CHRISTOPHER N. HUG vs. GARGANO & ASSOCIATES, P.C., & another. [Note 1]

KANTROWITZ, J. The underlying facts of this case involving legal malfeasance are disturbing. A judge of the Superior Court found that Paul A. Gargano and Gargano & Associates, P.C. (law firm), not only knew about their client's false representations to the Department of Industrial Accidents (DIA), but actively assisted the client in making those representations. Furthermore, the judge determined that they deliberately misled the DIA judge knowing that he would rely on these misrepresentations in approving the award of attorney's fees in their favor.

Background. This case arises out of a dispute between two attorneys over fees stemming from a workers' compensation lump sum settlement. In December, 2005, a Superior Court judge established liability against Gargano and the law firm, on all counts of Hug's complaint for breach of contract, fraud, recovery in quantum meruit, conversion, G. L. c. 93A violation, G. L. c. 221, § 50 violation, and declaratory judgment. In 2007, a second judge awarded attorney Hug actual damages in the amount of $24,967.14, doubled under G. L. c. 93A, § 11, to $49,934.28, and attorney's fees and costs in the amount of $27,918.30, totaling $77,852.58.

Hug appealed, arguing that (1) the judge erred in calculating damages due to him in quantum meruit, and (2) the defendants' fraud on the court warranted an award of treble rather than double damages under G. L. c. 93A. On cross appeal, the defendants argue that (1) the judge erred when she ruled that Hug contributed anything to the settlement obtained, and (2) the procedures below did not provide them fair notice and a realistic opportunity to be heard on the G. L. c. 93A claim. [Note 2]

We conclude that, while the judge certainly would have been justified in trebling damages under G. L. c. 93A, there was no abuse of discretion in not so doing. As such, we affirm.

Facts. The facts are taken from the judge's comprehensive findings, which are fully supported by the record. In April, 1988, Anthony Pirelli was injured in an industrial accident and began receiving workers' compensation benefits from his employer's

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insurance carrier, Liberty Mutual Insurance Company (Liberty Mutual). On November 16, 2000, Pirelli retained Hug to represent him in his claim seeking a permanent disability settlement. He agreed to pay Hug a twenty percent contingency fee from any lump settlement payment, plus expenses. Pirelli's prior counsel had obtained a $55,000 lump sum permanent disability settlement offer from Liberty Mutual, but Hug was confident that Pirelli was entitled to more.

For a period of almost three and one-half years between November 16, 2000, and March 15, 2004, Hug represented Pirelli, providing myriad legal services related to his claim for minimal compensation. [Note 3] The permanent disability claim was somewhat complex given that Pirelli held a job briefly during this time and his treating doctors were not willing to declare him totally disabled. Nonetheless, the judge found that by March, 2004, "Hug's work started to pay off," and Liberty Mutual increased its lump sum settlement offer to $200,000. This offer was rejected on the basis that it was still too low given Pirelli's life expectancy.

Despite Hug's efforts, on March 15, 2004, Pirelli discharged him, informing him that the law firm would be handling his case. While Hug complied with Pirelli's request to make his file available, the defendants never picked it up. On March 23, 2004, Hug filed a notice of attorney's lien, pursuant to G. L. c. 221, § 50, sending it by certified mail to the DIA, Liberty Mutual, Pirelli, and the law firm. Hug also contacted the law firm by telephone, spoke with associate Sean Beagan, and discussed a "referral fee" related to Pirelli's case. The judge found that "these conversations constituted an acknowledgment by the defendants that Hug was entitled to share in any fee from a lump sum settlement so that he could be compensated fairly for his time and expenses."

After several months, on June 14, 2004, Hug sent a second lien notice to the law firm and the DIA. In January, 2005, Hug contacted Liberty Mutual regarding Pirelli's case and learned that a lump sum settlement had been made to Pirelli months earlier. Upon inquiry at the DIA, Hug discovered that on June

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10, 2004, a DIA judge had approved a lump sum settlement of Pirelli's permanent disability claim in the amount of $300,000, and in doing so, had authorized payment of attorney's fees to the law firm, in the amount of $58,760. [Note 4]

In order to obtain approval of the settlement, Pirelli signed, under the "pains and penalties of perjury," a lien disclosure form certifying that there were no outstanding liens for reimbursement out of the proceeds of the settlement; he also submitted an affidavit to the DIA stating that the law firm had represented him from the inception of his claim. In her findings, the judge concluded "that the defendants made these misrepresentations so that they would not have to share any part of their contingency fee with Hug."

After learning of the settlement, Hug made repeated attempts to contact the law firm, the beneficiary of a hefty fee for less than three months of work representing Pirelli. Hug, who had incurred $967.14 in expenses, meanwhile, received nothing for his close to sixty hours of work over the course of nearly three and one-half years. Hug also contacted Liberty Mutual, who informed him that its representative had specifically brought Hug's lien to Gargano's attention and sent a facsimile copy of it to the law firm prior to releasing the check, and that the defendants had assured Liberty Mutual that they would deal directly with Hug regarding the lien. The defendants cashed the settlement check within a day of receiving Hug's second notice of lien.

Stonewalled by Gargano, Hug finally brought suit against both him and the law firm. [Note 5] On December 21, 2005, due to Gargano's failure to answer interrogatories, see Mass.R.Civ.P. 33(a)(3), as appearing in 436 Mass. 1401 (2002), judgment entered for Hug on the liability aspect of the case. The court allowed Hug to pursue discovery with respect to his claim under G. L. c. 93A and to proceed with his claim against Liberty Mutual. [Note 6]

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At a February 21, 2007, scheduling hearing, after some objection from Gargano, the judge confirmed that liability was established by the earlier order and set a final date of March 27, 2007, to determine damages.

Gargano did not attend the March 27 hearing, sending an associate, Beagan, in his place. At the hearing, Beagan called Vincent Tentindo as an expert on workers' compensation law to testify regarding Hug's entitlement to any fees from Pirelli's settlement. Neither Beagan nor Tentindo disclosed to the court that Tentindo's previous firm had represented Pirelli in an earlier stage of his claim, and the judge noted that this omission affected the weight she gave to Tentindo's testimony.

At the hearing, Hug submitted affidavits outlining the hours he spent on Pirelli's case and the hours spent representing himself on his claims against Gargano and the law firm; he also testified on his own behalf regarding his contributions to the settlement and the basis for his claim for multiple damages under c. 93A.

With these facts in mind, we turn to the issues on appeal.

Quantum meruit. Hug claims that, as a result of the role he played in increasing Pirelli's settlement offer prior to his discharge, he is entitled to a quantum meruit recovery of seventy-five percent of the $58,760 contingency fee paid to the defendants, to wit, an award of $44,070.

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While a client has "the unquestioned right" to discharge counsel, he has the concomitant obligation to compensate his attorney "for the fair and reasonable value of services and skills expended on [his] behalf, on the theory of quantum meruit." Malonis v. Harrington, 442 Mass. 692, 696-697 (2004). "Strictly speaking, the termination of the attorney's engagement ends the attorney's right to recover on the contingent fee agreement itself," but "[t]he ability of an attorney to recover fees under a theory of quantum meruit arising out of a contingent fee agreement is settled." Zabin v. Picciotto, 73 Mass. App. Ct. 141, 151 (2008) (citations and internal quotation marks omitted). "[W]hile a party does not recover on the contract itself under quantum meruit, a court may look to the terms of the underlying contract to help determine appropriate recovery under quantum meruit . . . [as well as to] the customary [factors] applicable in measuring a legal fee: the special skills which may have been brought to bear, the complexity of the case, the size of the case in terms of dollars, the caliber of the services, the fees usually charged for work of the kind involved, the time spent, and the success achieved." Ibid. (citations and internal quotation marks omitted).

In determining the fair value of an attorney's quantum meruit recovery, "[t]he question of what is fair and reasonable compensation for legal services rendered is one of fact for a trial judge to decide." Malonis, supra at 699, quoting from Mulhern v. Roach, 398 Mass. 18, 23 (1986). Such findings "shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of witnesses." Mulhern, supra at 23, quoting from Mass.R.Civ.P. 52(a), 365 Mass. 816 (1974).

Here, the judge heard the witnesses and evaluated Hug's efforts on Pirelli's behalf, which contributed to securing the lump sum settlement, entitling him to recovery under quantum meruit. The judge found that Hug "is a lawyer with twenty-two years [of] experience, most of that in the worker's compensation area." She further found that Hug's representation of Pirelli was "effective," noting that, in addition to other beneficial, uncompensated legal services rendered over an almost four-year period, Hug increased the initial Liberty Mutual settlement offer from $55,000 to $200,000. The judge concluded that the fair and reasonable compensation for Hug's representation was $24,000, a figure

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reached by taking Hug's hourly rate ($200), and multiplying it by the number of uncompensated hours Hug spent assisting Pirelli (sixty hours), then doubling that amount ($12,000 times two) "in recognition of the part that Hug played in negotiating the lump sum settlement." The judge also awarded Hug $967.14 in costs.

While the judge could have adopted Hug's position, there was no error in her calculation. In reaching the initial $12,000 figure, she properly considered Hug's skills and experience, his usual fees, and his time spent on Pirelli's claim. She further recognized the complexity and dollar value of Pirelli's case, the caliber of the services Hug delivered, and the degree of success he achieved with regard to the total settlement, doubling his total fee of $12,000 to an award of $24,000. Contrary to Hug's assertion, the judge did not focus solely on the hours billed, as is reflected by the fact that she doubled the hourly award in recognition of his more intangible contributions to the settlement. As Hug's expenses of $967.14 were uncontested below, we discern no error in the judge's award of $24,967.14. [Note 7]

G. L. c. 93A damages. The principles of G. L. c. 93A, § 11, are well known and need not be repeated in detail. Here, the sole issue is whether the damages should have been trebled as opposed to doubled. [Note 8] "Although neither c. 93A nor our cases construing that statute provide a trial judge with clear guidance in deciding how damages should be multiplied, the decision is

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to be based on the egregiousness of the defendant's conduct." Brown v. LeClair, 20 Mass. App. Ct. 976, 980 (1985) (citation and internal quotation marks omitted). See International Fid. Ins. Co. v. Wilson, 387 Mass. 841, 853 (1983) ("Based on the egregiousness of each defendant's conduct, the trial judge may assess between double and treble damages"); Kattar v. Demoulas, 433 Mass. 1, 16 (2000) ("Ultimately, c. 93A ties liability for multiple damages to the degree of the defendant's culpability").

At the hearing, Hug testified and presented evidence of his efforts to resolve the fee matter with the defendants, as well as their misrepresentations and evasions. Gargano did not attend the hearing, and his associate Beagan did not object to Hug's evidence or present evidence contradicting Hug's claim that the defendants made wilful misrepresentations to the DIA judge and were evasive when Hug attempted to resolve the matter. [Note 9] When questioned by the judge regarding Hug's c. 93A claims, Beagan merely objected on the ground that Gargano was not present at the hearing.

As noted by the judge, Gargano had sufficient notice of the hearing and his decision not to attend was his own choice. As such, both Gargano and the law firm had ample notice and opportunity to be heard. [Note 10]

Without question, the misrepresentations made to the DIA judge were unfair and deceptive as a matter of law. "A 'fraud on the court' occurs where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some

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unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense." Munshani v. Signal Lake Venture Fund II, LP, 60 Mass. App. Ct. 714, 718 (2004), quoting from Rockdale Mgmt. Co. v. Shawmut Bank, N.A., 418 Mass. 596, 598 (1994). All of the evidence supports the judge's conclusion that the defendants "made numerous misrepresentations or material omissions of fact . . . to a judge in order to obtain his approval of the lump sum settlement without Hug's knowledge," amounting to "an unfair and deceptive business practice."

Furthermore, there was no error in the judge's conclusion that the defendants' behavior was "intentional and wilful." We need not repeat the abuses here; suffice it to say that based on their intentional misrepresentations to the DIA judge and Liberty Mutual, their refusal to respond to Hug's reasonable offers to resolve the case, and their repeated attempts to thwart discovery, the defendants exhibited intentional and wilful misconduct.

Thus, we are left with the question of the degree of multiple damages. The language of the statute itself gives the trial judge, who is in the best position to view the evidence and assess the credibility of the witnesses, discretion in determining the award. [Note 11] While Hug may be correct in noting that the behavior exhibited here was egregious, and while we might have acted differently, we cannot discern an abuse of discretion in awarding double rather than treble damages. [Note 12] The judge, by her actions, awarded Hug $77,852.58, [Note 13] far in excess of the $58,760 he would have

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received had he remained on the case and achieved the same ultimate result.

Conclusion. With some reservation given the behavior and actions of the defendants, we hold that the judge did not abuse her discretion in ordering double rather than triple damages. As such, we affirm the award of actual damages in the amount of $24,967.14, doubled under G. L. c. 93A, § 11, to $49,934.28, and attorney's fees and costs in the amount of $27,918.30.

While Hug did not specifically request appellate attorney's fees and costs in his brief, he did so at oral argument. We allow his motion. See Lowell v. Massachusetts Commn. Against Discrimination, 65 Mass. App. Ct. 356, 358 (2006). In accordance with the procedure outlined in Fabre v. Walton, 441 Mass. 9, 10- 11 (2004), Hug should, within fourteen days, submit an application for appellate attorney's fees and costs, with any supporting materials. The defendants may then, within ten days, respond. See Murphy v. Miller, 75 Mass. App. Ct. 210, 219 (2009). [Note 14]

Pursuant to S.J.C. Rule 3:09, Canon 3(D)(2), as appearing in 440 Mass. 1301 , 1317 (2003), the clerk of the Appeals Court shall forward a copy of this opinion to the Bar Counsel's office of the Board of Bar Overseers.

Judgment affirmed.