Opinion
Civ. 3:20-CV-2357
04-28-2023
STEPHAN ZOURAS LLP, Plaintiff, v. THOMAS MORE MARRONE, et al., Defendants.
MANNION JUDGE
REPORT AND RECOMMENDATION
MARTIN C. CARLSON UNITED STATES MAGISTRATE JUDGE
I. Introduction
This case, which comes before us for consideration of cross motions for summary judgment, (Docs. 78 and 79), presents two cautionary tales regarding life and litigation.
First, this lawsuit provides us with a sobering parable regarding the divisive and destructive power of money. The adversaries in this litigation, the Zouras and MoreMarrone law firms, were once allies in a great litigative victory, in that they were co-counsel for the plaintiff class in Smiley v. E.I. Du Pont De Nemours and Co., Civil No. 3:12-CV-2380. That Fair Labor Standards Act lawsuit concluded with a significant victory for the plaintiffs, a victory which resulted, in part, in an aggregate attorneys' fee award of $1,793,423.00 for all plaintiffs' counsel, a sum which was entrusted to the MoreMarrone law firm for disbursement. However, this victory has now turned these attorney allies into adversaries, and this success has spawned strife between counsel, strife fueled by their competing and irreconcilable demands for a share of these legal fees. Thus, a dispute over money now overshadows this shared success in a fashion which consumes and divides these erstwhile legal allies.
Second, this case reveals a fundamental truth in life and litigation. Oftentimes those who chart a course based upon bitter mutual enmity find at the end of an acrimonious journey that they are right back where they started.
So it is here.
In the Fall of 2020, in the course of the Smiley litigation, all of these attorney antagonists agreed that they were collectively entitled to the $1,793,423.00 fee award ordered by the district court. These legal adversaries also conceded that all counsel had contributed some measure of sweat equity to the success of the Smiley case, but they could not agree on an equitable allocation of these fees. Now, nearly three years later following contentious and expensive litigation, upon consideration of the parties' cross motions for summary judgment, we find that they have returned to precisely the place they found themselves at in the Fall of 2020. Specifically, we conclude that the Zouras firm's breach of contract claims fail as a matter of law given the paucity of proof concerning the crucial terms of any fee sharing agreement between the parties. Indeed, the plaintiff has conceded as much and does not contest summary judgment in favor of MoreMarrone on these claims. Therefore, summary judgment should be entered in favor of the MoreMarrone defendants on these claims.
However, the undisputed evidence establishes that the Zouras firm has a valid, yet unquantified, quantum meruit claim, since it is uncontested that the plaintiff attorneys provided some value and sweat equity to the successful litigation of the Smiley case and have not yet been compensated for their efforts. Indeed, the MoreMarrone defendants have essentially conceded that the Zouras firm provided some value in the Smiley litigation since MoreMarrone included the fees of their former co-counsel in the fees petition submitted to the district court and approved by the court. Thus, we conclude that the Zouras firm is entitled to summary judgment in its favor on the issue of its entitlement to some quantum meruit recovery from the fee award.
While this much is clear, what remains unclear and hotly contested between the parties is how this fee award should be equitably divided between these combative counsel. This issue cannot be decided as a matter of law, but rather involves competing factual claims. And so in 2023 we find ourselves where the parties began in 2020: It is conceded that all counsel contributed some sweat equity to the success of the Smiley case, but counsel remain unable to agree on an equitable allocation of these fees.
On these facts, as discussed in greater detail below, it is recommended that the cross motions for summary judgment be granted, in part, and denied, in part as follows: The MoreMarrone law firm's summary judgment motion should be granted with respect to the plaintiff's breach of contract, breach of fiduciary duty, fraud, and conversion claims. That motion, however, should be denied with respect to the Zouras firm's quantum meruit and unjust enrichment claims. Instead, summary judgment as to liability only should be entered in favor of the plaintiff on these claims, and the contested issue of the proper measure of quantum meruit damages should be scheduled for trial.
This factual background is taken from the parties' statements of material facts to the extent that those averments are supported by independent, undisputed evidence in the record.
In order to understand how the parties have reached this impasse, it is necessary to briefly consider the long and tortured history of the Smiley litigation. The lawsuit which inspired this case commenced on November 28, 2012, when the MoreMarrone law firm and its then co-counsel, Greenblatt, Pierce, Funt & Flores, filed a putative class and collective action lawsuit under the Fair Labor Standards Act (FLSA) against Du Pont, alleging that the shift relief policy at Du Pont's Towanda facility violated the wage and hour provisions of federal and state law. Smiley v. E.I. Du Pont De Nemours and Co., Civil No. 3:12-CV-2380. What then ensued was nearly a decade of litigation filled with sudden changes in fortune. Initially in 2014, the district court granted summary judgment in favor of Du Pont on these FLSA claims and dismissed this case. Smiley v. E.I. du Pont de Nemours & Co., No. 3:12CV2380, 2014 WL 5762954, at *1 (M.D. Pa. Nov. 5, 2014). The plaintiffs appealed and in 2016, the Third Circuit reversed this summary judgment ruling and remanded the case for further proceedings. Smiley v. E.I. Dupont De Nemours & Co., 839 F.3d 325 (3d Cir. 2016). Du Pont then sought Supreme Court review of this appellate court ruling, but in June of 2018 the Supreme Court denied Du Pont's petition for writ of certiorari, over a dissent by three justices. E.I. Du Pont De Nemours & Co. v. Smiley, 138 S.Ct. 2563, 201 L.Ed.2d 1100 (2018). The parties then renewed their district court litigation.
By 2018, MoreMarrone's initial co-counsel, Greenblatt, Pierce, Funt & Flores, elected to withdraw from this case. Because co-counsel had been tasked with the leading role in FLSA damages calculation, MoreMarrone agreed that the Zouras law firm, and its attorney David Cohen, would join this lawsuit and focus on the development of this damages claim. The Zouras law firm agreed to undertake this role in the litigation, entered an appearance in this case in November of 2018, and served as co-counsel through the conclusion of this merits litigation.
While these attorneys skillfully litigated the Smiley case to a successful conclusion, they defined their own professional relationship in a singularly inartful fashion. The parties never entered into any comprehensive, integrated written agreement defining their professional relationship. Instead, the relationship between these two law firms rested upon a series of ambiguous oral representations and enigmatic email communications. In these communications, at most Stephen Marrone, the lead partner in the MoreMarrone law firm, represented to the Zouras firm that its involvement in the Smiley litigation would “be as favorable to you as possible” and “present the most favorable scenario for you.” Further, and notably, nothing in the cryptic communications between these counsel at the outset of their joint representation in the Smiley litigation provided a reasoned contractual basis for allocating an attorneys' fee award among counsel at the conclusion of the lawsuit. With this crucial aspect of their relationship essentially undefined, the Zouras and MoreMarrone law firms engaged in a joint representation of the Smiley plaintiffs from November 2018 through October 2020.
This fatal ambiguity in the attorneys' joint representation remained latent and undetected as the MoreMarrone and Zouras firms engaged in merits litigation and settlement discussions in the Smiley lawsuit. Rather, it was only the success of the Smiley litigation that cast in sharp relief the complete failure of these attorneys to agree upon a formula for the allocation of attorneys' fee. Yet, while the parties continue to hotly contest and dispute the relative value of the Zouras firm's contributions to the success of the Smiley case, one fact remains clear and undisputed: The Zouras firm did contribute to the successful outcome of the Smiley litigation to some degree.
On this score, with respect to the relative value of the Zouras firm's contributions to this litigation, the parties' positions are irreconcilable and starkly conflict. From MoreMarrone's perspective, the Zouras firm was little more than a scrivener tabulating loss numbers. In contrast, the Zouras firm describes its role in the litigation in far more expansive terms asserting that it combined creative legal analysis, with careful marshaling of the evidence, and skilled advocacy to dramatically increase the value of this case for the Smiley plaintiffs. These absolutely inconsistent and conflicting views are not amenable to summary judgment resolution. Therefore, while the fact of the Zouras firm's contribution to this case is uncontested, the value of that contribution remains stubbornly a matter of factual dispute.
Indeed, the fees petition jointly submitted by the MoreMarrone and Zouras firms plainly attested to the fact that the Zouras law firm had contributed in some measure to the successful outcome in the Smiley litigation. That fees petition included fees declarations jointly submitted by both law firms. The Zouras firm fee declaration stated that, from 2018 to 2020, its attorneys and staff spent 511 hours on Smiley which, at billing rates between $200.00 and $725.00 per hour, provided a total lodestar of $336,277.50. The MoreMarrone firm, in turn, submitted a fees declaration which asserted that, from 2012 to 2020, Marrone spent 813.6 hours on Smiley which, at his $850 per hour billing rate, provided a total lodestar of $691,560.00. The Zouras and MoreMarrone firms then jointly requested a $2,000,000.00 fee that represented both 40% of the $5,000,000.00 payment they achieved for the class along with a 1.95 multiplier of their accumulated total $1,027,837.50 lodestar.
The district court largely adopted the joint representations of the Zouras and MoreMarrone law firms that their combined efforts led to the successful conclusion of the Smiley FLSA case. On October 2, 2020, having “carefully reviewed and considered” all the relevant information submitted by the parties, the district court entered an order granting final settlement approval and approving an attorney's fee of $1,750,000.00 to Class Counsel as fair, reasonable, and adequate based on this Court's consideration of each of the relevant factors, including the size of the settlement fund and the quality of the result reached in this litigation, the absence of objections from the FLSA Collective and Rule 23 Class members, the skill and efficiency of Class Counsel, the complexity and duration of this litigation, the risk of non-payment Class Counsel assumed, and the amount of time Class Counsel devoted to the case. This $1,750,000.00 fee award to the Zouras and MoreMarrone firms represented both 35% of the $5,000,000.00 payment they achieved for the class and 1.7 times their accumulated total lodestar. While the district court's order accepted the representation that both law firms contributed significantly to the successful outcome of the Smiley case, it did not purport to allocate this fees award between these two law firms.
This singular success then led to years of acrimony between these attorneys as they have been unable to reach any agreement regarding a fair allocation of these fees. Throughout this time the MoreMarrone firm has retained these fees. Thus, two and one half years have passed since the district court approved the fees award in the Smiley litigation without any distribution of funds to the Zouras firm, even though all counsel agree that the Zouras firm provided some sweat equity in this litigation. The parties' unresolved attorneys' fee dispute, in turn, led to this litigation with the Zouras law firm filing a six-count complaint against the defendants on December 15, 2020. (Doc. 1). In that complaint, the plaintiff law firm alleged that it was deprived of at least $573,000, its claimed pro rata share of this fees award. (Id., ¶ 43). According to the plaintiff, the failure of the MoreMarrone firm to pay these fees constituted a breach of contract or, in the alternative, justified a quantum meruit recovery. In addition, the Zouras firm brought claims of breach of fiduciary duty, fraud, conversion, and unjust enrichment against the defendants. (Id.)
Following an occasionally contentious course of discovery, the parties have now submitted cross motions for summary judgment. (Docs. 78, 79). In its motion, the MoreMarrone firms argues that the Zouras firm's breach of contract claim fails as a matter of law. Moreover, according to MoreMarrone the failure of this breach of contract claim precludes any recovery by the Zouras firm on a quasi-contract quantum meruit or unjust enrichment claim. For its part, the Zouras firm now agrees that their breach of contract claim, and related fiduciary duty claims, fail as a matter of law. Accordingly, the Zouras firm consents to the entry of summary judgment on those claims. However, the Zouras firm seeks summary judgment on the quantum meruit and related unjust enrichment claims, arguing that the uncontested evidence shows that they contributed to the success of the Smiley litigation in some degree, and they have not yet been compensated in any fashion for their contributions to this litigation.
These cross motions for summary judgment have been fully briefed and are now ripe for resolution. For the reasons set forth below, it is recommended that the cross motions for summary judgment be granted, in part, and denied, in part, as follows: The MoreMarrone law firm's summary judgment motion should be granted with respect to the plaintiffs' breach of contract, breach of fiduciary duty, fraud, and conversion claims. That motion, however, should be denied with respect to the Zouras firm's quantum meruit and unjust enrichment claims. Instead, summary judgment as to liability only should be entered in favor of the plaintiff on these claims, and the contested issue of the proper measure of quantum meruit damages should be scheduled for trial.
III. Discussion
A. Cross Motions for Summary Judgment: Standard of Review
The parties have filed cross motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, which provides that the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Through summary adjudication, a court is empowered to dispose of those claims that do not present a “genuine dispute as to any material fact,” Fed.R.Civ.P. 56(a), and for which a trial would be “an empty and unnecessary formality.” Univac Dental Co. v. Dentsply Int'l, Inc., 702 F.Supp.2d 465, 468 (M.D. Pa. 2010). The substantive law identifies which facts are material, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is genuine only if there is a sufficient evidentiary basis that would allow a reasonable fact finder to return a verdict for the non-moving party. Id., at 248-49.
The moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). Once the moving party has shown that there is an absence of evidence to support the non-moving party's claims, “the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument.” Berckeley Inv. Group. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006), accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial,” summary judgment is appropriate. Celotex, 477 U.S. at 322. Summary judgment is also appropriate if the non-moving party provides merely colorable, conclusory, or speculative evidence. Anderson, 477 U.S. at 249. There must be more than a scintilla of evidence supporting the non-moving party and more than some metaphysical doubt as to the material facts. Id., at 252; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In making this determination, the Court must “consider all evidence in the light most favorable to the party opposing the motion.” A.W. v. Jersey City Pub. Schs., 486 F.3d 791, 794 (3d Cir. 2007).
Moreover, a party who seeks to resist a summary judgment motion by citing to disputed material issues of fact must show by competent evidence that such factual disputes exist. Further, “only evidence which is admissible at trial may be considered in ruling on a motion for summary judgment.” Countryside Oil Co., Inc. v. Travelers Ins. Co., 928 F.Supp. 474, 482 (D.N.J. 1995). Similarly, it is well-settled that: “[o]ne cannot create an issue of fact merely by . . . denying averments . . . without producing any supporting evidence of the denials.” Thimons v. PNC Bank, NA, 254 Fed.Appx. 896, 899 (3d Cir. 2007) (citation omitted). Thus, “[w]hen a motion for summary judgment is made and supported . . ., an adverse party may not rest upon mere allegations or denial.” Fireman's Ins. Co. of Newark New Jersey v. DuFresne, 676 F.2d 965, 968 (3d Cir. 1982); see Sunshine Books, Ltd. v. Temple University, 697 F.2d 90, 96 (3d Cir. 1982). “[A] mere denial is insufficient to raise a disputed issue of fact, and an unsubstantiated doubt as to the veracity of the opposing affidavit is also not sufficient.” Lockhart v. Hoenstine, 411 F.2d 455, 458 (3d Cir. 1969). Furthermore, “a party resisting a [Rule 56] motion cannot expect to rely merely upon bare assertions, conclusory allegations or suspicions.” Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985) (citing Ness v. Marshall, 660 F.2d 517, 519 (3d Cir. 1981)).
Finally, it is emphatically not the province of the court to weigh evidence or assess credibility when passing upon a motion for summary judgment. Rather, in adjudicating the motion, the court must view the evidence presented in the light most favorable to the opposing party, Anderson, 477 U.S. at 255, and draw all reasonable inferences in the light most favorable to the non-moving party. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). Where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true. Id. Additionally, the court is not to decide whether the evidence unquestionably favors one side or the other, or to make credibility determinations, but instead must decide whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Anderson, 477 U.S. at 252; see also Big Apple BMW, 974 F.2d at 1363. In reaching this determination, the Third
Circuit has instructed that:
To raise a genuine issue of material fact . . . the opponent need not match, item for item, each piece of evidence proffered by the movant. In practical terms, if the opponent has exceeded the “mere scintilla” threshold and has offered a genuine issue of material fact, then the court cannot credit the movant's version of events against the opponent, even if the quantity of the movant's evidence far outweighs that of its opponent. It thus remains the province of the fact finder to ascertain the believability and weight of the evidence.Id. In contrast, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks omitted); NAACP v. North Hudson Reg'l Fire & Rescue, 665 F.3d 464, 476 (3d Cir. 2011).
In this case, we are presented with cross motions for summary judgment. In this setting:
“When confronted with cross-motions for summary judgment ... ‘the court must rule on each party's motion on an individual and separate basis, determining, for each side, whether a judgment may be entered in accordance with the summary judgment standard.' ” Transguard Ins. Co. of Am., Inc. v. Hinchey, 464 F.Supp.2d 425, 430 (M.D. Pa. 2006) (quoting Marciniak v. Prudential Fin. Ins. Co. of Am., 184 Fed.Appx. 266, 270 (3d Cir. 2006)). “If review of [the] cross-motions reveals no genuine issue of material fact, then judgment may be entered in favor of the party deserving of judgment in light of the law and undisputed facts.” Id. (citing Iberia Foods Corp. v. Romeo, 150 F.3d 298, 302 (3d Cir. 1998)).Pellicano v. Office of Pers. Mgmt., Ins. Operations, 8 F.Supp.3d 618, 625-26 (M.D. Pa. 2014), aff'd sub nom. Pellicano v. Office of Pers. Mgmt., 714 Fed.Appx. 162 (3d Cir. 2017).
B. The MoreMarrone Law Firm is Entitled to Summary Judgment on the Plaintiff's Breach of Contract and Related Claims.
Turning first to the MoreMarrone firm's motion for summary judgment with regard to the Zouras firm's breach of contract claim, the defendants argue that they are entitled to judgment as a matter of law in their favor on this claim since the undisputed evidence reveals that no enforceable fee sharing agreement existed between these two law firms. Upon reflection, the plaintiff now agrees and has consented to the entry of summary judgment in favor of the defendants on these breach of contract and related claims.
We concur in this consensus that no legally enforceable agreement existed between these attorneys. As a federal court exercising diversity jurisdiction in this case, we are obliged to apply the substantive law of Pennsylvania to this dispute. Reynolds Packaging KAMA, Inc. v. Inline Plastics Corp., No. 3:08-CV-1902, 2011 WL 5089500, at *6 (M.D. Pa. Oct. 25, 2011) (citing Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d. Cir. 2000). The principles which govern enforceability of contracts under Pennsylvania law are well settled and were aptly summarized in Ecore Int'l, Inc. v. Downey, 343 F.Supp.3d 459, 487-88 (E.D. Pa. 2018) where the court explained that:
“To establish the existence of an agreement one must show that: (1) both parties have manifested an intention to be bound by the terms of the agreement; (2) the terms of the agreement are sufficiently definite
to be specifically enforced; and, (3) there is mutuality of consideration.” Redick v. Kraft, Inc., 745 F.Supp. 296, 300 (E.D. Pa. 1990) (citing Channel Home Ctrs. v. Grossman, 795 F.2d 291, 298-99 (3d Cir. 1986)); see also Szymanski v. Sacchetta, No. 10-2336, 2012 WL 246249, at *4 (E.D. Pa. Jan. 26, 2012) (setting forth elements of enforceable contract). “For a contract to be enforceable, the nature and extent of the mutual obligations must be certain, and the parties must have agreed on the material and necessary details of their bargain.” Lackner v. Glosser, 892 A.2d 21, 30 (Pa. Super. Ct. 2006). “[A] contract may be manifest orally, in writing, or as an inference from the acts and conduct of the parties.” Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C., 635 Pa. 427, 137 A.3d 1247, 1258 (2016) (quoting J.F. Walker Co., Inc. v. Excalibur Oil Grp., Inc., 792 A.2d 1269, 1272 (Pa. Super. Ct. 2002)); see also Orta v. Con-Way Transp., No. 02-1673, 2002 WL 31262063, at *1 (E.D. Pa. Oct. 8, 2002) (“Pennsylvania recognizes and enforces oral agreements.” (citation omitted)).
“Under Pennsylvania law, ‘where the facts are in dispute, the question of whether a contract was formed is for the jury to decide.' ” Quandry Sols. Inc. v. Verifone Inc., No. 07-097, 2009 WL 997041, at *5 (E.D. Pa. Apr. 13, 2009) (quoting Ingrassia Constr. Co. v. Walsh, 337 Pa.Super. 58, 486 A.2d 478, 482 (1984)). “However, ‘[t]he question of whether an undisputed set of facts establishes a contract is a matter of law.' ” Id. (quoting Mountain Props., Inc. v. Tyler Hill Realty Corp., 767 A.2d 1096, 1101 (Pa. Super. Ct. 2001)); see also Legendary Art, LLC v. Godard, 888 F.Supp.2d 577, 585 (E.D. Pa. 2012) (“The question of whether an undisputed set of facts establishes a contract is typically one of law, but where the facts are in dispute, the question is for the jury to decide.” (citing Szymanski, 2012 WL 246249, at *4)).Ecore Int'l, Inc., 343 F.Supp.3d at 487-88.
In this case we are presented with a joint legal representation relationship which was initially premised on an exchange of ambiguous e-mails and oral communications. None of these fragmentary communications addressed a formula for the allocation of a fees award in any intelligible way. Indeed, the plaintiff acknowledges that it entered into this joint representation based upon nothing more than Mr. More Marrone's assertion that its involvement in the Smiley litigation would “be as favorable to you as possible” and “present the most favorable scenario for you.”
Such vague representations fall well short of an enforceable contract. Under Pennsylvania law, while in some instances an exchange of e-mails and other oral communications between parties may be sufficient to establish a contract, such exchanges do not always rise to the level of enforceable agreements. Reynolds Packaging KAMA, Inc, 2011 WL 5089500, at *8. Instead, “[t]he existence and terms of an oral contract must be established by clear and precise evidence.” Redick v. Kraft, Inc., 745 F.Supp. 296, 300 (E.D. Pa. 1990) (citing Browne v. Maxfield, 663 F.Supp. 1193, 1197 (E.D. Pa. 1987)). Accordingly:
Pennsylvania courts agree that “[a]n agreement to agree is incapable of enforcement” Highland Sewer and Water Auth. v. Forest Hills Municipal Auth., 797 A.2d 385, 390 (Pa.Commw.Ct.2002). Thus, the mere statement of an aspirational goal to reach some future agreement is not an enforceable contract in Pennsylvania. Channel Home Centers v. Grossman, 795 F.2d 291, 298 (3d Cir.1986).Reynolds Packaging KAMA, Inc., 2011 WL 5089500, at *8. Thus:
“[w]here ... there is no agreement or even a discussion as to any of the essential terms of an alleged bargain, such as time or manner of performance, or price or consideration, the ‘agreement' is too indefinite for a party to reasonably believe that it could be enforceable in an action at law.” Lackner, 892 A.2d at 31 (italics in original). Moreover, as a matter of law, courts “may not provide a reasonable term where an essential term is left open.” Sloan, 2013 WL 4433366, at *3.Ecore Int'l, Inc., 343 F.Supp.3d at 489-90. Applying these legal guideposts, it has been held that an alleged agreement which provided nothing more than a promise that someone would be “reasonably compensated” in the future did not create an enforceable contract entitling a party to some specific compensation. Id.
So it is here. Under Pennsylvania law Mr. More Marrone's bare assertion to the Zouras firm that its involvement in the Smiley litigation would “be as favorable to you as possible” and “present the most favorable scenario for you” falls far short of a legally enforceable contractual agreement entitling the Zouras firm to some specific portion of this fees award. In fact, upon reflection the plaintiff does not contest this point, since the Zouras firm has stated that: “To simplify and expedite resolution of this case, Plaintiff consents to the entry of an adverse judgment on Counts I-IV of its Complaint” (Doc. 80, at 1). Thus, the Zouras firm concedes that summary judgment may be entered in favor of the MoreMarrone firm on its breach of contract, breach of fiduciary duty, fraud, and conversion claims. Accordingly, the defense motion for summary judgment should be granted with respect to Counts I through IV of the plaintiffs' complaint.
C. The Zouras Firm is Entitled to a Summary Judgment in its Favor as to Liability Only with Respect to its Quantum Meruit and Unjust Enrichment Claims.
With the dismissal of the Zouras firm's contractually based claims, two counts, pleaded by the plaintiff in the alternative, remain in this lawsuit. Specifically, the Zouras firm alleges that, in the absence of an enforceable contract, it is still entitled to a quantum meruit recovery for the time and effort that it dedicated to the successful outcome of the Smiley litigation. (Doc. 1, Count VI). In addition, the Zouras firm asserts that under Pennsylvania's unjust enrichment doctrine, the MoreMarrone firm may not retain the entire amount of this fee award without compensating the Zouras firm for its work in this litigation. (Id., Count V).
These two remaining claims are now the subject of cross motions for summary judgment. For their part, the defendants assert that these claims also fail as a matter of law notwithstanding the undisputed fact that the Zouras firm performed hundreds of hours of work on this case at the defendants' behest but have yet to receive any portion of the fees award. In this regard, MoreMarrone's position rests upon a curious conflation of concepts. While MoreMarrone has argued-in our view successfully-that no enforceable specific fee sharing arrangement existed in this case, the defendants also insist that:
Under settled Pennsylvania law, when the parties' relationship is grounded upon a contract, there is no right to recovery under a quasi-contractual theory. Thus, Stephan Zouras cannot ignore the existence of a contract in order to proceed with what it perceives as a more lucrative unjust enrichment/quantum meruit claim.(Doc. 82, at 2). Therefore, stripped to its essentials, MoreMarrone's position seems to be that there was no enforceable contract with Zouras regarding fee sharing, but by alleging that such a contract existed, Zouras is now forever barred from pleading or proving in the alternative a right to a quantum meruit recovery.
We disagree.
In our view this argument is fatally flawed on several scores. First, MoreMarrone errs in suggesting that the plaintiff may not plead contract and quantum meruit claims in the alternative. Quite the contrary, cases are legion permitting just this form of alternative pleading. Indeed, it is well settled that:
Courts in this Commonwealth have continually recognized that a litigant may advance alternative or conflicting theories of recovery, including causes of action for breach of contract and quantum meruit/ unjust enrichment. See Lugo v. Farmers Pride, Inc., 967 A.2d 963, 970 n. 5 (Pa.Super.2009) (stating, “unjust enrichment may be pleaded in the alternative with breach of contract[ ]”), appeal denied, 602 Pa. 668, 980 A.2d 609 (2009); see also Halstead v. Motorcycle Safety Foundation, Inc., 71 F.Supp.2d 455, 459 (E.D.Pa.1999) (stating that while Pennsylvania law precludes recovery on a quantum meruit claim when a valid contract exists, plaintiffs are free to pursue alternative theories of recovery); Atlantic Paper Box Co. v. Whitman's Chocolates, 844 F.Supp. 1038, 1043 (E.D.Pa.1994) (stating that plaintiffs may allege “alternative theories of recovery based on both breach of contract and unjust enrichment even when the existence of a valid contract would preclude recovery under unjust enrichment....”). Accordingly, [a plaintiff] [is] not foreclosed from pleading alternative causes of action sounding in breach of contract and quantum meruit.Shafer Elec. & Const. v. Mantia, 2013 PA Super 111, 67 A.3d 8, 10 n. 2 (2013), affd on other grounds, 626 Pa. 258, 96 A.3d 989 (2014).
Moreover, MoreMarrone's argument ignores the fact that the defendants have successfully shown that there was no valid, enforceable fee sharing contract between these law firms. In this setting, pursuit of a quantum meruit claim is entirely appropriate since, while a plaintiff may not be able to pursue a quantum meruit claim in a case governed by an enforceable contract, see Rosengrant v. Transcon. Gas Pipe Line Co., LLC, No. 4:20-CV-01555, 2020 WL 7260997, at *4 (M.D. Pa. Dec. 10, 2020), it is absolutely clear that quantum meruit is the appropriate equitable remedy in a case such as this where some party performed valuable services under a flawed, imperfect, and unenforceable set of contractual expectations. Simply put, in Pennsylvania, “[i]t is well-settled at common law, . . ., that a party shall not be barred from bringing an action based in quantum meruit when one sounding in breach of express contract is not available.” Shafer Elec. & Const. v. Mantia, 626 Pa. 258, 269, 96 A.3d 989, 996 (2014) (citing Zawada v. Pa. Sys. Bd. of Adjustment, 392 Pa. 207, 140 A.2d 335, 338 (1958)). In fact, the Pennsylvania Supreme Court has expressly upheld the reliance on quantum meruit to recover attorneys fees in a dispute where no enforceable fee agreement existed, holding that in this factual context the “attorney is not deprived of his right to recover on a quantum meruit a proper amount for the services which he has rendered.” Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. L. Firm of Malone Middleman, P.C., 635 Pa. 427, 446, 137 A.3d 1247, 1259 (2016).
So it is here. The Zouras firm performed certain legal services in support of the lawsuit brought by the MoreMarrone firm, albeit without the benefit of an enforceable fee sharing agreement. Therefore, under Pennsylvania law, this firm is not deprived of its right to recover on a quantum meruit a proper amount for the services which it has rendered. Id. Since MoreMarrone's summary judgment motion rests upon fundamental misapprehensions regarding Pennsylvania's law governing quantum meruit claims, the defendants' motion for summary judgment on these quantum meruit and unjust enrichment claims should be denied.
The Zouras firm has filed its own cross motion for summary judgment seeking a judgment in its favor as a matter of law on these state quantum meruit and unjust enrichment claims. With respect to these claims the guiding principles under Pennsylvania law can be simply stated:
“Quantum meruit is an equitable remedy to provide restitution for unjust enrichment in the amount of the reasonable value of services.” Am. & Foreign Ins. Co. v. Jerry's Sport Ctr., Inc., 606 Pa. 584, 2 A.3d 526, 532 fn. 8 (2010) (citing Black's Law Dictionary (8th ed.2004)).
Where unjust enrichment is found, the law implies a contract, which requires the defendant to pay to the plaintiff the value of the benefit conferred. Schenck v. K.E. David, Ltd., 446 Pa.Super. 94, 666 A.2d 327 (1995).
The elements necessary to prove unjust enrichment are:
(1) benefits conferred on defendant by plaintiff;
(2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. (citations omitted). The application of the doctrine depends on the particular factual circumstances of the case at issue. In determining if the doctrine applies, our
focus is not on the intention of the parties, but rather on whether the defendant has been unjustly enriched.Id., 666 A.2d at 328. Durst v. Milroy Gen. Contracting, Inc., 2012 PA Super 179, 52 A.3d 357, 360 (2012). Thus, “[u]njust enrichment is a synonym for quantum meruit.” Ne. Fence & Iron Works, Inc. v. Murphy Quigley Co., 2007 PA Super 287, ¶ 9, 933 A.2d 664, 667 (2007).
In this case the Zouras firm contends that the undisputed evidence establishes the elements of an unjust enrichment and quantum meruit claim under Pennsylvania law. We agree.
At the outset, it is undeniable that the Zouras firm, which worked on the Smiley case at the behest of the MoreMarrone firm from 2018 through 2020, conferred some benefit to MoreMarrone in the Smiley litigation. During this time, it is uncontested that the Zouras firm devoted hundreds of hours to damages assessments in the Smiley litigation, and the fees petition submitted jointly by these two law firms in the Smiley lawsuit plainly attested that these legal services had value in terms of the favorable resolution of this complex FLSA action. Thus, the elements of conferral of benefits on defendants by the plaintiff and appreciation of such benefits by the defendants are fully satisfied here. Finally, it is entirely undisputed that, notwithstanding the benefit conferred by the Zouras firm to its co- counsel the MoreMarrone law firm in this litigation, the Zouras firm has not been compensated in any fashion for this work from the $1,790,000 fee award granted by the district court. Furthermore, the Zouras firm has received no compensation for its work in this litigation despite the passage of some two and one half years. Given these undisputed facts, there can be no question that it would be inequitable for the defendants to continue to retain the benefit of the full fees award without payment of value to the Zouras firm for its reasonable contribution to this effort. See Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. L. Firm of Malone Middleman, P.C., 645 Pa. 362, 378, 179 A.3d 1093, 1102 (2018). Therefore, we find that the Zouras firm has established its entitlement to some quantum meruit recovery in this case and recommend that summary judgment be entered in favor of the defendants as to liability only on these state law unjust enrichment and quantum meruit claims.
While this much is clear, as we have noted the parties advance competing, and irreconcilable, positions concerning the proper measure of these quantum meruit damages. As a general rule, in attorney fee disputes the correct quantum meruit measure of damages does not entail an evaluation of the relative contributions of various attorneys to the successful outcome of a lawsuit. Instead, what controls is an assessment of the reasonable value of the legal services rendered, “which is to be calculated based on the number of hours worked multiplied by a fair fee. “ Mager v. Bultena, 2002 PA Super 85, ¶ 25, 797 A.2d 948, 957 (2002). In the instant case, however, this valuation question is a fact-bound and factually contested issue. Therefore, assessing the proper amount of a quantum meruit recovery is not a task which can be resolved through a summary judgment motion. Rather, it must await trial.
IV. Recommendation
Accordingly, for the foregoing reasons, upon consideration of the parties' cross motions for summary judgment, (Docs. 78 and 79), IT IS RECOMMENDED as follows:
First, the defendant MoreMarrone law firm's summary judgment motion (Doc. 79) should be granted, in part, with respect to the plaintiffs' breach of contract, breach of fiduciary duty, fraud, and conversion claims, counts I thorough IV of the complaint. That motion, however, should be denied with respect to the Zouras firm's quantum meruit and unjust enrichment claims, counts V and VI of the complaint. With respect to the plaintiff's summary judgment motion, (Doc. 78), summary judgment as to liability only should be entered in favor of the Zouras firm on these quantum meruit and unjust enrichment claims, but the contested issue of the proper measure of quantum meruit damages should be scheduled for trial.
The parties are further placed on notice that pursuant to Local Rule 72.3:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within 26 fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions. The failure to timely object may constitute a waiver of any future right to object or appeal this issue.