Law360: Morris & Clemm Tried To Force Unearned Fee, Pa. Court Says

Law360: Morris & Clemm Tried To Force Unearned Fee, Pa. Court Says
By Matt Fair


Law360, Philadelphia (January 05, 2015, 3:20 PM ET) -- The Pennsylvania Commonwealth Court has rejected Morris & Clemm PC’s bid to claim nearly $175,000 in fees from a settlement share awarded to the state’s Underground Storage Tank Indemnification Fund in litigation over soil contamination at a Bucks County gas station.

A three-judge panel ruled Dec. 30 that firm attorney Robert Morris was not entitled to collect any fees from a settlement share allocated to USTIF, which was allowed to intervene in the contamination dispute, because he’d only been tapped to represent gas station owner Patrick Stanley and had no formal authorization to act as counsel for the fund.

“This action is about [the] law firm and Morris seeking to increase their own profit from the litigation,” the court ruled in an opinion penned by Judge P. Kevin Brobson. “Morris and [the] law firm have already recovered everything they were entitled to under the contingent fee agreement with Stanley.”

According to the opinion, Morris was retained in July 2001 to represent Stanley in a suit against a group of contractors accused of damaging a set of underground storage tanks and causing soil contamination.

The opinion said USTIF, acting under its statutory authority to respond to leaks and spills, incurred some $807,000 in cleanup costs at the site. Over initial objections from Morris & Clemm that the firm was adequately representing USTIF’s interests, the fund was ultimately allowed to intervene in the case with its own counsel in order to protect its rights to recover remediation costs.

As part of his agreement with the service station’s owner, Morris was entitled to keep a third of any amount recovered in the litigation. When the case ultimately settled for $752,000, the opinion said that Morris kept $83,000 of the $250,000 that was allocated to the service station’s owner.

But Morris also withheld another $167,333 representing a third of the money that was allocated to USTIF from the settlement. According to the opinion, Morris claimed he was entitled to the money because he had effectively acted as lead counsel for USTIF when the fund failed to litigate its own claims.

Both Morris & Clemm and USTIF subsequently filed dueling lawsuits aimed at cementing their claim on the settlement share.

In dispatching the firm’s claim to the $167,333, the Commonwealth Court rejected arguments that the fund was subrogated to Stanley for the entire amount of the award such that it would be responsible for paying fees out of its share.

Instead, the court couched the dispute as one over the division of labor and concluded that there was no case law in Pennsylvania which would allow an attorney to recover a fee from a party he or she did not formally represent.

“We … are unaware of any case law or legal principle that would allow Morris to collect an attorneys' fee from a party with whom he had no representation or fee agreement, and who, in fact, rejected Morris’s offer to represent its claims by hiring its own counsel and intervening,” the opinion said. “If Morris acted as lead counsel, whether by accident, design or demand, then he did so gratuitously — not only without a contract with USTIF but with full knowledge that USTIF had rejected his offer.”

USTIF is represented by John McMeekin II and Benjamin Rose of Rawle & Henderson LLP.

Morris & Clemm PC attorneys Mark Clemm and Seth Wilson represented the firm.

The cases are Underground Storage Tank Indemnification Fund v. Morris & Clemm PC, case number 222 MD 2011, and Morris & Clemm PC v. Underground Storage Tank Indemnification Fund et al., case number 489 MD 2011, both in the Pennsylvania Commonwealth Court.

--Editing by Chris Yates.