In re Thorpe

602 B.R. 906
United States Bankruptcy Court, E.D. Pennsylvania·Decided June 28, 2019·No. Bky. No. 13-15267 ELF·Published·Cited by 3 cases

Opinion

ERIC L. FRANK, U.S. BANKRUPTCY JUDGE

I. INTRODUCTION

On June 22, 2016, Joseph Q. Mirarchi Legal Services, P.C. ("MLS"), a law firm in which Joseph Q. Mirarchi ("Mirarchi") was the sole practitioner, filed a motion ("the Motion") ("Doc. 581") seeking payment of $113,400.00 that has been placed in the bankruptcy court clerk's registry ("the Escrowed Funds"). The Escrowed Funds constitute thirty-five percent (35%) of the settlement proceeds of a state court lawsuit ("the C.P. Action") that the chapter 12 debtor, Renee M. Thorpe ("the Debtor"), and her non-debtor husband, Dale Thorpe (collectively, "the Thorpes"), filed against Nationwide Mutual Insurance Company ("Nationwide").

Presently, the Motion is before the bankruptcy court on remand from the Court of Appeals and the district court. The district court instructed this court to make a recommendation concerning the proper amount of a quantum meruit award to MLS. (See Doc. # 695).

For the reasons set forth below, I recommend that the district court enter an order determining that MLS is entitled to $25,200.00 and that the Thorpes are entitled to the $88,200.00 balance of the Escrowed Funds.

II. PROCEDURAL HISTORY

A. Prior to the District Court Remand

The initial procedural history of this matter is set forth in detail in this court's Memorandum dated February 17, 2017. See In re Thorpe, 563 B.R. 576, 580-83 (Bankr. E.D. Pa. 2017) (" Thorpe I"), recommendation adopted sub nom., U.S. Trustee v. Thorpe, 2017 WL 3084388 (E.D. Pa. July 20, 2017) (" Thorpe II"); aff'd in part, rev'd in part sub nom., In re Thorpe, 755 F. App'x 177 (3d Cir. 2018) (nonprecedential) (" Thorpe III"). So, I will limit the discussion to a brief description of my initial Memorandum and the procedural events that followed.

In Thorpe I, after determining that the dispute was a non-core matter, see 563 B.R. at 594-97, I issued proposed findings of fact, proposed conclusions of law and a recommendation that the district court deny the Motion in its entirety. I concluded that MLS lacked any right to the Escrowed Funds based on the contingency fee contract between MLS and the Thorpes. I further concluded that Mirarchi's professional misconduct precluded any recovery in quantum meruit.

By Memorandum and Order entered on July 20, 2017, the district court adopted *910this court's recommendation and denied the Motion. Thorpe II.

On November 20, 2018, the Court of Appeals affirmed the district court's order in part, reversed it in part, and remanded the matter to the district court.

The Court of Appeals affirmed the district court's determination that MLS lacked a contractual right to the Escrowed Funds based on the contingency fee agreement. Thorpe III, 755 F. App'x at 180. The Court of Appeals reversed the district court's determination that, due to wrongful conduct, MLS was precluded from a recovery in quantum meruit, reasoning:

[W]e hold that the doctrine of unclean hands does not bar the quantum meruit claim of Mirarchi. We acknowledge that he was placed on administrative suspension due to his own failure, although seemingly negligent, to obtain the requisite CLE credits to continue practicing law in Pennsylvania. We also acknowledge that Mirarchi's failure to disclose his administrative suspension violated the Pennsylvania Rules of Disciplinary Enforcement, see Pa. R.D.E. 217(b), and that his work on behalf of the Thorpes during his one-month administrative suspension constituted the unauthorized practice of law, see 42 Pa. C.S.A. § 2524 ; Pa. R.D.E. 217(j). We do not applaud the manner in which Mirarchi handled his representation of the Thorpes once he was placed on administrative suspension. Nonetheless, we do not believe his conduct shocks the conscience such that he should be completely denied recovery based on the doctrine of unclean hands.

Id. at 182.

The Court of Appeals remanded the matter "to the Bankruptcy Court and the District Court to determine in the first instance the proper amount of Mirarchi's recovery in quantum meruit." Id. at 183 (footnote omitted).1

Following the remand to the district court, by order entered December 17, 2018, the district court "referred" the matter to this court "to determine the proper amount of [the] quantum meruit award." See (Doc. # 695).

B. After the District Court Remand

1. overview

On December 20, 2018, this court entered an order requiring:

*911on or before January 4, 2019, each party shall file a statement stating whether this court may comply with the requirements of the remand order based on the existing evidentiary record or whether it is necessary and/or appropriate for this court to take further evidence on the issue. If a party asserts that further evidence is necessary and/or appropriate, the party [must] state with specificity the reasons for its position.

(Doc. # 696) (emphasis in original).

No party in interest filed a timely request for the opportunity to supplement the existing evidentiary record.

On March 18, 2019, after determining that additional briefing "would be of assistance to the court," I entered another order, this time directing that each party submit a memorandum on or before April 9, 2019. (Doc. # 706).

The March 18, 2019 order was specific in describing the issues to be addressed in the requested memoranda:

(a) the appropriate legal standards to be applied in determining a quantum meruit award in a case in which an attorney's services have been terminated before the right to a contingent fee has vested; and

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In re Thorpe, 602 B.R. 906 (Pa. 2019).

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