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Zamarello v. Reges

Supreme Court of Alaska

March 28, 2014


Page 388

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Frank A. Pfiffner, Judge. Superior Court No. 3AN-08-07950 CI.

Richard W. Maki and David H. Shoup, Tindall Bennett & Shoup, P.C., Anchorage, for Appellant.

Anthony M. Sholty and Lael A. Harrison, Faulkner Banfield, PC, Juneau, for Appellees.

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.


Page 389

WINFREE, Justice.


A client sued his lawyer for breach of contract, breach of fiduciary duty, misrepresentation, and professional negligence in a fee agreement dispute. After a jury found in favor of the lawyer and judgment was entered the client appealed, arguing that the superior court erred by issuing certain jury instructions regarding contract interpretation and by denying the client's motion for a new trial or judgment notwithstanding the verdict. We conclude that any error in the superior court's jury instructions was not prejudicial, and we affirm the superior court's decision to deny the client's post-trial motions because there was sufficient evidence for the jury to find for the lawyer on each of the claims.


A. Facts

1. Initial contingency fee agreement

Peter Zamarello owned a mobile home park in Anchorage through a company called Alaskan Village, Inc. In December 1999 real estate developer Gerald Neeser obtained an option to purchase a portion of the mobile home park. The Alaska Department of Environmental Conservation (ADEC) subsequently required Zamarello to address contamination on the property. Zamarello met with attorney Robert Reges,[1] who recommended litigation against Zamarello's insurers to obtain remediation funds. Reges prepared a two-page fee agreement dated July 11, 2000. This proposed fee agreement described a contingent hourly fee arrangement, and noted that an adverse party could receive awards of costs and attorney's fees in the event that Zamarello lost a lawsuit. The

Page 390

litigation plan was dropped in favor of a remediation agreement with ADEC, and Zamarello never signed Reges's proposed fee agreement.

In September 2000 a system of underground pipes and tanks was discovered on the property. With potential remediation costs raised significantly by this discovery, Zamarello reverted to a litigation strategy. Reges again presented the July 11 fee agreement; Zamarello asked that it be reduced to a single page due to his limited ability to read English. The parties dispute whether Reges's or Zamarello's staff redrafted the agreement, but Zamarello signed it on October 3, 2000. The shortened agreement provided for a contingent hourly fee, but did not include language regarding the potential liability for opposing parties' costs and fees. According to Reges, at an October 4 meeting with Zamarello's in-house attorney present, Reges and Zamarello discussed the July 11 agreement and the potential that Zamarello would be liable to opposing parties if he lost a lawsuit. Reges claims the language in the July 11 agreement was " part of the deal."

In February 2001 Zamarello and Neeser amended their option agreement. Zamarello reduced the purchase price in exchange for Neeser's agreement to pay for the environmental remediation. The parties agreed to jointly pursue claims against potentially responsible parties, with Zamarello receiving the first $3 million recovered plus reimbursement of costs and attorney's fees expended to obtain the recovery. In 2002 Reges filed two lawsuits on Zamarello's behalf -- one against Denali Fuel, the company that installed the underground pipes and tanks, and one against 11 insurers alleged to have provided insurance coverage for the environmental contamination.

Although the fee agreement provided for Reges to deduct attorney's fees and costs from recoveries, in practice Zamarello paid Reges's monthly invoices for fees and costs, and Zamarello received the full settlements.

2. Modification of the purchase option

In July 2004 Denali Fuel settled with Zamarello for $1.5 million. Because Neeser was a co-owner of the claims, Denali Fuel insisted that he be a party to the settlement. On July 16 Reges, Zamarello, Zamarello's business manager Paul Gardner, Neeser, Neeser's attorney Donald McClintock, and representatives from Denali Fuel met to obtain Neeser's signature on the settlement. Neeser and Zamarello also discussed how to proceed against the insurers who had not yet settled. Because Zamarello was to receive the first $3 million of recoveries under the option addendum, and because the total recoveries appeared unlikely to exceed that amount, the parties negotiated an incentive for Neeser to continue with the litigation. After negotiations primarily between Zamarello and Neeser, McClintock wrote an agreement with Reges looking over his shoulder. The resulting agreement modified the February 2001 addendum to the purchase option so that future recoveries would be shared equally between Zamarello and Neeser's assignee, Muldoon Community Improvement, LLC. The agreement also stated in part:

Out-of-pocket expenses and court costs should be paid by Muldoon Community Improvement, LLC. Attorney's fees shall be paid for on an hourly contingent fee basis with the law firm of Reges & Boone, LLC who shall be entitled to be paid accrued fees on recoveries as they are received. . . . Prepaid costs will be paid to Muldoon Community Improvement, LLC from any recovery. (Emphasis added.)

The parties later claimed different subjective understandings of the agreement. Reges understood the modification to provide that from future recoveries Neeser first would be reimbursed for his prepaid costs, followed by payment of Reges's unpaid contingency fees, with the balance of the recoveries divided equally between Neeser and Zamarello. This understanding was echoed by Neeser and McClintock. On the other hand, Zamarello understood the agreement to mean that Neeser would pay all costs and ...

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