Submitted: November 13, 2014
Melissa N. Donimirski, Esquire Proctor Heyman LLP
David S. Eagle, Esquire Klehr Harrison Harvey Branzburg LLP
Jay N. Moffitt, Esquire
Robert S. Saunders, Esquire
Katten Muchin Rosenman LLP ("Katten") asks to intervene in the long legal battle between Plaintiff Martha S. Sutherland (as trustee of the Martha S. Sutherland Revocable Trust dated August 18, 1976, "Martha") and Defendants, directors of Nominal Defendants Dardanelle Timber Co., Inc. and Sutherland Lumber-Southwest, Inc. (the "Individual Defendants" and the "Companies, " respectively). Katten seeks to file a Verified Petition for a Charging Lien based on $766, 166.75 in unpaid fees and expenses incurred in representing Martha in earlier stages of this litigation.
Martha retained Katten in 2004 in connection with an action to inspect the books and records of the Companies under 8 Del. C. § 220. Although Katten cannot locate the engagement letter it executed with Martha,  it is undisputed that Katten served as counsel in this litigation through the filing of derivative and double-derivative claims against the Individual Defendants, a successful effort to oppose a motion to dismiss (during the pendency of which the Individual Defendants acted to moot some of the claims), the filing of an amended complaint, and a partially successful defense against a motion for summary judgment. In the spring of 2011, Martha retained Kusper Law Group, Ltd. ("Kusper") as counsel, and Katten withdrew.
To facilitate this transition, on March 29, 2011, Katten, Kusper, and Proctor Heyman LLP ("Proctor, " and together with Kusper, "Current Counsel") agreed that Katten would "delay filing for an attorney charging lien." In turn, Current Counsel would not contest the timeliness of such filing if made "within 30 days of a substantive ruling by the Delaware Chancery Court that awards monies to Martha either as damages or as reimbursement of legal fees incurred" (the "March Agreement").
The Individual Defendants ultimately prevailed at trial. However, in a July 31, 2014, letter opinion, "the Court conclude[d] that Martha should be awarded attorneys' fees and expenses of $275, 000" because of amendments to certain employment agreements following "vigorous motion practice." Shortly before expiration of the time to appeal the Court's order granting Martha's fee petition (and within the period prescribed by the March Agreement), Katten moved to intervene, attaching a petition for a charging lien.
Katten moves to intervene pursuant to Court of Chancery 24 (and to file a petition for a charging lien deemed filed nunc pro tunc to the date of the March Agreement), citing its engagement letter with Martha and the common law right to assert an attorney charging lien. Katten highlights its unique interest in relation to the parties to this litigation and their counsel, as well as the March Agreement purportedly justifying its timeline.
Martha opposes intervention, emphasizing "stringent standards" for post-judgment intervention due to concerns about judicial order and prejudice, given the protracted litigation and delayed filing. Martha also focuses on a lack of evidence supporting Katten's contractual right to recover fees from Martha in her capacity as trustee.
Katten replies that the March Agreement precludes a timeliness objection and that its right to recovery would need to be determined at some point after the Court made a fee award. It contends that "stringent standards" do not govern this dispute because the policy reasons underlying any enhanced standards are not applicable. With respect to the engagement letter, Katten argues that an inability to produce the letter is not determinative of the ...