Polland & Cook v. Lehmann

832 S.W.2d 729, 1992 Tex. App. LEXIS 1503, 1992 WL 125104
CourtCourt of Appeals of Texas
DecidedJune 11, 1992
Docket01-90-01099-CV
StatusPublished
Cited by47 cases

This text of 832 S.W.2d 729 (Polland & Cook v. Lehmann) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Polland & Cook v. Lehmann, 832 S.W.2d 729, 1992 Tex. App. LEXIS 1503, 1992 WL 125104 (Tex. Ct. App. 1992).

Opinions

OPINION

DUNN, Justice.

This is an appeal from a take-nothing judgment in a suit for the recovery of attorney referral fees. The law firm of Polland & Cook (Polland) filed suit against Jeffrey A. Lehmann, individually, and Jeffrey A. Lehmann & Associates (collectively, Lehmann), for breach of contract, breach of partnership agreement or special relation, and breach of fiduciary relationship. Trial was to the court without a jury, and the court entered judgment that Polland take nothing against Lehmann.

Summary of the Facts

Polland was counsel for Major Funding Corporation (MFC), a debtor-in-possession in a Chapter 11 liquidation bankruptcy. Quorum Management Corporation (Quorum) had advised several hundred people to invest in MFC projects through Quorum, and the MFC bankruptcy put those investments at risk. Quorum asked Polland to represent the investors in the MFC bankruptcy. Because of a potential conflict of interest, Polland told Quorum that his firm could not represent the investors, but he offered to refer Quorum to another lawyer.

In March of 1987, Polland had a telephone conversation with Lehmann about representing the MFC investors. Polland told Lehmann that Quorum wanted to find a law firm to represent 200 to 500 of the individual investors of MFC. Polland generally discussed a referral fee with Lehmann at this time. Lehmann indicated to Polland that he “would be willing to pay a referral fee for the referral of that kind of business.”

On March 19, 1987, Quorum wrote to the investors and told them about the pending litigation, that it had contacted Lehmann to represent them in the MFC bankruptcy, and informed them about the shared costs for the litigation. If the investors wanted to be included in the suit, Quorum asked them to sign and return an enclosed power of attorney form designating Quorum “as your liaison and representative,” and to send a check to Quorum made payable to “Quorum Management Corp., Trustee/Attorney’s Fund.” Fees were calculated on how much each investor was owed by MFC. Polland drafted both the Quorum letter to the investors and the power of attorney for them to sign. Quorum collected legal fees from individual investors and sent the powers of attorney and checks to Polland, who copied them and sent them on to Lehmann. [732]*732Quorum ultimately referred 279 investors to Lehmann as clients.

On March 22, 1987, Rick Bachman, president of Quorum, consented in writing by letter addressed to Lehmann to the referral fee to be paid by Lehmann to Polland. At trial, Lehmann testified that he was not contesting that Quorum had the authority to hire and retain him on behalf of the investors. He also stated that representatives of Quorum knew about and had consented to the referral fee agreement.

In April of 1987, Polland met with Leh-mann and David Cook, Polland's partner, and Quorum’s representative regarding Lehmann’s representation of, at that time, the unidentified investors. At this first meeting, Quorum’s representative told Leh-mann that Quorum wanted motions for relief from the stay filed for the investors so they could get their property out from under the bankruptcy. Lehmann responded that it was not a problem “if Major Funding and their attorneys (Polland) are cooperating with me in that score.” Polland confirmed that he would not oppose the motions to lift the stay as long as their paperwork checked out. At the meeting, Quorum’s representative voiced strong opposition to the appointment of a bankruptcy trustee for MFC. Those present generally discussed their strategy regarding the bankruptcy from the perspective of MFC and the investors. Polland also discussed a referral fee with Lehmann, and Lehmann consented, with reservations, to a fee split. Lehmann wanted the fees from the investors to reach a minimum amount of $100,-000 before he would pay a referral fee. Lehmann refused to sign the documents drafted by Polland that guaranteed a one-third referral fee to Polland.

On April 13, 1987, Lehmann sent Quorum a letter stating that Lehmann had filed a motion to modify the stay on behalf of investors who had paid portions of agreed attorney’s fees and that Lehmann intended to file, for these investors, a motion to lift stay in the bankruptcy proceeding. Lehmann said he would not undertake any other litigation on behalf of the investors until the investors paid the full amount owed in fees. The investors paid attorney’s fees to Lehmann through Quorum. Once monies were received, Leh-mann deposited the funds in a trust account.

From the time of the initial meeting with Lehmann, Polland had not been able to reach Lehmann, who did not return his calls. In late April, Polland called Leh-mann and told him he had a check for $20,000 from the investors and that he wanted to meet with Lehmann to discuss the referral fee. On April 23, 1987, Pol-land and Lehmann met to discuss the fee agreement. Polland told Lehmann that if they could not agree to the one-third referral fee, Polland would send the investors to other counsel. Lehmann said his only concern was compensation for expenses. Pol-land agreed to modify the agreement to take care of Lehmann’s concerns and Leh-mann added some handwritten language to the agreement, shown below as underlined. Polland testified Lehmann did not express any concerns about the propriety of the referral agreement at that meeting. Leh-mann testified that, at the time he signed the agreement, it was his intention to pay a referral fee and that he, as well as Polland, intended for the agreement to be effective.

As modified by Lehmann, the referral fee agreement between the parties (plaintiff’s exhibit one), states:

THIS AGREEMENT, between the law firm of Polland & Cook, hereinafter referred to as “FORWARDING ATTORNEYS” and Jeffrey A. Lehmann of Leh-mann & Associates, hereinafter referred to as “ATTORNEY OF RECORD,” is entered into this 23d day of April, 1987. As consideration for FORWARDING ATTORNEYS furnishing ATTORNEY OF RECORD with the clientele consisting of numerous investors with Major Funding Corporation who wish to pursue a cause of action against the State of Texas, the ATTORNEY OF RECORD herein agrees to compensate the FORWARDING ATTORNEYS by paying a sum equal to one-third (V3) of fees to be collected from all said clientele for the contemplated legal action. All funds re[733]*733ceived mil be placed in the trust account of Jeffrey A. Lehmann, Tr untl [sic] $150,000from this or other groups referred is placed in there in the name of Quorum Management Corp. Trustee & it mil then be disbursed. Should the total not be reached the parties will meet and determine the referral fee by mutual agreement.
All parties to this agreement acknowledge that the total fee charged the clientele shall not exceed reasonable compensation for all legal services which are rendered on their behalf; and that this division of fees between the FORWARDING ATTORNEYS and the ATTORNEY OF RECORD complies with the requirements and restrictions as set forth in Disciplinary Rule 2-107 of the Texas Code of Professional Responsibility.
Quorum Management Corp., the Trustees for the clientele by and through President Rich [sic] Bachman or Vice-President Tommy Knight, acting within their authority and on behalf of the numerous clientele and acting with a power of attorney executed by the clientele have consented to the employment of the ATTORNEY OF RECORD after full disclosure and with knowledge that a division of fees will be made with the FORWARDING ATTORNEYS.

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Cite This Page — Counsel Stack

Bluebook (online)
832 S.W.2d 729, 1992 Tex. App. LEXIS 1503, 1992 WL 125104, Counsel Stack Legal Research, https://law.counselstack.com/opinion/polland-cook-v-lehmann-texapp-1992.