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Sirote & Permutt, P.C. v. Caldwell

Supreme Court of Alabama

August 16, 2019

Sirote & Permutt, P.C.
v.
C. Randall Caldwell, Jr.

          Appeal from Mobile Circuit Court (CV-18-902403)

          WISE, JUSTICE.

         Sirote & Permutt, P.C. ("Sirote"), appeals from a summary judgment entered in favor of C. Randall Caldwell, Jr. We reverse and remand.

         Facts and Procedural History

         Caldwell worked for George Woerner, who owned several businesses headquartered in Foley. In 2009, Caldwell was promoted to president of Woerner Landscape, Inc., one of those businesses. Caldwell stated that, at that time, he was a licensed attorney in good standing in Alabama even though he was not engaged in private practice. During his employment with Woerner, the BP oil spill occurred in the Gulf of Mexico.[1] Caldwell contacted an attorney with Cunningham Bounds, LLC, a law firm in Mobile, regarding the possibility of referring Woerner's businesses to Cunningham Bounds for Cunningham Bounds to handle their claims arising out of the BP oil spill. In April 2011, the Woerner companies retained Cunningham Bounds to represent them in the litigation related to the BP oil spill. Cunningham Bounds executed representation agreements with each of the Woerner companies; those agreements provided that Cunningham Bounds would be paid a contingency fee for the work. Each of the representation agreements included the following provisions: "

TO: CUNNINGHAM BOUNDS, LLC
"1. I/We hereby employ Cunningham Bounds, LLC ('Attorneys') to represent me/us on my our claim for damages arising out of the Deepwater Horizon oil spill disaster caused by BP PLC and/or related BP entities, Transocean, LTD and/or other Transocean entities, and in Attorneys' discretion, any other defendants.
"....
"Referral fees, if applicable: I/We understand that my/our claims and case were referred to you by Randall Caldwell (Referring Attorney) who may receive up to 1/3 of the attorneys fees set out in this Agreement. I/We understand that this referral fee will not result in total attorneys fees greater than that provided in Paragraph 2."

         Caldwell left his employment with Woerner in spring 2012 and returned to the private practice of law.

         In 2014, the Woerner companies retained Sirote to assist Cunningham Bounds in the BP oil-spill litigation. Additionally, each of the Woerner companies sent Caldwell a letter dated May 6, 2014, in which they stated that Caldwell had previously assisted with a BP oil-spill claim asserted on behalf of that Woerner company; that the claim had been principally handled by Cunningham Bounds; and that at the time Caldwell provided assistance he was working as in-house counsel for one or more of the Woerner companies. Each letter went on to assert that the claim would have to be reworked

          "based on newly announced guidelines from appellate courts hearing BP's objections to some of the previously filed claims"; that the owners and management of the Woerner companies felt that it would be in their best interest to retain a firm with experienced tax and business attorneys to assist in the claims; that the Woerner companies wished to continue their representation by Cunningham Bounds; that they were terminating the attorney-client relationship between Caldwell and the Woerner companies; and that they were retaining Sirote to assist Cunningham Bounds in reworking the claims asserted by the Woerner companies. After receiving this letter, Caldwell contacted one of the attorneys at Cunningham Bounds and told him that it was his position that he was entitled to the referral fees discussed in the representation agreements because, he said, he had referred the Woerner companies' claims to Cunningham Bounds.

         Subsequently, the Woerner companies reached a settlement regarding their BP oil-spill claims. On September 20, 2018, Cunningham Bounds filed a complaint for interpleader and seeking declaratory relief against Caldwell and Sirote. In its complaint, Cunningham Bounds asserted:

"4. Plaintiff Cunningham Bounds represented numerous business entities in connection with the settlement of the Deepwater Horizon catastrophe. Defendant Caldwell referred several clients to Cunningham Bounds for representation. Among the clients referred to [Cunningham Bounds], Caldwell referred Client A, Client B, and Client C.
"5. The representation agreements entered into with Client A, Client B, and Client C specified that:
"'I/we understand that my/our claims and case were referred to you by Randall Caldwell, referring attorney, who may receive up to 1/3 of the attorneys fees set out in this agreement. I/we understand that the referral fee will not result in total attorney fees greater than that provided in Paragraph 2.'
"Those representation agreements were executed on or about April 25, 2011.
"6. On or about May 2, 2014, Client A, Client B, and Client C informed [Cunningham Bounds] that they had terminated Caldwell from any representation relating to the Deepwater Horizon settlement. On May 20, 2014, Client A, Client B, and Client C directed [Cunningham Bounds] to remove Caldwell from any correspondence related to the Deepwater Horizon claims and to deal exclusively with its counsel Sirote as it related to those matters. Client A, Client B, and Client C directed [Cunningham Bounds] not to disburse any fees to Caldwell.
"7. On July 8, 2014, [Cunningham Bounds] reached an agreement with Defendants that it would not disburse any referral fees related to the above-mentioned representation absent an ...

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