn statement of Leo Corey, plaintiff's father, is admissible. If not, the Court can not rely on it to aid in the resolution of this dispute. Intervenors argue that the sworn statement is inadmissible hearsay because it was taken the day before the evidentiary hearing in this matter, and intervenors had no right to cross-examine him. Intervenors submit the declarations of Sal Brocato and Jim S. Hall to counter Leo Corey's testimony. They readily admit, however, that these declarations are also hearsay and ask the Court to consider them only if it considers the statement of Leo Corey. [Doc. #435 at p. 2].
Hearsay is an out-of-court statement offered in evidence to prove the truth of the matter asserted. Fed.R.Evid. 801(c). Unless hearsay is subject to a hearsay exception, it is not admissible. Fed.R.Evid. 802, 803. There is no dispute that the statement of Leo Corey and the declarations of Brocato and Hall are offered to prove the truth of the matter asserted. The Court's review of the hearsay exceptions does not reveal that an exception to the rule exists here. Accordingly, the Court will not consider the statement or the declarations. In any event, the Court finds the properly-submitted evidence sufficient to resolve this matter.
II. The Attorneys'-Fees Dispute
1. Whether a contingency-fee contract existed between intervenors and Corey.
This Court must first determine whether a contingency-fee contract existed between intervenors and Corey. If not, intervenors are entitled - if at all - only to quantum meruit and not the amount allegedly specified in the contract.
Under Louisiana Rule of Professional Conduct 1.5(b), "[a] contingent fee agreement shall be in writing and signed by the client." La. Rule Prof. Conduct 1.5(b). The Louisiana Revised Statutes also provide that by "written contract signed by his client, an attorney at law may acquire as his fee an interest in the subject matter of a suit." La. Rev. Stat. § 37:218(A). Rule 1.5(c) further requires that "[a] copy or duplicate original of the executed agreement shall be given to the client at the time of execution of the agreement." La. Rule Prof. Conduct 1.5(c).
The Fifth Circuit has held that under Rule 1.5(c), "there cannot be a division of contingency fees by lawyers who are not included in a written, client-signed contingency fee contract." In re Calm C's, Inc., 179 Fed.Appx. 911, 913 (5th Cir. 2006). In Calm C's, the Fifth Circuit clarified that when no contingency-fee contract exists and when the attorney is discharged for cause, the attorney is entitled to recovery only on a quantum meruit basis. See id. This Court follows these mandates.
See Mogilles v. Allstate Insurance Co., Civ. A. No. 07-6560, 2009 WL 653165, at *2 (E.D. La. Mar. 11, 2009) ("The law is clear: in order to be awarded a contingency fee, an attorney must get his ...