Abbott v. Chesley

413 S.W.3d 589, 2013 WL 4635160, 2013 Ky. LEXIS 367
CourtKentucky Supreme Court
DecidedAugust 29, 2013
DocketNo. 2011-SC-000291-DG
StatusPublished
Cited by33 cases

This text of 413 S.W.3d 589 (Abbott v. Chesley) is published on Counsel Stack Legal Research, covering Kentucky Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Abbott v. Chesley, 413 S.W.3d 589, 2013 WL 4635160, 2013 Ky. LEXIS 367 (Ky. 2013).

Opinion

Opinion of the Court by

Justice VENTERS.

This case arose in the aftermath of the settlement of Darla S. Guard, et' ál. v. American Home Products, Inc. (Guard).1 The Guard case, which is also known as “Jonetta Moore, et al. v. American Home Products, Inc.,” or the “Moore ” case, was brought by Kentucky residents who had taken the popular diet drug known as Fen-Phen. Each Appellant/Cross-Appel-lee (collectively “Appellants”) was a plaintiff in the Guard case and was represented under a contingent fee contract by Appel-lees/Cross-Appellants (collectively “Appel-lees”) 2 Shirley A. Cunningham, William J. Gallion, or Melbourne Mills, Jr. Appellee Stanley M. Chesley later joined the plaintiffs’ team, of attorneys. Appellants’ complaint alleges that Appellees breached their fiduciary duties by wrongfully retaining or by improperly disbursing a substantial portion of the Guard case settlement money that should have gone to Appellants.

The trial court granted Appellants a partial summary judgment on the claim that Cunningham, Gallion, and Mills (“CGM”)3 breached their fiduciary duty. The trial court concluded that genuine issues of material fact existed in connection with Chesley’s role, and so the motion for summary judgment against him was denied. The Court of Appeals reversed the partial summary judgment against CGM and remanded the case against them for further proceedings. It declined Appellants’ request for review of the trial court’s [596]*596denial of summary judgment against Ches-ley.

On discretionary review, we now address the following issues:

1) Whether the Court of Appeals erred in reversing the partial summary judgment entered against CGM;
2) Whether the Court of Appeals erred by declining to review the trial court’s denial of summary judgment against Chesley;
3) Whether the trial court could impose upon CGM joint and several liability for the damages sustained by Appellants;
4) Whether the Court of Appeals erred in affirming the trial court’s decision refusing to transfer the case from the Boone Circuit Court to the Fayette Circuit Court; and,
5) Whether the trial court erred in crediting the monetary judgment against CGM with undocumented expenses that Mills claimed he incurred in the Guard case.

For the reasons set forth below, we reverse the Court of Appeals’ opinion upon the issue of CGM’s breach of fiduciary duty and reinstate the partial summary judgment entered against CGM by the trial court. We also conclude that the imposition of joint and several liability against CGM was proper, and so we likewise reverse that aspect of the Court of Appeals’ opinion. In addition, we affirm the Court of Appeals’ conclusion that the denial of summary judgment against Ches-ley was not an appealable issue; we affirm the Court of Appeals’ determination that the Boone Circuit Court properly refused to transfer the case to the Fayette Circuit Court; and we agree with Appellants that the trial court erred by crediting CGM with the undocumented expenses claimed by Mills.

I. FACTUAL AND PROCEDURAL BACKGROUND

After discovery in the mid-1990s that the popular weight-loss drug combination of fenfluramine and phentermine known as Fen-Phen was linked to heart damage and other dangerous side-effects, Fen-Phen was taken off the market. American Home Products (American Home), the manufacturer of Fen-Phen soon faced several lawsuits by Fen-Phen users. Appel-lees Cunningham, Gallion, and Mills were Kentucky attorneys with separate law practices. However, they pooled their talents and resources into a collective effort to represent some 431 individual plaintiffs, all of whom were Kentucky residents who had taken Fen-Phen. Each of the 431 plaintiffs had signed a contingent fee contract with Cunningham, Gallion, or Mills. Cunningham’s clients had agreed to a contingent fee of “33 1/3% of the total sum recovered, whether by settlement or by trial ...” plus reimbursement for expenses “directly incurred in investigating or litigating this claim.... ” Gallion’s contingent fee agreement provided for “33% of the total sum recovered, whether by settlement or by trial ...” plus expenses “incurred in investigating or litigating this claim[.]” Mills’s contingent fee agreement provided that “Attorney’s fees shall be set by the court, but shall not be more than 30% of the client’s net recovery.” Expenses were to be “repaid [to the attorney] off the top before calculation of fee.”

In the early stages of the litigation, Ap-pellees had the case certified by the Boone Circuit Court as a class action. Chesley had only a few Fen-Phen clients, but he had experience in the settlement of Fen-Phen proceedings, having served on the management committee of the national Fen-Phen class action litigation. Because of Chesle/s experience and national reputation, CGM agreed to his participation in the Guard case. Chesley, Gallion, Cun[597]*597ningham, Mills, and an attorney from Cincinnati named Richard Lawrence who also represented a few individual Fen-Phen claimants, entered into a written agreement outlining the role each attorney was to perform in the litigation and agreeing upon a method of sharing the fees earned in the case. Gallion would serve as lead trial counsel in the event the case was tried, and would prepare the case accordingly. Cunningham and Mills would enroll clients and maintain client contact information. Chesley would act as “lead negotiator” in the effort to secure a collective settlement of the claims.

The written agreement provided that if a negotiated settlement was achieved, Chesley would take a 21%-share of the combined attorneys’ fee; CGM would split 74% of the total fee among themselves and their associates; and Richard Lawrence, who is not a party to this case, would take 5%. If a negotiated settlement was not achieved, the lawyers agreed that Chesley would get 15% of the fees generated by a verdict and CGM would share 80%, with Lawrence receiving the remaining 5%. The agreement also provided that “all parties to this agreement shall have the right to review all contracts between themselves and any other parties that may affect the fees earned and all clients shall be advised of this agreement.” The agreement further provided that “all parties to this agreement shall be identified as co-counsel in the class action styled Guard v. American Home Products in Boone Circuit Court in Kentucky.” Appellants however were not made aware of this agreement among the attorneys.

Eventually, American Home agreed to pay an aggregate sum of $200 million to settle the claims of all of the Guard case claimants. The settlement agreement provided that Appellees would obtain, in the Boone Circuit Court, the decertification of the Guard class action and the dismissal of all the individual claims. The settlement fund, less $7.5 million to be reserved for possible future claimants, was allocated among the 481 clients with whom CGM had fee contracts. The claims of 143 other individuals, who had joined the class action but had not personally retained any of Appellees, were dismissed without prejudice with the expectation .that those individuals could elect to join the national settlement. American. Home left it to CGM to determine how much of the fund would be allocated to each client.

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Cite This Page — Counsel Stack

Bluebook (online)
413 S.W.3d 589, 2013 WL 4635160, 2013 Ky. LEXIS 367, Counsel Stack Legal Research, https://law.counselstack.com/opinion/abbott-v-chesley-ky-2013.