Barrett v. Jones, Funderburg, Sessums, Peterson & Lee, LLC
| Docket Number: | 2008-IA-00421-SCT Linked Case(s): 2008-M-00421-SCT2008-IA-00421-SCT2008-IA-00421-SCT |
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| Oral Argument: | 08-11-2009 | |
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| Supreme Court: | Opinion Link Opinion Date: 11-12-2009 Opinion Author: Chandler, J. Holding: Reversed and Remanded |
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| Additional Case Information: |
Topic: Joint venture - Sanctions - Inherent powers of court - URCCC 1.10 - URCCC 1.03 - Vicarious liability - Section 79-13-307(c) - Ordinary course of business - Section 79-13-305 Judge(s) Concurring: Waller, C.J., Graves, P.J., Randolph and Lamar, JJ. Non Participating Judge(s): Dickinson and Kitchens, JJ. Dissenting Author : Carlson, P.J., with separate written opinion. Dissent Joined By : Joined In Part by Pierce, J. Dissenting Author : Pierce, J., with separate written opinion. Dissent Joined By : Joined In Part by Carlson, P.J. Procedural History: Interlocutory Appeal Nature of the Case: CIVIL - OTHER; Interlocutory Appeal |
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| Trial Court: |
Date of Trial Judgment: 02-26-2008 Appealed from: Lafayette County Circuit Court Judge: William F. Coleman Disposition: The trial court sanctioned the defendants by striking their answer, striking their motion to compel arbitration, entering a default against all defendants, and ordering the defendants to pay the plaintiffs’ reasonable attorneys fees and costs incurred since July 17, 2007. Case Number: L07-135 |
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| Consolidated: Consolidated with 2008-IA-00788-SCT Don Barrett, Individually, Barrett Law Office, P.A., and Lovelace Law Firm, P.A. v. Jones, Funderburg, Sessums, Peterson & Lee, LLC; Lafayette Circuit Court; LC Case #: L07-135; Ruling Date: 04/16/2008; Ruling Judge: William Coleman | ||
| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Don Barrett, Individually; Barrett Law Office, P.A. and Lovelace
Law Firm, P.A. |
LARRY D. MOFFETT,
WILTON V. BYARS, III,
SHEA STEWART SCOTT |
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| Appellee: | Jones, Funderburg, Sessums, Peterson & Lee, LLC | WILLIAM K. DUKE, JR., GRADY F. TOLLISON, CAMERON MORGAN ABEL | ||
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| Topic: | Joint venture - Sanctions - Inherent powers of court - URCCC 1.10 - URCCC 1.03 - Vicarious liability - Section 79-13-307(c) - Ordinary course of business - Section 79-13-305 |
| Summary of the Facts: | The Circuit Court of Lafayette County imposed sanctions against all members of the Scruggs Katrina Group, a joint venture, along with Don Barrett and Richard Scruggs individually, based upon the misconduct of Richard Scruggs, who pled guilty to conspiracy to bribe the trial judge in the underlying lawsuit over attorneys’ fees. The SKG co-venturers, including the Scruggs Law Firm, P.A.; Nutt & McAllister, PLLC; the Barrett Law Office, P.A.; and the Lovelace Law Firm, along with Don Barrett and Richard Scruggs individually, were defendants in a fee-dispute lawsuit filed by a former co-venturer, the law firm of Jones, Funderburg, Sessums, Peterson & Lee, LLC. The trial court sanctioned the defendants by striking their answer, striking their motion to compel arbitration, entering a default against all defendants, and ordering the defendants to pay the plaintiffs’ reasonable attorneys fees and costs incurred since July 17, 2007. The Supreme Court granted an interlocutory appeal. |
| Summary of Opinion Analysis: | Issue 1: Inherent powers The appellants argue that, absent a finding of bad faith personal to the party to be sanctioned, a court lacks the inherent power impose a sanction on that party. A court has the inherent power to impose sanctions in order to protect the integrity of the judicial process. URCCC 1.10 provides that “no person shall undertake to discuss with or in the presence or hearing of the judge the law or the facts or alleged facts of any case then pending in the court or likely to be instituted therein, . . . nor attempt in any manner, . . . to influence the decision of the judge in any such case or matter.” URCCC 1.03 provides that any person embraced by the rules who violates any provision of the rules “may be subjected to sanctions, contempt proceedings, or other disciplinary actions imposed or initiated by the court.” The Jones Firm argues that there was evidence before the trial court that the appellants had constructive notice of the criminal acts, because the $40,000 in bribe money was reimbursed from joint-venture funds; thus, there was evidence that they acted in bad faith. The trial court rejected this evidence, concluding that there was “little, if any” evidence the plaintiffs had knowledge of the bribery conspiracy, and the court ordered sanctions based upon the vicarious liability of joint venturers. Where the basis for the award is itself a product of abused discretion, so too is the award. The trial court’s refusal to attribute knowledge of the bribery conspiracy to the appellants was not manifestly erroneous; therefore, the finding was within the court’s discretion. As a joint venture, SKG was governed by Mississippi’s partnership law, the Uniform Partnership Act of 1997. Under the Act, a joint venture is liable for any penalty incurred as the result of a wrongful act or omission, or other actionable conduct, of a joint venturer acting in the ordinary course of business of the joint venture. In the absence of an agreement with the claimant or as otherwise provided by law, all co-venturers are jointly and severally liable for joint-venture obligations. A litigant may sue a joint venture in the name of the partnership or he may bring an action against any or all of the partners in the same action or in separate actions. However, a judgment against a partnership may not be satisfied from a partner’s assets unless there is also a judgment against the individual partner. Rather than suing SKG, the Jones Firm chose to sue the co-venturers, a litigation strategy encouraged by section 79-13-307©, and two individuals who were not co-venturers. The trial court possessed the discretion to sanction SKG, but only upon a finding that Richard Scruggs’s misconduct was within the ordinary course of business of SKG. Issue 2: Ordinary course of business Under section 79-13-305, a partnership is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a partner acting in the ordinary course of business of the partnership or with authority of the partnership. "Course of business” is defined as what is usually done in the management of trade or business. The SKG joint-venture agreement specified that the joint venture’s purpose was to “bring a number of lawsuits on behalf of individuals and businesses who were wrongfully denied insurance coverage for property damage arising out of Hurricane Katrina.” SKG earned $26.5 million in profits from the Katrina litigation. When a fee dispute arose, SKG ousted the Jones Firm, resulting in its suit against SKG’s remaining co-venturers for a share of the joint-venture profits. When the Jones Firm sued, the remaining co-venturers hired attorneys and filed a motion to compel arbitration pursuant to the joint-venture agreement’s arbitration clause. Subsequently, Richard Scruggs pleaded guilty to a conspiracy to bribe the trial judge to enter an order granting the motion to compel arbitration. Members of the other co-venturer law firms testified that they lacked any knowledge of the conspiracy and did not authorize or ratify it. The record aptly demonstrates that the scope of SKG’s business did not contemplate an attempted bribery of the trial judge. There was no evidence that Scruggs intended, by this act, to benefit SKG; in fact, the Nutt Firm, having been allotted thirty-five percent of the net fee by the joint-venture agreement, could not have lost its share of the net fee at a trial over the division of the remaining sixty-five percent. Because the misconduct of Richard Scruggs was outside the ordinary course of SKG business, the trial court abused its discretion in finding otherwise. Thus, the order imposing sanctions upon the appellants is reversed. |
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