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Estate of Stevens

February 09, 1999

ESTATE OF EDWARD H. STEVENS, III APPELLANT
v.
JAMES K. WETZEL AND MGA INSURANCE APPELLEES COMPANY, INC.



The opinion of the court was delivered by: McMILLIN, P.j.

DATE OF JUDGMENT: 03/18/96

TRIAL JUDGE: HON. R. B. REEVES, JR.

COURT FROM WHICH APPEALED: PEARL RIVER COUNTY CHANCERY COURT

NATURE OF THE CASE: CIVIL - CONTRACT

TRIAL COURT DISPOSITION: SUIT AGAINST SUBSTITUTE COUNSEL FOR FAILURE TO PROTECT LIEN OF PRIOR COUNSEL WAS DISMISSED

DISPOSITION: AFFIRMED IN PART AND REVERSED IN PART - 02/09/99

MOTION FOR REHEARING FILED:

CERTIORARI FILED:

MANDATE ISSUED:

EN BANC.

¶1. The case before the Court today is, at its heart, a dispute between two attorneys regarding fees due from a personal injury action commenced by one attorney but prosecuted to Conclusion by the other. There is an additional party to the litigation, namely, the insurance company that paid the judgment in the personal injury suit. The trial court rendered judgment that denied the first attorney any relief against either the second attorney or the insurance company. We reverse that judgment in part and affirm it in part.

I.

Facts

¶2. Edward Stevens, an attorney, was retained to pursue recovery for personal injuries suffered by Peggy Cuevas in an automobile accident. Cuevas entered into a contingency fee contract with Stevens under which the attorney was to receive one-third of any recovery as his fee. At some point after suit was filed, Cuevas became dissatisfied with Stevens's representation and terminated the contract. Cuevas then retained Wetzel to represent her on essentially the same terms. After Stevens saw his contract terminated, he sought leave to intervene in the pending personal injury action to assert a claim for compensation for his work on the case prior to his termination. The underlying suit had been filed in the federal district court and the motion to intervene was referred to a magistrate Judge for resolution. The magistrate Judge declined to permit Stevens to intervene; however, the ruling was based on procedural considerations and did not reach the merits of Steven's right to compensation. Stevens made no effort to appeal the magistrate Judge's ruling to the district Judge. Instead, he continued informal contacts with Wetzel in which he insisted on his right to payment. The record does not reflect any contact by Stevens with the insurance company after his motion to intervene in his former client's suit was denied.

¶3. The judgment ultimately recovered in the personal injury action was substantially less than all parties involved had expected. The jury assessed damages at $45,000. Wetzel, on behalf of his client, indicated to MGA Insurance, which provided liability coverage for the tortfeasor defendant, that an appeal based on the inadequacy of the verdict was anticipated. At that point, a settlement was reached whereby MGA Insurance agreed to pay $52,500, which was $7,500 more than the jury's verdict. In exchange, Cuevas agreed to forego any right of appeal.

¶4. MGA Insurance disbursed the settlement proceeds by draft payable jointly to Wetzel and his client. Wetzel, with his client's consent, deposited the funds in his trust account and disbursed the funds. He paid himself one-third of the gross recovery plus an additional sum for costs and expenses he had advanced in connection with the litigation. He tendered the sum of $2,479.38 to Stevens as reimbursement for expenses incurred by Stevens prior to his discharge. The remainder of the settlement proceeds were disbursed in various amounts to certain medical providers who had treated Cuevas's injuries arising from her accident. Apparently, because of the magnitude of the outstanding medical bills, Cuevas did not receive any of the settlement proceeds herself. Stevens refused the tender of $2,479.38, claiming instead that he was entitled to an additional amount for quantum meruit compensation for his services. He asked for $8,618.75 together with actual expenses of $3,070.48 for a total amount of $11,689.33.

¶5. When it became apparent that a payment in that amount would not be made, Stevens commenced this action against Wetzel and MGA Insurance, claiming that Stevens had a valid lien against the settlement fund in the amount of $11,689.33 and that both Wetzel and MGA Insurance were liable for their participation in the disbursement of the settlement proceeds in a manner that ignored his rights in the fund.

ΒΆ6. Wetzel defended by saying that he had no obligation to see that Stevens was paid for his work on the case and that the sole remedy available to Stevens was an ...


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