Gaddy Engineering Co. v. Bowles Rice McDavid Graff & Love, LLP

746 S.E.2d 568, 231 W. Va. 577, 2013 WL 2920057, 2013 W. Va. LEXIS 694
CourtWest Virginia Supreme Court
DecidedJune 14, 2013
Docket12-0206
StatusPublished
Cited by91 cases

This text of 746 S.E.2d 568 (Gaddy Engineering Co. v. Bowles Rice McDavid Graff & Love, LLP) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gaddy Engineering Co. v. Bowles Rice McDavid Graff & Love, LLP, 746 S.E.2d 568, 231 W. Va. 577, 2013 WL 2920057, 2013 W. Va. LEXIS 694 (W. Va. 2013).

Opinions

PER CURIAM:

The petitioner, Gaddy Engineering Company (“Gaddy”), appeals from an adverse summary judgment ruling entered by the Circuit Court of Roane County on January 12, 2012, in a case that involves an alleged fee-sharing agreement between Gaddy and the respondents. The respondents are an individual lawyer, J. Thomas Lane, and the Charleston, West Virginia, law firm in which Mr. Lane is a partner — Bowles Rice MeDa-vid Graff & Love, LLP (“Bowles Rice”). At the center of this dispute is the petitioner’s contention that Mr. Lane agreed to pay Gad-dy one-third of all sums Bowles Rice received in connection with its provision of legal representation to a group of land companies in a case to be filed against Columbia Natural Resources (“Columbia”) for alleged underpayment of gas royalties.1 Through two separate orders, the circuit court granted summary judgment to the respondents as to all of the claims Gaddy asserted against the respondents.2 Upon a meticulous review of the sizeable record submitted to this Court and in consideration of well-established principles of law, we conclude that the circuit court did not commit error. Accordingly, we affirm.

I. Factual and Procedural Background

In December 2003, John Bullock, the president of Gaddy,3 approached Mr. Lane to discuss exploring whether Columbia was underpaying its royalty obligations.4 In January or February 2004, Gaddy and the respondents reached a verbal agreement to jointly evaluate potential claims on behalf of their current clients as well as other additional land company lessors. The stated objective for the proposed evaluations was to ascertain (1) whether there were viable claims; (2) whether the lessors wished to pursue such claims; and (3) whether the likely value of those claims would justify the cost of litigation against Columbia. Under the terms of this agreement, Gaddy would assess the lessors’ past and future losses from underpayment of royalties while Bowles Rice would review the respective leases to evaluate the lessors’ individual legal claims. In order to attract the largest pool of potential clients, Mr. Lane and Gaddy agreed to charge a reduced flat fee of $1,750 for this evaluation.5 That combined charge would include a $750 fee for Gaddy’s assessment and a $1000 fee for the legal work performed by Bowles Rice.6

In accordance with the terms of this undisputed aspect of the agreement, Mr. Lane contacted various land companies in writing and offered the claim evaluation described above. In response to the letters distributed by Mr. Lane through Bowles Rice, a number of land companies sought the claim evaluation which was then jointly performed by the parties. As a result of these evaluations, twelve land companies (the “land companies”) decided to utilize the services of [581]*581Bowles Rice to pursue litigation against Columbia in connection with its alleged underpayment of royalties.

The controversy at the center of this case stems from Gaddy’s allegation that Bowles Rice, through Mr. Lane, agreed to give the petitioner one third of any recovery it received for pursuing claims against Columbia.7 According to the respondents, John Bullock proposed more than once that Gaddy should receive some percentage of any legal fee Bowles Rice obtained as a result of the Columbia litigation.8 The respondents, however, deny that they ever agreed to this proposal. Through his affidavit and during his deposition, Mr. Lane avowed that in the event Bowles Rice initiated litigation against Columbia on behalf of the land companies, his understanding was that Gaddy would serve as a litigation consultant and that Gad-dy would separately negotiate a fee agreement with the respective clients. In Mr. Lane’s mind, this fee agreement between Gaddy and the land company clients would have been structured to include a bonus feature in the event of a favorable outcome.

When the parties began their joint venture, they were aware of a pending action before the Circuit Court of Roane County— the Tourney case9 — which involved a large group of oil and gas lessors seeking damages against Columbia for alleged royalty underpayments.10 Due to concerns based on the proposed class size and differing lease terms, it was unclear for some time whether that case would be certified as a class action. Following its decision to certify the class in Tawney,11 the circuit court imposed a deadline of October 15, 2004, for class members to opt out of the class action.

Despite the recommendation by Bowles Rice that the land companies exercise the option to pursue their claims in the Circuit Court of Kanawha County rather than as a part of the class action, the land companies decided to participate in the Tawney case. From that point forward, the possibility that Bowles Rice would be prosecuting independent claims for the land companies ceased to exist. And, while Bowles Rice registered a formal appearance in Tourney on behalf of a subclass composed of its land company clients,12 Marvin Masters, as lead counsel, was in control of the litigation decisions affecting the plaintiff class.13

When Mr. Lane approached class counsel to inquire about allowing Gaddy to serve as an expert consultant, Mr. Masters stated that he had already retained an expert witness and had no use for Gaddy’s services. He did indicate, however, a willingness to seek court approval of the claim evaluation work Gaddy had previously performed if the plaintiffs were successful in establishing their royalty claims. In February 2006, Mr. Lane informed Gaddy that he would need to submit an invoice to the circuit court reflecting hourly rate charges for its claim evaluation work. On January 31, 2007, during the week after the jury verdict was returned in Tawney, 14 Gaddy submitted an invoice to Bowles Rice for the amount of $367,225. This invoice, which we refer to as the “Bullock invoice,” purported to charge for work performed by Mr. Bullock on a weekly basis from January 1, 2000, through the end of [582]*5822006.15 Because the invoice reflected time for work that preceded any agreement between the respondents and Gaddy by more than four years as well as charges for work that clearly post-dated the “opt out” date of October 15, 2004, Mr. Lane told Mr. Bullock he could not submit that invoice to the trial court for payment approval. Based on Mr. Lane’s insistence that a new invoice reflecting work performed by Gaddy beginning in March 2004 would be required, Gaddy submitted a revised invoice to Bowles Rice on February 14, 2007. That invoice, which we refer to as the “McCullough invoice,” set forth a total of $74,275 in charges which pertained primarily16 to work performed by Gaddy’s Vice President Frank McCullough17 from March 5 through July 27, 2004.

Bowles Rice submitted the McCullough invoice to the circuit court and obtained approval for the work and expenses Gaddy reflected on the invoice. When Bowles Rice tendered payment to Gaddy for the full amount of the McCullough invoice after receiving its counsel fee and expense reimbursements, the payment was refused.

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Bluebook (online)
746 S.E.2d 568, 231 W. Va. 577, 2013 WL 2920057, 2013 W. Va. LEXIS 694, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gaddy-engineering-co-v-bowles-rice-mcdavid-graff-love-llp-wva-2013.