Whalley Development Corp. v. First Citizens Bancshares, Inc.

• Decision Date: 12 March 1992
• Citation: 834 S.W.2d 328
• Parties: WHALLEY DEVELOPMENT CORPORATION and the Professional Group Realtors, Inc., Plaintiffs-Appellants, v. FIRST CITIZENS BANCSHARES, INC., P.T. Grantham, Stephen Anderson, and Associated Realty Services, Inc., Defendants-Appellees.
• Court: Tennessee Court of Appeals

Page 328

834 S.W.2d 328

WHALLEY DEVELOPMENT CORPORATION and the Professional Group Realtors, Inc., Plaintiffs-Appellants, v. FIRST CITIZENS BANCSHARES, INC., P.T. Grantham, Stephen Anderson, and Associated Realty Services, Inc. Defendants-Appellees.

Court of Appeals of Tennessee Western Section.

March 12, 1992.

Application for Permission to Appeal

Denied by

Supreme Court

June 1, 1992.

Lanier Fogg, Memphis, for plaintiffs-appellants.

Stephen D. Wakefield, Bradley E. Trammell, Memphis, Charles Cary, Bolivar, for defendants-appellees.

FARMER, Judge.

The plaintiffs appeal from the trial court's order granting defendants' motion to disqualify plaintiffs' attorney. The appeal is by permission pursuant to Rule 9 T.R.A.P.

In August 1989 plaintiffs, Whalley Development Corporation and The Professional Group Realtors, Inc., filed suit against defendants First Citizens Bancshares, Inc. (hereinafter the "Bank"), P.T. Grantham, Stephen Anderson, and Associated Realty Services, Inc., for fraud and breach of contract based on defendants' failure to pay plaintiffs a real estate commission. Plaintiffs contended that they had an oral agreement with the defendants under which the plaintiffs would be paid a 10% real estate commission if they produced a purchaser. Plaintiffs further contended that they did produce a purchaser, the defendant P.T. Grantham, but that the Bank refused to pay the agreed commission.

In January 1991, the defendants filed a motion to disqualify plaintiffs' trial counsel on the basis that defendants planned to call plaintiffs' attorney, Lanier Fogg, as a witness and that Fogg's testimony would be prejudicial to his clients (citing State v. Browning, 666 S.W.2d 80 (Tenn.Crim.App.1983)). In the alternative, defendants argued that Fogg was a material witness as to contested issues in the litigation and, therefore, as trial counsel he could not properly be a witness as to those issues (citing Boyd v. Boyd, 680 S.W.2d 462 (Tenn.1984)). The trial judge granted the motion and disqualified Fogg from representing plaintiffs at trial.

Prior to filing this lawsuit on behalf of plaintiffs, Fogg had conversations with attorneys representing two of the defendants, Grantham and the Bank, in which Fogg attempted to obtain a commission for his clients. The content of these conversations is disputed, and defendants argue that Fogg ought to testify on behalf of his clients as to these matters at trial.

The first such conversation, which occurred about August 23 or 24, 1989, was with an attorney for the Bank, J. William Pierce, Jr. In his deposition, Fogg claimed that Pierce informed him during this conversation that the plaintiffs would receive a 3% commission per the Bank's instructions. Pierce, on the other hand, contended that he informed Fogg that the Bank would not pay a real estate commission to anybody except the defendant Associated Realty Services, Inc. It is uncontroverted that Fogg appeared at the closing and demanded a commission of 3%.

The second conversation was with Charles M. Cary, the attorney for defendant P.T. Grantham. On August 23, 1989, Fogg telephoned Cary to inform him that Fogg's clients were claiming a 10% commission and to request assistance in obtaining the commission. Cary stated that, during this conversation, Fogg made no statement that he would seek to recover a judgment for the commission against Cary's client, Grantham. Fogg maintained, however, that he told Cary he would be looking to everybody involved for his clients' commission. In any event, it is undisputed that on August 24, 1989, Cary sent a letter by fax to the Bank's attorney, Pierce, referencing Cary's August 23 conversation with Fogg and informing Pierce that Fogg's clients were claiming a 10% commission. In the letter, Cary also requested that Grantham be indemnified as to any cause of action brought against him for a real estate commission.

Under the Code of Professional Responsibility, Rule 8, Rules of the Supreme Court, when an attorney foresees before trial that he ought to be called as a witness to testify as to disputed issues on behalf of his client, the attorney should withdraw from the trial of the case. DR 5-102(A); Bowman v. State, 598 S.W.2d 809, 811 (Tenn.Crim.App.1980). On the other hand, if the attorney learns he will be called as a witness by opposing counsel, the attorney may continue to represent his client until it becomes apparent that his testimony is or may be prejudicial to his client. DR 5-102(B); State v. Browning, 666 S.W.2d 80, 87 (Tenn.Crim.App.1983).

The Code explains the ethical considerations involved when an attorney serves as both advocate and witness:

Occasionally a lawyer is called upon to decide in a particular case whether he will be a witness or an advocate. If a lawyer is both counsel and witness, he becomes more easily impeachable for interest and thus may be a less effective witness. Conversely, the opposing counsel may be handicapped in challenging the credibility of the lawyer when the lawyer also appears as an advocate in the case. An advocate who becomes a witness is in the unseemly and ineffective position of arguing his own credibility. The roles of an advocate and of a witness are inconsistent; the function of an advocate is...