WLODZIMIERZ DUDA, EMPLOYEE, ERNEST F. FRIEDMAN, PLAINTIFF, 2001 ACO #24 S T A T E O F M I C H I G A N WORKER'S COMPENSATION APPELLATE COMMISSION V DOCKET # 00-0300 BERNARD S. EDELSON, DEFENDANT, THE SCORE GROUP, INCORPORATED AND TRANSPORTATION INSURANCE COMPANY, EMPLOYER AND CARRIER. APPEAL FROM DIRECTOR PETERSEN. ERNEST F. FRIEDMAN PRO SE, SANDRA L. REWALT FOR DEFENDANT. WITTE, COMMISSIONER OPINION Plaintiff Attorney Ernest Friedman appeals Director Craig R. Petersen s decision, mailed July 5, 2000, affirming an apportionment of attorney fees between Plaintiff Attorney Ernest F. Friedman and Defendant Attorney Bernard S. Edelson, the first attorney representing employee Wlodzimierz Duda in a worker s compensation claim ultimately redeemed before Magistrate Jerome H. Solomon. 1 The employee discharged defendant and hired plaintiff to continue to represent him through redemption of the matter. Magistrate Solomon divided the attorney fees at $7,272.72 for defendant and $2,727.27 for plaintiff. Plaintiff requests that either defendant receive no attorney fee or that the matter be remanded for a proper legal analysis: I. By virtue of his misrepresenting the facts to his client, Mr. Edelson is not entitled to any attorney fees. II. Even if this court determines that Mr. Edelson is entitled to attorney fees Magistrate Solomon and Director Petersen used the wrong method to 1 This case has been ready for review since November 27, 2000.
determine said fees and this case should be remanded for a proper determination. Defendant Attorney Edelson represented the employee from February 1995 until March 1998. The parties entered a voluntary pay agreement on December 6, 1996 to include all past benefits and Attorney Edelson received payment of his contingent attorney fees and file expenses through that point. Magistrate Solomon found that on November 19, 1996 the employer/insurance company offered plaintiff $80,000 to redeem the case. The employee s responsive demand, through his counsel by letter written February 27, 1998, was $175,000. On March 11, 1998, for reasons unclear to the magistrate, the employee discharged Attorney Edelson. Edelson filed a lien on November 11, 1998. Plaintiff Attorney Friedman took over the employee s representation and on March 25, 1999, 12 months after Edelson s discharge, without notifying Attorney Edelson, redeemed the case for $110,000. The magistrate noted that no further depositions were taken, and merely telephone calls were exchanged to achieve the redemption. Following a trial before Magistrate Solomon on September 16, 1999 to split the $10,000 attorney fee, 2 Attorney Edelson was awarded $7,272.72 and Attorney Friedman was awarded $2,727.27, based on a conclusion that the men had done 80% and 20% respectively of the necessary work. The magistrate noted that this would be fair under either an actual examination of the attorneys time investment or a quantum meruit evaluation. On appeal to the director, the magistrate s decision was affirmed. Director Petersen concluded his affirmance with these remarks: Attorney Friedman was hired by the plaintiff subsequent to Attorney Edelson s representation. Attorney Friedman was aware of Attorney Edelson s involvement in this claim and was provided a copy of the client s file by Attorney Edelson. However, Attorney Friedman never notified Attorney Edelson of the redemption prior to or after the hearing. This action of Attorney Friedman took place even though he was on notice of the attorney fee lien filed by Attorney Edelson. He made no efforts to disclose and resolve this issue with Attorney Edelson until the petition was filed in this matter to fix attorney fees. Attorney Friedman provided no evidence to Magistrate Solomon or the director of what efforts he made toward resolving this claim. There was no new medical evidence submitted or any new theories of recovery expressed. However, 2 Normally the fee would be $11,000, but Plaintiff Attorney Friedman stated that he waived $1,000 of Mr. Duda s fees. See transcript before Director Petersen, page 18: Mr. Friedman: I actually reduced my fee for Mr. Duda. Although no party mentions it, it could certainly be said that Mr. Friedman has already been compensated in that amount. 2
through his efforts, Attorney Friedman was able to increase the value of the settlement to $110,000.00 from $80,000.00. Based on the record, I find that Attorney Edelson is entitled to an attorney fee on the offer of $80,000.00 he obtained from the defendant before his services were terminated by his client. He provided the work that brought the value of the claim to this level. Attorney Friedman is entitled to an attorney fee on the balance of the settlement, or $30,000.00. 3 Attorney Friedman finds error in the director s result as follows:... Mr. Duda became dissatisfied with the representation he received from Mr. Edelson. Mr. Edelson was misrepresenting facts to him and because of this Mr. Duda discharged Mr. Edelson as his attorney. ([S]ee attached affidavit.) * * * Mr. Edelson also brought no written proof or affidavit that he communicated the settlement offer to Mr. Duda. (HT1, page 10) This was highly unprofessional and disciplinable misconduct under MRPC 1.4.... Mr. Edelson never brought forth any proof or evidence of showing [sic] the time he spent working on the case after the voluntary pay for which he had already received attorney fees for [sic]. Mr. Edelson did not bring any kind of written statement showing the number of hours spent working on the case or what services he performed while representing Mr. Duda. Mr. Edelson brought no such proof either to Magistrate Solomon o[r] Director Peters[e]n. * * * Despite this lack of proof, Magistrate Solomon determined that Mr. Edelson should receive attorney fees based on the Eighty Thousand Dollar ($80,000) offer he claimed he received. * * * The decision of Magistrate Solomon is incorrect for two reasons. First, by virtue of his misrepresenting facts to Mr. Duda, Mr. Edelson was not entitled to any attorney fees. Polen v Melonakos, 220 Mich App 20 (1997). Next, even if this Court determines that Mr. Edelson was entitled to attorney fees, those fees should have been 3 Director s decision, 2-3. 3
determined on a Quantum Meruit basis. The correct determination in this case should have been to multiply the hours Mr. Edelson spent on the case by his hourly fee. 4 Attorney Friedman states that Attorney Edelson engaged in misconduct, specifically, failing to convey a settlement offer, thus disentitling him to any fees. The record does not support this allegation. Rather, at trial before Magistrate Solomon, Attorney Edelson stated repeatedly to the magistrate that he obtained an offer of $80,000 to settle the matter and he communicated that offer to Mr. Duda, who rejected it: MR. EDELSON:... this gentleman actually wanted the insurance company to make him better. He claimed he didn t want money. He didn t speak English. We took depositions. We came down on numerous trial dates, and as I said, we subsequently obtained the voluntary payment offer that he accepted, of course. The settlement offer he rejected. He wanted to be made better. He didn t want money from them. MAGISTRATE SOLOMON:... But, Mr. Edelson, what do your records disclose as to the $80,000[?] Was it, in fact, conveyed to Mr. Duda by some MR. EDELSON: It was on numerous occasions, your Honor. And he did constantly tell me that he didn t want to settle the case. He wanted to be fixed.... We continually discussed settlement until the last time I visited with him, and until I was discharged. I did talk with his daughter who did speak English, and I talked with his interpreter when he would call. We discussed settling the case right through the last time I met with him. And MAGISTRATE SOLOMON: Uh-huh. Was the figure of $80,000 mentioned at all or just generally settlement? MR. EDELSON: No. The figure was mentioned, and other figures were mentioned.... Oh, I absolutely told him about it. 5 4 Plaintiff s brief, 4, 7, 5, 6-7. 5 Trial transcript, 4-5, 10-11, 12. 4
The only proof of misconduct which Attorney Friedman submits is an affidavit attached to his appellate brief. (His trial brief before Magistrate Solomon concludes with the statement: The undersigned is informed and believes that the reason for this [discharge] was that Mr. Edelson misrepresented to Mr. Duda and his agents. The undersigned is attempting to gather and submit the appropriate documentation to support this. ) The affidavit attached to the appellate brief was never submitted at trial and it includes the vague statement that Mr. Edelson was replaced because on various occasions Mr. Edelson misrepresented the facts to Mr. Duda.... We are not persuaded to reverse on this basis. There is competent, material and substantial evidence on the whole record for the magistrate s conclusion, affirmed by the director, that It appears, no dispute, that Atty. Edelson conveyed to Mr. Duda the settlement offer of $80,000 on November 19, 1996. 6 We see no evidence of misconduct on Mr. Edelson s part, thus disqualifying him from any fees. Second, Attorney Friedman states that there was not adequate proof of the time Attorney Edelson invested in the file and, since a voluntary pay agreement was entered, Attorney Edelson should not be paid for any time invested prior to that date. The magistrate and director both rejected this position and recognized that the voluntary pay agreement made plaintiff current from past due benefits and that the redemption, was for the employer and carrier s future obligation. Attorney Friedman further asserts that the director inappropriately placed on Friedman the burden of proof to show that he should be entitled to more fees, rather than recognizing Edelson should be entitled to less fees. We disagree since any apportionment based on value is relative and both attorneys efforts should be examined. In terms of time invested, Attorney Edelson explained that, as an attorney working for a contingent fee, he did not keep detailed records. At trial before Magistrate Solomon, he testified that Attorney Friedman, despite numerous requests, refused to return Edelson s original file so that he could make a more precise list of time invested based on that documentation. Edelson explained to the court that he met with his client (and the interpreter) many times: I can t tell you the number of times I ve met with him.... [The meetings] were so numerous... it was becoming burdensome. 7 Attorney Edelson also attended all of the depositions and necessary court appearances. The bureau file jacket indicates that between March 1995 and March 1998 there was a total of nine pre-trial, control and trial dates. By comparison, once Friedman assumed representation, as the magistrate noted, he made some telephone calls, attended some control dates, and handled the redemption hearing. Following the jacket s notation changed plaintiff s counsel, only five control dates and the redemption date appear. Finally, the record supports Attorney Edelson s position, expressed to Magistrate Solomon, that Attorney Friedman stood on my shoulders, accepting the work Edelson did to achieve a file value of $80,000, which, through further time and party exhaustion, resulted in a redemption of 6 Magistrate s decision, 2. 7 Trial transcript, 13. In his trial memorandum before Magistrate Solomon, Attorney Edelson explained he met with Mr. Duda approximately one dozen times. Each meeting lasted a minimum of one hour and sometimes as long as two and one-half hours. Page 3. 5
$110,000. 8 That the magistrate and director both recognized that the lion s share of the work was accomplished by Attorney Edelson does not violate a burden of proof as Attorney Friedman represents. Since the $10,000 attorney fee was split on a quantum meruit basis, the work each attorney performed was relevant. Director Petersen s decision is affirmed. Commissioners Leslie and Martell concur. Joy L. Witte Richard B. Leslie Marie E. Martell Commissioners 8 Trial transcript, 25. 6
WLODZIMIERZ DUDA, EMPLOYEE, ERNEST F. FRIEDMAN, PLAINTIFF, S T A T E O F M I C H I G A N WORKER'S COMPENSATION APPELLATE COMMISSION V DOCKET # 00-0300 BERNARD S. EDELSON, DEFENDANT, THE SCORE GROUP, INCORPORATED AND TRANSPORTATION INSURANCE COMPANY, EMPLOYERS. This cause came before the Appellate Commission on plaintiff s appeal from Director Craig R. Petersen s decision, mailed July 5, 2000, affirming Magistrate Jerome H. Solomon s award of attorney fees. The Commission has considered the record and counsels briefs, and believes that the director s decision should be affirmed. Therefore, IT IS ORDERED that the director s decision is affirmed. Joy L. Witte Richard B. Leslie Marie E. Martell Commissioners