Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 85 C 221 Brian Barnett Duff, Judge.
Bauer, Chief Judge, Posner and Ripple, Circuit Judges.
This appeal arises out of a fee dispute between two attorneys, plaintiff Kimberly Sutherland and defendant Paul R. O'Malley.*fn1 Ms. Sutherland asked Mr. O'Malley to serve as co-counsel in the representation of one of her clients, Kerwin Albright. After a settlement was obtained in the Albright case, Mr. O'Malley caused the settlement payments to be sent to him and deposited the payments in his firm's client fund account. In an effort to recover the funds, Ms. Sutherland filed this action in federal district court. Ms. Sutherland's pleadings alleged that, by diverting the settlement funds to his own firm, Mr. O'Malley violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968. Her pleadings also alleged state common-law claims for conversion, fraud, and interference with business relationships. On July 11, 1985, the district court granted summary judgment in favor of the defendants on the conversion count, and, on September 21, 1987, the district court granted summary judgment on the RICO claim. The remaining pendent common-law claims were then dismissed. Ms. Sutherland's motions to reconsider the orders granting summary judgment to the defendants were denied, and she now appeals. We affirm the judgment of the district court.
In March 1977, Ms. Sutherland entered into a contingency fee contract with Kerwin Albright in which she agreed to represent Mr. Albright in a personal injury action. The contract entitled her to attorney's fees in the amount of 40% of any recovery plus expenses. The action was filed in Illinois state court in May 1977, naming Norbran Leasing Co., Ford Motor Co., and Al Piemonte Ford, Inc. as defendants.
In March 1978, Ms. Sutherland asked Mr. O'Malley to associate himself with her as co-counsel in the Albright case. Mr. O'Malley agreed, and, in a letter to Ms. Sutherland dated April 7, 1978, stated that "[our] arrangement to split fees on a fifty-fifty basis or other equitable arrangement based on the degree of effort is satisfactory with me." R.24, Ex. A. Although Ms. Sutherland had filed the complaint in the Albright case and apparently participated in one deposition and a few brief court hearings and meetings, Mr. O'Malley maintains that he did the bulk of the work preparing for, and trying, Mr. Albright's case. The trial ended in a jury verdict for Mr. Albright. An appeal was taken.
The Albright case eventually settled. The settlement from all defendants totalled $127,000, resulting in attorney's fees under the contingent fee contract of $50,800. Ms. Sutherland maintains that Mr. O'Malley committed three acts of mail fraud in obtaining the settlement checks from the Albright defendants. She alleges that, in September 1982, Mr. O'Malley sent two of the defendants forged releases of her attorney's lien and instructed them to make their settlement checks payable to "Kerwin Albright and O'Malley & O'Malley, Ltd., his attorneys." Appellant's Br. at 3. In February 1983, the third defendant sent Mr. O'Malley a letter informing him that it understood that its settlement check should be made payable to Mr. Albright and the O'Malley firm. Ms. Sutherland maintains that Mr. O'Malley "omitted to correct this impression." Id. at 4. Ms. Sutherland also alleges that Mr. O'Malley sent this defendant a release, that he had signed, "in full satisfaction of claims for attorney's lien." Id. After obtaining the three settlement checks, Mr. O'Malley paid Mr. Albright his net share, paid $8,000 of his own outstanding expenses related to the Albright case, and deposited the balance, $50,800, in the O'Malley firm client fund account.
In March 1983, Mr. O'Malley informed Ms. Sutherland of the settlement and his distribution of the proceeds and advised her that "[attorney's] fees and your reimbursement of expenses have been retained in my Client Fund Account subject to further agreement between us." R.1, Ex. I; R.42, Ex. B. Mr. O'Malley also informed Ms. Sutherland that he was "certainly available to discuss further with [her] [his] position regarding division of attorney's fees." Id. He also stated that his "view has always been that the handling of this case was so time consuming to this office and a successful outcome so tenuous and unpredictable that any division of attorney's fees would have to be based upon fundamental fairness and equity." Id.
On March 16, 1983, Ms. Sutherland filed an action in Illinois state court against Mr. O'Malley alleging the conversion of her attorney's fees and expenses and seeking to recover 50% of the attorney's fees generated by the Albright case. The state court ordered Mr. O'Malley to retain $25,815.55 (50% of the total attorney's fees plus Ms. Sutherland's claimed expenses of $415.55) in the O'Malley firm client fund account pending the outcome of the state action. Mr. O'Malley has stated that the funds remain in the client fund account at this time.
On January 10, 1985, Ms. Sutherland filed this federal action. She now seeks recovery of the entire $50,800. After instituting the federal suit, Ms. Sutherland requested that the defendants in this action be voluntarily dismissed from the suit pending in state court.
The district court initially granted Mr. O'Malley partial summary judgment on the conversion claim.*fn2 Later, it granted summary judgment on the RICO claim and dismissed the remaining pendent claims. Ms. Sutherland asks us to review the district court's ...