Willey v. Riley, 94-130

• Decision Date: 20 December 1995
• Docket Number: No. 94-130,94-130
• Citation: 541 N.W.2d 521
• Parties: 11 IER Cases 445 Wythe WILLEY, Appellee, v. Tom RILEY and Tom Riley Law Firm, P.C., Appellants.
• Court: Iowa Supreme Court

Page 521

541 N.W.2d 521

11 IER Cases 445

Wythe WILLEY, Appellee, v. Tom RILEY and Tom Riley Law Firm, P.C., Appellants.

No. 94-130.

Supreme Court of Iowa.

Dec. 20, 1995.

David J. Dutton and James R. Hellman of Dutton, Braun, Staack, Hellman & Iverson, P.L.C., Waterloo, and T. Todd Becker, Cedar Rapids, for appellants.

Timothy S. White of White & Johnson, P.C., Cedar Rapids, for appellee.

Considered by McGIVERIN, C.J., and LARSON, NEUMAN, ANDREASEN, and TERNUS, JJ.

McGIVERIN, Chief Justice.

In this action by plaintiff attorney against defendants, his former law firm and employer, two questions are presented. On appeal, defendants contend substantial evidence did not support submission by the district court to the jury of plaintiff's claim for intentional interference with a prospective contract. On cross-appeal, plaintiff attorney contends the court erred in granting defendants summary judgment on plaintiff's claim for conversion concerning the handling of a case settlement check.

Finding reversible error only in the district court's submission to the jury of plaintiff's claim for intentional interference with a prospective contract, we reverse on the appeal and affirm on the cross-appeal. We remand for appropriate judgment.

I. Background facts and proceedings. In June 1987, attorney Tom Riley, of the Tom Riley Law Firm, P.C., hired attorney Wythe Willey to work as a full-time associate for the law firm. Under the terms of Willey's employment agreement, Riley agreed to compensate Willey:

(1) A base salary of $60,000 per year, payable periodically or 60% of total billings, whichever is greater, and

(2) A bonus equal to one-third of the firm "profits" on contingent fee cases that [Willey] handle[d] and [brought] into the office. "Profits" are generally the balance received by the [Tom Riley] office after deducting hourly charges and expenses.

(3) For cases in which [Willey] [did] not participate, a bonus equal to 10% of the legal work that [he] [brought] into the office.

Soon thereafter, Willey went to work for Riley and the law firm and received regular compensation based on the agreement.

On March 30, 1990, Willey left several letters at the Tom Riley Law Firm office for Riley stating that he was resigning from his associate position with the law firm effective immediately. Riley was out of town on the day Willey resigned, and Willey did not inform Riley in person or over the telephone of his resignation.

Upon returning to the office on April 1, Riley learned of Willey's resignation when he found the letters left by Willey. In one letter, Willey itemized sums totaling $235,664 that he contended the law firm still owed him at the time of his resignation.

On April 12, after his resignation from the law firm, Willey filed a petition at law in district court against Riley and the law firm seeking alleged unpaid wages, damages, and attorney fees pursuant to Iowa Code chapter 91A (1989). Riley and the law firm answered and counterclaimed, alleging Willey owed the firm damages based on fees Willey allegedly received directly from clients for services rendered to clients while employed by the law firm. One alleged instance involved Willey's representation of Reese Communications Companies, Inc., a public relations company that performs lobbying work with state legislatures and the United States Congress for Philip Morris U.S.A. and other companies. This allegation involved fees Willey allegedly received from Reese and failed to turn over to his employer law firm. ¹

Defendants also alleged Willey wrongfully entered into a separate contract and accepted money for services from Philip Morris without payment being turned over to the law firm.

In March 1991, Willey amended his petition against Riley and the law firm to include allegations that (1) Riley intentionally interfered with prospective contractual relationships between Willey and two companies, Reese and Philip Morris, and that (2) Riley wrongfully converted a $650,000 settlement check in a wrongful death case in which Willey was the lead attorney. The conversion claim was dismissed by the court prior to trial in sustaining defendants' motion for summary judgment.

The case proceeded to trial.

The jury found defendants were liable under Iowa Code chapter 91A (1991) for wrongfully withholding $35,599.07 in wages from Willey, with $32,590.53 of that amount found to be intentionally withheld. This verdict and judgment thereon is not challenged on appeal by either party.

The jury also awarded Willey $30,000 in damages after finding defendants intentionally interfered with Willey's prospective contractual relationship with Philip Morris. The jury also found defendants intentionally interfered with Willey's contractual relationship with Reese but concluded Willey suffered no damages as a result of the wrongful interference.

The district court entered a total judgment, including liquidated damages pursuant to Iowa Code section 91A.2(6), of $98,189.60 with interest against defendants.

After the verdicts, defendants filed a motion for judgment notwithstanding the verdict, see Iowa R.Civ.P. 243, in which they claimed, as a matter of law, plaintiffs failed to generate a jury question on the intentional interference with a prospective contract claim. In its motion, defendants claimed Willey failed to prove that defendants acted with a purpose to financially injure or destroy Willey. This motion was overruled and defendants filed a notice of appeal limited to the award of $30,000 to plaintiff for interference with a prospective contract with Philip Morris.

Plaintiff's intentional interference with a prospective contract claim with Philip Morris, which survived defendants' motions for directed verdict and judgment notwithstanding the verdict, is the only issue raised in defendants' appeal. Plaintiff's conversion claim, dismissed prior to trial pursuant to a summary judgment motion filed by defendants, is the only issue raised in plaintiff's cross-appeal.

The record indicates that the parties have each filed charges with the appropriate authority claiming violations of the canons of professional responsibility by the other party in actions at issue in the present case. We do not address those ethics charges in this opinion.

II. Defendants' appeal concerning plaintiff's claim of intentional interference with a prospective contract. The appeal, filed by defendants Riley and the law firm, is from the district court's order overruling defendants' motion for judgment notwithstanding the verdict in favor of plaintiff on plaintiff's claim for intentional interference with a prospective contractual relationship with Philip Morris. The intentional interference claim is rooted in two telephone calls initiated by Tom Riley, Willey's former employer, to Philip Morris, a company for which Willey formerly lobbied.

A. Additional facts. In August 1988, after Willey joined the law firm, Willey entered into a service agreement with Reese Communications Companies, Inc., to perform various services from September 1, 1988 to December 31, 1989. At that time, Reese hired Willey to be a company representative in Iowa and to manage a pilot program for Philip Morris involving grass roots lobbying efforts.

In January 1990, upon termination of his Reese lobbying contract, Willey entered into a one-year professional services agreement directly with Philip Morris to perform various federal lobbying functions for the company. Philip Morris compensated Willey $2,500 each month under the contract from January 1, 1990 to December 31, 1990. ²

Riley allegedly did not learn of Willey's contractual agreement with Philip Morris until after March 30, 1990, the day Willey terminated his employment with the law firm. Willey admitted he never discussed with Riley his contractual relationship with Philip Morris. Riley allegedly first learned of Willey's connection to Philip Morris by way of a memorandum that was faxed from Patricia Wilson, midwest regional manager of Philip Morris' government affairs division, to Willey at the law firm on Friday, March 30, 1990 at 6:03 p.m. Wilson, in charge of Philip Morris' lobbying activities in Iowa, was the person to whom Willey reported on a regular basis. Willey had given Wilson the law firm's telephone and fax numbers in order for her to know how and where to reach him if needed. Willey did not inform Wilson of his plans to resign from the law firm and move to a new location until after he had completed his move on April 2, 1990. At the time Philip Morris faxed the memorandum to the law firm in care of Willey, Riley was out of town and Willey had already resigned from the firm and was gone from the office.

After the fax was brought to Riley's attention on Monday, April 2, Riley initiated one of two telephone calls to Patricia Wilson of Philip Morris. The first conversation occurred on April 2, the same day Riley returned to the office and learned of Willey's resignation.

On that date, prior to Riley telephoning her, Wilson telephoned the law firm and asked to speak with Willey in regard to the fax. A secretary or receptionist of the law firm informed Wilson that Willey was not in the office at that time, but, if the fax was sent to the law firm, Willey must have received it.

Wilson was not informed during the telephone conversation with the secretary or receptionist that Willey had resigned from the firm. Wilson left a message that she was desperate to contact Willey and that "if anybody at the firm or just anyone knew where he was, to please have him call [her]." On the same day as Wilson's telephone call, Riley saw the message and fax from Wilson and then telephoned her.

When Riley telephoned Wilson, he informed her he was in possession of the memorandum that she had faxed to Willey and then he began asking her questions about Willey's relationship with Philip Morris. According to Wilson, Riley did not say anything derogatory about Willey...