Holman v. Coie

• Decision Date: 09 May 1974
• Docket Number: No. 854--42442--III,854--42442--III
• Citation: 522 P.2d 515,11 Wn.App. 195
• Parties: , 72 A.L.R.3d 1209 Francis E. HOLMAN and William M. Holman, Appellants, v. J. Paul COIE et al., Respondents.
• Court: Washington Court of Appeals

Page 195

11 Wn.App. 195

522 P.2d 515, 72 A.L.R.3d 1209

Francis E. HOLMAN and William M. Holman, Appellants, v. J. Paul COIE et al., Respondents.

No. 854--42442--III.

Court of Appeals of Washington, Division 3.

May 9, 1974.

Rehearing Denied June 13, 1974.

Stuart G. Oles and David C. Stewart, of DeGarmo, Leedy, Oles & Morrison, Seattle, for appellants.

William L. Dwyer, of Culp, Dwyer, Guterson & Grader and William A. Helsell, of Helsell, Paul, Fetterman, Todd & Hokanson, Seattle, for respondents (Individuals).

Jack P. Scholfield, of Guttormsen, Scholfield & Stafford, Seattle, for respondents Boeing Co.

MUNSON, Judge.

Plaintiffs complained against their former law partners for their expulsion from the firm, alleging damages resulting from a breach of their partnership agreement, breach of trust, and conspiracy; also against The Boeing Company (hereinafter referred to as Boeing) for alleged tortious interference with plaintiffs' contractual relationship with their former law partners, and conspiracy. Plaintiffs also commenced an action in King County Superior Court for an accounting after their expulsion; this action was terminated when plaintiffs took a voluntary nonsuit.

Plaintiffs appeal from a judgment based upon the granting Plaintiff Francis Holman joined the defendant law firm, of which his father was a senior partner, in 1941. He was made a partner in 1954 and has worked almost exclusively upon legal matters for Boeing, a firm client. Plaintiff William M. Holman joined the firm in 1949, and became a partner in 1957. During his early tenure he had done legal work for Boeing, but he had not done so for many years preceding the plaintiffs' expulsion from the law firm. Plaintiffs' father retired from the law firm in 1962, after a distinguished legal career.

of defendants' motions challenging the sufficiency of the evidence made at the close of plaintiffs' case. We affirm.

The law firm, at the time of commencement of this action, consisted of 22 partners and other associates. Various partnership agreements had been entered into by the partners over the lifetime of this firm. Both plaintiffs were signators to the agreement controlling this action which was effective January 1, 1968. It provided, as had other previous agreements, that the business affairs of the partnership would be administered by an executive committee, comprised of 10 named partners. Both plaintiffs were members of this committee, which had the right to name new members and expel present members from the firm. The possibility of expulsion is mentioned in over a dozen different places throughout the partnership agreement. The agreement states that 'any member may be expelled from the Firm by a majority vote of the Executive Committee,' but does not specify whether expulsion shall be with or without cause or list any of the grounds for expulsion.

Subsequent to plaintiffs' association with the law firm, certain members left the firm to take executive positions with several of the corporate clients of the law firm, including Boeing. William M. Allen, who was a senior partner in the law firm at the time Francis Holman joined it, was the president of Boeing at the time of plaintiffs' expulsion. Likewise, during that period of time, James Prince left the law firm and accepted an executive position with Boeing, as had Lowell P. Mickelwait.

William Holman had, over a period of time, raised questions with the executive committee regarding the inadequacy of the legal rates which the firm charged the Boeing Company. He had also questioned other fee structures and the amount of 'unchargeable time' accumulated by several of the senior partners for other than legal work. There was testimony by another member of the executive committee that, prior to the admission of William Holman to the executive committee, the committee's meetings had been pleasant, friendly, and characterized by a spirit of unselfishness and devotion to the best interests of the firm. However, after admission of the Holmans, there appeared to develop a polarization among the committee, with the Holmans on one side and the remainder of the committee on the other. There is also testimony which would indicate that a number of years prior to the expulsion some consideration had been given to requesting the Holmans to leave the firm. Plaintiffs characterized the discussions over Boeing's fees and other matters as those directly related to the business of the firm and matters which, of necessity, had to be discussed by the managerial committee. They were totally unaware that they were in any way polarizing the members of the committee.

In 1965, with the concurrence of the firm, Francis Holman ran for, and was elected to, the State House of Representatives. In 1968, he ran for, and was elected to the Washington State Senate, without seeking the firm's approval--but no objection was made by any member of the firm. There apparently was some unexpressed disapproval relative to the amount of time consumed in legislative service, and the disproportionate money return, to-wit $3,600 per year. In 1967, his percentage of income from the partnership business was reduced, because of the amount of time he was spending on legislative matters and in legislative service.

There is testimony that in March, 1969, several of the officers of Boeing discussed, with several members of the In mid-April, 1969, Francis Holman made a speech before the State Senate regarding personal property tax legislation which was then before the Senate. There may have been some misstatement in the speech or in the reporting of it; in any event, the speech apparently served to aggravate several of the top officials of Boeing. The speech was not recorded; it was extemporaneous; consequently, there are several versions of exactly what was said. In any event, the following day, upon the request of another senator, one area of comment made during the prior day's speech was clarified by Senator Holman.

executive committee, a newspaper article ¹ written by a political columnist, which characterized Senator Holman as a 'tax reform maverick,' and praised him for his independence from his client, principally Boeing. There is also testimony that in April, 1969, the president of Boeing took issue with legal fees charged by Francis Holman for legal work which he had done for the company. Francis Holman had not been in charge of the billing for the particular work done, nor had he ever been notified of the complaint until after the lawsuit was commenced.

There was also an allegation by one Boeing executive that Francis Holman had exploited his attorney-client relationship with Boeing by using some of the information obtained as its attorney in commenting upon this legislation. ²

In April, preceding the speech, the president of Boeing advised the managing partner of the law firm that they desired Francis Holman to do no further legal work on their behalf. This had not been conveyed to Francis Holman, who was performing his legislative duties in Olympia.

On May 7, 1969, the executive committee--the only absent members being plaintiffs and one other member who was on a European trip--met for 9 1/2 hours in the Olympic Hotel. The room was rented by Boeing on at least a semi-permanent basis. Meals ordered by the members present on May 7 were charged to Boeing, a fact learned by the plaintiffs during discovery proceedings; after that discovery, the law firm reimbursed Boeing. Francis Holman was not notified of the meeting; William Holman had been informed earlier that there would be no executive committee meeting on May 7. The seven partners present discussed in detail whether the Holmans should be expelled from the law firm; the record shows the consensus favored expulsion, although neither a formal vote nor formal action was taken.

The 1969 legislative session ended May 12, 1969. Francis Holman returned home the next day about 6 p.m. He was William Holman surmised that they were about to be expelled, an impression which became a harsh reality when they appeared at the 8 p.m. meeting. The meeting was convened by the managing partner, who then read aloud a resolution which, without giving cause or reasons, expelled them from the partnership. When they asked the reasons for the resolution, none were stated. A vote was taken; by a 7--2 result the partners were expelled. It is this action which serves as the basis for the suit brought against the law firm and Boeing.

then advised by his brother, William, of an executive committee meeting scheduled for 4 p.m. which had been recessed until 8 p.m. because of Francis Holman's absence; and that he had been advised it was particularly important that both Holmans be present.

At the conclusion of the plaintiffs' evidence, and after lengthy argument, the trial court, in an extensive oral opinion, granted defendants' motion to dismiss on the ground of insufficiency of the evidence.

INDIVIDUAL DEFENDANTS

Initially, we examine plaintiffs' position with respect to all the partners of the law firm. The trial court dismissed the action as to all partners of the law firm who were not members of the executive committee stating in its oral opinion that those partners had no power to act and that the record contained no evidence those partners did anything actionable. This was improper. By their partnership agreement, all partners had designated and authorized the executive committee as the managerial body of the firm. Inasmuch as each partner is responsible for the actions of every other partner, the delegation of the managerial function to certain members did not relieve the other partners of the responsibility for their acts. RCW 25.04.090; Dygert v. Hansen, 31 Wash.2d 858, 860, 199 P.2d 596 (1948). Therefore, we find that the dismissal of all partners except those comprising the executive committee was error. However, this is inconsequential unless the dismissal of the members of the...