Ex Parte Bland
| Decision Date | 22 September 2008 |
| Docket Number | No. 26547.,26547. |
| Court | South Carolina Supreme Court |
| Parties | Ex parte Eric Steven BLAND and Ronald L. Richter, Jr., Respondents, In re James W. Myrick, Pinnacle Land & Timber Co., Inc., High Bluff Developers, LLC, and Shoreline Investments, Plaintiffs, v. Nexsen Pruet Jacobs Pollard & Robinson, LLP, and Neil C. Robinson, Appellants. |
G. Trenholm Walker, of Pratt-Thomas Epting & Walker, of Charleston, for Appellants.
William C. Helms, III, John W. Fletcher, and Rodney K.E. Mintz, all of Barnwell Whaley Patterson & Helms, of Charleston, for Respondents.
This appeal arises out of a claim that two attorneys violated a court order related to discovery and breached a settlement agreement containing a non-disclosure and confidentiality clause. The trial court held that the attorneys had not materially breached the court's order or the settlement agreement, declined to award damages or equitable relief, and declined to hold the attorneys in contempt. This appeal followed.
We reverse the trial court's decision and hold that the attorneys clearly breached the protective order and settlement agreement, and that the trial court therefore erred in declining to hold the attorneys in contempt. We accordingly order the respondents to perform specific actions to cure the breach of the protective order and settlement agreement, and we remand this matter to the trial court to determine the amount of attorneys' fees to be awarded to Nexsen Pruet under the settlement agreement, as well as the appropriate sanction for our finding of contempt.
Appellants Neil C. Robinson and the law firm Nexsen Pruet Jacobs Pollard Robinson (collectively "Nexsen Pruet") brought a motion in the trial court requesting that the court find that the respondents, Eric S. Bland and Ronald L. Richter, Jr., violated a protective order and a settlement agreement entered in litigation between Nexsen Pruet and the plaintiffs captioned in this action. Bland and Richter represented the plaintiffs in the merits phase of the litigation, and in order to provide a complete factual background for this appeal, it is necessary to recap the events leading up to the lawsuit and the settlement.
The litigation underlying this appeal began when the plaintiffs captioned in this action, James W. Myrick, Pinnacle Land Timber Company, High Bluff Developers, and Shoreline Development (collectively "Myrick") sued Nexsen Pruet alleging legal malpractice. Myrick's claim was based on a purported conflict of interest in Nexsen Pruet's alleged representation of both Myrick and a competitor in a prospective real estate transaction. In his discovery requests, Myrick sought several of Nexsen Pruet's internal documents such as billing records, financial statements, and policy manuals outlining Nexsen Pruet's procedure for checking for conflicts of interest. As part of its response to this discovery, Nexsen Pruet produced several documents which the parties collectively refer to as a "policy manual" for opening files and checking conflicts. The parties entered into a protective order which provided that all documents marked by the parties as "confidential" would be used "only for purposes of this litigation," and contained a stipulation that all internal materials related to Nexsen Pruet's policies and procedures would be treated as confidential material. Most importantly, the order expressly prohibited the use of confidential material in any other litigation "or for any other purpose," and required that all confidential material be returned upon written demand at the conclusion of the litigation.
The parties eventually settled the case and entered into a consent order of dismissal. The settlement agreement contained a "covenant of strict confidentiality" which provided:
The parties to this settlement agreement and release agree that the terms and conditions of this settlement agreement and release, including but not limited to the amount of the payment, shall be held in strict confidence and shall not be disclosed to any person.... If asked about the settlement, the parties hereto agree that the only affirmative response shall be that the matter was resolved to the mutual satisfaction of the parties.
Additionally, the settlement agreement contained a provision entitled "enforcement of confidentiality." That clause provided:
The parties to this [settlement agreement] hereto acknowledge and agree:
(a)that the covenant of confidentiality is a material and essential term of the [settlement agreement] ...
(b)that a violation of the covenant of confidentiality will necessarily cause damages and injury to the non-breaching party ... and
(c)that neither monetary damages nor any other remedy at law may be adequate or sufficient to protect the non-breaching parties if there is a breach, and that, because such damages are difficult to calculate, $10,000 shall constitute a reasonable and fair estimate of the minimum damages to be suffered ... as a result of such breach. If [] an action or motion is brought and a violation of the covenant of confidentiality is demonstrated and supported by affidavit or other proof, the breaching persons shall be liable, at a minimum, for the liquidated damages set forth herein ($10,000), any additional damages as may be proven, and for the attorney's fees and costs incurred of the non-breaching party bringing the proceeding.
Myrick, Bland, and Richter executed the settlement agreement, and it is instructive to note that the settlement agreement contained an attestation that all materials designated as confidential in the protective order had been either returned to Nexsen Pruet or destroyed.1
About two years after the parties executed the settlement agreement, Bland and Richter filed a complaint alleging legal malpractice against Nexsen Pruet on behalf of Frank Robertson, another former client of the firm. Bland and Richter again sought discovery of several of Nexsen Pruet's internal documents. During discovery, Bland and Richter apparently grew concerned that although they requested an "entire Nexsen Pruet manual" related to conflicts of interest, they initially received only a few redacted pages and not the full policy manual received in the Myrick case. At some point, Bland and Richter discovered that they were in fact still in possession of copies of the policy manual which had been produced in the Myrick litigation. Bland and Richer alleged that they had overlooked these copies in their attempts to purge their files of confidential material because the copies were attached as exhibits to depositions in the Myrick case.
Bland and Richter notified Nexsen Pruet's counsel in the Robertson litigation that they were in possession of "the entire [Nexsen Pruet] manual," and shortly thereafter, Bland and Richter introduced the policy manual as an exhibit during the deposition of Nexsen Pruet's corporate designee for discovery. Nexsen Pruet's then-counsel contacted the Charleston attorney who represented Nexsen Pruet in the Myrick litigation and allegedly informed him how discovery had proceeded with respect to the policy manual. Shortly after this contact, Nexsen Pruet filed a motion under the caption of the Myrick case to enforce the settlement agreement. Nexsen Pruet alleged that Bland and Richter had violated the terms of the protective order as well as the settlement agreement, and Nexsen Pruet requested damages, attorneys' fees, and a determination of whether Bland and Richter were in contempt.
While Bland and Richter argued that their continued possession of the policy manual was inadvertent, Nexsen Pruet argued that it was calculated and deliberate. In support of their contention, Nexsen Pruet offered printouts from Bland and Richter's firm website which touted the amount of a settlement of "a legal malpractice/breach of fiduciary claim against one of South Carolina's largest firms," as well as e-mails from Bland to Nexsen Pruet's counsel in the Robertson litigation containing inflammatory and inappropriate language. Nexsen Pruet additionally offered a picture of a display in Bland and Richter's office. This picture shows Richter holding a blow-up of a check that is drafted payable to "Bland Law Firm and Richter Law Firm, and their client James W. Myrick." The amount of the check is listed as "$$$$$$$$ Big Money $$$$$$$$." Bland is positioned to one side of the check and is shaking the hand of a person on the opposite of the check. The face of Neil C. Robinson, the Nexsen Pruet attorney whose conduct was primarily at issue in the Myrick case, is super-imposed over the face of the person shaking Bland's hand in the display.
The trial court held that Bland and Richter had not materially breached the protective order or the settlement agreement, declined to award any damages or equitable relief, and declined to hold either Bland or Richter in contempt. The trial court specifically held that Bland and Richter's possession of the policy manual was an unintentional oversight, that there was no evidence of an inappropriate intent to harm, and that upon discovering that they were still in possession of the policy manual, Bland and Richter immediately contacted Nexsen Pruet's counsel in the Robertson case. Nexsen Pruet appealed.
This Court certified the appeal from the court of appeals pursuant to Rule 204(b), SCACR. Nexsen Pruet presents the following issues for review:
I. Did the trial court err in holding that Bland and Richter did not violate the protective order and the settlement agreement by retaining the policy manual and by introducing the manual in subsequent litigation?
II. Did the trial court err in holding that neither Bland and Richter's website testimonial nor their office display violated the settlement agreement's covenant of confidentiality?
III. Did the trial court err in failing to...
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