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Christopher V. Langone v. Schad

December 3, 2010

CHRISTOPHER V. LANGONE,
PLAINTIFF-APPELLANT,
v.
SCHAD, DIAMOND AND SHEDDEN, P.C.; ANTHONY J. MADONIA AND ASSOCIATES; AND CHILDRESS, DUFFY AND GOLDBLATT, LTD.,
DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County. No. 08 L 12209 The Honorable Mary A. Mulhern, Judge Presiding.

The opinion of the court was delivered by: Justice Lampkin

FIRST DIVISION

JUSTICE LAMPKIN delivered the opinion of the court: This case involves a dispute between law firms for the attempted recovery of attorney fees awarded as part of a class action settlement fund. Plaintiff, Christopher Langone, appeals from the trial court's order denying his motion pursuant to section 2-1203 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1203 (West 2008)), which sought the removal of "with prejudice" language from a prior order dismissing plaintiff's breach of contract action against defendants and co-class counsel, Schad, Diamond & Shedden, P.C. (Schad), and Childress, Duffy & Goldblatt, LTD. (Childress).

FACTS

In January 1999, plaintiff's law firm, the Langone Law Firm, and the law firms of Schad, Childress,*fn1 and Anthony J. Madonia and Associates*fn2 (Madonia) entered into a contingent fee agreement with class members in a putative class action against Royal Macabees Life Insurance Company (Royal Macabees). Relevant to this appeal, the terms of the agreement provided:

"4. *** If a court determines that CLIENT'S [class representative James Miller] case should proceed as a class action, then the LAW FIRMS' [plaintiff's firm, Schad, Childress, and Madonia] fees will be set by the court hearing the case.

***

6. If they decide it is appropriate, and the client consents, the LAW FIRMS may, at their expense, associate with other attorneys in the prosecution of CLIENT'S claim. CLIENT understands that as a result of the services rendered by LAW FIRMS, LAW FIRMS will share in the total fees paid on a pro rata basis according to the amount of time each has expended or as awarded by the Court hearing the case. The LAW FIRMS

assume equal legal responsibility for the performance of legal services." (Emphasis added.)

In October 2000, class certification was granted and plaintiff's firm, Schad, Childress, and Madonia were named as co-class counsel. In August 2002, partial summary judgment was granted to the class. By December 2004, the class secured breach of contract liability against Royal Macabees and won summary judgment on the majority of Royal Macabees' affirmative defenses.

In 2005, a dispute arose in which there was a request for the removal of plaintiff and Childress as class counsel and a question as to which of the other firms should act as lead counsel. Class counsel agreed to mediate the dispute. Following mediation, an agreed order was entered in which Schad was appointed lead counsel and Schad and Childress were appointed trial counsel. No mention was made of plaintiff's removal as class counsel; however, the record contains an affidavit from James Shedden of the Schad law firm stating that the mediator recommended plaintiff remain as cocounsel.

In January 2008, plaintiff filed a federal lawsuit alleging breach of fiduciary duty against co-class counsel*fn3 and seeking a declaration of the parties' respective rights and obligations under the contingent fee agreement. Schad filed a motion to dismiss, contending plaintiff's claims were not ripe for adjudication. The federal court dismissed plaintiff's suit without prejudice.

On January 11, 2008, the chancery court entered an order providing preliminary approval of a class action settlement agreement and providing the schedule for "Class Counsel's petition for attorneys' fees and for reimbursement of expenses." The settlement agreement provided for a $93 million settlement fund to satisfy the claims of the class members, as well as an insurance rate rollback valued at approximately $34,600,000. In the subsequent notice of class action settlement, the court instructed class counsel to "petition the Court for an award of attorneys' fees, not to exceed one-third of the cash portion of the Settlement, including accrued interest. Class Counsel will also seek reimbursement of the expenses incurred by them in this litigation. No attorney fees will be paid or any expenses reimbursed except those approved by the Court."

Thereafter, Schad, Childress, and Madonia filed a joint fee petition seeking 33.3% of the settlement fund plus expenses. Plaintiff did not join in the fee petition. The chancery court requested detailed fee petitions from each law firm to ensure the reasonableness of the fee award. Specifically, on February 19, 2008, an order was entered instructing plaintiff to file a fee petition within 7 days and to exchange time records within 7 days. Schad, Childress, and Madonia complied with the request, submitting voluminous time records totaling 41,381 hours of time spent in connection with the litigation. Schad, Childress, and Madonia claimed that a lodestar multiplier of 1.6 was a reasonable fee.

Plaintiff filed an objection to the fee petition on behalf of himself and one class member arguing that the fees and expenses sought were excessive. Specifically, plaintiff argued that the time records submitted in support of cocounsel's fee petition were inflated and the attorneys were entitled only to 10% of the settlement fund instead of 33.3% in light of the size of the recovery in the case.

On April 4, 2008, the chancery court held a hearing for final approval of the class action settlement and to determine the issue of attorney fees. At the outset, plaintiff stated that he did not object to the approval of the settlement. The final settlement was approved by the court. Plaintiff, however, argued that he was not provided adequate notice with respect to the notice of class action settlement, in that the notice was sent to an old address. The court overruled plaintiff's objection to lack of adequate notice.

Turning its attention to the issue of attorney fees, the court admonished plaintiff for failing to submit his time records per the court's request. The following relevant exchange between the court and plaintiff ensued:

"MR. LANGONE: There has been a petition that has been filed that seeks one-third of the fund as award to Class counsel as a whole and there has been a petition that has been filed that says that the Court should award 10 percent of the fund to Class counsel as a whole.

And this Court made it clear for the record when the Court spoke on February 19th and said---and I'm quoting the Court---and please make clear---I will make clear for the record there will be one award of attorneys' fees to Class counsel. And I think that the Court's intent in saying that was that the Court is not going to get involved in this dispute that exists as to how to divvy up the pie but just determine what size of it is going to be. And if---you know, if the Court wants to get into looking at all the lodestars of all four law firms, obviously that's --

THE COURT: I don't have yours.

MR. LANGONE: ---within the Court's discretion.

THE COURT: I don't have yours. I don't have anything from you.

MR. LANGONE: Well, I submitted to them, and the Court never indicated that it was going to be making lodestar determinations.

THE COURT: Of course I did.

MR. LANGONE: The Court said we should exchange--THE COURT: Of course I did. I said, and specifically to your colleague who was here on that day, that your own time should be filed if you were seeking fees. I specifically said that. You haven't done it.

MR. LANGONE: Well, your Honor, your Honor said that you were going to make one award of attorneys' fees to Class counsel.

THE COURT: Mr. Langone, I've read the transcript. I remember what I said.

MR. LANGONE: Well, I have it with me now.

THE COURT: I just read it.

MR. LANGONE: No, I have the time records with me. THE COURT: I ...


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