Villa v. Heilmann

VILLA_V_HEILMANN.92-372; 162 Vt. 543; 649 A.2d 543


[Filed 09-Sep-1994]

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-372


 James G. Villa                               Supreme Court

                                              On Appeal from
      v.                                      Chittenden Superior Court

 Thomas F. Heilmann                           January Term, 1994



 Alden T. Bryan, J.

 Francis X. Murray and William F. Ellis of McNeil & Murray, Burlington, for
   plaintiff-appellant

 Michael B. Clapp of Dinse, Erdmann & Clapp, Burlington, for defendant-
    appellee



 PRESENT:  Gibson, Dooley, Morse and Johnson, JJ., and Peck, J. (Ret.),
           Specially Assigned




      JOHNSON, J.     Plaintiff James Villa, an attorney who sued former law
 partner Thomas Heilmann for breach of contract when defendant refused to
 split the contingency fee he received in a case that was pending at the time
 the parties ended their law practice together, appeals from a jury verdict
 in favor of defendant.  We affirm.
      Most of the relevant facts are not in dispute.  In 1977, prior to the
 time the parties became partners, defendant was retained by Greenmoss
 Builders to represent its interests in a defamation action against a company
 that issued an erroneous credit report.  In August 1979, the parties formed

 

 a law firm known as Villa & Heilmann, P.C.  While a partner at the firm,
 defendant tried Greenmoss to a jury, which returned a verdict in favor of
 his client in the amount of $350,000.  The trial judge, however, set aside
 the verdict and ordered a new trial.  The case was pending before this Court
 in June 1982 when the parties decided to end their relationship as law
 partners.  On June 1, 1982, the parties signed the following agreement,
 hereinafter referred to as the Greenmoss agreement:
                                  AGREEMENT

        THIS AGREEMENT is between VILLA & HEILMANN, a Professional
      Corporation, and JAMES G. VILLA and THOMAS F. HEILMANN, both
      individuals.

        In light of the fact that both James G. Villa and Thomas F.
      Heilmann will no longer be employed by the law firm of Villa &
      Heilmann; and that the case of Greenmoss Builders, Inc. vs. Dun &
      Bradstreet, presently on appeal, is a complex and difficult
      lawsuit best handled by the two individuals rather than the law
      firm of Villa & Heilmann; the three parties agree herein as
      follows:

        1. Any fee paid in the case of Greenmoss Builders, Inc. vs. Dun
      & Bradstreet shall be paid to Villa & Heilmann.

        2. The proceeds shall be divided as follows:

             a) A fee, as already agreed, shall be paid to the law firm of
        Valsangiacomo & Detora.

             b) All costs and disbursements shall be paid to the party
        who incurred them.

             c) The remainder of the fee shall be split equally between
        James G. Villa and Thomas F. Heilmann.

 Other than offering occasional advice, plaintiff did not work on Greenmoss
 prior to the Greenmoss agreement, and did not work on the case at any time
 following the agreement.
      After June 1982, the parties, plaintiff's wife, and two other people
 continued to be involved together in a real estate partnership known as 231

 

 Maple Street Partnership.  By the summer of 1984, relations between the
 parties had become strained.  In August 1984, plaintiff and his wife
 purchased the partnership interests of defendant and the other partners.
 Defendant conveyed his interest in the partnership for cash and a general
 release from all suits, debts, or contracts arising from matters preceding
 the date of the release.  The general release did not refer to the Greenmoss
 agreement or the Greenmoss case, which was still in the appellate process.
      In 1983, this Court reinstated the jury verdict in Greenmoss.
 Following two arguments before the United States Supreme Court, the case
 came to a final resolution in 1985, with Greenmoss Builders receiving a jury
 verdict plus interest, a total of $572,845.  In accordance with defendant's
 contingency fee agreement, he was paid $213,641 for his services.  Shortly
 thereafter, plaintiff requested fifty percent of that fee pursuant to the
 Greenmoss agreement.  Defendant refused to pay, citing among other things,
 the general release plaintiff had signed in August 1984.  Plaintiff
 asserted that the general release was never intended to extend beyond
 matters involving the real estate partnership.
      In 1988, plaintiff filed a complaint against defendant for breach of
 contract for failing to pay him his share of the Greenmoss fee.  The case
 was tried before a jury.  At the conclusion of the presentation of evidence,
 the court read its instructions and provided the jury with a set of eight
 interrogatories.  The first two interrogatories read as follows:

           1.  Was the Greenmoss agreement one to settle accounts
               between the plaintiff and the defendant upon their
               departure from the firm of Villa & Heilmann, P.C.?

           2.  Was the Greenmoss agreement one for the division of
               fees for work that the plaintiff and the defendant
               might perform on the case in the future and for
               which they would be paid?

 

 The jury was instructed to render a verdict for defendant if it answered no
 to question one and yes to question two.  Based on its negative response to
 the first question and its affirmative response to the second question, the
 jury rendered a verdict for defendant without answering the last six inter-
 rogatories.
      On appeal, plaintiff argues that the trial court erred by (1)
 instructing the jury on defendant's claim that the Greenmoss agreement
 improperly split fees between unassociated attorneys, in violation of DR 2-
 107 of the Code of Professional Responsibility; (2) refusing to instruct the
 jury that consideration for the Greenmoss agreement existed as a matter of
 law; (3) excluding expert testimony on custom and practice relating to
 attorney partnerships; (4) excluding expert testimony and failing to
 instruct the jury on the fiduciary duties that existed between the parties;
 and (5) directing a verdict in favor of defendant on plaintiff's fraud
 claim.
      The first issue raised by plaintiff concerns DR 2-107, which provides
 that a lawyer is not permitted to divide a fee for legal services with
 another lawyer who is not his or her partner or associate, unless (1) the
 client consents after full disclosure, (2) the division is made in pro-
 portion to the services rendered, and (3) the total fee does not clearly
 exceed reasonable compensation for all legal services rendered.  This
 disciplinary rule does not prohibit, however, "payment to a former partner
 or associate pursuant to a separation or retirement agreement."  DR 2-
 107(B).
      Following the close of evidence in the case, defendant sought a
 directed verdict, arguing that the Greenmoss agreement violated DR 2-107

 

 because it provided for the splitting of fees for legal services performed
 by two attorneys who were no longer associated with each other.  The court
 denied the motion, pointing out that plaintiff claimed the Greenmoss agree-
 ment represented a distribution of assets pursuant to the parties' termina-
 tion of their association with the law firm, not an agreement regarding
 compensation for future work to be done on the Greenmoss case.  The court
 indicated it would instruct the jury on this point as follows:

             If you determine that this contract was for work that
           they would both be doing in the future then Mr. Villa is
           not entitled to enforce paragraph 2(c) because at the
           time the contract was written the parties overlooked the
           Canon of Ethics which says that lawyers unassociated
           together cannot share a client's fee except according
           to the value of the time that each has contributed to
           the case.  Under paragraph 2(c), Mr Villa cannot enforce
           payment in excess of the value of the time he spent on
           the case.  As it turned out that Mr. Villa did not spend
           any time on the Greenmoss case after he signed the
           contract and left the old firm, he cannot claim any part
           of the fee from Mr. Heilmann.

      Plaintiff objected to this instruction at the charge conference,
 arguing that defendant had waived any claim of illegality under DR 2-107 by
 failing to raise it as an affirmative defense in his pleadings.  Plaintiff
 pointed out that the court had excluded proffered testimony from his expert
 that the Greenmoss agreement did not violate DR 2-107 because it was part of
 a separation agreement.  He requested that the court either omit the
 instruction or, in the alternative, instruct the jury further that DR 2-
 107's prohibition against splitting fees does not apply to separation
 agreements.  The court responded that plaintiff did not need the latter
 instruction because its charge on the potential ethics violation was
 relevant only if the jury found that the Greenmoss agreement was a contract

 

 for future services rather than a separation agreement to settle accounts.
 The court then instructed the jury as indicated above.
      We conclude that any error in the challenged instruction is harmless.
 See V.R.C.P. 61 (errors that do not affect substantial rights of parties
 shall be disregarded); Turgeon v. Schneider, 150 Vt. 268, 276, 553 A.2d 548,
 553 (1988) ("party claiming error in jury instructions must establish not
 only that they were erroneous but that prejudice resulted").  Plaintiff's
 position throughout the trial, as noted by the trial court in its charge to
 the jury, was that the Greenmoss agreement represented a final settlement of
 accounts between defendant and himself.  Plaintiff sought to convince the
 jury that he was entitled to half of the Greenmoss fee, regardless of how
 much time he put into the case, because it was an asset of the firm.  He
 contended that defendant agreed to split fees that might be forthcoming in
 Greenmoss as consideration for any interest plaintiff may have had in the
 firm had there been an accounting of work in progress.  On the other hand,
 defendant asserted that the Greenmoss agreement represented the parties'
 intention to share fees received from the case based on their expectation
 that they would both be doing future work on the case.  The jury's response
 to the first two interrogatories indicates that it accepted defendant's
 interpretation of the agreement.  Because the jury determined that the
 Greenmoss agreement was intended to divide fees for future work on the case
 rather than to settle accounts upon termination of the parties' law partner-
 ship, the court's charge that plaintiff would not be entitled to enforce the
 fee-splitting arrangement if the contract was for work they would both be
 doing in the future could not have prejudiced plaintiff.  Given the jury's
 determination of the meaning of the contract, and the undisputed fact that

 

 plaintiff did not work on Greenmoss after June 1, 1982, plaintiff would not
 have been entitled to any fee under the agreement regardless of whether the
 fee-splitting arrangement violated ethical rules.(FN1)
      The challenged instruction may have been superfluous, but it was not
 prejudicial.  The court explicitly instructed the jury in its summary of
 the charge that defendant could be required to pay plaintiff one half of the
 $213,641 fee collected in Greenmoss if the parties intended the agreement
 to settle accounts between the parties, if consideration existed for the
 agreement, and if the release did not cover the agreement.  The jury did not
 reach the latter two issues because, as noted, it rejected plaintiff's
 assertion that the agreement was intended to settle the parties' law-firm
 accounts.  Accordingly, we reject plaintiff's claim that he was prejudiced
 by the challenged instruction.
      Moreover, because the jury did not need to answer the interrogatory
 asking if there was consideration for defendant's agreement to split the
 Greenmoss fee, the court's refusal to instruct the jury that consideration
 for the agreement existed as a matter of law could not have prejudiced
 plaintiff.  "Whether there is consideration for an agreement is a question
 of law, not fact."  Lloyd's Credit Corp. v. Marlin Management Services,
 Inc., 158 Vt. 594, 598, 614 A.2d 812, 814 (1992).  Although plaintiff argued

 

 that there was consideration in this case as a matter of law, he conceded
 that the issue of whether consideration existed could go to the jury, and he
 has not argued otherwise in his appellate brief.  Therefore, reversal cannot
 be grounded on the fact that the court treated the issue as a question of
 fact for the jury.  See Keene v. Willis, 128 Vt. 187, 188, 260 A.2d 371, 371-72 (1969) (where case proceeded on theory that tenant was entitled to
 recover consequential damages for breach of convenant to repair, and such
 issue was so charged without objection of the parties at trial or on appeal,
 theory became law of case).  In any event, as noted, because the jury did
 not need to reach the interrogatory on consideration, plaintiff cannot show
 prejudice.
      Plaintiff also argues that the court erred by not instructing the jury
 that when a contract is susceptible of two meanings, the meaning that would
 give it effect as a legal contract should be adopted.  According to
 plaintiff, the trial court instructed the jury that if it construed the
 Greenmoss agreement as a contract to split future fees, the agreement would
 be illegal under DR 2-107; therefore, it should have further instructed the
 jury that plaintiff's characterization of the agreement as a contract to
 settle accounts is preferred over defendant's characterization of the
 contract as a fee-splitting arrangement.  This argument is unpersuasive.
 First, the trial court did not instruct the jury that the agreement would be
 illegal if defendant's interpretation were accepted; rather, it instructed
 the jury that plaintiff would not be entitled to enforce the agreement if
 that were the case.  More importantly, determining the parties' intent in
 making the agreement was a question of fact for the jury.  United Railway
 Supply v. Boston & Maine Corp., 148 Vt. 454, 457, 535 A.2d 325, 327 (1987)

 

 (intent of parties regarding ambiguous contractual provision is question for
 trier of fact).  For all practical purposes, the jury instruction requested
 by plaintiff would have taken from the jury its role of determining what the
 parties intended by their ambiguous agreement.  None of the cases cited by
 plaintiff hold that a court must instruct jurors that they should interpret
 a contract in a way that renders the agreement enforceable.  We find no
 abuse of discretion in the court's refusal to instruct the jury as
 requested.
      Next, plaintiff argues that the court erred by excluding certain expert
 testimony.  First, plaintiff contends that the court erred by excluding
 testimony from Martin Miller, a Vermont attorney, regarding how law
 partnerships customarily operate and how law partners terminate their
 professional relationships.  Attorney Martin would have testified that
 accepted trade and practice entitled plaintiff to share in fees generated
 from Greenmoss, regardless of the amount of work he put in the case, because
 the case was an asset of Villa & Heilmann at the time the parties terminated
 their relationship.  According to plaintiff, because the testimony would
 have explained to the jury that he was entitled to some compensation from
 Greenmoss and other cases kept by defendant following the parties' breakup,
 the jury would have been more inclined to perceive the Greenmoss agreement
 as a contract between law partners to settle accounts.
      Under V.R.E. 702, expert testimony may be admitted if the proposed
 witness has "scientific, technical, or other specialized knowledge [that]
 will assist the trier of fact to understand the evidence or to determine a
 fact in issue."  The admission or exclusion of evidence under this rule is
 highly discretionary; the court's ruling is not subject to revision unless

 

 the appealing party clearly and affirmatively demonstrates that such
 discretion has been abused or withheld.  State v. Percy, 156 Vt. 468, 475,
 595 A.2d 248, 252 (1990).  Further, the appealing party has the burden of
 showing that any abuse of discretion was prejudicial.  Id.
      Here, the court concluded that the proposed testimony of Attorney
 Miller would not assist the jury in determining the parties' intent in
 signing the Greenmoss agreement.  We conclude that although the proffered
 testimony may have been relevant, plaintiff has failed to show prejudicial
 error requiring reversal of the judgment.  Through direct and cross-
 examination of witnesses and through opening and closing arguments,
 plaintiff made the point to the jury that the parties, as law partners, were
 entitled to share in the fees obtained from the firm's cases, regardless of
 which attorney worked on which particular cases.  In support of his
 contention that the parties intended the Greenmoss agreement to be a final
 distribution of a firm asset -- the Greenmoss case -- to settle accounts
 upon the dissolution of their law partnership, plaintiff contended that he
 was entitled to a share of the Greenmoss fee because he contributed
 billable work for the firm that provided a steady income for both parties,
 while defendant did contingency work such as Greenmoss that occasionally
 provided a big payoff.  The proffered testimony of Attorney Miller, though
 perhaps collaterally relevant to issues before the jury, would have added
 little to plaintiff's case, even considering that the testimony was offered
 as coming from an objective expert.  Cf. United States v. Heath, 970 F.2d 1397, 1405 (5th Cir. 1992) (although trial court erroneously limited
 testimony of real estate lawyer regarding use of non-recourse loans to
 execute real-estate deals, limitation of testimony did not mandate reversal

 

 because information was available from other witnesses).  Indeed, during his
 lengthy offer of proof and the ensuing bench conference, plaintiff's counsel
 gave little emphasis to the proposed testimony whose exclusion he challenges
 here; rather, he emphasized the need for Attorney Miller's expert testimony
 that defendant had fiduciary duties toward plaintiff with respect to the
 general release the parties signed.
      Plaintiff also argues that the court erred by excluding testimony from
 a law professor who would have explained why the prohibition against the
 splitting of fees by unassociated attorneys in DR 2-107 did not apply to the
 Greenmoss agreement.  The court did not err in excluding expert testimony on
 this question of law.  See Town of Brighton v. Griffin, 148 Vt. 264, 271,
 532 A.2d 1292, 1296 (1987) (as general rule, witness may not give opinion on
 question of law).  Further, the jury's verdict is unaffected by this claim
 of error.
      Plaintiff's next argument is that the court erred by excluding expert
 testimony, and failing to instruct the jury, on the fiduciary duties that
 existed between the parties as law partners.  At trial, plaintiff contended
 that, as plaintiff's partner in the 231 Maple Street Partnership, defendant
 violated fiduciary duties owed to plaintiff by failing to inform plaintiff
 that he intended the general release the parties signed in 1984 to extend to
 the Greenmoss agreement.  Because the jury did not reach the interrogatories
 regarding the release, the verdict is unaffected by this claim of error;
 therefore, we need not address the issue.
      Finally, plaintiff argues that the trial court erred by, in effect,
 directing a verdict in favor of defendant on plaintiff's fraud claim.
 During his opening statement, plaintiff stated that the evidence in the case

 

 would demonstrate that defendant perpetrated a fraud upon plaintiff by
 failing to disclose to plaintiff that he intended the general release to
 extend to the Greenmoss agreement.  Following defendant's objection, the
 court informed the jury that plaintiff had made no claim of fraud in his
 pleadings.  We reject plaintiff's argument that the court "directed a
 verdict" on a claim of fraud; plaintiff's counsel himself stated to the
 court that plaintiff was not claiming fraud as a cause of action.  In
 essence, plaintiff's "fraud" claim is the same as his claim that defendant
 breached fiduciary duties by not informing plaintiff of his intent con-
 cerning the release.  To the extent that plaintiff is arguing that the
 court erred by not instructing the jury, or allowing expert evidence, on the
 issue of whether defendant improperly failed to disclose to defendant his
 true intentions regarding the release, we need not address this argument
 because, again, the jury's verdict is unaffected by the claim of error.
      Affirmed.

                                  FOR THE COURT:

                                  ________________________________________
                                  Associate Justice


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                               Footnotes


FN1.   Plaintiff points out in his statement of the case that he objected to
 the first two interrogatories on the same basis that he objected to the
 instruction on the ethics violation.  Further, at one point, he lists as one
 of his issues presented for review that the court erred by instructing and
 submitting interrogatories to the jury on the issues of illegality and DR 2-
 107.  The first two interrogatories, however, do not directly concern
 illegality of the agreement or ethical violations; rather, they merely ask
 the jury to choose between the parties' competing positions on the meaning
 of the Greenmoss agreement.  Plaintiff has not indicated how submission of
 the interrogatories constitutes error, and indeed we find no error.