Brief Fact Summary. Attorney 1 entered into an agreement with Attorney 2 and Attorney 3, working as a partnership, for the partnership to assist Attorney 1 in prosecuting a personal injury matter. Attorney 1 wished only to work with only Attorney 2 and not Attorney 3. Attorney 2 did a substantial amount of the work on the personal injury matter. Attorney 2 became a judge and as such no longer could work on the personal injury matter.
Synopsis of Rule of Law. "[W]here one member of a two-person law firm becomes incapable of performing on a contract of association with another lawyer, the obligations of the parties to the contract are discharged if it was contemplated that the incapacitated attorney would perform substantial services under the agreement."
Where a contract contemplates the personal services of a party, performance is excused when that party dies or becomes otherwise incapable of performing.View Full Point of Law
Issue. "Are plaintiffs Roy Cazares and Thomas Tosdal, former partners in the law firm of Cazares & Tosdal, entitled to one-half of a contingent fee promised them by defendant Phil Saenz when he associated the firm on a particular personal injury case, notwithstanding that Cazares became a municipal court judge before the case was settled?"
• How do the doctrines "frustration of purpose, incapacitation of parties to a contract, and the proper measure of quantum meruit recovery" apply to an attorney fee situation?
Held. "[W]here one member of a two-person law firm becomes incapable of performing on a contract of association with another lawyer, the obligations of the parties to the contract are discharged if it was contemplated that the incapacitated attorney would perform substantial services under the agreement." The court concluded that the Defendant was within his rights when he refused to work with Mr. Tosdal after Mr. Cazares became a judge. According to Restatement Second, "[W]here a contract contemplates the personal services of a party, performance is excused when that party dies or becomes otherwise incapable of performing." Additionally, "If the existence of a particular person is necessary for the performance of a duty, his death or such incapacity as makes performance impracticable is an event the non-occurrence of which was a basic assumption on which the contract was made." The Defendant and Mr. Cazares "testified that Cazares's prosecution of the case to completion was a 'basic assumption on which the contract was made.' "
• "[Mr.] Cazares and [Mr.] Tosdal are not entitled to 50 percent of the contingent fee as provided in the association agreement. They may, however, recover the reasonable value of the legal services rendered before [Mr.] Cazares's incapacitation, prorated on the basis of the original contract price." The reasonable value of legal services is referred to as quantum meruit. The courts then goes into a detailed discussion of how to calculate the reasonable value of legal services on an hourly basis and on a contingency basis. "[I]n this type of case, where the contract is between associated attorneys, an unforeseen event which renders complete performance by one party impossible should not result in a windfall to the other attorney. In essence, having contracted with the lawyer or firm to pay a particular fee, the associating attorney is estopped to deny that the pro rata contract price accurately measures the reasonable value of the services rendered."
Discussion. This case offers an interesting discussion of frustration of purpose in the context of relationships between attorneys.