Vowell & Meelheim, P.C. v. Beddow, Erben & Bowen, P.A.

• Decision Date: 19 April 1996
• Citation: 679 So.2d 637
• Parties: VOWELL & MEELHEIM, P.C., and J. Scott Vowell v. BEDDOW, ERBEN & BOWEN, P.A. BEDDOW, ERBEN & BOWEN, P.A. v. VOWELL & MEELHEIM, P.C., and J. Scott Vowell. 1940528, 1940566.
• Court: Alabama Supreme Court

Page 637

679 So.2d 637

VOWELL & MEELHEIM, P.C., and J. Scott Vowell v. BEDDOW, ERBEN & BOWEN, P.A.

BEDDOW, ERBEN & BOWEN, P.A. v. VOWELL & MEELHEIM, P.C., and J. Scott Vowell.

1940528, 1940566.

Supreme Court of Alabama.

April 19, 1996.

Rehearing Denied July 19, 1996.

Lee H. Zell of Balch & Bingham, Birmingham, and Susan S. Wagner of Berkowitz, Lefkovits, Isom & Kushner, Birmingham, for Vowell & Meelheim, P.C.

Dennis G. Pantazis and Brian M. Clark of Gordon, Silberman, Wiggins & Childs, P.C., Birmingham, for Beddow, Erben & Bowen, P.A.

INGRAM, Justice.

These appeals arise out of a dispute between lawyer J. Scott Vowell and Vowell & Meelheim, P.C., and Beddow, Erben & Bowen, P.A. ("Beddow"), regarding the division of the legal fees received in four contingency fee cases. The trial court conducted an ore tenus proceeding and issued a comprehensive order containing a detailed statement of the facts as well as an exhaustive discussion of the applicable law. The trial court entered a judgment against Vowell and the Vowell firm and in favor of the Beddow firm, in the amount of $220,891.15. Specifically, the trial court held that Vowell was entitled only to the percentage of the fees recovered that he would have received had he stayed with the Beddow firm, plus a reasonable hourly rate for the time he spent in completing the work on the four cases. ¹ Vowell and the Vowell firm appeal, and Beddow cross appeals.

At the outset we note that the trial court's findings of fact will not be disturbed unless they are clearly erroneous, without supporting evidence, manifestly unjust, or against the great weight of the evidence. Marvin's, Inc. v. Robertson, 608 So.2d 391 (Ala.1992). Furthermore, this Court will not presume error and will affirm the trial court's judgment if it is supported by any valid legal ground. Marvin's, Inc., supra.

The facts, as found by the trial court, are as follows: J. Scott Vowell was first employed as a law clerk in 1960 by the Beddow law firm, which was then a partnership known as Beddow, Embry & Beddow. After Vowell's graduation from law school in 1961, he was employed as an attorney by that same law firm, and he became a partner in the early 1970s.

In 1978, the structure of the Beddow firm was changed from a partnership to a professional association. Its partners became shareholders, officers, and directors of the new professional association, which took the name Beddow, Fullan & Vowell, P.A. In 1987, Vowell's percentage participation in the profits of the firm was 21%.

In 1987, the law firm employed Richard Meelheim and Gregory McKay as associates. Vowell, Meelheim, and McKay represented plaintiffs in personal injury cases and other civil cases. In August of that year, Vowell informed Bowen and Beddow that Vowell, Meelheim, and McKay were leaving the Beddow firm. Vowell and Meelheim began contacting clients of the Beddow firm to secure their agreement to be represented by Vowell and his new firm. These contacts were made either in writing or by telephone in September 1987, while Vowell was still a shareholder, officer, and director of the Beddow firm and were made without the knowledge or consent of the other shareholders. The contacts were made from the offices of the Beddow firm. Vowell never advised the other members of the firm that he was meeting with the clients with respect to Vowell's departure from the firm and his representing them in the future.

Vowell, Meelheim, and McKay moved out of the Beddow firm's offices on October 1, 1987. Included in the materials moved were the lawyers' files on the four cases in dispute here. The trial court found from the evidence that there was never any agreement among the attorneys concerning the distribution of the fees to be earned from these four cases.

Vowell and Meelheim reached an agreement with the four clients that the Vowell firm would represent each of them. The four clients effectively terminated the Beddow firm as counsel for them.

The dispositive issue on appeal is whether the trial court erred in its division of the contingent fees earned from the four cases at issue. Specifically, in regard to these four cases, did Vowell breach any fiduciary duty or obligations to the Beddow firm, and, if so, what would be the appropriate division of legal fees that were recovered from the four cases?

Citing Chief Judge Benjamin Cardozo's opinion in Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545 (1928), as well as Meehan v. Shaughnessy, 404 Mass. 419, 535 N.E.2d 1255 (1989), the trial court held that Vowell owed fiduciary obligations to the Beddow firm and that, if there was any conflict, it was Vowell's duty as a fiduciary to consider the interest of the Beddow firm first.

In Meehan, Meehan and Boyle were partners in a law firm. They decided to leave that firm and form their own law partnership. Planning to leave the old firm, both began making lists of clients and of referring attorneys involved in cases they were handling. The trial court held that Meehan and Boyle did not breach the fiduciary duty owed to their partners. However, the Supreme Judicial Court of Massachusetts reversed, holding that Meehan and Boyle did breach their fiduciary duties. Specifically, that court stated:

"We agree that Meehan and Boyle, through their preparation for obtaining clients' consent, their secrecy concerning which clients they intended to take, and the substance and method of their communications with clients, obtained an unfair advantage over their former partners in breach of their fiduciary duties.

"A partner has an obligation to 'render on demand true and full information of all things affecting the partnership to any partner.' "

404 Mass. at 436, 535 N.E.2d at 1264. (Citation omitted.)

As stated by the trial court, while the meetings between Vowell and Meelheim and the four clients may not have been secret or surreptitious, the meetings were not disclosed to the other lawyers in the Beddow firm. We agree with the trial court that Vowell breached his fiduciary obligations owed to the Beddow firm, by contacting clients of that firm and obtaining employment as...