DEXTER & KILCOYNE, ESQS. VS. ANTHONY X. ARTURI, JR.,ESQ.(L-10660-15, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4862-15T1

DEXTER & KILCOYNE, ESQS.,

Plaintiffs-Appellants,

v.

ANTHONY X. ARTURI, JR., ESQ.
and ARTURI, D'ARGENIO, GUAGLARDI
& MELITI, LLP,

Defendants-Respondents.
___________________________________

Argued August 1, 2017 – Decided August 17, 2017

Before Judges Sabatino and O'Connor.

On appeal from Superior Court of New Jersey,
Law Division, Bergen County, Docket No. L-
10660-15.

Bruce H. Dexter argued the cause for
appellants (Dexter & Kilcoyne, attorneys; Mr.
Dexter, on the briefs).

Anthony X. Arturi, Jr., argued the cause for
respondents (Arturi, D'Argenio, Guaglardi &
Meliti, LLP, attorneys; Mr. Arturi, of counsel
and on the brief).

PER CURIAM

This appeal concerns a dispute over unpaid legal services

under circumstances in which a personal injury client was
represented on a contingent basis by two successive law firms.

After her first law firm performed certain pre-lawsuit work, the

client discharged that firm and retained a second law firm. The

second law firm filed suit and recovered a settlement for the

client, but declined to share any of the contingency fee with its

predecessor. The first law firm consequently sued the second law

firm for the reasonable value of the work it had performed. The

trial court dismissed on summary judgment the first law firm's

claim for fees, and this appeal ensued.

For the reasons that follow, we vacate the summary judgment

order, and remand for further proceedings in the trial court to

reconsider the first law firm's quantum meruit claims.

The pertinent sequence of events is relatively

straightforward and in many respects undisputed. In April 2010,

the client1 ingested a french fry that contained a fragment of

metal. After she began having pain and difficulty breathing, she

went to a local hospital. Doctors conducted emergency surgery to

remove the metal fragment, which had lodged in her esophagus and

pierced her lung.

After recovering from this mishap, the client consulted with

plaintiff, Dexter & Kilcoyne, Esqs. ("the first law firm"). She

1
We discern no necessity to mention the client's name in this
opinion.

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entered into a written retainer agreement with the firm to

represent her interests in connection with the french fry incident.

Among other things, the agreement specified that the client would

pay a contingent fee to be computed in accordance with the sliding

scale percentages set forth in Rule 1:21-7. As is customary, the

retainer agreement also recited that "[i]n the event there is no

recovery . . . the client shall not be obligated to pay the

[first] attorney for his services, but . . . shall reimburse the

attorney for all disbursements made . . . in connection with the

institution and prosecution of the claim."

After being retained, the first law firm performed several

initial steps in furtherance of the client's interests. Among

other things, between April 2010 and March 2011, the first law

firm obtained the client's medical and anesthesia records, spoke

with prospective expert witnesses, prepared a form of complaint,

conducted legal and Internet research, and exchanged

correspondence with the manufacturer of the defective french fry.

Perhaps most importantly, the first law firm obtained from the

hospital a key item of physical evidence, the metal fragment that

had been removed from the client in surgery, and sent the fragment

to a laboratory for analysis.

In March 2011, before any lawsuit was filed against the

manufacturer, the client notified the first law firm that she was

3 A-4862-15T1
terminating its services. About two weeks later, the first law

firm received a fax from defendants, Anthony X. Arturi, Jr., Esq.

and Arturi, D'Argenio, Guaglardi & Meliti, LLP ("the second law

firm"), asking for the client's file. The first law firm

accordingly transmitted the file as requested to the second law

firm, accompanied by a letter and a copy of a client invoice for

the services the first law firm had rendered.

The invoice reflected that the first law firm had devoted

29.05 hours of attorney time to the client's matter and had

incurred $245.75 in disbursements. The letter requested that the

second law firm promptly reimburse the first law firm for its

disbursements and "retain a copy of our statement in your file so

that we can be compensated for our time spent on this matter at

the conclusion of the case." The second law firm did not

acknowledge or respond to the first law firm's letter, based upon

an assumption that it owed no obligations to a law firm that the

client had discharged and which had not filed suit. Nor did the

second law firm pay the disbursements as requested.

After entering into its own contingent fee arrangement with

the client, the second law firm filed a personal injury action on

the client's behalf in federal court against the french fry

manufacturer. Following several years of litigating the case, the

second law firm negotiated a settlement for the client in 2013.

4 A-4862-15T1
The settlement was for a confidential sum not disclosed in this

appellate record. We were advised at oral argument on the appeal

that the second law firm collected a contingent fee of one-third

of the settlement amount, after deducting its own disbursements.

According to the first law firm, it made repeated inquiries

of the second law firm about the status of the client's matter but

received no response. Eventually, in November 2014, the second

law firm advised the first law firm that the client's matter had

settled, that the settlement terms were confidential, and that it

did not have a legal obligation to share any portion of the fee

or the client's recovery with the first law firm.

The first law firm claimed it was entitled to a lien on the

client's recovery, as well as recovery of the reasonable value of

the services it had provided. The second law firm disagreed,

which prompted the first law firm to attempt initially to gain

relief from the federal court. After the federal court apparently

indicated that the fee dispute was more appropriately resolved in

the Superior Court, the first law firm filed the present action

against the second law firm.

The second law firm moved for summary judgment, which the

trial court granted. In her written statement of reasons, the

motion judge observed that the second law firm had shown "an

apparent lack of professional courtesy" in failing to respond to

5 A-4862-15T1
the first law firm's March 2011 letter asserting a right to share

in an ultimate recovery of proceeds in the case. Nonetheless, the

judge also concluded, albeit with reluctance, that the controlling

law did not afford the first law firm any recourse.

We need not devote extended discussion to this unfortunate

situation. First, we agree with defendants and the trial court

that the first law firm had no basis to assert a lien on the

client's settlement proceeds. The governing statutory provision,

N.J.S.A. 2A:13-5, only allows a lien for compensation to be

asserted by an attorney in situations in which that attorney has

filed a complaint, third-party complaint, counterclaim, or other

pleading on the client's behalf. That did not occur here because

no such pleading had been filed by the first law firm by the time

the client terminated its services in March 2011.

The absence of a lien, however, does not end the analysis.

Our law has recognized a personal injury attorney's potential

entitlement to a quantum meruit recovery for the reasonable value

of services that he or she provided before litigation was brought

by a successor lawyer or the client, pro se. Frequently, and

ideally, the first law firm and the successor law firm(s) reach

an agreement for the ultimate allocation of the fee at the time

the client's file is transferred. However, there are instances,

as in this case, in which no such agreement is attained and the

6 A-4862-15T1
first law firm is left to the court's legal and equitable authority

to fashion a remedy.

The governing principles are aptly set forth in a leading New

Jersey treatise on attorney ethics:

When a client dismisses one attorney and hires
a second, the two often will have no agreement
on the division of fee, and so the LaMantia
analysis will come into play. See, e.g.,
Straubinger v. Schmitt, 348 N.J. Super. 494,
500, 505 (App. Div. 2002). See also Cohen v.
Radio-Electronics Officers, 146 N.J. 140, 162-
163 (1996), indicating that when an attorney
is dismissed after having done some work, the
"modern rule" is that the attorney may recover
the fair value of the services rendered before
the discharge, and that this rule applies to
contingent fee cases as to others.

[Kevin H. Michels, New Jersey Attorney Ethics
895 (2016).]

In LaMantia v. Durst, 234 N.J. Super. 534, 540-41 (App. Div.),

certif. denied, 118 N.J. 181 (1989), which is cited above by

Professor Michels, we set forth the following factors that guide

a quantum meruit valuation of the superseded attorney's services:

(1) the length of time each of the firms spent on the case relative

to the total time expended to conclude it; (2) the quality of

representation by each firm; (3) the viability of the claim at the

time of the file's transfer; (4) the amount of recovery realized

in the underlying lawsuit; and (5) any pre-existing partnership

agreements. Although the dispute in LaMantia arose in the context

7 A-4862-15T1
of a lawyer who left the first law firm and took the client's file

with him, the same principles of fair compensation logically apply

here. See also Ciecka v. Rosen, 908 F. Supp. 2d 545, 553 (D.N.J.

2012) (observing that under New Jersey law an attorney or law firm

may bring an action for quantum meruit against an unrelated

successor attorney or law firm for a portion of a contingency

fee); Goldberger & Shinrod v. Baumgarten, 378 N.J. Super. 244, 251

(App. Div. 2005) (recognizing similar quantum meruit principles).

The second law firm maintains that it should not be a

"guarantor" of the first law firm's fee, and that the legal work

performed by the first law firm was merely "incidental" and thus

non-compensable. The second law firm further argues that the

first law firm's sole remedy is against the client, who has already

paid the maximum fee allowed without court approval under the

sliding scale of Rule 1:21-7.

We are not persuaded by these arguments. The second law firm

was not being asked to "guarantee" the first law firm's fee;

indeed, if the contingent case resulted in no recovery, then

neither law firm would have earned a fee. The value of the first

law firm's efforts – including obtaining the metal fragment as a

critical piece of evidence – was not manifestly "incidental." The

resolution of the reasonable value of the services implicates

genuine issues of fact that should be resolved by the trial court

8 A-4862-15T1
on a plenary basis and not through summary judgment. Brill v.

Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Lastly,

to the extent that the former client is found to be a necessary

or indispensable party to the fee claim, she may be potentially

added to the remand proceedings in the trial court's discretion.

We therefore vacate the summary judgment order and remand for

the trial court's reconsideration of the first law firm's quantum

meruit claim. On remand, either plaintiff or defendant may

promptly file a motion for leave to add the client as a direct or

third-party defendant. The client may interpose any defense she

may wish to assert, including but not limited to laches and an

argument that she should not have to sustain any further reduction

of her recovery beyond the amount already deducted by the second

law firm, and that the two law firms instead must divide the

already-deducted fee between themselves.

Vacated and remanded. Before any further motions or pleadings

are filed in the Law Division, the trial court shall conduct a

case management conference within thirty days to plan the remand

proceedings. We do not retain jurisdiction.

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