Ferguson v. Williams & Hunt, Inc.

• Decision Date: 31 July 2009
• Docket Number: No. 20080273.,20080273.
• Citation: 2009 UT 49,221 P.3d 205
• Court: Utah Supreme Court
• Parties: Gary B. FERGUSON, Plaintiff and Appellant, v. WILLIAMS & HUNT, INC.; Elliott J. Williams; George A. Hunt; and Kurt Frankenburg, Defendants and Appellees.

221 P.3d 205

2009 UT 49

Gary B. FERGUSON, Plaintiff and Appellant, v. WILLIAMS & HUNT, INC.; Elliott J. Williams; George A. Hunt; and Kurt Frankenburg, Defendants and Appellees.

No. 20080273.

Supreme Court of Utah.

July 31, 2009.

Roy A. Jacobson Jr., Mel C. Orchard III, Jackson, WY, Charles F. Peterson, Boise, ID, Edwin S. Wall, Salt Lake City, for plaintiff.

M. David Eckersley, Salt Lake City, for defendants.

DURHAM, Chief Justice:

INTRODUCTION

¶ 1 Appellant Gary Ferguson appeals the orders of the trial court that dismissed his claims against his former law firm, Williams & Hunt, and former colleagues Elliott Williams, George Hunt, and Kurt Frankenburg (collectively, Defendants). Specifically, Mr. Ferguson asks that we reverse the directed verdict in favor of Defendants on claims of defamation and intentional interference with prospective economic relations, summary judgment in favor of Mr. Frankenburg on claims of defamation and intentional interference, and Defendants' motion in limine.

¶ 2 The claims stem from statements made by Mr. Ferguson's former partners. Mr. Williams told the firm's major client-whom Mr. Ferguson exclusively represented-that the firm had formed the belief it could not trust the accuracy of Mr. Ferguson's bills. The firm then terminated Mr. Ferguson. Months later, Mr. Frankenburg contacted Mr. Ferguson's new firm to warn that Mr. Ferguson was conflicted from certain cases. Because Mr. Ferguson failed to show that Defendants made the statement to their client knowing it was false or with reckless disregard as to its falsity, Defendants did not abuse their conditional privilege. Mr. Ferguson also failed to establish the elements for his other claims. We therefore affirm.

BACKGROUND

¶ 3 In 1991, Gary Ferguson and his partners founded the law firm of Williams & Hunt. Mr. Ferguson worked there as a trial attorney for roughly fourteen years, specializing in medical malpractice defense for the firm's main client, the Utah Medical Insurance Association (UMIA).

¶ 4 At trial Mr. Williams testified that starting in January 2005, Mr. Ferguson began to bill more hours than he normally did. Mr. Ferguson informed his partners of his plans to take upcoming vacations in April and May to spend time with family. Previous to that year, Mr. Ferguson "was pretty steady most of the time" and never billed more than any other attorneys at the firm. But the partners "noticed a substantial change in the number of hours Gary was billing, without observing any change in his work productivity. That is, what he seemed to be doing ... [was] the same as always, but now the hours were greater." Looking at the monthly billing summaries, Mr. Ferguson's "January numbers were off the chart. February followed, also very high. Those two months were definitely different than [the partners had] ... ever seen before." By the end of the first quarter, Mr. Ferguson billed 130 hours more than his baseline for the two previous years, and he out-billed all of the firm's top-billing partners, even the highest billing partner who "worked about seven days a week, most nights, all weekends." Yet the partners observed that Mr. Ferguson "never worked weekends [and] never worked evenings. [To them, t]hat was suspicious. ..."

¶ 5 Also early that year, Mr. Ferguson showed Mr. Williams an unusually high bill of $22,000 for one month of work on a UMIA case. In response, Mr. Williams criticized Mr. Ferguson for spending too much time preparing for a deposition. Mr. Ferguson later sent an e-mail to Mr. Williams stating that he had worked every minute billed in the case and that Mr. Williams should not criticize the time billed without knowing everything. Mr. Williams never asked Mr. Ferguson to cut the time billed.

¶ 6 Because of the high bill and the unusual number of hours, the other partners of the firm grew concerned that Mr. Ferguson was overbilling. Yet, uncertain of Mr. Ferguson's billing practices, they concluded more information was needed. This information came from a compilation of three sources: (1) a computer program, (2) Mr. Ferguson's calendar, and (3) the legal descriptions from Mr. Ferguson's billing statements.

¶ 7 The partners used these three sources to analyze Mr. Ferguson's billing practices. The computer program tracked when Mr. Ferguson logged on and off of his desktop computer. Although the new program had never been used to track time before and the firm did not require attorneys to log on and off computers at the beginning and end of each day, the attorneys at the firm, as a practical matter, logged on to their computers in the morning to get their e-mail and voice mail. The program did not track the time Mr. Ferguson spent working on his laptop or account for billable work done away from the computer, including depositions, appearances in court, or other work outside the office. To address these deficiencies, the partners verified that Mr. Ferguson did not, via laptop, check in or out any documents from their server, which tracked each time a document was entered or modified. Also, the partners obtained access to Mr. Ferguson's calendar to account for his work outside the office. Further, Mr. Ferguson's own description of the billed work "allowed them to see if it was the kind of work customarily done in the office or not."

¶ 8 Using the three sources of information, the partners began to track Mr. Ferguson's billing. On March 23, 2005, the day the computer program became active, Mr. Ferguson's calendar showed he had a medical procedure that morning. The program indicated that Mr. Ferguson logged on to his desktop around noon and that he left about five o'clock. Mr. Ferguson billed 11.25 hours that day. When asked if he worked the 11.25 hours, Mr. Ferguson testified, "I don't remember anything I did on this day, other than the ultrasound; but if I billed it, I did it, and I did it on that day." He also explained that his medical procedure that morning took only about thirty minutes to complete. Looking at his description of work, he testified that the two conferences listed required him to be in the office but that the other work could have been done away from his office. Mr. Ferguson also testified that if he anticipated doing work in the evening, "he would estimate the amount of time and enter it with that batch before [he] left [for] home."

¶ 9 On May 5, 2005, following six weeks of observation, the firm's five main partners, George Hunt, Bruce Jensen, Jody Burnett, Dennis Ferguson, and Elliott Williams, met to discuss Mr. Ferguson's billing practices. "[W]ith about 150 years of combined experience in this kind of work, [the partners] came to the inescapable conclusion that [Mr. Ferguson] was overbilling for what he was doing. It was very obvious." That same day over lunch, Mr. Williams informed the president of UMIA, Martin Oslowski, that "we had formed the belief, after reviewing the information we'd collected, that we could not trust the accuracy of [Mr. Ferguson's] bills. That was the decision we had made; and that was one of the reasons why we had to terminate his employment." At trial, Mr. Williams confirmed his belief:

Q. When you told Mr. Oslowski what you told him, did you believe it?

A. Absolutely.

The firm later credited UMIA $10,000 for the overbilling.

¶ 10 On May 5, 2005, Mr. Williams and Mr. Hunt fired Mr. Ferguson. When asked why, they told Mr. Ferguson, "We concluded that you had over-billed." Mr. Ferguson told them that "[he] had not over-billed UMIA." When Mr. Ferguson questioned what case or what day, they could not point to anything specific. Mr. Ferguson requested time to prove he had not over-billed, but they told him the decision was unanimous. When asked what they told UMIA, Mr. Williams said, "I told Marty that you can no longer trust Gary's bills." Mr. Ferguson replied that Mr. Williams had "poisoned the well at UMIA."

¶ 11 Mr. Ferguson contacted Arthur Glenn, the Vice President of Claims for UMIA, to learn if they had complained of the overbilling; they had not. Rather, Mr. Glenn, who routinely referred cases to Mr. Ferguson and reviewed all the monthly bills, never found any suspicious billing. Even after analyzing the bills a second time and creating a spreadsheet detailing Mr. Ferguson's work and time, Mr. Glenn could not "find anything unusual in the billing that [he] would consider overbilling." Mr. Ferguson asked Mr. Glenn if UMIA would ever refer another case. Mr. Glenn said it was up to Mr. Oslowski and to him "it was an issue of trust." The next day, Mr. Oslowski telephoned Mr. Glenn to tell him "we weren't to assign any more work to Gary."

¶ 12 Mr. Ferguson struggled to find work but finally gained employment with another law firm. He now works as a plaintiffs' lawyer litigating medical malpractice cases. At Williams & Hunt, Mr. Ferguson earned roughly $250,000 per year; at his current firm he has earned $1,082, $22,000, and $67,000 for the 2006, 2007, and 2008 years, respectively.

¶ 13 At his new firm, Mr. Ferguson was contacted by Kurt Frankenburg of Williams & Hunt. Mr. Frankenburg told Mr. Ferguson that under the professional rules of conduct, Mr. Ferguson was conflicted from representing clients in certain cases. One actual conflict existed; the other concerns regarding conflicts were later withdrawn.

¶ 14 Following the above events, Mr. Ferguson and his wife brought suit against Williams & Hunt and individually against Mr. Williams, Mr. Hunt, and Mr. Frankenburg seeking to recover damages for two counts of defamation, the first for Defendants' statement to UMIA, the second for Mr. Frankenburg's statement regarding conflicts; two counts of intentional interference with economic relations, the first with UMIA, the second with Mr. Ferguson's current firm; intentional infliction of emotional distress; wrongful discharge; and loss of consortium. The parties stipulated to the dismissal of the claim for loss of consortium.

¶ 15 Prior to trial Defenda...