Sanders, Bruin, Coll & Worley, P.A. v. McKay Oil Corp.

1997 NMSC 030, 943 P.2d 104, 123 N.M. 457
CourtNew Mexico Supreme Court
DecidedJune 18, 1997
Docket23479
StatusPublished
Cited by3 cases

This text of 1997 NMSC 030 (Sanders, Bruin, Coll & Worley, P.A. v. McKay Oil Corp.) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sanders, Bruin, Coll & Worley, P.A. v. McKay Oil Corp., 1997 NMSC 030, 943 P.2d 104, 123 N.M. 457 (N.M. 1997).

Opinion

OPINION

BACA, Justice.

1. Upon certification from the Court of Appeals pursuant to NMSA1978, Section 34-5-14 (Repl.Pamp.1996), Roy L. McKay and his corporate entities (collectively referred to as “McKay”) seek review of a district court order granting summary judgment in favor of Appellees Fisher, Worley, Coll, and Kraft. This Court now considers whether the trial court properly granted the motion. We hold that the summary judgment motion should not have been granted, and therefore we reverse and remand the case to the trial court for hearing.

I.

2. During the 1990’s, Roy McKay, owner of McKay Oil Corporation, used the law firm of Sanders, Bruin, Coll & Worley, P.A. (“the firm”) to represent him in a number of matters involving his corporate interests. The firm was organized as a professional corporation under the laws of New Mexico at all times relevant to this case. Prior to the events causing the current dispute, the firm was preparing to defend McKay against a multi-million dollar claim. One of the firm’s attorneys, Damon Richards, acted as primary counsel for McKay, preparing for an arbitration which would be one of the first proceedings in the multi-million dollar claim.

3. Approximately six weeks before Richards was to represent McKay in the arbitration, four of the firm’s five attorney-shareholders held a meeting and concluded that they would terminate McKay as a client and end all firm representation, including Richards’ work in the forthcoming arbitration. Richards was the only attorney-shareholder not present at this meeting.

4. Pursuant to this decision, the firm sent McKay a letter notifying him of the termination. The letter cited Richards’ alleged health concerns, his inability to serve as lead counsel, and the firm’s inability to continue the representation as reasons warranting the termination. The letter was signed by the five attorney-shareholders of the firm, including Richards. The facts suggest that Richards did not agree with the termination, but he signed the letter under an alleged threat that he might be fired if he did not sign the letter.

5. Upon receipt of the letter, McKay sought and secured other counsel for the pending case. After his new counsel received an extension of the arbitration date, and after a lengthy trial, McKay was successful in his defense.

6. In August of 1994, the firm filed an action against McKay seeking collection of unpaid attorneys fees stemming from the work it allegedly had done in McKay’s case prior to the termination. McKay then filed a counterclaim asserting that the firm and its individual shareholders wrongfully terminated representation of McKay and breached an employment contract entered into by the parties. McKay also alleged that these actions rose to the level of malpractice. He therefore sought recovery from both the firm as a corporation as well as from each of the individual attorneys.

7. After depositions of the principals were taken, Fisher, Worley, Coll, and Kraft jointly filed a Motion for Summary Judgment which was granted by the trial court. The court found that the termination of the relationship between the firm and McKay was a corporate act for which the lawyers would not have individual liability. McKay’s suit against the firm remains pending.

8. Timely notice of appeal was filed, and certification to this Court was sought by the Court of Appeals, asserting that the case presented issues of substantial public interest. Upon certification, we now review two primary issues: 1) whether attorneys can limit liability to clients while practicing within a professional corporation and whether the conduct of the attorneys in this case is of the type that should be shielded by corporate status, and 2) whether the trial court erred in granting the firm’s summary judgment motion on the basis that no grounds for personal liability on the part of the attorney-shareholders could be found.

9. We hold that, as a general matter, membership or shareholder status in a professional corporation does not shield an attorney from individual liability for his own mistakes or professional misdeeds. However, it remains unclear from the record whether the actions taken by the attorney-shareholders in this case rose to the level of a breach of duty of any type. Therefore, we reverse the trial court’s grant of summary judgment, finding material issues of fact exist as to whether the attorney-shareholders should be personally liable for their actions regarding the representation of McKay.

II.

10. Appellees contend that the termination of McKay should be characterized only as a “decision to terminate a business relationship,” amenable to an action sounding in contract. We disagree. The termination of McKay necessarily involved a legal component substantially related to representation and cannot be classified merely as a business act.

11. In the immediate case, four of the five attorney-shareholders met and discussed the termination of McKay. In the end, all five signed the letter terminating the representation. The practical result of this action was that McKay was without legal representation six weeks before his legal proceedings were to begin. McKay was forced to seek and secure other counsel on very short notice. He was also in the difficult position of wondering whether a new attorney would have time to prepare his case and whether his interests would be adequately protected.

12. The significant regulation of the process of termination by the courts suggests that termination substantially affects legal representation. See Rule 16 — 116(B) NMRA 1997 (outlining the permissible parameters for attorney withdrawal from representation and stating that “a lawyer may withdraw from representing a client if withdrawal can be accomplished without material adverse effect on the interests of the client” and that “a lawyer shall take steps [in terminating] to the extent reasonably practicable to protect the client’s interests____”). This seems intuitively correct since termination necessarily means that a client will no longer have representation or might not enjoy the continuity of representation that might best address his claims.

13. Both decisions from this Court and from other jurisdictions demonstrate the impact of termination on representation and the substantial control the courts exercise over the process. Cf. In re Kelly, 119 N.M. 807, 808-09, 896 P.2d 487, 488-89 (1995) (holding that failure to protect client interests at termination was a factor warranting disbarment); In re Sparks, 108 N.M. 249, 251, 771 P.2d 182, 184 (1989) (holding that disorderly termination of attorney-client relationship, along with other factors in representation, warranted suspension from the practice of law); Karlsson & Ng P.C. v. Frank, 162 A.D.2d 269, 556 N.Y.S.2d 626 (1990) (discussing the need for specific act of termination in ending representation); State v. Cummings, 199 Wis.2d 721, 546 N.W.2d 406, 416-18 (1996) (setting court’s conditions for withdrawal from the attorney-client relationship at issue in the case).

14.

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Bluebook (online)
1997 NMSC 030, 943 P.2d 104, 123 N.M. 457, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sanders-bruin-coll-worley-pa-v-mckay-oil-corp-nm-1997.