Appeal from the United States District Court for the District of Nevada Philip M. Pro, District Judge, Presiding. D.C. No. CV-05-00877-PMP.
The opinion of the court was delivered by: D.W. Nelson, Senior Circuit Judge
Argued and Submitted April 16, 2009 Submission Withdrawn April 27, 2009 -- San Francisco, California.
Before: Dorothy W. Nelson, Marsha S. Berzon and Richard R. Clifton, Circuit Judges.
Napier, Fitzgerald & Kirby, LLP and Brian Fitzgerald (collectively "Fitzgerald") appeal the district court's dismissal of their Second Amended Counterclaim ("SAC"). They also appeal the district court's award of quantum meruit compensation subsequent to a bench trial. Crockett & Myers, Ltd. and J.R. Crockett, Jr. ("Crockett") cross-appeal the district court's denial of its posttrial motion for attorneys' fees. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we (1) affirm the dismissal of Fitzgerald's SAC; (2) affirm the denial of Crockett's motion for fees; and (3) vacate the district court's award of quantum meruit compensation and remand for recalculation.
FACTUAL AND PROCEDURAL BACKGROUND*fn1
On or about June 8, 2001, Wendy Nostro retained Brian Fitzgerald, a New York lawyer known to her family, to investigate whether the death of her husband in Nevada was due to potential medical malpractice. Soon after, Fitzgerald contacted a Nevada attorney, J.R. Crockett of Crockett & Myers, Ltd. Crockett and Fitzgerald orally agreed that they would serve as co-counsel to Nostro and that Fitzgerald would receive 50% of the attorneys' fees for his referral (the "Referral Agreement"). Fitzgerald also convinced Crockett to reduce his usual contingency fee from 40% to 33.33%.
Crockett, Fitzgerald, and Nostro subsequently entered into a written Attorney Retainer Agreement (the "Retainer Agreement"). Pursuant to the Retainer Agreement, which was attached to the SAC, the attorneys' fees were to be divided equally between Crockett and Fitzgerald. The Retainer Agreement further provided that:
[a]ll matters of policy, including but not limited to preparation and presentation of this claim, litigation, costs, possible settlement, trial and/or appeal, if the same shall arise, shall be determined jointly by the CLIENT and ATTORNEYS as reasonable as possible within the professional discretion of ATTORNEYS and within the Canons of Ethics[,] and that:
[t]he CLIENT will be responsible for all costs advanced by the ATTORNEYS in presentation of the aforementioned claim or action. . . . It is further agreed and understood that the costs advanced dur- ing the course of said claim will be paid for equally by CROCKETT & MYERS and BRIAN FITZGERALD, ESQ.
Both attorneys continued to represent Nostro. At some point, Fitzgerald contacted Nostro and requested that she pay her share of the court costs. Nostro contacted Crockett, who advised her that "it was their policy not to go after a client for court costs" and that "she could fire Mr. Fitzgerald." Fitzgerald was not included in this conversation. On June 27, 2003, Nostro discharged Fitzgerald.
In October 2004, Crockett informed Fitzgerald that a settlement had been reached in Nostro's suit. Crockett did not forward 50% of the attorneys' fees. After a failed attempt at mediation, Crockett filed for relief in Nevada state court, requesting a judgment that Fitzgerald was only entitled to recovery in quantum meruit. The state action was then removed to federal court on the grounds of diversity of the parties.
Fitzgerald filed the SAC, alleging, inter alia: (1) breach of the oral Referral Agreement; (2) breach of the written Retainer Agreement; (3) breach of the implied covenant of good faith and fair dealing; (4) breach of the duty of loyalty and as a fiduciary by reason of joint ...