Grayson & Grayson, P.A. v. Couch

• Decision Date: 04 January 2012
• Docket Number: No. CA 11–189.,CA 11–189.
• Court: Arkansas Court of Appeals
• Parties: GRAYSON & GRAYSON, P.A., Appellant v. David A. COUCH, Appellee.

2012 Ark. App. 20

388 S.W.3d 96

GRAYSON & GRAYSON, P.A., Appellant

v.David A. COUCH, Appellee.

No. CA 11–189.

Court of Appeals of Arkansas.

Jan. 4, 2012.

Charles R. Hicks, Little Rock, for appellant.

Brian Gene Brooks, Greenbrier, for appellee.

DOUG MARTIN, Judge.

[Ark. App. 1]This dispute is between a law firm, appellant Grayson & Grayson, P.A., whose principals are Melanie Grayson and Keith Grayson, and an attorney, appellee David Couch. The circuit court granted summary judgment against both parties. Grayson & Grayson brought this appeal, and Couch filed a cross-appeal. We reverse the summary judgment entered against Grayson & Grayson on its claims against Couch and remand for trial. We affirm the summary judgment entered against Couch on his claims against Grayson & Grayson.

I. Procedural History

According to Grayson & Grayson, the law firm invited Couch to enter into an “of counsel” relationship with it in early fall 2003, after Couch's former partner had ended their [Ark. App. 2]association. The precise terms of the parties' oral agreement are disputed; however, it is not disputed that Couch moved into Grayson & Grayson's law office and was given access to its staff, equipment, and supplies, in exchange for his splitting fees with Grayson & Grayson on some nursing-home cases. On October 8, 2003, Couch formed David A. Couch, PLLC. The parties worked together on some cases and separately on others. A number of clients signed engagement contracts with Grayson & Grayson and Couch; Couch opened probate proceedings for some of them, signing some of the pleadings “Grayson & Grayson, P.A., by David A. Couch.” He signed some settlement agreements in the nursing-home cases as “David A. Couch, Grayson & Grayson,” and used Grayson & Grayson's letterhead. Some fees were paid to the client and Couch. In December 2005, Couch and Keith Grayson met to “square up” some matters; precisely what was discussed is in dispute. In January 2006, however, Grayson & Grayson terminated its relationship with Couch, who moved out of Grayson & Grayson's office space at the end of that month.

On August 24, 2006, Grayson & Grayson filed this action against Couch, individually, and his PLLC, alleging breach of contract and unjust enrichment for their failure to properly split fees collected in settling five lawsuits. Couch's PLLC filed a counterclaim against Grayson & Grayson for one-half of the fee paid to Grayson & Grayson in settling a lawsuit brought by Leister Dewey against Beverly Enterprises. Grayson & Grayson responded that it was holding that fee in trust as a set-off against the amount Couch owed the firm. Grayson & Grayson filed a first amended complaint against Couch and his PLLC in August 2007. In their answer, Couch and his PLLC denied that they had practiced with Grayson & Grayson but stated, “The only affiliation is that the defendants held themselves out to the general [Ark. App. 3]public as ‘Of Counsel.’ ” As before, Couch and the PLLC raised several affirmative defenses, including accord and satisfaction, set-off, and the statute of frauds. In its first amended counterclaim, the PLLC listed other resolved cases for which Grayson & Grayson allegedly owed it fees. In its answer, Grayson & Grayson admitted that “there were agreements between itself and David A. Couch, PLLC concerning work on cases” and that the PLLC was entitled to one-half of the fees from the Dewey case but denied the other allegations.

Grayson & Grayson failed to serve the PLLC with process. Couch and the PLLC moved for partial summary judgment, alleging that Grayson & Grayson did not perform any work on three of the cases; that Melanie Grayson attended two hearings in the probate proceeding in another case; and alternatively, that Grayson & Grayson was barred by accord and satisfaction from sharing fees in four of the cases. Couch and the PLLC also argued that all agreements were with the PLLC, and not Couch, individually. To support the summary-judgment motion, Couch submitted an affidavit in which he stated that he was the president and an employee of the PLLC and that all business conducted with Grayson & Grayson was done on behalf of the PLLC and not himself, individually. To further support his claim that the parties had reached an accord and satisfaction, Couch's affidavit also stated the following:

4. On or about December 16, 2005, Mr. Grayson sent the attached email to me indicating that “Up to now we have been able to work it out informally within the cases we worked on together.” In addition he stated, “Going forward I don't think we will have as many opportunities to do so because of the changes in the nursing home industry.” The email proposed a rent and cost sharing arrangement. At the time I received this email I was on a family vacation in Colorado. When I returned from vacation I countered the proposal. My handwritten notes are on the email which is attached hereto and I also tendered to Grayson & Grayson a check in the amount of $1,250.00 for the monthly rent which was subsequently cashed.

[Ark. App. 4]5. Sometime in mid-January Mr. Grayson came to my office and told me that he did not want to be a landlord and I told him I understood and would find another office. After this meeting I found on my desk the check I had given Grayson & Grayson for rent in the amount of $1,250.00 with an attached note dated 1/17/2006 that stated “Just pay for the days in January you are here. Thanks, KG.” I took this to mean I should find an office in a hurry which I did. I moved on January 30, 2006 and returned to Grayson & Grayson the check in the amount of $1,250.00 which was deposited and cashed.

In support of its response to Couch's motion for summary judgment, Grayson & Grayson filed affidavits from Melanie and Keith Grayson; a letter from Couch to the Chief Counsel at DHS; the affidavit of Rebecca Hepler, a client; engagement contracts with various clients; and a pleading in a probate case that Couch signed on behalf of Grayson & Grayson.

In her affidavit, Melanie Grayson stated:

2. Grayson & Grayson, P.A. had an agreement with Mr. David Couch that he would be “of counsel” with our law firm. We added Mr. David Couch, J.D. as “of counsel” to our letterhead. Our letterhead did not state David Couch, PLLC as being “of counsel.” ... Mr. Couch used this firm letterhead to correspond with various persons.... In addition, Mr. Couch had his own law firm letterhead separate from Grayson & Grayson, P.A. that he used for cases in which he did not share a fee with Grayson & Grayson, P.A.

3. In exchange for Mr. Couch receiving use of Grayson & Grayson, P.A.'s nursing home system, office space, phone lines, fax machines, computer server, secretaries, postage, and copy machines, we agreed to joint venture certain nursing home cases.

4. Mr. Couch never made any statement to me that Grayson & Grayson, P.A. would only get the fee on these cases if work was personally performed by Keith Grayson or me. I considered each of the cases in dispute in this litigation to be Grayson & Grayson, P.A. cases. Jan Armstrong, Grayson & Grayson, P.A.'s legal assistant, at my instruction, then began filing Probate petitions and obtaining orders to have the contingent contracts approved by the various Probate courts. Mr. Couch signed many of these pleadings and orders under the heading of “Grayson & Grayson, P.A.” Again at no time did Mr. Couch ever state to me or, to my knowledge, Keith Grayson, that [Ark. App. 5]Grayson & Grayson, P.A.'s fees in these cases were contingent upon personal work product of Keith Grayson or myself.

5. The medical authorization for these cases list Grayson & Grayson, P.A. as the attorney for the Plaintiff. Records requests for these cases were sent out by Jan Armstrong on Grayson & Grayson, P.A. letterhead. Jan Armstrong, my legal assistant, performed extensive work on these and other cases for Mr. Couch. Grayson & Grayson, P.A. did not receive any separate compensation from David Couch for her services. Grayson & Grayson, P.A. paid all of Jan Armstrong's salary and benefits during this time frame without any contribution from Mr. David Couch or David Couch, PLLC.

....

11. My husband forwarded to me a memo and check from Mr. Couch listing costs and the calculation for the fee divisions on the Forest and Hogue cases. I did not check Mr. Couch's math on the fee division. Mr. Couch had access to the correct numbers. I did not consider payment of costs for these two cases in dispute along with other cases a settlement for the fees owed in [the] Hepler, Hawley, Barnett and Wegman cases. In the Hawkins case, Mr. Couch paid our costs on August 5, 2005, but did not pay our portion of the fee until October 5, 2005.

12. Keith and I discussed our continuing relationship with Mr. Couch. I did not want to be in a position of being a landlord or having to monitor Mr. Couch's usage of our staff and facilities to keep our relationship financially fair. We asked Mr. Couch to move in December of 2005.

13. We have learned that settlement checks in the Hepler, Barnett, and Hawley cases were not made payable to Mr. David Couch, PLLC but were rather made payable to the client and to Mr. David Couch personally.

Keith Grayson's affidavit contained similar statements; in addition, Keith averred the following:

10. Eventually, I began to see that Mr. Couch was working on cases with other lawyers and not having Grayson & Grayson, P.A. participate. These cases were not cases that he sent out joint fee agreements on with Grayson & Grayson, P.A. However, Jan Armstrong performed secretarial work for Mr. Couch on these cases without compensation to Grayson & Grayson, P.A. David Couch wanted the use of our facilities and personnel without payment for them.

11. On or about December, 2005, I caused an email to be sent to Mr. Couch asking him how he saw our business relationship going forward. Mr. Couch responded [Ark. App. 6]in writing that he was willing to pay some...