Buechel v. Bain

Frederick Buechel and Michael Pappas (inventors) (plaintiffs) invented a medical device. John Bain and John Gilfillan (lawyers) (defendants) were partners in a law firm that the inventors hired to prosecute the patent application for their invention. Rhodes was the lawyers’ former partner. Rhodes sued the inventors, seeking payment of legal fees pursuant to a fee agreement. The lawyers were parties to Rhodes’s suit. The inventors filed a counterclaim against Rhodes that challenged the enforceability of the fee agreement. The lawyers were not parties to the inventors’ counterclaim as initially pleaded (which surprised the lawyers), and the lawyers successfully defeated the inventors’ later effort to amend the counterclaim to add them as defendants. After extensive litigation, the court ruled that the fee agreement was unenforceable and thus limited Rhodes to quantum meruit damages. While the Rhodes case was pending, the inventors sued the lawyers, whose payment rights under identical fee agreements were coextensive with Rhodes’s, alleging that the lawyers could not enforce their fee agreements either. After the inventors won their counterclaim against Rhodes, the supreme court ruled that the lawyers were collaterally estopped from arguing that the fee agreement was enforceable. The appellate division affirmed. The lawyers appealed.