Bernstein & Grazian, P.C. v. Grazian & Volpe, P.C.

931 N.E.2d 810, 402 Ill. App. 3d 961, 341 Ill. Dec. 913, 2010 Ill. App. LEXIS 634
CourtAppellate Court of Illinois
DecidedJune 25, 2010
Docket1-09-0149
StatusPublished
Cited by43 cases

This text of 931 N.E.2d 810 (Bernstein & Grazian, P.C. v. Grazian & Volpe, P.C.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bernstein & Grazian, P.C. v. Grazian & Volpe, P.C., 931 N.E.2d 810, 402 Ill. App. 3d 961, 341 Ill. Dec. 913, 2010 Ill. App. LEXIS 634 (Ill. Ct. App. 2010).

Opinion

JUSTICE FITZGERALD SMITH

delivered the opinion of the court:

Plaintiffs-appellants and cross-appellees Bernstein & Grazian, EC. (B&G), and the estate of Isadore M. Bernstein, deceased (Bernstein), 1 brought suit against B&G’s former law partners defendants-appellees and cross-appellants Grazian & Volpe, EC. (G&V), John Leonard Grazian (Grazian), and Richard S. Volpe (Volpe) 2 for breach of contract and fiduciary duty, seeking an accounting, an injunction and other relief. G&V Grazian and Volpe, meanwhile, brought a counterclaim against B&G, also for breach of fiduciary duty. Following a bench trial, the trial court issued a decision finding that no party violated any fiduciary duty and that quantum meruit was the appropriate legal doctrine to apply to the instant facts. It ultimately awarded Bernstein 10% of the attorney fees recoverable in B&G cases that G&V had assumed following the dissolution of that law partnership.

Bernstein appeals, contending that the trial court erred as a matter of law in awarding him fees under quantum meruit. He argues that he is entitled to 50% of the attorney fees at issue pursuant to a certain agreement in operation at B&G or, alternatively, that he is entitled to 70% of these fees pursuant to Illinois corporate law. He asks that we vacate the trial court’s order and award him a greater percentage of the attorney fees. For his part, Grazian cross-appeals, contending that the trial court erred in finding that Bernstein did not violate any fiduciary duty and that it erred in awarding Bernstein the 10% of attorney fees under quantum meruit, arguing that there was no evidence to support this.

For the following reasons, we dismiss Bernstein’s direct appeal, and we affirm in part and vacate in part the trial court’s judgment regarding Grazian’s cross-appeal.

BACKGROUND

Bernstein and Grazian first met in the early 1990s; Grazian eventually began working for Bernstein as an independent contractor in Bernstein’s law practice. In 1998, Bernstein asked Grazian to merge practices and they formed the law partnership of B&G, which focused on personal injury and workers’ compensation cases. Bernstein was the president of B&G and owned 70% of its stock; the firm operated from his offices and he contributed the case files and money to start the business. Grazian was vice president, secretary and treasurer and owned the remainder of the stock; he did not share in any of the expenses of B&G but, instead, worked as a salaried employee handling B&G’s personal injury cases. Later, Volpe came to work at B&G; he was not a founding partner of the firm and did not share in the expenses, but only worked on B&G’s workers’ compensation matters. B&G also dealt with medical malpractice cases in that any that came into the firm were referred out by Bernstein; neither Grazian nor Volpe worked on these cases. The compensation agreement in operation at this time reflected Grazian’s status as a salaried employee. It described that he was to work 50 hours a week, would be paid an annual salary of $100,000, and that, if his employment were terminated, B&G would purchase his stock and pay him a set severance.

By January 2003, Bernstein, Grazian and Volpe decided to change B&G’s method of compensation. They entered into a new compensation agreement (Agreement), effective February 2003. Significantly, the handwritten Agreement, as signed by Bernstein, Grazian and Volpe, provided that the three attorneys were to “split” all office expenses, or general overhead, of B&G “equally.” In addition, the Agreement stated, in pertinent part:

-Bernstein and Volpe “will split all litigation expenses on the workers!/] compensation files, only, equally”;
-Bernstein and Grazian “will split all litigation expenses on the personal injury cases files [szc], only, equally”;
-Bernstein and Volpe “will split all fees fees [sic] received on workers [’] compensation cases *** on a 50/50 basis”; and
-Bernstein and Grazian “will split all fees received on personal injury case files *** on a 50/50 basis”. (Emphasis in original.)

Essentially, and the parties agree, the crux of the Agreement resulted in Volpe paying 50% of the expenses of B&G’s workers’ compensation cases and receiving 50% of the attorney fees generated therefrom; Grazian paying 50% of the expenses of B&G’s personal injury cases and receiving 50% of the attorney fees generated therefrom; and Bernstein paying the remaining 50% of the expenses on both B&G’s workers’ compensation and personal injury cases and receiving the remaining 50% of the attorney fees generated therefrom.

By 2005, 3 Grazian and Volpe decided to leave B&G and form their own law firm, known as G&V Accordingly, Bernstein and Grazian agreed to terminate and dissolve B&G as of December 31, 2005, and that G&V would take over B&G’s open cases. However, there are differing accounts regarding the division of recoverable attorney fees on the pending B&G cases. Bernstein testified at trial that he told Grazian that he (Grazian) could take and transfer B&G’s open personal injury and workers’ compensation cases to G&y as long as Grazian and Volpe gave him 50% of the attorney fees they recovered. Bernstein further testified that Grazian accepted his offer. In direct contrast, Grazian testified at trial that he did not agree to this, but offered Bernstein only one-third of the fees they recovered and that Bernstein accepted his offer.

As Grazian and Volpe’s departure from B&G and B&G’s dissolution approached, steps were taken to transfer B&G’s open cases to G&V A letter was signed by each of the parties — Bernstein, Grazian and Volpe — and was sent to each of B&G’s clients explaining the termination of B&G, its withdrawal from their open cases, and the creation of G&V An accompanying cover letter sought the written consent of each client for the transfer of its files from B&G to G&V Every B&G client agreed to the transfer. In addition, both Grazian and Bernstein signed withdrawal and substitution-of-attorney forms in each and every B&G case. Grazian took these forms and filed them in court. The record again demonstrates disagreement on these points. Bernstein testified at trial that he was shocked that Grazian filed these forms in court, and he did not intend to withdraw or allow Grazian to become the substitute attorney on the open B&G cases until there was a formal separation and exit agreement drafted among the parties guaranteeing him (Bernstein) 50% of the recoverable attorney fees. In contrast, Grazian testified that Bernstein never mentioned any sort of exit agreement but, rather, knew that he (Grazian) was going to file these forms in court and that G&V would be giving Bernstein one-third of the attorney fees on the open B&G cases, not 50%.

Bernstein and B&G filed a complaint for injunctive and other relief against Grazian, Volpe and G&V alleging breach of contract and breach of fiduciary duty and demanding an accounting.

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Bluebook (online)
931 N.E.2d 810, 402 Ill. App. 3d 961, 341 Ill. Dec. 913, 2010 Ill. App. LEXIS 634, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bernstein-grazian-pc-v-grazian-volpe-pc-illappct-2010.