Virden v. Campbell Delong, LLP
| Decision Date | 27 September 2022 |
| Docket Number | 2021-CA-00478-COA |
| Parties | BRITT VIRDEN APPELLANT v. CAMPBELL DELONG, LLP, HAROLD H. MITCHELL, JR., ROBERT N. WARRINGTON, P. SCOTT PHILLIPS, BRADLEY F. HATHAWAY AND FRANK G. POWER APPELLEES |
| Court | Mississippi Court of Appeals |
¶1. A partner voluntarily withdrew from his law firm weeks after obtaining a multimillion-dollar settlement. Despite receiving a large payout, the lawyer later sued for more. He alleged the firm did not follow his contract, resulting in an incorrect calculation of what he was owed. The law firm filed a motion for declaratory judgment that it did not owe any further amounts, which the trial court granted. Aggrieved the lawyer now appeals.
¶2. Britt Virden is an attorney, and for nearly a quarter century, he practiced law in Greenville with Campbell Delong LLP. In 2001, Mr. Virden and the other partners of the law firm executed an Amended and Restated Memorandum Agreement. The purpose of the Agreement was to "govern the withdrawal, termination or retirement of any of [the partners] from the Partnership." All the partners signed the Agreement.
¶3. While he was a partner at the firm, Mr. Virden worked on a case for a client who sought damages stemming from the Deepwater Horizon oil spill. The claim was successful, and in 2018 Mr. Virden emailed his partners about the BP settlement's result:
After 5 years I finally completed the large BP claim for Producers Rice Mill. As with most BP claims the final amount less than originally calculated but eligibility award totaled $12,344,583. The attorneys fee from that is $3,085,002 which will be deposited today.... Since this is an extraordinary attorney[]s fee I want to go ahead and disburse the funds.
In the same email, Mr. Virden suggested the firm pay a bonus to each staff member and associate, pay off a bank loan, and deposit some money into a profit-sharing plan.
¶4. The very end of the email contained what seemed to be an unremarkable suggestion-"Balance to RBV (Mr. Virden's initials) as extra-ordinary draw in 2018." Yet a cursory review of the math behind this suggestion reveals the lawyer was asking the firm pay him a little over $2.8 million dollars-or 92% of the total fee recovered. In Mr. Virden's proposal, the other partners would receive very little despite the large settlement.
¶5. Mr. Virden did not receive an immediate response from the other partners. He then asked the firm's bookkeeper to issue him a check for the $2.8 million. Several of the partners were out of town and had not had the opportunity to respond to Mr. Virden's requests, and the rest of the firm successfully blocked Mr. Virden from withdrawing the money from the firm's bank account.
¶6. The firm's allocation committee met to discuss the disbursement of the fee. The committee at first recommended Mr. Virden receive $1,700,000, but ultimately the committee allocated him $1,910,855. He received a check in this amount, which was just under 62% of the whole law firm's share.
¶7. A month later, Mr. Virden gave notice he was withdrawing from the firm. Simultaneously, he delivered letters from several of the firm's clients notifying the firm that those clients were terminating their attorney-client relationship with the firm and would follow him to his new firm.
¶8. Mr. Virden then sued the firm and its partners alleging that he was entitled to more money from the BP settlement. The firm and its partners filed their answer and affirmative defenses, which included a motion for declaratory relief, a request to stay discovery, and a counterclaim. In the firm's motion for declaratory judgment, it sought a ruling that all of Mr. Virden's claims were encompassed by the Agreement.
¶9. After a hearing, the trial court granted the motion for declaratory judgment from the bench. First the trial court pointed out that "it appears that in this particular case that this agreement had been in place since 2001" and "that when Mr. Virden withdrew from the firm, he was well aware of the agreement ...." The trial court further held, "Mr. Virden was aware of what [the agreement] contained in it, that he received the benefits of it when he needed to, and he used it to his advantage on other occasion[s]." The trial court declared "that paragraphs 7, 12, 13 and 14 of that agreement," which addressed partnership withdrawal and compensation, controlled the outcome of the case. The trial court further held the agreement was enforceable and subsequently granted the firm's declaratory judgment.
¶10. Since the firm prevailed, the trial court instructed the law firm to prepare the order. However, the parties could not agree on the language in the order. As a result, both Mr. Virden and the firm submitted proposed orders mirroring the trial court's bench ruling. The trial court signed both orders, and both were then stamped filed by the circuit court clerk.
¶11. The order Virden drafted held that the trial court had jurisdiction over the parties, that the motion for declaratory judgment was granted, and that all discovery was stayed.
¶12. The order the law firm drafted was lengthier and more detailed but contained the same relief. The parallel order explained that the Agreement "sets forth [the law firm's] payment obligations to [Mr. Virden] upon [Mr. Virden's] withdrawal from [the firm] as more specifically set forth in paragraphs 7, 12, and 13 of the Agreement." The order further set out "[t]he Agreement's payment obligations in paragraphs 7, 12, and 13 are the only payment obligations that the [law firm] owed to Virden upon Virden's voluntary withdrawal from the Firm on March 7, 2019." This order also stayed all discovery.
¶13. The firm's drafted order declared the Agreement was enforceable, and "all monetary claims asserted by Virden . . . are governed by the express terms of the parties' Agreement." "[P]er the express terms of the Agreement the only payment obligation that [the law firm] owes to Virden is the amount of Virden's Working Capital Account at the time of Virden's withdrawal from the Firm." Further, under the Agreement, "Virden is estopped from claiming entitlement to any monetary amount from the [law firm] for acts and/or events which occurred when Virden was a Partner in the Firm except to Virden's entitlement to the amount of Virden's Working Capital Account at the time of his withdrawal." Last, pursuant to "Paragraph 14 of the Agreement, Virden has a legal and binding contractual obligation to convey his entire interest in the Firm and in Campbell DeLong Properties, LLC, and in their respective assets to the Firm and Campbell DeLong Properties, LLC ...."[1]
¶14. Mr. Virden moved for the court to reconsider its ruling. The trial court conducted a hearing on the matter and denied the motion to reconsider. The former partner to the law firm appealed.
¶15. The Court applies "a de novo standard of review to questions of law, including a motion for a declaratory judgment." Smith v. Safeway Ins. Co., 301 So.3d 104, 106 (¶11) (Miss. Ct. App. 2020). "A de novo standard of review is applied to questions of contract construction." Epperson v. SOUTHBank, 93 So.3d 10, 16 (¶16) (Miss. 2012).
¶16. The lawyer raises a series of issues on appeal, which can be grouped into four sections. His core argument is that the Agreement does not preclude him from seeking a larger share of compensation from the firm. Second, he argues his causes of action against the law firm were not barred by the 2001 Agreement, including his claims for unjust enrichment conversion, and the duty of good faith and fair dealing. Third, he disputes the trial court's grant of declaratory judgment. Last, the lawyer claims declaratory judgment should not have been granted because discovery had not been conducted.
¶17. Whether Virden can sue his former firm for equitable relief and related claims requires us first to determine the effect of the Agreement.
¶18. "This Court has held that a plaintiff asserting any breach-of-contract claim has the burden to establish: (1) the existence of a valid and binding contract, and (2) a showing that the defendant has broken, or breached it." Watkins &Eager PLLC v. Lawrence, 326 So.3d 988, 991 (¶9) (Miss. 2021) (internal quotation marks omitted). "A breach is material when there is a failure to perform a substantial part of the contract or one or more of its essential terms or conditions, or if there is such a breach as substantially defeats [the purpose of the contract]." Id. (citation and internal quotation marks omitted).
¶19. At the outset, "[w]e generally apply a three-step analysis when reviewing contract interpretation." Martindale v. Hortman Harlow Bassi Robinson &McDaniel PLLC, 119 So.3d 338, 342 (¶9) (Miss. Ct. App. 2012). "The first step requires that we determine whether the contract is ambiguous." Id. "If it is not, we must accept the plain meaning of a contract as the intent of the parties." Id. (internal quotation marks omitted). "The mere fact that the parties disagree about the meaning of a provision of a contract does not make the contract ambiguous as a matter of law." Id.
¶20. "If we cannot ascertain the contract's meaning and the parties' intent within the contract's four corners, we apply the canons' of contract construction." Id. (internal citation and quotation marks omitted). "If the meaning of the contract is still ambiguous, we turn to extrinsic evidence." Id. at (¶9).
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