HAMILTON, Circuit Judge.
Attorney-appellant Barry A. Gomberg briefly represented appellee Anil Goyal in settlement negotiations with a former employer over his claims of retaliation for whistle-blowing. The settlement negotiations did not produce an agreement, and Goyal later retained new counsel to pursue litigation. Years later, without the aid of any counsel, Goyal settled with his former employer.
Back when Gomberg had represented Goyal, though, he had given Goyal's employer notice of an attorney lien on any settlement or judgment. So after Goyal settled, Gomberg reappeared and demanded a share, and the employer paid a portion of the settlement to Gomberg rather than to Goyal. Goyal then sought to quash Gomberg's lien in the district court. The court granted Goyal's motion, effectively ordering Gomberg to pay Goyal. Gomberg has appealed, claiming that his lien on a portion of Goyal's settlement was proper. We affirm the order of the district court.
Anil Goyal was an engineer whose employment with Gas Technology Institute (GTI) was suspended in September 2003 and terminated in March 2004 after he informed the chief executive officer that two of Goyal's superiors had engaged in fraud and that he believed other members of upper management were involved as well. We can assume the allegations had a good deal of substance. The two accused upper-level managers were indicted by a federal grand jury; one pled guilty and the other died before his case could be resolved.
After Goyal was suspended in September 2003, he retained Barry A. Gomberg & Associates to represent him during mediation with GTI. Goyal and Gomberg signed a retainer agreement dated September 24, 2003, which provided:
Gomberg began representing Goyal in mediation sessions, beginning with a first session on November 21, 2003. Two weeks later, on December 2, 2003, Gomberg sent a letter to GTI's attorneys claiming an "attorneys lien in the amount of $70,000 attached to any settlement, verdict, judgment, payment, or Order entered and to any monies recovered by Anil Goyal resulting from his current claims or possible future litigation against Gas Technology Institute." (Gomberg told the district court that he informed Goyal of this lien;
By March 2004, GTI had made a "final" offer to settle for $375,000. Goyal rejected the offer and his employment was terminated on March 9. At that point, Gomberg's representation of Goyal ended, as indicated in emails and letters. On March 12, 2004, Gomberg sent Goyal a letter stating:
Goyal claims that this last quoted sentence is the first time he learned of any lien filed by Gomberg for attorney fees. He points to a letter he sent to Gomberg in response on March 24, 2004. In the letter, Goyal asked about the lien and stated his understanding that "if no settlement is reached then you will not receive any money other than the initial retainer money," and "since I have not received any money as of today as a result of your representation, your share so far would be only $2,500 of initial retainer fee which you have already received from me." Goyal and Gomberg then went their separate ways.
In September 2005, with assistance of new counsel, Goyal sued GTI in the Northern District of Illinois for retaliation in violation of the federal False Claims Act and Illinois common law. The district court eventually denied summary judgment for GTI, see Goyal v. Gas Technology Institute, No. 05-cv-5069, 2008 WL 4369332 (N.D.Ill. Sept. 23, 2008), and about a month before the scheduled trial, Goyal's counsel withdrew as counsel citing irreconcilable differences with Goyal that had arisen over the course of settlement negotiations. Without further representation by counsel, Goyal settled with GTI for approximately $1.3 million in April 2009.
Goyal attempted to stop GTI's attorneys from honoring the lien and sought the assistance of a bar association to resolve his dispute with Gomberg. In January 11,
We have appellate jurisdiction to review the district court's grant of Goyal's motion to quash the lien because the order operated in substance as an interlocutory injunction under 28 U.S.C. § 1292(a)(1). See Union Oil Co. of California v. Leavell, 220 F.3d 562, 566 (7th Cir.2000) (even though district judge "did not use the magic word `injunction,'" the order was injunctive in nature and appeal was therefore within appellate court's jurisdiction); In re City of Springfield, 818 F.2d 565, 567 (7th Cir.1987) (orders are "injunctions" under section 1292(a)(1) "if they effectively grant or withhold the relief sought on the merits and affect one party's ability to obtain such relief in a way that cannot be rectified by a later appeal"). Although the district court did not label its order granting Goyal's motion to quash as an injunction, the order had the effect of an injunction because it both required Gomberg to return the transferred funds and quashed an assignment to him of an equitable legal right — the lien. See Home Fed. Sav. & Loan Ass'n of Centralia v. Cook, 170 Ill.App.3d 720, 121 Ill.Dec. 345, 525 N.E.2d 151, 153-54 (1988) (attorney liens create an "equitable assignment of a portion of the recovery, as opposed to a mere promise to pay" and can assert priority over other creditors); see also Eastman v. Messner, 188 Ill.2d 404, 242 Ill.Dec. 623, 721 N.E.2d 1154, 1156 (1999) (defining liens in Illinois as involving an equitable assignment of debt with a right to priority over other creditors). We therefore have appellate jurisdiction under 28 U.S.C. § 1292(a)(1).
Although not disputed by the parties, we must also clarify the foundation of the district court's jurisdiction over Goyal's motion to quash. District courts may exercise supplemental jurisdiction over disputes between attorneys and clients concerning costs and fees for representation in matters pending before the district court. See Baer v. First Options of Chicago, Inc., 72 F.3d 1294, 1299-300 & n. 5 (7th Cir.1995) (collecting cases and stating that "supplemental jurisdiction generally has been asserted over attorney's fee disputes when the disagreement arises between the client and the lawyer"). Supplemental jurisdiction does not extend, however, to attorney fee disputes after the case has been dismissed and jurisdiction has been relinquished. See Hill v. Baxter Healthcare Corp., 405 F.3d 572, 576-77 (7th Cir.2005) (district court did not retain supplemental jurisdiction to resolve a dispute over a motion to quash an attorney fee lien where the district court had dismissed the case with prejudice, thus terminating federal jurisdiction); Shapo v. Engle, 463 F.3d 641, 644-45 (7th Cir.2006) (no supplemental jurisdiction to enforce attorney-client master fee agreement after district court approved settlement and dismissed case).
In this case, although Goyal had settled with GTI, the district court had not
We review de novo the district court's interpretation of the written retainer agreement as precluding Gomberg's lien. BKCAP, LLC v. CAPTEC Franchise Trust 2000-1, 572 F.3d 353, 358 (7th Cir. 2009). Goyal and Gomberg executed the retainer agreement in Illinois for services in Illinois, so we apply the laws of that state in analyzing whether the agreement gave rise to a valid equitable lien. See In re Motorola Securities Litig., 644 F.3d 511, 517 (7th Cir.2011). "In Illinois, an attorney acquires an equitable lien on a judgment if the agreement between attorney and client makes an equitable assignment of a portion of the recovery, as opposed to a mere promise to pay. To make this determination requires an examination of the exact language of the contract." Home Fed. Sav. & Loan Ass'n, 121 Ill.Dec. 345, 525 N.E.2d at 153. We consider first the parties' retainer agreement and then Gomberg's extra-contractual theories.
Like Judge Pallmeyer, we agree with Judge Keys' well reasoned opinion that Gomberg does not hold a valid lien on Goyal's settlement. The retainer agreement authorized an equitable lien on only the funds "secured by us." Gomberg's representation put no cash in Goyal's hands. Gomberg argues, though, that GTI's offer of $375,000 in early 2004 constituted funds that he "secured" for Goyal. In support he cites a dictionary's definition of "secure" as "to give a pledge of a payment to (a creditor) or of (an obligation); to bring about, effect." Gomberg seems to be relying on the part of the definition that refers to securing repayment of a debt with a promise to pay, but such "security" requires an agreement between the relevant parties. That portion of the definition has no application here, of course, for the parties (GTI and Goyal) simply never reached an agreement while Gomberg was involved.
Gomberg argues further that he "secured" $375,000 for Goyal when GTI made the offer: "If Mr. Goyal had accepted the settlement offer of $375,000.00, GTI would have paid it. The offer was on the table. All it required was Mr. Goyal's agreement." That's true but legally irrelevant. In our legal system, it is axiomatic that there is no contract (and no settlement) without both offer and acceptance. This is a fundamental principle of contract law. See 2 Williston on Contracts § 6:1 (4th ed.) ("Acceptance of an offer is necessary to create a simple contract, since it takes two to make a bargain."); Restatement (Second) of Contracts § 3 (1981) ("An agreement is a manifestation of mutual assent on the part of two or more persons."). GTI's offer, alone, in no way "secured" funds for Goyal and thus no funds were "secured" by Gomberg. Another
To illustrate how unreasonable Gomberg's position is, suppose that one condition of GTI's offer had been Goyal's agreement never to work in the industry again. Receiving an offer with such an onerous condition would not have meant that his attorney had "secured" the offered funds. And Goyal retained the right to reject any conditions of a proposed settlement, including even the mutual releases that would be customary.
Or suppose that GTI and Goyal had actually agreed to settle for $375,000, with a written and signed settlement agreement with mutual releases. And then suppose that GTI had reneged on the agreement and refused to pay. No attorney in his right mind would claim that he had then "secured" $375,000 for Goyal and was then entitled to immediate payment of a percentage of the unpaid settlement. See Restatement (Third) of Law Governing Lawyers § 35(2) (2000) ("Unless the contract construed in the circumstances indicates otherwise, when a lawyer has contracted for a contingent fee, the lawyer is entitled to receive the specified fee only when and to the extent the client receives payment."). Gomberg did not take Goyal even as far as an agreement, and yet he still claims a right to a fee based on having obtained an unacceptable offer.
The retainer agreement's term "secured by us" is not ambiguous as applied to the unaccepted offer. Gomberg is not entitled to an equitable lien on funds that were merely offered to Goyal on terms that were not acceptable to him.
In the alternative, Gomberg attempts to establish a legal right to a portion of Goyal's settlement funds under either Illinois' statutory lien provision or the equitable remedy of quantum meruit. Neither entitles Gomberg to any of Goyal's settlement funds. The Illinois Attorney's Lien Act, 770 Ill. Comp. Stat. 5/1, grants an attorney a lien "for the amount of any fee which may have been agreed upon by and between such attorneys and their clients." Id. For the reasons explained above, Goyal and Gomberg's retainer agreement did not provide for a lien on ten percent of the settlement offer GTI made during Gomberg's representation. If the attorney and client have not made a fee agreement, the Act provides for reasonable fees and costs, but that provision is not available when the attorney and client entered into a fee agreement. 770 ILCS 5/1; In re Solis, 610 F.3d 969, 974 (7th Cir.2010) (attorney could not rely on Illinois lien statute to increase fee above amount under valid fee agreement).
As to quantum meruit, Illinois law provides an equitable remedy for attorneys retained on a contingent fee basis to "recover on a quantum meruit basis a reasonable fee for services rendered before discharge." Leoris and Cohen, P.C. v. McNiece, 226 Ill.App.3d 591, 168 Ill.Dec. 660, 589 N.E.2d 1060, 1063-64 (1992), citing Rhoades v. Norfolk & W. Ry. Co., 78 Ill.2d 217, 35 Ill.Dec. 680, 399 N.E.2d 969 (1979). This mechanism protects attorneys from the unfairness of being fired by a client on the brink of settlement or victory. It permits attorneys to recover reasonable
Although Gomberg requested this relief in conclusory terms, he has not argued why the circumstances of the termination of his representation of Goyal should actually entitle him to such compensation. See id., 198 Ill.Dec. 381, 632 N.E.2d at 715-16 (quantum meruit compensation is available only to attorneys who are discharged or who justifiably withdraw from representation). He failed to develop the argument before the magistrate judge and made no argument on the point before the district judge. We thus deem the argument waived.
Attorney Gomberg is not entitled to any part of the settlement funds Goyal secured from GTI in 2009. We also believe Gomberg's professional conduct is questionable in two distinct respects. First, for reasons we explained above, his position that he "secured" funds for Goyal when the opposing party made an unacceptable and unaccepted settlement offer is unreasonable to the point of being frivolous and possibly warrants sanctions under Federal Rule of Appellate Procedure 38. Second, even apart from a legal theory that we consider specious, Gomberg's assertion of a lien for $70,000 was far greater than ten percent of even GTI's unaccepted (and not yet made) offer of $375,000. We see no apparent basis for it.
We recognize that attorneys and clients will have reasonable and good faith disputes about fees, but we believe that Rule of Professional Conduct 1.5 on attorney fees includes an implicit requirement that an attorney not assert unreasonable or baseless demands for attorney fees contrary to his fee agreement, including asserting a lien. Cf. Restatement (Third) of Law Governing Lawyers § 43, cmt. h
The district court's order quashing attorney Gomberg's lien is AFFIRMED.
