Lee v. Thompson
| Docket Number: | 2008-CA-01932-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 09-09-2010 Opinion Author: Pierce, J. Holding: On Direct Appeal: Affirmed and Remanded. On Cross-Appeal: Reversed and Remanded. |
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| Additional Case Information: |
Topic: Contract - Refund - Pro rata basis - Jurisdiction - Uniform Enforcement of Foreign Judgments Act - Contingency fee Judge(s) Concurring: Waller, C.J., Carlson, P.J., Dickinson, Randolph, Lamar, Kitchens and Chandler, JJ. Non Participating Judge(s): Graves, P.J. Procedural History: Summary Judgment Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 01-31-2008 Appealed from: Hinds County Circuit Court Judge: Bobby DeLaughter Disposition: The trial court granted partial summary judgment to the plaintiffs and partial summary judgment to the defendant. Case Number: 251-04-01301 |
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| Party Name: | Attorney Name: | |||
| Appellant: | Herbert Lee, Jr. |
LEONARD McCLELLAN |
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| Appellee: | Gloria Thompson and Deborah Dixon | LANCE L. STEVENS |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Refund - Pro rata basis - Jurisdiction - Uniform Enforcement of Foreign Judgments Act - Contingency fee |
| Summary of the Facts: | Gloria Thompson and Deborah Dixon hired attorney Herbert Lee, Jr., to represent them in diet-drug litigation against the diet-drug manufacturer, American Home Products. The parties dispute whether the contingency fee agreed to was forty percent or forty-five percent. The diet-drug lawsuit settled for an aggregate amount of approximately $32 million. As part of the settlement, a Multi District Litigation 1203 assessment fee of six percent of the total settlement was withheld and sent to the MDL 1203 Fee and Cost Account. The six percent fee resulted from Lee contracting with the Plaintiffs’ Management Committee of MDL 1203 to provide he and his clients certain “common benefit” discovery material. More than a year after the settlement of the plaintiffs’ cases against AHP, the trustee of the MDL 1203 fund made a determination that one-third of all the sums deposited into the MDL 1203 Fee and Cost Account should be returned to those who had contributed them through a process approved by the MDL trustee’s office. Consequently, two percent of Lee’s diet-drug clients’ $32 million settlement was returned to Lee. In allocating the refund, Lee retained forty-five percent as his attorney’s fee and refunded each client a per capita share, rather than a pro rata share, of the remaining fifty-five percent. This resulted in each of Lee’s diet-drug clients receiving one-thirteenth of the refund instead of an amount based on a percentage of the total settlement the client received. However, Lee no longer represented Thompson and Dixon and they would not sign the necessary acknowledgment and consent form; therefore, their refund was not sent to Lee for disbursement. The refunds allocated for Thompson and Dixon still remain on deposit with the MDL 1203 Trustee. Thompson and Dixon subsequently filed the present lawsuit against Lee, claiming breach of contract, tortious breach of contract, failure to properly refund the plaintiffs their MDL fees, and that Lee is only entitled to be paid on a quantum meruit basis. Lee filed a motion for summary judgment alleging that no genuine issue of material fact existed regarding whether the plaintiffs had signed the retainer agreements and disbursement sheets authorizing a forty-five percent contingency fee. Thompson and Dixon moved the trial court to grant partial summary judgment in their favor. The trial court entered a memorandum opinion and order granting partial summary judgment to both parties. The trial court found that the plaintiffs had ratified the forty-five percent paid to Lee as attorney’s fees and there existed no genuine issue of material fact with respect to the breach of contract and tortious breach of contract claims. The trial court granted summary judgment to Lee as to that issue. Because of this holding, the trial court also found that payment to Lee in quantum meruit is not appropriate and summary judgment was granted in favor of Lee on this claim, as well. With regard to the MDL fees, the trial court found that, “[t]he MDL Agreement entered into on behalf of his clients by Lee indicates that [six percent] of the settlement of each client shall be deposited in the MDL Fund.” The trial court further found that certain federal MDL 1203 pretrial orders were applicable in the present matter and required disbursement of the MDL refund on a pro rata basis. Therefore, summary judgment was granted to the plaintiffs as to this issue. Both parties appeal. |
| Summary of Opinion Analysis: | Issue 1: Refund Lee argues that the trial court incorrectly relied on three pretrial orders entered by the United States District Court for the Eastern District of Pennsylvania, MDL 1203 Pre-Trial Orders 467, 517, and 2152, in granting summary judgment to the plaintiffs on the issue of the MDL fee refund. Lee alleges that these pretrial orders are inapplicable because no mechanism exists to transfer a case from a Mississippi state court to a federal MDL court and because the circuit court did not enter an order as required by the language of Pre-Trial Order No. 467. The MDL 1203 Pre-Trial Orders 467 and 2152 are applicable in the present matter. MDL 1203 Pre-Trial Order 467 specifically states, “The Court shall establish an insured, interest bearing escrow account to receive and disburse funds as provided in this Order. The Court will, by future Order, designate an escrow agent to manage the account. All funds in the account will be held as funds subject to the direction of the Court.” Lee admits that he willingly participated in the MDL Common Benefit Fund, and therefore he voluntarily subjected himself to the orders of the United States District Court for the Eastern District of Pennsylvania in regard to the funds he placed in the MDL account. Therefore, the Pre-Trial Orders are applicable. Because the Pre-Trial Orders are applicable, the trial court was correct in granting summary judgment to the plaintiffs as to the issue of whether the MDL refund was to be distributed on a pro rata basis. Lee argued in his motion for summary judgment and now on appeal that “each of [Lee’s thirteen] diet-drug clients paid an equal amount of the Common Benefit Fund because each received equal benefits from the funds. Thus, each paid [one-thirteenth] of the total amount.” Lee further argued, “Neither Thompson nor Dixon paid into the MDL Fund based upon the amount of their individual settlements and are not entitled to refunds based upon the amounts of their individual settlement amounts.” However, Lee’s argument is mathematically illogical because the assessment was a percentage, rather than a specific dollar amount. Each client cannot contribute the same amount when the assessment is a percent of their recovery unless each client recovers the same amount. Based on the requirements of Pre-Trial Order 2152, as evidenced by the above example, the entire six-percent MDL fee was to be deducted from Lee’s attorney’s fees. Payments to all of Lee’s thirteen diet-drug clients should have been made in this manner. Had that been done, the entire two-percent refund would have belonged to Lee – as the entirety of the MDL 1203 fee would have been deducted entirely from his attorney’s fees. Therefore, the trial court was correct in granting summary judgment to the plaintiffs as to the MDL refunds because there is no genuine issue of material fact that such payments should have been made on a pro rata basis. However, this issue must be remanded to the trial court to determine if the settlement was distributed in accordance with MDL 1203 Pre-Trial Order 2152, and if not, to order such distribution. Issue 2: Jurisdiction Lee questions the trial court’s jurisdiction to hear this case and further argues that the trial court improperly granted full faith and credit to the order of a foreign court in granting the plaintiffs summary judgment on this issue of the MDL fee refund. Lee purposefully and willfully availed himself of the common-benefit discovery and agreed to pay into the MDL fund in exchange. Therefore, the argument he makes on this issue is without merit. Lee also argues the plaintiffs, Thompson and Dixon, should have followed the procedure laid out in the Uniform Enforcement of Foreign Judgments Act, Mississippi Code Sections 11-7-301 through 11-7-309, in order to have the MDL 1203 Pre-Trial Orders enforced. However, the procedure set forth in the Uniform Enforcement of Foreign Judgments Act is applicable to final judgments upon which collection can be made - - not pretrial orders. Issue 3: Contingency fee Thompson and Dixon argue that the trial court erred in granting summary judgment to Lee regarding the disputed contingency fee. The trial court held that in signing the settlement-disbursement sheet, the plaintiffs became aware that Lee was retaining forty-five percent of their recovery as attorney’s fees and agreed to let him do so. Both plaintiffs allege Lee coerced them into signing the disbursement sheets which stated Lee’s fee was forty-five percent, because Lee stated that their failure to do so would delay their compensation or prevent it all together. Both Thompson and Dixon allege that their attorney – who owed them all of the fiduciary duties which are part of the attorney-client relationship – “strong-armed” them into signing the disbursement sheets. This matter must be remanded to the trial court for the finder of fact to determine if such coercion was present at the time the disbursement sheets were signed, keeping in mind the fiduciary relationship between a lawyer and his client. It will be a question for the jury as to whether Thompson and Dixon originally entered a contract with Lee to pay him forty percent or forty-five percent of their recovery. |
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