State Supreme Court found contract excluded appellate work
by Sylvia Hsieh
The Daily Record Newswire
BOSTON (Daily Record Newswire) — Trial lawyer Michael Piuze is used to grabbing headlines for his work in the courtroom, mostly for winning billions of dollars for smokers against tobacco companies.
Last month he was in court again, sitting at counsel’s table — but this time Piuze was away from his home state and not an attorney in a lawsuit, but a defendant. A Nebraska lawyer had sued him over legal fees the two shared in a rollover case against General Motors.
After winning over $20 million on behalf of a quadriplegic woman, Piuze paid Daniel McCord $2.25 million for referring and working on the case. The fee represented a portion of the 40 percent contingent fee charged to the client.
McCord believed he was owed an additional $562,500 in fees for work on the appeal, and sued Piuze.
A trial court agreed with McCord and granted summary judgment. But the Nebraska Supreme Court disagreed, finding the contract between the lawyers explicitly excluded appellate work.
The court sent the case back for trial, where the lawyers (and their lawyers) battled with each other and with the 105-degree heat during a two-week trial in the middle of the hottest July in U.S. history.
“It was a nasty, uncomfortable lawsuit,” said Peter Ezzell, an attorney with Kaufman, Dolowich, Voluck & Gonzo in Los Angeles, who represented Piuze.
In 2003, after Penny Shipler was crushed in a rollover accident by the S-10 Chevy Blazer she was driving, she contacted her friend McCord, of McCord & Burns in Lincoln, Neb. When the case turned into more than a suit against the other driver and shaped up to be a roof crush suit against GM, McCord searched for an attorney with product liability expertise and found Piuze.
A retainer agreement signed by Shipler and both lawyers said she would pay a contingent fee of 40 percent of any recovery. A separate referral authorization sent by Piuze to McCord and signed by McCord said the lawyers would split the fees 75/25.
A jury in the roof crush case awarded Shipler $19.6 million, but the trial judge reduced it to $18.6 million.
Under a new agreement between Piuze and Shipler, she agreed to pay 10 percent of the eventual award for handling the appeal.
The Nebraska Supreme Court upheld the award, and Shipler later settled for $22.5 million.
Piuze then sent $2.25 million, or 25 percent of the 40 percent contingent fee, to McCord.
McCord expected an additional 25 percent of the 10-percent appellate fee, or $562,500, and sued under the contract, arguing that it explicitly provided for a 75/25 split of “any fees.”
A trial court agreed, but the Nebraska Supreme Court reversed, finding that at the time of the signing “any fees” meant trial-related fees only, and that the referral letter between Piuze and McCord explicitly excluded “fees for an appeal or a retrial, if they become necessary.”
On remand, McCord amended his lawsuit to include two new theories: that the two lawyers had formed a “joint venture” under state rules, which would entitle him to half of the appellate fees, or $1.1 million; or, in the alternative, that he was entitled to fees for the work he performed under quantum meruit.
The trial exposed a deep gulf between the two lawyers, in both style and substance.
According to Ezzell, the plaintiff portrayed Piuze as a “Beverly Hills attorney who likes to race fast cars and loves pretty women,” and who hoodwinked the Midwesterner McCord.
“The plaintiff’s lawyer did everything she could to pit Nebraska against California,” said Ezzell.
But Maren Lynn Chaloupka, who represented McCord, suggested it was more a tale of two men than a clash of cultures.
“The theme of the case, as we saw it, was betrayal — betrayal of trust and Mr. Piuze taking something that wasn’t his,” said Chaloupka, a partner with Chaloupka, Holyoke, Snyder, Chaloupka, Longoria & Kishiyama in Scottsbluff, Neb.
She pointed to an email that McCord wrote to Piuze just before the appeal that said if the client did not agree to increase her fees for the appeal, McCord would handle the appeal himself.
According to Chaloupka, Piuze testified he understood the email to mean McCord expected a fee covering his appellate work, but Piuze did nothing to explain to McCord that fee would not be forthcoming.
“The emails showed [McCord] did not agree to work for free,” said Chaloupka.
Indeed, hundreds of emails revealed major squabbles between the two attorneys over how to handle the appeal.
According to McCord, who spoke to Lawyers USA after the verdict, he wanted the appellate brief to be law-oriented, while Piuze wanted it to be fact-oriented.
Piuze gave a different account, saying that McCord convinced him to hire a Nebraska attorney for the appeal, whom he paid $30,000.
“I saw his brief. I didn’t like it and criticized his work. He quit less than two weeks before the brief was due,” Piuze said.
Aside from the 500 pages of documents contained in 150 exhibits, Ezzell said the case came down to the credibility of the two attorneys and a third lawyer, who sat in the courtroom.
Jeffrey Patterson, the lawyer who Piuze said quit during the appeal of the GM verdict, was hired by McCord as part of his team in his lawsuit against Piuze for fees.
When McCord was asked on the stand whether Patterson was his attorney, he answered no, according to Ezzell. But when Patterson was cross-examined, he admitted he was representing McCord, that he signed all the pleadings and strategized with co-counsel at every recess, according to Piuze.
“It’s clear that the jury thought Mike was more credible than McCord and Patterson. They were just trying to double-dip. Pigs get fed, hogs get slaughtered,” said Ezzell with a twist on the old saying.
McCord said that while evidence at trial demonstrated that he worked extensively on and filed the brief in the GM appeal, the jury may have been swayed by the fact that Piuze fronted $600,000 in expenses.
“The jury could have thought the guy footing the bill is the boss,” he said.
But Ezzell suggested McCord’s own testimony damaged his claim.
According to Ezzell, McCord testified that although he read and signed the fee agreements, he did not believe in following the written word.
“It was an incredible statement for a lawyer,” Ezzell said.
After two hours of deliberation, the jury of 12, led by a foreperson about to start law school, unanimously decided in favor of Piuze on both claims, awarding McCord nothing.
Ezzell said the case illustrates the importance of knowing the law on sharing fees, especially out of state, where unfamiliar rules may reign.
“The moral of the story is before you go into another state and hire a local lawyer, you need to investigate their rules of professional conduct,” Ezzell said, noting that Piuze’s home state of California does not have Nebraska’s rule about “joint venture” relationships between attorneys.
McCord, who retired shortly after the GM case settled and was reached by phone while fishing in the Dakotas, said lawyers should heed their own advice to clients and “have everything spelled out in black and white every step of the way.”
“I had dealt with other lawyers — a handshake was always the norm in Lincoln, and that was enough,” he said.
