Honeycutt v. Billingsley
| Decision Date | 08 April 1999 |
| Docket Number | No. 01-95-01099-CV,01-95-01099-CV |
| Citation | 992 S.W.2d 570 |
| Parties | Mary Anne HONEYCUTT and Gene Austin Honeycutt, Appellants, v. Callan M. BILLINGSLEY, Appellee. Callan M. Billingsley, Cross-Appellant, v. Mary Anne Honeycutt and Gene Austin Honeycutt and Carroll Motors, Cross-Appellees. (1st Dist.) |
| Court | Texas Court of Appeals |
Gary L. McConnell, Horseshoe Bay, for Appellant.
Callan M. Billingsley, Boerne, Philip S. Gordon, Houston, for Appellee.
Panel consists of Chief Justice SCHNEIDER and Justices HEDGES and ANDELL.
The central issue in this case is the effect of a referral agreement on a prior contingency fee agreement for legal services. Specifically, does the subsequent referral agreement extinguish, either by way of novation or accord and satisfaction, the rights and obligations created by the previous contingency fee agreement. Appellants, Mary Anne and Gene Honeycutt (the Honeycutts), attack a judgment entered in favor of appellee, Callan M. Billingsley (Billingsley), after a jury awarded Billingsley damages arising out of the breach of a contingency fee agreement with the Honeycutts. Billingsley, as cross-appellant, also appeals from the portion of the judgment that granted a directed verdict on his claims against cross-appellee, Carroll Motor Company (Carroll Motors). On reconsideration, we deny the Honeycutts' motion for rehearing, grant Billingsley's motion for rehearing, withdraw all previous opinions, and issue this opinion in its stead.
On February 2, 1990, Mary Anne Honeycutt was seriously injured when her car was struck by an automobile driven by 90-year-old Clarence Patterson. Carroll Motors owned the car driven by Patterson and had allowed Patterson to drive it.
Mary Anne sought legal assistance from Billingsley, an attorney who had represented Mary Anne and her husband, Gene, on other legal matters. Billingsley had some experience as a personal injury defense lawyer, although at the time, his practice focused on real estate, banking, and bankruptcy law. On February 7, 1990, Mary Anne orally agreed that Billingsley would represent her in her claims against Patterson and Carroll Motors. On that same date, Billingsley sent demand letters to Patterson and Carroll Motors notifying them that he represented Mary Anne, and that he had a contingent fee interest in her claim.
On June 8, 1990, Mary Anne, without Gene being a party, signed a contingent fee agreement with Billingsley. The agreement authorized Billingsley to (1) file and prosecute a lawsuit to judgment, and (2) negotiate a settlement with Patterson and Carroll Motors. The terms of the agreement provided that:
(a) Billingsley was to make no settlement without Mary Anne's approval;
(b) Mary Anne was to make no settlement without Billingsley's consent; and
(c) in consideration for services rendered, and to be rendered to Mary Anne, she granted, sold, assigned, and conveyed as Billingsley's compensation, an undivided interest in her claim as follows: (1) 25% if a settlement was made before suit was filed; or (2) 40% if a collection or settlement was made after suit was filed.
Although Mary Anne's husband, Gene, did not sign the contingency fee agreement, on September 14, 1990, Billingsley filed suit on behalf of both Mary Anne and Gene. Sometime thereafter, Patterson's insurance carrier tendered its policy limits. After discussing the matter with Billingsley, Mary Anne agreed to settle her claim against Patterson for the $20,000 policy limits. Mary Anne was the only participant in the settlement with Patterson because the $20,000 policy limits were not sufficient to cover both her claims and Gene's derivative loss of consortium claims. Furthermore, the insurance company did not insist that Gene release any claims that he might have against Patterson.
Billingsley continued working on the lawsuit by conducting pretrial discovery. Gene and Mary Anne both helped prepare responses to interrogatories. Although most of his conversations were with Mary Anne, Billingsley talked and worked with Gene on several occasions. After Mary Anne underwent surgery, Billingsley felt that the case was becoming too complex and required an attorney who specialized in personal injury trial law.
On April 24, 1991, in a telephone conference with Mary Anne, Billingsley recommended that the case be referred to Brian Jensen, who was board certified in personal injury trial law. Billingsley testified that Mary Ann had no problem with the referral "so long as her fee did not go up."
Billingsley prepared a referral agreement and mailed it to Mary Anne and Gene. In addition to Billingsley and the Honeycutts, Jensen's law firm, Burridge & Jensen, was also a party to the agreement. 1 The referral agreement provided as follows:
This Agreement, entered into this 12th day of June, 1991, by CALLAN M. BILLINGSLEY ("Billingsley"), and LAW OFFICE OF BURRIDGE AND JENSEN ("Burridge and Jensen") and MARY ANNE HONEYCUTT and GENE AUSTIN HONEYCUTT (collectively "Honeycutt").
WHEREAS, Honeycutt has employed Billingsley to represent them in their claim or claims for damages arising out of an automobile accident in which Mary Anne Honeycutt was involved on or about Feb. 2, 1990;
WHEREAS, Billingsley desires to refer Honeycutt's claim or claims for damages arising out of such accident to Burridge & Jensen, who are specialists in the area of personal injury and insurance law;
WHEREAS, Honeycutt desires that Billingsley refer any and all such claims to Burridge and Jensen, and
WHEREAS, the parties desire to set forth in writing the terms of such referral.
NOW, THEREFORE, in consideration of the premises, covenants and conditions contained herein, the parties agree as follows.
Billingsley shall and does hereby refer any and all claims of Honeycutt arising out of the automobile accident in which Mary Ann Honeycutt was involved on or about Feb. 2, 1990, including, but not limited to claims against CLARENCE B. PATTERSON, CARROLL MOTOR COMPANY, their respective insurers, Honeycutt's insurers, and any and all other persons who may be liable to pay Honeycutt, jointly and severally, any sum of money for damages arising out of such accident to Burridge and Jensen. Burridge and Jensen agree to abide by the fee agreement entered into by and between Billingsley and Honeycutt, a true and correct copy of which is attached hereto as Exhibit "A" and incorporated herein by reference. In consideration for Billingsley referring Honeycutt's claims to Burridge and Jensen, and in consideration for Burridge and Jensen handling the prosecution of such claims on behalf of Honeycutt, Burridge & Jensen and Billingsley agree that they will divide any and all attorney's fees, whether such attorney's fees are recovered by settlement, judgment, or otherwise, on a 60% (Burridge & Jensen) 40% (Billingsley) basis. (By way of example, in the event Honeycutts recover the sum of $1,000.00 and reimbursable expenses total $100, Honeycutt would receive $540.00, Burridge & Jensen would receive $216.00 and Billingsley would receive $144.00).
Honeycutt consents to this Referral Agreement as evidenced by their signatures below.
This referral agreement was signed on June 12, 1991. On June 27, 1991, Billingsley withdrew as attorney of record in the trial court, and Jensen was substituted as attorney of record. Like the referral agreement, the motion to withdraw and substitute counsel was signed by Billingsley, Jensen, and the Honeycutts. Between that time and December 1991, at least one deposition was held in Billingsley's office, where he was available for assistance. The Honeycutts admitted that Mary Anne discussed the status of the case with Billingsley even after the referral agreement was signed.
On May 22, 1992, Jensen filed a motion to withdraw as the Honeycutts' counsel. The testimony differs as to what led to the split between Jensen and the Honeycutts. Jensen testified that he discussed a $150,000 settlement demand in December 1991, and that he got Mary Anne's approval to make such a demand. Mary Anne contends that the only settlement demand she approved was for $260,000. Whatever the demand was, Carroll Motors countered with an $8,000 offer. On February 4, 1992, Jensen shared this counteroffer with Billingsley; this is the last time that the record shows that Billingsley was contacted personally about evaluating or contributing to the prosecution of the Honeycutts' claims against Carroll Motors.
Later in February 1992, Jensen told Mary Anne about the settlement impasse. Mary Anne, who was "infuriated," sent a letter to Jensen on March 17, 1992, stating that his $150,000 demand was "unacceptable," and that she wanted a $260,000 demand made. When he received her letter, Jensen immediately called Mary Anne. Mary Anne testified that Jensen refused to submit her suggested demand, a fact Jensen denies. Mary Anne also testified that when she threatened to find another attorney who would make the demand, Jensen told her to go ahead and get another attorney.
On May 22, 1992, Jensen filed a motion to withdraw and to substitute Gary L. McConnell as attorney of record for the Honeycutts. Jensen did not notify Billingsley that McConnell had been substituted as new counsel, and there was no referral agreement between Jensen and McConnell. The Honeycutts admitted in their responses to requests for admissions they never notified Billingsley they had hired McConnell, nor did they inform Billingsley they wanted his services. On December 3, 1992, Billingsley became aware that McConnell had been substituted as attorney of record when McConnell subpoenaed him to testify in the Honeycutts' case against Carroll Motors.
On December 4, 1992,...
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