Jowett v. Scruggs, No. 2002-CA-00039-COA.
| Decision Date | 03 August 2004 |
| Docket Number | No. 2002-CA-00039-COA. |
| Citation | 901 So.2d 638 |
| Parties | Juliet Lawson JOWETT, individually and for and on behalf of Scruggs, Millette Lawson, Bozeman & Dent, P.A and Scruggs, Millette, Bozeman and Dent, P.A., Appellants v. Richard F. SCRUGGS; Richard F. Scruggs, P.A.; Scruggs, Millette, Bozeman & Dent, P.A.; Asbestos Group, P.A. and Occupational Hearing Loss, P.A., Appellees. |
| Court | Mississippi Court of Appeals |
Juliet Lawson Jowett, Ocean Springs, attorney for appellants.
William N. Reed, Jackson, attorney for appellees.
Before SOUTHWICK, P.J., IRVING and GRIFFIS, JJ.
SOUTHWICK, P.J., for the Court.
¶ 1. Juliet Lawson Jowett was a shareholder in a law firm. She was terminated as an employee, but in this litigation has argued that she has never been validly expelled as a shareholder. The lower court awarded her about $420,000 for undistributed taxable income and for the value of her shares. On appeal, Jowett argues that the chancellor incorrectly determined the date that she ceased to be a shareholder, incorrectly determined the value of her shares, erred in finding no breach of fiduciary duty by other firm members, and improperly denied her punitive damages and her attorney's fees. We find that she has been properly compensated. Consequently, we affirm.
¶ 2. In 1989, Juliet Lawson Jowett began working for Richard Scruggs as an employee of Asbestos Group, P.A. Jowett worked primarily in the area of occupational hearing loss. She litigated cases as a member of another of Scruggs' professional associations, Occupational Hearing Loss, P.A. In 1994, the law firm of Scruggs, Millette, Lawson, Bozeman & Dent, P.A. ("SMLBD") was formed. Jowett was the "Lawson" in this firm and owned eight percent of the shares.
¶ 3. The shareholders of the firm were paid a salary and were given a portion of net revenue based on their performance. The board of directors determined the annual bonuses of the shareholders. In 1995, Jowett signed an employment contract with SMLBD which discussed her rights as an employee of the firm and provided for a base salary of $100,000.
¶ 4. Jowett continued to work on the hearing loss litigation until she went on maternity leave in 1996. Another attorney took over the litigation at the time that Jowett began her leave. In 1997, Jowett returned to SMLBD. She and Scruggs executed a written agreement, effective on January 1, 1997, that modified the 1995 employment contract. Jowett would receive $100,000 annual salary, $110,360 cash, a possible annual bonus to be determined by the board of directors, one-third of the net fees received by SMLBD for the hearing loss cases, and $3,000 per month for rent and supplies for an Ocean Springs office.
¶ 5. Jowett opened an office in Ocean Springs under the name of Juliet Jowett, P.A. All advertisements and contracts with clients were done under this name and not SMLBD. Jowett kept all fees from this firm and did no further work for SMLBD. However, she continued to receive the contracted-for salary from SMLBD along with the $3,000 per month for expenses. On February 13, 1998, Scruggs sent Jowett a letter advising her that she would be terminated sixty days from the date of the letter. Her termination was ratified by the firm on October 14, 1999.
¶ 6. During the period of Jowett's work with Scruggs, litigation on behalf of the State against major tobacco companies was brought. See In re Fordice, 691 So.2d 429, 430-31 (Miss.1997)
(). In October 1997, there was an agreement involving the amount of payments by the defendants to the plaintiff-states, but there was no agreement as to attorneys' fees. In December 1997, the settlement was approved with a provision for arbitration to determine attorneys' fees. In July 1998, the law firm, now Scruggs, Millette, Bozeman & Dent, P.A., received its first advance fee payment.
¶ 7. On February 26, 1998, Jowett filed suit against Scruggs and the firm in federal court on the basis of sex discrimination and other employment claims. This case was eventually dismissed with prejudice. On January 12, 1999, Jowett filed this complaint with the Chancery Court of Jackson County. In two phases of trial, the judge found that Jowett was entitled to $184,156 for income that was not distributed to her, taxable for the year 1997. He also found that the values of her shares of stock was $234,053.84. Dissatisfied with these awards, Jowett appeals.
DISCUSSION
¶ 8. Jowett divides her appellate arguments into fourteen issues. We find the division to be somewhat unwieldy in analyzing what is before us. The following is our path to a conclusion: (1) was Jowett properly expelled as a shareholder; (2) if so, what is the date to value her shares; (3) what was the value of her shareholder interest on that date; (4) was there a breach of fiduciary duty owed by Scruggs or others to Jowett; (5) should punitive damages and her attorney's fees be awarded?
¶ 9. During the first phase of the trial, the chancellor found that Jowett's shares in SMLBD should be valued as of April 14, 1998. This was sixty days from the date of the termination letter that Scruggs sent to her. The letter stated that she would be terminated after that time lapse.
¶ 10. The chancellor noted his belief that Jowett actually ceased being a shareholder the date that she opened her firm, Juliet Jowett, P.A., which was in April 1997. He reasoned that she could not be a shareholder in more than one professional corporation under the Mississippi Rules of Professional Conduct and the Professional Corporations Act. He found that she was a "passive shareholder" in SMLBD from the time she opened her own firm until April 1998. The chancellor ultimately did not value Jowett's shares as of the 1997 date that she started a new firm, but instead as of April 14, 1998, when her termination from SMLBD became effective.
¶ 11. Some states have professional rules explicitly prohibiting attorneys from participating in more than one association. See Petition of New Hampshire Bar Ass'n, 110 N.H. 356, 266 A.2d 853 (1970)
. Mississippi has no such rule. We agree that there may be questions of loyalty and confidences that become more difficult when a professional belongs to more than one association. Yet we find no definite prohibition in Mississippi for an attorney to be a member of multiple legal associations. Since the Supreme Court has sole appellate court authority over the rules of professional discipline, we are disinclined to resolve this appeal on this ground if there is an alternative basis on which to rule. There is, as we will discuss below.
¶ 12. Prior to bringing the present suit, Jowett had filed suit in federal court against Scruggs and other defendants. That suit was dismissed with prejudice. For our purposes, the primary importance of that earlier litigation is that the federal court found that the January 1997 employment agreement between Jowett and the firm was valid and enforceable. The federal suit ended and no appeal was taken. Therefore, the present litigation cannot again challenge the validity of the 1997 employment contract. Williams v. Vintage Petroleum, Inc., 825 So.2d 685, 688 (Miss.Ct.App.2002). The chancellor properly relied on res judicata to find the employment contract valid.
¶ 13. The employment contract stated that its purpose was to define the relationship between SMLBD as an employer and Jowett as an employee. By signing the agreement, Jowett accepted employment under the conditions of the contract. The final paragraph of section 11 of the contract, that section's being entitled "Termination of Employment," provides for valuing the "shares or other entitlements" of the employee. In addition, occasionally Jowett is referred to as "shareholder," though the opening provision of the contract states that the shorthand reference to her will be as "employee." These cursory allusions to shareholder status in an employment contract at least provide some basis for the belief, adopted by the chancellor, that the 1997 contract was creating a new relationship between the firm and Jowett in contemplation of her permanent departure.
¶ 14. Jowett argues that she was improperly terminated, and regardless, that she was never expelled as a shareholder. On the first point, Jowett alleges that her termination was not within the language of the contract. She argues that she was not a disqualified shareholder as the chancellor found nor was she terminated "for cause." Jowett argues that under these circumstances, she is still a shareholder. To consider this question, we examine the 1997 employment contract. Section 11 is entitled "Termination of Employment." Section 11.01 has these reasons for termination:
Section 11.05 therefore provides that the giving of sixty days...
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