Daynard v. Mrrm, P.A.
| Decision Date | 02 July 2004 |
| Docket Number | CIV.A. No. 01-10099-WGY. |
| Citation | 335 F.Supp.2d 156 |
| Parties | Richard A. DAYNARD, Plaintiff, v. MRRM, P.A., Ronald Motley, Scruggs, Millette, Bozeman & Dent, P.A., and Richard F. Scruggs, Defendants/Third-Party Plaintiffs, v. CASTANO PLAINTIFFS' LEGAL COMMITTEE a/k/a "Castano Group" Richard Sandman, and Rodman, Rodman & Sandman, P.C., Third-Party Defendants/Counterclaim Plaintiffs. |
| Court | U.S. District Court — District of Massachusetts |
Edward J. Barshak, William L. Boesch, Sugarman, Rogers, Barshak & Cohen, Boston, MA, Holly B. Anderson, Cunningham, Machanic, Cetlin, Johnson & Harney, LLP, Natick, MA, for Plaintiffs.
Mark A. Pogue, Stephen M. Prignano, Annemarie M. Carney, Edwards & Angell, LLP, Providence, RI, Michael E. Mone, Patricia L. Kelly, Esdaile, Barrett & Esdaile, Alan M. Spiro, Edwards & Angell, LLP, Michael D. Lurie, Steven P. Perlmutter, Robinson & Cole, Gabrielle R. Wolohojian, James W. Prendegrast, Jeffrey B. Rudman, Linda M. Ricci, Hale & Dorr, LLP, Boston, MA, for Defendants.
Coale Cooley Leitz, Washington, DC, pro se.
Diane Cooley, Coale Cooley Lietz, Washington, DC, pro se.
David K. Lietz, Coale Cooley Lietz, Washington, DC, pro se.
Carter & Cates, New Orleans, LA, pro se.
Daniel E. Becnel, Jr., Reserve, LA, pro se.
This case involves disputes stemming from the Master Settlement Agreement ("Master Agreement") that resolved litigation against various tobacco manufacturers. The Plaintiff, Richard Daynard ("Daynard"), sued Ronald Motley; Ness, Motley, Loadholt, Richardson & Poole (now MRRM, P.A.; hereinafter "Ness Motley"); Richard F. Scruggs; and Scruggs, Millette, Bozeman & Dent (collectively "Scruggs"), alleging that they failed to pay him an agreed-upon percentage of attorneys' fees generated by the Master Agreement. Ness Motley filed a third-party complaint and Scruggs filed a cross-claim against the Castano Plaintiffs' Legal Committee (the "Castano Group") and its individual members (collectively the "Third-Party Defendants") for allegedly breaching the terms of a memorandum of understanding (the "Memorandum of Understanding") and mutual release (the "Mutual Release") agreed to by the parties to resolve a dispute over attorneys' fees allocation under the Master Agreement. Ness Motley and Scruggs also claimed breach of warranty, indemnification, and negligent misrepresentation. The Third-Party Defendants subsequently filed counterclaims against Ness Motley and Scruggs for allegedly breaching the terms of the Memorandum of Understanding and the covenant of good faith and fair dealing. Daynard has since settled his claims against Ness Motley and Scruggs.
On February 12, 2004, after hearing cross-motions for summary judgment filed by Ness Motley and Scruggs [Doc. No. 301] and the Third-Party Defendants [Doc. No. 305], this Court held that Louisiana law governed the third-party claims and counterclaims. This memorandum explains the reasoning behind the Court's decision.
The facts of this case are documented in four prior decisions of this Court, Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 178 F.Supp.2d 9 (D.Mass.2001) ("Daynard I"); Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 184 F.Supp.2d 55 (D.Mass.2001) ("Daynard II"), rev'd, 290 F.3d 42 (1st Cir.2002); Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 188 F.Supp.2d 115 (D.Mass.2002) ("Daynard III"); Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 284 F.Supp.2d 204 (D.Mass.2003) ("Daynard IV"). Nevertheless, the Court will outline those facts most relevant to the question of what law governs the dispute between Ness Motley and Scruggs and the Third-Party Defendants.
Daynard, a resident of Massachusetts and former member of the Castano Group, is a law professor at Northeastern University specializing in litigation against the tobacco industry. Daynard IV, 284 F.Supp.2d at 208. He alleged in the underlying suit that he provided extensive assistance to Ness Motley, a South Carolina law firm with an office in Louisiana, and Scruggs, a Mississippi law firm, in their lawsuits against the tobacco industry. Id. Daynard further alleged that he and Ness Motley and Scruggs orally agreed that in exchange for his services he would receive a fixed percentage of the attorneys' fees recovered by Ness Motley and Scruggs under the Master Agreement. Id. Ness Motley and Scruggs denied the existence of this arrangement. Id. This Court held in Daynard III, 188 F.Supp.2d at 123, that the law of Massachusetts governed this dispute between Daynard and Ness Motley and Scruggs. The parties have since settled these claims. Daynard IV, 284 F.Supp.2d at 208.
The Castano Group is an unincorporated association of approximately fifty-six lawyers and law firms and has its principal place of business in New Orleans, Louisiana. Id. Twenty-three of the fifty-six lawyers and law firms that compose the Castano Group have their principal place of business in Louisiana. Third-Party Defs./Countercl. Pls.' Reply [Doc. No. 318], Ex. A. The association was formed in January 1994 to prosecute litigation against the tobacco industry. Daynard, 284 F.Supp.2d at 208.
Richard Sandman, a Massachusetts resident, and Rodman, Rodman & Sandman, P.C., located in Massachusetts, are the only remaining individual Castano Group members named as Third-Party Defendants in this case. See id. at 217. There is no evidence in the record that either of these members played any direct role in the negotiation or execution of the Mutual Release or Memorandum of Understanding.
The contract and negligent misrepresentation claims set forth by Ness Motley and Scruggs in this third-party litigation stem from an alleged breach of the Mutual Release. Following the settlement of the majority claims against the tobacco industry, the Castano Group and Ness Motley and Scruggs became involved in a dispute concerning the allotment of attorneys' fees arising out of the Master Agreement. The Castano Group, through its representatives Robert Redfern, Calvin Fayard, and Wendell Gauthier, and Ness Motley and Scruggs attempted to resolve the dispute in late 1999 and early 2000. Defs./Third-Party Pls.' Facts [Doc. No. 316] ¶ 5. The Castano Group sought compensation from Ness Motley for the benefits they had received as a result of the Castano Group's tobacco-related work (the "Common Benefit Claims"). Id. ¶ 6.
Eventually, a Mutual Release was negotiated at meetings in Florida and South Carolina and by telephone from Louisiana, South Carolina, and Mississippi. Third-Party Defs./Countercl. Pls.' Facts ¶¶ 16, 20-22. The Mutual Release, the Memorandum of Understanding, and a side letter between Ness Motley and the Castano Group were drafted by Robert Redfearn in Louisiana. Id. ¶¶ 19-20, 25; Defs./Third-Party Pls.' Facts ¶ 9. The final draft of the Mutual Release contains a representation from the Castano Group that "each and every law firm and lawyer now or formerly comprising part of it" releases Ness Motley and Scruggs "from any and all claims, rights or causes of action ... that may arise out of or relate in anyway to (i)[Ness Motley's or Scruggs'] association, membership and relationship whatsoever with [the Castano Group], and (ii) any claim for fees or reimbursements of costs paid to or to be paid to" Ness Motley and Scruggs pursuant to the Master Agreement. Defs./Third-Party Pls.' Facts, Ex. B (hereinafter "Mutual Release") ¶ 2. In exchange for this release, Ness Motley and Scruggs agreed to assist the Castano Group with their fee arbitration in California's Davis-Ellis case. Defs./Third-Party Pls.' Facts ¶ 8. The Mutual Release was executed by the Castano Group and Mr. Rice in Louisiana. Third-Party Defs./Countercl. Pls.' Facts ¶ 23.
The Mutual Release stated that Mr. Gauthier, as the Castano Group's signatory, was "duly authorized to execute and deliver" the Mutual Release on behalf of the Castano Group. Mutual Release ¶ 3. The Mutual Release was circulated among the Castano Group's members for their individual signatures. Defs./Third-Party Pls.' Facts ¶ 16. Fifty-one attorney members of the Castano Group signed the release, but Daynard did not. Id., Ex. F (Guidroz Dep.) at 46. Daynard later contacted the Castano Group by telephone to explain that he had outstanding issues with Ness Motley and Scruggs regarding legal fees. Id. ¶¶ 27-28.
The Castano Group's alleged misrepresentations regarding their authority to release Daynard's individual claims through the Mutual Release are at the heart of Ness Motley and Scruggs' third-party claims and cross-claims of indemnification, breach of the Mutual Release, breach of warranty, and negligent misrepresentation.
The Memorandum of Understanding was drafted in connection with the Mutual Release and provided that Ness Motley and Scruggs would assist the Castano Group with the fee arbitration in California's Davis-Ellis tobacco litigation. Id. ¶ 43. Specifically, Ness Motley and Scruggs agreed to "work in good faith to assist and support the [Castano Group] in obtaining (i) a fair, reasonable and equitable hearing and result in the Davis-Ellis Fee Arbitration, [and] (ii) an early arbitration date for the Davis-Ellis Fee Arbitration." Id., Ex. J (hereinafter "Memorandum of Understanding") ¶ 1.
The Third-Party Defendants counterclaim that Ness Motley and Scruggs breached the Memorandum of Understanding by delaying the Castano Group's arbitration date and by engaging in bad faith conduct that resulted in a lower arbitration award.
Although this Court previously held that Massachusetts bears the closest relationship to Daynard's original breach of contract claims, Daynard III, 188 F.Supp.2d at 118-23, the Third-Party Defendants have argued that "the third-party claims and crossclaims arise from a different set of facts, albeit...
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