As Corrected August 5, 2015.
Released for Publication September 15, 2015.
Counsel Corrected October 27, 2015.
Appeal from Montgomery Circuit Court.
(CV-12-901472), Truman M. Hobbs, Jr., Judge.
For Appellant: Jerry M. Blevins, Montgomery.
For Appellees: Lee Cook, Montgomery; Donald R. Rhea, Rhea, Boyd & Rhea, Gadsden.
MOORE, Judge. Pittman, Thomas, and Donaldson, JJ., concur.
On Application for Rehearing
This court's opinion of July 18, 2014, is withdrawn, and the following is substituted therefor.
Arthur Barney appeals from a summary judgment entered by the Montgomery Circuit Court (" the trial court" ) in favor of Elizabeth Bell, as personal representative of the estate of Maurice Bell, deceased, and William Clay Teague on Barney's legal-malpractice claim.
The record establishes the following pertinent facts. On July 15, 2010, Barney was injured in an automobile accident arising out of and in the course of his employment with the Lowndes County Commission (" the employer" ). Barney retained Maurice Bell and William Clay Teague to represent him in regard to both a claim against the employer for workers' compensation benefits and a claim against the third party allegedly responsible for the automobile accident. In connection with the third-party action, Barney agreed to a 50% contingency-fee arrangement.
Barney entered into a compromise settlement of his workers' compensation claim with Meadowbrook Insurance Group (" Meadowbrook" ), the third-party claims
administrator responsible for handling the employer's workers' compensation insurance claims. In that settlement, Meadowbrook agreed to pay, among other things, a lump-sum amount of $42,500 to Barney. Pursuant to the terms of that settlement, Bell and Teague received 15% of the lump-sum amount, i.e., $6,375, as their fee for handling the workers' compensation claim on behalf of Barney. Meadowbrook reserved its right to reimbursement in the amount of $65,032.09 from any recovery obtained in Barney's third-party action. The trial court approved the terms of that settlement, including the 15% attorney-fee award, on May 20, 2011.
In January 2012, State Farm Mutual Automobile Insurance Company, the insurer for the third party involved in the automobile accident with Barney, agreed to pay a lump sum of $45,000 to settle Barney's third-party action. It is undisputed that, on January 9, 2012, Bell and Teague retained 50% of the $45,000, i.e., $22,500, and that they forwarded the remaining $22,500 to Meadowbrook in satisfaction of Meadowbrook's right to reimbursement in the third-party action.
On November 2, 2012, Barney filed a complaint against Bell and Teague alleging legal malpractice pursuant to the Alabama Legal Services Liability Act (" the ALSLA" ), Ala. Code 1975, § 6-5-570 et seq. Barney alleged that Bell and Teague had failed to inform Barney that he was owed additional funds, that Bell and Teague had retained for their own benefit funds to which Barney was entitled, and that Bell and Teague had charged Barney excessive attorney's fees. More specifically, Barney asserted that Meadowbrook had agreed to reduce its subrogation interest in the third-party action to $22,500 and that, therefore, Bell and Teague were entitled to only $11,250 pursuant to their 50% contingency-fee agreement. Barney also asserted that, even if Meadowbrook had not agreed to reduce its subrogation interest in the third-party action, Bell and Teague were not entitled to retain the $6,375 that had been awarded to them as attorney's fees in the workers' compensation settlement.
Bell and Teague moved for a summary judgment, attaching an affidavit from Kathy McClamroch, the claims adjuster for Meadowbrook who had handled Barney's claim. The trial court denied that motion. Thereafter, the parties deposed McClamroch, who testified that Meadowbrook had agreed to accept $22,500 of the $45,000 third-party recovery in satisfaction of its statutory credit and subrogation rights, taking into account that Barney had agreed to pay Bell and Teague a 50% attorney's fee. McClamroch testified that Meadowbrook had maintained its rights to the entire third-party recovery, but she acknowledged that, based on the contingency-fee arrangement, Bell and Teague were owed 50% of the $45,000 recovery as attorney's fees, thus entitling it to only $22,500. Teague also testified in his deposition that he had made an oral agreement with McClamroch to pay Meadowbrook $22,500 to satisfy its claim to the third-party recovery.
On June 27, 2013, Barney filed a motion for a partial summary judgment " as to liability and partial damages." In support of that motion, Barney attached requests for admissions he had sent to Teague on May 20, 2013, but to which Teague had not yet responded. In those requests for admissions, Barney asked Teague to admit that Meadowbrook had agreed to accept the sum of $22,500 " in full and final settlement of its workers' compensation
subrogation interest" and that Teague had remitted $22,500 to Meadowbrook in accordance with that agreement. Barney also attached excerpts from the depositions of McClamroch and Teague relating to the settlement of Meadowbrook's claim against the third-party ...