United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 10, 2007 Decided October 12, 2007
No. 06-7119
KING & KING, CHARTERED
APPELLANT
v.
HARBERT INTERNATIONAL, INC., ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 06cv00324)
Christopher M. McNulty argued the cause and filed the
briefs for the appellant.
Michael J. McManus argued the cause for the appellees.
With him on the brief for appellees Harbert International, Inc.,
and Raymond J. Harbert were Jeffrey J. Lopez and Justin O.
Kay.
Laurence Schor and Dennis Ehlers were on the brief for
appellees Bilhar International Establishment, Bill Harbert
International Construction, Inc., and Bill L. Harbert.
Before: HENDERSON, RANDOLPH, and BROWN, Circuit
Judges.
2
Opinion for the Court filed by Circuit Judge BROWN.
BROWN, Circuit Judge: Appellant King & King, Char-
tered, appeals from the district court’s dismissal of a claim for
quantum meruit and a claim of tortious interference with
contractual relations. We affirm the district court’s decision as
to both claims.
I
King & King, Chartered, a law firm with offices in
Washington, D.C., represented one or more of the appellees in
a dispute with the United States over construction contracts. In
confusing circumstances, the clients elected not to pursue the
case, and King & King thus lost the chance to earn its contingent
fee. Although the clients had already paid a deposit of $150 per
billed hour, the firm demanded more, filing the instant action in
Superior Court in the District of Columbia, asking for the full
$4.8 million it would have earned for a complete recovery.
Alternatively, the firm sought quantum meruit compensation for
work performed. In addition, King & King sought damages for
tortious interference, alleging two of the appellees caused the
clients to withdraw the case. After removing the case to district
court, appellees successfully moved to dismiss the entire
complaint for failure to state a claim. King & King, Chartered
v. Harbert Int’l, Inc., 436 F. Supp. 2d 3 (D.D.C. 2006). King &
King appeals the dismissal of the quantum meruit and tortious
interference claims.
Appellees include Bill Harbert, his nephew Raymond
Harbert, corporations they control, named Bill Harbert Interna-
tional Construction (BHIC) and Harbert International (HII)
respectively, and a corporation of which each originally con-
trolled 50%, named Bilhar International Establishment (Bilhar).
Between 1987 and 1989, HII received fifteen contracts for
construction work on Kwajalein Atoll related to the Strategic
Defense Initiative. Appellant, who had provided legal services
3
to HII since the early 1980’s, represented the corporation in
various disputes with the U.S. Government over the perfor-
mance of the Kwajalein contracts. Eventually, the disputes
became so substantial that the appellees filed a claim at the
Armed Services Board of Contract Appeals (ASBCA) request-
ing a $12.8 million adjustment to the contract price. King &
King prepared this claim in 1992 and 1993 and filed the claim
in 1994. King & King continued to prosecute the claim over the
succeeding years.
At first, HII apparently paid the firm on an hourly basis,
but in 1995 they agreed to a contingent fee. Under the agree-
ment, King & King was to receive 20% of the first $2 million
recovered in the case and 25% of any greater recovery. In the
meantime, King & King was to bill $150 per hour, and these
payments would be deducted from the eventual contingent
recovery. According to the complaint, Bill Harbert signed the
1995 fee agreement on behalf of BHIC and HII. He controlled
the former corporation, and he had been the President of the
latter until 1990 and Vice Chairman until 1992. On June 18,
2002, Bill Harbert sent King & King a letter promising person-
ally to pay debts owed by HII for the firm’s services.
Meanwhile, Bill and Raymond Harbert had adjusted their
business structures. In 1990 Raymond succeeded Bill as
President of HII, and the two agreed to transfer HII’s interna-
tional construction business to Bilhar. On December 9, 1991,
HII assigned all its pending and future claims under the
Kwajalein contracts to Bilhar, while Bill Harbert bought HII’s
interest in Bilhar. King & King did not learn about the
assignment until 1997, when HII revealed it in response to a
government discovery request in the ASBCA case.
In 1998, the ASBCA suspended the proceedings, at the
request of the Department of Justice, which had begun a
criminal investigation into the Harberts’ dealings. After the
Department requested a further stay, the ASBCA finally
4
dismissed the proceedings on September 28, 1998. The
dismissal was without prejudice as long as HII reinstated its
claim before September 29, 2001. During the intervening three
years, the criminal investigation focused on Bill Harbert’s
corporations, which the government accused of fraud and bid
rigging in relation to some construction contracts in Egypt.
These contracts had already given rise to a federal qui tam
lawsuit, which the United States joined in February 2001. The
government followed with a criminal indictment of Bill
Harbert’s corporations in July 2001.
As the 2001 deadline for refiling at the ASBCA
approached, King & King tried to contact Bill Harbert. By
September 28, he had not replied, but the firm refiled the case
anyway. The ASBCA immediately suspended all proceedings
until the criminal trial ended on February 12, 2002. When the
ASBCA proceeding reconvened, the Government demanded
proof that King & King had authority to refile the case. The
firm drafted a letter of authorization for Raymond Harbert, the
President of HII, to send to the ASBCA. He responded through
his criminal attorney, demanding, among other things, that King
& King move to substitute Bilhar for HII as the claimant at the
ASBCA. In depositions and in filings at the ASBCA, Raymond
Harbert refused either to disavow the proceeding or to ratify it
unequivocally. Eventually, on December 20, 2002, the ASBCA
issued a show cause order demanding that HII ratify the refiling.
Since the company did not respond, the ASBCA dismissed the
case with prejudice.
King & King complains that appellees’ effective
abandonment of the ASBCA case spoiled the firm’s chance to
follow through on work already done and win the case. In
addition, Raymond Harbert and HII, by not ratifying the refiling,
interfered with the firm’s representation of Bilhar, preventing
recovery of the contingent fee.
5
II
This Court reviews the dismissal of a complaint de novo.
Am. Fed’n of Gov’t Employees v. Rumsfeld, 321 F.3d 139, 142
(D.C. Cir. 2003).
A
A client has the ultimate authority to control his affairs;
thus, he may settle a claim, regardless of his attorney’s efforts
to prosecute it. Barnes v. Quigley, 49 A.2d 467, 468 (D.C.
1946). A client may also, in good faith, choose to withdraw a
claim despite having expressly promised his attorney otherwise.
Id. In addition, a client may discharge his attorney, with or
without cause, and such a discharge will not constitute a breach
of any agreement between them. Skeens v. Miller, 628 A.2d
185, 187 (Md. 1993).
This rule is admittedly harsh to attorneys, especially to
those who provide services under contingent-fee agreements, for
they bear a substantial risk. An attorney’s fees under such an
agreement depend not only on the merits of the case, but also on
the client’s continued zeal for the cause and his willingness to
continue retaining the attorney.
The District of Columbia, like other jurisdictions, wants
clients to “compensate attorneys reasonably,” as a matter of
“fundamental fairness.” Connelly v. Swick & Shapiro, P.C., 749
A.2d 1264, 1267-68 (D.C. 2000). Therefore, a contingent-fee
attorney may seek reasonable compensation when his client
terminates the representation without cause. Universal
Acupuncture Pain Servs. P.C. v. Quadrino & Schwartz, P.C.,
370 F.3d 259, 263 (2d Cir. 2004) (unless a contingent-fee
attorney was discharged for cause, he is entitled to reasonable
compensation); Skeens, 628 A.2d at 188. If the attorney
substantially performed his tasks before being terminated, he
may receive the agreed proportion of the client’s eventual
recovery. Kaushiva v. Hutter, 454 A.2d 1373, 1375 (D.C.
6
1983). Even if he performed negligible services, of little actual
benefit to the client, he is entitled to quantum meruit
compensation. In re Waller, 524 A.2d 748, 750 (D.C. 1987).
Conversely, an attorney terminated for good cause
cannot recover a contingent fee. Greenberg v. Sher, 567 A.2d
882, 884 (D.C. 1989). A similar rule should preclude quantum
meruit compensation when the client chooses to discontinue a
case because of his reasonable assessment that there is “no
chance of recovery.” Universal Acupuncture, 370 F.3d at 265
n.7. Otherwise, a contingent-fee client, convinced he had no
chance of success, would have to continue his case just to avoid
quantum meruit liability. Such a policy would encourage
litigants to take unwarranted risks and prolong litigation simply
to avoid paying attorney fees — a predicament that mocks the
ideal of client control.
The facts here exemplify the dilemma. By 2002,
appellees had disputed the Kwajalein contracts with the
Government for eleven years without success, and their overall
legal position had deteriorated disastrously. Their original claim
for $12.8 million had grown, with the addition of interest, to
$20.1 million, while the Government had continued to oppose
them vigorously. In 2002, the Government was trying to get the
appellees’ claims dismissed on the ground that HII’s 1991
assignment of the Kwajalein contracts to Bilhar was made
without government consent and was therefore illegal. HII
apparently doubted its ability to oppose dismissal, since during
this phase of the ASBCA proceeding, it made factual
representations that King & King asserts “would have resulted
in the forfeiture of the appeals.” [Compl. ¶ 26, JA 16]1
Meanwhile, Bill Harbert and his companies were busy
1
Needless to say, a client’s general authority to control his
affairs includes the responsibility to represent the facts accurately.
7
defending civil and criminal fraud cases arising from the Egypt
contracts.
Federal criminal indictments came in July 2001, and a
criminal trial took place in February 2002. The civil case, a qui
tam lawsuit, began in 1995, but the Government had just
intervened in February 2001. In the middle of these fraud cases,
in September 2001, King & King, of its own volition, filed to
reinstate the ASBCA case. Given their situation, it would be
eminently reasonable for the appellees to believe they had no
chance to prevail at the ASBCA; to concentrate their efforts on
defending the more dangerous fraud cases; and even to abandon
the ASBCA case as part of a compromise with the Government.
These are the kinds of difficult decisions a client must have the
autonomy to make. The appellees tried to free their hands by
putting the ASBCA case on a contingent-fee basis; in such
extremely adverse circumstances, the law will not handcuff
them by requiring quantum meruit compensation.
B
Appellant’s claim for tortious interference with
contractual relations fails because no third party who interfered
with the contingent-fee agreement has been identified.2 A
person cannot be liable for interfering with his own contract.
Sorrells v. Garfinckel’s, Brooks Bros., Miller & Rhoads, Inc.,
565 A.2d 285, 289 (D.C. 1989).
2
The district court ruled that appellant had no claim because a
client’s decision to terminate an attorney is not a breach of a
contingent-fee agreement. 436 F. Supp. 2d at 16-17. We suspect that
the District of Columbia would follow Maryland in allowing tortious
interference claims when a third party induces a client to terminate an
attorney. See Sharrow v. State Farm Mut. Auto. Ins. Co., 511 A.2d
492, 497-98 (Md. 1986).
8
King & King argues Raymond Harbert and HII were not
parties to the contingent-fee contract. On this theory, when
Raymond Harbert failed to ratify the reinstated ASBCA case, he
interfered with the contingent-fee agreement Bill Harbert
executed. However, the Complaint itself refutes this argument.
King & King alleged Bill Harbert executed the agreement on
behalf of “HII and BHIC,” and that he later promised to honor
“the commitments he had made on behalf of HII to pay for
plaintiff’s legal services.” [Compl. ¶ 34, JA 20-21] The firm
then demanded that HII pay $4.8 million as its contingent fee.
[Compl. ¶ 36, JA 21] It alleged that by not paying, HII “breach-
ed the fee agreement . . . entered into by defendant, Bill Harbert
on its behalf.” [Compl. ¶ 38, JA 38] Although the firm also
suggested, in the alternative, that Bill Harbert acted only on his
own behalf, [Compl. ¶ 37, JA 21] this allegation is insufficient,
because the tortious interference claim would be illogical. HII
was the named party in the ASBCA case. If there was any
contingent-fee agreement to interfere with, HII must have been
a party to that agreement.3
As a party to the contingent-fee agreement, HII cannot
have interfered with it. Therefore, King & King has no claim
for tortious interference with contractual relations.
III
The district court’s order dismissing King & King’s
complaint as to all claims is
Affirmed.
3
Because Raymond Harbert acted in his capacity as President of
HII, he cannot be liable for tortiously interfering with its contracts.
See Press v. Howard Univ., 540 A.2d 733, 736 (D.C. 1988) (officers
of a corporation cannot tortiously interfere with its contracts).