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Morad Elusta et al v. City of Chicago et al

May 4, 2011

MORAD ELUSTA ET AL., PLAINTIFFS,
v.
CITY OF CHICAGO ET AL., DEFENDANTS.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge:

MEMORANDUM OPINION AND ORDER

On December 13, 2010, the Honorable David A. Coar issued a comprehensive ruling on Plaintiff Morad Elusta's attorneys' fees in this civil rights case. Plaintiff Morad Elusta ("Elusta") now brings the present motion to direct payment of those attorneys' fees. In connection with Elusta's motion, his first attorneys -- David Cerda ("Cerda") and John DeLeon ("DeLeon") -- ask the Court to reconsider Judge Coar's ruling as to their fees. For the reasons discussed below, the Court denies Cerda and DeLeon's motion to reconsider and directs the court-awarded payments as follows: attorney's fees under 42 U.S.C. § 1988 are awarded to Zane D. Smith & Associates, Ltd. and Sheila A. Gelson, and Elusta is liable to Cerda and DeLeon for the $15,000.00 award in quantum meruit.

BACKGROUND*fn1

On February 16, 2006, Elusta retained attorneys Cerda and DeLeon to bring a civil rights lawsuit on his behalf against Defendant City of Chicago ("City") and individual defendant Chicago police officers. Elusta entered into a contingent fee agreement with Cerda and DeLeon which set forth the agreed terms of the representation. The case appears to have come close to settling in August 2007, but those efforts ultimately failed. On October 9, 2007, Cerda and DeLeon filed a motion to withdraw as counsel on the grounds that a conflict had arisen that put them in an adverse relationship with Elusta. Judge Coar conducted a motion hearing on October 31, 2007, and granted counsel's motion to withdraw.

Soon thereafter, Elusta retained the law firm of Zane D. Smith & Associates, Ltd. ("Smith") to represent him in his lawsuit. The law firm of Sheila A. Genson ("Genson") was retained as joint counsel. As provided in the Attorney-Client Agreement, Elusta agreed to pay Smith "[a] sum equal to 40% of the gross amount recovered from the claim by judgment or settlement" in consideration for his services. (R. 261-2, Attorney-Client Agreement.) Elusta also acknowledged his "understanding of and consent to the fact that SHEILA A. GENSON and ZANE D. SMITH & ASSOCIATES, LTD., will divide the attorney's fees recovered in [Elusta's] claim." (Id.) Smith and Genson took the case to trial in October 2008. Following an eight day jury trial, Elusta prevailed on his § 1983 excessive force claim and on his state law claim of intentional infliction of emotional distress (as to one of the defendant officers). The jury awarded Elusta compensatory damages of $20,000 for each claim, for a total award of $40,000. Judge Coar entered judgment consistent with the verdict on October 16, 2008.

On October 30, 2008, Smith and Genson petitioned the court for attorneys' fees pursuant to 42 U.S.C. § 1988.*fn2 Elusta apparently retained a third set of attorneys, Donald L. Johnson and Joseph T. Gentleman ("Johnson and Gentleman"), to litigate the apportionment of those fees, because on March 18, 2009 -- before Judge Coar had ruled on the fee petition -- Elusta filed a motion to direct payment of the attorney's fees. See R. 261 (3/18/09 Motion to Direct Payment and for Other Relief). Judge Coar denied Elusta's motion without prejudice as premature. (R. 264, 3/20/09 Minute Entry.) Nearly sixteen months later, Cerda and DeLeon filed two fee-related motions with the court. See R. 287 (7/8/2010 Motion to Adjudicate Lien); R. 288 (7/8/2010 Motion to Set Schedule for Filing Fee Petition).

On December 13, 2010, Judge Coar issued a lengthy and thorough ruling on Elusta's fee petition and on Cerda and DeLeon's motions. See R. 300 (12/13/10 Mem. Op. & Order). In that ruling, Judge Coar granted Smith and Genson $82,696.50 in attorney's fees under § 1988.*fn3

Judge Coar also ruled that although Cerda and DeLeon's proffered attorney's lien was invalid, they were entitled to recover $15,000.00 in quantum meruit for their services.

On December 23, 2010, Elusta re-filed his motion to direct payment and for other relief, updated to reflect the fees recently awarded by Judge Coar.*fn4 In his motion, Elusta asks the Court to direct 60% of all of the attorneys' fees granted by Judge Coar -- those granted for the work done by Smith and Genson, as well as the quantum meruit award to Cerda and DeLeon -- to him, personally, with the remaining 40% to be paid to the respective attorneys. Elusta contends that the clear language of his retainer agreements with each set of attorneys compels that result.

Elusta also disavows any liability for Cerda and DeLeon's quantum meruit recovery, arguing that the City should bear the burden of those costs. Smith and Genson object to Elusta's motion and argue that their retainer agreement clearly sets forth their right to the entirety of the attorney's fees. Cerda and DeLeon object to Elusta's motion on several grounds, as discussed in more detail below, and ask the Court to reconsider Judge Coar's ruling as to their fees. The City takes no position on the allocation of the court-awarded attorneys' fees, but does object to Elusta's suggestion that the City must bear the financial burden of Cerda and DeLeon's award. The Court has jurisdiction to resolve this dispute pursuant to 28 U.S.C. § 1367.

ANALYSIS

Disputes over attorney's fees are never pleasant, and this case provides no exception. Given the tumultuous history of this case, however, it comes as little surprise that Elusta is before the Court on this issue. As early as October 2007, when it appeared the parties might reach a settlement agreement, the record in this case shows that Elusta was sufficiently upset by the amount his first attorneys would have recovered pursuant to their retainer agreement that it was preventing him from signing the agreement or maintaining productive communications with his attorneys.*fn5 Elusta voiced that dissatisfaction on the record, in open court, acknowledging the good work that his attorneys had done but expressing frustration at the amount they would recover under the terms of their contingency fee agreement. See R. 111-9, Transcript of 10/25/07 Status Hrg. Magistrate Judge Cox offered to mediate their fee dispute, and that option initially appeared to present a hopeful resolution to the matter. The mediation did not ultimately go forward, however, and Cerda and DeLeon withdrew from the case. It is clear from the record that Elusta's dissatisfaction with the contingency fee agreement led, at least in part, to the breakdown of his relationship with Cerda and DeLeon.

By Elusta's own admission, he experienced challenges trying to find an attorney to replace Cerda and DeLeon. "[T]he case was rejected by several attorneys prior to [Smith and Genson] accepting the case. Despite uncertainties involved with the issues in this case, counsel agreed to accept the case on a contingent basis and expended over 650 hours on the prosecution of this matter. In expending such a large amount of time on this matter in such a shortened period counsel showed a significant commitment to the prosecution of Plaintiff's case which prevented counsel from applying those hours to other cases." (R. 231, Elusta Fee Petition, at 4.) Given these facts, one might have thought that Elusta's fee-related concerns had abated once he retained Smith and Genson. Not so.

While his fee petition was pending before Judge Coar, Elusta retained a third set of attorneys -- Johnson and Gentleman -- to litigate the terms of his retainer agreement with Smith and Genson. As part of his reply brief on the underlying motion, Elusta submits a letter that Johnson and Gentleman sent to Smith and Genson in this regard. Dated December 17, 2008, the letter sets forth Elusta's position that his contingency fee agreement with Smith and Genson entitles them to 40% of all monies recovered from the lawsuit, including an award of attorney's fees. It demands that Smith and Genson respond within 48 hours of their receipt of the letter and warns that failure to respond within that time frame will force them to consider "all of the options" available to Elusta, explaining further, "You should be aware that one option available is for [Elusta] to order you to dismiss the fee petition because the fee petition is a right of the clients and you have no standing to bring such a claim." See R. 307-1, Ex. 2 to Elusta Reply, at 9. Smith and Genson appear not to have responded to the letter. Id. at 10 (12/23/08 Johnson Letter to Smith and Genson). With Johnson and Gentleman appearing on his behalf, ...


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