Miller v. Foulston, Siefkin, Powers & Eberhardt, 63627

• Decision Date: 13 April 1990
• Docket Number: No. 63627,63627
• Citation: 790 P.2d 404,246 Kan. 450
• Parties: Malcolm MILLER, Appellant, v. FOULSTON, SIEFKIN, POWERS & EBERHARDT, a Kansas Partnership; and Robert C. Foulston, Robert N. Partridge, John F. Eberhardt, Robert M. Siefkin, Richard C. Harris, Gerald Sawatzky, Robert L. Howard, Charles J. Woodin, Mikel L. Stout, Michael Kim Moore, William R. Sampson, Christopher P. Christian, Jerry G. Elliott, Benjamin C. Langel, William H. Dye, Phillip S. Frick, Stanley G. Andeel, Frederick L. Haag, Richard D. Ewy, Darrell L. Warta, Harvey R. Sorensen, James M. Armstrong, Mary Kathleen Babcock, Charles P. Efflandt, and James D. Oliver, individuals in said partnership, Appellees.
• Court: Kansas Supreme Court

Page 404

790 P.2d 404

246 Kan. 450

Malcolm MILLER, Appellant, v. FOULSTON, SIEFKIN, POWERS & EBERHARDT, a Kansas Partnership and Robert C. Foulston, Robert N. Partridge, John F Eberhardt, Robert M. Siefkin, Richard C. Harris, Gerald Sawatzky, Robert L. Howard, Charles J. Woodin, Mikel L Stout, Michael Kim Moore, William R. Sampson, Christopher P Christian, Jerry G. Elliott, Benjamin C. Langel, William H. Dye, Phillip S. Frick, Stanley G. Andeel, Frederick L. Haag, Richard D. Ewy, Darrell L. Warta, Harvey R. Sorensen, James M. Armstrong, Mary Kathleen Babcock, Charles P. Efflandt, and James D. Oliver, individuals in said partnership, Appellees.

No. 63627.

Supreme Court of Kansas.

April 13, 1990.

Syllabus by the Court

1. Under the facts of this case, the provisions of the partnership agreement, which provide that an expelled partner who qualifies for retirement is entitled to retirement benefit payments as long as he does not practice law, do not restrict the plaintiff's right to practice law within the meaning of DR 2-108(A) (1989 Kan.Ct.R.Annot. 159) and are enforceable.

2. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. An issue of fact is not genuine unless it has legal controlling force as to a controlling issue. A disputed question of fact which is immaterial to the issue does not preclude summary judgment. If the disputed fact could not affect the judgment, it does not present a genuine issue of material fact. Following Ruebke v. Globe Communications Corp., 241 Kan. 595, 738 P.2d 1246 (1987).

3. The trial court may properly enter summary judgment where the only material questions presented are those of law.

4. In an action brought by an expelled partner against a law firm and his former partners, the record is examined and it is held: The district court did not err (1) in denying plaintiff's motion for partial summary judgment; (2) in holding that plaintiff's claims were time barred; and (3) in granting summary judgment in favor of the defendants.

John Terry Moore, of Hinkle, Eberhardt & Elkouri, Wichita, was on the brief for appellee Christopher P. Christian.

Frederic Dorwart, of Holliman, Langholz, Runnels & Dorwart, Tulsa, Okl., argued the cause, and James D. Bryant, of the same firm, and Mark G. Ayesh, of Ayesh, Herd & Theis, Wichita, were with him on the briefs for appellant.

Arden J. Bradshaw, of Michaud, Hutton & Bradshaw, Wichita, argued the cause and was on the brief for appellees.

ALLEGRUCCI, Judge:

This is a civil action brought by the plaintiff, Malcolm Miller, against the law firm of Foulston, Siefkin, Powers & Eberhardt (Foulston-Siefkin) and his former partners. The plaintiff involuntarily left the firm under pressure, and, although he alleges ten separate claims in his petition, the basis of his action is that he should receive retirement benefits and a share of the attorney fees the firm received for its 20-year litigation in two sets of class action cases that have become known as the consolidated and the private helium cases. The district court denied plaintiff's motion for partial summary judgment and granted summary judgment to defendants on the grounds the claims were barred by the statute of limitations. Miller appeals from that judgment.

Miller began practicing with Foulston-Siefkin in 1952. In a memo dated May 13, 1982, the executive committee of Foulston-Siefkin advised plaintiff that it was concerned about his participation in the firm and was suggesting a substantial reduction in compensation. In December 1982, plaintiff was advised by memorandum from "his partners" of their desire for him to resign rather than face expulsion. Fifteen partners signed the memo. It was based upon a unanimous recommendation from the executive committee that plaintiff be expelled from Foulston-Siefkin. Plaintiff left the firm January 1, 1983. He was of counsel with the firm until February 28, 1983, when he was required to remove all his belongings from the firm's offices. Plaintiff never intended to retire from the practice of law when he left Foulston-Siefkin.

Foulston-Siefkin first became involved in complex helium litigation in 1963. One set of cases in this class action became known as the consolidated helium cases. One of these cases settled in 1985, the others in 1988. The court awarded attorney fees of approximately $17 million. The second set of cases, known as the private helium cases, which were filed in 1971 and 1986, resulted in attorney fees of approximately $4.5 million. According to plaintiff, he suggested to his partner, Gerald Sawatzky, that Foulston-Siefkin seek a consensual achievement fee in the helium litigation but was told that such a request was not possible because the attorney time had been billed at a high rate throughout the litigation. This claim was denied by Sawatzky. His affidavit states that the continuous agreement with Foulston-Siefkin's clients in the helium cases was that the firm would bill at a minimum level with the understanding that, if recovery occurred, the court would be asked to award attorney fees from the amount recovered at full compensation.

Plaintiff and Foulston-Siefkin disputed whether plaintiff should receive retirement benefits. At one point, the firm agreed to pay plaintiff retirement benefits in the amount of $190,416.89 in 120 equal installments of $1,586.81, beginning June 1, 1983, conditioned upon plaintiff's retirement. In May 1983, at the Foulston-Siefkin partnership meeting, it was reported that the firm would begin paying these retirement benefits. In the fall of 1983, plaintiff and Foulston-Siefkin attempted to negotiate a settlement which would allow plaintiff to continue some activity in the practice of law while remaining retired and receiving retirement benefits under the 1965 Foulston-Siefkin partnership agreement. Pursuant to the proposal, Foulston-Siefkin agreed to pay plaintiff $190,000 over ten years while liberalizing the phrase "practice law" contained in the partnership agreement to allow some minimal activity. Foulston-Siefkin offered to pay plaintiff $2,000 a month for 96 months if he restricted his practice to "permitted activities."

In December 1985, plaintiff learned that Foulston-Siefkin had sought extraordinary attorney fees in the helium cases. Foulston-Siefkin first received payment on those fees in December 1985. Plaintiff sought to have a portion of the helium fees, but his request was denied. He filed the original petition on November 30, 1987. He filed his amended petition, which alleges the ten claims against the defendants, on January 20, 1989.

Plaintiff filed a motion for partial summary judgment on October 26, 1988, asking the trial court to find: (1) that the 1965 Foulston-Siefkin partnership agreement was void under the Kansas Code of Professional Responsibility, DR 2-108(A) (1989 Kan.Ct.R.Annot. 159); or, in the alternative, (2) that the withdrawal, retirement, and expulsion portions of the 1965 agreement are void under the Code of Professional Responsibility. The trial court denied the motion, finding that the 1965 agreement did not violate any ethical code and that plaintiff did not retire, which meant that he was not entitled to retirement funds available under the 1965 agreement.

Defendants (except Christopher P. Christian) filed a motion for summary judgment, arguing plaintiff's claims were time barred. The trial court found that the longest applicable statute of limitations was three years; that the action should have commenced about the end of 1985 or the early part of 1986; and that, because the action was not commenced until late in 1987, the claims were barred. The court further found that plaintiff's status in the law firm gave him knowledge that would include an awareness of the potential attorney fees that could be produced under the helium litigation even though the exact amount of anticipated fees was not known in late 1982. Finally, the court concluded that, even though plaintiff's claims are time barred, they might provide offsets to defendants' counterclaims. The defendants dismissed their counterclaims on March 13, 1989. Defendant Christian's motion for summary judgment was granted on March 27, 1989, based upon the same grounds as the others.

Plaintiff argues that the trial court erred in denying his motion for partial summary judgment because the 1965 Foulston-Siefkin partnership agreement is unethical and unenforceable in two ways. First, plaintiff argues that the agreement on its face restrains the practice of law and does not comply with the requirements of DR 2-108 (1989 Kan.Ct.R.Annot. 159) of the Kansas Code of Professional Responsibility, which allows for conditional payment of retirement benefits. Second, plaintiff argues that Foulston-Siefkin attempted to use the agreement to compel plaintiff to quit practicing law, which would also violate DR 2-108. Finally, plaintiff argues that, because the agreement's restraint on the practice of law was unethical and unenforceable, the entire 1965 partnership agreement is invalid and should be found to be void.

We first consider if the conditional payment of retirement benefits make the 1965 agreement unethical and unenforceable on its face. DR 2-108(A) is intended to give clients the widest possible choice of attorneys by providing as follows "A lawyer shall not be a party to or participate in a partnership or employment agreement with another lawyer that restricts the right of a lawyer to practice law after the termination of a relationship created by the agreement, except as a condition to payment of retirement benefits." 1989 Kan.Ct.R.Annot. 159.

The purpose behind DR 2-108(A) is to protect the public's right "to select and repose confidence in lawyers of their choice without restriction by providing full availability of legal counsel." Cohen v. Lord, Day & Lord, 144 App.Div.2d 277, 280, 534 N.Y.S.2d 161 (1988), rev'd ...