Alton Godwin and Karen Godwin, His Wife v. Victor Schramm, United States of America. Appeal of Kenneth W. Behrend

731 F.2d 153, 1984 U.S. App. LEXIS 23981
CourtCourt of Appeals for the Third Circuit
DecidedMarch 30, 1984
Docket83-5065, 83-5129 and 83-5130
StatusPublished
Cited by15 cases

This text of 731 F.2d 153 (Alton Godwin and Karen Godwin, His Wife v. Victor Schramm, United States of America. Appeal of Kenneth W. Behrend) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alton Godwin and Karen Godwin, His Wife v. Victor Schramm, United States of America. Appeal of Kenneth W. Behrend, 731 F.2d 153, 1984 U.S. App. LEXIS 23981 (3d Cir. 1984).

Opinion

OPINION OF THE COURT

SLOVITER, Circuit Judge.

At issue is the 25 percent statutory limit on attorney’s fees in federal tort claims. The plaintiffs below, Alton and Karen God-win, settled their medical malpractice claim against the United States for a cash payment of $1,125,000 and provision for lifetime medical care by the Veterans Administration (VA). Kenneth Behrend, the lawyer who represented the Godwins, appeals from the district court’s orders limiting his contingent fee to 25 percent of the cash award and excluding the future medical benefits from the base upon which the fee may be calculated. We affirm.

I.

FACTS AND PROCEDURAL HISTORY

Kenneth Behrend and the law firm of Behrend, Aronson & Morrow (jointly referred to as Behrend) were retained by the Godwins following a referral after Godwin suffered injuries while undergoing surgery by Veterans Administration physicians. During the surgery, which was performed to remove growths from Godwin’s vocal cords, a laser beam ignited oxygen being administered through a tube in Godwin’s throat. Godwin’s entire bronchial tract was severely damaged; his left lung is totally impaired, and because scar tissue obstructs his airway Godwin must breathe through a tracheostomy and undergo frequent operations to dilate the airway. He can speak only with the aid of an electronic box. Godwin was 34 years old at the time of the surgery, was a veteran, was disabled from a job related injury, and was married with two young children.

Behrend filed an administrative claim with the Veterans Administration on August 11, 1980 alleging liability of Dr. Victor Schramm, supervising surgeon for the VA. On November 18, 1980, Godwin executed a power of attorney to Behrend that provided for a contingent fee of 40 percent in connection with the prosecution of his “claim against Brunswick and others” for the injuries. App. at 37a. In April 1981, Behrend filed a Pennsylvania state court suit against Brunswick Corporation, the seller *155 of the endotracheal tube used in the operation. That suit was dismissed after some discovery. Behrend also filed suit in state court against Dr. Michael Duvall, the resident who performed the operation, and Dr. Schramm. In May 1981, pursuant to 38 U.S.C. 4116 (1976), the United States removed the case to the United States District Court for the Western District of Pennsylvania, substituted itself as the defendant, and later brought some third party defendants into the case.

In August 1981 Behrend sent the God-wins a letter informing them that their fee “will be limited to 25 percent of the total gross recovery.” Behrend did not inform the Godwins that because the case was now a federal tort claim action, it came under 28 U.S.C. § 2678 which limits attorney’s fees to 25 percent of a judgment or settlement. Instead, the letter Behrend sent stated, “We have taken this action [25% fee] after reviewing your case and coming to the conclusion that your damages are, indeed, more substantial than was understood at the time the Power of Attorney was signed.” App. at 38a. There was no written acceptance by the Godwins, and there is no record of assent by them.

The matter proceeded and ultimately a settlement was negotiated for a cash payment of $1,125,000 and provision for lifetime medical care and treatment at the Veterans Administration Hospital. 1 Behrend counseled the Godwins to reject this proposal and to proceed to trial. He also prepared a settlement sheet which he presented to the Godwins in November 1982. This document, signed by the God-wins, authorized Behrend to approve the settlement and to make distribution in the manner set forth. The settlement sheet calculated the amount “to be received in settlement” as $2,091,000. 2 This sum, which is $966,000 over the cash payment, is based upon Behrend’s calculation of the present value of future medical care to Godwin at $4,830,000. Since 80% of God-win’s medical costs would have been paid by the Medicare program, Behrend included 20 percent of the estimated value of that care as part of the settlement proceeds. The estimated value of medical care was based on a life expectancy 75 percent of normal, although there was no conclusive estimate of Godwin’s life expectancy and predictions ranged from three or five years to normal. Behrend then added the $966,-000 to the cash award to arrive at a figure for settlement proceeds of $2,091,000, and listed his fee as $522,750, or 25 percent of the total. The document provided that Behrend would be paid $350,000 upon settlement and the remainder in six annual installments of $28,791.66. The document also provided for payment upon settlement *156 of approximately $60,000 in expenses, and stated that the signatures of the Godwins were “with the intention of being legally bound.”

While Behrend was still urging the God-wins to go to trial, Mrs. Godwin telephoned the district judge. As the judge later stated on the record, Mrs. Godwin said she was confused, “[s]he believed that they were receiving bad advice, that Mr. Behrend had recommended against the settlement, and that Mr. Behrend was charging what she concluded were unreasonable fees which would prevent the Godwins from recovering virtually any money from this case.” App. at 647a. The judge stated that the Godwins “were in a quandary as to what to do,” and he told her he would address the matter at the conference on Monday morning. Id. After this conversation the God-wins decided to accept the government’s offer. A settlement conference was held December 13, and the events that transpired there are critical to this appeal.

The district court began the conference by reviewing the settlement agreement, and ruled that the only viable claims were those for the Godwins and not for their children. He then turned to the matter of lawyers’ fees, referred to the statutory limit of 25 percent, stated that “no claim or demand for counsel fees may be made for any service rendered by the Veterans Administration in the future,” and stated that counsel fees would be $281,250, or 25 percent of the cash settlement of $1,125,000. App. at 609a. Behrend did not object nor did he make any reference to the settlement sheet which had been signed the month before. The participants discussed the purchase of an annuity by the government for the Godwins with some of the proceeds. Behrend then stated that he didn’t want to take any responsibility for the enforcement of the agreement because it failed to give the Godwins the “unfettered right to go to civilian medicine.” The court stated the agreement was enforceable by an injunction against the Veterans Administration if necessary. A significant colloquy then took place, quoted in full in the appendix to this opinion, during which the district court asked:

Now, are you satisfied with your lawyer?
MR. GODWIN: Yes.
MRS. GODWIN: My understanding is he will be paid off in full?
THE COURT: Yes.

App. at 619a.

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731 F.2d 153, 1984 U.S. App. LEXIS 23981, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alton-godwin-and-karen-godwin-his-wife-v-victor-schramm-united-states-of-ca3-1984.