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ARROW, EDELSTEIN & GROSS, P.C. v. ROSCO PRODUCTION

April 8, 1982

ARROW, EDELSTEIN & GROSS, P.C., Plaintiff, against ROSCO PRODUCTIONS, INC.; NAVEL ENGAGEMENTS, INC.; MOONPIE MUSIC COMPANY; GARY ROSSINGTON and ALLEN COLLINS, Defendants


The opinion of the court was delivered by: DUFFY

MEMORANDUM & ORDER

Plaintiff, a professional corporation-law firm, brought this suit against the various corporate defendants and the individual defendants Gary Rossington and Allen Collins to recover fees in accordance with what allegedly is a written fee contract. The plaintiff alleges that the individual defendants hired the law firm to negotiate certain agreements in the entertainment field between them and the corporate defendants and that this fee contract provided that the law firm would be paid a percentage of the gross receipts of the various defendants. Defendants originally moved to dismiss Counts II through V which are allegedly based on a September 10, 1979 written contract between the parties. Defendants argued that the alleged written contract had never been signed by the individual defendants on their own behalf or on behalf of any of the corporate defendants. The motion originally was brought under Rule 12(b) of the Federal Rules of Civil Procedure. In view of the fact that a number of affidavits and exhibits were introduced with the original 12(b) motion, I deemed the motion as one for summary judgment under Rule 56 and instructed the parties to submit whatever documents and evidence they deemed appropriate in connection with such a motion.

 From all that is before me, certain facts appear to be beyond dispute. The plaintiff law firm did render some services to the defendants and billed for these services. On September 10, 1979 the plaintiff law firm sent a letter to the defendants which provided "you agree to compensate us for our services by paying to us the sum of five percent (5%) of your gross earnings at the end of each month. You hereby assign to us an interest in such gross earnings to the extent of five percent (5%) thereof." This letter agreement at the bottom stated "Accepted and Agreed" and provided for the signatures of the two individual defendants; however, it was not signed by the defendants. Apparently there were some discussions about affecting the arrangement described in the letter but the content of those discussions is in dispute. In any event, on October 8, 1979, plaintiff sent a revised letter contract to the defendants (dated October 3, 1979) which contained basically the same payment provision quoted above. Similarly this proposed contract was not signed by the individual defendants on their own behalf or on behalf of the corporate defendants.

 On or about December 14, 1979, plaintiff sent another copy of the retainer agreement dated October 3, 1979 to the defendants which suggested that the proposed revised retainer agreement be signed and returned "for posterity." Apparently, this letter evoked a letter from the individual defendants on December 27, 1979, which provides in relevant part:

 
In reply to your letter of December 14 regarding your form of payment. We would like to straighten out, finally, that we do not wish to pay anybody a percentage, and that we would prefer to paying you as we have in the past. Whilst on the subject, we would like to see breakdowns of all invoices in the future.

 Apparently this rejection by the defendants evoked a letter from Mr. Arrow which provided:

 
With respect to fees, I believe I told you in the beginning of our relationship that I didn't particularly care on what basis we charged you. When you explained to me what your overall problems were and your general feelings about things, we changed our usual manner of billing and agreed with you in principle to accept a percentage of your income. Subsequently, you asked for a cut-off of our right to receive income. In the future should you terminate our services and I agree to that because I thought it was fair.
 
When we were in Jacksonville, Gary asked me what would happen if the band was an extraordinary success (as we all hope it will be) and our fees approached some astronomical number. I responded to Gary that, obviously, there is a degree of reasonableness in every decent when we were outside of reasonable boundaries and make an adjustment at that time.
 
I gather from your letter than [sic] you now wish to go on a straight fee basis. Our firm certainly doesn't object to this, particularly since we have never charged Rossington, Collins Band a dollar for our services up to now. If that is your intention, please call me and I will hold the bill on the premise that our fees will generally be computed at the rate of five percent (5%) of income as set forth in the letter.

 Plaintiff has also submitted the affidavit of Joseph F. Rascoff, a C.P.A. who claims that he was the accountant and financial manager for the various defendants during the period from September, 1979 through August 31, 1980. Mr. Rascoff asserts that it was his understanding that the plaintiff was to receive payment on a percentage basis and that he kept the books and records of income of the various defendants in such a manner that the legal fee would be paid on a five percent of gross earnings basis. Mr. Rascoff also sent a letter to plaintiff dated April 8, 1980, which provides:

 
During my visit to Jacksonville last week, Gary and Allen requested (actually insisted) that office disbursements such as telephone, photo-copying, postage etc. not be billed as long as our fees are computed on a percentage basis.
 
[The reference to "our fees" apparently refers not only to the fees of plaintiff but also to Rascoff's own fees.]

 It is to be noted that Counts II through V of the complaint are all derived from the September 10, 1979 letter from the ...


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