United States District Court, D. Minnesota
Bridgette Trice, as trustee for the heirs and next of kin of Devyn Bolton, deceased, Plaintiffs,
Toyota Motor Corporation, et al., Defendants. Quincy Ray Adams, Plaintiff,
Toyota Motor Corporation, et al., Defendants.
Markovits, Esq., Christopher D. Stock, Esq., and Louise M.
Roselle, Esq., Markovits, Stock & DeMarco, LLC,
Cincinnati, OH, on behalf of Plaintiffs Bridgette Trice and
Quincy Ray Adams.
Karlowba R. Adams Powell, Esq., Powell Law Office, St. Paul,
MN, on behalf of Padden Law Firm, PLLC.
Nicholas R. Farnolo, Esq., and Hunter J. Shkolnik, Esq.,
Napoli Shkolnik, PLLC, Melville, NY, on behalf of Napoli
MEMORANDUM OPINION AND ORDER
MONTGOMERY U.S. DISTRICT JUDGE
the Court is Plaintiffs Bridgette Trice (“Trice”)
and Quincy Ray Adams' (“Adams”)
(collectively, “Plaintiffs”) Motion for
Authorization to Distribute Disputed Attorneys' Fees and
Medical Expense Proceeds [Trice Docket No. 716; Adams Docket
No. 464]. The Motion asks the Court to divide among
the law firms that represented Plaintiffs the 40% contingency
fee earned in these companion cases. Responses have been filed by
Padden Law Firm LLC (“Padden Firm”), Napoli
Shkolnik PLLC (“Napoli Firm”),  and Robert
Bolton.See Trice Docket Nos. 736, 746,
849. Also before the Court are the Napoli Firm's Motion
to Seal [Trice Docket No. 843; Adams Docket No. 566] and
Trice's Motion to Strike [Trice Docket No. 850; Adams
Docket No. 570]. For the reasons set forth below,
Plaintiffs' Motion is granted, Trice's Motion to
Strike is denied, and the Napoli Firm's Motion to Seal is
February 2015, a jury found that a product defect in a 1996
Toyota Camry was the direct cause of a tragic 2006 car
accident that permanently injured Adams and rendered
Trice's daughter, six-year-old Devyn Bolton, a
quadriplegic until she died from her injuries in 2007.
See Verdict [Trice Docket No. 550; Adams Docket No.
349]. On appeal, the Eighth Circuit affirmed the jury's
finding of liability but remanded the judgment amounts to
this Court. See Op. USCA [Trice Docket No. 693;
Adams Docket No. 446]. Thereafter, the parties stipulated to
judgment amounts of $5, 543, 453.22 for Trice and $1, 717,
384.82 for Adams. See Stipulation J. Amounts [Trice
Docket No. 714; Adams Docket No. 462]. A judgment reflecting
these amounts was entered on December 8, 2017. See
J. [Trice Docket No. 729; Adams Docket No. 474].
recoveries are subject to a 40% contingency fee in favor of
the multiple law firms that represented them over the course
of the litigation. There is no dispute that the law firm of
Markovits, Stock & DeMarco, LLC (“MSD”) is
entitled to 55% of the overall contingency fee. The Court
entered orders authorizing distribution of MSD's portion
of the contingency fee on December 8, 2017. See
Order Approving Wrongful Death Distribution (“Trice
Distribution Order”) [Trice Docket No. 732]; Order
Directing Distribution Attorneys' Fees Adams
(“Adams Distribution Order”) [Adams Docket No.
dispute remains over allocating the remaining 45% of the
contingency fee, which totals $997, 090.83 in the Trice case
and $308, 885.68 in the Adams case. The disputed amounts are
being held in the trust account of the Law Office of Kenneth
R. White, P.C. (“White Firm”) pending further
Order of the Court. See id. The three firms vying
for a share of the remaining fees are the Napoli Firm, which
served as Plaintiffs' lead counsel from late 2012 to
April 2014, and the Padden and White Firms, which have
represented Plaintiffs since 2010.
argue that the Napoli Firm is not entitled to any fees
because the Plaintiffs terminated the Napoli Firm for cause
and were harmed by the Napoli Firm's negligent
prosecution of their case. The Napoli Firm disagrees and
argues that it performed significant work on the file and is
entitled to recover its fees of $112, 202.50 under the theory
of quantum meruit.
also argue that the remaining 45% of the contingency fee
should be divided among the Padden and White Firms by paying
30% to the White Firm and 15% to the Padden Firm. Plaintiffs
contend that this allocation reflects the relative
contributions of each firm to Plaintiffs' cases. The
Padden Firm disagrees and argues that it is entitled to 30%
of the contingency fee pursuant to the fee agreement that
Plaintiffs signed in April 2014. The Padden Firm further
argues that it is entitled to 40% of the recovery obtained by
Robert Bolton, one of the next of kin in the Trice case.
Robert Bolton disputes the Padden Firm's claim.
January 16, 2018, United States Magistrate Judge David T.
Schultz conducted a settlement conference on the disputed
attorneys' fees, as well as the disputed claims to the
judgment proceeds by medical providers. See Min.
Entry [Trice Docket No. 835; Adams Docket No. 559]; Order
Approving Stipulation [Trice Docket No. 769; Adams Docket No.
502]. Although settlement was reached on the medical
providers' claims,  the attorneys' fee issues were not
resolved. All counsel waived any hearing on the
attorneys' fee issues and asked the Court resolve the
dispute based on counsels' written submissions.
See Letter District Judge [Trice Docket No. 765;
Adams Docket No. 499].
Relevant Factual Background
of this dispute requires a review of the many attorney-client
relationships in these cases.
Padden Law Firm LLC and Law Office of Kenneth R. White,
2010, Plaintiffs retained the Padden Firm to represent them
in these companion cases. Pls.' Mem. Supp. Mot.
Distribute [Trice Docket No. 718; Adams Docket No. 466] at 3;
Padden Mem. Opp'n [Trice Docket No. 829] at 7. Shortly
thereafter, the Padden Firm's principal, Michael B.
Padden, Esq. (“Padden”) requested and obtained
the assistance of the White Firm to serve as additional
counsel on the cases. Kenneth R. White, Esq.
(“White”) is a principal at the White Firm.
addition to being retained by Adams and Trice in 2010, Padden
also entered into a June 2010 Attorney-Client Consent
Distribution Proposal (“Distribution Proposal”)
with Robert Bolton. Padden Letter Br. [Trice Docket No. 842]
Ex. 1. In the Distribution Proposal, Robert Bolton:
acknowledged paternity of Devyn Bolton; requested that Trice
be approved as trustee for Trice's wrongful death claim
on behalf of Devyn Bolton; agreed to receive 10% of any
recovery obtained by Trice; stated that he had no obligation
to pay attorneys' fees of 40% unless he received a
recovery; and stated that Bridgette Trice consents to
Padden's representation of him. Id. ¶¶
3, 6-8. Padden has not communicated with Robert Bolton since
this 2010 meeting. Bolton Letter Br. [Trice Docket No. 849]
Ex. 1 (“Bolton Decl.”) ¶ 3.
Waite, Schneider, Bayless and Chesley Co., LPA
April 2010, Padden and White, with Trice and Adams'
consent, chose the Ohio law firm of Waite, Schneider, Bayless
and Chesley Co., LPA (the “Chesley Firm”) to
serve as primary litigation counsel in Trice and Adams'
cases. See Markovits Reply Decl. Ex. 1 [Trice Docket
No. 774; Adams Docket No. 507]; First Trice Decl. [Trice
Docket No. 722; Adams Docket No. 468] ¶ 2. The Chesley
Firm was chosen because White had previously worked with the
firm and knew that Stanley Chesley (“Chesley”)
served as counsel in multidistrict litigation alleging
instances of sudden unintended acceleration in Toyota
vehicles (“Toyota MDL”). First White Decl. [Trice
Docket No. 723; Adams Docket No. 469] ¶ 2; Padden Decl.
[Trice Docket No. 737] Ex. 8.
Padden, White, and Chesley Firms entered into an April 8,
2010 letter agreement outlining the division of fees among
the firms. See Markovits Reply Decl. Ex. 1. The
Chesley Firm agreed to advance all ongoing expenses of the
litigation. Id. On April 26, 2010, the agreement was
amended to provide that the Chesley Firm would pay Padden $1,
500 per month for “overhead expenses.” Markovits
Reply Decl. Ex. 2 [Trice Docket No. 775; Adams Docket No.
508]. The amendment provides that if one of the cases should
“result in payments of fees or costs, the total amount
of these overhead payments up to that time will be deducted
from [Padden's] share and paid to [the Chesley]
firm.” Id. Pursuant to this amendment, Padden
received monthly payments totaling $34, 500 from the Chesley
Firm. Markovits Reply Decl. [Trice Docket No. 772; Adams
Docket No. 505] ¶ 25, Exs. 32, 33 [Trice Docket Nos.
805, 806; Adams Docket Nos. 538, 539]. In an August 2012
letter to Chesley, Padden acknowledged that “in the
event of recovery, I am obligated to reimburse these funds to
your firm.” Markovits Reply Decl. Ex. 3 [Trice Docket
No. 776; Adams Docket No. 509].
a recovery has been obtained in these cases, Padden has not
reimbursed the Chesley Firm for the $34, 500 payments he
received as “overhead expenses.”
Napoli Bern Ripka Shkolnik LLP
2012, Chesley recommended that the Napoli Firm take over the
Chesley Firm's role as primary litigation counsel. First
White Decl. ¶ 3; Padden Mem. Opp'n at 18. Chesley
made the recommendation in light of his disbarment
proceedings arising from conduct in an unrelated case. First
Farnolo Decl. [Trice Docket No. 745; Adams Docket No. 479]
¶¶ 3-4. The Napoli Firm had also been counsel in
the Toyota MDL. First White Decl. ¶ 3. The clients
consented to the change in lead counsel and the Napoli Firm
began working on the cases in July 2012. Id. ¶
3. The Chesley Firm withdrew from Plaintiffs' cases in
June 2013. Id.
the Napoli Firm took over as lead counsel, the Court issued
orders requiring expert disclosures to be served in November
2012 and discovery to be completed by May 31, 2013.
See Order Joint Mot. Extension Time Expert
Disclosure [Trice Docket No. 249; Adams Docket No. 136];
Fourth Am. Scheduling Order [Trice Docket No. 262; Adams
Docket No. 139]. In November 2012, White sent an email to the
Napoli firm stating, “I assume that we will be
designating experts in some manner in compliance with the
court order.” White Reply Decl. [Trice Docket No. 808;
Adams Docket No. 541] ¶ 6, Ex. 2 [Trice Docket No. 811;
Adams Docket No. 544]. On January 23, 2013, White received a
courtesy copy of a letter sent by Toyota to the Napoli Firm
informing them that discovery responses were overdue and that
Plaintiffs had not served expert disclosures by the November
2012 deadline. First White Decl. ¶ 6, Ex. 5. White sent
an email to the Napoli Firm referencing the letter and
stating, “I trust that you will get these issues
corrected immediately to the extent that the letter is
accurate.” White Reply Decl. Ex. 4 [Trice Docket No.
813; Adams Docket No. 546]. The Napoli Firm responded by
saying, “We responded to this already, they were
looking for medicals on Devyn Bolton.” Coates Decl.
[Trice Docket No. 754; Adams Docket No. 490] Ex. 3.
April 2014, White and Padden discovered that the Napoli Firm
made an unauthorized settlement demand to Toyota in February
2014 without Plaintiffs' knowledge or consent. First
White Decl. ¶ 4, Ex. 3. Padden and White first learned
of the settlement demand through an email they received from
Toyota's counsel stating that settlement demands relayed
by the Napoli Firm to Toyota were “too high to lead to
productive negotiations.” First White Decl. Ex. 3. The
Napoli Firm had not consulted with Padden, White, or
Plaintiffs before making the demand. First White Decl. ¶
5, Ex. 4. Upon learning of the Napoli Firm's unauthorized
settlement demand, Trice and Adams each sent the Napoli Firm
an April 22, 2014 letter terminating their attorney-client
relationship and demanding that the Napoli Firm withdraw from
their cases immediately. First White Decl. Ex. 4.
23, 2014, three months after Plaintiffs had terminated the
Napoli Firm, Padden sent a letter to the Napoli Firm asking
that Plaintiffs' case files be forwarded to the Padden
Firm. First Markovits Decl. [Trice Docket No. 721; Adams
Docket No. 467] Ex. 1 at 2. On August 4, 2014, the Napoli
Firm responded that it would “draft a letter outlining
any expenses incurred, ” and that “[u]pon payment
of the expenses we will immediately make arrangements to
transfer the file.” Id. at 5. Plaintiffs'
attorneys informed the Napoli Firm that the files were needed
as quickly as possible because trial was scheduled for
November 3, 2014, less than three months away. Id.
at 4. Nevertheless, the Napoli Firm persisted in its position
until Plaintiffs' counsel alerted the Napoli Firm to
Minnesota Rule of Professional Conduct 1.16(g), which
prohibits a lawyer from conditioning the return of client
papers and property upon the payment of the lawyer's fees
or the cost of copying the file. First Markovits Decl. ¶
3, Ex. 1 at 2-3, 7; First Farnolo Decl. ¶ 21.
the files were returned, Plaintiffs learned that the Napoli
Firm had failed to disclose approximately $500, 000 of Devyn
Bolton's $1.5 million in expenses before the close of
discovery. First Markovits Decl. ¶ 5. This failure
subsequently impacted the amount of medical expenses which
was admissible evidence at trial, because of Toyota's
successful argument that expenses be limited to the amounts
disclosed in discovery. Id. As a result, Plaintiffs
were limited to medical expenses of $1 million rather than
$1.5 million. Id. Thus, there was an approximate
$500, 000 difference between the medical expenses incurred
and those Trice was awarded on behalf of the next of kin.
Id. The amount of pre-judgment interest Plaintiffs
would have recovered on the additional $500, 000 would also
have been substantial based on the extended duration of the
litigation. See id.
also learned that the Napoli Firm failed to disclose any
expert prior to the deadline set by the Court. Id.
¶ 6. Thus, Plaintiffs' only damages expert, Dr.
Harvey Rosen, could not be used at trial even though he had
prepared a report and had been deposed. Id.
Plaintiffs paid Dr. Rosen's expert witness fees of $4,
000 although he could not testify at trial because of
discovery violations by counsel. Id. ¶ 6, Ex.
Markovits, Stock & DeMarco, LLC
termination of the Napoli Firm, Plaintiffs retained MSD to
assume the role of lead counsel. Two of MSD's principals,
Markovits and Stock, were former associates of the Chesley
Firm and had worked on Plaintiffs' cases when they were
employed at the Chesley Firm. Markovits Reply Decl. Ex. 3
[Trice Docket No. 776; Adams Docket No. 509] .
April 2014, Plaintiffs signed a retention agreement with MSD
that (a) reaffirmed the 40% contingency fee structure that
had been in place since the case began; (b) directed MSD to
serve as lead litigation counsel should the case go to trial;
and (c) provided for an allocation of the contingent fee as
follows: 55% to MSD, 30% to the Padden Firm, and 15% to the
White Firm. First Padden Decl. Ex. 12; First Markovits Decl.
¶ 8; First Trice Decl. ¶ 7.
case was tried to a jury beginning January 7, 2015, and the
jury reached a verdict on February 3, 2015. White was
involved in the trial preparations and attended the trial;
Padden did not. First ...