Volz v. Liberty Mutual Insurance Company, Inc.

• Decision Date: 16 October 1974
• Docket Number: No. 73-3044.,73-3044.
• Citation: 498 F.2d 659
• Parties: Charles H. VOLZ, Jr., et al., etc., Plaintiffs-Appellants, v. LIBERTY MUTUAL INSURANCE COMPANY, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

498 F.2d 659 (1974)

Charles H. VOLZ, Jr., et al., etc., Plaintiffs-Appellants, v. LIBERTY MUTUAL INSURANCE COMPANY, INC., Defendant-Appellee.

No. 73-3044.

United States Court of Appeals, Fifth Circuit.

August 12, 1974.

Rehearing and Rehearing Denied October 16, 1974.

Roscoe B. Hogan, William W. Smith, John F. Kizer, Jr., Birmingham, Ala., for plaintiffs-appellants.

David B. Cauthen, Decatur, Ala., for Ala. Trial Lawyers Assn., amicus curiae.

Warren B. Lightfoot, John H. Morrow, Stanley D. Bynum, Birmingham, Ala., for defendant-appellee.

Before TUTTLE, COLEMAN and AINSWORTH, Circuit Judges.

Rehearing and Rehearing En Banc Denied October 16, 1974.

COLEMAN, Circuit Judge.

This is an action to recover damages for an alleged interference with attorney-client contracts. The plaintiffs, Charles H. Volz, Jr., Leon M. Capouano, Charles H. Wampold, Jr., and Alvin T. Prestwood, are members of a Montgomery, Alabama, law firm. They claim that the defendant Liberty Mutual Insurance Company, a Massachusetts corporation, wrongfully induced Helen Sparks, Oscar Henderson, and Susie Henderson to sever an attorney-client contractual relationship with the plaintiffs. Liberty Mutual denied that a contract ever existed as to Helen Sparks. As to all "clients", it denied any tortious act.

Sitting without a jury, the District Judge accepted both defenses. He found no contract existed as to Helen. As to Oscar Henderson and Susie Henderson, he found that the actions of the defendant were not tortious under Alabama law. The factual findings are, of course, to be reviewed under the clearly erroneous rule, 52(a) F.R.Civ.P.

We affirm.

I FACTS

Oscar Henderson and Susie Henderson are husband and wife. Helen Sparks is their married (widowed) daughter. On October 18, 1970, Susie Henderson, Helen Sparks, and Stella Sparks (another passenger) were riding in an automobile driven by James Sparks, Helen's husband. About eighteen miles north of Montgomery their automobile crashed into a truck which was blocking the highway. Both James and Stella were killed. Helen was rendered a quadriplegic. Susie Henderson's injuries were less ghastly and non-permanent, but nonetheless serious. The offending truck was insured by Liberty Mutual, up to $500,000. Liberty Mutual immediately began an effort to persuade the injured parties to settle their claims for personal injuries directly with it, in the obvious hope of cutting its loss.

Defendant's first steps to effect direct, company to individual, settlement were taken on October 19, 1970, the day after the accident. An agent of the defendant, Robert Dow, visited Oscar Henderson at the hospital. He presented Mr. Henderson with literature, appropriatedly called "The Persuader". As might be expected, it graphically illustrated the advantages of early settlement and the disadvantages of attorneys and law suits. Dow also offered to pay hospital and medical costs and Oscar Henderson accepted this offer. When Dow contacted Oscar Henderson on that day plaintiffs clearly had no attorney-client relationship with either the Henderson or Helen Sparks. They had not met the Hendersons or Helen Sparks.

The very next day, at the request of a relative who had been contacted by Mr. Henderson, Attorney Volz went to the hospital and secured a contingency fee contract of employment, signed only by Mr. Henderson. Mr. Henderson was not in the car, was not injured, but was the husband of one and the father of the other victim. Mrs. Henderson signed the contract on October 29. Helen Sparks never signed it.

Later, on the same day, the defendant learned of the alleged attorney-client relationship as the result of a chance meeting between Dow and Volz. This occurred when both were inspecting the wreckage. Volz, at this meeting, explained to Dow that he had been employed to represent the Hendersons and Helen Sparks.

Still later, on the same day, Liberty Mutual's man, Dow, learned there was some question as to whether Helen was actually represented. During a visit with Oscar Henderson at the hospital, Dow confirmed that Helen was in intensive care and had not been in any condition to participate in the employment of an attorney. Additionally, Oscar Henderson specifically denied at the time that Helen was represented.

October 20, then, was the day when the defendant learned of a probable attorney-client relationship between Henderson and the plaintiffs and a possible attorney-client relationship between Helen Sparks and plaintiffs. Having this knowledge, defendant proceeded with its efforts to secure direct settlement with the injured parties. It never directly suggested that the attorneys be discharged or that settlement be made directly. Instead, through varied and imaginative measures, defendant tried to convince the injured parties that by reason of its solicitude their interests were being assiduously protected, so the attorneys were superfluous.

The procedure adopted by defendant may be briefly summarized as follows: It visited Helen Sparks five or six times during the first four weeks following the accident. It had flowers, books, and candy sent to the room occupied by Helen Sparks and Mrs. Henderson. It arranged hotel accommodations for persons who visited Helen. It paid Mrs. Henderson's medical and hospital bills. It persuaded Helen Sparks to enter its Boston rehabilitation clinic. It paid for a trip by Mr. and Mrs. Henderson to Boston to visit Helen. It paid for additions to the Henderson's home which were designed to make Helen more comfortable.

All this, done without the knowledge of the plaintiffs, say the plaintiffs, amounted to an actionable interference with their attorney-client contract.

In short, by October 29, plaintiffs undoubtedly had contingency fee contracts signed by the Hendersons. To prove that they also had established an attorney-client contract with Helen Sparks, they rely not only on the purported contract but upon several other events. One of the most significant of these occurred on November 13, 1970, when Volz and his associate, Al Sansone, went to the hospital to record Helen's statement. During the recording of the statement, the parties were interrupted on two occasions by hospital attendants, who were distributing the noon meal. On each occasion Volz or Sansone explained that they were the occupants' attorneys. On neither occasion did Helen deny the accuracy of the statement. Plaintiffs contend this evidence proves that Helen silently ratified Oscar's prior act of hiring the plaintiffs.

Just before plaintiffs left the Sparks-Henderson room, they requested that Helen sign a medical authorization form. Helen refused, saying she would have to talk with her father about it. Plaintiffs use this event as the basis of an argument that Helen held her father out as having apparent authority to act for her and is now estopped to deny that her father acted as her agent.

Defendant, on the other hand, points to a number of factual matters indicating there was never an attorney-client contract between Helen and plaintiffs; Helen herself has specifically denied either entering a contract with plaintiffs or authorizing her father to enter a contract on her behalf. Plaintiffs...