Graves v. Johnson

• Decision Date: 20 February 2015
• Docket Number: Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 1. ,No. 113064.,113064.
• Citation: 2015 OK CIV APP 81,359 P.3d 1151
• Parties: Cassie GRAVES, Plaintiff/Appellant, v. N. Scott JOHNSON, Defendant/Appellee.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

359 P.3d 1151

2015 OK CIV APP 81

Cassie GRAVES, Plaintiff/Appellant

v.N. Scott JOHNSON, Defendant/Appellee.

No. 113064.

Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 1.

Court of Civil Appeals of Oklahoma, Division No. 1.

Feb. 20, 2015.

Rehearing Denied March 24, 2015.

Richard D. Gibbon, Gibbon, Barron & Barron, P.L.L.C., Tulsa, Oklahoma, for Plaintiff/Appellant.

N. Scott Johnson, N. Scott Johnson & Associates, P.L.L.C., Tulsa, Oklahoma, for Defendant/Appellee.

Opinion

BRIAN JACK GOREE, Presiding Judge.

¶ 1 Plaintiff/Appellant, Cassie Graves (Client), seeks review of the trial court's order granting summary judgment in favor of Defendant/Appellee, N. Scott Johnson (Lawyer) in Client's action for breach of fiduciary duty and breach of the implied covenant of good faith and fair dealing. We affirm because Client's allegations do not state an actionable claim for bad faith and there is no evidence that Lawyer breached a duty that is fiduciary in nature.

¶ 2 Client's petition alleged that she and Lawyer executed an attorney-client contract on March 23, 2001. She alleged that during their initial visit on the same day, she advised Lawyer that she did not have sufficient money or credit to pay a retainer, and he told her that he would proceed with collection of the attorney fees from Client's husband, the petitioner in their divorce action. She alleged he stated that he would file a pleading indicating there was a $10,000.00 retainer in the attorney/client contract.

¶ 3 Client alleged that Lawyer thereafter received payments of $3,500.00 and $5,000.00 from her husband in the divorce, and continued to try to collect the balance of the fee from him until January 2012, when the negotiations failed. She alleged that she received from Lawyer a document entitled “Important Notice,” which sought to collect the balance of Lawyer's fee from her. She alleged that the Important Notice breached the covenant of good faith and fair dealing and breached Lawyer's fiduciary duty to her. She alleged she was confused and frightened by the notice, and it was contrary to his representations and outward actions as to the handling of the divorce proceedings. She alleged she paid Lawyer $5,000.00. She sought compensatory damages for pain and suffering, as well as punitive damages.

¶ 4 Lawyer admitted entering into the attorney-client contract and sending the Important Notice to Client, but otherwise denied the allegations. He moved for summary judgment and submitted a copy of the attorney-client contract.

¶ 5 The contract provided, in part:

2. That the compensation of Attorney will be based upon an hourly rate for all time expended in connection with Client's case....

3. Client agrees to pay a retainer of $10,000....

Client agrees to pay all reasonable expenses incurred by Attorney....

4. Client understands that Client will receive monthly itemized billing statements from Attorney. These statements are due in full upon receipt. Any sums not paid in full within thirty (30) days of the date of the respective monthly statement will accrue interest at the rate of 23.99 percent per annum. Client further understands that his or her account must be paid in full and in a current status not less than ten days prior to trial.

¶ 6 Client objected to the motion for summary judgment, submitting her own affidavit in support. Her affidavit stated:

2. I went to [Lawyer] ... for the purpose of discussing his representation of me in the ... divorce action.... It was determined during our discussion that all of [Lawyer's] legitimate attorney fees for representing me in the divorce action would be collected from [the divorce petitioner] Daniel Graves.

3. [Lawyer] explained to me the need for the written Attorney/Client “Contract” was to have something to present to the Court and to Daniel Graves reflecting [Lawyer's] representation of me in the divorce action.

4. [Lawyer] asked me to sign an already completed Attorney/Client “Contract” which had a blank for the dollar amount of a retainer. He filled in the amount of $10,000 in the blank, in accordance with our agreement to collect his attorney fees from Daniel Graves.

5. I received monthly statements from [Lawyer] which I understood to be in accordance with his statement to me that he needed evidence to present to Mr. Graves. After some months, I received a notice that the account was in arrears and I immediately called [Lawyer's] office to ask what this meant or what are you all doing, and I was told by [Lawyer's] secretary that I should not be concerned and that there was nothing for me to do.

6. An agreement for Daniel Grave's [sic] payment of the entire attorney fee of [Lawyer] was made, which was accepted by [Lawyer]. Yet, this agreement was refused by [Lawyer] after he was told payments would be made monthly instead of by post-dated checks.

7. Contrary to our agreement, [Lawyer], who had knowledge of my IRA, demanded payment from me for his attorney fees. I did make payment to him due to the pressure he placed on me. [Lawyer] has continued to make demands on me for payment of the balance of his attorney bill.

¶ 7 After a hearing, the trial court granted summary judgment in favor of Lawyer. The court acknowledged the existence of a disputed question of fact as to whether Lawyer orally guaranteed that he would seek all fees from Client's husband or merely asserted he would try to collect the attorney fees from him. The trial court noted, however, that Client was not seeking damages for negligence or breach of the written contract, but for breach of fiduciary duty and breach of the implied covenant of good faith and fair dealing. It ruled that Lawyer did not breach any duty to Client by seeking payment of his fees.

I.Standard for Summary Judgment

¶ 8 Client appeals without appellate briefs in conformance with the procedures for the appellate accelerated docket, Okla. Sup. Ct. R. 1.36, 12 O.S. Supp.2013, Ch. 15, App. 1. She contends the trial court erred in granting summary judgment because there are material facts in dispute. The facts she contends are material relate to the terms of the attorney/client contract. Appellate review of a summary judgment is conducted de novo. Manley v. Brown, 1999 OK 79, ¶ 22, 989 P.2d 448. All facts and inferences must be viewed in the light most favorable to the non-movant. Id.

¶ 9 Accordingly, in analyzing Client's claim, we will assume that Lawyer orally guaranteed that he would seek all fees from Client's husband and that he represented that the written contract was merely to present in court as evidence of the fees charged that were to be paid by Client's husband. Client acknowledges that she signed the written contract, albeit without reading it. We will assume that as a result of Lawyer's collection efforts, Client paid to Lawyer the $5,000.00 from her IRA account and suffered mental anguish and anxiety.

II.Breach of the Implied Duty of Good Faith and Fair Dealing

¶ 10 Client contends that every contract contains an implied covenant of good faith and fair dealing, and an attorney-client relationship stems from a contract of adhesion which should be liberally construed to support an action for bad faith.

¶ 11 In Christian v. American Home Assurance Co., 1977 OK 141, 577 P.2d 899, the Supreme Court adopted the rule that an insurer has an implied duty to deal fairly and act in good faith with its insured and that the violation of this duty gives rise to an action in tort for which consequential and, in a proper case, punitive damages may be sought. Christian, ¶ 25. Although it is implied in every contract that the parties will carry out the agreement in good faith, a breach of that duty ordinarily sounds in contract and not tort.¹

¶ 12 Christian recognized that the insurance industry is quasi-public in nature, and subject to governmental regulation. Christian, ¶ 11. Great disparities in economic power and bargaining ability exist between insureds and insurance companies, and a consumer may be without means of protection from instances of abuse. Christian, ¶ 10, citing Fletcher v. Western National Life Ins. Co., 10 Cal.App.3d 376, 89 Cal.Rptr. 78 (1970).

¶ 13 The implied covenant of good faith and fair dealing was adopted as a distinct tort, arising from a duty that is both non-consensual and imposed by law. Christian, ¶ 6. In contrast, the attorney-client relationship is a private, consensual contract and the duties are imposed from the terms of the contract and the professional relationship.² The rationales underpinning Christian are not present in this case and we decline to extend the tort of bad faith to the attorney-client relationship.³

III.Breach of Fiduciary Duty

¶ 14 Client argues Lawyer breached her trust when he failed to follow through with their agreement concerning the collection of his fee. A fiduciary relationship exists between two persons when one of them is under a duty to act or give advice for the benefit of another upon matters within the scope of that relation. May v. The Oklahoma Bank and Trust Company, 2011 OK 52, ¶ 15, n. 3, 261 P.3d 1138. “One standing in a fiduciary relation with another is subject to liability to the other for harm resulting from a breach of duty imposed by the relation.” Schovanec v. Archdiocese of Oklahoma City, 2008 OK 70, ¶ 43, 188 P.3d 158 [quoting Restatement (Second) of Torts 874 cmt. A (1979) ]. The duty is based on the status of the parties and it arises from a relationship of trust and confidence. Lowrance v. Patton, 1985 OK 95, ¶ 18, 710 P.2d 108 ; Panama Processes, S.A. v. Cities Serv. Co.,

1990 OK 66, ¶ 35, 796 P.2d 276. The lawyer-client relationship is a fiduciary relationship. Lowrance v. Patton, 1985 OK 95, ¶ 17, 710 P.2d 108.

¶ 15 The scope of a client's claim against an attorney for breach of fiduciary duty is a question of first impression in Oklahoma. In 2008, The Supreme Court adopted Oklahoma Uniform Jury Instructions 26.1 through 26.5 prescribing the law on the tort of breach of...