Muentes v. Bruce S. Rosenwater & Associates, P.A.

Fourth DCA

Muentes v. Bruce S. Rosenwater & Associates, P.A.—(J. Damoorgian; 4DCA; 1/11/13). This is about an interesting fee dispute. The retainer agreement included an “initial retainer” that was expressly a “non-refundable engagement fee” that was to be “depleted by a $500.00 monthly fee against it.” It stated that when the initial retainer was depleted, an additional retainer might be required, and the client would be billed on an hourly basis for work performed. The contract also required the client to dispute any billing on the grounds of unreasonableness within 30 days, and failure to do so waived the right to dispute the billing as incorrect, inaccurate, or unreasonable. The firm reduced the retainer by $500 a month for the first six months but also billed additional amounts. In the end, the firm sought 8 $6,728.80 in additional fees. The client balked and stated that it was under the impression that billing for that first six months was to be at a flat $500-a-month rate and they should not have to pay additional amounts for those months. The firm answered that the $500-per-month was intended as a payment plan, not a flat fee. The trial court engaged in a clearly flawed analysis. The court found that the contract was “clear and unambiguous” and provided, as the client stated, that the first six months of representation would be covered by a flat fee of $3,000 billed at $500 per month. But then, after finding the contract clear and unambiguous, it resorted to extrinsic evidence—testimony by the firm— that the contract was meant only as a payment plan, and the trial court held that that testimony created a latent ambiguity in the contract. The court then awarded the firm fees as compensatory damages for reasons that are not entirely explained. It is possible that the court invalidated the contract due to the latent ambiguity and then resorted to quantum meruit to determine the fees owed. This was just so wrong. Come on. The DCA instantly held that because the trial court held (and the DCA agreed) that the clear and unambiguous language of the contract set out a flat fee for the first six months, the court had no business going beyond the four corners of the contract to determine the intent of the parties or use extrinsic evidence to create a latent ambiguity. The language meant that the clients owed $500 per month, and only when that flat fee was depleted at the end of the six months would hourly billing begin. As for the hourly fees relating to the time period after the initial six month period, however, those amounts were affirmed. The clients had challenged the post-6-months fees under case law standing for the proposition that the court could not enter a fee award unless the law firm introduced expert testimony on the reasonable hourly rate and hours expended, but that case law was not applicable to this kind of case. This is not a “prevailing party” kind of fee. The law firm sued the client for breach of contract. If a party is seeking to recover previously incurred attorney’s fees as an element of compensatory damages in a separate breach of contract action, that party is not required to provide an independent expert witness to corroborate the reasonableness of the fees. He only needed to show the existence of a contract and its terms including an oral contract. (Apparently the hourly rate was the result of an oral agreement). 095841_i.pdf

Terry P. Roberts
Director of Appellate Practice Fischer Redavid PLLC
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