Jones v. Mackey Price Thompson & Ostler

• Decision Date: 28 July 2015
• Docket Number: No. 20130135.,20130135.
• Parties: Gregory N. JONES, Appellant, v. MACKEY PRICE THOMPSON & OSTLER,Appellees.
• Court: Utah Supreme Court

355 P.3d 1000

2015 UT 60

Gregory N. JONES, Appellant

v.MACKEY PRICE THOMPSON & OSTLER¹ Appellees.

No. 20130135.

Supreme Court of Utah.

July 28, 2015.

James D. Gilson, J. Tayler Fox, Salt Lake City, for appellant.

Thomas R. Karrenberg, Salt Lake City, for appellees, Mackey Price Thompson & Ostler, Randall A. Mackey, and Gifford W. Price.

Blake T. Ostler, Salt Lake City, for appellees, C. Jeffrey Thompson, Russell C. Skousen, Thompson & Skousen, L.L.C., and Russell C. Skousen, L.L.C.

Chief Justice DURRANT authored the opinion of the Court, in which Associate Chief Justice LEE, Justice DURHAM, Justice PARRISH, and Judge LAWRENCE joined.

Due to his retirement, Justice NEHRING did not participate herein; Third District Judge BARRY G. LAWRENCE sat.

Justice DENO G. HIMONAS became a member of the Court on February 13, 2015, after oral argument in this matter, and accordingly did not participate.

Chief Justice DURRANT, opinion of the Court:

Introduction

¶ 1 This case arises out of a dispute over compensation paid to an attorney, Gregory Jones, by the law firm Mackey Price Thompson & Ostler (Mackey Price) for work Mr. Jones performed on several class-action contingency fee cases involving the weight-loss pill Fen–Phen. Mr. Jones worked on the Fen–Phen cases from 2002 to May 26, 2005, when he abruptly developed a mental disability

called dissociative amnesia, which prevented him from remembering anything prior to that date. This disability also prevented him from continuing to work on the Fen–Phen litigation. The Fen–Phen cases eventually generated $1,060,869.20 in fees, and Mr. Jones was paid $165,000 (or around 15 percent) of these fees.

¶ 2 Mr. Jones claims that he and Mackey Price agreed that the general Compensation Agreement (which entitled Mr. Jones to 80 percent of the fees he generated from hourly work after payment of his overhead) would apply to the fees generated by the Fen–Phen litigation. In the alternative, he argues under quantum meruit that Mackey Price and additional Defendants were unjustly enriched by his work. Finally, Mr. Jones claims that a second law firm that worked on the Fen–Phen litigation and received a portion of the fees, Thompson & Skousen, is liable to him under Utah's Fraudulent Transfer Act as recipients of the disputed funds.

¶ 3 Mr. Jones appeals a series of decisions by the district court. First, he appeals the district court's dismissal of his contract claim on summary judgment. Second, he appeals the district court's decision to deny his jury demand on his quantum meruit claim. Third, he challenges the district court's measure of damages under his quantum meruit claim. Finally, he appeals the district court's decision to dismiss his quantum meruit and Fraudulent Transfer Act claims against the individual Defendants.

¶ 4 We uphold the district court's dismissal of Mr. Jones's contract claim. Mr. Jones claimed that he and Mackey Price had agreed that the Compensation Agreement would govern the Fen–Phen fees. Mackey Price moved for summary judgment on this claim, arguing that it was undisputed that no such agreement was reached. Mackey Price directed the court to evidence supporting this assertion and in response, Mr. Jones failed to present affirmative evidence demonstrating a genuine issue of fact for trial regarding this claim. Accordingly, we affirm the district court's dismissal of Mr. Jones's contract claim.

¶ 5 We reverse the denial of Mr. Jones's jury demand because at the time of the ratification of the Utah Constitution a claim for money damages under quantum meruit was a claim at law, not in equity. In sending the claim back to the jury, we clarify that the correct measure of damages for the contract-implied-in-law branch of a quantum meruit claim is the benefit conferred. Finally, we uphold the district court's dismissal of the individual Defendants from both the quantum meruit claim and the Fraudulent Transfer Act claim.

Background

¶ 6 Mr. Jones began working for Mackey Price in 1991. Over the next ten years Mackey Price paid him a salary based on the number of hours he billed. The lone exception to this arrangement was a personal-injury contingency fee case that he originated. In January 2001, Mr. Jones and Mackey Price began experimenting with different compensation arrangements to accommodate his health problems. Finally, in 2002, they agreed to the following Compensation Agreement: the first $4,000 in legal fees generated by Mr. Jones would go to Mackey Price to cover a portion of Mr. Jones's overhead; the next roughly $2,000 would be split fifty-fifty to cover the remaining overhead; and once all the overhead was paid for the current month and all previous months, Mackey Price would retain 20 percent of all fees generated by Mr. Jones and he would receive the remaining 80 percent. Although the Compensation Agreement was never reduced to writing, it governed compensation for Mr. Jones's hourly work until he left the firm in May 2005.

¶ 7 The litigation that spawned the fee dispute between Mr. Jones and Mackey Price related to the diet drug fenfluramine

and dexfenfluramine—known as Fen–Phen. In early 2002, C. Jeffery Thompson and Russell C. Skousen, partners at the law firm Thompson & Skousen, began supervising and managing the Fen–Phen case program.² As part of this program, Thompson & Skousen set up a client-referral program, located physicians and other Fen–Phen experts, arranged for financing of litigation costs, and arranged for clients to receive the medical testing necessary to demonstrate injury from the drug. They also established relationships with attorneys in other states to help facilitate the litigation.

¶ 8 Mr. Thompson and Mr. Skousen presented Mackey Price's attorneys with the opportunity to work on the Fen–Phen cases. Later, Thompson & Skousen reached an agreement with Mackey Price regarding how the firms would split the fees. Under this agreement, Mackey Price attorneys were to be paid from Mackey Price's percentage of the fees.

¶ 9 In 2002, Mr. Jones decided to work on the Fen–Phen cases and began contacting medical practitioners to find clients. He enlisted Rebekah Brown, a Mackey Price employee, to help him locate potential clients. Ms. Brown cold-called Dr. Poulsen, who entered into a services agreement with the law firm Thompson & Skousen. This agreement provided that Dr. Poulsen's patients could receive an echocardiogram

test and cardiologist evaluation paid for by the firm. While Mr. Thompson ultimately negotiated the service agreement with Dr. Poulsen, Mr. Jones did much of the other work, including meeting with clients from Dr. Poulsen's office, assisting with their medical testing, and helping them fill out the paperwork to submit their claims.

¶ 10 Mr. Jones also contacted various diet centers located in Georgia and paid for some of the expenses he incurred to travel there for meetings. He performed much of the work associated with entering into agreements with the diet centers and he arranged to have their patients receive medical testing.³ Thompson & Skousen made arrangements with two law firms, Armstrong & Guy and Thach & Thach, to manage the cases for the Georgia patients. To assist those firms with the Georgia cases, Mr. Jones advanced $6,000 in personal funds and borrowed approximately $167,000 from his neighbor at an interest rate of 30 percent per annum to help cover litigation costs. He did not inform Mackey Price that he was funding the Georgia cases. Finally, Mr. Jones also performed a large amount of work on eight cases that originated from the medical offices of Dr. Brown.⁴

¶ 11 The facts regarding Mr. Jones's compensation are central in this appeal. Initially, Thompson & Skousen proposed that Mackey Price pay him 40 percent of the fees generated from the cases he originated. Following these discussions, Mr. Thompson told Mr. Jones that Mackey Price would pay him 40 percent of fees on cases he originated. But approximately six weeks later, Mackey Price adjusted the fee percentages between it and Thompson & Skousen and requested that Mr. Thompson stop discussing Mr. Jones's compensation because he was an employee of Mackey Price, not Thompson & Skousen. Mr. Thompson later told Mr. Jones that Mackey Price did not agree to pay him 40 percent, and he urged Mr. Jones, on multiple occasions, to negotiate his compensation with Mackey Price.

¶ 12 During a discussion Mr. Jones had with Gifford Price, a shareholder of Mackey Price, Mr. Jones mentioned his understanding that he would be paid 40 percent of the fees on the cases he originated. Mr. Price changed the subject and would not discuss the compensation issue further. Both Mr. Price and Randall Mackey, another shareholder at Mackey Price, testified that no agreement was reached with Mr. Jones regarding the Fen–Phen cases.

¶ 13 Mr. Jones regularly had lunch with Jeffrey Olsen, another associate at Mackey Price. According to Mr. Olsen, Mr. Jones told him, on multiple occasions, that he had not yet worked out an agreement with Mackey Price regarding his compensation from the Fen–Phen cases. Mr. Olsen testified that he encouraged Mr. Jones to finalize a compensation structure with Mackey Price.

¶ 14 Mr. Jones also discussed his compensation with the neighbor who lent him the money for the Georgia cases. The neighbor testified that Mr. Jones initially indicated that he, Mr. Jones, would receive 40 percent of the fees generated from the cases, but that he later indicated he would receive less than 40 percent.

¶ 15 On February 12, 2005, over two years after he began working on the Fen–Phen cases, Mr. Jones made a hand-written memorandum concerning his compensation. In it he recounted the conversation he had with Mr. Price about his compensation:

Finally [Mr. Price] met w/me and tried to open up the issue by saying ‘we need to discuss what to do with the 60% that does not go to [Thompson & Skousen].’ I responded that all I knew is that I got 40% and did not care what the other arrangements were.

After recounting...