TWO APPEALS FROM THE Circuit Court for Baltimore City. Thomas E. Noel, JUDGE
Argued Before Wilner, C.J. Bishop, and Alpert, JJ.
In this opinion we dispose of two appeals that have been consolidated. The first appeal, filed by Jacob Fraidin (Fraidin) and his corporations, Pacific Mortgage & Investment Group, Ltd. and North American Credit Corporation (the Corporations), is from a judgment entered after a jury awarded compensatory and punitive damages against Fraidin and the Corporations in favor of Sheldon H. Braiterman, P.A. (Braiterman, P.A.) and Andre R. Weitzman (Weitzman), appellees.
The second appeal, filed by Braiterman, P.A. and Weitzman, is from a judgment entered in favor of defendants below, appellees, Melvyn J. Weinstock (Weinstock), his law firm, Weinberger, Weinstock, Sagner, Stevan & Harris, P.A. (Stevan & Harris) and Lawrence D. Coppel (Coppel) and his law firm, Gordon, Feinblatt, Rothman, Hoffberger & Hollander (Gordon, Feinblatt).
As a prerequisite to understanding the issues involved in the case sub judice, it is necessary to relate the background of the underlying case out of which this appeal arose.
On May 24, 1982, Ray Dorman (Dorman) and Margarette Dorman (Mrs. Dorman) (collectively the Dormans) hired Sheldon H. Braiterman (Braiterman), James D. Johnson (Johnson), and Andre R. Weitzman, of Braiterman & Johnson, P.A., to represent them in an action against Fraidin and the Corporations. The Dormans executed a Power of Attorney and Contingent Fee Arrangement (the Contract) that provided they were to pay their attorneys 1/3 "if terminated without suit," 40 percent "if suit is filed but there is no trial," and 50 percent "if suit is tried on all amounts recovered by settlement or verdict." The Contract further provided that the Dormans were to reimburse their attorneys for expenses advanced, including court costs.
On April 1, 1985, Weitzman started his own law firm. The Dormans executed a new Contract, dated April 10, 1985, with the same fee arrangement but appointing only Weitzman as their attorney. Fraidin and the Corporations employed Weinstock, of Stevan & Harris, to represent him in the defense of the Dormans' lawsuit. On September 23, 1985, the jury returned a verdict in favor of the Dormans against Fraidin and the Corporations and awarded the Dormans $366,949.86 in compensatory and punitive damages, plus interest and costs. The present litigation involves the fee the Dormans owed Braiterman, P.A. and Weitzman as a result of the litigation between the Dormans and Fraidin which was settled directly with the Dormans by Fraidin.
Braiterman & Johnson P.A. and Weitzman initiated this suit in the Circuit Court for Baltimore City by filing a Complaint against: the Dormans, Fraidin, the Corporations, Weinstock and Stevan & Harris, Coppel, and Gordon, Feinblatt. Count I alleged that the Dormans breached the terms of the Contract. In the alternative to Count I, Count II alleged that the Dormans were required to pay Braiterman & Johnson P.A. and Weitzman for the reasonable value of their services under the theory of quantum meruit. Count III alleged that the Dormans defrauded Braiterman & Johnson P.A. and Weitzman. Count IV alleged that Fraidin, the Corporations, Weinstock, Stevan & Harris, Coppel, and Gordon, Feinblatt tortiously interfered with the Contract. Count V alleged that all of the defendants--Fraidin, the Corporations, Weinstock, Stevan & Harris, Coppel, Gordon, Feinblatt, and the Dormans--engaged in a civil conspiracy to accomplish the breach of the Contract. Punitive damages were sought under Counts IV and V. The court (Noel, J.) later granted Fraidin's motion for judgment on Count II (quantum meruit). Although it is unclear from the record what the disposition was of Count III (fraud), the parties have indicated it was dismissed.
Trial initially commenced in January 1990, but ended in a mistrial. After the second trial, commenced on September 18, 1990, the jury returned a verdict for Braiterman, P.A. and Weitzman against the Dormans, Fraidin, and the Corporations; it returned a verdict in favor of defendants Weinstock, Stevan & Harris, Coppel, and Gordon, Feinblatt (collectively Lawyer Defendants). The jury assessed the following damages: Count I (breach of contract)--$12,500 "plus interest" in compensatory damages each to Braiterman, P.A. and Weitzman; Count IV (tortious interference with contract)--$91,737.47 "plus interest" in compensatory damages each to Braiterman, P.A. and Weitzman; Count V (Civil Conspiracy)--the jury determined that the Dormans, Fraidin, and the Corporations, but not the Lawyer Defendants, conspired to interfere with the Contract, but that Braiterman, P.A. and Weitzman did not sustain any damages as a result of the conspiracy. The jury determined punitive damages should be assessed against Fraidin and the Corporations, but not against the Dormans. A second phase of the trial was commenced to determine the amount of punitive damages. The jury assessed punitive damages against Fraidin and the Corporations in favor of Weitzman in the amount of $2,500,000, and in favor of Sheldon Braiterman, P.A. in the amount of $500,000. Although Braiterman & Johnson P.A. is the party named as the plaintiff in the complaint, the verdict sheet indicates punitive damages were assessed in favor of "Plaintiff, Sheldon Braiterman, P.A." Possibly, there was an amendment during trial, but we find no explanation of the discrepancy in the record or the briefs. In this opinion we will refer to Braiterman, P.A.
To say that the trial was exhaustive is an understatement. The trial lasted for 29 days, and the record extract before this Court consumes over 4,000 pages. The parties disputed much of the evidence. We relate the facts as we have garnered them from the record.
Shortly after obtaining judgment for the Dormans in Dorman v. Fraidin, Weitzman began efforts to collect from Fraidin by filing Interrogatories in Aid of Enforcement of Judgment and a Request for Production of Documents in Aid of Execution. As a result, Weitzman obtained Fraidin's application to Atlantic Bonding Company, Inc., filed in the summer of 1985, in which Fraidin, under oath, stated combined personal and corporate assets slightly in excess of $3,000,000. The brief of Braiterman, P.A. and Weitzman refers to another financial statement made by Fraidin to the Western surety Company showing Fraidin's net worth to be $3,125,000 as of June 30, 1985. Our review of this document and the accompanying trial testimony indicates that the document showed Fraidin's net worth to be $3,158,300 as of June 30, 1985. In November 1985, settlement discussions regarding the judgment in Dorman v. Fraidin developed. These negotiations are central to the allegations of Braiterman, P.A. and Weitzman that the defendants tortiously interfered with the Contract, therefore we recount these negotiations in detail.
On November 1, 1985, Fraidin, without Weinstock, met with Weitzman and Braiterman to discuss settlement. Fraidin testified he offered to settle the underlying action for $100,000 over five years, or $60,000 payable immediately. Fraidin's post-trial motions in the underlying action were denied on November 7, 1985.
On November 12, 1985, Fraidin hired additional counsel from Gordon, Feinblatt to handle the post-judgment proceedings in Dorman v. Fraidin, and to advise him of his options in light of the judgment, including the possibility of filing bankruptcy. Coppel, a specialist in bankruptcy at Gordon, Feinblatt, was assigned Fraidin's case. Coppel familiarized himself with the case: he met with Fraidin, obtained the pleadings from Weinstock, reviewed the facts, and arranged for his partner, Lawrence S. Greenwald, a specialist in litigation, to prepare an appeal. Coppel testified that Weinstock continued to represent the Corporations even after Fraidin retained Gordon, Feinblatt. Fraidin's understanding was that Gordon, Feinblatt represented him and the Corporations for appeal of the judgment in Dorman v. Fraidin. Nevertheless, correspondence from Coppel to Weinstock indicates that Gordon, Feinblatt represented Fraidin only, and that Weinstock continued to represent the Corporations. On November 14, 1985, Fraidin, accompanied by Weinstock, met with Braiterman and Weitzman to discuss Fraidin's assets. On November 18th or 20th, Weinstock, on behalf of Fraidin, called Weitzman to discuss the possibility of providing security for the appeal with a non-refundable escrow fund in the amount of $20,000 which the Dormans would keep, regardless of the outcome of the appeal.
Eventually, there was direct contact between Fraidin and the Dormans, although the parties disputed who initiated the contact. It was clear, however, that, on November 25, 1985, Dorman telephoned Weinstock's office and left a message for Fraidin with Weinstock's secretary that Dorman: "just wants his money back and he'll settle." Fraidin testified that Weinstock delivered the message to him either that day or the next, and that Fraidin called Dorman and arranged to meet with him on Thanksgiving Day, November 28, 1985. Dorman's deposition testimony, which was introduced at trial, indicated that Fraidin telephoned Dorman, and that it was only after this call that Dorman telephoned Weinstock's office. Fraidin denied initiating the contact. Dorman testified at his deposition that he never placed another call to Weinstock's office, and that he never spoke with any of the attorneys there, only with the secretary with whom he left the message. Weinstock testified that, after Dorman's call, he instructed his employees not to transfer Dorman's calls to him, and not to give out Fraidin's telephone number. Dorman testified at his deposition that he never spoke to any attorney about a settlement. Weitzman's testimony confirmed that neither Weinstock, nor any member of his firm, ever contacted the Dormans directly.
Regardless of who initiated the contact, the uncontroverted evidence was that, on either November 25th or 26th, Fraidin and Weinstock discussed whether it was permissible for Fraidin to contact Dorman directly to discuss settlement. Weinstock advised Fraidin he could talk directly to Dorman. On November 26, 1985, Fraidin questioned Coppel about the propriety of Fraidin's negotiating directly with the Dormans. Coppel explained his understanding of the law to Fraidin: that it is permissible for the parties to a lawsuit to settle directly with each other. Coppel testified that, notwithstanding his opinion on the legality of direct settlement between Fraidin and the Dormans, he counseled Fraidin against such a settlement. In his testimony, Fraidin confirmed that Coppel gave him this advice. On November 27, 1985, Dorman informed Weitzman that Fraidin had called Dorman to set up a meeting. Weitzman advised Dorman to meet with Fraidin only if Weitzman were present.
On Thanksgiving Day, Fraidin met with the Dormans at a bar in east Baltimore. Dorman's deposition testimony indicated the following series of events. Fraidin met Dorman, Weitzman, and Johnson at Tom & Olive's bar. Dorman was drinking that night. Fraidin told Dorman he had $20,000 from "his people" out in the car, and he was willing to settle for that. Fraidin did not show Dorman the "flash money." Dorman responded he would not settle for $20,000, and suggested a figure of $50,000, and a low interest loan of $120,000 he could use to purchase Tom & Olive's bar. Fraidin declined Dorman's offer and insinuated he could have Dorman "bumped off" if he refused to settle. Fraidin also stated that, if Dorman settled, he would not have to pay Weitzman, and that Fraidin would keep the amount of the settlement confidential. The trial testimony differed significantly from Dorman's deposition testimony. Weitzman's version of events follows. Weitzman went to Tom & Olive's bar with Johnson. Johnson went inside, but Weitzman waited outside. Twenty minutes later Johnson emerged from the bar and told Weitzman that Dorman was very drunk, and that Fraidin, the Dormans, and the bar owner were having a meeting upstairs where he was not allowed. Weitzman telephoned into the bar and reached Mrs. Dorman, who told him Fraidin had some loan papers regarding the bar. Weitzman asked to speak to Dorman. Dorman said Fraidin was talking to him about "selling [sic] the case." At this point, Weitzman and Johnson went inside to the meeting. Weitzman glanced at the papers on the table before Fraidin put them away. They looked like loan applications. When Dorman went downstairs, Weitzman told Fraidin he should not be attempting to settle with a drunk, and that Fraidin was asking for another law suit.
The following day, Fraidin told Coppel about the meeting in the bar. According to Weitzman, Coppel objected to Weitzman's having met with Fraidin without Coppel's being present, and Coppel threatened to institute disciplinary action against Weitzman.
The Saturday after Thanksgiving, November 28, 1985, Fraidin met with Dorman and Weitzman at a McDonald's (restaurant).
According to Dorman's deposition testimony, admitted into evidence at trial, Fraidin made it clear at the meeting that he would not deal with Dorman in Weitzman's presence.
A bizarre conversation involving Dorman and Coppel occurred on December 3, 1985. Dorman, apparently a problem drinker, called Weitzman and demanded to speak with Coppel. Weitzman telephoned Coppel and informed him that Dorman wanted to speak to him. According to Coppel's notes, Dorman, who was apparently drunk, told him that: Fraidin had threatened the Dormans' lives; Fraidin tried to bribe Dorman into not paying Weitzman and Braiterman; and Fraidin said that Weinstock had taken $20,000 out of his own bank account for the settlement. Dorman made comments about meeting Fraidin in a bar and asked Coppel to attend the meeting. Coppel did not attend any meeting.
On December 4, 1985, the Dormans sent a letter discharging Weitzman and Braiterman as their attorneys. The letter read, verbatim:
"To whom it may concern [sic].
I Ray Dorman & Margarette Dorman. on this fourth day of December 1985 do here by Fire and dismiss Aundra Weitzman. and Sheldon Braiterman . from the case which they were handling for us with Jacob Fraidin."
Dorman stated at his deposition that Fraidin dictated the letter to him over the telephone, and that Mrs. Dorman "typed it up." Dorman testified: "Fraidin told me that I had to write a letter discharging Mr. Weitzman before he could settle the case without Mr. Weitzman present or another attorney." Dorman explained that Fraidin told him to make three copies: one for Weitzman, one for his own records, and one that Fraidin would send a cab down to pick up. Weitzman stated at trial that he never received this letter from the Dormans, and that Weitzman learned of the letter only through a telephone conversation with Weinstock.
On December 5, 1985, Weitzman wrote Coppel a letter advising him that Dorman was suffering from an extreme case of alcoholism. Weitzman cautioned that "a settlement with Mr. Dorman while under the influence of alcohol and its side effects will only create new litigation in place of or in addition to that now pending." Weitzman suggested that Coppel should urge Fraidin to withdraw his efforts to communicate with the Dormans.
On December 6, 1985, Weitzman met with Dorman and obtained a handwritten statement from Dorman disclaiming the December 4th letter to Weitzman and Braiterman, and asserting that the Dormans had not settled the case. Fraidin testified that he met with Weitzman in the parking lot of the Mount Washington Tavern on December 8, 1985, and told Weitzman that he was going to settle with the Dormans the next day. Fraidin maintained that he invited Weitzman to the settlement, and that Weitzman made his own decision not to be present.
On the morning of December 9, 1985, Weitzman called Dorman from a deposition he was attending in Rockville. Dorman was very excited and told Weitzman he was not going to make any deal with Fraidin unless it was for $175,000. While still in Rockville, Weitzman received a call from Coppel. Coppel said there was a signed letter firing Weitzman, and asked Weitzman if he had evidence of his authority to act for the Dormans. Through a paralegal in his office, Weitzman arranged for Coppel to receive a copy of the Dormans' handwritten statement of December 6, 1985.
On the afternoon of December 9, 1985, the Dormans settled with Fraidin for $50,000 cash. The settlement proceedings were recorded and transcribed, and a Notice of Satisfaction of Judgment was executed by the Dormans and later filed with the court. At settlement, Fraidin had the Dormans reaffirm the discharge of Weitzman and Braiterman as their lawyers by initialing and dating the discharge letter of December 4th. Fraidin also had the Dormans sign a confidentiality agreement in which they agreed not to disclose the amount of the cash settlement to third parties.
Neither Weinstock nor Coppel attended the settlement. Coppel's time records show three telephone calls with Fraidin on December 9, 1985, but the conversations were not admitted into evidence as a result of Fraidin's assertion of attorney-client privilege. Mrs. Dorman testified that sometime after settlement she placed a call to Weitzman's house for her husband. She handed the phone to Dorman, and a heated discussion ensued. Mrs. Dorman testified that when Dorman hung up the telephone he said he had offered to pay Weitzman 50 percent of $50,000, but that Weitzman had rejected that as "peanuts." Weitzman denied that the "peanuts" conversation ever occurred.
On December 10, 1985, Weinstock called Braiterman and, with Weitzman on the extension, advised that Fraidin had settled with the Dormans. The following day, Weitzman and Braiterman filed a Motion to Set Aside the Order of Satisfaction. On December 13, 1985, Weitzman wrote two letters, one to the Dormans, and the other to Judge Hinkel, the presiding judge in Dorman v. Fraidin. He advised the Dormans that he had filed a motion to set aside the order of satisfaction. He also requested a copy of a statement made by the Dormans, which he learned about from Weinstock and Coppel, in which the Dormans purportedly repudiated testimony they gave at the Dorman v. Fraidin trial. The letter to Judge Hinkel advised the judge that Weinstock and Coppel had copies of a statement by the Dormans that repudiated their trial testimony, and a transcript of the settlement. On December 18th, Weitzman and Braiterman received a certified letter signed by the Dormans dated December 14, 1985 that stated:
"We have advised you previously that you have been fired and no longer have the authority [sic] to represent [sic] us. We insist [sic] that you dismiss your motion to set aside order of satisfaction and not file any more pleadings on our behalf."
On December 16th, Lawrence Greenwald, of Gordon, Feinblatt, wrote Weitzman to reaffirm Coppel's advice that Weitzman not communicate directly with Fraidin, and to advise him against continuing collection proceedings and making defamatory statements about Fraidin or the Corporations--including furnishing copies of the motion to set aside the order of satisfaction to Fraidin's customers.
A hearing on the motion to set aside the order of satisfaction was held before Judge Hinkel. The Dormans testified that the settlement was voluntary and that they were satisfied with it. Judge Hinkel denied the motion to set aside the order of satisfaction. At the trial in the case sub judice, Weitzman presented evidence, in the form of Dorman's deposition testimony, that Fraidin hired an attorney for the Dormans to appear at the hearing on the motion to set aside the order of satisfaction, and that Fraidin told the Dormans what to say. Dorman testified, at his deposition, that he did not tell the truth in front of Judge Hinkel on December 26, 1986 because of threats Fraidin made against him.
Additional facts are included in our discussion of the issues.
Appellants Fraidin and the Corporations present these issues:
A. May a claim alleging tortious interference with a contractual relationship be based on an unethical and excessive fee agreement?
B. Does Braiterman, P.A. have standing to sue for tortious interference with contract, when Braiterman was not a party to the contract?
A. Did the trial court err in admitting evidence from the Dorman v. Fraidin trial?
B. Was Dorman's unsworn statement properly withdrawn from evidence?
III. COMPENSATORY DAMAGES
A. Are compensatory damages restricted to 50 percent of the $50,000 settlement received by Dorman?
B. Should Fraidin and the Corporations receive credit on the judgments against them for $25,000--the amount of the judgment rendered against the Dormans for breach of contract?
A. When a tort arises from a contract and there is evidence that the sole motivating factor for the defendants' conduct was the desire to save money rather than the desire to deliberately injure the plaintiff, can a punitive damage award be upheld?
B. Does the punitive damage award against Fraidin and the Corporations comply with due process requirements?
C. When the jury based its punitive damage award on prejudicial and erroneously admitted evidence from a separate trial, must the punitive damage award be vacated?
Did the trial court abuse its discretion in awarding prejudgment interest to appellees?
A. Does the bias of the trial judge, which resulted in the judge incarcerating Fraidin, without due process, warrant a mistrial?
B. Did the trial court err when it (a) refused to refer the motion for recusal to another judge and (b) ultimately denied the motion for recusal?
Appellants Braiterman, P.A. and Weitzman present the following issues in their appeal against appellees Weinstock and Stevan & Harris, and Coppel and Gordon, Feinblatt:
VII. Did the trial court err in permitting Coppel to withhold his testimony of some conversations with Fraidin and notes of all conversations with Fraidin concerning the events occurring between the parties to this case on the basis of attorney-client privilege, where Fraidin asserted at trial that he acted in reliance upon the advice of counsel, where portions of those conversations were voluntarily revealed by Fraidin and Coppel, and where the advice of counsel was used in the perpetration of the tort of interference with contract?
VIII. Did the trial court err in instructing the jury with incorrect and contradictory statements of law concerning an attorney's liability for aiding, encouraging, and assisting a client in the commission of the tort of interference with contract and liability for conspiring with his client to commit that tort?
FRAIDIN AND THE CORPORATIONS APPEAL
The Contract the Dormans signed in May 1982 appointed Weitzman, Braiterman, and Johnson to represent them in their suit against Fraidin. As a fee for services, the Dormans agreed to pay their attorneys the following percentages "of all amounts recovered by settlement or verdict:" 33 1/3 percent if the case terminated without suit; 40 percent if suit was filed and the case settled before trial; and 50 percent if the case was tried. The Dormans also agreed to reimburse their attorneys for expenses advanced. At trial Braiterman explained that it was his practice in 50 percent contingency fee cases to deduct the expenses and then calculate the fee, so that the lawyers never net more than the client. There was no additional fee for appellate work. In April 1985, Weitzman started his own law office. The Dormans executed a revised Contract containing the same fee arrangement but appointing only Weitzman as their attorney. The document purports to have been signed on April 10, 1985; however, under cross examination, Weitzman admitted that the new Contract was not signed until October 1985, after the trial in Dorman v. Fraidin. Weitzman did not explain the terms of the new Contract to the Dormans, and he did not give the Dormans a copy of the Contract.
As a threshold issue, appellants, Fraidin and the Corporations, ask whether "a claim alleging tortious interference with a contractual relationship [can] be based on an unethical and excessive fee agreement." Appellants contend that the fee agreement violated public policy, and was, therefore, "unenforceable" and incapable of forming the basis of a suit for tortious interference with contract. Specifically appellants claim: 1) Weitzman's fee was excessive; 2) Weitzman had a greater stake in the litigation than the Dormans; 3) Weitzman obtained the Dormans' consent to the fee agreement in an improper and unethical manner; and 4) the power of attorney provision contained in the fee agreement gave Weitzman unlimited discretion to control the litigation.
A suit for tortious interference with contract does not depend upon whether the underlying agreement was "enforceable;" it depends upon whether the agreement was "valid." Only a valid agreement can support a claim for tortious interference with contract; an invalid agreement cannot. Thus, appellants' argument is that, because the fee provision was excessive, the contract between the Dormans and their attorneys was invalid and, consequently, not capable of serving as the basis of a suit for tortious interference with contract.
We disagree. Under the circumstances, the Contract was not excessive, rather, it was a valid contract capable of serving as the basis of a suit for tortious interference with contract. We explain.
The elements of tortious interference with contract are: 1) existence of a contract between plaintiff and a third party; 2) defendant's knowledge of that contract; 3) defendant's intentional interference with that contract; 4) breach of that contract by the third party; 5) resulting damages to the plaintiff. Fowler v. Printers II, 89 Md. App. 448, 466 (1991). Appellants' argument is directed at the first element of the tort. A valuable discussion of the type of contract that will support a claim for tortious interference is included in R. Gilbert, P. Gilbert & R. Gilbert, Maryland Tort Law Handbook, § 7.3 (1986):
"Obviously if there is no valid contract, one cannot be said to have interfered with its existence. Thus, if D interferes with an invalid agreement between P and O by inducing O to abandon pursuit of the invalid agreement, D is not liable to P."
(Citations omitted). (Emphasis added). A similar statement is contained in W. Page Keeton, Prosser and Keeton on Torts § 129 at 994-95 (5th ed. 1984):
"Virtually any type of contract is sufficient as the foundation of an action for procuring its breach. It must of course be valid, in force and effect, and not illegal as in restraint of trade, or otherwise opposed to public policy, so that the law will not aid in upholding it."
Thus, the general rule is that "for there to be a right of action against one for contractual interference, there must be in existence a valid contract subject to that interference." Armendariz v. Mora, 553 S.W.2d 400 (1977) (emphasis added). See also, Annotation, Interference with Invalid Contract, 96 A.L.R.3d 1294, 1296-97 (1980) ("All of the cases in this annotation involving invalid contracts support the view that, regardless of the particular ground for invalidity . . . there is no liability for interfering with an invalid contract.)
Although a 50 percent contingency fee is high, the fee agreement was not excessive, or invalid, based on the facts of this case. In determining whether a particular fee agreement is excessive for disciplinary purposes, the following factors are considered:
"(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly. (2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer. (3) The fee customarily charged in the locality for similar legal services. (4) The amount involved and the results obtained. (5) The time limitations imposed by the client or by the circumstances. (6) The nature and length of the professional relationship with the client. (7) The experience, reputation, and the ability of the lawyer or lawyers performing the services. (8) Whether the fee is fixed or contingent."
Attorney Grievance Comm'n v. Wright, 306 Md. 93, 97-98 (1986), quoting DR 2-106(B). Moreover, attorneys are not to acquire a "propriety interest" in any litigation conducted for a client. DR 5-103(A). Although the case sub judice does not involve attorney discipline, these factors are relevant to the extent that they express public policy. A contract that violates public policy is invalid. State Farm Mut. Automobile Ins. Co. v. Nationwide Mut. Ins. Co., 307 Md. 631, 643 (1986). In Maryland, there is no per se rule regarding the reasonableness of attorneys' fees--each case is decided individually, on its facts. See e.g., Attorney Grievance Comm'n v. Korotoki, 318 Md. 646 (1990) (75% fee was excessive in this particular case).
In the case sub judice, the Contract provided for a fee of 50 percent only if the case were tried, otherwise, the fee was less than 50 percent. Because the fee was contingent, the Dormans' attorneys risked not receiving any compensation for their services if their efforts were unsuccessful. The 50 percent fee included appellate work. From what we are able to learn of the Dormans' case against Fraidin from the record, it does not appear to be routine, and the outcome was not a certainty. The Dormans' attorneys were skilled legal advocates who were familiar with the subject matter of the Dormans' case. In short, the fee, although high, was not excessive.
Appellants' other arguments regarding the validity of the Contract are not supported by the record. Appellant argues that the Contract gave Weitzman unlimited discretion over the Dormans' case and that the Dormans' consent to the agreement was improperly obtained. Contrary to appellants' assertion, the Contract did not authorize the Dormans' attorneys to settle the case. Moreover, appellants' arguments regarding improprieties in the execution of the second fee agreement--not explaining the document, not giving the Dormans a copy, back-dating the agreement--ignore the fact that the second agreement was the same as the first, except that Weitzman was the only attorney.
In their reply brief, appellants argue that whether the fee agreement violated public policy is a question of law, not of fact, and should not have been decided by the jury. The jury instructions listed, almost verbatim, the factors in the disciplinary rules for determining whether a fee is reasonable. The jury was also advised that "it is generally improper for a lawyer's stake to exceed that of his client." Based upon these instructions, the jury found that Braiterman, P.A. and Weitzman had an enforceable contract with the Dormans.
Appellants have not directed our attention to any portion of the record evidencing their objection to the submission of the issue to the jury. In general, we do not decide issues that were not raised in the trial court. Md. Rule 8-131. See also, Rose v. Paape, 221 Md. 369, 379 (1960) (where a question was not presented until it was raised in the appellants' reply brief, the Court of Appeals refused to decide it because it was too late under the Rule). Therefore, we need not address whether the issue was properly submitted to the jury. Moreover, because we have determined that the Contract was valid and did not violate public policy, appellants' argument on this issue is moot.
B. Standing of Braiterman, P.A.
Appellants' next contention is that Braiterman, P.A. has no claim against them for tortious interference with contract because Braiterman did not have a contract with the Dormans. Appellants argue that because Braiterman was not a party to the second contract, and it replaced the first, Braiterman lacks standing to sue.
The first written contract appointed Weitzman, Braiterman and Johnson as attorneys for the Dormans. At that time, the attorneys were all members of Braiterman & Johnson, P.A. When Weitzman left the practice, he took the Dormans' case with him, and a second contract was written appointing only Weitzman as the Dormans' attorney. Braiterman, P.A. and Weitzman maintain, however, that Braiterman remained involved in the case at the Dormans' request, and that, although not evidenced in writing, a contract for the provision of legal services existed between the Dormans and Braiterman.
Testimony with respect to Braiterman's involvement in the case was as follows. When Weitzman started his own practice, he took the Dormans' case with him, with Braiterman's approval. Weitzman and Braiterman agreed that they would share equally in any fees. Before and during the trial, Braiterman served as a consultant to Weitzman. After trial in Dorman v. Fraidin, Braiterman and Weitzman agreed, with the Dormans' consent, that Braiterman would enter his appearance and work with Weitzman on collection of the judgment. Weitzman testified that the Dormans authorized Braiterman to come back into the case, and they knew Braiterman was going to share the fee with Weitzman. A handwritten document signed by Weitzman and Braiterman, dated October 25, 1985, divided responsibilities for the post-trial legal work between Weitzman and Braiterman.
Whether an attorney client-relationship existed between the Dormans and Braiterman was a factual question. The jury found, by a preponderance of the evidence, that Braiterman, P.A. had a contract with the Dormans. Existence of an attorney-client relationship may be implied from the conduct of the parties; it does not depend on the execution of a formal contract, unless the parties so specify. Crest Investment Trust, Inc. v. Comstock, 23 Md. App. 280, 297 (1974), cert. denied, 276 Md. 747 (1975). The verdict of a jury on a question of fact is conclusive on appeal. Fowler v. Benton, 245 Md. 540, 545, cert. denied, 389 U.S. 851 (1967). It is not our function to inquire into the weight of the evidence, rather, we determine only whether there was legally sufficient evidence to support the jury verdict. Temoney v. State, 290 Md. 251, 261-62 (1981); Gray v. Director, Patuxent Inst., 245 Md. 80, 84 (1966).
The facts viewed in the light most favorable to the prevailing party, Braiterman, P.A., are that Braiterman was listed as attorney on the initial contract signed by the Dormans. Although Weitzman took the Dormans' case when he left Braiterman, and a new contract was executed, Braiterman remained involved in an advisory capacity. Later, the Dormans authorized Braiterman's involvement to pursue collection of the judgment, and Braiterman did, in fact, try to collect the judgment. This evidence is legally sufficient for a jury to infer that Braiterman, P.A. had a contract with the Dormans.
Prior to trial, Weinstock and Stevan & Harris, co-defendants with Fraidin below and appellees in the second appeal, submitted a motion in limine requesting that references to Dorman v. Fraidin be limited to: 1) the amount of the judgment; 2) the post-trial proceedings, such as motions, the appeal, and discovery in aid of execution; and 3) settlement negotiation. Other evidence from Dorman v. Fraidin was inadmissible. They argued that, because it was extrinsic evidence of collateral matters, its admission would unnecessarily lengthen the trial, confuse the facts and issues, and risk undue prejudice to the defendants. In addition, they contended that the other evidence was inadmissible impeachment evidence. The court denied the motion in limine and indicated that it "would grant a great deal of latitude in that because, without that, this [case] would make no sense." On appeal, appellants complain that the following were erroneously allowed: opening statements made by counsel for Braiterman, P.A. and Weitzman explaining the particulars of the loan that formed the basis of the suit in Dorman v. Fraidin; questions asked of Fraidin by counsel for Braiterman, P.A. and Weitzman regarding Fraidin's businesses aimed at portraying Fraidin as a "moneylender;" introduction of a yellow page advertisement for one of the Corporations.
"We have observed many times that the reception of evidence is to a large degree entrusted to the discretion of the trial court and its action will seldom constitute grounds for reversal." Attorney Grievance Comm'n v. Kerpelman, 288 Md. 341, 359 (1980), cert. denied, 450 U.S. 970 (1981); State v. Conn, 286 Md. 406, 425 (1979). Moreover, a trial judge has wide discretion "to control the course of the trial and the exercise of such discretion will not be reversed on appellate review except in those rare cases where there has been a clear abuse of that discretion." Thrifty Diversified, Inc. v. Searles, 48 Md. App. 605, 615 (1981). See also Board of County Comm'rs v. Dorcus, 247 Md. 251, 261 (1967) ("Surveillance of counsel's argument to the jury is within the sound discretion of the trial judge[.]").
Appellants argue the trial court erroneously admitted irrelevant evidence from Dorman v. Fraidin. The admission of background evidence is a generally accepted exception to the relevancy requirement. See 1 Strong, McCormick on Evidence § 185, at 774 (4th ed. 1992) ("Considerable leeway is allowed even on direct examination for proof of facts that do not bear directly on the purely legal issues, but merely fill in the background of the narrative[.]"). The advisory committee note to Fed. R. Evid. 401 (relevance) states:
"Evidence which is essentially background in nature can scarcely be said to involve disputed matter, yet it is universally offered and admitted as an aid to understanding.
A rule limiting admissibility to evidence directed to a controversial point would invite the exclusion of this helpful evidence, or at least the raising of endless questions over its admission."
"[It is] always necessary to place a transaction or controversy into some sort of setting or framework before any sense can be made out of the evidence submitted to the jury." 1 Wigmore, Evidence § 9.1(3) at 660 (Tillers rev. 1983). The case sub judice involved a large cast of characters and a complicated set of facts. The trial court did not abuse its discretion in admitting evidence from Dorman v. Fraidin to provide the jury with a useful background to the current controversy.
B. Dorman's Statement of January 16, 1990
At the beginning of the trial, counsel for Braiterman, P.A. and Weitzman read to the jury, as substantive evidence, Dorman's sworn deposition testimony. The admissibility of this evidence is not an issue. Dorman's deposition testimony contained a variety of statements that were damaging to appellants. On January 16, 1990, during the first trial that ended in a mistrial, Dorman made an unsworn statement in open court, but out of the presence of the jury, that he was drunk on the day of his deposition. During Fraidin's testimony, counsel for the Corporations introduced, over objection from counsel for Braiterman, P.A. and Weitzman, an excerpt from the transcript of the January 16th proceedings containing Dorman's statement that he was drunk during his deposition. Although the court initially admitted the statement, it withdrew the statement from evidence prior to giving the jury its final instructions. The court explained to the jury:
"Ladies and gentlemen, on October 26 there was exhibit number 2 of North American Credit Corporation and Pacific Investment Group. It was an unsworn statement made on January 16, 1990 by Mr. Dorman which said that he was drunk when his deposition was given. It came into evidence and I have since ruled that it was not proper for me to admit it into evidence and you are to disregard that statement in your deliberations and that statement will not be taken into the jury room with you. It was my error to admit it initially, and I am correcting that error."
Fraidin objected to the court's withdrawal of the statement from evidence. Appellants now argue that a new trial must be granted because the judge committed prejudicial error by withdrawing the statement. In their brief, appellants argue Dorman's statement that he was drunk was admissible to impeach Dorman, because it was a prior inconsistent statement, and because it was the admission of a party opponent.
In 6 McLain, Maryland Evidence § 806.1 (1987) the text writer explains:
"[If an out-of-court] declarant does not testify at trial, but his or her out-of-court statement has been admitted as substantive evidence, the court in its discretion may allow impeachment, and then rehabilitation, of the declarant."
The rule is justified in 3 A Wigmore, Evidence § 884 as follows. When an out-of-court statement is received into evidence, the statement "stands testimonially as the equivalent of a statement made on the stand. . . . The statement being testimonial in [its] nature, it is proper to subject [it], when admitted, to impeachment in the appropriate ways[.]" Because the trial court admitted Dorman's deposition as substantive evidence, the statement was subject to impeachment. Moreover, because a witness's deficiencies in perception and memory of the facts are a proper subject for impeachment, Fraidin was entitled to offer evidence tending to prove that Dorman was drunk at his deposition. See generally, 6 McLain, Maryland Evidence § 607.8. Here, however, the evidence Fraidin utilized to impeach the deposition testimony--Dorman's January 16th statement--was hearsay. It was an out-of-court statement offered to prove the truth of the matter asserted--that Dorman was drunk at his deposition. A statement "remains an 'out-of-court' statement for the purpose of the hearsay definition even if it was made in a court at some other time." 6 McLain, Maryland Evidence § 801.2; Bright v. State, 183 Md. 308, 319 (1944) (statement made at preliminary hearing was hearsay). Fraidin argues the statement was admissible because it was a prior inconsistent statement, and the declaration of a party opponent. We disagree that the statement falls within either of these exceptions to the hearsay rule.
Appellants' assertion that Dorman's January 16th statement was a prior inconsistent statement, begs the question: inconsistent with what? Here, Fraidin did not call Dorman to the stand; instead, he attempted to introduce the statement himself. The text of Dorman's deposition contained in the record extract does not contain a statement by Dorman that he was sober. Dorman's statement that he was drunk at his deposition was not, therefore, inconsistent with any statement Dorman made in the deposition.
Impeachment by prior inconsistent statement is problematic for another reason. Before a witness may be impeached with a prior inconsistent statement, counsel must lay a proper foundation. "The foundation is laid by interrogating the witness [who made the statement] as to when, the place at which, and the person to whom such contradictory statements were made." State v. Kidd, 281 Md. 32, 46 n. 8 (1977), cert. denied, 434 U.S. 1002 (1977). Because Dorman was never put on the witness stand, counsel could not have questioned Dorman about the circumstances under which the January 16th statement was made. Since no foundation for the statement was laid, it could not be introduced. Appellants' alternative was, of course, to call Dorman as a witness. For whatever reason, appellants made a tactical decision not to do so. Without putting Dorman on the stand, however, his January 16th statement was inadmissible. Matthews v. Dare, 20 Md. 248, 269 (1863).
Appellants' assertion that the statement was admissible because it was an admission of a party opponent fails as well. To qualify as an admission, the statement "must be offered against the party opponent." 2 Strong, McCormick on Evidence § 254, at 143; Aetna Casualty & Surety v. Kuhl, 296 Md. 446, 455 (1983). Since no claims or cross claims were made between appellants and the Dormans, they were not opponents. The exception is inapplicable.
Having perceived its error in admitting Dorman's January 16th statement, the trial court properly withdrew the statement from evidence. Appellants' argument that "had the court ruled the statement inadmissible, the Defendants would have been on notice to offer other evidence to prove the same facts," is unpersuasive. Appellants had ample opportunity to present such evidence. Anyone who was present at Dorman's deposition could have testified as to whether they believed he was drunk. Appellants could have called Dorman to the stand, but chose not to do so. Moreover, when appellants did learn that Dorman's January 16th statement was being withdrawn from evidence, they did not ask the trial court for the opportunity to put on additional evidence. Having failed to ask for the opportunity to present additional evidence in light of the trial court's ruling, appellants may not complain about their inability to do so now.
III. COMPENSATORY DAMAGES
The jury awarded a total of $183,474.94 in compensatory damages on the count of tortious interference with contract: $91,737.47, plus interest, each to Braiterman, P.A. and Weitzman. This amount is precisely one-half the amount of the judgment in Dorman v. Fraidin. Appellants make two arguments with respect to the compensatory award: 1) the award should be limited to $25, 000--one-half the amount the Dormans received to settle the claim; 2) because the Dormans are jointly and severally liable with appellants for damages caused by the Dormans' breach of contract, the compensatory award against appellants must be modified.
In Rite Aid Corp. v. Lake Shore Investors, 298 Md. 611 (1984), the Court of Appeals considered how damages for interference with a contract are to be measured. The damages include "such damages as would reasonably flow from a tortious contractual interference," and may include pecuniary loss of the benefits of the contract, consequential losses, emotional distress, actual harm to reputation, and, in the appropriate circumstances, punitive damages. Id. at 621-22. Under the facts of this case, we hold that the compensatory damages are not limited to $25,000 (one-half the amount of the settlement).
This precise point was addressed in State Farm Ins. Co. v. Gregory, 184 F.2d 447, 448 (4th Cir. 1950), and we find its reasoning persuasive:
"It is argued that the recovery should have been limited by the percentage provided for in the contingent fee as applied to the amount of the compromise and not as applied to the face of the policy; but it is clear that the damages recoverable as the result of the wrongful interference with contract should not be limited to the proceeds of the settlement which resulted from the wrongful interference. The jury might well have concluded that, but for the interference, plaintiff would have recovered the full amount of the policy for his client and would have been entitled to the percentage thereof provided for in his contract for contingent fee. The settlement at less than the face of the policy was based upon the elimination of the plaintiff's fee by the wrongful interference with his contract; and damages for the wrongful interference with his contract; and damages for the wrong should embrace all elements reasonably flowing therefrom and not be limited by the amount of the settlement made in its perpetration. To permit this would be to permit the wrongdoer to profit to that extent from the wrong that he has perpetrated."
Financial statements introduced by Braiterman, P.A. and Weitzman showed appellants' net worth to be well in excess of that needed to satisfy the Dorman v. Fraidin judgment. The jury could have concluded from these statements that, but for Fraidin's interference, Braiterman, P.A. and Weitzman would have recovered the full amount of their contingent fee.
Appellants argue the $183,474.94 compensatory award entered against them for tortious interference with contract should be reduced by $25,000 to account for the $25,000 compensatory award entered against the Dormans for breach of contract. Appellants' argument that Braiterman, P.A. and Weitzman are being compensated twice for the value of the contract has some merit, but a reduction in the judgment against appellants is not required at this time.
In Lakeshore, the Court of Appeals specifically adopted as the law of Maryland the provisions of § 774A of Restatement (Second) Torts. 298 Md. at 621. Section 774A(2) provides:
"In an action for interference with a contract by inducing or causing a third person to break the contract with the other, the fact that the third person is liable for the breach does not affect the amount of damages awardable against the actor; but any damages in fact paid by the third person will reduce the damages actually recoverable on the judgment."
The comment to this section explains:
"The fact that the plaintiff may have a cause of action against the person who has broken his contract does not prevent recovery against the defendant who has induced or otherwise caused the breach, or reduce the damages recoverable against him. The defendant and the contract breaker are both wrongdoers . . . and each is liable for the entire loss that he has caused. Even a judgment obtained for breach of the contract if it is not satisfied does not bar or reduce recovery from the one who has caused the breach. But since the damages recoverable for breach of the contract are common to the actions against both, any payments made by the one who breaks the contract or partial satisfaction of the judgment against him must be credited in favor of the defendant who has caused the breach."
Accordingly, appellants are not entitled to a reduction in the amount of the judgment against them for tortious interference with contact. Should the Dormans satisfy the judgment against them for breach of contract, or any part thereof, appellants would be entitled to a credit in that amount.
Appellants challenge the constitutionality of the jury's $3,000,000 punitive damage award ($2,500,000 in favor of Weitzman and $500,000 in favor of Braiterman, P.A.).
A. Sufficiency of the Evidence
Appellants contend the evidence was insufficient to show they acted with "actual malice" in injuring Braiterman, P.A. and Weitzman. Actual malice refers to "conduct characterized by evil motive, intent to injure, ill will, or fraud." Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, n. 20 at 460 (1992). See also Schaefer v. Miller, 322 Md. 297, 300 (1991) (Actual malice is "the performance of an act without legal justification or excuse, but with an evil or rancorous motive influenced by hate, the purpose being to deliberately and willfully injure the plaintiff.")
There was evidence before the jury from which it could conclude Fraidin "deliberately and wilfully" interfered with the contract between Braiterman, P.A. and Weitzman and the Dormans and that "the interference was purposely done in order to injure" Braiterman, P.A. and Weitzman. Lake Shore Investors v. Rite Aid Corp., 55 Md. App. 171, 181 (1983), aff'd, 298 Md. 611 (1984). Fraidin stated, in an east Baltimore bar, that if Dorman settled with Fraidin, Dorman would not have to pay Weitzman, and that Fraidin would keep the amount of the settlement confidential. Fraidin made clear at the meeting that occurred at McDonald's that Fraidin would not deal with the Dormans in Weitzman's presence. Fraidin dictated to the Dormans the letter firing their counsel, and had them reaffirm the discharge by initialing the firing letter at settlement. Weitzman testified Fraidin threatened to sue him. Fraidin explained to Weitzman his strategy was to sue the lawyers that sued him, because "if he gave lawyers who sued him enough trouble . . . lawyers would stop bringing cases against him." Weitzman testified he had "a clear notion" it was Fraidin's intention to settle the Dormans' case without his being present at the settlement because Fraidin wanted to assure he did not get paid.
When the facts in the case sub judice are compared with facts that courts have found sufficient to constitute actual malice, it is clear to us that the evidence in the case sub judice was sufficient. For example, Lake Shore involved a dispute between a possible tenant, Rite Aid, and a limited partnership that was developing a shopping center, LSI. After negotiations with Rite Aid deteriorated, LSI entered into a lease with Drug Fair. The evidence showed that a representative of Rite Aid vowed "to fix" the partner at LSI who had attempted to negotiate the lease with Rite Aid. Another representative of Rite Aid threatened litigation unless LSI agreed to build a Rite Aid in the shopping center. Counsel for Rite Aid contacted counsel for Drug Fair and said in an "intimidating" voice that Drug Fair could either yield its lease or be in the same shopping center with Rite Aid. The court concluded these facts were sufficient to support an award of punitive damage.
In McClung-Logan Equip. Co., Inc. v. Thomas, 226 Md. 136 (1961), a seller of tractors wrongfully seized a tractor from a buyer who had lodged several complaints about the tractor's performance. In upholding an award of punitive damages, the court found ample evidence from which a jury could find, "that [the seller] acted wilfully, wantonly, and maliciously in utter disregard of [the buyer's] rights." 226 Md. at 149. The court explained "it was a reasonable and proper inference that" the seller became "provoked" with the buyer's numerous complaints about the tractor's performance and determined to stop the complaints by seizing the tractor and forcing the buyer to sign a release of the claims it might have against the seller. Id. The court further explained that the evidence was particularly clear in light of the seller's insistence that the buyer release all claims against the seller in order to redeem the tractor. Id.
In the case sub judice, there was evidence that Fraidin required the Dormans to discharge Braiterman, P.A. and Weitzman before he would settle the case. In fact, Fraidin was the author of the letter that discharged the Dormans' attorneys. Because Fraidin could have settled with the Dormans without forcing them to discharge their counsel, it is obvious that Fraidin intended to injure Braiterman, P.A. and Weitzman. The evidence was ...