Filed: Sep. 29, 2020
Latest Update: Sep. 29, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 19-3062 _ MONTAGUE WALKER v. PENNSYLVANIA DEPARTMENT OF CORRECTIONS, an agency of the Commonwealth of Pennsylvania; SCI EMPLOYEE SHELLY MANKEY; SCI EMPLOYEE KENNETH MCWILLIAMS; SCI EMPLOYEE STANLEY HENRY; SCI EMPLOYEE ROBERT D. RHODES; SCI EMPLOYEE TONY TRAYTOR; SCI EMPLOYEE DANIELLE TERNITSKY-GORDON; SCI EMPLOYEE MARY BOBECK; WEXFORD HEALTH SOURCES, INC; DR.PAUL DASCANI; MONTAGUE WALKER; ALVIN F. DE LEVIE, ESQ., Appella
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 19-3062 _ MONTAGUE WALKER v. PENNSYLVANIA DEPARTMENT OF CORRECTIONS, an agency of the Commonwealth of Pennsylvania; SCI EMPLOYEE SHELLY MANKEY; SCI EMPLOYEE KENNETH MCWILLIAMS; SCI EMPLOYEE STANLEY HENRY; SCI EMPLOYEE ROBERT D. RHODES; SCI EMPLOYEE TONY TRAYTOR; SCI EMPLOYEE DANIELLE TERNITSKY-GORDON; SCI EMPLOYEE MARY BOBECK; WEXFORD HEALTH SOURCES, INC; DR.PAUL DASCANI; MONTAGUE WALKER; ALVIN F. DE LEVIE, ESQ., Appellan..
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 19-3062
_____________
MONTAGUE WALKER
v.
PENNSYLVANIA DEPARTMENT OF CORRECTIONS,
an agency of the Commonwealth of Pennsylvania;
SCI EMPLOYEE SHELLY MANKEY;
SCI EMPLOYEE KENNETH MCWILLIAMS;
SCI EMPLOYEE STANLEY HENRY;
SCI EMPLOYEE ROBERT D. RHODES;
SCI EMPLOYEE TONY TRAYTOR;
SCI EMPLOYEE DANIELLE TERNITSKY-GORDON;
SCI EMPLOYEE MARY BOBECK;
WEXFORD HEALTH SOURCES, INC; DR.PAUL DASCANI;
MONTAGUE WALKER;
ALVIN F. DE LEVIE, ESQ.,
Appellants
_______________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 2-14-cv-1504)
Magistrate Judge: Hon. Lisa P. Lenihan
_______________
Submitted Under Third Circuit LAR 34.1(a)
September 25, 2020
Before: McKEE, JORDAN, and RENDELL Circuit Judges.
(Filed: September 29, 2020)
_______________
OPINION
_______________
JORDAN, Circuit Judge.
Alvin F. de Levie, Esq. appeals the District Court’s determination that he and James
E. Beasley, Jr., Esq. of the Beasley Firm, LLC (“TBF”), reached a binding oral agreement
regarding their joint representation of plaintiff Montague Walker in the civil rights and
personal injury lawsuit that underlies this fee dispute. According to de Levie, the Court
lacked subject matter jurisdiction over the fee dispute and further erred in holding that he
and Beasley were parties to an enforceable contract. Because neither of de Levie’s
contentions have merit, we will affirm.
I. BACKGROUND
Walker suffered catastrophic injuries while incarcerated in a Pennsylvania
penitentiary, resulting in his permanent paralysis. He retained de Levie under a contingent
fee agreement to represent him in any potential lawsuit relating to the incident. Prior to
filing suit, de Levie “brought in” Beasley “to act as co-counsel” so that he could have “the
benefit of additional resources and another experienced lawyer for a case of this magnitude
and seriousness[.]” (Opening Br. at 5.) “The attorneys proceeded on an oral agreement
between de Levie and Beasley to work on the case together, with TBF and Mr. de Levie
both to advance costs, and to share a contingency fee equally in the event of a successful
This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
2
conclusion to the case by trial or settlement.” (Opening Br. at 5-6.) The terms of de Levie’s
and Beasley’s agreement appear to be the same terms they had utilized in a previous
personal injury case in which de Levie had asked Beasley and TBF to become involved.
de Levie and Beasley filed suit on behalf of Walker in November 2014, asserting
federal civil rights claims under 42 U.S.C. § 1983, as well as claims for negligence and
malpractice under Pennsylvania state law. Both attorneys signed the complaint and, along
with other TBF lawyers, continued to work together on Walker’s case until April 2016. At
that time, Walker, at de Levie’s behest, requested that TBF withdraw from the case,
purportedly because of Beasley’s failure to take a sufficiently active role and the firm’s
failure to diligently prosecute the matter. Shortly after receiving the withdrawal request,
TBF filed a “Notice of Attorney’s Charging Lien” (the “Lien”) with the District Court,
asserting “an attorney’s charging lien against any recovery in favor of [Walker] … with
respect to costs incurred and [TBF’s] contractual and/or equitable rights to an attorney’s
fee.” (App. 96). The Lien provided further that “distribution of any proceeds arising from
a recovery in this mater -- by way of settlement, judgment or otherwise -- shall not be made
until [TBF] has received written notice of the recovery, and the Court has had an
opportunity to adjudicate [TBF]’s right to reimbursement of costs/expenses and its right to
payment of an attorney’s fee out of the aforesaid proceeds.” (App. 96.) TBF and its
attorneys who had entered appearances on Walker’s behalf, including Beasley, then moved
to withdraw and were granted leave to do so.
Following that withdrawal, de Levie continued to represent Walker on his own and
secured a significant settlement for Walker in January 2019. Thereafter, Walker moved to
3
compel TBF to submit an affidavit justifying the Lien. TBF responded that the Lien was
proper for two reasons: (i) there was a binding oral contract between de Levie and Beasley
to equally split any counsel fees attributable to Walker’s recovery; and (ii) TBF
independently satisfied the five requirements for an equitable charging lien under the
Pennsylvania Supreme Court’s decision in Recht v. Urban Redevelopment Authority,
168
A.2d 134 (Pa. 1961).1
After full briefing, an evidentiary hearing, and post-hearing supplemental briefing,
the District Court held that TBF was not entitled to an equitable lien under Recht but that
de Levie and Beasley were parties to an enforceable oral contract to work together and to
evenly divide the contingent fee associated with any recovery obtained. Accordingly, the
Court ordered that “[a]ny monies remaining [after reimbursement of costs] from the fee
collected from the settlement agreement of this matter are to be split 50/50 between each
firm pursuant to the terms of the oral agreement between [TBF] and de Levie.” (App. 14.)
1
The five requirements are:
“(1) that there is a fund in court or otherwise applicable for
distribution on equitable principles, (2) that the services of the
attorney operated substantially or primarily to secure the fund out of
which he seeks to be paid, (3) that it was agreed that counsel look to
the fund rather than the client for his compensation, (4) that the lien
claimed is limited to costs, fees or other disbursements incurred in the
litigation by which the fund was raised and (5) that there are equitable
considerations which necessitate the recognition and application of
the charging lien.”
Recht, 168 A.2d at 138-39.
4
de Levie moved for reconsideration on the ground that the Court erred in concluding
there was a “meeting of the minds on the essential terms of the agreement[.]” (D. Ct. D.I.
409, at 5.) He also argued that the Court’s holding that counsel fees should be net of costs
and expenses, rather than a gross percentage of Walker’s recovery in addition to
reimbursement of costs and expenses, was contrary to the terms of his fee agreement with
Walker and “would result in a significant reduction in the attorney’s fee in this matter.”
(D. Ct. D.I. 409, at 6.) The District Court held there was no basis to reconsider its
conclusion regarding the existence of an enforceable contract between de Levie and
Beasley, and stated with respect to the proper calculation of attorneys’ fees in this case
“that costs are to be paid first and the 40% fee is to be taken from the remainder, or net,
settlement.” (App. 19.)
de Levie timely appealed both the District Court’s order holding that he and Beasley
were parties to a binding contract and its order denying reconsideration.
5
II. DISCUSSION2
A. The District Court’s Subject Matter Jurisdiction3
de Levie argued before the District Court that it had subject matter jurisdiction to
resolve the fee dispute with TBF. Having lost before that court, he now says that it never
had jurisdiction to decide the issue. We disagree.
Federal courts may exercise ancillary jurisdiction over matters that “enable a court
to function successfully, that is, to manage its proceedings, vindicate its authority, and
effectuate its decrees[.]” Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 380
(1994). de Levie attempts to style this dispute as being entirely among lawyers and having
no effect on the underlying litigation. But that view is refuted by the Lien’s plain language.
TBF filed the Lien “against any recovery in favor of” Walker and sought to enjoin the
“distribution of any proceeds arising from a recovery in this matter” to which Walker was
entitled. (App. 96.) On its face, the Lien evidences a dispute between TBF and its former
client Walker, a party to the underlying litigation. Resolution of that dispute has had a
tangible effect on the litigation parties’ rights, including Walker’s, by hindering the parties
from finalizing their settlement. (See App. 6 (District Court noting that the settlement
amount “has not been deposited into the Court, but a settlement agreement was negotiated
2
The District Court had jurisdiction over the underlying Walker litigation under 28
U.S.C. §§ 1331 and 1367. For the reasons discussed herein, the District Court also had
ancillary jurisdiction to resolve TBF’s entitlement to attorneys’ fees. We have jurisdiction
under 28 U.S.C. § 1291.
3
We review a district court’s exercise of ancillary jurisdiction de novo. In re Cmty.
Bank of N. Va. Mortg. Lending Practices Litig.,
911 F.3d 666, 670 (3d Cir. 2018).
6
and defendants stand ready to pay once the Court determines how much each of [TBF and
de Levie] are entitled to”).)4 The District Court thus had subject matter jurisdiction to
adjudicate the propriety of the Lien, which directly affected the Court’s ability to manage
its proceedings and the rights of multiple litigants.
Kokkonen, 511 U.S. at 379-80; see also
Novinger v. E.I. DuPont de Nemours & Co.,
809 F.2d 212, 217 (3d Cir. 1987) (“This
description of the purpose of ancillary jurisdiction suggests that it is particularly necessary
for disputes such as this one. Attorneys’ fee arrangements in diversity cases, and in most
federal question cases as well, are matters primarily of state contract law. Nevertheless the
federal forum has a vital interest in those arrangements because they bear directly upon the
ability of the court to dispose of cases before it in a fair manner.”).
To render a decision regarding the Lien, the District Court also found it necessary
to decide whether de Levie and TBF had reached a binding oral agreement regarding how
any recovery would be shared. (See App. 7 (District Court holding TBF satisfied third
Recht factor because “there was a fee splitting agreement between Beasley and de Levie”);
id. at 7-8 (“The Court further finds that the reason Beasley cannot meet the second Recht
factor is because de Levie precluded it from any further work on the file; in essence, de
Levie precluded it from fulfilling its obligation under the contract.”).) In addition,
4
This is but one example in the record of how the fee dispute has affected the
litigation parties’ rights and how the Court did, functionally, exercise constructive control
over the settlement funds despite those funds never formally being deposited with it. (See,
e.g., App. 132 (Court authorizing distribution of settlement proceeds to special needs trust
established for Walker); App. 80-81 (docket entry discussing Court’s telephone conference
with the parties, which was requested by one of the defendants “because, given the Beasley
lien, there are issues with distribution of the fund”).)
7
resolution of that contract dispute affected Walker’s rights, both in terms of the amount of
money he actually was entitled to receive from the settlement and the timing of his receipt
of the money. (See App. 19 (District Court confirming that attorneys’ fees would be net
of expenses, thereby reducing amount of attorneys’ fees and increasing Walker’s
recovery).) That further underscores the Court’s subject matter jurisdiction to rule on the
Lien and any matters integral to it, including what, if any, agreement de Levie and Beasley
had. And de Levie cites no authority for the proposition that a federal court lacks subject
matter jurisdiction over a fee dispute that directly affects the rights of one or more of the
litigants.5 Accordingly, his jurisdictional argument fails.
B. Existence of an Enforceable Contract6
de Levie’s merits-based contentions fare no better than his jurisdictional one. He
says that any oral understanding between himself and Beasley was not an enforceable
contract because it lacked essential terms and was too indefinite. He goes on to say that,
5
de Levie’s reliance on In re Community Bank of Northern Virginia Mortgage
Lending Practices Litigation,
911 F.3d 666 (3d Cir. 2018) is misplaced. The core holding
in that case was that “a federal court should decline to exercise ancillary jurisdiction over
a fee dispute between two attorneys where the court has no control over the funds and the
fee-splitting dispute has no impact on the timing or substance of the litigants’ relief in the
underlying case over which the federal court has jurisdiction.”
Id. at 672. As already
discussed, however, not only did the District Court functionally exercise control over the
funds at issue, the fee dispute between de Levie and Beasley impacted both the timing and
substance of the plaintiff’s relief in the underlying action.
6
“Th[e] issue of contract formation invokes a mixed standard of appellate review.”
ATACS Corp. v. Trans World Commc’ns, Inc.,
155 F.3d 659, 665 (3d Cir. 1998). The
District Court’s factual findings are reviewed for clear error.
Id. “Conclusions drawn with
respect to the legal effect of any agreement, however, are questions of law and therefore
subject to plenary review.”
Id.
8
even if an enforceable agreement existed, the District Court erred in not treating the
arrangement as a joint venture that was terminable at will. But de Levie has forfeited both
of those arguments by failing to properly raise them before the District Court.
As to his essential terms/indefiniteness argument, de Levie says that the contract
was unenforceable because there was no evidence the parties agreed what would happen if
either terminated the agreement or if Walker discharged either of them. To the extent de
Levie raised before the District Court any argument about contract terms, however, that
argument was based entirely on the parties’ purported failure to agree on the specific role
that Beasley would play in representing Walker. de Levie never asked the District Court
to address whether the lack of a termination provision rendered the parties’ oral agreement
unenforceable. He thus failed to preserve the issue for appeal.7 See Garza v. Citigroup
Inc.,
881 F.3d 277, 284 (3d Cir. 2018) (“To preserve a matter for appellate review, a party
must unequivocally put its position before the trial court at a point and in a manner that
permits the court to consider its merits. It is well established that arguments not raised
before the District Court are waived on appeal.” (internal quotation marks and citations
omitted)).
7
Moreover, and regardless of whether he properly preserved them, de Levie’s
challenges to the enforceability of his agreement with Beasley are meritless. There is
ample evidence in the record to support the Court’s holding that de Levie and Beasley had
a “meeting of the minds” and agreed to an enforceable contract pursuant to which “the
firms would run the case together, and if there were a recovery, each firm’s costs would be
reimbursed, and any counsel fees split 50/50.” (App. 17.) That evidence includes, but is
not limited to, the parties’ history and course of dealing and de Levie’s admission to the
District Court that he had a binding agreement with Beasley.
9
Regarding his joint venture assertion, de Levie readily acknowledges that he did not
raise the issue before the District Court. We will not consider it in the first instance.
Id.
de Levie has thus failed to articulate a basis for us to disturb the District Court’s holding
that he and Beasley had a binding contract with respect to representing Walker.
III. CONCLUSION
For the foregoing reasons, we will affirm the orders of the District Court.
10