Fuston, Petway & French, LLP v. Water Works Bd. of Birmingham, 1180875

CourtSupreme Court of Alabama
Writing for the CourtPER CURIAM.
PartiesFuston, Petway & French, LLP v. The Water Works Board of the City of Birmingham
Decision Date30 June 2021
Docket Number1180875

Fuston, Petway & French, LLP
The Water Works Board of the City of Birmingham



OCTOBER TERM, 2020-2021
June 30, 2021

Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0649), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.

Appeal from Jefferson Circuit Court


Fuston, Petway & French, LLP ("the Firm"), appeals from a summary judgment entered by the Jefferson Circuit Court ("the trial

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court") in favor of The Water Works Board of the City of Birmingham ("the Board") regarding the Board's termination of a contract between the parties.

Facts and Procedural History

In September 2015, the Firm and the Board entered into a one-year contract in which the Firm agreed to provide legal representation for the Board. In 2016, the Firm and the Board entered into negotiations for a new contract. Robert Mims, then the chairman of the Board, approached the Firm regarding the Board's need to have independent oversight and review of a program designed to attract "historically underutilized business entities," such as minority-owned businesses, which the parties refer to as "the HUB program." Several members of the Board were concerned that the HUB program, which was being administered by employees of the Board, was underperforming. One of the members of the Board drafted a memorandum expressing his desire to create a "contract-compliance program" to oversee the HUB program by (1) reviewing and monitoring all Board contracts and non-bid procurements, (2) developing an outreach program to minority-owned businesses to

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solicit contracting and subcontracting opportunities, (3) developing a verifiable method of tracking minority-owned-business data for project utilization and timely payment for services from general contractors, (4) developing written guidelines for contract administration, (5) using bidders conferences to discuss utilization of minority-owned businesses, (6) developing a non-bid process that ensures fair administration and rotation of non-bid work. (7) monitoring and ensuring the legitimacy of contractor quotes submitted with bids in terms of the solicitation effect on minority-owned businesses, (8) engaging the banks that the Board does business with to better assist minority-owned businesses, (9) developing classifications that reflect the types of minorities owning businesses involved in the HUB program, and (10) reaching out to community colleges concerning programs that would aid minority-owned businesses. The Board member requested that $2 million from an economic-development fund be used to finance the contract-compliance program.

At its meeting held on November 10, 2016, the Board agreed to transfer "$2,000,000.00 from its Reserve Fund allotted for Economic Development to its Operational Fund relative to a Contract Compliance

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Program." The adoption of a contract-compliance program was not presented to the Board or voted on at that time.

On November 22, 2016, the Board met and discussed the contract-compliance program and the proposed new contract with the Firm. The minutes of that meeting reflect the following:

"[T]he Board was asked to approve an agreement with Fuston, Petway & French, LLP, as set forth in agenda item 6, to provide general legal services for a three-year period effective November 22, 2016, and to authorize the Chairman to accept said agreement. After the motions were made, Director Lewis indicated she was surprised to see the referenced item on today's agenda because she was not involved in any discussions concerning said agreement. She asked who wrote said agreement and Board Attorney French stated he drafted the agreement, pointing out said Firm's previous agreement that was executed in September 2015 for one (1) year has expired. Director Lewis stated her concern is the stipulations that are in the agreement because they do not protect the Board and they take away its control. Following, Director Lewis inquired as to why the referenced agreement was not discussed with her as a Board member. Attorney French replied he emailed said agreement to all Board members yesterday wherein Director Lewis pointed out said attorney's timeline allowed her less than 24 hours to review the agreement and she added it took more than said hours to prepare the referenced agreement wherein some prior discussion had to have taken place. Subsequently, Director Lewis asked the General Manager when he received said agreement, if he had read it, and if due process had been followed. The General Manager indicated he saw the

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agreement yesterday afternoon. Following, Director Lewis inquired of the whereabouts of 'Exhibit A' that was referenced in the new agreement and Attorney French stated said Exhibit A was not included and indicated it was included in the previous agreement. After reading a portion of the new agreement that mentioned the exhibit as being a part of the new agreement, Director Lewis asked if someone could provide her with a copy. Following, the General Manager said the referenced exhibit in the previous agreement was a rate schedule that listed hourly rates from $125.00 to $250.00. He said the new hourly rate of $275.00 is listed in item six (6) on page three (3) of Attorney French's proposed new agreement. Following, Director Lewis expressed great concern with the Board relative to increasing the attorneys' fees at this point. She said the Board's previous attorneys were paid an hourly rate of $175.00 to $250.00. She also said under the previous agreement, the Board's current attorneys charged hourly rates based on the following: years of experience: 0 - two (2) years $125.00; two (2) - five (5) years $150.00; five (5) - ten (10) years $200,00; ten (10) - 15 years $225.00; and over 15 years $250.00 per hour wherein each lawyer would now be paid $275.00 under the current agreement. Following, Director Lewis asked how long it took the Board's previous attorneys to get a raise and the General Manager stated hourly rates for said attorneys remained the same from 2001 through 2015.

"Following, Director Lewis said the new agreement indicates the Board's current attorneys want to administer the Contract Compliance Program based on stipulations in said agreement. When she questioned whether the Board had voted to initiate said program, Director Muhammad said the Board had agreed. Director Lewis said she believes the Board voted to move $2,000,000.00 and indicated she does not recall the Board voting to start said program. Following, Director

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Muhammad said the Board voted to move the money and to initiate the referenced program. Director McKie said there would be nothing to administer if the Board does not start said program. Director Lewis commented that it is strange such language would be included in the agreement and she again expressed her concern about the verbiage, pointing out according to item 4 on page two (2) of the new agreement, the Board would hand over its power to the attorneys, if it is approved. She then asked why it is not a part of the Board's duties to decide on said program. Director Lewis pointed out that a 'supermajority' of votes would be needed to terminate the new agreement with the Fuston Petway and French law firm and she questioned why the Board would accept an agreement that would be difficult to modify. Director Lewis said the wording is the same as language that was in Russell Management Group, LLC's (RMG) agreement, which the Board later rescinded. Following, Director McKie stated the new agreement would not make it difficult for the Board to make changes or affect how the Board could hire other attorneys to do whatever it could give to its current attorneys. Director Lewis pointed out the previous agreement specified things would be done with the Board's approval wherein such wording is not included in the new agreement. Director Lewis said she had not spoken with Attorney French and noted he does not respond to her emails.

"Subsequently, Director Lewis asked Attorney French why the new agreement indicates his law firm would manage the Contract Compliance Program and Attorney French said he had a conversation with Director Muhammad after the Board voted to approve the budget for said program at the November 10, 2016 Regular Board of Directors' Meeting, relative to his firm administering and helping to oversee the referenced program. Director Lewis asked Attorney French did he not think it would be wise to discuss a $2,000,000.00 project

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with all of the Board members wherein Attorney French stated Director Muhammad indicated he had a two-hour telephone conversation with Director Lewis. Following, Director Lewis stated said discussion did not occur wherein Director Muhammad stated Director Lewis called him and Director Lewis indicated she returned Director Muhammad's call. Director Lewis then asked Attorney French if Director Muhammad had indicated she agreed with him and Attorney French said he believes this would be up to the Board to decide on today. Following, Director Muhammad said the aforementioned telephone conversation lasted two (2) hours, but it was not about the Contract Compliance Program. Director Lewis then asked how said program was included in the new agreement. Director Muhammad said he sent an email to all of the directors prior to the Board voting to move the referenced funds for said program and pointed out that he had also talked with the General Manager. He said in his email he requested that the Board consider the attorneys and independent engineer to administer said program because said entities report to the Board. Director Muhammad added he could easily see how this

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