In Tanguis v. M/V WESTCHESTER, 2003 WL 21674473 (E.D.La. July 16, 2003) (Zainey, J.), the court found that the conflict at issue did not involve an attorney-client fee dispute as the claimants were dismissed with prejudice for failure to timely file their claims.Summary of this case from Melancon v. Great S. Dredging, Inc.
CIVIL ACTION NO. 01-0449 c/w 01-1558 and 01-3559, SECTION "A" (5).
July 15, 2003.
MINUTE ENTRY ZAINEY, JUDGE
ORDER AND REASONS
This matter is before the Court on the motion to distribute attorney's fees to the attorney representing all persons found on Exhibit "A" (Dismissed Claimants-in-Limitation) (Rec. Doc. 102). The motion is opposed by members of the Interim Plaintiffs' Steering Committee. For the reasons that follow, the motion is DENIED.
BACKGROUNDThe M/V/WESTCHESTER allegedly lost power and struck an underwater obstruction on November 28, 2000 in Plaquemines Parish, Louisiana, causing crude oil cargo to escape into the Mississippi River. Subsequently, the WESTCHESTER filed this limitation proceeding. Master answer and claim forms were submitted by Claimants-in-Limitation and contained the names of approximately 4000 claimants represented by the Committee attorneys and approximately 2000 claimants represented by attorney Michael Fenasci. On May 16, 2003, this Court entered an order dismissing with prejudice all claimants who failed to submit claim form questionnaires as of January 31, 2003. These dismissed claimants appear on "Exhibit A" and are represented by Mr. Fenasci.
The instant issue is a dispute over attorney's fees between the Committee attorneys and Fenasci. Fenasci asserts in this motion that through his law firm's "frank and direct negotiations with the shipping interests," he was able to salvage a settlement for those claimants listed on "Exhibit A" prior to their dismissal by this Court. He now seeks a disbursement of attorney's fees associated with his efforts on behalf of the "Exhibit A" claimants. The Committee attorneys vehemently oppose this disbursement. They assert that they in fact represented the "Exhibit A" claimants for over two years as opposed to Fenasci's representation of one day. The Committee attorneys further urge the Court to hold an evidentiary hearing to review the evidence regarding the nature and extent of the services performed for each claimant by the Committee and by Fenasci. Through this motion the attorneys seek to have this Court resolve an internal dispute between them. Neither Fenasci nor the Committee attorneys have addressed the legal issue of whether or not this Court has jurisdiction to do so.
Where the parties have not raised the issue of jurisdiction "it is our duty to raise this issue sua sponte." Gaar v. Quirk, 86 F.3d 451, 453 (5th Cir. 1996).
DISCUSSIONThis limitation proceeding itself is properly before the Court pursuant to 46 U.S.C. § 181-189. Neither the Committee attorneys nor Fenasci questioned this Court's jurisdiction over this issue. However, even where the parties have not raised the issue "it is our duty to raise this issue suasponte." Parties cannot waive subject matter jurisdiction. Ofcourse, the Court has jurisdiction over the limitation action.
However, a jurisdictional problem exists with respect to the controversy among the attorneys. There is no diversity, federal question, or other independent basis for jurisdiction over the controversy presented in this motion. The persons involved in this controversy are neither parties to the limitation action nor are they intervenors. If this Court has subject matter jurisdiction to resolve the dispute, it must do so under the aegis of supplemental jurisdiction. The reason is that "The rights and obligations of a contingency fee contract," what this motion is ultimately about, "are governed by state law."
28 U.S.C. § 1367 provides, in part, ". . . in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy . . ." (emphasis added).
Supplemental jurisdiction allows a court to hear claims that have a "logical relationship to the aggregate core of operative facts which constitutes the main claim over which the court has an independent basis of federal jurisdiction." As a general matter, federal courts addressing the matter of attorney's fees disputes have concluded that fee disputes meet the relatedness test for supplemental jurisdiction. In Broughten v. Voss, 634 F.2d 880 (5th Cir. 1981) the Fifth Circuit declined to exercise supplemental jurisdiction over an attorney-client fee dispute (emphasis added). In that case, the district court believed that the resolution of the fee dispute was required prior to the attorney's withdrawal. On appeal, the Fifth Circuit stated that where counsel's withdrawal is voluntary, the court does not have supplemental jurisdiction over a fee dispute. Instead, the only matter that was properly before the district court was whether withdrawal would prejudice the client or disrupt the prosecution of the suit.
Warren G. Kleban Eng'g Corp. v. Caldwell, 490 F.2d 800, 802 (5th Cir. 1974).
See In re Private Counsel Agreement, 1999 WL 1022131 (E.D.Tex.) and cases cited therein.
There are more compelling facts present in this matter than in Broughten to steer the Court away from exercising supplemental jurisdiction. First, the present matter does not involve an attorney-client fee dispute. This dispute arises purely from a private contract, or lack thereof, among the attorneys representing the claimants in this limitation action. It involves their competing fee claims. Second, it does not involve a motion to withdraw or a motion to substitute counsel. Third, in this case, the claimants were dismissed with prejudice for failure to timely file their claims. The Court will not exercise jurisdiction to determine the rights to settlement proceeds or attorney's fees involving claimants that have been dismissed with prejudice from the underlying limitation proceeding prior to the conclusion of the limitation proceeding. Fourth, the Court would have to engage in extensive fact-finding to resolve this dispute. Finally, the Court's failure to decide the dispute does not deprive those who were never parties to the original action of any rights.
Louisiana courts have settled disputes between competing attorneys in a contingency fee setting. See Patton v. Lemoine, 2003 WL 21276334 (La.App. 3 Cir. 2003) and The Law Offices of Robert M. Becnel v. Ancale, 829 So.2d 573 (La.App. 5 Cir. 2002).
In dicta, the Broughten court said the situation would be different if there were suit proceeds. In that case the court would have jurisdiction over the dispute because it may determine the rights to suit proceeds. Broughten, 634 f.2d at 883.
There is no connection between the underlying limitation proceeding and the dispute among the attorneys that would justify an assumption of supplemental jurisdiction. The claim must bear a "logical relationship to the aggregate core of operative facts which constitutes the main claim over which the court has an independent basis of federal jurisdiction." This claim does not meet that criteria.
Hernon v. Revere Copper Brass, Inc., 494 F.2d 705, 707 (8th Cir.), cert. denied, 419 U.S. 867, 95 S.Ct. 124, 42 L.Ed.2d 105 (1974), sustaining a judgment n.o.v. for the defendant Revere Copper Brass, supra, 426 F.2d at 714.
IT IS ORDERED that the Motion to Distribute Attorney Fees is DENIED.