Supreme Court rejects fee-sharing claim made by engineering firm

By John O'Brien | Jun 19, 2013

CHARLESTON – The law firm Bowles Rice is entitled to the $4 million in fees it earned in a $380 million settlement and won’t have to pay an engineering firm that says it was promised one-third.

On June 14, the state Supreme Court ruled in favor of Bowles Rice in a lawsuit brought in Roane County Circuit Court by Gaddy Engineering Company, which alleged the firm promised it one-third of fees recovered.

The 4-1 decision awards Gaddy only $74,275.

Gaddy approached Bowles Rice attorney Tom Lane to discuss whether Columbia Natural Resources was underpaying its royalty obligations in 2003.

Eventually, the two decided to perform an evaluation by reaching out to various land companies to offer a claim evaluation. Twelve land companies decided to hire Bowles Rice to pursue litigation against Columbia.

John Bullock, the president of Gaddy, said he proposed several times that Bowles Rice should give his company one-third of any recovery. Bowles Rice denied that it ever agreed to the proposal.

Lane said Gaddy was to serve as a litigation consultant and that Gaddy would separately negotiate a fee agreement with the clients.

At the time, a class action lawsuit was pending in Roane Circuit Court. It was that case that led to the $380 million settlement. Bowles Rice recommended to its clients that they opt out of the settlement and pursue their claims separately, but the clients chose not to.

A $404 million verdict was reached in 2007, but the defendants agreed to the $380 million settlement in exchange for dropping the appeal.

Roane Circuit Judge Thomas Evans’ decision granted Bowles Rice’s motion for summary judgment on claims for negligence, gross negligence, intentional breach, negligent misrepresentation, conversion, promissory estoppel, unjust enrichment and quantum meruit.

Bowles Rice argued that once the land companies decided to participate in the class action settlement, the parties were no longer capable of performing any alleged fee-sharing agreement.

If a jury found a fee-sharing agreement existed, the doctrine of impracticability would excuse performance of all obligations.

The court’s opinion says Gaddy stopped working on the claims in 2004.

“(T)here is no evidence that the respondents (Bowles Rice) agreed, as part of the alleged fee-sharing agreement, to share fees with Gaddy even if the presupposed events did not transpire,” the opinion says.

Gaddy also argued an attorney-client relationship existed between it and Bowles Rice.

“There was never any assertion, as the respondents make clear, that Gaddy had any intention of being a party-plaintiff in any litigation that might ensue against Columbia,” the opinion says.

On Gaddy’s fraud claim, the court ruled it was merely a breach of contract claim masquerading as a fraud claim because Gaddy only redoubled its efforts to try to prove the existence of the alleged oral fee-sharing agreement.

“(W)e think it is obvious that the petitioner’s fraud claims were clearly contract claims disguised as tort claims as the source of the alleged breach of duties was the alleged fee-sharing agreement and not ‘the larger social policies embodied by the law of torts.’”

The majority opinion didn’t sit well with Justice Allen Loughry, who filed a concurring opinion criticizing it over a need to address the illegality of a fee-sharing agreement between a lawyer and a nonlawyer.

Even less pleased with the majority opinion was Justice Menis Ketchum, who wrote in his dissenting opinion that a great injustice had been done because Gaddy never got its day in court.

From the West Virginia Record: Reach John O’Brien at

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