Sledge v. Grenfell Sledge & Stevens, PLLC, 2017-CA-00978-SCT

• Decision Date: 13 December 2018
• Docket Number: NO. 2017-CA-00978-SCT,2017-CA-00978-SCT
• Citation: 263 So.3d 655
• Court: Mississippi Supreme Court
• Parties: T. Mark SLEDGE v. GRENFELL SLEDGE AND STEVENS, PLLC d/b/a Grenfell & Stevens, PLLC, James B. Grenfell and John Hunter Stevens, Individually

263 So.3d 655

T. Mark SLEDGE

v.GRENFELL SLEDGE AND STEVENS, PLLC d/b/a Grenfell & Stevens, PLLC, James B. Grenfell and John Hunter Stevens, Individually

NO. 2017-CA-00978-SCT

Supreme Court of Mississippi.

December 13, 2018

Rehearing Denied February 28, 2019

ATTORNEYS FOR APPELLANT: T. JACKSON LYONSMARC E. BRAND, Jackson

ATTORNEY FOR APPELLEES: STEVEN H. FUNDERBURG, Jackson

BEFORE WALLER, C.J., COLEMAN AND MAXWELL, JJ.

COLEMAN, JUSTICE, FOR THE COURT:

¶ 1. Upon the withdrawal of T. Mark Sledge from the law firm Grenfell Sledge and Stevens, PLLC, an issue arose regarding the fee distribution for several of the firm's and Sledge's cases, more specifically, the interpretation of the firm's partnership agreements and related documents. Sledge filed suit against his former firm and its individual members. Following a hearing, the Hinds County Chancery Court granted the motion for summary judgment filed by Grenfell Sledge and Stevens, PLLC, and its individual members and also a declaratory judgment in their favor. Sledge challenges the chancery court's rulings; however, we are unpersuaded by his arguments on appeal and affirm.

FACTS AND PROCEDURAL HISTORY

¶ 2. On April 3, 2014, James Grenfell, T. Mark Sledge, and John H. Stevens executed a "Supplement to Partnership Agreement For Grenfell, Sledge & Stevens"¹ (Supplement Agreement) to address the division of fees in general and, more specifically, the division of fees and firm property in the event of death, disability, retirement, withdrawal of firm members, and/or dissolution of the firm. The Supplement Agreement became effective on January 1, 2014, although it was not executed until April 3, 2014.

¶ 3. According to the Supplement Agreement's section providing for the division of fees, Grenfell Sledge and Stevens, PLLC, agreed that,

Beginning January 1, 2014, cases signed up after that date, not related to joint firm advertisement, the said partner that obtained case or fee generated therefrom will be entitled to fifty percent ... of the fee as compensation from the case, from the total fee to the firm, with the remaining fifty percent ... to be divided per the prior partnership agreement [or one-third] each after the payment of overhead and expenses. We recognize that on these individual cases the partner who has the case is responsible for fifty percent ... of the case specific expenses until settlement. The remaining fifty percent ... expenses will be paid from the general partnership fund.... The Agreement set forth above will take place in the year 2014 and in the year 2015 the partner obtaining the case or generating the fee will be entitled to sixty percent ... of the fee and be responsible for sixty percent ... of the expenses on each case under the same terms as set forth above. In 2016, the generating partner's percentage will increase to seventy percent ... of the fees and expenses as set forth above. In 2017, the generating partner's percentage will increase to eighty percent ... as set forth above. In 2018, the generating partner's percentage will increase to ninety percent ... as set forth above. In 2019 and in subsequent years, the generating partner will be entitled to one hundred percent ... of the fees they generated and will be responsible for one hundred percent ... of the expenses on each case.

Additionally, each member was required to pay one-third of the expenses for operation of the common office-operation expenses.

¶ 4. The Supplement Agreement also contained a provision for how fees would be handled in the event of the death, disability, retirement, or withdrawal of a member. According to the provision,

Should a member of this partnership retire, withdraw, die or become permanently unable to practice law, fees from cases that he leaves with the firm will be handled by the remaining partner(s) and he or his estate or representative will receive one-half ... of any fees from cases resolved in the first six ... months following his departure or one-third ... of the fees generated from cases remaining with the firm thereafter. Said ... withdrawn ... partner will receive compensation only on his cases or on cases obtained through advertising and referred to other law firms as addressed below....

Cases that were advertised for and referred to other attorneys ... will continue to be divided one-third ..., one-third ..., one-third ..., whenever resolved, unless the referred case results in substantial work for the remaining partner(s).... Where advertisement is ongoing at the time of ... withdrawal, the departing partner will be entitled to fees from, and only from, cases that are signed up prior to his ... withdrawal.

Fees from cases obtain[ed] through joint firm advertisement ... will continue to be divided equally between the partners....

Last, but also important, the Supplement Agreement stated, "Any dispute or decision related to this agreement or partnership shall be settled by a majority vote of the partners."

¶ 5. Then, on April 30, 2014, Grenfell, Sledge, and Stevens amended the Supplement Agreement because it "did not address each partner[']s case inventory of individual existing cases in the office before January 2014[.]" The Amended Supplement Agreement explained, "From this day forward each partner will receive [fifty] percent of the fees brought into the firm of any case considered an individual case that was signed up before [January] 2014. The remaining [fifty] percent will be divided [twenty-five] percent to each of the other [two] partners."

¶ 6. The group operated as such until Sledge provided notice to the others that he was withdrawing from the firm effective August 4, 2015. According to Sledge, he was "forced" to withdraw from the firm "[d]ue to the intentional actions of members Grenfell and Stevens, including harassment, false accusations, breach of good faith and fair dealings and threats of litigation directed toward Sledge[.]"

¶ 7. Following an unsuccessful mediation attempt on August 21, 2015, Grenfell and Stevens, as the remaining members of the firm, executed a "Joint Resolution of Grenfell, Sledge & Stevens, PLLC" (Joint Resolution), addressing Sledge's withdrawal from the firm. According to the Joint Resolution, "Sledge has ... taken the position that he had withdrawn from the Firm, that he is taking all of his caseload with him and that the Firm is not entitled to fees from these cases, regardless of firm resources used on said cases." However, "[t]he Firm's position is that it was never the intent of the parties to allow a partner to withdraw from the Firm and take all of his cases with him, without owing fees to the Firm, and that the Supplement Agreement is clear." The Joint Resolution referred back to the Supplement Agreement's language that any dispute related to the Supplement Agreement is to be settled by a majority vote of the members. Then, the Joint Resolution contained the following language:

[T]he majority of the partners/members hereby resolve the dispute as follows:

As discussed and promoted by all three ... members in mediation, we will agree to allow Mark Sledge to retain 100% of any fees on all cases in his caseload as of August 4, 2015, subject to reimbursement of any expenses incurred by the Firm before August 4, 2015, to the Firm and excepting specific cases as follows: 1. the O'Quinn case, 2) the Firm BP case and 3) the Burkes Case ....

As a compromise and what the majority partners believe to be a reasonable resolution to the dispute each individual attorney will keep any fees generated from his caseload after August 4, 2015, and any fees from the three ... disputed cases (O'Quinn, Firm BP and Burkes) will be divided equally (with James Grenfell, Mark Sledge and John Stevens each receiving 1/3) upon resolution.

Lastly, the Joint Resolution provided,

The majority of the members acknowledge and agree that the offered compromise is made in an attempt to resolve this matter .... However, if the terms of this proposal are not accepted, then the Firm and Grenfell and Stevens, individually, will rely on the terms of the Partnership Agreement as written and as voted on by the majority of the partners, and enforce this Agreement and Resolution as necessary.

Sledge did not agree with or sign the Joint Resolution.

¶ 8. Sledge sued the firm and its remaining members, Grenfell and Stevens. In his complaint, Sledge sought a declaratory judgment "to declare the rights, duties, obligations and legal status of the party under the [firm's operating] agreements ... and to declare Sledge's entitlement to the assets retained by the [firm] which were legally owed to him."² Moreover, Sledge requested an accounting of fees from the cases existing at the time of his withdrawal from the firm, an accounting of all the trust funds held by the firm at the time of his withdrawal, an accounting of all expenses incurred on cases existing at the time of his withdrawal, and an accounting "for all sums due pursuant to the partnership [a]greement ... that are being unlawfully held by the Defendants." Sledge also requested equitable and injunctive relief, more specifically, "a money [j]udgment for draws not paid and Sledge's share of the proceeds from the aforesaid cases settled before August 4, 2015 but paid after said date." Sledge requested that the trial court "order and enjoin" the firm to list office property at a "reasonable selling price" as opposed to the 12.5 percent above appraisal that was the current list price at that time. Last, Sledge claimed that the "Defendants have ... breached the terms of the [firm's] agreements by withholding moneys belonging to Sledge[, entitling him] to a judgment for such fees due him under the [firm a]greements."

¶ 9. Both parties presented motions for summary judgment to the trial court, and both parties agreed that the case was ripe for resolution through a declaratory judgment. The trial court found in favor of the firm and granted the firm's motion for summary judgment as to Sledge's request for an...