Woodson v. Bank of Am., N.A.

• Decision Date: 02 June 2020
• Docket Number: No. ED 107947,ED 107947
• Parties: Debra WOODSON, Plaintiff, v. BANK OF AMERICA, N.A. and Millsap & Singer, LLC, Defendants, Millsap & Singer, P.C. and Millsap & Singer, LLC, Respondents.
• Court: Missouri Court of Appeals

602 S.W.3d 316

Debra WOODSON, Plaintiff,

v. BANK OF AMERICA, N.A. and Millsap & Singer, LLC, Defendants,Millsap & Singer, P.C. and Millsap & Singer, LLC, Respondents.

No. ED 107947

Missouri Court of Appeals, Eastern District, DIVISION FOUR.

Filed: June 2, 2020

FOR APPELLANTS: Kenneth B. McClain, II, 221 West Lexington, Suite 400, Independence, Missouri 64051.

FOR RESPONDENTS: Richard C. Wuestling, Susan M. Dimond, 1034 S. Brentwood, Suite 2100, St. Louis, Missouri 63117, Charles S. Pullium, III, 612 Spirit Drive, St. Louis, Missouri 63005.

James M. Dowd, P.J., Gary M. Gaertner, Jr., J., and Robin Ransom, J.

James M. Dowd, Presiding Judge

Introduction

Gregory Leyh, the plaintiff's expert witness in the above-styled case, appeals the judgment that granted Millsap & Singer's motion to enforce settlement and imposed a monetary sanction against Leyh. The disputed settlement concerns contempt proceedings brought by Millsap alleging Leyh violated a protective order by disclosing in a separate lawsuit a deposition marked confidential which Leyh had received in his capacity as an expert witness in this case.

We affirm the judgment to the extent it held that on July 26, 2018, the parties reached a settlement of the contempt proceedings. We reverse the remainder of the judgment including the $35,000 sanction against Leyh imposed by the trial court because we find Leyh did not engage in bad faith or unethical conduct.

Background

Leyh and Millsap have been battling in litigation for years. Leyh has represented hundreds of plaintiffs in lawsuits against Millsap alleging Millsap engaged in improper conduct in connection with its own legal representation of banks and mortgage holders in foreclosure and collection matters. In 2017, Leyh was appointed class counsel in the Stagner v. Wells Fargo Bank et al., class action pending in Ray County, Missouri which includes claims against Millsap for similar improper conduct. Millsap, for its part, has sought to sanction Leyh, decertify the Stagner class, and has filed suit against Leyh personally for malicious prosecution and abuse of process.

The underlying suit here, not brought by Leyh but by a different attorney, was filed on behalf of Debra Woodson in 2010 against Millsap and its client Bank of America for wrongful foreclosure after the bank instructed Woodson to stop making mortgage payments in order to qualify for a loan modification but then the bank began foreclosure on her home. Leyh was hired by Woodson's counsel to testify as an expert witness on issues addressing Millsap's liability. In August 2014, the parties entered into a protective order which provided that documents marked confidential were not to be disclosed or used in any current or future litigation. Woodson's counsel testified that he failed to notify Leyh of the existence of the protective order or provide him with a copy of it. Likewise, Leyh testified that he was unaware of the existence or dictates of the protective order.

Nevertheless, as plaintiff's expert, Leyh received a copy in 2014 of the deposition taken in this case of Vernon Singer, of the Millsap & Singer law firm. The deposition was marked confidential. Then, in December 2017, in his role as class counsel in the Stagner litigation, Leyh disclosed the Singer deposition during discovery in that case. So, on March 9, 2018, Millsap filed its motion for contempt alleging that Leyh's disclosure and use of the Singer deposition was a knowing and intentional violation of the Woodson protective order which warranted holding him in contempt. The court issued to Leyh its order to show cause why he should not be held in contempt and set the matter for hearing on July 26, 2018 at 2:00 p.m.

As the time for the hearing approached, the parties discussed settlement. These negotiations continued on July 26^th as Leyh and his counsel made their way together by automobile across Missouri to the St. Charles County courthouse for that afternoon's hearing. Eventually, an outline of the terms under negotiation was transcribed into a 10-paragraph, one-page document titled "Memo Memorializing Settlement by and between Greg Leyh, et. al and Millsap & Singer, et al."

The 3 paragraphs of the memorandum most relevant to this opinion are as follows:

1. $35,000 cash payment by Leyh to Millsap & Singer, PC in 14 days after execution of the settlement agreement.

2. Leyh agrees to be bound by the Woodson Protective Order.

***

10. Settlement to be completed in final settlement agreement.

As for the remainder of the memorandum, paragraphs 3, 5, 6, and 7 generally require Leyh to rectify any past disclosures which he may have already made of materials covered by the protective order and to take specific actions going forward with respect to the protective order. Paragraph 4 deems the settlement confidential, paragraph 8 calls for the dismissal of the Woodson case upon Leyh's settlement payment and the exchange of mutual releases, and paragraph 9 states that each side will be responsible for its own attorney's fees and costs.

The July 26^th negotiations culminated in the 3 o'clock hour. At 3:12 p.m., Leyh's counsel received from Millsap the final version of the memorandum. Leyh's counsel agreed to it at 3:18 p.m. Then, Millsap's counsel, with Leyh's counsel's consent, advised the court that the matter had been settled and that the hearing should be cancelled which it was.

However, during the succeeding months, the parties disputed both the terms of the purported settlement and whether the matter was even settled. The first post-July 26^th communication between the parties occurred on August 13, 2018 when Millsap's counsel sent Leyh's counsel a draft of the final settlement agreement and release of all claims. While that document tracked most of the terms set forth in the July 26^th memorandum, Millsap unilaterally changed paragraph 2 from "Leyh agrees to be bound by the Woodson Protective Order" to "Leyh agrees he is bound by the Woodson Protective Order." (Emphasis added.). Leyh refused to sign this document and instead, on August 22, 2018, sent Millsap a new version of the July 26^th memorandum which revised paragraph 2 to read "As of the effective date , Leyh agrees to be bound by the Woodson Protective Order." Millsap rejected this proposal.

On October 3, 2018, Millsap's counsel emailed Leyh's counsel and attached a new version of the final settlement agreement. The email stated: "The only issue remaining to be resolved on the settlement agreement was the language of paragraph 2. Since the parties could not agree on the revisions as proposed, we reverted back to the precise language of the settlement memo. We assume you/Greg will not have an issue with this approach as you have previously stated the memo controls." Numerous communications between counsel followed including efforts by Leyh's counsel to obtain Leyh's signature on the agreement but Leyh never signed.

On November 1, 2018, Millsap filed its motion to enforce settlement. Millsap asserted that the parties reached a settlement on July 26, 2018 at approximately 3:18 p.m. when Leyh's counsel "agreed" to the memorandum and Millsap's counsel, with Leyh's counsel's consent, notified the court that the matter had been settled and that the contempt hearing should be cancelled. Millsap alleged that after the parties were unable to agree to the form and substance of a final settlement agreement to be formally signed by both parties, Leyh should be compelled to execute the October 3, 2018 version of the agreement which parroted the terms set forth in the July 26^th memorandum.

In his response, Leyh denied that the matter had been settled. He claimed that the language of paragraph 10 of the July 26^th memorandum—"Settlement to be completed in final settlement agreement"—meant that there was no agreement until he approved and signed a final settlement agreement. Leyh also claimed that the extensive post-July 26^th communications between the parties demonstrated that no final agreement had been reached on July 26^th or at any time. Leyh's argument relied on Millsap's counsel's August 13^th unilateral change to the language of paragraph 2, one of the critical terms of the July 26^th memorandum. Leyh argued that Millsap's change to the verb tense in paragraph 2 addressing when Leyh's obligation under the Woodson protective order began, carried significant implications for the parties’ other on-going litigation and demonstrated that the parties had not reached an agreement.

Leyh further argued that Millsap's October 3^rd emailed statement that "[t]he only remaining issue to be resolved on the settlement agreement was the language in paragraph 2" further demonstrated that no agreement had been reached.

After a two-day hearing, the trial court issued its judgment in which it made a number of findings and conclusions relevant to our analysis. First, the court found that the parties had in fact reached a settlement on July 26, 2018 at 3:18 p.m. and memorialized it in their 10-paragraph memorandum. The court then delved into the parties’ extensive post-July 26^th communications and negotiations regarding the terms of a formal settlement agreement before concluding that Leyh's counsel had accepted the October 3, 2018 iteration of the settlement agreement, which the court found had reverted back to the terms of the July 26^th memorandum, and Leyh's refusal to execute that October 3, 2018 version of the agreement was in bad faith.

The court rejected as not credible Leyh's assertion that his counsel had the authority to negotiate but not settle the dispute. Moreover, the court found that Leyh's failure to advise Millsap's counsel that his own counsel's authority was limited in this regard constituted a violation of Rule 4-4.1¹ of the Missouri Supreme Court's Rules of Professional Responsibility that imposed on Leyh as an attorney the duty to be truthful to opposing counsel. As a result, the court imposed a $35,000 sanction against Leyh based on this finding that he had acted...