City of Alexandria v. Cleco Corporation, et al

Filing

UNPUBLISHED OPINION FILED. [13-30364 Affirmed] Judge: CDK , Judge: EBC , Judge: JEG. Mandate pull date is 03/26/2014 [13-30364]

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Date Filed: 03/05/2014

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 13-30364

United States Court of Appeals
Fifth Circuit

FILED
March 5, 2014

CITY OF ALEXANDRIA,

Lyle W. Cayce
Clerk

Plaintiff – Third Party Plaintiff – Appellee
v.
CLECO CORPORATION; ET AL,
Defendants
JOHN M. SHARP,
Third Party Defendant – Appellant
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 1:05-CV-1121
Before KING, CLEMENT, and GRAVES, Circuit Judges.
PER CURIAM*:

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
*

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Attorney John M. Sharp appeals the denial of his Rule 54 motion for
attorneys’ fees as part of a long-running dispute over legal fees with the City
of Alexandria, Louisiana. For the following reasons, we AFFIRM the district
court.
FACTS AND PROCEEDINGS
By now both the litigants and this court are well aware of the long
history of the City of Alexandria’s litigation with the Cleco Corporation, as
well as the subsequent attorneys’ fees dispute between the City and its
former contingency counsel. See, e.g., City of Alexandria v. Brown, 740 F.3d
339 (5th Cir. 2014) (“City of Alexandria I”). As such, we restrict ourselves to
the core facts bearing upon John Sharp’s (“Sharp”) present appeal.
In 2004 the City of Alexandria hired a legal team to pursue the City’s
legal claims against the Cleco Corporation for electricity overcharges. The
City hired Sharp, a successful Louisiana energy lawyer, along with H. Craig
Davidson, a former associate of Sharp’s who had just started his own firm, to
be the legal team’s energy law experts.
Though Sharp and Davidson worked for separate firms, the City hired
Sharp and Davidson in a single contract (the “Sharp/Davidson contract”).
And while the contract was concluded in haste, it is undisputed that the
contract refers to Sharp and Davidson collectively as “Attorney,” awards
Sharp and Davidson a 20% contingency, and was authorized by the City
Council in July 2005. The contract indicates that Sharp and Davidson “will
take the lead role and control all proceedings relating to the Claims.” The
Sharp/Davidson contract also contains an attorneys’ fees provision indicating
that “Client further covenants and agrees to pay any and all attorney fees
and costs Attorney incurs as a result of any lawsuit or action brought to
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recover any fees, costs, expenses, or reimbursement due Attorney under this
Agreement or arising as a result of any breach of this Agreement.”
The City filed suit against Cleco in Louisiana state court in June 2005,
and Cleco then removed the case to federal court. The case moved forward in
fits and starts until February 2007, when KMPG, the impartial courtappointed auditor, released a report calculating the financial impact of
Cleco’s overcharges to the City.

The KMPG draft report kickstarted

mediation discussions, some of which were handled by Sharp and Davidson,
some of which were handled by the City.

After a little over a year of

mediation talks, the City and Cleco signed a Memorandum of Understanding
(“MOU”) in May 2008, and began the process of translating the MOU into a
workable settlement agreement.

Sharp, along with John Adranga (a

Washington, D.C.-based energy law specialist), took the lead in preparing the
Power Supply Agreement.
However, as those negotiations were ongoing, Davidson discovered in
August 2008 that the Louisiana Bar Disciplinary Counsel had recommended
Sharp’s disbarment for settling a personal injury case off-the-books, and then
keeping the proceeds of the settlement from his partners until he was caught.
Davidson—and not Sharp—called City Attorney Johnson and informed him
of the development. Shortly thereafter, the City faxed Sharp a termination
letter.
After Sharp was terminated in August 2008, the City and Cleco
struggled, for a variety of reasons, to translate the MOU into a settlement
agreement. The Cleco litigation continued and did not ultimately settle until
the eve of trial in February 2010. The settlement agreement had a value of
approximately $50.7 million for the City.
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Once the primary litigation settled, Sharp claimed (along with the
other contingency attorneys) that the City owed him his full contingency fee.
Rather than pay that fee, the City filed a third party complaint and request
for a declaratory judgment against Sharp and Davidson.

The City’s

declaratory judgment action claimed that the Sharp/Davidson contingency
contract was void and/or unenforceable, and that Davidson and Sharp could
recover only on the basis of quantum meruit and not the contracted-for
contingency

fee.

In

response

to

the

City’s

complaint,

Davidson

counterclaimed for his fee, and Sharp filed a third-party complaint.
After discovery, the court held a six-day bench trial on Sharp’s,
Brown’s, and Davidson’s claims for fees. In its post-trial order, the Court
awarded Brown $0, Sharp $700,000, and Davidson $1,300,000. To arrive at
the $700,000 figure, the district court eschewed enforcing the contingency
contract, and instead calculated Sharp’s award on the basis of quantum
meruit.

The court justified its choice of quantum meruit analysis by

explaining that Sharp’s
own misconduct and disbarment also acted as an impediment to
his completion of the case and required the city to retain new
counsel, rework the entire case strategy and progress, and incur
very substantial attorney’s fees with replacement counsel. In our
view the only way to compare apples to apples here is to consider
all the factors in making a quantum meruit calculation.
In then calculating the quantum meruit award due Sharp, the court
noted the maximum value of Sharp’s contingency contract ($5.07 million), the
amount of Sharp’s proposed lodestar calculation ($1,124,700), and the
amount that the City paid Sharp’s replacement to litigate the case to
settlement ($1,522,691.15). The court then considered those amounts in light
of “all the factors” relating to the value of Sharp’s representation, including
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the factors set out in Louisiana Rule of Professional Conduct Rule 1.5(a). As
a positive factor supporting a higher monetary award, the court highlighted
that Sharp’s representation “did have value” for the City because Sharp
succeeded in “getting the case to a point, even though not a final point” for
the City. But the Court also noted that multiple points in the record (Sharp’s
disbarment, “attitude,” and “lack of deference to the City’s strategy”)
supported a lower award.

The court found Sharp’s behavior during the

settlement talks, wherein he “began to think he was in charge of whether the
City would settle or not,” to “have been a particularly negative factor” in
determining the amount owed. The court then balanced the positive and
negative factors and decided that the City owed Sharp $700,000.
Sharp, Brown, and Davidson all filed notices of appeal of the district
court’s decision. The City cross-appealed as to Sharp and Davidson. Before
Sharp filed a brief, however, Sharp and the City filed a joint motion to
dismiss Sharp’s appeal and the City’s cross-appeal as to Sharp with
prejudice. The motion noted that:
Following dismissal of their respective pending appeals of the
July 19, 2012 judgment, Sharp and the City shall resume
litigation of the Rule 54 motion—and defenses thereto—before
the District Court.
Accordingly, pursuant to the parties’
agreement, Sharp shall retain all rights and claims for attorney’s
fees addressed by the pending Rule 54 motion before the District
Court, and the City shall retain all defenses thereto. The
pending Rule 54 motion shall be separately litigated to final
judgment, including by separate and distinct appeal, if filed by
either party.
This court granted the unopposed motion to dismiss the appeal. After
Sharp’s appeal was dismissed, the parties returned to district court and
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litigated Sharp’s Rule 54 motion. The district court denied Sharp’s request
for fees.
In the beginning of its oral order on the Rule 54 motion, the court
explained that its previous order awarding attorneys’ fees had left the exact
status of Sharp’s claim for his attorneys’ fees up in the air.

To clarify

matters, the court indicated that it had meant to “reject[] the counterclaim’s
demand for additional attorney’s fees for the collection suit,” but also added “I
didn’t say that.” The court went on to note that even if the previous ruling
did not preclude Sharp from advancing his claims, Sharp still lost on the
merits for two reasons.
First, the court noted that “the contract was terminated for cause,” at
which point “the contract is gone, period.” Once Sharp was disbarred, the
court explained, “he was prohibited from going forward under the contract.”
Accordingly, there was a “failure of consideration or cause for the
continuation of the contract,” and Sharp “no longer . . . had any contract
rights” and could only “recover in quantum meruit.”
Next, the court explained that the contract’s severability clause 1 could
not otherwise save Sharp’s claim for attorneys’ fees. Because Sharp had been
terminated for cause, the court indicated, “the entire contract was
terminated” and could not be revived via the severability clause. “[N]othing
in this contract allows it to survive,” the court noted, “when the attorney is

The severability clause provides that “[s]hould any term, provision, or part of this
Agreement be found to be unenforceable or contrary to law, then the remainder shall be
given full force and effect without the offending portions, or with such offending portions
rewritten so as to give full effect to the parties’ intent and cause for entering into the
agreement.”
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disbarred for misconduct.”

The court accordingly denied Sharp’s Rule 54

motion. Sharp timely appealed.
While Sharp’s appeal was pending, another panel of this court issued
the City of Alexandria I opinion, which resolved Brown’s and Davidson’s
appeals of their fee awards, as well as the City’s cross-appeal as to Davidson’s
fee award.

In relevant part, the opinion held that Davidson—the other

lawyer retained by the Sharp/Davidson contract—could neither collect his
contracted-for contingency fee nor recover his attorneys’ fees for suit because
Sharp’s disbarment meant that Sharp and Davidson did not perform the
joint, indivisible obligation set out by the Sharp/Davidson contract. City of
Alexandria I, 740 F.3d at 354-58.
STANDARD OF REVIEW
A district court’s determination of attorneys’ fees is reviewed for an
abuse of discretion. Findings of fact supporting the award are reviewed for
clear error, and legal conclusions are reviewed de novo. Dean v. Riser, 240
F.3d 505, 507 (5th Cir. 2001).
DISCUSSION
Under this circuit’s rule of orderliness, “only an intervening change in
the law (such as by a Supreme Court case) permits a subsequent panel to
decline to follow a prior Fifth Circuit precedent.” United States v. Alcantar,
733 F.3d 143, 145 (5th Cir. 2013). We believe that City of Alexandria I is
dispositive of the questions presented by this appeal. Given that Sharp is
trying to collect on the exact same contract, and it was Sharp, and not
Davidson, that was actually disbarred, we are compelled to conclude that
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Sharp cannot enforce the contract to collect attorneys’ fees for the costs of
bringing his collection suit because he did not perform under the contract.
Though Sharp submits that he “respectfully disagrees with the Court’s
conclusion [in City of Alexandria I], regarding the enforceability of Mr.
Davidson’s attorney’s fee clause,” disagreeing with a prior panel opinion is
not one of the exceptions to the rule of orderliness. As such, we affirm the
district court’s denial of Sharp’s Rule 54 motion.
CONCLUSION
We AFFIRM the district court.

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