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Law Firms Battle Over Attorney Fees

June 2, 2016 | Posted in : Ethics & Professional Responsibility, Fee Allocation / Fee Apportionment, Fee Dispute, Fee Dispute Litigation / ADR, Quantum Meruit

A recent Delaware Law Weekly story, “Two Wilmington Firms’ Battle Over Attorney Fees Rolls on Fees,” reports that a heated fee dispute between two Wilmington law firms will continue to play out in Delaware Superior Court after a judge last week let stand both counts of a complaint seeking compensation for attorney fees and work performed.

L. Vincent Ramunno, founder of the personal injury firm Ramunno & Ramunno, initially filed his complaint against Stephen B. Potter and Potter, Carmine & Associates in December 2014.  But since then, efforts to resolve the case have foundered, as both sides continue to levy "troublesome" charges regarding professional behavior, according to court documents.

The feud became public in February, when Resident Judge William L. Witham Jr. issued the first of three orders greenlighting the litigation involving compensation for two separate cases in which both firms represented the same clients.  The other two back-to-back orders came last week on Potter's latest motions to dismiss the case.

In the first count, Ramunno claimed Potter was unjustly enriched when a client, Bertha Flores, hired Potter to negotiate a settlement with an insurance company over two car accidents she was involved in.

Flores had originally retained Ramunno to represent her in the proceedings but later switched over to Potter's firm because, Potter said, Ramunno failed to provide a translator for an arbitration hearing.  After he was discharged, Ramunno claimed he sent a "voluminous file" to Potter, who owed him a substantial portion of the recovery on the basis of quantum meruit.

Ramunno argued he had a charging lien on a chunk of Potter's fees, which Potter was required to hold in escrow until the dispute is resolved.  Potter denied the allegations and filed a motion to dismiss in October 2015.  He argued Ramunno was barred from bringing the claim because quantum meruit requires a plaintiff to bring a claim against the former client and not the attorney or firm that later represented them.

But Witham denied the motion, citing a 2009 case in which the court allowed Ramunno to bring claims of quantum meruit directly against another attorney who represented 10 of Ramunno's former clients.  In March, Potter filed another motion to dismiss the first count for lack of subject matter jurisdiction, but on May 10, Witham nixed the motion, finding the Superior Court—as a court of general jurisdiction—maintained its reach over the case as a matter of law.

The second count of Ramunno's complaint involved the representation of Roblisha Smith, the daughter of a woman killed in October 2014 when her car was struck by a man fleeing police.  Shortly after the fatal crash, Smith hired Potter, who quickly reached settlements with two insurance carriers for a combined total of $40,000.

However, Smith discharged Potter before he could open an estate for Smith's mother and hired Ramunno's firm that November.  Ramunno made a claim to the proceeds for the estate, but the insurance carrier refused to tender a check due to Potter's and Ramunno's competing claims.

Ramunno meanwhile filed a complaint against Potter seeking compensation for fees owed in the Smith case, and Witham denied Potter's first motion to dismiss for failing to state a claim for relief.  Potter again tried to have the suit tossed in March, filing motions for summary judgment and to dismiss for lack of subject matter jurisdiction.

Witham denied both motions, saying there were questions of material fact relating to the scope of Potter's representation.  "If Potter represented to Smith that an estate would be opened as part of the recovery process, then Ramunno may be entitled to part of the recovery for opening the estate," Witham said in a six-page order published May 11.  "Because this question of material fact exists, Potter's motion for summary judgment cannot succeed."  Last week's orders keep alive the protracted fee litigation, which Witham has described as "highly contentious."

In February, the judge called the parties' inability to agree on alternative methods of dispute resolution "most unfortunate," and the conduct involved raised serious concerns for both the attorneys and the court, he said.  "The insinuations by the parties raise the specter of multiple violations of the Delaware Lawyers' Rules of Professional Conduct," Witham said in his February order.  "Each party has alluded to acts that, among other things, question the competency of representation, communication with the client, and the reasonableness of fees."

The recriminations, though not quite rising to the level of accusations, would need to be developed at trial, he said.  Ramunno declined to discuss the case, saying it was a matter "between two attorneys." Potter also declined to comment on the ongoing litigation.