United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
March 1, 2006
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-31000
Mervin H. Wampold
Plaintiff-Appellee,
versus
E. Eric Guirard & Associates,
Thomas R. Pittenger, and
Steven A. Debosier
Defendants-Appellants
E. Eric Guirard and Associates,
Thomas R. Pittenger
Plaintiffs-Appellants,
versus
Mervin H. Wampold,
Defendant-Appellee.
Appeal from the United States District Court
For the Middle District of Louisiana
Before JOLLY, HIGGINBOTHAM, and SMITH, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
We are asked to determine whether, under Louisiana law, the
phrase “gross proceeds of recovery” in a standard-form,
contingency-fee contract includes future, post-judgment disability
benefits. Concluding that it does not, we affirm the judgment of
the district court.
I
The present dispute over legal fees arises out of Thomas
Pittenger’s representation of Mervin Wampold in a lawsuit against
Wampold’s insurance provider, Paul Revere. Wampold suffered
serious injuries in a car accident in 1998; he filed a claim under
his insurance policy, which provided for $5,100 monthly disability
payments during the period of any disability as defined in the
policy. Paul Revere denied coverage, and Wampold filed suit in
Louisiana state court. Pittenger provided a standard-form,
contingency contract, entitling him to attorneys’ fees in the form
of “an undivided vested interest in [Wampold’s] claim, to be paid
from the gross proceeds of recovery” in certain percentages.1
Neither contract mentioned whether Pittenger would recover a
portion of future, post-judgment disability payments.
In the state-court lawsuit, the jury returned a verdict in
Wampold’s favor, finding that his disability was covered under the
policy and that his inability to perform his usual work was the
result of an “injury” not an “illness,” entitling Wampold to
monthly disability benefits as long as he remained disabled.2
1
The first contract, undated, set (via handwritten edits to the standard-
form contract) the fee rate at “25% if settled before trial” and “33% in the
event the claim is tried.” The second contract, signed March 14, 1999 after
commencement of the litigation, set (via the standard-form contract’s unedited
terms) the fee rate at “1/3% [sic] if settled without suit; 40% in the event that
suit is filed.”
2
Had the jury determined that Wampold’s injury was due to an “illness,”
rather than an “injury,” Wampold would only receive monthly disability benefits
until he was sixty-five years old.
2
Judgment was entered in September 2000.3 Following a hearing, the
district court awarded Wampold penalties and attorneys’ fees;4
Wampold received nearly $400,000, of which Pittenger recovered one
third. Wampold, represented by Pittenger, sued Paul Revere a
second time for recovery of disability benefits, penalties, and
attorneys’ fees for August and September 2000, the two months
between the jury’s verdict and entry of the court’s judgment.
Following settlement in January 2003, Pittenger sent Wampold a
final disbursement statement, which Wampold signed, acknowledging
that “[t]his constitutes a full and final settlement of all amounts
due me [Wampold] arising out of this matter.” Paul Revere
continues to pay disability payments to Wampold.
The present litigation began in March 2003 when Pittenger
claimed a right to either a percentage of each post-judgment
monthly disability benefit check or a lump sum representing the
present value of the future benefit stream based on actuarial
tables. After a joint stipulation of facts, both parties moved for
summary judgment. The district court granted summary judgment to
3
The judgment awarded Wampold “monthly benefits for total disability due
to injury in the amount of $5,100 per month, from October 30, 1998 through the
date of judgment, subject to the Paul Revere policy elimination period and waiver
of premium provisions.”
4
Louisiana Revised Statute § 22:657(A) requires prompt payment under any
insurance contract absent “just and reasonable grounds for delay” and provides
for “a penalty payable to the insured of double the amount” of benefits due
during the period of delay, “together with attorney’s fees” as determined by the
court. LA. REV. STAT. ANN. § 22:657. The judgment awarded Wampold “penalties of
one hundred percent (100%)” of the monthly benefits “from March 15, 1999 through
July 28, 2000.” The judgment also awarded Wampold “attorney’s fees as provided
by 22:657 in the amount of 33 1/3% of the total disability benefits and penalties
due to Dr. Wampold.”
3
Wampold, interpreting the term “gross proceeds of recovery” against
Pittenger as not including Wampold’s future disability benefits.
We have jurisdiction under 28 U.S.C. § 1291.5
II
Louisiana allows lawyers to enter into contingency-fee
agreements with their clients,6 and they are construed in line with
standard rules of contract interpretation.7 If unambiguous, the
plain terms govern;8 if ambiguous, resort to default rules of
interpretation and the parties’ intent is necessary.9 We examine
de novo the contingency-fee agreement.10
Our question is whether the phrase “gross proceeds of
recovery” includes post-judgment, future disability payments.
Pittenger argues that the phrase covers “everything recovered as a
5
Wampold, having moved to Florida, filed a declaratory judgment action in
federal court based on diversity of citizenship. Pittenger filed his own claim,
also invoking diversity jurisdiction, and the claims were consolidated.
6
LA. REV. STAT. ANN. § 37:218(A) (“By written contract signed by his client,
an attorney may acquire as his fee an interest in the subject matter of a suit
. . . .”); id. § 37:218(B) (“The term ‘fee’ . . . means the agreed upon fee,
whether fixed or contingent . . . .”).
7
See Chittenden v. State Farm Mut. Ins. Co., 788 So.2d 1140, 1147 (La.
2001); Classic Imports, Inc. v. Singleton, 765 So.2d 455, 459 (La. App. 4 Cir.
2000) (construing a contingency-fee contract in line with standard rules of
contract interpretation).
8
LA. CIV. CODE ANN. art. 2046 (“When the words of a contract are clear and
explicit and lead to no absurd consequences, no further interpretation may be
made in search of the parties’ intent.”).
9
LA. CIV. CODE ANN. art. 2053 (“A doubtful provision must be interpreted in
light of the nature of the contract, equity, usages, the conduct of the parties
before and after the formation of the contract, and of other contracts of a like
nature between the same parties.”).
10
Borden, Inc. v. Gulf States Utilities Co., 543 So.2d 924, 928 (1989).
4
result of Pittenger’s representation.” Because Wampold would not
be receiving benefits but for Pittenger’s representation, so the
argument goes, those future benefits must be included. Although we
see the logic in this contention, it runs counter to the
unambiguous terms of the parties’ agreement.11
We construe the words of the agreement in line with their
generally prevailing meaning.12 Pittenger contends, and Wampold
does not dispute, that “gross proceeds” includes the total amount
of money received without adjustment for deductions or
subtractions. Pittenger, however, fails to offer a definition of
11
Although not discussed by either party, several cases from various state
supreme courts support Pittenger’s argument. See Strobe v. Kitley, 249 N.W.2d
667 (Iowa 1977); Continental Cas. Co. v. Knowlton, 232 N.W.2d 789 (Minn. 1975);
Blazek v. N. Am. Life & Cas. Co., 121 N.W.2d 339 (Minn. 1963); Van Dale v. Karon,
285 N.W. 781 (Wisc. 1939) (all holding that a lawyer recovered a portion of post-
judgment, monthly disability benefits under a contingency-fee agreement). Three
of these cases are easily distinguishable: In Strobe, Blazek, and Van Dale, the
client paid a portion of monthly disability benefits received post-judgment to
the lawyer; it was only subsequently that coverage was disputed under the
contract. Strobe, 249 N.W.2d at 670 (noting that the client paid a proportional
“part of policy benefits received for several months after entry” of the
judgment); Blazek, 121 N.W.2d at 237 (noting that the client paid one-third of
monthly payments “for some time” after entry of the judgment); Van Dale, 285 N.W.
at 783 (“The [client] paid one-third of each $50 benefit for several months and
then decided he would like to be relieved of that obligation too.”). Here, in
contrast, there is no evidence that Wampold paid any portion of post-judgment
benefits to Pittenger. This lack of payment is telling, as it is well-
established that course of performance under a contract is highly probative of
the parties’ intent. See LA. CIV. CODE ANN. art. 2053. Continental, although not
involving payment, is also distinguishable. There, the client offered some
testimony suggesting that the parties discussed the lawyer’s recovery of a
portion of post-judgment monthly benefits, and, although recognizing that “the
evidence of intent of the parties is not as clear as [they] would like,” the
court deferred to the trial court’s finding that such fees were included in the
agreement. Continental, 232 N.W.2d at 795. Here, there is no evidence in the
record of such discussion, and there are affidavits from Wampold and his
financial advisor that expressly deny any discussions.
12
LA. CIV. CODE ANN. art. 2047 (“The words of a contract must be given their
generally prevailing meaning.”).
5
“recovery,” the operative word in this case. Black’s Law
Dictionary provides two relevant definitions: “2. The obtainment of
a right to something (esp. damages) by a judgment or decree. 3. An
amount awarded in or collected from a judgment or decree.”13 Both
definitions tie the total amount of money received, prior to any
deductions––that is, the “gross proceeds”––to that obtained “by” or
“from” a “judgment or decree.” In short, the phrase “gross
proceeds of recovery” contains an inherent limit: it only includes
money received by Wampold as a result of the judgment. And here,
the judgment entered by the trial court accepting the jury’s
verdict orders Paul Revere to pay monthly disability benefits to
Wampold “from October 30, 1998 through the date of judgment,
subject to the Paul Revere policy elimination period and waiver of
premium provisions.” Pittenger received a portion of fees for the
payments between October 30, 1998 and the date of judgement; no one
contests whether those fees were contemplated by the parties. As
the judgment demands no more, recovery should be so limited.
While we find the agreement unambiguous, it is not sufficient
that Pittenger establish some ambiguity in the language, because
Louisiana requires any ambiguity in a contingency-fee agreement to
be construed against the attorney. In cases of doubt, “a provision
in a contract must be interpreted against the party who furnished
13
BLACK’S LAW DICTIONARY 1302 (8th ed. 2004); see also THE RANDOM HOUSE COLLEGE
DICTIONARY 1104 (rev. ed. 1982) (defining “recovery,” in part, as “the obtaining
of right to something by verdict or judgment of a court of law”).
6
its text;”14 here, it is undisputed that Pittenger provided both
contingency-fee contracts. Moreover, “A contract executed in a
standard form of one party must be interpreted, in case of doubt,
in favor of the other party.”15 Again, it is undisputed that the
contracts at issue fit the bill for a construction against
Pittenger: Both contracts are pre-printed, standard-form contracts
with blanks for names, dates, and signatures. Both contain nearly
identical terms, with only the hand-written changes to the fee
amounts on the first contract.16 Both provisions of article 2056
counsel against Pittenger’s expansive interpretation of “gross
proceeds of recovery.”
Likewise, Louisiana’s Rules of Professional Conduct impose
strict requirements on contingency-fee agreements. Rule 1.5(c)
provides: “A contingent fee agreement shall be in writing and shall
state the method by which the fee is to be determined . . . .”17
Rule 1.5(c) is, in effect, a heightened specificity standard for
contingency-fee agreements, necessitated by the sound public policy
14
LA. CIV. CODE ART. 2056; see also Golz v. Children’s Bureau of New Orleans,
Inc., 326 So.2d 865, 869 (La. 1976) (noting that the drafting party is in a
position of superior bargaining power).
15
LA. CIV. CODE ART. 2056; see also Doucet v. Standard Supply & Hardware Co.,
250 So.2d 549, 551 (La. App. 3 Cir. 1971) (considering previous version of art.
2056).
16
See infra note 1. As the district court noted, the handwritten changes
to the terms of the contracts, accompanied by the initials of Pittenger
(“T.R.P.”), are further evidence that Pittenger furnished the text of the
agreement. See Wampold v. E. Eric Guirard, No. 03-253-A, at 7 n.5 (M.D. La.
Sept. 20, 2004).
17
LA. RULES OF PROF’L CONDUCT 1.5(c).
7
attempting to minimize attorney-client fee disputes. Again, these
concerns counsel against Pittenger’s interpretation.
The unambiguous language of the contingency-fee agreement,
Louisiana’s statutory rules of construction, and the Rules of
Professional Conduct dictate the result in this case: the phrase
“gross proceeds of recovery” does not include future, post-judgment
monthly disability benefits. If Pittenger intended to receive a
portion of each monthly disability payment from Paul Revere to
Wampold, then the attorney-client agreement should have been more
specific. Neither contract references post-judgment disability
payments; neither contract references insurance; and neither
contract references Pittenger’s asserted entitlement to a
percentage of any future, post-judgment payments. Following the
conclusion of the first trial, Pittenger never moved for a new
trial on the court’s judgment, ordering payment “through the date
of judgment.” Pittenger did not appeal the first order, nor did he
request future disability payments in the second lawsuit,
instituted to recover disability payments for the two months
between the jury’s verdict and the court’s entry of judgment.
Pittenger’s first request for future, post-judgment disability
payments came in March 2003, following settlement of the second
litigation with Paul Revere. The untimeliness of this assertion
weighs against Pittenger’s expansive interpretation. Finally,
Pittenger submitted, and Wampold signed, two disbursement
documents, neither of which made any reference to Wampold’s receipt
8
of post-judgment benefits or Pittenger’s entitlement to a share of
such benefits. We find no reason to adopt Pittenger’s expansive
interpretation.
III
In sum, the phrase “gross proceeds of recovery” does not
include recovery of future, post-judgment monthly disability
benefits.18 The district court’s judgment is affirmed.
18
We also find Pittenger’s alternative theories of recovery––unjust
enrichment, quantum meruit, and negotiorum gestio––without merit. Unjust
enrichment and negotiorum gestio were not presented below, and so we do not
consider them here. Under Louisiana law, quantum meruit is only available in the
absence of a contract, which, as discussed, is not the case here. See Baker v.
Maclay Properties Co., 648 So.2d 888, 896 (La. App. 1 Cir. 1995).
9