ILNews

Judges uphold contingent fees award

Back to TopE-mailPrintBookmark and Share

The contingent fee contract a law firm entered into with a city regarding a sewer fee dispute, which ultimately led to the firm collecting nearly 10 times more than the city anticipated, was valid and reasonable, the Indiana Court of Appeals affirmed today.

In The City of New Albany v. K. Lee Cotner, Richard R. Fox, Steve Gustafson, and Law Offices of Fox & Cotner, No. 22A01-0904-CV-175, New Albany hired Fox & Cotner on a contingency fee basis in regards to its sewer fee dispute with the Town of Georgetown. The terms of the agreement with the firm said Fox & Cotner would get one third of whatever they ultimately collected from Georgetown in the dispute. The city later retained another attorney to help with regards to sewer litigation seeking back sewer fees and penalties from Georgetown.

Around this time, Fox & Cotner proposed a new fee contract because it thought it had lost the original one and wanted to ensure payment, as well as to avoid any argument related to the fee since the city was also paying the other attorney. The city rejected the new contract, which including recouping a one-tenth contingent fee on capital improvements, leaving the old one in place; the original contract was eventually located.

Georgetown ultimately settled with New Albany and agreed to pay $100,000 as payment for back sewer fees and $800,000 as payment for its remaining payment obligations. Over the city's objections, Fox & Cotner sought a third of the total amount, not just the $100,000 for back sewer fees. The trial court granted summary judgment for the firm and ordered the city to pay $300,000 plus interest.

New Albany argued the scope of the fee contract, whether estoppel applies, and the reasonableness of the fee were genuine issues of material fact, but the appellate judges disagreed.

The term "sewer fee dispute" in the original contract is ambiguous, but all of the designated evidence points to the fact that it generally involved the collection of back sewer fees, unpaid connection fees, and penalties for excess flow under the terms of the contract between the municipalities, wrote Judge Nancy Vaidik.

"The 'sewer fee dispute' encompassed the issue of penalties for excess flow and thus, in accordance with the sewage contract, also encompassed its alternative of monetary contributions toward capital improvements," she wrote.

The judges also rejected New Albany's argument that Fox & Cotner had a duty to tell the city at mediation that it was going to assert a claim for a third of the total amount of the settlement fees, not just the back sewer fees. But the city knew of the firm's claim for contingent fees on the capital improvement claims because the firm attempted to renegotiate its fees, including on capital improvements, but the city rejected the proposed contract.

Examining the contingent fee contract at the time it was entered into, the Court of Appeals ruled it was reasonable. The city claimed it was reasonable when it was entered into, but that the $300,000 the firm tried to recoup was unreasonable because it didn't expend enough effort to justify such a high fee. But the city's evidence doesn't address the dispositive issue of whether the contingent fee was unreasonable at the time the contract was entered in to, so "without more, 20/20 hindsight is simply not enough to overcome the presumption that the contingent fee is reasonable," wrote Judge Vaidik.

ADVERTISEMENT

Sponsored by
2015 Distinguished Barrister &
Up and Coming Lawyer Reception

Tuesday, May 5, 2015 • 4:30 - 7:00 pm
Learn More


ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. by the time anybody gets to such files they will probably have been totally vacuumed anyways. they're pros at this at universities. anything to protect their incomes. Still, a laudable attempt. Let's go for throat though: how about the idea of unionizing football college football players so they can get a fair shake for their work? then if one of the players is a pain in the neck cut them loose instead of protecting them. if that kills the big programs, great, what do they have to do with learning anyways? nada. just another way for universities to rake in the billions even as they skate from paying taxes with their bogus "nonprofit" status.

  2. Um the affidavit from the lawyer is admissible, competent evidence of reasonableness itself. And anybody who had done law work in small claims court would not have blinked at that modest fee. Where do judges come up with this stuff? Somebody is showing a lack of experience and it wasn't the lawyers

  3. My children were taken away a year ago due to drugs, and u struggled to get things on track, and now that I have been passing drug screens for almost 6 months now and not missing visits they have already filed to take my rights away. I need help.....I can't loose my babies. Plz feel free to call if u can help. Sarah at 765-865-7589

  4. Females now rule over every appellate court in Indiana, and from the federal southern district, as well as at the head of many judicial agencies. Give me a break, ladies! Can we men organize guy-only clubs to tell our sob stories about being too sexy for our shirts and not being picked for appellate court openings? Nope, that would be sexist! Ah modernity, such a ball of confusion. https://www.youtube.com/watch?v=QmRsWdK0PRI

  5. LOL thanks Jennifer, thanks to me for reading, but not reading closely enough! I thought about it after posting and realized such is just what was reported. My bad. NOW ... how about reporting who the attorneys were raking in the Purdue alum dollars?

ADVERTISEMENT