Citation. 435 F.2d 962 (5th Cir. 1970)
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Brief Fact Summary.
An attorney entered into a retainer agreement with a client in a divorce matter. The attorney charged the client a $25,000 retainer fee and a 1/3 contingency fee.
Synopsis of Rule of Law.
The general rule is "that courts will not aid either party to an illegal contract but will leave them where they place themselves." However, Florida recognizes an exception to this rule. The exception applies when "law or public policy requires action by the courts, or where the parties are not in pari delicto."
The Plaintiff, Geneva Singleton (the "Plaintiff"), was represented by the Defendant, Percy Forman (the "Defendant"), in a divorce proceeding. The Defendant required the Plaintiff to pay a $25,000 retainer fee and was entitled to 1/3 contingency fee if victorious in the matter. To secure the $25,000 retainer fee, the Plaintiff gave the Defendant certain jewelry. The Defendant was dismissed by the Plaintiff on February 28, 1969, 21 days after the parties' initial meeting. The Plaintiff then brought this suit to recover her jewelry and other damages, including punitive damages. The lower court dismissed the suit.
Although the retainer agreement is void under Florida law, will the court entertain an action by the Plaintiff who is not in pari delicto with the Defendant?
• Is the contract divisible?
The court immediately recognized that the Plaintiff had a valid cause of action to at least have the retainer returned to her. Under Florida law, attorneys are not allowed to charge contingent fees in divorce cases. Any agreements that do so are void and unenforceable, as against public policy.
• The court first recognizes that Florida acknowledges the general rule "that courts will not aid either party to an illegal contract but will leave them where they place themselves." However, Florida recognizes an exception to this rule. The exception applies when "law or public policy requires action by the courts, or where the parties are not in pari delicto." The court observes that since the Plaintiff is not in pari delicto with the Defendant, the Florida courts would "go to her aid to the extent of returning the consideration which she tendered in performance of her part of the invalid contract."
• The court also disagrees that the contract is divisible and refuses to sever the violative provision, the contingency fee. Florida law provides "a contract should be treated as entire when, by a consideration of its terms, nature, and purpose, each and all of its parts appear to be interdependent and common to one another and to the consideration." On the other hand "a contract is indivisible where the entire fulfillment of the contract is contemplated by the parties as the basis of the arrangement." Since the "retainer and contingent fee were related to the sole object of employment, the divorce" the court found that the contract was clearly indivisible. The court observed "[i]t is impossible to think that a portion of the contract with this much significance could be entirely 'eliminated from the contract and still leave a valid working arrangement fairly reflecting the original mutual understanding between the parties.' "
It is interesting to read this case alongside [Bateman Eichler, Hill Richards, Inc. v. Berner] to see how two different courts apply the in pari delicto defense.