Law Offices of Peter Thompson & Assoc. v. Gerber

• Court: Superior Court of Maine
• Decided: February 11, 2014
• Docket: CUMcv-11-418
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss. CIVIL ACTION Docket No. CV-11-410 / 1/J ....,...-r) . 1 L . . 1, Nt- Q II ~c t·1 1 -+~ ttv·- -~' r1

Plaintiff FEB 1 l Z0\4 v. .-~·~·''{"•:t'""'t~l.l~"'lrlRDER tl <. t: vI:: l \1 b: 1::/J LOWELL GERBER, et al

Defendants

Before the court is a motion for summary judgment by plaintiff Law Offices of

Peter Thompson and Associates P.A. and by third party defendants Peter Thompson

and Chad Hansen.

The Thompson Law Office initiated this action to collect a contingent fee

allegedly owed by two former clients, defendants Lowell Gerber, M.D., and Nurse

Practitioner Danielle Duval, based on a settlement of Gerber's and Duval's claims

against Down East Community Hospital (DECH) and certain individuals affiliated with

DECH (collectively, the DECH parties).

Dr. Gerber and Ms. Duval have denied that any contingent fee is owed and have

asserted counterclaims against the Thompson Law Office, against Attorney Peter

Thompson individually, and against Chad Hansen, another attorney in the Thompson

Law Office, for breach of contract, legal malpractice, and disgorgement. 1 The

1 Although named as third party defendants, attorneys Thompson and Hansen technically do not qualify as persons who may be liable to Gerber and Duvall for the Thompson Law Office's claim against Gerber and Duval. See M.R.Civ.P. 14(a). However, no objection to this effect has been raised on Thompson and Hansen's behalf, probably because Thompson and Hansen would otherwise qualify as additional parties on Gerber and Duval's counterclaim against the disgorgement claim has since been withdrawn. See Defendants' Opposition to Motion

for Summary Judgment dated October 2, 2013 at 27.

The Thompson Law Office, Thompson, and Hansen (collectively, the Thompson

parties) are now seeking summary judgment on the Law Office's claim against Gerber

and Duval and summary judgment dismissing Gerber's and Duval's counterclaims.

1. Summary Judgment

Summary judgment should be granted if there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law. In considering a

motion for summary judgment; the court is required to consider only the portions of the

record referred to and the material facts set forth in the parties' Rule 56(h) statements.

~.,Johnson v. McNeil, 2002 ME 99 <]I 8, 800 A.2d 702. The facts must be considered in

the light most favorable to the non-moving party. Id. Thus, for purposes of summary

judgment, any factual disputes must be resolved against the movant. Nevertheless,

when the facts offered by a party in opposition to summary judgment would not, if

offered at trial, be sufficient to withstand a motion for judgment as a matter of law,

summary judgment should be granted. Rodrigue v. Rodrigue, 1997 ME 99 <]I 8, 694 A.2d

924.

This case has a complicated factual history, including an underlying arbitration/

and this has resulted in a statement of material facts, an opposing statement of material

Thompson Law Office pursuant to M.R.Civ.P. 13(h). The court will therefore omit any further reference to third party claims and will refer only to Gerber's and Duval's counterclaims. 2 A review of the motions in limine which the parties have filed and which are referred to in their summary judgment papers reveals that Gerber and Duval also brought a bar complaint against Attorney Thompson raising the same allegations that form the basis for their claims of legal malpractice. That complaint led to a hearing before a Grievance Panel, which found that no misconduct under the Rules of Professional Conduct had occurred, with one panel member dissenting. Decision in GCF-11-258, filed May 29, 2013.

2 facts, and a reply statement of material facts totaling 53 pages and 156 paragraphs. The

court has attempted to carefully review those submissions and, where factual assertions

have been disputed, has reviewed the underlying record citations.

Several deficiencies should be noted. Among the submissions by Gerber and

Duval in opposition to the motion for summary judgment are an 11-page, 67-paragraph

affidavit from Gerber and a 6-page, 35-paragraph affidavit from Duvall. The

defendants' statement of material facts repeatedly cites to the Gerber and Duval

affidavits without specifying a page or paragraph number. 3 This does not comply with

M.R.Civ.P. 56(h)(4)'s requirement that record citations identify the specific page or

paragraph of the material cited.

This is not a case where, despite noncompliance with Rule 56(h)(4), the court can

nevertheless discern the basis for a party's factual assertions without difficulty.

Compare North Star Capital Acquisition LLC v. Victor, 2009 ME 129

1278, 1280 n.3. A court cannot be expected to search through 17 pages and 102

paragraphs in order to determine whether there is factual support in each of the

instances where Gerber and Duval have provided general citations to unspecified

portions of their affidavits. Record citations to the Gerber and Duval affidavits have

therefore been disregarded, and any factual assertions which have not been admitted

and for which those affidavits are the only record support cited have been deemed

unsupported. See M.R.Civ.P. 56(h)(4); HSBC Bank N.A. v. Gabay, 2011 ME 101

A.3d 1158; Levine v. R.B.K. Caly Corp., 2001 ME 77

3 E.g., Defendants' Statement of Material Facts dated October 2, 2013 (Defendants' SMF) '1['1[ 58- 62, 66-74, 77-78, 80-84, 92-93, 96-97, 99-100, 103-05, 107-10, 113-14, 116-20, 132, 143-54, 156. In many of those instances, a general citation to unspecified portions of the Gerber and Duval affidavits is the only record support cited by defendants. E.g., Defendants' SMF '1['1[ 66, 71, 81, 83, 96-97, 99-100, 103, 107, 113, 116-17, 146-48, 151-54.

3 There are also deficiencies in the summary judgment submissions of the

Thompson parties. Some of the denials and qualifications in the Thompson parties'

Reply Statement of Material Facts dated October 23, 2013 (Thompson Reply SMF) cite to

incorrect paragraphs in the Thompson and/ or Hansen affidavits. 4 If the court had to

resolve this issue, the court might be prepared to overlook the errors where the correct

paragraphs are easily discernable. North Star Capital Acquisition LLC v. Victor, 2009

ME 129 1 5 n. 3. Otherwise, the court would disregard the record citation in question.

However, the court does not have to reach this issue. Because the deficiencies in

question appear in the Reply SMF, they do not detract from the Thompson parties'

motion to the extent that the Thompson parties are entitled to summary judgment

based on the court's review of the Thompson parties' initial Statement of Material Facts

dated September 5, 2013 (Thompson SMF) and of Defendants' opposing SMF. The

court's decision on the instant summary judgment motion does not depend on any

paragraphs in the Reply SMF where affidavits have been incorrectly cited.

2. Defendants' Breach of Contract and Legal Malpractice Claims

Defendants' counterclaims for breach of contract and legal malpractice are both

based on the alleged failure of Thompson and Hansen to adequately represent Gerber

and Duval at the mediation and subsequent arbitration of Gerber's and Duval's claims

against DECH. See Defendants' Counterclaim and Third Party Complaint 11 1-42.

First, Gerber and Duval claim that Thompson and Hansen failed to adequately

represent them at the mediation that occurred before Patrick Coughlan of Conflict

Solutions on July 30, 2010. Specifically, they allege that they were not prepared for the 4 E.g., Thompson Reply SMF errerr 82, 86, 87, 108, 109, 118. In many of those cases the citation is off by one paragraph. E.g., Thompson Reply SMF err 108 (citing Thompson A££. err 4 instead of err 5), err 109 (citing Thompson Aff. err 5 instead of err 6), err 118 (citing Thompson Aff. err 8 instead of err 9).

4 mediation process and did not understand that they would be pressured to reach a

decision at the mediation on settlement. They contend Thompson and Hansen failed to

vigorously advocate for their interests and that Thompson and Hansen, along with the

mediator, improperly pressured them to agree to the Term Sheet that was signed at the

mediation. They allege that the terms of the settlement, including a provision that any

disputes would be arbitrated before the mediator, were not adequately explained to

them. They further contend that the Term Sheet did not adequately address their desire

to obtain a reference letter from DECH. In all these respects they contend that

Thompson and Hansen failed to comply the standard of conduct required of attorneys.

Second, Gerber and Duval claim that when - starting the day after the July 30,

2010 mediation - they began raising objections to the agreement reached at mediation

on the ground that they had been "unduly pressured in a hostage situation,'' 5

Thompson and Hansen violated their duty as attorneys by engaging in negotiations

with counsel for DECH leading to agreement on modified terms that Gerber and Duval

had not authorized and then by declining to represent Gerber and Duval in disputes

that arose in connection with certain details of the settlement.

According to Gerber and Duval, Thompson and Hansen were "uniquely

positioned" to represent them in the disputes that arose with respect to details of the

settlement that were to be incorporated in a final settlement agreement, and Gerber and

Duval argue that Thompson and Hansen's failures of representation and their

subsequent withdrawal resulted in an arbitration before Patrick Coughlan in March

5 See July 31, 2010 email from Gerber to Hansen included in Ex. 37 to Defendants' SMF. That first email complains about the settlement but is ambivalent as to the performance of the attorneys. On the one hand, it complains that Thompson and Hansen knew the mediation "scenario," that Gerber and Duval did not, and that Gerber and Duval had been unduly pressured and duped. On the other hand, the email states that Gerber and Duval appreciated Thompson and Hansen's hard work and "brilliant organization of the case" and also states, "Maybe you want to call this 'buyer's remorse."'

5 2011 that imposed various new provisions adverse to Gerber's and Duval's interests

that departed from the mediation Term Sheet and that had never been agreed to.

3. Alleged Malpractice Relating to July 30, 2010 Mediation

It is undisputed that the July 30, 2010 mediation resulted in a Term Sheet that

was signed by the DECH parties and by Gerber and Duval. Exhibit 3 to Thompson

SMF. The Term Sheet states that it "contains the essential terms of the settlement"

between Gerber and Duval and the DECH parties, that it "will be binding on the

parties," and that any disputes as to the terms of the settlement would be referred to

Conflict Solutions for binding arbitration. Id. CJICJI 1, 14-15.

Gerber and Duval argue that there are factual disputes between the parties with

respect to Thompson and Hansen's alleged malpractice in connection with the July 30,

1010 mediation, specifically alleging that Thompson and Hansen improperly pressured

Gerber and Duval to settle, that Thompson and Hansen failed to advocate for their

clients' interests with respect to a DECH reference letter, and that Thompson and

Hansen failed to explain the provisions and ramifications of the Term Sheet.

Notwithstanding those disputes, there are two reasons why the court concludes

that the Thompson parties are entitled to summary judgment with respect to Gerber

and Duval's claims of breach of contract and malpractice based on the July 30, 2010

mediation. The first is based on collateral estoppel. The second is because Gerber and

Duval have not offered any evidence that they would have obtained a more favorable

result at mediation but for the alleged failures of Thompson and Hansen.

Collateral estoppel applies because the essential factual issues which Gerber and

Duval are raising in connection with the July 30, 2010 mediation have already been

resolved against Gerber and Duval in the subsequent arbitration. After Gerber and

6 Duval raised objections to the Term Sheet and to the final settlement agreement that the

DECH parties proposed, 6 it is undisputed that Gerber and Duval, represented by new

counsel/ agreed to proceed to arbitration before Patrick Coughlan on those issues.

Thompson SMF <[ 45, citing Thompson SMF Ex. 90. In the brief they submitted before

the arbitration hearing Gerber and Duval expressly argued that the status of the dispute

could not be resolved

without a clear understanding of the level of distrust and communication breakdown that has occurred not only between the parties, but also between the Plaintiffs and the attorneys who represented them at the mediation.

See Thompson SMF Exhibit 9 at 1 (emphasis added), cited in Thompson SMF <[51.

In their arbitration brief Gerber and Duval specifically argued that that they had

been told by their attorneys that mediation would just be a fact finding exercise but that

at the mediation itself they were put under "immense pressure by their own attorneys

to settle" and that while they had "reluctantly agreed to many of the settlement terms,

others were never disclosed to them or explained." They further argued that the Term

Sheet was prepared without their input and that

with the pressure of time and without explanation, they were asked to sign the Term Sheet, which included an arbitration clause, the ramifications of which they never fully understood until later.

Id. at 2.

6 Although the Term Sheet signed by Gerber and Duval stated that it contained the essential terms of settlement and was binding on the parties(~ 14), it also contemplated the subsequent preparation of a final Settlement Agreement and Mutual Release. See ~~ 9, 16. 7 Attorney A.J. Greif appeared for Gerber and Thompson in late September 2010, and Thompson and Hansen thereafter filed an unopposed motion to withdraw in early October. Attorney Greif subsequently withdrew in January 2011, and was replaced by Attorney Michelle Allott, who represented Gerber and Duval at the arbitration before.Patrick Coughlan in March 2011. See Ex. 91 to Thompson SMF (docket sheet).

7 In the decision issued after the March 9, 2011 arbitration, however, Arbitrator

Coughlan specifically rejected those arguments, finding, inter alia:

Counsel for all parties cooperated in the drafting of the Term Sheet, and all parties had ample opportunity to revise the Term Sheet before it was signed. At the mediation, counsel for all sides aggressively championed their clients' positions, and clients fully participated in discussions concerning the ramifications of the terms of the Term Sheet and final settlement.

Exhibit 5 to Thompson SMF at 2, cited in Thompson SMF (_[52 (admitted). 8

The Law Court has ruled that arbitration decisions are entitled to collateral

estoppel effect when parties later attempt to relitigate the identical issues heard and

decided by the arbitrator. Beal v. Allstate Insurance Co., 2010 ME 20 (_[(_[ 14-16, 989 A.2d

733. In this case Gerber and Duval argued before the arbitrator that they had been

improperly pressured and that they had not understood the terms and ramifications of

the term sheet. The arbitrator rejected certain of those claims explicitly and others

implicitly. See Gray v. TD Bank N.A., 2012 ME 83 (_[ 14, 45 A.3d 735 (implicit as well as

explicit findings necessarily made in prior proceeding are entitled to collateral estoppel

effect). The arbitrator's findings are therefore entitled to collateral estoppel effect in this

case.

Gerber and Duval do not argue that the arbitration lacked the essential elements

of adjudicatory procedure necessary for collateral estoppel to apply. See Beal v. Allstate

Insurance Co., 2010 ME 20 (_[ 13. Instead, they argue that collateral estoppel does not

apply because the arbitrator was not presented with their claim of legal malpractice and

did not rule on that issue. The problem with this argument is that the factual predicates

8 In addition, Gerber and Duval do not dispute that at the outset of the mediation, the mediator explained- and Gerber and Duval understood- that the mediation was a non-binding process and that it was up to Gerber and Duval to decide whether or not to settle the case. Thompson SMF 'li 7 (admitted).

8 for Gerber and Duval's claims that Thompson and Hansen committed malpractice by

improperly pressuring them to sign the Term Sheet and by failing to explain the terms

and ramifications of the Term Sheet were decided against them in the arbitration. They

cannot now relitigate those issues.

The second problem with Gerber and Duval's claims of malpractice based on the

July 30, 2010 mediation is that they have not offered evidence demonstrating the

existence of a factual dispute for trial on whether they would have received a more

favorable outcome at the mediation absent the alleged failings of Thompson and

Hansen. In this connection it bears emphasis that Gerber and Duval are not arguing

that in the absence of Thompson and Hansen's alleged malpractice, they would not

have settled but would instead have gone to trial and would have received a more

favorable result after trial. Gerber and Duval have offered no argument, evidence, or

expert opinion to that effect. Gerber and Duval are instead arguing that, but for

Thompson and Hansen's malpractice, they would have obtained more favorable

settlement terms and would have been relieved of certain settlement provisions that

they find onerous and objectionable.

A plaintiff in a legal malpractice action must demonstrate that he or she would

have received a more favorable result but for the defendant's malpractice. Niehoff v.

Shankman & Assoc. Legal Center P.A., 2000 ME 214 c:![ 9, 763 A.2d 121. The same rule

applies when the action sounds in contract. Id.

Gerber and Duval would have been likely to have obtained more favorable settlement

terms at the mediation if Thompson and Hansen had not engaged in malpractice faces

the immediate obstacle that more favorable terms could only have been obtained if the

DECH parties had made further concessions. There has been no evidence offered to

support the possibility of such concessions.

9 Gerber and Duval argue that Thompson and Hansen committed malpractice by

allowing Gerber and Duval to agree at the mediation that any future disputes

concerning the terms of the settlement would be referred for binding arbitration before

Patrick Coughlan. See Term Sheet signed by Gerber and Duval (Thompson SMF Ex. 3) «][

15. However, arbitration before a mediator who is familiar with the terms of the

settlement and the discussions which led to that settlement is a fairly standard

provision, and Gerber and Duval have not cited to any expert opinion that it was

malpractice for Thompson and Hansen not to have objected to binding arbitration

before the mediator. Nor have Gerber and Duval offered any expert opinion or other

evidence that another arbitrator would have given them a more favorable decision.

While Gerber and Duval's papers now suggest in passing that Coughlan was

biased against them, see Defendants' SMF <[<[ 137, 141, a review of the record materials

they cite contain no support for any claims of bias. Moreover, if their current

suggestions of bias are based on rulings in the subsequent arbitration decision (to the

extent that Coughlan apparently did not find Gerber's testimony at the arbitration

hearing to be credible in certain respects), they have offered no evidence that any

supposed bias by Coughlan was or should have been evident to Thompson and Hansen

at the time of the mediation. 9

4. Alleged Post-Mediation Malpractice

Gerber and Duval's claim that Thompson and Hansen engaged in further

malpractice after the July 30, 2010 mediation is based on two arguments. First, they

argue that Thompson and Hansen, when requested to engage in further negotiations

9 No objection based on bias was raised by subsequent counsel for Gerber and Duval in advance of the arbitration hearing. See Thompson SMF Ex. 90; Thompson SMF Ex. 9.

10 with DECH counsel over the wording of the reference letter and certain other issues,

reached agreements with opposing counsel without consulting their clients. Second,

they argue that Thompson and Hansen refused to represent them at the arbitration

hearing on issues relating to alleged variances between what had been agreed to at the

July 30, 2010 mediation and the final settlement document that was contemplated as

part of the settlement. On both issues Gerber and Duval have offered only conclusory

assertions that they would have obtained a more favorable settlement in the absence of

the alleged malpractice by Thompson and Hansen, and such assertions are insufficient

to raise a disputed issue for trial.

With respect to the claims that Thompson and Hansen reached unauthorized

agreements with counsel for DECH while negotiating changes to the reference letter

language after the mediation, Gerber and Duval repeatedly emphasize that, in the

subsequent arbitration proceedings, counsel for DECH attempted to rely on Thompson

and Hansen's alleged assent. 10 The record certainly indicates that the counsel for DECH

complained at some length as to counsel's belief that an agreement had been reached

with Thompson and Hansen. However, counsel for DECH ultimately stated that for

purposes of arbitration, the DECH defendants "are willing to accept [Gerber and

Duval's] assertion that an agreement was not reached" and that the arbitrator therefore

needed to decide the issues in dispute. DECH Arbitration Brief (Exhibit 126 to

Defendants' SMF) at 8.

Moreover, nothing in the Arbitrator's ultimate decision suggests that the

arbitrator relied in any way on Thompson and Hansen's supposed agreement to terms

not authorized by their clients. See Arbitration Order of March 18, 2011 (Thompson 10 There is a factual dispute whether Thompson and Hansen had represented that they were authorized to reach agreements or whether any agreements they discussed with DECH counsel were tentative and subject to client approval.

11 SMF Ex. 5). As a result, there is no evidence (and nothing more than speculation) that

Gerber and Duval would have received a more favorable result at arbitration but for

any unauthorized negotiations between Thompson and Hansen and counsel for DECH.

Gerber and Duval's other major argument is based on the circumstances of

Thompson and Hansen's withdrawal from the case. There is evidence that, after Gerber

and Duval began objecting that they had been pressured into signing the Term Sheet

and began seeking what Thompson and Hansen believed were changes from the

agreements reached at mediation, Thompson and Hansen advised Gerber and Duval

that they could not provide continued representation as to those issues. 11 Thompson

and Hansen stated that it was their understanding that Gerber and Duval wished to

argue that the Term Sheet was not an enforceable agreement and that Thompson and

Hansen could not take that position because they did not believe that to be the case.

Thompson SMF Ex. 32 (email of August 26, 2010).

Thereafter, when Gerber outlined all his objections to the settlement, including

an objection that the $700,000 monetary settlement that had previously been agreed to

was inadequate, 12 Thompson and Hansen advised Gerber and Duval that they could not

continue to represent them in contesting issues that they thought had been resolved at

the mediation. Thompson SMF Ex. 42 (email of September 21, 2010). After Attorney

Greif entered his appearance for Gerber and Duval, Gerber and Duval terminated their

attorney-client relationship with Thompson and Hansen, who filed an unopposed

11 Gerber testified at the Grievance Committee hearing that Thompson had first suggested that if Gerber had doubts about the advice he was receiving from Thompson, Gerber should get a second opinion. Grievance Hearing Tr. (Thompson SMF Ex. 124) at 128-29. 12 See Thompson SMF Ex. 41 (letter dated September 17, 2010), referred to in Thompson SMF <][ 37. Although Defendants' SMF denies Thompson SMF <][ 37, Gerber and Duval do not deny that Gerber wrote the document in question.

12 motion to withdraw. Thompson SMF <][ 44; Grievance Hearing Tr. 173; Thompson SMF

Ex. 91 (docket sheet).

The record reflects considerable disagreement between the lawyers and their

clients as to which issues had been resolved at mediation and which issues represented

new terms that had not been agreed to. As discussed below, the arbitration decision

ultimately rejected Gerber and Duval's contentions that the DECH parties were

proposing new terms or terms that were inconsistent with the agreement reached at

mediation.

Even if this were not true, however, Gerber and Duval have not demonstrated

that there are any disputed issues of fact for trial on a necessary element of their legal

malpractice claims - that they would have received a more favorable result after the

June 30, 2010 mediation if Thompson and Hansen had remained in the case and had not

"abandoned" them. A review of Gerber and Duval's statement of material facts

demonstrates that the only evidentiary support offered for the claim that Gerber and

Duval would have obtained a more favorable result but for the withdrawal of the

Thompson Law Office is the following:

(1) a citation to the Gerber and Duval affidavits for the assertion that if

Thompson and Hansen had continued to advocate for their clients, they would have

avoided an additional new term hindering Gerber and Duval from seeking

reinstatement of their medical privileges. See Defendants' SMF <][ 107. For the reasons

discussed above, a general citation to unspecified portions of the Gerber and Duval

affidavits does not comply with Rule 56(h)(4). Moreover, this is an issue that would

require expert testimony. See Corey v. Norman Hanson & DeTroy, 1999 ME 196 <][ 13,

742 A.2d 933.

13 (2) Defendants' SMF <[ 111, citing to the deposition of plaintiff's expert, Attorney

John Campbell, for the proposition that Thompson and Hansen were "uniquely

positioned" to assist Gerber and Duval and that they alone could have convinced the

arbitrator that DECH was attempting to add new terms. A review of the deposition

testimony cited, however, shows that while Campbell gave the opinion that Thompson

and Hansen were uniquely equipped to help their clients because they knew the history

of the case, his cited testimony does not contain any opinion that Thompson and

Hansen would have been able to convince the arbitrator to rule more favorably to

Gerber and Duval.

(3) Other assertions to the same effect that cite to Campbell's testimony, to

Campbell's expert designation, and to the affidavits of Gerber and Duval generally. See

Defendants' SMF <[<[ 136-37, 141. Once again, the cited portions of Campbell's

testimony recount his criticisms of Thompson and Hansen but do not include an

opinion that Gerber and Duval would have obtained a more favorable result but for

their attorneys' failings. Moreover, an expert designation is not admissible evidence on

summary judgment and is not made admissible simply because the expert identifies it

as his designation at his deposition. 13

(4) a general assertion that Attorney Campbell "will testify" that the attorneys'

breach of the standard of care proximately caused harm to Gerber and Duval.

Defendants' SMF <[ 139. A prediction as to future testimony is insufficient to

13 In addition, a general citation to a 17-page expert designation does not satisfy Rule 56(h)(4). Even if this were not the case and if Gerber and Duval had offered sworn testimony from Campbell consistent with his designation, Campbell's designation nowhere offers an expert opinion that Gerber and Duval would have obtained a more favorable result but for the malpractice of Thompson and Hansen. At most it suggests that Thompson and Hansen "would have had the best opportunity to try to salvage the settlement." Expert Designation (Ex. 97 to Defendants' SMF) at 17 (emphasis added). This falls well short of evidence that it is more likely than not that a more favorable result would have been achieved.

14 demonstrate the existence of disputed facts for trial. Moreover, neither a citation to a

120-page portion of Campbell's deposition nor a general citation to the Gerber and

Duval affidavits complies with Rule 56(h)(4), and citations to expert designations do not

constitute admissible evidence on summary judgment.

(5) Various assertions by Gerber and Duval that they were harmed by the

outcome of the mediation and arbitration. E.g., Defendants' SMF Cf[Cf[ 116-17. However,

Gerber and Duval are not entitled to recover for any alleged harm unless they prevail

on their counterclaims, and they cannot prevail on their counterclaims in the absence of

expert testimony that Gerber and Duval would have been likely to have obtained more

favorable settlement terms but for the alleged malpractice. In addition, many of

Gerber's and Duval's assertions of harm are based only on general citations to

unspecified portions of the Gerber and Duval affidavits in violation of Rule 56(h)(4).

It bears emphasis that as a general matter, the assertion that Thompson and

Hansen were "uniquely positioned" to pursue Gerber and Duval's arguments after the

July 30, 2010 mediation is conclusory at best. Such an assertion would only have

traction if there were evidence showing how Thompson and Hansen would likely have

been able to succeed where successor counsel failed.

The summary judgment record demonstrates that successor counsel vigorously

argued at the arbitration that the DECH parties were attempting to impose new terms

on Gerber and Duval that had never been agreed to and that were inconsistent with the

agreement reached at mediation. See Thompson SMF Ex. 9 at 3-16. No evidence has

been presented demonstrating the existence of a factual dispute for trial as to how

Thompson and Hansen could have argued those issues more forcefully or more

effectively. Indeed, since Thompson and Hansen disagreed that some of the terms

challenged by Gerber and Duval were new or inconsistent, successor counsel was

15 actually less constrained in arguing those issues than Thompson and Hansen would

have been.

Ultimately, the arbitrator rejected Gerber and Duval's contentions almost entirely

and concluded that the terms to which Gerber and Duval were objecting either had

been agreed to at the mediation or were fully consistent with the settlement that had

been reached. On two issues the arbitrator specifically found that the post-mediation

objections raised by Gerber and Duval involved issues that had been resolved at the

mediation. As to those issues the arbitrator's decision is entitled to collateral estoppel

effect for the reasons previously stated.

Thus Gerber and Duval argued at the arbitration (and continue to argue before

this court) that they were exposed to an unfair, one-sided liquidated damages provision

for any violations of the confidentiality provisions of the settlement. That provision is

expressly contained in the Term Sheet at paragraph 13, and the Arbitrator found that it

had been "specifically negotiated as part of the settlement and all parties discussed it."

March 18, 2011 Arbitration Order at 2. 14

Similarly, while Gerber and Duval complain that a provision that they not

reapply for employment at DECH was not discussed or agreed to at mediation and

departed from the Term Sheet, the arbitrator disagreed, noting that all parties had

extensively discussed the need to permanently end the relationship between the parties

and that the agreement of the DECH parties to pay $700,000 had been predicated on a

settlement that would bring all past and future litigation to an end. March 18, 2011

Arbitration Order at 2. The arbitration decision further found that the importance of the

parties not working together was "clearly discussed and contemplated" and that the

14 In this connection the arbitration order noted that the DECH parties were also bound by the confidentiality provision and were subject to damages without any cap. Id.

16 failure to expressly include a provision in the Term Sheet preventing Gerber and Duval

from reapplying for employment was a "scrivener's error." Id. at 3.

There were several issues that had not been specifically addressed at the

mediation, including Gerber and Duval's right to reapply for DECH hospital privileges.

On that issue the arbitrator again referred to the intent of all parties to put the dispute

behind them and avoid future litigation. See March 18, 2011 Arbitration Order at 2

(citing Gerber's statement that the goal of the settlement was to get the dispute over

with and let plaintiffs "get on with their lives"). In order to protect Gerber and Duval's

interest in obtaining future employment while eliminating the prospect of future

litigation between the parties, the arbitrator concluded that Gerber and Duval should be

able to reapply for DECH hospital privileges and could truthfully state to other

employers that their medical privileges had not been denied. However, he ruled they

could not sue DECH if they in fact applied and were turned down. Id. at 3-4.

The arbitrator also found that the Term Sheet contained specific language for the

reference letter to be provided to Gerber and Duval but did not include language for the

hospital to use when a potential employer or a regulatory body made an inquiry.

Arbitration Order at 3. 15 After the mediation Gerber and Duval had requested

additional language, and the arbitrator concluded that inquiries by employers and

regulators should be answered as follows:

15 The specific language agreed to in the Term Sheet for the reference letter was the following:

Dr. Gerber and Danielle Duval were not terminated due to any deficiencies regarding patient care. Nor were they terminated for disciplinary reasons, professional concerns, or as a result of any ethical or moral concerns.

Term Sheet Cfi 4.

17 Dr. Lowell Gerber and Ms. Danielle Duval were known at DECH for their personalized patient care and their excellent clinical skills. Down East Community Hospital has no ethical or moral concerns with Dr. Gerber and Ms. Duval. Neither Dr. Gerber or Ms. Duval were the subject of any disciplinary action by Down East Community Hospital.

Id. at 4. 16

This language had been advocated by Gerber and Duval and was acceptable to

them, but they objected to the arbitrator's further ruling that this additional language

was to be restricted to employer or regulatory inquiries and was not to be made public.

See Gerber and Duval Arbitration Brief at 6-7 (Thompson SMF Ex. 9). The arbitrator's

ruling on this issue appears to have been designed to prevent the dispute between the

parties from being re-ignited by public comments. As the arbitration order noted, Dr.

Gerber had recently sent a letter to various public officials about the settlement, and the

arbitrator therefore ordered that Gerber and Duval "shall not use the letter [with the

additional language] against the hospital." Id.

The decisions by the arbitrator with respect to reference letter language and

hospital privileges may or may not have been correct but those decisions were, in the

arbitrator's view, appropriate to effectuate the settlement. As set forth above, Gerber

and Duval have not demonstrated that there is a disputed issue for trial on whether

they could have obtained a more favorable outcome on those issues and on any of the

other issues they have raised relating to alleged malpractice of the Thompson Law

Office after the June 30, 2010 mediation.

16 The arbitrator agreed with Gerber and Duval in ruling that DECH shall handle all inquiries about Gerber and Duval "in the same manner as all other past employees who left DECH in good standing" and that the hospital's reference letter should also make clear that the hospital's termination of Gerber and Duval was without cause. Id.

18 5. The Law Office's Claims under the Contingent Fee Agreement

For the foregoing reasons, the Thompson parties are entitled to summary

judgment dismissing Gerber and Duval's affirmative claims for breach of contract and

legal malpractice against them. A different result obtains, however, with respect to the

Thompson Law Office's claims against Gerber and Duval based on the contingency fee

agreements that both Gerber and Duval had entered into. 17

As relevant to the situation presented in this case, the Contingent Fee

Agreements, Thompson SMF Ex. 1 & 2, provide, inter alia:

• that Gerber and Duval agree to retain the Thompson Law Office to perform

legal service in connection with their claim against DECH and that the Law Office

agrees to perform such services "faithfully and with due diligence;"

• that the Law Office will receive compensation equaling 40 percent of the gross

amount collected in a judgment or settlement, before deduction of any expenses (Cf[ 5);

and

• that the Law Office shall have the right to withdraw in the event the clients fail

to cooperate with the Law Office (C[ 12).

Specific provisions applicable in the event of a settlement and attorney

withdrawal are as follows:

13. In the event that; a) Client discharges Attorney at any time; b) Attorney exercises his right to withdraw because Client misrepresented or failed to disclose material facts to Attorney; or c) Attorney exercises his right to withdraw because Client failed to cooperate with Attorney in the prosecution of the case; Client shall immediately be liable to Attorney for either four-tenths (40 percent) of the last settlement offer received by Attorney or a fee in an

17 The complaint filed by the Thompson Law Office includes two counts: (1) a count seeking a declaratory judgment that the Law Office is entitled to the fee specified in the contingent fee agreement, an amount which has been placed in escrow pending resolution of this action, and (2) a claim for breach of the contingent fee agreement.

19 amount equal to the number of hours devoted to the case by Attorney multiplied by the Attorney's customary hourly rate, whichever is greater, plus 15 %. . . .

14. In the event that Attorney receives settlement offer for Client which Client rejects, and Attorney subsequently withdraws as counsel, Client shall pay Attorney an amount equal to four-tenths (40 percent) of said settlement offer in the event that Client subsequently settles or obtains a judgment. . . .

The Law Office appears to contend that this case is governed by paragraph 14,

because Gerber and Duval agreed to the Term Sheet but rejected the later Settlement

Agreement and eventually received a monetary settlement on which, according to the

Law Office, a 40 percent fee is owed. It may be more accurate to characterize this case as

one where Gerber and Duval agreed to an overall settlement but later disagreed with

certain of the details of the settlement. In either event, however, it can be argued that

the Law Office is entitled to 40 percent of the $ 700,000 settlement amount under the

terms of the Contingent Fee Agreements. See 'JI'JI 2, 5, 13.18

Gerber and Duval, however, argue that the Law Office should not be entitled to

the 40 percent fee requested because the Law Office violated its professional obligations

to its clients. In particular, Gerber and Duval argue that the Law Office did not achieve

success with respect to the non-monetary relief sought by Gerber and Duval, that

Thompson and Hansen sacrificed that non-monetary relief in order to collect their fee

on the$ 700,000, and that Thompson and Hansen wrongfully declined to represent their

clients' interest with respect to the disputes that arose after the June 30, 2011 mediation.

Gerber and Duval also argue that the Contingent Fee Agreements violate Rule 1.5(a) of

18 Gerber and Duval argue that the Contingent Fee Agreements are ambiguous. They do not, however, identify any specific provisions which they claim to be ambiguous. Moreover, while ambiguity, if it existed, would allow the admission of extrinsic evidence as to interpretation of contractual terms, neither party in this case has offered any evidence that goes to interpretation. The court will therefore apply standard contract principles in interpreting the Contingent Fee Agreements.

20 the Maine Rules of Professional Conduct, which provides that a lawyer "shall not make

an agreement for, charge, or collect an unreasonable fee. . . ."(emphasis added).

The basis for summary judgment against Gerber and Duval on their affirmative

claims against the Thompson parties is that many of the factual predicates of those

claims are barred by collateral estoppel and that all of those claims fail because Gerber

and Duval have not demonstrated the existence of a factual dispute for trial on whether

they might have obtained a more favorable outcome but for the alleged malpractice.

Regardless of their inability to demonstrate that they might have obtained a more

favorable settlement, however, Gerber and Duval have demonstrated that factual

disputes exist as to whether the Law Office performed "faithfully and with due

diligence" as required by the second sentence of the Contingent Fee Agreements.

If the Law Office breached its obligations under the Contingent Fee Agreements

and if that breach was material, that could as a matter of contract law excuse Gerber

and Duval from their obligation to pay the contingency fee. It is essentially undisputed

that Gerber and Duval discharged Thompson and Hansen as a result of the differences

that arose between attorneys and clients after the July 30, 2010 mediation. Thompson

SMF (_IT 44; Defendants' SMF (_IT 44. However, the court does not interpret paragraph 13 of

the Contingent Fee Agreements (which addresses the eventuality where the client

<:Us charges the attorney) to provide that a 40 percent contingent fee would still be

applicable if the attorneys were discharged for significant violations of their

professional obligations.

Moreover, while collateral estoppel precludes relitigation of issues decided by

the arbitrator, not all of Gerber and Duval's complaints against the Law Office are

barred by collateral estoppel. Thus there is a factual dispute whether Gerber and Duval

had a legitimate reason to discharge the Law Office if, after the July 30, 2010 mediation,

21 Thompson and Hansen negotiated with DECH counsel without authorization. A factual

dispute also exists as to whether Thompson and Hansen wrongfully declined to

represent Gerber and Duval with respect to the certain of the disputes that arose in

connection with the final settlement agreement. The arbitrator did not rule on either of

those issues.

The court is not convinced that there should be a trial as to whether - even in

light of Gerber and Duval's considerable dissatisfaction with the non-monetary relief

they ultimately obtained- a 40 percent fee based on the monetary relief obtained alone

was "unreasonable" within the meaning of Maine Rule of Professional Conduct l.S(a).

The Contingent Fee Agreements do not specify that the lawyers' entitlement to a

contingent fee is predicated on overall success as to both monetary and non-monetary

relief. However, if the lawyers did not faithfully represent Gerber and Duval with

respect to non-monetary relief, that might constitute a breach that would affect the Law

Office's entitlement to a contingent fee.

In sum, although Gerber and Duval remain barred by collateral estoppel from

relitigating issues decided by the arbitrator, they have demonstrated the existence of

disputed factual issues as to which collateral estoppel does not apply and which require

a trial on the Law Office's claim for the contingent fee.

The entry shall be:

The motion for summary judgment by the plaintiff Law Offices of Peter Thompson & Associates and by third party defendants Peter Thompson and Chad Hansen is granted as to the counterclaims and third party claims of defendants Lowell Gerber and Danielle Duval, and the counterclaims and third party claims are dismissed.

The Thompson Law Office's motion for summary judgment on its claims against defendants based on the contingent fee agreement is denied.

22 The clerk is directed to incorporate this order in the docket by reference pursuant to Rule 79(a).

Dated: February II 2014

Thomas D. Warren Justice, Superior Court

23 OF COURTS rland County y Street, Ground Floor ,d, MF "1:101

THOMAS MARJERISON ESQ NORMAN HANSON & DETROY LLC PO BOX 4600 PORTLAND, ME 04112-4600

OF COURTS rland 'nty y Stret., ....:iround Floor d, ME 04101

MICHELLE ALLOTT, ESQ FARRIS LAW 491 US ROUTE ONE SUITE 22 FREEPORT, ME 04032 STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss. CIVIL ACTION Docket No. CV-1l:4J.8 -c~v~J - c \J IV\-- 'f5t' {.z o ,z__ LAW OFFICES OF PETER THOMPSON & ASSOCIATES P .A.,

Plaintiff

v. ORDER

LOWELL GERBER, et al

The parties have submitted letters enumerating a number of discovery disputes

and have raised certain privilege issues. To the extent that ~ither plaintiffs or

defendants wish to supplement the letters previously filed with transcripts, discovery

materials, and legal authorities, they shall do so by August 17, 2012.

In the meantime, counsel shall confer on any discovery issues as to which no

Rule 26(g) conference has been held 1 and counsel for plaintiff shall advise the clerk

whether plaintiff objects to the proposed amended scheduling order submitted by

counsel for defendants with her July 26, 2012letter.

A Rule 26(g) discovery hearing shall thereafter be scheduled.

Discovery order entered. The Clerk is directed to incorporate this order in the docket by reference pursuant to Rule 79(a).

1 Fir instance, the court cannot discern whether the parties have conferred with respect to plaintiff's objections to defendants' Rule 30(b)(6) deposition notice and Rule 30(b)(5) request for production. Dated: August 1 , 2012 ~~ Thomas D. Warren Justice, Superior Court

2 STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss. CIVIL ACTION Docket No. CV-11-418 / LAW OFFICES OF PETER THOMPSON & ASSOCIATES P .A.,

LOWELL GERBER, et al ' -. -,') Defendants t._ "-ii ~ o'r.

,_ '·~ - '· J The court has reviewed the submissions of non-parties Wayne Dodwell and

Down East Community Hospital in response to its July 5, 2012 order to show cause. It

has also reviewed the authorities cited by Down East Community Hospital to the extent

that those authorities are available to the court. 1

None of the authorities that the court has reviewed speak to the circumstances of

this case - where a plaintiff law firm which is not subject to any confidentiality

agreement (although in possession of the information contended to be confidential)

seeks to collect fees from defendants who are subject to confidentiality provisions

contained in a settlement agreement with non-parties but who allege that no fees are

owed and that the law firm committed malpractice in connection with the

(contractually confidential) terms of the settlement agreement.

The cited case which may be closest on its facts to the instant case is Young v.

State Farm Mutual Automobile Insurance Co., 169 F.R.D. 72 (S.D.W.Va. 1996), in which

1 Two of the decisions cited are apparently only available on Westlaw, which is not available to the court. In re KLA-Tencor Corp. Shareholder derivative Action, 2009 WL 37827, * 1 (N.D. Cal. Jan. 6, 2009); Saunders v. ChampSports Inc., 2008 WL 5142393, * 1 (S.D.W.Va. Dec. 8, 2008). a law firm sought to collect fees it claimed were owed based on a confidential

settlement. The court in Young was faced with a threshold question of whether the

defendants could resist discovery as to the settlement amount because of the contractual

confidentiality provision. The court concluded that notwithstanding the confidentiality

provision, the information sought was discoverable. Although it granted the requested

discovery subject to a protective order, the opinion leaves very little doubt that the

settlement amount would also be admissible at trial.

The court in Young did not have to reach the issue presented here - whether the

contractual confidentiality provision would require the court to seal its file and hold

any trial in a closed courtroom. Under circumstances of this case, the principle that

court proceedings and records are public cannot be reconciled with the non-parties'

request that crucial terms of the settlement agreement continue to receive confidential

treatment.

As far as the court can tell, absent some kind of star chamber proceeding closed

to the public, it would be impossible for the parties to litigate this case without

disclosing the information claimed to be confidential. By way of example, if the plaintiff

law firm offers evidence at trial of its contingent fee agreement and the amount received

by defendants in the settlement - evidence required to justify a damage award if the

law firm were to prevail at trial - this will necessarily result in disclosure of information

that is confidential under the settlement agreement.

The principle that court proceedings are open to the public is a fundamental

tenet of our judicial system. See, ~., Publicker Industries Inc. v. Cohen, 733 F.2d 1059

(3d Cir. 1984). The court is unwilling to engage in the kind of star chamber proceeding

2 that would be necessary to allow the parties to litigate the merits while maintaining the

confidentiality sought by the non-parties?

In addition, the non-parties have fallen far short of demonstrating a sufficiently

compelling interest in confidentiality. Counsel for Dodwell asserts only that it is "highly

unlikely" that he would have settled absent a confidentiality provision. Down East

Community Hospital has submitted an affidavit from its CEO similarly indicating that

the hospital would not have settled without a confidentiality provision and expressing

concern that the disclosure of certain terms of the settlement "could send the wrong

message to the public, . . . reflect negatively on [the hospital], . . . open up old

wounds, . could be disruptive to the [hospital] community and/ or derail the

significant progress [the hospital] has made." These are speculative concerns that do not

constitute the kind of "clearly defined and serious injury" or "overriding interest" that

could possibly justify keeping court proceedings confidential. See Publicker Industries,

733 F.2d at 1071, 1073. 3

The court understands that confidentiality provisions are often necessary for

settlement, and to the extent possible it would enforce such provisions if it could do so

without the necessity of (1) sealing any dispositive motions that are filed, (2) dosing the

2 This is equally true with respect to issues to be decided by the court (e.g., on a dispositive motion or at a bench trial) and with respect to issues to be decided by a jury if any party here exercises its right to a jury trial. Moreover, imposing confidentiality in the event of a jury trial would raise an additional set of issues- do the non-parties expect that the court, in addition to closing the courtroom, will impose a gag order on jurors? 3 In dicta, the Publicker court indicated that a binding contractual obligation might in some circumstances justify confidential treatment. 733 F.2d at 1073-74. However, it limited that situation to information which was "innocuous but newsworthy," and nowhere suggested that contractual confidentiality provisions would justify a procedure where the courtroom would be closed during the presentation of all evidence on the merits followed by the issuance of a secret decision.

3 courtroom during any litigation of the merits, and (3) issuing a secret decision at the

conclusion of the case.

As the court has previously stated, however, this does not mean that the entire

record will be unsealed at this time. Counsel for Down East has informed the court that

it is only seeking confidential treatment with respect to certain specified terms in the

Term Sheet and Settlement Agreement and with respect to certain pleadings that have

been filed. None of the parties have filed dispositive motions, the case has not been

reached for trial, and defendants are currently seeking an extension of the discovery

deadline. 4 As far as the court can tell, moreover, this case has not yet gone to mediation,

and it may never be necessary to litigate the merits. In the interim, therefore,

confidential treatment can be maintained to a limited extent.

Accordingly, the court orders as follows:

1. The court file is unsealed effective immediately except as specified below.

2. Paragraphs 3 and 4 of the Term Sheet and Paragraphs S(A), S(D), 8 and 12 of

the Settlement Agreement shall remain under seal pending further order of the court.

Within 14 days of the date of this order, counsel for Down East Community Hospital

and/ or counsel for Dodwell and/ or counsel for defendants shall submit copies of the

Term Sheet and the Settlement Agreement with those paragraphs redacted so that

redacted copies may be placed in the open court file and unredacted copies maintained

under seal.

3. Any specific portions of plaintiff's complaint, defendants' answer and

counterclaims, and plaintiff's reply to counterclaims that disclose information as to the

specified paragraphs of the Term Sheet and Settlement shall remain under seal pending

4 It is not clear whether plaintiff objects to this request. Indeed, given the additional discovery sought by plain1iff, it appears likely that plaintiff may agree to the extension requested.

4 further order of the court. Within 14 days of the date of this order, counsel for Down

East Community Hospital and/ or counsel for Dodwell and/ or counsel for defendants

shall submit redacted copies of those pleadings5 so that the redacted copies may be

placed in the open court file and unredacted copies maintained under seal.

4. If redacted copies are not received by the court within 14 days as specified

above in paragraphs 2 and 3, the court will unseal all of the documents and pleadings

for which redacted copies have not been submitted.

5. For the reasons set forth above, if any dispositive motions are filed or if the

case goes to trial, the court will unseal Paragraphs 3 and 4 of the Term Sheet and

Paragraphs 5(A), 5(D), 8 and 12 of the Settlement Agreement to the extent that it is

necessary to do so to allow the merits of the case to be litigated consistent with the right

of public access to court proceedings.

6. Any documents or other evidence obtained by the parties during the course of

discovery shall be the subject of a protective order providing that the parties and their

attorneys shall not disclose information obtained in discovery relating to the terms of

the settlement except as necessary to prepare the case for trial, to participate in

mediation, and to litigate the case at trial.

With the exceptions specified above, the court file shall be unsealed effective immediately. Procedural order entered as to the continued confidentiality of certain specified information. The Clerk is directed to incorporate this order in the docket by reference pursuant to Rule 79(a).

5 Any redactions made shall only include the specific words (or at most paragraphs) as to which confidential treatment is sought. If overly broad redactions are submitted, the court will unseal the relevant pleadings in their entirety.

5 LAW OFFICES OF PE1'ER THOMPSON AND ASSOCIATES VS LOWELL GERBER ET AL UTN:AOCSsr -2011-·0092665 CASE #:PORSC-CV-2011-00418

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