SIMPSON PERFORMANCE PRODUCTS v. Horn, 03-126.

• Decision Date: 18 June 2004
• Docket Number: No. 03-126.,03-126.
• Citation: 92 P.3d 283,2004 WY 69
• Parties: SIMPSON PERFORMANCE PRODUCTS, INC., Appellant (Defendant), v. ROBERT W. HORN, P.C., Appellee (Plaintiff).
• Court: Wyoming Supreme Court

92 P.3d 283

2004 WY 69

SIMPSON PERFORMANCE PRODUCTS, INC., Appellant (Defendant), v. ROBERT W. HORN, P.C., Appellee (Plaintiff).

No. 03-126.

Supreme Court of Wyoming.

June 18, 2004.

Representing Appellant: David B. Hooper of Hooper Law Offices, P.C., Riverton, Wyoming.

Representing Appellee: Robert W. Horn of Robert W. Horn, P.C., Jackson Hole, Wyoming.

Before HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

VOIGT, Justice.

[¶ 1] The appellant, Simpson Performance Products, Inc. (SPP), hired the appellee, Robert W. Horn (Horn), to conduct an investigation and to provide legal counsel regarding a possible lawsuit by SPP against the National Association of Stock Car Auto Racing (NASCAR). Upon completing his work, Horn submitted a bill to SPP for $40,383.29 for legal fees and costs. SPP paid Horn $20,000.00, but refused to pay the balance. Horn sued SPP to collect the outstanding amount. The district court found in favor of Horn. SPP now appeals, claiming that Horn is not entitled to the entire fee because his representation of E.J. "Bill" Simpson (Simpson), individually, violated Rule 1.9 of the Wyoming Rules of Professional Conduct for Attorneys at Law (Rule 1.9). Finding no violation of Rule 1.9, we affirm.

ISSUE

[¶ 2] Horn represented SPP in investigating a possible lawsuit against NASCAR. He then represented Simpson, who had recently resigned as the CEO of SPP, in a lawsuit against NASCAR involving the same facts and cause of action. The issue presented by this case is whether Horn's representation of Simpson, his new client, was "materially adverse" to SPP, his former client, and therefore a violation of Rule 1.9.

FACTS

[¶ 3] SPP manufactures and sells automobile racing safety equipment such as fire-resistant driver suits, helmets, shoes, seatbelts and other products. In 1998, Simpson, the company's founder, sold a two-thirds interest in the company to Carousel Capital. Simpson retained his one-third share and remained involved with the company, acting as the Chairman of the Board of Directors and Chief Executive Officer.

[¶ 4] On February 18, 2001, Dale Earnhardt died in a racing accident at the Daytona 500. Five days later, NASCAR held a press conference where a NASCAR representative displayed an SPP brand seatbelt and stated that it had broken in the crash. Further, the NASCAR representative asserted that had the seatbelt not failed, Earnhardt would have survived the accident.

[¶ 5] The negative publicity resulting from the NASCAR press conference threatened SPP's reputation and financial well-being. SPP hired Epley and Associates, a public relations group, to assess the situation and to propose a plan to counter the negative publicity. Additionally, SPP considered a slander/false-light lawsuit against NASCAR, and was concerned with a potential wrongful death suit by the Earnhardt family. Nelson Schwab (Schwab), Carousel Capital's managing partner, and Simpson agreed to hire two attorneys to "gather information and facts surrounding the accident in case there was a possible lawsuit." Robert Horn, a Jackson lawyer who had performed some prior work for Simpson, and Jim Voyles, a lawyer from Indianapolis, Indiana, were hired in March of 2001 to perform this task. No formal engagement letter was drafted;¹ however, it was agreed that Horn would bill SPP "at 200 an hour for non-court time and 250 for court time, and that the cost of the case would be borne by Simpson Performance Products."

[¶ 6] From March 28, 2001, to September 9, 2001, Voyles and Horn provided legal services to SPP. They actively participated in an investigation conducted by NASCAR into the cause of Dale Earnhardt's death. During that time, Horn billed approximately 200 hours and incurred expenses relating to three trips: two to Indianapolis, Indiana, and one to Atlanta, Georgia. Another substantial expense involved documenting and cataloguing all of the articles and press releases concerning the highly publicized case.

[¶ 7] Simpson was saddened and distraught by the death of Earnhardt, who was a personal friend, and even more upset that SPP was being partly blamed for the tragedy. He was quite steadfast in his desire to sue NASCAR, and felt that a lawsuit was necessary to clear the company's name and protect its reputation. However, Schwab did not share Simpson's view. Schwab felt the only way to stabilize SPP and maintain its viability was to work with NASCAR and preserve that relationship. In August of 2001, Simpson resigned from SPP, reporting that his "relationship with them had become very strained." He stated, "I don't know if [the resignation] was in regard to us suing NASCAR. It was in regard to us protecting the name, the Simpson name, that I worked so hard to build a spotless reputation."

[¶ 8] Having completed its investigation into the Earnhardt crash, NASCAR held another press conference on August 21, 2001, to report its results. Schwab, Horn, Voyles, Simpson,² and other SPP representatives attended the press conference. The results of NASCAR's investigation indicated a number of factors, including a failure of the seatbelt, contributed to Earnhardt's death. Simpson felt that NASCAR's statement was inadequate and that SPP was not exonerated. Following the press conference, the group from SPP "huddled briefly" and agreed to meet in the next few days to decide how to respond.

[¶ 9] On September 5, 2001, Horn and Voyles participated in a conference call with Schwab to discuss an appropriate course of action for SPP. The attorneys reported the conclusions they had reached as a result of their investigation, and offered their opinions about SPP's likelihood of success in a lawsuit against NASCAR. Schwab then indicated that SPP's relationship with NASCAR was improving and stated that he had discussed the possibility of the lawsuit with SPP corporate counsel and they predicted a remote chance of success. Schwab then told Voyles and Horn that SPP had no interest in pursuing a lawsuit against NASCAR.

[¶ 10] When Schwab decided that SPP would not sue NASCAR, the purpose for which Horn had been hired—to participate in the investigation and evaluate the possibility of a lawsuit by SPP against NASCAR—was complete. Although no formal termination letter was written, it appears that following the September 5th conference call, Horn's representation of SPP did, in fact, end. No further services were requested of Horn, Horn did not bill SPP for any work thereafter, and according to Schwab, "there was no communication one way or the other to Mr. Horn after that date." Horn prepared a final bill totaling $40,383.29, which he submitted to SPP in October of 2001.

[¶ 11] Two months after SPP decided it would not pursue an action against NASCAR, Simpson decided to sue NASCAR on his own. He contacted Voyles and Horn to inform them that he planned to sue and to ask their opinion. Simpson told them that he was going to send them a "pile of information" to look over to determine if there was a basis for his individual lawsuit. Horn and Voyles sought the assistance of Dick Cardwell, an Indianapolis lawyer with special expertise in libel issues, and the three attorneys began preparing the lawsuit for Simpson.

[¶ 12] Although Simpson had resigned from SPP, there was continued discussion between Simpson and SPP about the possibility of his returning to the company in some capacity. Simpson was adamant that he would only return if SPP agreed to go forward with the lawsuit against NASCAR. Because of the continued negotiations between Simpson and SPP, the first draft of the lawsuit against NASCAR included both Simpson individually and SPP as named plaintiffs. When SPP received a draft of the complaint in late January 2002, or early February 2002, Schwab immediately called Horn and Voyles to inform them that SPP had no interest in the lawsuit, and issued a press release announcing that SPP was not suing NASCAR. On February 13, 2002, Simpson, as the lone plaintiff, filed the suit against NASCAR.

[¶ 13] When SPP received Horn's bill, Chuck Davies (Davies), who was acting as the company's CEO following Simpson's resignation, was "uncomfortable" with the amount and told Horn that SPP would pay "$10,000 a month until it was either paid in full or I decide I had paid enough." Davies approved two $10,000 payments on Horn's bill: one in December of 2001 and the other in January of 2002. On February 28, 2002, Horn received an email from Davies informing him that SPP would make no further payments. The email stated, "I think that the [$]20,000 we have paid you is the most we consider reasonable for the only bill you submitted in October representing work you said was for several earlier months." Davies later testified that he probably would have paid the entire amount had Horn not prepared the lawsuit for Simpson.

[¶ 14] On March 19, 2002, Horn filed a lawsuit to collect the unpaid balance of his bill. Following a two-day trial, the district court took the matter under consideration. Less than one month later, a decision letter finding in favor of Horn was sent to the parties; and on April 21, 2003, the district court entered a judgment in the amount of $20,383.29 in favor of Horn. SPP filed a notice of appeal on May 13, 2003.

STANDARD OF REVIEW

[¶ 15] "`When a trial court in a bench trial makes express findings of fact and conclusions of law, we review the factual determinations under a clearly erroneous standard and the legal conclusions de novo.'" Schlesinger v. Woodcock, 2001 WY 120, ¶ 13, 35 P.3d 1232, 1237 (Wyo.2001) (quoting Rennard v. Vollmar, 977 P.2d 1277, 1279 (Wyo.1999)). The parties do not dispute the findings of fact; rather, SPP argues that, as a matter of law, the district court erred in its application of Rule 1.9. We will review this legal conclusion de novo.

DISCUSSION

[¶ 16] SPP claims that Horn violated Rule 1.9 when he represented Simpson in the lawsuit against NASCAR, and therefore he should be required to forfeit...