Waggoner v. Williamson
| Decision Date | 26 February 2009 |
| Docket Number | No. 2007-IA-00565-SCT.,2007-IA-00565-SCT. |
| Parties | Barthel D. WAGGONER and Jacqueline M. Waggoner v. Edward A. WILLIAMSON, Individually; Edward Williamson, P.A.; and Michael J. Miller, Individually. |
| Court | Mississippi Supreme Court |
David Jefferson Dye, Gregg Lindsey Spyridon, Philip Gipson Smith, attorneys for appellants.
Matthew Anderson Taylor, James P. Streetman, III, Jeremy Peter Diamond, Robert C. Latham, attorneys for appellees.
EN BANC.
¶ 1. Barthel D. Waggoner and Jacqueline M. Waggoner (the Waggoners) sued attorneys Edward A. Williamson, Edward Williamson, P.A. (Williamson), and Michael J. Miller (Miller), in the Adams County Circuit Court alleging breach of fiduciary duty, breach of contract, and negligent misrepresentation arising from the aggregate settlement in Annette Williams, et al. v. American Home Products Corp., et al. In their complaint against Williamson and Miller, the Waggoners requested a disgorgement of attorneys' fees; compensatory damages; punitive damages, based on allegations of actual malice and gross negligence evincing a willful, wanton and reckless disregard for their rights and commission of actual fraud; attorneys' fees and costs; an accounting of the settlement proceeds; rescission of the representation agreement; and an award of attorneys' fees to Williamson and Miller based upon quantum meruit. Williamson and Miller filed motions for summary judgment which the trial court granted in part and denied in part. The Waggoners thereafter filed with us a petition for an interlocutory appeal, which we granted. See M.R.A.P. 5. Finding error in the trial court's order granting in part defendants' motions for summary judgment, we reverse the trial court's order and remand this case to the Circuit Court of Adams County for a jury trial consistent with this opinion.
¶ 2. In 1999, Barthel D. Waggoner alleged that he sustained severe injuries resulting from the ingestion of diet drugs manufactured by American Home Products Corporation (AHP). Waggoner decided not to join a class-action suit against AHP and sought individualized representation from attorney Edward A. Williamson, who undertook the representation of Waggoner and his wife, Jacqueline, and included these claims in Annette Williams, et al. v. American Home Products Corp., et al.1 (hereinafter "the Annette Williams litigation") filed on May 23, 2000. Although the Waggoners contend that Williamson indicated they would be represented individually, Williamson represented more than thirty (30) named and unnamed plaintiffs from Mississippi in the Annette Williams litigation.
¶ 3. Williamson also associated with and entered into fee-sharing agreements with attorney Michael J. Miller of Virginia and Edward Blackmon, Jr.2 of Madison County. The Waggoners assert that Williamson never disclosed this attorney association to them, and they never approved it. At the time of this association, Miller represented fourteen clients located in Washington, D.C., and Virginia in substantially similar litigation against AHP. Subsequent to his association by Williamson, Miller represented these fourteen clients against AHP through the Annette Williams litigation.
¶ 4. On April 24, 2001, Miller negotiated an aggregate settlement3 in the amount of $73,500,000 with AHP. This settlement included thirty-one Mississippi claimants, including the Waggoners, and Miller's fourteen Virginia and Washington, D.C., claimants. Based on an aggregate settlement agreement drafted by a representative for AHP and approved by Williamson and Miller, AHP would not allocate the $55 million offered to the Mississippi claimants and the $18.5 million to the Washington, D.C., and Virginia claimants, but rather required the settling attorneys to comply with the American Bar Association's Model Rules of Professional Conduct or the counterpart state rules of professional conduct. Paragraph 5a of the settlement agreement stated:
AHP shall not be responsible for, or participate in, any allocation, whether (i) as between the Settling Attorneys and the Settling Claimants or (ii) as among any of the Settling Attorneys or (iii) as among any of the Settling Claimants. The Settling Attorneys represent that they have complied and will comply with Rule 1.8 of the ABA Model Rules of Professional Conduct or its applicable state counterpart(s).
(Emphasis added). The settling attorneys determined the distribution of the $55 million among the Mississippi claimants. The Waggoners allege that, notwithstanding the agreement of Williamson and Miller to comply with Mississippi Rule of Professional Conduct 1.8, Williamson and Miller did not disclose the following to the Waggoners and the other Mississippi claimants participating in the aggregate settlement: (1) the existence and amount of the aggregate settlement received from AHP and the resulting allocation of funds between the Mississippi, Washington, D.C., and Virginia claimants; (2) the existence and nature of all claims included within the aggregate settlement; and (3) the financial allocation to or participation of each claimant in the aggregate settlement reached with AHP, including the basis for related calculations, distributions of funds, and the required accounting for the aggregate settlement proceeds.
¶ 5. The Waggoners also allege that, although the settlement was reached in April 2001, they first learned of the aggregate settlement approximately two months later, on or about June 25, 2001, when they received a telephone call directing them to meet Williamson and his assistant at the Adams County Airport. According to the Waggoners, at the airport, Williamson presented the Waggoners with a disbursement statement setting forth the following monetary allocations:
Client Name: Barthel Waggoner
Attorney(s): Edward Williamson
Settlement Amount: $3,008,961.75
Attorney's Fee (45%): $1,354,032.79
MDL fees 3%:4 $90,268.85
MTLA Contribution:5 $30,042.87
Expenses
Miller & Associates (case
specific): $ -0-
The Williamson Law Firm
(case specific) $15,041.64
Generic Expenses: $47,475.10
Total Expenses: $62,516.74
Net to Client: $1,472,100.50
The Waggoners alleged that the meeting at the airport lasted less than twenty minutes, and the Waggoners contend that they did not have an adequate opportunity to review and question the disbursement statement or the means by which the amounts were determined. The Waggoners assert that Williamson required their signatures on the disbursement statement, otherwise they would face possible forfeiture of any right to the settlement.
¶ 6. As asserted by the Waggoners, the April 24, 2001 aggregate settlement agreement required the settling attorneys to comply with Rule 1.8 of the American Bar Association Model Rules of Professional Conduct or its applicable state counterparts. Mississippi Rule of Professional Conduct 1.8(g) states in pertinent part "[a] lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients ... unless each client consents after consultation, including disclosure of the existence and nature of all the claims ... involved and of the participation of each person in the settlement."6 The Waggoners further assert that they would not have signed the settlement documents with AHP had Williamson and Miller fully disclosed to them the items required by the AHP Settlement Agreement and Mississippi Rule of Professional Conduct 1.8(g).
¶ 7. The Waggoners likewise allege that subsequent to the signing of the disbursement statement, they became aware of other alleged wrongdoing by Williamson and Miller; therefore, they requested an accounting of the and "generic" expenses deducted from the gross recovery allocated to the Waggoners. Williamson, as asserted by the Waggoners, did not cooperate with this request, and instead, filed suit seeking a declaratory judgment in the Chancery Court for the First Judicial District of Hinds County to validate his performance of the representation agreement signed by Mr. Waggoner; however, the Waggoners filed and served the underlying action in the Adams County Circuit Court before receiving service of process in Williamson's chancery court action. The Hinds County Chancery Court matter was transferred to the Adams County Circuit Court where it remains idle, and only the action now before this Court was pursued by the parties.
¶ 8. On June 30, 2004, after filing a motion for leave to file an amended complaint and receiving permission from the circuit court via entry of an order, the Waggoners filed their Amended Complaint, which added Michael J. Miller, individually, as a defendant, and which alleged breach of fiduciary duty, breach of contract, and negligent misrepresentation against the defendants. In this amended complaint, the Waggoners requested, inter alia, disgorgement of the attorneys' fees taken by Williamson and Miller and an award of attorneys' fees to Williamson and Miller based upon quantum meruit, compensatory damages, punitive damages due to actual fraud by defendants, costs, attorneys fees, and other relief. Likewise, in their amended complaint, the Waggoners detailed alleged wrongdoing by Williamson and Miller with respect to each line-item on the disbursement statement, and they also provided instances in which Williamson and Miller purportedly allocated settlement funds to the detriment of the Waggoners and other claimants in the Annette Williams litigation. Williamson and Miller admitted via deposition testimony that they purposefully did not disclose information to the Waggoners regarding the aggregate settlement with AHP.
¶ 9....
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