Justice Ketchum: Ruling for Bowles Rice 'a great injustice'

By John O'Brien | Jun 19, 2013

Ketchum


CHARLESTON – For the second time in 10 days, state Supreme Court Justice Menis Ketchum has found himself in the minority of his colleagues and has filed a critical dissent.

On June 14, Ketchum filed a dissenting opinion in Gaddy Engineering’s case against the law firm Bowles Rice. Gaddy alleged it and the firm entered into a fee-sharing agreement that would pay it one-third of recovery by the firm in lawsuits against Columbia Natural Resources.

The majority opinion, released the same day, rejected Gaddy’s claim and affirmed a summary judgment ruling in favor of Bowles Rice.

Ketchum wrote a “great injustice” occurred.

“The (Roane County) circuit court found that Gaddy presented a genuine issue of material fact on whether the two parties entered into a fee-splitting agreement and concluded that a jury question was presented on this issue,” Ketchum wrote.

“Nevertheless, the court granted summary judgment in favor of Bowles Rice because it concluded that even if an agreement existed, Bowles Rice was excused from performing because of impracticability.”

“This court’s majority decision agreed with the circuit court. Gaddy was denied the opportunity to present its case to a jury. I am deeply troubled by this result.”

Gaddy Engineering’s appeal of a Roane Circuit Judge Thomas C. Evans III decision was heard April 17.

The lawsuit alleged Gaddy Engineering was promised one-third of the fees Bowles Rice attorney Tom Lane would receive from a verdict in a case against Columbia Natural Resources.

A class action lawsuit resulted in a $404 million verdict, one of the largest in state history. In exchange for dropping the appeal, Columbia agreed to a $380 million settlement.

Attorneys were awarded $125 million, though only $4 million of it went to Bowles Rice, which claimed there was no fee-sharing agreement.

If there were an agreement, it became impracticable to perform because Bowles Rice’s clients decided to join the class action, the trial court ruled.

Gaddy was paid $75,000 from the settlement by the court after Bowles Rice submitted an invoice on its behalf. The invoice included work from 2006, two years after the class action was certified.

“Despite this evidence showing that Gaddy worked on the Tawney class action in 2006, the circuit court concluded that it was undisputed that Gaddy performed no work in the case after the class action was certified,” Ketchum wrote.

“This ruling is baffling. How can a court say Gaddy performed no work in the class action when the same court granted Gaddy a $75,000 fee award for work performed in the class action?”

Gaddy submitted more than enough evidence to overcome a summary judgment motion on the issue of impracticability, Ketchum wrote, adding that a jury should be allowed to decide whether the issues.

On June 5, Ketchum took issue with a 3-2 majority’s decision that held an insurer had to pay for default judgments entered against policyholders even though it had no knowledge of the legal proceedings initiated against the policyholders.

The ruling said The Hartford was on the hook for default judgments entered against Calusa Investments and Equity South Mortgage, which both apparently became defunct and never filed responses to the complaints.

“The majority opinion ignores the plain language of our statutory law squarely dealing with the facts presented in this case. It ignores the statute’s plain language and relies upon a 1914 case that interprets a different statute,” Ketchum wrote.

“It is unfair to bind the surety when the principal is out of business and has no interest in defending the suit. The majority opinion also allows plaintiffs to obtain collusive consent judgments against the principal in return for the promise to only enforce the judgment against the surety who is unaware of the suit.

“The majority opinion is unfair to insurance companies that act as sureties for companies that are required to have bonds before they can do business in West Virginia.”

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.

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