Hall v. Envtl. Litig. Grp., P.C.

• Citation: 157 So.3d 876
• Decision Date: 20 June 2014
• Docket Number: 1130301.
• Parties: Mary HALL, personal representative of the Estate of Adolphus Hall, Sr., and Anaya McKinnon, personal representative of the Estate of Wanzy Lee Bowman v. ENVIRONMENTAL LITIGATION GROUP, P.C.
• Court: Supreme Court of Alabama

157 So.3d 876

Mary HALL, personal representative of the Estate of Adolphus Hall, Sr., and Anaya McKinnon, personal representative of the Estate of Wanzy Lee Bowman

v.ENVIRONMENTAL LITIGATION GROUP, P.C.

1130301.

Supreme Court of Alabama.

June 20, 2014.

Kearney Dee Hutsler, Birmingham, for appellants.

Romaine S. Scott III and Rita H. Scott for Scott & Scott Law, LLC, Fairhope, for appellee.

Opinion

BRYAN, Justice.

Mary Hall, the personal representative of the estate of Adolphus Hall, Sr., and Anaya McKinnon, the personal representative of the estate of Wanzy Lee Bowman (hereinafter collectively referred to as “the plaintiffs”), appeal from the Jefferson Circuit Court's order dismissing their complaint filed against Environmental Litigation Group, P.C., a law firm (“ELG”). For the reasons set forth herein, we reverse and remand.

Facts and Procedural History

On March 19, 2013, the plaintiffs filed a complaint in the Jefferson Circuit Court against ELG, requesting a declaratory judgment and alleging one count of unjust enrichment and one count of breach of contract. The plaintiffs asserted those claims on behalf of the estates they represented and on behalf of “others similarly situated as a class action pursuant to Rule 23,” Ala. R. Civ. P. The plaintiffs' complaint included the following factual allegations: in the 1990s, ELG agreed to represent hundreds of clients who had been exposed to asbestos, including Adolphus Hall and Bowman; ELG entered into an attorney-employment agreement with each client; pursuant to that agreement, ELG agreed to “take all legal steps necessary to enforce the said tort claim,” and in return ELG would receive 40% of amounts collected from any settlement or judgment as its fee; the agreement also permitted ELG to reimburse itself for reasonable expenses related to the clients' claims; on February 23, 2012, ELG sent a memorandum to all of its “asbestos clients” stating that, as a result of additional work required to obtain the proceeds of a settlement that ELG had negotiated, ELG would begin charging an “administrative-service-expense charge” in the amount of $250 for living clients and $600 for clients who were deceased, which could be deducted from settlement proceeds due to be passed on to the client; between April 2011 and July 2012, the estate of Adolphus Hall received settlement proceeds from three asbestos defendants and, from those proceeds, ELG deducted $192.01 in expenses and a $600 administrative-service-expense charge, in addition to deducting 40% of the settlement proceeds as an attorney fee; and, in December 2012, the estate of Wanzy Lee Bowman received settlement proceeds from one asbestos defendant and ELG deducted $68.64 as an “administrative credit” in addition to deducting 40% of the proceeds as an attorney fee. The plaintiffs alleged that the administrative-service-expense charge “is nothing more than an extra attorney fee collected by ELG in addition to the 40% contingent fee” provided as the attorney fee in the attorney-employment agreement.

The plaintiffs asked the circuit court to enter an order declaring that ELG had breached the attorney-employment agreement “by charging, without legal authority, more than 40% for attorney staff services”; that ELG had been unjustly enriched by its wrongful activities; that the plaintiffs were due monetary relief; and that the plaintiffs were entitled to recover an attorney fee and reasonable expenses related to the prosecution of this action. In addition, the plaintiffs alleged separate counts of unjust enrichment and breach of contract, which were based on ELG's alleged breach of the attorney-employment agreement.

In response to the plaintiffs' complaint, ELG moved the circuit court to dismiss the complaint pursuant to Rule 12(b)(6), Ala. R. Civ. P., for failure to state a claim upon which relief could be granted.¹ ELG attached several documents to its motion to dismiss, including the attorney-employment agreement signed by Adolphus Hall and Mary Hall, the attorney-employment agreement signed by Bowman, and an “adoption and ratification” of Bowman's attorney-employment agreement signed by McKinnon. ELG also attached the memorandum dated February 23, 2012, from ELG to its asbestos clients informing them of the implementation of the administrative-service-expense charge.

ELG subsequently filed a supplement to its motion to dismiss, arguing that the plaintiffs had, “in essence, ... asserted that ELG has charged its clients an excessive fee and [they] ask this court to enter a declaratory judgment to that effect.” ELG further argued, among other things, that Rule 1.5, Ala. R. Prof. Cond., directly addresses the issue of excessive attorney fees;² that the Alabama State Bar was not a party to the action; and that a declaratory judgment in the present case would constitute only an advisory opinion by the circuit court because, it argued, the Alabama State Bar has sole authority to enforce the Alabama Rules of Professional Conduct and to determine whether an attorney fee is excessive under Rule 1.5. Thus, ELG argued, the circuit court was required to dismiss the plaintiffs' complaint for lack of subject-matter jurisdiction. See Rule 12(b)(1), Ala. R. Civ. P. (providing that “lack of jurisdiction over the subject matter” is a defense that may be made by motion). ELG cited B.W.T. v. Haynes & Haynes, P.C., 20 So.3d 815, 822 (Ala.Civ.App.2009), to support its position. The plaintiffs filed a response to ELG's motion to dismiss, arguing, among other things, that their complaint was not “based merely on an ethics charge of ‘excessive fees' ” but was based on an allegation that “ELG ha[d] breached the terms of the [attorney-employment agreement,] which ELG drafted and entered into with each client.”

On June 19, 2013, the circuit court entered an order denying ELG's motion to dismiss and ordered “review by the Alabama State Bar as it relates to Rule 1.5 of the Alabama Rules of Professional Conduct.” The circuit court stayed the proceedings “until ruling from the Alabama State Bar.”

On September 4, 2013, the plaintiffs filed a motion to reconsider the circuit court's June 19 order. The plaintiffs alleged that, in the time that had passed since the entry of that order, the Alabama State Bar had not responded to the circuit court's order. The plaintiffs also reiterated that their complaint was based on a breach of contract by ELG, not a purported violation of the Alabama Rules of Professional Conduct by ELG. In response, ELG filed another motion to dismiss the plaintiffs' complaint because, it alleged, the circuit court was without subject-matter jurisdiction. ELG argued that the Disciplinary Commission and the Disciplinary Board of the Alabama State Bar have exclusive disciplinary jurisdiction over attorneys admitted to practice law in Alabama and that “the only claim made by the plaintiffs—that ELG is engaging in professional misconduct by charging excessive fees—falls outside the [circuit] court's jurisdiction.”

On November 20, 2013, the circuit entered an order denying the plaintiffs' motion to reconsider its June 19 order and dismissing the case with prejudice. The plaintiffs timely filed a notice of appeal. On appeal, the plaintiffs argue that the circuit court erred in dismissing their complaint because, they say, the allegations in their complaint articulated a breach-of- contract claim against ELG and because their complaint was not an ethics complaint against ELG, which, they contend, would have been subject to the exclusive jurisdiction of the Alabama State Bar. In response, ELG asserts that the circuit court properly dismissed the plaintiffs' complaint because, ELG says, the circuit court did not have subject-matter jurisdiction over the plaintiffs' complaint.

Discussion

In Newman v. Savas, 878 So.2d 1147 (Ala.2003), this Court set forth the standard of review of a ruling on a motion to dismiss for lack of subject-matter jurisdiction:

“A ruling on a motion to dismiss is reviewed without a presumption of correctness. Nance v. Matthews, 622 So.2d 297, 299 (Ala.1993). This Court must accept the allegations of the complaint as true. Creola Land Dev., Inc. v. Bentbrooke Housing, L.L.C., 828 So.2d 285, 288 (Ala.2002). Furthermore, in reviewing a ruling on a motion to dismiss we will not consider whether the pleader will ultimately prevail but whether the pleader may possibly prevail. Nance, 622 So.2d at 299.”

878 So.2d at 1148–49.

ELG argued below, and maintains on appeal, that the Court of Civil Appeals' decision in B.W.T. v. Haynes & Haynes, P.C., supra, required the dismissal of the plaintiffs' complaint for lack of subject-matter jurisdiction. The plaintiffs argued below, and they maintain on appeal, that B.W.T. is distinguishable from the present case.

In B.W.T., B.W.T., the client and an attorney, entered into a fee agreement with Haynes & Haynes, P.C. (“the law firm”), which had agreed to represent B.W.T. in an employment-discrimination case. Pursuant to the fee agreement, the law firm was entitled to 45% of all amounts recovered as a result of a judgment or settlement in favor of B.W.T., plus expenses incurred by the law firm. In addition, the law firm was entitled to 100% of any attorney-fee award assessed against the adverse party. In the employment-discrimination action, the jury returned a verdict in favor of B.W.T., and B.W.T. was awarded attorney fees in the trial court and on appeal; the total award to be divided between B.W.T. and the law firm was $437,920. When the law firm proposed to give B.W.T. only $127,034.82 as his portion of the recovery, B.W.T. objected and sent the law firm several opinions from other jurisdictions holding that an attorney is not entitled to recover a contingency fee in addition to court-ordered attorney fees...