Potts v. Mitchell, Civ. No. A-75-78.

• Decision Date: 23 February 1976
• Docket Number: Civ. No. A-75-78.
• Citation: 410 F. Supp. 1278
• Court: U.S. District Court — Western District of North Carolina
• Parties: Jack H. POTTS and H. Paul Averette, Jr., d/b/a Hamlin, Potts & Averette, Plaintiffs, v. Harold Eugene MITCHELL et al., Defendants.

410 F. Supp. 1278

Jack H. POTTS and H. Paul Averette, Jr., d/b/a Hamlin, Potts & Averette, Plaintiffs, v. Harold Eugene MITCHELL et al., Defendants.

Civ. No. A-75-78.

United States District Court, W. D. North Carolina, Asheville Division.

February 23, 1976.

Robert S. Cilley and V. Scott Peterson, Ramsey, White & Peterson, Brevard, N. C., for plaintiffs.

John M. Beauchamp, Albany, Ga., James H. Toms, Toms & Toms, Hendersonville, N. C., for defendants.

MEMORANDUM OF DECISION

WOODROW WILSON JONES, Chief Judge.

The Plaintiffs, Jack H. Potts and H. Paul Averette, Jr., doing business as Hamlin, Potts and Averette, Attorneys at Law, instituted this civil action against the Defendants, Harold Eugene Mitchell, Ellis S. Rubin, and Canal Insurance Company, seeking monetary damages from the Defendant Mitchell for an alleged breach of contract, and from the Defendant Rubin for an alleged interference with such contract, and injunctive relief from the Defendant Canal Insurance Company. This Court's jurisdiction is invoked under the diversity of citizenship provisions of 28 U.S.C.A. 1332.

The Plaintiffs contend that the Defendant Mitchell employed the law firm of Hamlin, Potts and Averette on April 7, 1975, on a contingent fee basis to represent his family's interest in civil actions and claims arising out of the wrongful deaths of his wife and three children and the personal injuries to another child occurring on April 2, 1975 in Tifton, Georgia. The Plaintiffs further contend that the Defendant Rubin, a Florida attorney, wrongfully interfered with this contract of employment by causing Mitchell to retain him as counsel on April 14, 1975, and to dismiss the Plaintiffs as counsel by letter dated April 15, 1975. As a result of this alleged breach, the Plaintiffs contend that they are entitled to 25% of any settlement recovered from those liable to the Defendant Mitchell because of said accident, this being the contracted fee between Mitchell and the Plaintiffs. The Plaintiffs also seek exemplary damages against the Defendant Rubin for an alleged wrongful interference with the contract.

In Answer, Defendant Mitchell admits that he signed the agreement of April 7, 1975, but contends that he was unduly influenced at the time and unable to transact business because of the traumatic deaths of his wife and three children. The Defendant Rubin denies offering any inducement to the Defendant Mitchell to terminate his contract with the Plaintiffs or to employ his services.

The matter was tried by the Court without a jury at the January 1976 Term in Asheville, and after full consideration of evidence, the arguments of counsel, and the briefs, the Court now enters its findings and conclusions.

The Plaintiffs, Jack H. Potts and H. Paul Averette, Jr., are duly licensed and practicing attorneys at law in Brevard, North Carolina, and are doing business under the firm name of Hamlin, Potts and Averette, and are resident citizens of North Carolina. The Defendant Ellis S. Rubin is a duly licensed and practicing attorney and resident citizen of the State of Florida. The Defendant Harold Eugene Mitchell formerly resided in Brevard, North Carolina, but sometime prior to the execution of the contract in question, he and his family moved to Homestead, Florida, and at the time this action was instituted he was a resident citizen of the State of Florida. The Defendant Canal Insurance Company is a foreign corporation.

On April 2, 1975, the Defendant Mitchell's wife and three children were killed in an automobile-truck collision near Tifton, Georgia. A fourth child was seriously injured and hospitalized in Albany, Georgia. Funeral services and interment were conducted in Brevard, North Carolina, on April 5, 1975. The day following the funeral services Mitchell discussed his legal rights and remedies with the Plaintiff Jack H. Potts in Brevard, and on April 7, 1975 signed a contingent fee contract with the Plaintiffs' law firm whereby the Plaintiffs agreed to represent the defendant Mitchell in the wrongful death and personal injury actions growing out of the accident. The agreed fee was "25% of any recovery if settled without litigation." Although the evidence shows that the Defendant Mitchell was upset and apprehensive at the time of the signing of the contract, it is clear that he possessed the presence of mind necessary to execute a binding contract. The evidence establishes that he entered into this contract freely and voluntarily, and that no undue pressure or influence was used to obtain his signature.

As a result of this contract, Plaintiffs Potts and Averette accompanied the Defendant Mitchell to Georgia on April 8th in order to investigate the accident and to talk with Susan Mitchell, the surviving fourth child. During their stay in Georgia from April 8th to April 11th, the Plaintiffs made initial contact with Canal Insurance Company, the liability insurance carrier for the owner and operator of the truck involved in the collision. After completing their investigation in Georgia, Potts, Averette and Mitchell returned to Brevard on April 11, 1975 and sometime thereafter the Defendant Mitchell returned to his home in Florida.

After his return to Florida, Mitchell met with the Defendant Rubin on April 14, 1975. The evidence shows that this meeting was arranged by Earl Mitchell, a brother of the Defendant Mitchell. Mitchell expressed to Rubin some concern over the contract he had signed with the Plaintiffs and sought Rubin's advice as to whether or not he was bound by the contract. Rubin, relying upon the case of 610 Lincoln Road, Inc. v. Kelner, 289 So.2d 12 (Fla.App.1974), informed Mitchell that he could release the Plaintiffs as his counsel with or without cause. The Defendant Mitchell thereupon entered into a contingent fee agreement with Rubin in which Rubin would be compensated to the extent of 25% of the amount recovered as damages and in which Rubin agreed to compensate the Plaintiffs for the work they had performed in connection with the claims and lawsuits. The Defendant Rubin then prepared a letter which Mitchell signed, notifying the Plaintiffs that their services were terminated, and Rubin advised the Plaintiffs by letter dated April 15, 1975 that he was representing Mitchell and that the Plaintiffs would be compensated for services rendered prior to their discharge.

Shortly thereafter, a settlement meeting, which had been arranged initially by Potts before his discharge, was held in Atlanta, Georgia, with representatives of Canal Insurance Company. Potts attended this meeting but was orally informed by the Defendant Mitchell that Rubin was now representing his interests. Potts thereafter took no active part in the negotiations which resulted in a $160,000.00 settlement from which a contingent fee of $40,000.00 is now due. The Plaintiffs instituted this action on June 11, 1975 against Mitchell and Rubin seeking to recover the $40,000.00 contingent fee which they contend to be due under their contract, and in addition seek to recover actual and punitive damages from Rubin for his alleged wrongful interference with their contract. They seek to enjoin Canal Insurance Company from paying the settlement amount until this controversy is determined. By a Consent Order entered by this Court on November 21, 1975, the Defendant Canal Insurance Company agreed to withhold the sum of $40,000.00 which represents 25% of the settlement effected with the Defendant Mitchell, until further orders of this Court.

In considering the legal claims presented the Court will first address the question of whether Defendant Rubin wrongfully interfered with the Plaintiffs' contract. In order to prevail on such a claim the North Carolina Supreme Court has held that a plaintiff must show (1) that a contract existed between the plaintiff and a third party; (2) that the defendant had knowledge of this contract; (3) that the defendant intentionally induced the third person not to perform this contract with the plaintiff; (4) that the defendant acted without justification; (5) that the plaintiff suffered actual damages because of the defendant's actions (Emphasis added.)...