Contingency Fee • Unauthorized Practice of Law • Issue Preclusion • Claim Preclusion

The Law Offices of Joseph Q. Mirarchi Legal Serv., P.C. v. Thorpe, PICS Case No. 17-1413 (E.D. Pa. Aug. 29, 2017) Beetlestone, J. (17 pages).

Plaintiff's complaint seeking to recover legal fees from a contingency fee agreement to represent defendants in a dispute with their property insurer was dismissed with prejudice because a prior court had determined that plaintiff was not entitled to the legal fees since he was terminated for unlawful activity–the unauthorized practice of law and the failure to disclose his suspension to clients–and the current action asserting breach of contract, detrimental reliance, unjust enrichment and other claims against defendants and others was barred by the final judgment that foreclosed his equitable or legal rights to a contingency fee. Dismissed.

Plaintiff sought to recover legal fees from a contingency fee agreement to represent defendants in a dispute with their property insurer. Plaintiff negotiated a settlement offer with insurer but defendants did not accept the settlement and terminated his representation when they learned that he had been administratively suspended from the practice of law at the time he negotiated the settlement. They hired another attorney and accepted the agreement negotiated by plaintiff. One defendant was in a Chapter 12 bankruptcy proceeding and the dispute over the legal fees became intertwined with the settlement of the bankruptcy. The other parties to the bankruptcy refused to allocate a portion of the settlement to plaintiff, the funds were placed in escrow and plaintiff filed a motion seeking disbursement. The bankruptcy court denied the motion because plaintiff was terminated for unlawful activity, the unauthorized practice of law and the failure to disclose his suspension to clients, and was not entitled to the disputed legal fees. That ruling was appealed and plaintiff then filed breach of contract, detrimental reliance, unjust enrichment and other claims against defendants and the firm they hired to complete plaintiff's work, defendants' bankruptcy attorney, defendants' primary debtors and the attorney for those debtors. Those defendants all filed motions to dismiss under 12(b)(1) and 12(b)(6).