Jones v. Feiger, Collison & Killmer

Citations: 903 P.2d 27; 1994 WL 716892Docket: 93CA1709

Court: Colorado Court of Appeals; September 11, 1995; Colorado; State Appellate Court

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George Jones, the plaintiff-appellant, appeals a jury verdict that favored the defendant-appellee law firm, Feiger, Collison. Killmer, which found against him on claims of breach of contract and fiduciary duty while ruling in the firm's favor on its counterclaim for legal fees. The court affirms the judgment against Jones regarding his claims but reverses the award for legal fees due to the unenforceability of certain provisions in the representation agreement, remanding for a new trial on the reasonable value of the firm's services.

Jones hired the firm to assist with his wrongful termination claim from his executive position at an investment company, formalized through a representation agreement that included a reduced hourly rate and contingency fee structure. The agreement stipulated that the firm could not settle claims without Jones's consent, and he was expected to consider any settlement recommendations seriously and not unreasonably refuse settlements. Additionally, it allowed the firm to withdraw for justifiable reasons, including Jones's non-compliance, with the stipulation that he would owe fees at normal rates upon withdrawal.

During settlement negotiations, conflicting evidence arose regarding communication between the parties. Notably, after an unsuccessful meeting between Jones and the employer's attorney, a senior attorney from the firm, without Jones's prior authorization, inquired about a potential $800,000 offer from the employer. Though initially upset, Jones later authorized a counteroffer at the same figure. The negotiations became complicated when Jones ultimately declined the offer with the employer's conditions, prompting the law firm to remind him of his contractual obligation to settle reasonably. A subsequent meeting revealed concerns from the firm about their deteriorating relationship with Jones and the possibility of withdrawal.

The client retained separate counsel for settlement advice while not discharging the original law firm. After settling with the employer, the client refused to pay the law firm fees and subsequently filed a lawsuit alleging breach of contract and fiduciary duty. The client argued that the representation agreement was void due to unreasonable restrictions on settlement control, but the court denied the motion for partial summary judgment, emphasizing that reasonableness issues are not suitable for summary judgment and that factual analysis was needed.

At trial, the client claimed the law firm's unauthorized actions limited potential settlement outcomes and that the firm pressured him into accepting the settlement. The client and law firm attorneys testified about the negotiation process. The client attempted to call the employer's attorney as a rebuttal witness, but the trial court denied this request, citing the lack of prior endorsement and the potential relevance of the attorney's testimony to both sides' cases.

The court concluded that allowing the unendorsed attorney to testify would be improper. The jury ultimately ruled in favor of the law firm on both the breach of contract and fiduciary duty claims and awarded the law firm the fees claimed under the representation agreement. The client argued that the trial court's refusal to allow the rebuttal witness constituted reversible error, particularly as opposing counsel commented on the absence of this testimony in front of the jury. However, the court maintained that the client's failure to secure a court order for the attorney's testimony and the lack of discovery limited the client's ability to introduce that evidence.

The trial court has discretion in permitting rebuttal testimony, and its decision will only be overturned on appeal if there is an abuse of that discretion (People v. Silburn). In this case, the client did not request the court to lift a confidentiality order prior to trial, nor did the client's attorney provide a sufficient offer of proof regarding the rebuttal testimony's content. Consequently, the propriety of the rebuttal testimony could not be assessed. The trial court's refusal to allow the testimony was not merely due to its out-of-order presentation; rather, the employer's attorney's testimony was pivotal to the case. The client did not claim surprise regarding the testimony from the law firm's attorneys, and allowing the rebuttal witness would contravene C.R.C.P. 16, which mandates disclosure of potential witnesses. Therefore, without a specific offer of proof or prior disclosure efforts, the client failed to prove that the trial court abused its discretion in excluding the unendorsed rebuttal witness.

Furthermore, the client argued that the trial court erred in allowing opposing counsel to reference the absence of the employer's attorney during closing arguments. The court characterized this as a 'fair argument,' and it was determined that it did not imply the attorney's testimony would be unfavorable to the client. Instead, it related to the client’s failure to prove that the law firm's inquiry was perceived as a settlement offer. The scope of closing arguments is also within the trial court's discretion (People v. Alvarez), and no abuse of discretion was found in this instance. The jury was instructed to disregard any remarks from the court not directed at them, and it is presumed they followed these instructions (People v. Carrier).

Lastly, the client contested the denial of a pretrial motion for partial summary judgment, arguing that the representation agreement was void due to public policy restrictions on his control of settlement. On appeal, it was concluded that certain provisions of the representation agreement are indeed unenforceable, thus supporting the client's position regarding the law firm's counterclaim for fees based on the agreement.

The law firm is entitled to recover the reasonable value of its legal services since the contract did not involve illegal acts, statutory prohibitions, or violations of public policy. The court must first determine if the trial court's denial of the client's motion for partial summary judgment is a final order eligible for appeal. Because the denial was based on a legal point rather than disputed facts, it is deemed reviewable. The reference to Manuel v. Fort Collins Newspapers, Inc. illustrates that appeals regarding summary judgment denials are typically not allowed when material facts are disputed. However, when a denial is clearly based on legal grounds, as clarified in cases like Navajo Freight Lines, review may be appropriate to prevent injustice. The document emphasizes that the general rule against reviewing such denials does not apply when the basis for denial is purely legal. Consequently, the conclusion supports that a review of the denial is permissible post-trial if the legal basis is evident.

A party is not required to reassert a legal point, previously denied in a motion for summary judgment, during trial to preserve that point for appeal, as allowed under C.R.C.P. 56(h). This rule facilitates timely legal determinations, avoiding unnecessary trial complications. In Uptain v. Huntington Lab, the Colorado Supreme Court established that pretrial objections preserved for appeal do not necessitate contemporaneous objections during trial. Similarly, rulings on points of law made prior to trial, including those from summary judgment motions, are adequately preserved for appellate review. The court can revise or reverse its earlier decisions, but requiring redundant efforts at trial is discouraged to enhance judicial efficiency. The enforceability of contract provisions against public policy is determined by the court, and in this case, the undisputed terms of the representation agreement allow for a legal evaluation of whether any terms unreasonably restrict the client’s right to control settlement, thereby placing the issue before the court for resolution.

Parties in litigation have the right to control their cases, a principle established in Jones v. Jones and reflected in both the Code of Professional Responsibility and the Colorado Rules of Professional Conduct. Clients have an absolute right to accept or reject settlement offers, and any legal service agreement that limits this right is unenforceable as it contravenes public policy. The representation agreement in question included a clause preventing clients from "unreasonably" refusing settlements and allowed the law firm to withdraw if they did so, while also permitting the firm to charge normal hourly rates for work performed upon withdrawal. This agreement did not clarify that court approval is needed for withdrawal and that client refusal to settle is not a valid basis for attorney withdrawal under ethical rules. Such provisions may pressure clients to accept settlements deemed reasonable by the law firm, compromising their control over the case. The law firm argued for the reasonableness of their contingent fee agreement, citing Ramirez v. Sturdevant, but the contested provisions could create undue pressure on clients, especially as trial dates approach. The court acknowledges the risks attorneys face in contingent fee arrangements, recognizing that clients might exploit their settlement rights to negotiate better fees. However, the problematic provisions in the representation agreement render it unenforceable against public policy.

A client's right to control settlement cannot be limited by a contingent fee arrangement unless there is a change in public policy by the supreme court or General Assembly. The law firm argues that provisions allowing withdrawal if the client unreasonably refuses to settle can be severed from fee calculation terms. However, these provisions are interrelated, affecting the client's decisions regarding settlement and the law firm's legal service agreement. The enforcement of fee calculation terms may pressure clients to accept settlements deemed reasonable by the firm, thereby undermining their control over settlement decisions. Consequently, clauses restricting a client's right to control settlement are deemed unenforceable.

Despite the unenforceability of certain provisions, the client remains obligated to pay for services rendered, as the representation agreement itself is not illegal or against public policy. If a contract provision is void due to public policy, the remaining enforceable parts stand, especially concerning the payment of legal fees. In cases where the attorney withdraws without misconduct, the reasonable value of services may still be recoverable, even if fee calculation provisions are unenforceable. The court instructed the jury that, while lawyers may make decisions in specific non-meritorious areas, the client retains the ultimate authority to make decisions affecting their legal representation, such as accepting settlement offers.

The jury determined that the law firm did not violate its fiduciary duty to the client, which justifies compensation based on quantum meruit for the firm's services. Consequently, the judgment awarding damages under the representation agreement was reversed, and the case is remanded for a new trial to assess the reasonable value of the law firm's services. The remaining aspects of the judgment are affirmed. Judge Ruland agrees with part of the majority opinion but dissents regarding the appellate review of the attorney-client agreement's validity. He points out that the trial court found the contract was not evidently void as against public policy and emphasizes the established rule from Manuel v. Fort Collins Newspapers, Inc., which typically precludes appellate review of summary judgment denials. Ruland argues that this consistent application is crucial for clarity in litigation processes and warns against the implications of allowing such reviews, which could complicate future appeals. He advocates for affirming the trial court's judgment in all respects and supports the defendant-appellee's petition for rehearing.