Cooke v. Gillespie

• Decision Date: 01 February 2008
• Docket Number: No. 96,250.,96,250.
• Citation: 176 P.3d 144
• Parties: Polly T. COOKE, Trustee of the Polly. G. Townsend Revocable Trust, Appellant, v. James P. GILLESPIE, Executor of the Warren B. Gillespie Estate, Appellee.
• Court: Kansas Supreme Court

176 P.3d 144

Polly T. COOKE, Trustee of the Polly. G. Townsend Revocable Trust, Appellant, v. James P. GILLESPIE, Executor of the Warren B. Gillespie Estate, Appellee.

No. 96,250.

Supreme Court of Kansas.

February 1, 2008.

Jeffery L. Carmichael, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita, argued the cause and was on the briefs for appellant.

Stephen M. Kerwick, of Foulston Siefkin LLP, of Wichita, argued the cause, and Dennis L. Gillen, of Depew Gillen Rathbun & McInteer, L.C., of Wichita, was with him on the brief for appellee.

The opinion of the court was delivered by NUSS, J.:

This appeal is the latest in a dispute which has spawned over 20 years of litigation, five prior trips to this court, three to our Court of Appeals, and 5 years of litigation in the United States Bankruptcy Court. The current disagreement arises out of an interpleader action to determine distribution of funds that had been withheld from these parties' lawsuit settlement proceeds in order to pay litigation expenses. Upon reversal and remand from the Court of Appeals, Cooke v. Gillespie, No. 91,078, ___ Kan.App. 2d ___, 101 P.3d 740, 2004 WL 2848636 unpublished opinion filed December 10, 2004, the district court ultimately ordered an equitable distribution: the Townsend Trust was to be paid approximately $33,000 and the Gillespie Estate just over $223,000. The Townsend Trustee (Cooke) appealed, and the Gillespie Executor (Gillespie) cross-appealed. We transferred the case from the Court of Appeals on our own motion pursuant to K.S.A. 20-3018(c).

Cooke argues that Gillespie's claims to the funds under quantum meruit, unjust enrichment, or a common fund theory are barred by the statute of limitations because the claims were raised for the first time 7 years after the settlement funds were to be disbursed.

Gillespie denies that the statute of limitations bars his recovery but, if so, argues that it similarly bars Cooke's recovery.

Our holding is based upon a related consideration: Cooke's statute of limitations argument was not preserved for appeal. Accordingly, the decision of the district court is affirmed.

FACTS

These factions have been involved in disputes since 1987. See Seymour v. Thornton, 79 F.3d 980 (10th Cir.1996); Gillespie v. Seymour, 272 Kan. 1387, 39 P.3d 61 (2002); Gillespie v. Seymour, 263 Kan. 650, 952 P.2d 1313 (1998); Gillespie v. Seymour, 255 Kan 774, 877 P.2d 409 (1994); Gillespie v. Seymour, 253 Kan. 169, 853 P.2d 692 (1993); Gillespie v. Seymour, 250 Kan. 123, 823 P.2d 782 (1991); Cooke v. Gillespie, No. 91,078, ___ Kan.App.2d ___, 101 P.3d 740, 2004 WL 2848636, unpublished opinion filed December 10, 2004; Gillespie v. Seymour, 19 Kan. App.2d 754, 876 P.2d 193, rev. denied 255 Kan. 1001 (1994); Gillespie v. Seymour, 14 Kan.App.2d 563, 796 P.2d 1060 (1990).

A recapitulation of certain facts is necessary to understand the present controversy. Many of the facts, which are undisputed, are taken from the Court of Appeals' unpublished opinion in Cooke v. Gillespie, and from the district court's decision on remand: the nunc pro tunc journal entry of judgment dated February 28, 2006.

In August 1987, Polly Gillespie Townsend sought an accounting of the family trust when certain suspicions arose as to the trustees' management. Originally, an attorney represented Polly on an hourly basis. Later, the other trust beneficiaries, her brother Warren Gillespie and their mother Pauline Gillespie, joined as additional plaintiffs. Shortly after the filing of the litigation, Pauline died and her estate was substituted.

After Pauline's death, an attorney sent a proposed joint contingency fee agreement to Polly which provided for a sliding scale of rates ranging from 35% to 50% based on the stage of litigation in which the case was won. The proposal stated that if there was no recovery, there would be no compensation for services except for the out-of-pocket expenses incurred. Polly signed the agreement after crossing out the provision concerning payment of out-of-pocket expenses in the event of no recovery. The contract did not address recovery of out-of-pocket expenses in the event the litigation was successful.

Upon receiving this contract, the attorney contacted Warren and his son James Gillespie concerning fees and expenses. This consultation resulted in a separate fee agreement between Warren and the attorney. According to this agreement, Warren would advance payment for litigation expenses as they were incurred. However, if the litigation was successful, Warren would receive a 5% reduction on his portion of the contingency fee.

Ultimately, after numerous trials and appeals, the case was resolved in favor of the plaintiffs: the Townsends and the Gillespies. Then one of the defendants filed for bankruptcy, at which time Warren and James met with the attorneys and agreed to pay for work on the bankruptcy case on an hourly basis. Polly was not involved in these discussions and did not sign any further agreements.

Prior to the resolution of the bankruptcy case, both Polly and Warren died. Their children, James (Gillespie) and Polly Townsend Cooke (Cooke), were substituted and later became, in their representative capacities, the present parties to this appeal.

In 1995, the case settled and Gillespie and Cooke were awarded approximately $2,250,000 which was split in half between them. Gillespie had to pay 45% out of his half to the attorney and Cooke had to pay 50% of her share to the attorney. Later that year a dispute arose between Gillespie and Cooke over the responsibility for the litigation expenses. A little over $167,000 of Cooke's settlement was set aside in a trust fund pending resolution of these issues. This dispute concerned not only out-of-pocket expenses incurred but also attorney fees incurred due to the bankruptcy litigation.

Gillespie filed a motion asking the court to resolve the dispute under Kansas Rules of Professional Conduct 1.5 (2007 Kan. Ct. R. Annot. 428). District Court Judge Paul Buchanan ruled in favor of Gillespie, i.e., the expenses should be split. After appeal by Cooke, we reversed and remanded on jurisdictional grounds. Gillespie v. Seymour, 263 Kan. 650, 952 P.2d 1313. On remand, Judge Keith Anderson ruled in favor of Gillespie: The expenses should be split.

After another appeal by Cooke, this court decided, on February 1, 2002, that Gillespie "had no standing under a KRPC 1.5(e) application either to test the reasonableness of Polly [Cooke's] separate fee contract, or to seek a resolution of his oral contract dispute with Polly." Gillespie v. Seymour, 272 Kan. at 1394-95, 39 P.3d 61. The case was reversed and the decision of the district court was set aside.

Within 3 weeks after our decision, the Wichita law firm of Young, Bogle, McAusland, Wells & Clark, P.A., (Young, Bogle) the original attorneys for both Cooke and Gillespie in the underlying litigation, filed a petition for interpleader, asking the court to "issue an order determining which of the parties herein is entitled to said trust monies...."

On the motion of Cooke, these funds were paid into court and, subsequently, the parties agreed Young, Bogle could be dismissed. Gillespie lay claim to the funds under a number of theories, including an oral contract, an interpretation of the written contract, quantum meruit, unjust enrichment, and the common fund theory. Gillespie's trial brief identified one of the issues as follows: Are either or both sides of the family's claims against the other side barred by the applicable statutes of limitations?

Cooke then filed a motion for summary judgment, contending that any claim that Gillespie might have to the funds was barred by the statute of limitations. Gillespie filed a cross-motion, arguing that if his claims were barred, Cooke's claims would be barred by the statute of limitations as well. Both of these dispositive motions were heard and eventually denied by a third district court judge, David Kennedy, on January 9, 2003.

Consistent with procedures of the Sedgwick County District Court, the interpleader was then assigned to another judge, Rebecca Pilshaw, for trial. After a bench trial, on June 18, 2003, Judge Pilshaw directly rejected Gillespie's claims based upon a verbal agreement and quantum meruit. Although Cooke had raised the statute of limitations in her motion for summary judgment before Judge Kennedy, and again at trial before Judge Pilshaw, the latter judge did not rule on that issue. She stated: "I do not need under that ruling to reach the issues regarding the statutes of limitations, and I'm not going to rule on those matters."

Gillespie appealed to the Court of Appeals. Among other grounds, he asserted in his brief that Judge Pilshaw erred "in failing to address Gillespie's common fund theory for recovery." By contrast, despite Judge Pilshaw's similar failure to address several of Cooke's defenses, including statute of limitations, Cooke failed to file a cross-appeal. Moreover, Cooke not only failed to raise the statute of limitations defense in her response brief but also argued that the issue was not one before the Court of Appeals, stating:

"Finally, because the case was resolved on other issues, the trial court did not reach the statute of limitations argument. [Citation omitted.] Therefore, the issues remaining from the pretrial conference order and Appellant's trial brief are equitable claims based on the doctrines of common fund and quantum meruit."

On December 10, 2004, the Court of Appeals found that under the common fund theory, as well as under quantum meruit or an unjust enrichment analysis, Cooke should be responsible for payment of an equitable share of the litigation expenses. Cooke v. Gillespie, slip op. at 6. It reversed and remanded for "the determination of an equitable division of the expenses of litigation and a distribution of the funds held by the clerk of the court." Slip op. at 6. As Cooke admits, the...