Preview:

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

EDELL & ASSOCIATES, P.C. v. LAW OFFICES OF PETER ANGELOS :

: CIVIL NO. L-99-3546 :

MEMORANDUM Before this Court is Defendant's Motion for Summary Judgment and Plaintiffs' Motion for Leave to File a Second Amended Complaint. The parties have extensively briefed the See Local

motions, and the Court dispenses with a hearing. Rule 105.6 (D. Md. 1999).

For the reasons stated below, the

Court will, by separate Order, GRANT Defendant's Motion for Summary Judgment and DENY Plaintiffs' Motion for Leave to File a Second Amended Complaint.

I.

Background A. Maryland Tobacco Litigation

This case arises from several states' recent litigation against the tobacco industry. In 1995, the Attorney General

of Maryland solicited proposals from lawyers and law firms to represent the State of Maryland against the tobacco industry. In December 1995, Defendant Law Offices of Peter Angelos ("the

1

Angelos firm") through its president, Peter Angelos ("Angelos") approached Plaintiff Marc Z. Edell ("Edell") about the possibility of his law firm, Plaintiff Edell & Associates, P.C. ("Edell's firm"), participating on Angelos's litigation team. Plaintiff Marc Edell is a New Jersey attorney with experience in tobacco litigation. According to the proposal

that Angelos submitted to the Maryland Attorney General, Edell is "one of the preeminent authorities on tobacco litigation in the country," having been the "first to bring a successful suit to verdict against tobacco companies on behalf of a smoker."1 (Edell Aff., Ex. C at 15.) Because of Edell's

expertise in tobacco litigation, Angelos postured that the addition of Edell's firm to the team would enhance the likelihood of success in litigation if the Maryland Attorney General selected Angelos's proposal. (See id.)

Initially, Edell agreed to work with Angelos as a consultant. Although Edell and Angelos had not yet discussed

Edell's compensation, Angelos submitted the proposal to the Maryland Attorney General on December 29, 1995, which included
1

In its Memorandum in Support of Summary Judgment, the defendant disputes Edell's qualifications as a tobacco litigator. The Court notes, however, that the language challenged is language that the defendant wrote itself in the proposal to the Maryland Attorney General. 2

a description of Edell's participation.

The proposal stated (See

that Edell would serve as co-lead counsel at trial. Edell Aff., Ex. C at 15.)

After submitting the proposal, Angelos, through H. Russell Smouse ("Smouse"), a senior partner at the Angelos firm, began negotiating with Edell regarding Edell's compensation. On January 17, 1996, Edell sent a letter to

Smouse proposing that Edell receive a flat fee each year, and twenty percent of any contingency fee. D.) Smouse rejected this proposal. (See Edell Aff., Ex.

On January 25, 1996,

Edell sent another letter to Smouse proposing a larger flat fee, ten percent of the contingency fee for the first $100 million obtained, and five percent for any fee recovered thereafter. (See Edell Aff., Ex. E.) This proposed

compensation scheme was also rejected. On March 4, 1996, Edell and Angelos entered into a signed compensation agreement. The agreement provided that in

exchange for Edell's working fifteen hours each month on the case, Edell would receive monthly payments of $10,000, with payments totaling a guaranteed minimum of $500,000. In

addition, the Angelos firm would pay all of the expenses incurred during the litigation. both signed the agreement. Marc Edell and Peter Angelos

(See Edell Aff., Ex. F.)

3

On March 19, 1996, the Maryland Attorney General named the Angelos firm as special counsel for Maryland in the tobacco litigation. On March 27, Peter Angelos and Maryland's

Board of Public Works executed a contract by which the Angelos Firm agreed to represent Maryland in the litigation. The

contract provided that Angelos would receive a twenty-five percent contingency fee for any recovered funds. The contract

also prohibited the Angelos firm from assigning, transferring, or otherwise disposing of the contract or any rights created under the contract without the consent of the Attorney General. (See Def. Ex. A.)

The Angelos firm and the Maryland Attorney General jointly filed a complaint against the tobacco industry in the Circuit Court for Baltimore City on May 1, 1996. After Angelos and Edell signed the compensation agreement, and after the complaint was filed in Baltimore City Circuit Court, Edell continued to seek additional compensation from Angelos. Edell asserts that this additional compensation

represented the additional time that Edell was spending on the litigation. On June 4, 1996, Edell submitted to Smouse a proposal for a new compensation scheme. The proposal anticipated that

Edell would dedicate eighty percent of his time on the project

4

in exchange for $25,000 per month for a minimum of fifty months, plus eight percent of the first $250 million in fees received and five percent of any fees received thereafter. (See Edell Aff., Ex. K.) Although the Angelos firm did not

accept this proposal, Edell began dedicating more time to the project. On February 14, 1997, Edell sent another letter to Smouse, proposing that in exchange for Edell's extra time, Angelos pay him an hourly rate of $325. L.) (See Edell Aff. Ex.

In accordance with this proposal, Angelos paid an hourly

rate of $325 for every hour beyond the fifteen hours per month as stated in the original agreement. On June 9, 1997, Edell

wrote a memorandum to his file acknowledging that the parties had not yet entered into a formal agreement memorializing the modified compensation scheme. (See Edell Aff. Ex. M.)

On July 29, 1997, Edell wrote another letter to Smouse stating that he had not yet received a draft agreement. The

letter also stated that the amount owed did not "reflect the contingency fee component which we have also discussed." (Edell Aff. Ex. N.) Smouse responded to Edell's letter on (Edell

August 4, stating that he would draft an agreement. Aff. Ex. O.)

Each month thereafter, Edell submitted a summary

of his hours worked and the money owed, each time mentioning

5

that the issue of a contingency fee had still not been resolved. (See Edell Aff. Ex. P-R, T.)

On July 10, 1998, Smouse responded by letter to Edell's assertions of entitlement to a contingency fee. In the

letter, Smouse affirmatively denied the existence of a contingency fee agreement, and requested that Edell stop mentioning the contingency fee in the monthly billing statements. (See Edell Aff. Ex. U.)

According to Edell, Angelos continued to pressure Edell to contribute more hours to the tobacco litigation. On July

26, 1998, pursuant a request from Angelos, Edell submitted another proposal for a new compensation scheme. In addition

to receiving flat fees, Edell requested ten percent of any contingency fee. (See Edell Aff. Ex. V.)

Smouse expressly rejected this proposal on August 13, 1998. In his rejection letter, Smouse reiterated that the

Angelos firm at no time contemplated sharing any contingency fee with Edell. July 26 proposal. He also requested that Edell withdraw the (See Edell Aff. Ex. AA.) Edell complied

with this request on August 16.

(See Edell Aff. Ex. BB.)

After August 16, negotiations between Edell and Angelos broke down entirely. On November 18, 1998, the State of Maryland settled its

6

case against the tobacco industry for approximately $6.6 billion. Pursuant to its contract with the State of Maryland,

the Angelos firm stands to recover $1.6 billion in attorneys' fees. The Angelos firm denies that Edell's firm is entitled

to any portion of that fee. Until March 3, 1999, the Angelos firm complied with the original March 4, 1996 agreement signed by both Angelos and Edell. Each month, the Angelos firm sent Edell a payment of In addition, pursuant to

$10,000 pursuant to the agreement.

the February 14, 1997 letter, the Angelos firm paid Edell an hourly rate of $325 for each hour in excess of the fifteen hours agreed upon on March 4, 1996. On March 3, 1999, the This amount

Angelos firm sent Edell a check for $150,000.

represented the unpaid balance of the $500,000 guaranteed minimum prescribed in the March 4, 1996 agreement. In total,

Edell and his firm received $798,218 in payments for their participation in the tobacco litigation. B. Class Actions in Other States

While Angelos and Edell were working together on the Maryland tobacco litigation, they were also submitting bids for the tobacco class action lawsuits being filed in other states. In April 1996, the State of New Jersey requested

proposals from lawyers and law firms to represent New Jersey

7

in litigation against the tobacco industry.

Angelos

approached Edell about working together as a team for this proposal. Edell had been approached by other law firms as According to

well, and communicated these offers to Smouse.

Edell, Smouse assured Edell that the "partnership" between the Angelos firm and Edell's firm would be "rewarding." Edell Aff.

Download Edell v Angelos.pdf

Maryland Law