Opinion
No. 49A02-1102-CT-193
09-09-2011
DORIS AUTRY, et al, Appellant-, v. CENTRAL SOYA COMPANY, INC., et al, Appellee-.
ATTORNEY FOR APPELLANT : ROBERT S. RIFKIN Maurer Rifkin & Hill, P.C. Carmel, Indiana ATTORNEY FOR APPELLEE : SEAN T. WHITE Hoover Hull, LLP Indianapolis, Indiana
Pursuant to Ind.Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT:
ROBERT S. RIFKIN
Maurer Rifkin & Hill, P.C.
Carmel, Indiana
ATTORNEY FOR APPELLEE:
SEAN T. WHITE
Hoover Hull, LLP
Indianapolis, Indiana
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Michael D. Keele, Judge
Cause No. 49D07-9606-CT-0901
MEMORANDUM DECISION - NOT FOR PUBLICATION
FRIEDLANDER , Judge
Attorney Robert Rifkin appeals the denial of his request for attorney fees for legal services rendered in a lawsuit he filed against attorneys Roberta and Darrolyn Ross and the Law Group of Ross & Brunner (collectively, the Rosses) on behalf of individuals originally represented by the Rosses in a lawsuit stemming from a June 28, 1994 explosion at the Central Soya Company facility in Indianapolis. Rifkin presents the following restated issue for review: Did the trial court err in determining that Rifkin is not entitled to attorney fees with respect to funds from the original settlement that had been placed in a trust account but never distributed?
We affirm.
The facts favorable to the judgment are that on June 28, 1994, a hexane gas explosion occurred at a Central Soya facility in Indianapolis, injuring several persons and causing widespread property damage. Among the victims were Sheila Rudolph, Luvenia Kilpatrick, Cheryl Thompson, William Thompson, Esther Johnson, and Ella Williams. Ultimately, the victims hired the Rosses to represent them in an action against Central Soya. That lawsuit was filed against Central Soya in June 1996. In May 2003, the Rosses entered into mediation with Central Soya. The victims were not apprised that mediation would occur and did not attend or participate in any way. At the conclusion of mediation, the Rosses entered into a confidential, binding settlement agreement with Central Soya. The victims did not become aware of the settlement agreement until June 2003, when they were asked to sign a general release form as a condition of receiving their respective settlement checks.
Thereafter, the victims became dissatisfied with what they perceived to be the Rosses' lack of forthrightness in divulging the details of the settlement agreement, including the total value of the settlement and the amount of the Rosses' attorney fees. In March 2005, Sheila Rudolph and five other victims (the malpractice plaintiffs) retained Rifkin to represent them in a legal malpractice lawsuit against the Rosses. The complaint Rifkin filed on their behalf alleged, among other things, misrepresentation, dishonesty, self-dealing, and conversion of settlement funds on the part of the Rosses.
In his recitation of facts, Rifkin states: "Rudolph, together with five other of the underlying claimants retained the services of attorney Rifkin to file a lawsuit against Roberta and Darrolyn Ross on their behalf, and on behalf of all other persons who had been represented by the Rosses in litigation against Central Soya." Appellant's Brief at 5 (emphasis supplied). There is no indication, however, that any of the victims other than the six named above participated, and Rifkin acknowledged that he did not undertake the steps necessary to certify this as a class action.
On May 7, 2010, the malpractice plaintiffs settled their lawsuit against the Rosses. Pursuant to the terms of a confidential agreement, the Rosses paid $100,000 to settle the claims against them concerning breach of fiduciary duties. Rifkin and his clients agreed that he would retain one-third of that amount as attorney fees. The Rosses also paid an additional $60,441.78 (the undistributed funds) to the malpractice plaintiffs, which had, without the knowledge of any of the plaintiffs in the original action against Central Soya, been held in a trust account since the settlement of the underlying action. These funds represented proceeds that had never been disbursed to the victims. The settlement agreement signed by the parties in the malpractice lawsuit did not address whether Rifkin would be entitled to attorney fees from this source. Rather, the parties agreed that the Rosses would pay the undistributed funds to the court, where it would be distributed at the court's direction. On July 12, 2010, the Rosses filed a motion asking the court to permit them to interplead the $60,441.78 "for distribution pursuant to the Court's adjudication following submission of whatever claims may be filed." Appellant's Appendix at 200.
Darrolyn Ross died sometime before this motion was filed. After her death, her interests in the malpractice litigation were represented by her estate.
Rifkin thereafter submitted a claim to collect attorney fees for his work in helping secure recovery of the interpleaded funds. The six individuals who had hired Rifkin, plus the thirty-seven other individuals who were plaintiffs in the underlying litigation, also submitted claims. Following a hearing, the trial court granted the Rosses' motion for interpleader and determined that two of the original claimants should receive a total of $7320.74. The court further determined that the balance of the undistributed funds should be divided equally among those plaintiffs in the Central Soya action who had filed claims pursuant to the court's order on motion for interpleader, which was entered August 23, 2010. Finally, the court denied Rifkin's request for attorney fees to be paid out of the undistributed funds. Rifkin thereafter filed a motion to correct error, which the trial court denied after a hearing. This appeal ensued.
The question whether to award or deny a request for attorney fees is committed to the sound discretion of the trial court, and we will not reverse unless an abuse of discretion is shown. Estate of Daniels ex rel. Mercer v. Bryan, 856 N.E.2d 763 (Ind. Ct. App. 2006). In conducting our review we will not reweigh the evidence and may reverse only if the fee denial was clearly against the logic and effect of the facts and circumstances before the court. Id. Additionally, we review the trial court's legal conclusions de novo. Cf. Mansfield v. McShurley, 911 N.E.2d 581 (Ind. Ct. App. 2009) (reviewing denial of a request for attorney fees under Ind. Code Ann. § 34-52-1-1 (West, Westlaw through end of 2011 1st Regular Sess.)).
Rifkin claimed below and reiterates on appeal that he is entitled to contingent attorney fees pursuant to the common-fund doctrine. Pursuant to this doctrine, "an 'award of attorneys' fees is allowed to be paid from a common fund on the theory that those who benefit from the creation of the fund or from the creation of any other legal benefit should share in the expense of producing the benefit.'" Citizens Action Coal. of Indiana, Inc. v. N. Indiana Pub. Serv. Co., 812 N.E.2d 814, 817 (Ind. Ct. App. 2004) (quoting Northern Indiana Pub. Serv. Co. v. Citizens Action Coal. of Indiana, 548 N.E.2d at 161). The question here is whether Rifkin's efforts in the lawsuit against the Rosses created the fund (i.e., the undistributed funds) from which Rifkin seeks to collect a proportional fee or created a legal benefit with respect to that fund for the individuals who comprised the plaintiffs in the Central Soya lawsuit. We conclude that they did not.
Appellees cite Northern Indiana Pub. Serv. Co. v. Citizens Action Coal. of Indiana, Inc., 548 N.E.2d 153, 163 (Ind. 1989) as authority for this proposition, the "common fund doctrine is an exception to the American Rule, which states that each party must pay his or her own attorneys' fees." Appellees' Brief at 8. We can find no basis for this proposition in the indicated text. The so-called "American Rule" is most often invoked where a dispute arises between party opponents with respect to whether one should pay the other's attorney fees. Although there might be situations in which the common fund exception may be applied to resolve such a dispute, this is not one of them. Rifkin and the parties opposing his application for attorney fees from the undistributed funds were not on opposite sides in this lawsuit. Thus, the American Rule is not implicated.
We reiterate that there was evidence that the undistributed funds were in a trust account after the settlement between Central Soya and the victims of the explosion. Rifkin's efforts did not create those funds. At most, he helped his clients discover them. Neither did Rifkin's efforts create a legal benefit for his clients with respect to those funds. Their right to receive those funds existed before they engaged Rifkin's services. Moreover, and importantly, we are mindful that the undistributed funds had already been subjected to depletion by one-third as a result of the Rosses having deducted their legal fees in the original lawsuit. Subjecting the funds to further depletion by deduction of yet more legal fees hardly strikes us as an equitable result, especially in view of the fact that Rifkin did nothing in the Central Soya suit to create the funds.
Although it is not germane to this appeal, it appears that the Rosses contended that those funds had not been distributed because the individual recipients could not be located.
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The bottom line is that the legal malpractice lawsuit sought damages for the alleged breach of fiduciary duties on the part of the Rosses. The Rosses admitted their liability in that regard and agreed to pay damages in the amount of $100,000. This is the fund that Rifkin's legal representation created for the benefit of his clients. It may be presumed that included in the $100,000 damages award is whatever harm was suffered by the original plaintiffs as a result of the Rosses' breach of fiduciary duties, including their failure to more vigorously pursue timely distribution of the approximately $60,000 that remained in the trust account. Thus, if Rifkin's request had been granted, not only would his clients suffer the inequity of having to pay legal fees twice on this portion of the original award, but Rifkin would receive a double recovery with respect to his efforts in aiding his clients in accessing the undistributed funds. We recognize that Rifkin is claiming, in part, that it is unfair that the thirty-seven underlying plaintiffs who gained access to the undistributed funds largely through his efforts should not have to share in the legal expense incurred in finding it. We understand the point, but conclude that strict application of the elements of common-fund doctrine and a consideration of the equities involved counsels in favor of affirming the trial court's ruling. For these reasons, the trial court did not err in denying Rifkin's request.
Judgment affirmed. DARDEN, J., and VAIDIK, J., concur.