Gravel & Shea v. White Current Corp.

Gravel & Shea v. White Current Corp. (99-083); 170 Vt. 628;  752 A.2d 19

[Filed 03-Apr-2000]



                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 99-083

                             DECEMBER TERM, 1999


Gravel and Shea	                       }	APPEALED FROM:
                                       }
                                       }
     v.	                               }	Chittenden Superior Court
                                       }	
                                       }
White Current Corporation	       }	DOCKET NO. S1195-97 CnC	


             In the above-entitled cause, the Clerk will enter:


       Defendant White Current Corp. appeals a Chittenden Superior Court
  grant of summary judgment  to plaintiff law firm Gravel and Shea on the
  firm's claim for a contingent fee.  Defendant argues that  the court erred
  in concluding that a written fee agreement between plaintiff and defendant
  and  defendant's post-agreement conduct estopped defendant from raising
  pre-existing duty and duress  defenses.  Defendant also contends that the
  court erred in finding that no material fact remains in  dispute as to the
  amount of recovery subject to the disputed contingency fee.  We affirm.

                                  I.  Facts

       In 1986, defendant, through its president, Roger Lamson, entered into
  a written contingency  agreement with attorney William Donahue to represent
  it in actions against two utility cooperatives,  Vermont Electric
  Cooperative (VEC) and Vermont Electric Generation and Transmission (VEG&T). 
  The fee agreement called for a twenty percent contingent fee if settled
  before trial, and twenty-five  percent if settled after trial began. 
  Defendant was to reimburse Donahue promptly for all out-of-pocket
  expenses, important because experts played a significant role in the case.  

       In 1993, defendant and Donahue retained plaintiff law firm to try the
  damage claim against VEC and  VEG&T, as a portion of its liability claim
  had already been vindicated.  There was no written fee  agreement between
  plaintiff and defendant.  Plaintiff understood that it would be paid
  one-half of  one-third, or sixteen and two-thirds percent, and advanced a
  substantial sum of at least $37,500 for  expert witnesses.  

       In June 1994, plaintiff and defendant discussed altering the fee
  arrangement, but no agreement was  reached.  Work proceeded and trial
  commenced in Windsor Superior Court during the fall of 1994  .  In November
  1994, plaintiff obtained a $3.5 million jury verdict against VEC and VEG&T
  on  defendant's behalf.  

       In December 1994, plaintiff and defendant reached an agreement
  regarding fees that gave plaintiff  one-third of the net recovery, with an
  extra one percent for post-trial motion work and an additional  three
  percent for work on appeal.  This agreement was memorialized on January 6,
  1995

 

  ("the written fee agreement"), and is the foundation of plaintiff's action
  against defendant.  Plaintiff  continued to represent defendant in
  post-trial and appellate matters resulting from the jury verdict. 
 
       VEC and VEG&T filed for bankruptcy in April 1996, more than a year
  after defendant and plaintiff  had signed the written fee agreement.  No
  portion of the $3.5 million verdict against VEC and  VEG&T had been
  recovered at the time the utility cooperatives filed for bankruptcy. 
  Plaintiff and  defendant agreed to jointly retain Norman Cohen as
  bankruptcy counsel.  By agreement of the  parties, plaintiff paid -
  consistent with the written fee agreement - one-third of Cohen's fees.  
  Defendant accepted plaintiff's payments, totaling approximately $11,000,
  for the entire one-year  duration of the bankruptcy proceedings.  

       In April 1997, defendant settled with VEC for $1.3 million under the
  bankruptcy reorganization  plan.  Defendant disputed both the percentage
  and amount of legal fees it was obligated to pay  plaintiff, arguing that
  plaintiff was entitled to sixteen and two-thirds percent of $612,000,
  because  only that portion of the settlement amount actually came out of
  the work plaintiff had successfully  litigated at trial.  Plaintiff
  contended that, according to the terms of the written fee agreement, 
  defendant owed one-third of the entire $1.3 million recovery.  Arbitration
  failed to resolve the  dispute, and in August 1997, plaintiff sued to
  recover its fees and expenses consistent with the  written fee agreement.

       In October 1998, the court granted plaintiff's summary judgment
  motion, holding that defendant was  estopped from asserting its
  pre-existing duty and duress defenses, and that, in any event, those 
  defenses provided no relief for defendant.  The court concluded that the
  written fee agreement's one-third contingency applied to the full $1.3
  million recovered by defendant in the bankruptcy  proceeding, rather than
  the $612,000 that defendant asserted.  This appeal followed.

                               II.  Discussion

       We review a grant of summary judgment with the same standard as the
  trial court.  See In re  Margaret Susan P., __ Vt. __, __, 733 A.2d 38, 43
  (1999).  Summary judgment is appropriate only  where, taking the
  allegations of the nonmoving party as true, it is evident that there exist
  no genuine  issues of material fact and the movant is entitled to judgment
  as a matter of law.  Baisley v.  Missisquoi Cemetery Ass'n, 167 Vt. 473,
  477, 708 A.2d 924, 926 (1998).  In determining whether  a genuine issue of
  material fact exists, we regard as true all allegations of the nonmoving
  party  supported by admissible evidence, and we give the nonmoving party
  the benefit of all reasonable  doubts and inferences.  See Lane v. Town of
  Grafton, 166 Vt. 148, 150, 689 A.2d 455, 456 (1997).  "It is not the
  function of the trial court, however, to find facts on a motion for summary
  judgment,  even if the record appears to lean strongly in one direction." 
  Booska v. Hubbard Ins. Agency, Inc.,  160 Vt. 305, 309, 627 A.2d 333, 335
  (1993).  

       We do not address the merits of defendant's pre-existing duty and
  duress arguments because we hold  that it is estopped from asserting these
  defenses.  "The doctrine of [equitable] estoppel is based upon  the grounds
  of public policy, fair dealing, good faith, and justice, and its purpose is
  to forbid one to  speak against his own act, representations or commitments
  to the injury of one to whom they were  directed and who reasonably relied
  thereon."  Dutch Hill Inn, Inc. v. Patten, 131 Vt. 187, 193, 303 A.2d 811,
  815 (1973).  The test to determine whether a party is estopped from a claim
  is simply  stated: "'whether, in all the circumstances of the case,
  conscience and duty of honest dealing should  deny one the right to
  repudiate the consequences of his representations or conduct.'"  Greenmoss 
  Builders, Inc. v. King, 155 Vt. 1, 7, 580 A.2d 971, 974 (1990) (quoting
  Neverett v. Towne, 123 Vt.  45, 55, 179 A.2d 583, 590 (1962)).  The party
  asserting estoppel has the burden of establishing four  elements: (1) the
  party to be estopped must know the facts; (2) the party to be 

 

  estopped must intend that its conduct shall be acted upon, or the conduct
  must be such that the party  asserting estoppel has a right to believe it
  is intended to be acted upon; (3) the party asserting  estoppel must be
  ignorant of the true facts; and (4) the party asserting estoppel must
  detrimentally  rely on the conduct of the party to be estopped.  See Fisher
  v. Poole, 142 Vt. 162, 168, 453 A.2d 408,  412 (1982).

       Plaintiffs have established all four estoppel elements here.  First,
  defendant knew of and signed the  written fee agreement, which allocated to
  plaintiff one-third of the net recovery.  The written fee  agreement's
  language is unambiguous, and defendant concedes that it accurately reflects
  the terms  to which the parties agreed in December 1994.  Defendant,
  moreover, does not dispute that plaintiff  has established this element. 

       Second, defendant cannot now complain that it did not intend its
  conduct in entering into the written  fee agreement, nor its subsequent
  conduct consistent with the agreement, to be relied upon by  plaintiff. 
  Plaintiff continued to represent defendant after the written fee agreement
  was reached in  post-trial and appellate litigation under the one-third
  contingency it had a right to believe was in  effect.  More than two years
  after defendant executed the written fee agreement, plaintiff continued  to
  act upon defendant's conduct in the manner which defendant intended.  This
  is most clearly seen  by the fact that the bankruptcy counsel fees were
  shared in the same percentage as the written fee  agreement and that
  defendant accepted such payments from plaintiff without objection during
  the  entire bankruptcy proceedings.  "Estoppel can be based on silence
  where there is an obligation to  speak."  Greenmoss, 155 Vt. at 7, 580 A.2d 
  at 975. (FN1)  

       Third, plaintiff was ignorant of the "true facts;" that is,
  defendant's intention to pay plaintiff 

 

  a contingency fee of only sixteen and two-thirds percent of the recovery,
  rather than the one-third  amount in the written fee agreement.  "True
  facts" in estoppel are facts known to the party being  estopped but unknown
  to the party asserting estoppel.  See Ragosta v. Wilder, 156 Vt. 390, 395,
  592 A.2d 367, __ (1991) ("Equitable estoppel is inapplicable here because
  there were no facts known to  defendant but unknown to plaintiffs."). 
  Simply put, plaintiff relied upon the written fee agreement  as governing
  its recovery percentage, and did not know that defendant planned to pay
  them anything  less than this percentage.  In ignorance of the true facts,
  plaintiff's payment of one-third of the  bankruptcy counsel's fee mirrored
  the percentage of the written fee agreement.  We do not accept  defendant's
  attempt on appeal to characterize the "true facts" issue as whether payment
  of the  bankruptcy fee was in substitution for plaintiff's alleged
  obligation to represent defendant in all  proceedings necessary to collect
  a judgment.  Lamson's testimony contradicts this assertion:

          Plaintiff's Counsel: Do you recall telling Bob Hemley that 
     you did not expect Gravel and Shea to represent White Current in the 
     bankruptcy?

          Lamson: Yes.
     . . ..

          Q: What is the substance of that conversation?  Could you 
     provide us with that, please?


          A: I think Bob said something to the effect that, you can't 
     reasonably expect us to represent you in bankruptcy for the same fee.  
     And I said, no, I acknowledge that bankruptcy is a new ball game and 
     that I wouldn't try to stick you with that.


       Fourth, plaintiff detrimentally relied upon defendant's conduct in
  executing the written fee agreement  and its post-agreement conduct
  consistent with the agreement.  Plaintiff's post-trial and appellate  work
  on defendant's behalf and its payment of the bankruptcy counsel's fee in
  the same one-third  percentage plaintiff reasonably believed itself to be
  entitled to under the written fee agreement were  clearly to its detriment
  when, in 1997, the true facts of defendant's position on the legal fees
  became  apparent. 

       Based on its conduct, defendant is estopped from now attempting to
  avoid the contractual obligation  of the written fee agreement.  To allow
  defendant to do otherwise would violate the purpose of the  doctrine.  We
  hold that conscience and duty of honest dealing denies defendant the right
  to repudiate  the consequences of its representations or conduct here.  See
  Greenmoss, 155 Vt. at 7, 580 A.2d  at  974.  Therefore, the superior court
  did not err in granting plaintiff's summary judgment motion on  the grounds
  that defendant was estopped from asserting its pre-existing duty and duress
  defenses.

       Finally, we also reject defendant's assertion that, even if it is
  assumed that plaintiff has sustained its  burden on the issue of estoppel,
  the court erred in finding that no material fact remains in dispute as  to
  the amount of the recovery subject to the contingency fee.  Defendant
  argues that only a portion  of the $1.3 million bankruptcy settlement -
  $612,000 - was attributable to plaintiff's successful  litigation work on
  defendant's behalf.  The court characterized defendant's attribution theory
  as "a  sham."  Whatever the merits of the characterization, the affidavits
  of VEC's attorney and the  bankruptcy trustee confirm that the entire $1.3
  million paid to defendant in the bankruptcy settlement  was to satisfy the
  $3.5 million jury verdict obtained by plaintiff on behalf of defendant. 
  Moreover,  both affiants stated that the attribution plan, which defendant
  now asserts to establish its 

 

  argument, was solely Lamson's idea and had no bearing on the settlement
  result.  Notwithstanding  defendant's creative arguments to the contrary,
  our review of the record supports the conclusion that  no genuine issue of
  material fact exists as to the amount to which the contingency fee applies. 
  See  V.R.C.P. 56; Samplid Enter., Inc. v. First Vermont Bank, 165 Vt. 22,
  25, 676 A.2d 774, 776 (1996)  ("In determining whether a genuine issue of
  fact exists, the nonmoving party receives the benefit of  all reasonable
  doubts and inferences.  Allegations to the contrary must be supported by
  specific facts  sufficient to create a genuine issue of material fact.")
  (citations omitted).  


       Affirmed.



                                       BY THE COURT:



                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice

                                       _______________________________________
                                       David A. Jenkins, Superior Judge
                                       Specially Assigned




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  Footnotes


       Indeed, defendant's president, Lamson, testified in deposition that
  the agreement between  plaintiff and defendant to share the cost of the
  bankruptcy counsel in the same percentage as the  written fee agreement was
  intended by defendant to reflect the parties' respective "vested interests" 
  in the recovery of the jury award:

          [A]t the time of the bankruptcy, that is, in April 1996, there 
     was discussion as to who should handle the bankruptcy, what legal 
     services would be rendered.  And in the beginning there was 
     suggestion that Gravel and Shea would handle the bankruptcy.  I was 
     not interested in having that done, at least not for an extra fee.  And 
     [Gravel and Shea attorney] Bob Hemley suggested that Norman 
     Cohen could do the job.
          And I think that I said, well, what about the expense?  And 
     there was a discussion about vested interest and I can't remember 
     exactly who came up with the theory, Bob claimed it for his own 
     today, I think it may have been mine, but nonetheless, I mentioned 
     the term vested interest and I said we all have a vested interest in the 
     case as it presently stands.  We would all be due a percentage if we 
     get paid and we should probably account for the vested interest that 
     we have.  And not wanting to create discord on the issue, I indirectly 
     acknowledged that the vested interest which Gravel and Shea had was 
     the thirty-four percent as expressed in the . . . January 6th, 1995, 
     agreement.