Accord But Dissatisfaction

The Utah Supreme Court affirmed  summary judgment to a defendant law firm in a dispute over a substantial fee

Erik Schnibbe worked as an attorney at the law firm of Magleby, Cataxinos, and Greenwood for several years. After one of the firm’s clients prevailed at trial and won a large damages award, the firm paid Schnibbe $1 million for his share of the contingency fee by a direct deposit into his bank account. Schnibbe believed that he had been promised a greater share of the firm’s fee. However, he kept the $1 million. Years later, after he no longer worked for the firm, Schnibbe sued for the additional money he claimed he should have received.

The Defendants—the firm and two of its attorneys, James Magleby and Peggy Tomsic—moved for summary judgment, arguing that Schnibbe had accepted the direct deposit payment as full settlement of his share of the contingency fee. In their view, Schnibbe’s claims were therefore barred by the doctrine of accord and satisfaction. The district court agreed and granted summary judgment to the Defendants.

The firm had received a contingent fee of $55 million

Schnibbe did not complain to Magleby or Tomsic because they were celebrating in Mexico at the time, and Schnibbe thought the matter deserved a “face-to-face” discussion. However, even after Magleby and Tomsic returned, Schnibbe never voiced dissatisfaction with the payment to either of them until years later. Schnibbe understood that the firm did not intend to pay him anything else for his work on the contingency case. But he was “hopeful that [Magleby and Tomsic] would make things right,” and he was “[r]eluctant to sue his friends and law partners.” So Schnibbe kept the $1 million, believing that “he had time to seek recovery of the rest of his compensation later.”

Schnibbe first brought the issue to Magleby’s attention in March 2018. During a disagreement about Schnibbe’s work performance, Schnibbe remarked: “You asked for the ‘old Eric’ back. You killed him when you and Peggy reneged on the USA Power deal.” Two years after that, Magleby told Schnibbe that his salary would be reduced because he fell short of his billable requirements. Magleby also noted that they had previously “discussed [Schnibbe] taking a reduced salary,” based on an “email report” from July 2018. Schnibbe responded, “I don’t think it’s really fair for you to conflate the aftermath of the USA Power deal not being honored . . . with what happened later, in the last half of 2018 to present. I thought we had turned a corner on the USA Power thing and were moving on, but perhaps I was wrong.” 

Magleby terminated Schnibbe the following day. Schnibbe then sued the firm, Magleby, and Tomsic, seeking an additional $4.5 million he claimed the firm should have paid him from the contingency fee.

Affirmed

Here, the undisputed facts demonstrate that Schnibbe chose to keep the $1 million deposit, knowing the Defendants intended it as full payment of his share of the contingency fee. Accordingly, the third element of accord and satisfaction is satisfied as a matter of law: Schnibbe accepted the payment as full settlement of the disputed debt. We affirm.

(Mike Frisch)