Grillo v. Global Patent Grp. LLC
| Decision Date | 30 June 2015 |
| Docket Number | No. ED 101655,ED 101655 |
| Citation | 471 S.W.3d 351 |
| Parties | Salvator J. Grillo, Appellant, v. Global Patent Group LLC and Dennis Bennett, Respondents. |
| Court | Missouri Court of Appeals |
Michael P. Downey, 100 S. 4th Street, Suite 700, St. Louis, MO 63102, for appellant.
Gary A. Growe, 7733 Forsyth Blvd., Suite 325, Clayton, MO 63105, for respondents.
Plaintiffs Salvator Grillo and Global Pharma, L.L.C. (Pharma) (collectively, Plaintiffs) appeal the Circuit Court of St. Louis County's grant of summary judgment to defendants Dennis Bennett and Global Patent Group, L.L.C. (Patent) (collectively, Defendants) on their claims of breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and action for an accounting. Plaintiffs contend that the trial court erred in granting Defendants summary judgment because: (1) section 484.150 of the Missouri Revised Statutespermits a nonlawyer to receive a share of law firm profits; and (2) equity requires Defendants to pay Plaintiffs all promised compensation. We affirm.
Mr. Grillo is a nonlawyer Missouri resident and the sole owner of Pharma. Mr. Bennett is a lawyer licensed to practice law in Missouri and the sole owner of Patent, a law firm organized in Missouri in 2007. Mr. Grillo worked for Patent as a business manager from 2007 until his termination in October 2009.
On May 3, 2012, Plaintiffs filed a petition against Defendants for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and action for an accounting. In their petition, Plaintiffs alleged the following facts: From 2004 to 2007, Mr. Grillo and Mr. Bennett were partners in a pharmaceutical patent business located in Washington, D.C. In 2007, Mr. Grillo and Mr. Bennett dissolved the business “with the intent of reforming a partnership.” Mr. Bennett insisted that Mr. Grillo “transfer the new partnership” to St. Louis. “[R]elying on legal advice from his partner, [Mr. Bennett,]” Mr. Grillo incorporated Patent “on behalf of the partnership” in Missouri in 2007.1At that time, Mr. Bennett and Mr. Grillo “agreed and intended to operate [Patent] in accordance with the previous terms of their [Washington, D.C.] partnership.” Mr. Grillo and Mr. Bennett further agreed that Mr. Grillo would advance start-up expenses and costs and Mr. Grillo and Mr. Bennett would share management responsibilities and “profits and losses equally.” In 2007, Patent reimbursed Mr. Grillo for the start-up costs and expenses, and from 2007 to 2009, Mr. Bennett and Mr. Grillo shared equally in Patent's profits. From October 2009 through 2010, Mr. Grillo received less than half of Patent's profits, and in 2011, Mr. Grillo stopped receiving any share of Patent's profits. Mr. Grillo alleged that he “has not been compensated for his 50% ownership interest in [Patent.]”
Based on the above factual allegations, Plaintiffs raised two claims against Defendants and two claims against Mr. Bennett individually. In Plaintiffs' Count I for breach of contract against Defendants, they asserted that Mr. Grillo and Mr. Bennett “agreed and intended to share [Patent's] profits and losses equally” and Defendants breached the agreement by failing to pay Mr. Grillo's share of the profits. In Count II for breach of the covenant of good faith and fair dealing against Mr. Bennett, Plaintiffs alleged that Mr. Bennett and Mr. Grillo had an attorney-client relationship, Mr. Bennett “promised to act in good faith and fair dealing with [Mr.] Grillo,” and Mr. Bennett “breached the covenant of good faith and fair dealing” by renouncing the parties' agreement. In Count III for breach of fiduciary duty against Mr. Bennett, Plaintiffs claimed that Mr. Bennett breached his fiduciary duties to Mr. Grillo as a principal member of Patent and a licensed attorney because he did not intend to comply with the terms of the parties' agreement. In Count IV against Defendants for action in accounting, Plaintiffs alleged that Mr. Grillo was entitled to an accounting “because he is [Mr. Bennett's] partner” and Mr. Bennett purposefully and fraudulently misallocated Patent's expenses and profits and refused to pay Mr. Grillo his portion of Patent's profits.
Defendants filed their answer denying the petition's allegations and, subsequently, filed a motion for summary judgment on all counts. In their motion, Defendants asserted twenty-nine uncontroverted material facts, including the following: Mr. Bennett is a Missouri-licensed attorney, Mr. Grillo is not a lawyer, and Patent is a law firm in Missouri. Mr. Grillo worked for Patent as an administrative manager, and Patent paid him a salary as an independent contractor. Mr. Grillo understood that he could not be a partner in a Missouri law firm. In October 2009, Mr. Bennett terminated Mr. Grillo's employment with Patent. Mr. Grillo never retained Mr. Bennett as his lawyer, and Mr. Bennett provided no legal advice relating to Patent. In support of their statements of uncontroverted material facts, Defendants attached and cited to Mr. Grillo's and Mr. Bennett's depositions.
Based on their alleged uncontroverted facts, Defendants contended that they were entitled to summary judgment because the alleged verbal partnership and fee-splitting agreement between Mr. Grillo and Mr. Bennett violated Missouri law and rules of professional conduct and was therefore “illegal, invalid, and unenforceable.” Defendants further argued that Counts II, III, and IV failed because “each claim has, at its core, a foundation premised upon the enforceability of a ‘partnership agreement’ between [Mr.] Grillo and [Mr.] Bennett in the ownership, management, and operation of [Mr.] Bennett's law firm.”
In response, Plaintiffs filed a memorandum in opposition to Defendants' motion for summary judgment. In their memorandum, Plaintiffs reasserted that Mr. Grillo is “entitled to a share of the profits of the partnership [Patent]” because Defendants breached their partnership agreement with him. More specifically, Plaintiffs alleged that Mr. Grillo “acted as an equal Partner in [Patent]” and “fulfilled partnership qualities,” including “control of business decisions”; “Bennett advised Grillo that he could remain a silent partner in Missouri”; and “the financial relationship between Grillo and [Patent] was consistent with partnership and entirely inconsistent and beyond the scope of an employee or independent contractor relationship.” Plaintiffs further argued that they were entitled under principles of equity to a “quantum meruit share” of Patent's profits because Mr. Bennett's legal advice “misled” Mr. Grillo into “agreeing to be [a] silent partner” in Patent. Plaintiffs neither denied Defendants' statement of uncontroverted facts nor filed a statement of additional uncontroverted facts.
The trial court held a hearing on Defendants' motion for summary judgment. At the hearing, Plaintiffs moved for leave to amend their petition to add a count of quantum meruit, which Defendants opposed.
After hearing arguments, the trial court issued an order and judgment denying Plaintiffs' motion for leave to amend and granting Defendants' motion for summary judgment. In its judgment, the trial court found that there were no genuine issues of material fact and Defendants were entitled to judgment as a matter of law. The trial court explained that Plaintiffs' claims arose from an “alleged illegal verbal agreement of partnership.” According to the trial court, if such an agreement existed, it would violate Rule 4–5.4 of the Missouri Rules of Professional Conduct and section 484.150, “which both prohibit a licensed attorney or law firm in the State of Missouri from dividing any fees or compensation received from them from the practice of law or in doing law business [with non-lawyers].” The court further stated that it could not consider Plaintiffs' claim “that it would be unjust for the Defendants not to honor the alleged agreement.”
Plaintiffs filed a motion for reconsideration, and the trial court denied the motion. Plaintiffs appeal.
We review a grant of a summary judgment de novo,and view the record in the light most favorable to the party against whom judgment was entered. ITT Commercial Finance Corp. v. Mid–America Marine Supply Corp.,854 S.W.2d 371, 376 (Mo. banc 1993). We assume as true every fact set forth by affidavit or otherwise in support of the moving party's summary judgment motion unless the non-movant has denied it in its response. Id.The non-moving party's response must demonstrate the existence of some genuine dispute relating to a material fact necessary to the plaintiffs right to recover. Id.at 381. This court will uphold summary judgment only if it finds that there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Id.at 376; Rule 74.04(c).
In their first point on appeal, Plaintiffs claim that the trial court erred in granting summary judgment to Defendants because section 484.150“prohibits a lawyer only from dividing fees—not sharing profits—with a nonlawyer.” To support their position, Plaintiffs contend that: (1) reading section 484.150to invalidate profit-sharing agreements would improperly render the later-adopted Rule 4–5.4(a)(4) a ity; (2) permitting profit-sharing arrangements does not provide nonlawyers control over the delivery of legal services; (3) reading section 484.150to invalidate profit-sharing agreements would create an ambiguity that did not exist when the statute was enacted; and (4) long-standing authority allows profit sharing by nonlawyer employees. In response, Defendants assert that section 484.150applied to the agreement between Mr. Grillo and Mr. Bennett and rendered that agreement...
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