Southtrust Bank v. Jones, Morrison, Womack

• Decision Date: 18 March 2005
• Docket Number: 2030272.
• Citation: 939 So.2d 885
• Court: Alabama Court of Civil Appeals
• Parties: SouthTRUST BANK v. JONES, MORRISON, WOMACK & DEARING, P.C.

939 So.2d 885

SouthTRUST BANK v. JONES, MORRISON, WOMACK & DEARING, P.C.

2030272.

Court of Civil Appeals of Alabama.

March 18, 2005.

Rehearing Denied April 29, 2005.

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D. Charles Holtz of Fernandez, Holtz & Combs, L.L.C., Mobile; and Scott Tyra of Smith, Spires & Peddy, P.C., Birmingham, for appellant.

David A. Boyett III of Anders, Boyett & Brady, P.C., Mobile, for appellee Jones, Morrison, Womack & Dearing, P.C.

James B. Rossler of Rossler & Redditt, LLC, Mobile, for appellees Stokes, Clinton, Fleming & Sherling; Stokes & Clinton, P.C.; and Paul Clinton.

CRAWLEY, Presiding Judge.

SouthTrust Bank ("the Bank") appeals from a summary judgment in favor of Jones, Morrison, Womack & Dearing, P.C.; Stokes, Clinton, Fleming & Sherling; Stokes & Clinton, P.C.;¹ and Paul Clinton (hereinafter sometimes referred to collectively as "the lawyers") in a third-party legal-malpractice action. We reverse the summary judgments and remand the cause to the Mobile Circuit Court for further proceedings.

The undisputed facts of this case reveal the following: In 1993, the Bank issued a business credit card to LaCoste Construction Company, Inc. ("LCCI"), located in Mobile, Alabama. LCCI authorized nine of its employees, including Brewton Neal Greene, to use the credit card. None of the nine employees, including Greene, was a guarantor of the credit-card indebtedness, and none was personally liable for any of the charges made on the credit card. When LCCI failed to make payments on its credit-card account, the Bank employed the Atlanta, Georgia, law firm of Jones, Morrison, Womack & Dearing, P.C. ("the Jones, Morrison firm"), to collect the debt. The Bank sent the Jones, Morrison firm its file on the LCCI account. The file included a guaranty agreement that named LCCI and Neal Greene as "borrowers" and that was signed by Vincent D. LaCoste as "guarantor."

Upon receiving the LCCI collection file from the Bank, Saundra Morrison, the office manager at the Jones, Morrison firm, wrote a letter on August 9, 1999, to Sandra Nash, an employee in the Bank's recovery department, inquiring as follows:

"Pursuant to your note, the above Company has a personal guarantee. Do we have a guarantee for all nine individual[s] that are signed on the individual accounts or do we just have a personal guarantee on Vincent D. LaCoste? Please advise."

On August 23, 1999, Sezette Spivey, a legal-accounts representative for the Bank, wrote to Bill Morrison, an attorney in the Jones, Morrison firm, as follows:

"In response to the letter from your office dated August 9, 1999: Attached you will find a copy of the Guaranty of Payment. If you have any questions, please feel free to call."

A document entitled "Guaranty of Payment" enclosed with Spivey's letter states, in pertinent part, the following:

"To induce Bank to make a loan or extend credit or make other financial products or services available to LaCoste Construction Co., Inc. — Neal Greene (as hereinafter further defined, called the `Borrower'), Guarantor hereby agrees with Bank as follows:

"1. This Guaranty is made for the purpose of securing to Borrower, at Guarantor's request, one or more loans or extensions of credit with . . . Bank. . . . All such loans or other financial products or services now or hereafter provided by Bank to Borrower, and all extensions or renewals of debts or other obligations now or at any time hereafter owing by Borrower to Bank, are made by Bank in reliance on this Guaranty. . . .

"2. Guarantor jointly and severally if more than one, hereby unconditionally guarantees to Bank the payment and performance by Borrower of all the Guaranteed Obligations (as hereinafter defined)...."

LaCoste's signature on the guaranty agreement is not accompanied by a typewritten version of his name.² Spivey knew that the signature was that of LaCoste, but she did not inform the Jones, Morrison firm of that fact. She also did not send the Jones, Morrison firm a copy of the other guaranty agreements, each bearing the name of a different LCCI employee as a "borrower" but containing the signature of the sole guarantor, Vincent D. LaCoste.

The Jones, Morrison firm associated the Mobile firm of Stokes, Clinton, Fleming & Sherling ("the Stokes, Clinton firm") to file suit on the debt, and it provided that firm with a copy of the Bank's file, including the guaranty agreement signed by Vincent LaCoste and bearing Neal Greene's name as a "borrower." The Stokes, Clinton firm prepared a document entitled "Statement of Account/Sworn Statement of Claim" that identified the Bank as "creditor" and LCCI and Greene as "debtor" (singular). The Stokes, Clinton firm sent the statement to the Jones, Morrison firm on January 19, 2000; the Jones, Morrison firm forwarded the statement to Nancy Tray, a supervisor in the Bank's recovery department, with the following cover letter from Linda Seymour, who identified herself as a "legal representative" of the Jones, Morrison firm:

"Enclosed please find documents needed to proceed with legal actions. At your earliest convenience please sign, notarize and send back to our office. If there are any questions regarding this matter, please direct all phone calls, faxes, letters, etc. to my attention."

Tray signed the document and gave it to Spivey to return to the Jones, Morrison firm. Spivey testified that she saw Greene's name on the statement but that she did not think it meant that Greene would be a defendant in any lawsuit filed on behalf of the bank to collect the debt.

On March 3, 2000, the Stokes, Clinton firm filed a complaint in the Mobile Circuit Court on behalf of the Bank against LCCI and Neal Greene, jointly and individually, but not against Vincent D. LaCoste, seeking a total indebtedness of $50,432.55, plus costs. The complaint contained instructions requesting service on both defendants at 3463 LaCoste Road in Mobile. On March 16, 2000, the service of Greene was returned "not found," with a sheriff's notation that Greene was "no longer employed" by LCCI. Neither the summons and complaint nor any other motions and pleadings were sent to the Bank.

On May 10, 2000, the Bank learned that Vincent D. LaCoste had filed Chapter 7 bankruptcy proceedings, and it instructed the Jones, Morrison firm to "close the file" on the LCCI collection matter because of LaCoste's personal bankruptcy. On May 10 and 11, 2000, Bill Jones, an employee of the Jones, Morrison firm, noted on the firm's collection history that the file should be closed. On May 18, Spivey made a similar notation on the Bank's LCCI collection file. On May 31, 2000, Jack Fogelman, the collection manager at the Jones, Morrison firm, entered a "close-file" memorandum on the firm's accounts. The close-file instruction, however, was not communicated to the Stokes, Clinton firm.

On August 14, 2000, Saundra Morrison, the office manager at the Jones, Morrison firm, wrote the following letter to Drew Dorrance in the Bank's legal-recovery department:

"Our co-counsel has been unable to locate Neal Greene for service. Do you wish to serve by publication? The cost is approximately $120.00. Please advise."

Spivey testified that the letter was routed to her; she said that on August 23, 2000, she telephoned Jack Fogelman at the Jones, Morrison firm and inquired why any activity was occurring on a file that should have been closed. She did not specifically question why co-counsel was attempting to serve Greene.

Meanwhile, on August 15, 2000, Paul Clinton of the Stokes, Clinton firm had filed a motion for service by publication on Greene, with a supporting affidavit averring that he had personal knowledge of the fact that Greene had been avoiding service, that Greene had been absent from his residence for more than 30 days since the filing of the complaint, that Greene could not be located, and that service could not be perfected on Greene by any method other than by publication. The Mobile Circuit Court granted the motion on August 18, 2000.

On October 18, 2000, Saundra Morrison, the office manager at the Jones, Morrison firm, wrote the following letter, marked "Att'n: Meg" to the Stokes, Clinton firm, referencing the "[LCCI] account balance with SouthTrust Bank":

"Please be advised our client has requested that we close the above debtors file. They do not have adequate documentation to proceed on this case. If you have any questions, please advise."

The records of the Stokes, Clinton firm indicate that it received the letter from the Jones, Morrison firm on November 22, 2000. On October 24, 2000, when Greene had not answered or otherwise appeared in the Bank's action, Clinton requested the entry of default against Greene. On October 30, 2000, the Mobile Circuit Court entered a default judgment for the Bank against Greene in the amount of $50,702.97. The Stokes, Clinton firm recorded the judgment against Green on November 29, 2000.

At all times material to the Bank's lawsuit against Greene, Greene was listed in the Mobile telephone directory as "B. Neal Greene" residing at 6602 Cherry Pointe Court in Mobile. On February 21, 2001, Greene was attempting to close a sale of real property when he learned that there was a judgment recorded against him in favor of the Bank. Greene contacted a Bank official who investigated the matter, learned that there was no basis for a judgment against Greene, and instructed the Stokes, Clinton firm to cancel the judgment immediately. The judgment was subsequently set aside, and a summary judgment was entered in favor of Greene on May 11, 2001.

On June 26, 2001, Greene sued the Bank, but not the lawyers, alleging claims of malicious prosecution, abuse of process, negligence, wantonness, and outrage. On August 28, 2001, counsel for the Bank wrote a letter to Ben Stokes of the Stokes, Clinton firm, stating, in pertinent part:

"After reviewing a Bank file and the court file in the underlying case [SouthTrust Bank v....