Berks v. Cade, 1110423.
| Decision Date | 27 June 2014 |
| Docket Number | 1110423. |
| Citation | 158 So.3d 438 (Mem) |
| Court | Alabama Supreme Court |
| Parties | Martin K. BERKS; Environmental Attorneys Group, LLC ; and Environmental Attorneys Group, P.C. v. Gregory A. CADE et al. |
Richard H. Gill and Ashley N. Penhale of Cooper, Franco, Screws & Gill, PA, Montgomery; and Kevin D. Graham, Mobile, for appellants.
Romaine S. Scott III of Scott & Scott, LLC, Fairhope, for appellees.
On Application for Rehearing
APPLICATION OVERRULED. NO OPINION.
I concur in overruling the application for rehearing.
The present appeal arises from the most recent case in a series of actions stemming from the dissolution of Environmental Attorneys Group, LLC, a law firm (“EAG, LLC”), and the competing claims of the various parties, who are former partners in and/or employees of EAG, LLC, to certain fees. The defendants/counterclaim plaintiffs below—Martin K. Berks, EAG, LLC, and Environmental Attorneys Group, P.C. (“EAG, P.C.”)—appeal from the trial court's order dismissing, with prejudice, their counterclaim and third-party complaint.
On original submission, this Court affirmed the trial court's judgment, without an opinion. Berks v. Cade (No. 1110423, October 18, 2013). On rehearing, the appellants object to both this Court's affirmance and its decision not to issue an opinion. I write specially to explain why I concur with both decisions.
In 1989, J. William Lewis formed Environmental Litigation Group, P.C. (“ELG, P.C.”), a law firm specializing in toxic-tort representation.1 Berks and Mark Rowe were both subsequently employed by ELG, P.C., as attorneys, and Cade was employed, beginning in 1993, as a paralegal/investigator.
In 2001, Berks and Rowe formed EAG, LLC. Pursuant to the articles of incorporation, Berks and Rowe were the sole members of EAG, LLC, and each retained a 50% ownership interest. At some point thereafter, Cade was hired by EAG, LLC, as a paralegal. Cade subsequently obtained his juris doctorate and passed the Alabama bar examination and was employed by EAG, LLC, as an associate attorney.
In 2004, Cade planned to separate from EAG, LLC, and EAG, LLC,2 sued Cade in the Jefferson Circuit Court (CV–04–0752) seeking injunctive relief against Cade, who, it alleged, was attempting to “steal cases from EAG, [LLC,] ... by signing [engagement] contracts in his own name instead of the EAG [, LLC,] name.” Following court-ordered mediation, the parties ultimately resolved their dispute. The terms of the negotiated settlement agreement provided, in pertinent part:
The case was thereafter dismissed with prejudice and the record sealed.
Also in 2004, Berks communicated to the existing clients of EAG, LLC, his intention to leave EAG, LLC, and to form EAG, P.C., a new law firm formed solely by Berks. In conjunction with that plan, Berks requested that clients of EAG, LLC, sign new engagement contracts with EAG, P.C. Ultimately, Rowe separately formed The Rowe Law Firm, LLC, on April 2, 2004; Cade formed The Cade Law Firm, LLC, on that same date; and Berks formed EAG, P.C., on April 5, 2004. EAG, LLC, effectively ceased operation in February 2004, but the firm was not then dissolved.3
On March 1, 2005, Cade replaced Lewis as a shareholder, director, officer, and employee of ELG, P.C.4 When Cade joined ELG, P.C., it and Cade jointly continued to represent Cade's existing clients, including those referenced in the 2004 settlement agreement.
In February 2006, Rowe sued Berks and Berks's law firm, EAG, P.C., in the Jefferson Circuit Court (CV–06–749). Rowe's claims were resolved via mediation in July 2006, and that action was subsequently dismissed. As part of their mediated settlement, Rowe and Berks agreed “to the dissolution of EAG, LLC pursuant to the applicable provisions of the Operating Agreement.”5
Although Berks and EAG, P.C., subsequently sought to have the 2006 negotiated settlement set aside, the trial court denied that request and Berks's subsequent appeal was apparently dismissed without opinion. In August 2007, Rowe accepted employment with ELG, P.C.—where Cade worked—as an associate attorney.
In November 2008, Cade and his employer, ELG, P.C. (hereinafter sometimes collectively referred to as “the plaintiffs”), sued Berks; EAG, LLC; and Berks's firm, EAG, P.C. (hereinafter sometimes collectively referred to as “the defendants”); and various fictitiously named defendants in the Jefferson Circuit Court. Specifically, the verified complaint included the following counts:
| Count I | Injunctive Relief | |
| Count II | Breach of Contract | |
| Count III | Tortious Interference | |
| Count IV | Conspiracy to Tortiously Interfere with Contracts | |
| Count V | Fraudulent Inducement Regarding Settlement Agreement | |
| Count VI | Conversion of Attorney Fees (Gandy and Bubbett cases) | |
| Count VII | Declaratory Judgment7 | |
| Count VIII | Accounting |
The defendants subsequently answered and counterclaimed, alleging that they had complied in all respects with the terms of the 2004 settlement agreement but that Cade had repeatedly breached that agreement.8 Their counterclaim included the following counts:
Rowe subsequently moved, pursuant to Rule 24(a), Ala. R. Civ. P., to intervene in the underlying case. In support of his request, Rowe alleged both “[t]hat the entity known as [EAG, LLC], is still an active limited liability corporation and has not been closed” and that Rowe “ha[d] a property interest in any claims made for attorney fees on behalf of [EAG, LLC].”10 Upon an emergency motion by the defendants, the trial court ordered that the plaintiffs pay the clerk of the trial court the $2,399,125 fee received by them in conjunction with the resolution of the Florala cases. That same order granted, per the parties' stipulation in open court, Rowe's motion to intervene and his alignment as a plaintiff. The trial court, however, subsequently granted the plaintiffs' “Motion to Reconsider” and rescinded the portion of the order requiring the plaintiffs to pay the designated amount to the clerk.
In March 2009, Rowe demanded, pursuant to the terms of the 2006 mediated settlement agreement, that Berks take steps to formally dissolve EAG, LLC. Also in 2009, Berks and EAG, LLC, filed a third-party complaint against Lewis, the founder of ELG, P.C.—the firm Cade worked for—and against Robert L. Palmer, then a member and the president of ELG, P.C. That pleading alleged that Palmer and Lewis had “intentionally and maliciously interfered with Cade's performance of the terms of the [2004] Settlement Agreement....”
Lewis and Palmer later moved to dismiss the third-party complaint on, among others, the following grounds:
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Williams v. White
...Town of Argo, 871 So.2d 1, 20 (Ala.2003) (quoting Dykes v. Lane Trucking, Inc., 652 So.2d 248, 251 (Ala.1994) ); see also Berks v. Cade, 158 So.3d 438, 453 (Ala.2014) (same); O'Barr v. O'Barr, 163 So.3d 1076, 1082 (Ala.Civ.App.2014) (same); and Alabama Dep't of Labor v. Dental Referral Serv......