rel: 06/20/2014
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2013-2014
____________________
1130301
____________________
Mary Hall, personal representative of the Estate of Adolphus
Hall, Sr., and Anaya McKinnon, personal representative of
the Estate of Wanzy Lee Bowman
v.
Environmental Litigation Group, P.C.
Appeal from Jefferson Circuit Court
(CV-13-901014)
BRYAN, Justice.
Mary Hall, the personal representative of the estate of
Adolphus Hall, Sr., and Anaya McKinnon, the personal
representative of the estate of Wanzy Lee Bowman (hereinafter
1130301
collectively referred to as "the plaintiffs"), appeal from the
Jefferson Circuit Court's order dismissing their complaint
filed against Environmental Litigation Group, P.C., a law firm
("ELG"). For the reasons set forth herein, we reverse and
remand.
Facts and Procedural History
On March 19, 2013, the plaintiffs filed a complaint in
the Jefferson Circuit Court against ELG, requesting a
declaratory judgment and alleging one count of unjust
enrichment and one count of breach of contract. The
plaintiffs asserted those claims on behalf of the estates they
represented and on behalf of "others similarly situated as a
class action pursuant to Rule 23," Ala. R. Civ. P. The
plaintiffs' complaint included the following factual
allegations: in the 1990s, ELG agreed to represent hundreds of
clients who had been exposed to asbestos, including Adolphus
Hall and Bowman; ELG entered into an attorney-employment
agreement with each client; pursuant to that agreement, ELG
agreed to "take all legal steps necessary to enforce the said
tort claim," and in return ELG would receive 40% of amounts
collected from any settlement or judgment as its fee; the
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agreement also permitted ELG to reimburse itself for
reasonable expenses related to the clients' claims; on
February 23, 2012, ELG sent a memorandum to all of its
"asbestos clients" stating that, as a result of additional
work required to obtain the proceeds of a settlement that ELG
had negotiated, ELG would begin charging an "administrative-
service-expense charge" in the amount of $250 for living
clients and $600 for clients who were deceased, which could be
deducted from settlement proceeds due to be passed on to the
client; between April 2011 and July 2012, the estate of
Adolphus Hall received settlement proceeds from three asbestos
defendants and, from those proceeds, ELG deducted $192.01 in
expenses and a $600 administrative-service-expense charge, in
addition to deducting 40% of the settlement proceeds as an
attorney fee; and, in December 2012, the estate of Wanzy Lee
Bowman received settlement proceeds from one asbestos
defendant and ELG deducted $68.64 as an "administrative
credit" in addition to deducting 40% of the proceeds as an
attorney fee. The plaintiffs alleged that the administrative-
service-expense charge "is nothing more than an extra attorney
fee collected by ELG in addition to the 40% contingent fee"
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provided as the attorney fee in the attorney-employment
agreement.
The plaintiffs asked the circuit court to enter an order
declaring that ELG had breached the attorney-employment
agreement "by charging, without legal authority, more than 40%
for attorney staff services"; that ELG had been unjustly
enriched by its wrongful activities; that the plaintiffs were
due monetary relief; and that the plaintiffs were entitled to
recover an attorney fee and reasonable expenses related to the
prosecution of this action. In addition, the plaintiffs
alleged separate counts of unjust enrichment and breach of
contract, which were based on ELG's alleged breach of the
attorney-employment agreement.
In response to the plaintiffs' complaint, ELG moved the
circuit court to dismiss the complaint pursuant to Rule
12(b)(6), Ala. R. Civ. P., for failure to state a claim upon
which relief could be granted.1 ELG attached several
1
ELG also requested that the circuit court seal the record
and enter a protective order in favor of ELG so that it would
not be required to respond to the plaintiffs' discovery
requests, in order to protect the attorney-client privilege of
ELG's clients that were not parties to the proceeding. On June
3, 2013, the circuit court entered an order granting ELG's
motion for a protective order and its motion to seal the
record.
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documents to its motion to dismiss, including the attorney-
employment agreement signed by Adolphus Hall and Mary Hall,
the attorney-employment agreement signed by Bowman, and an
"adoption and ratification" of Bowman's attorney-employment
agreement signed by McKinnon. ELG also attached the
memorandum dated February 23, 2012, from ELG to its asbestos
clients informing them of the implementation of the
administrative-service-expense charge.
ELG subsequently filed a supplement to its motion to
dismiss, arguing that the plaintiffs had, "in essence, ...
asserted that ELG has charged its clients an excessive fee and
[they] ask this court to enter a declaratory judgment to that
effect." ELG further argued, among other things, that Rule
1.5, Ala. R. Prof. Cond., directly addresses the issue of
excessive attorney fees;2 that the Alabama State Bar was not
a party to the action; and that a declaratory judgment in the
present case would constitute only an advisory opinion by the
circuit court because, it argued, the Alabama State Bar has
sole authority to enforce the Alabama Rules of Professional
2
Rule 1.5(a), Ala. R. Prof. Cond., provides, in pertinent
part: "A lawyer shall not enter into an agreement for, or
charge, or collect a clearly excessive fee."
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Conduct and to determine whether an attorney fee is excessive
under Rule 1.5. Thus, ELG argued, the circuit court was
required to dismiss the plaintiffs' complaint for lack of
subject-matter jurisdiction. See Rule 12(b)(1), Ala. R. Civ.
P. (providing that "lack of jurisdiction over the subject
matter" is a defense that may be made by motion). ELG cited
B.W.T. v. Haynes & Haynes, P.C., 20 So. 3d 815, 822 (Ala. Civ.
App. 2009), to support its position. The plaintiffs filed a
response to ELG's motion to dismiss, arguing, among other
things, that their complaint was not "based merely on an
ethics charge of 'excessive fees'" but was based on an
allegation that "ELG ha[d] breached the terms of the
[attorney-employment agreement,] which ELG drafted and entered
into with each client."
On June 19, 2013, the circuit court entered an order
denying ELG's motion to dismiss and ordered "review by the
Alabama State Bar as it relates to Rule 1.5 of the Alabama
Rules of Professional Conduct." The circuit court stayed the
proceedings "until ruling from the Alabama State Bar."
On September 4, 2013, the plaintiffs filed a motion to
reconsider the circuit court's June 19 order. The plaintiffs
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alleged that, in the time that had passed since the entry of
that order, the Alabama State Bar had not responded to the
circuit court's order. The plaintiffs also reiterated that
their complaint was based on a breach of contract by ELG, not
a purported violation of the Alabama Rules of Professional
Conduct by ELG. In response, ELG filed another motion to
dismiss the plaintiffs' complaint because, it alleged, the
circuit court was without subject-matter jurisdiction. ELG
argued that the Disciplinary Commission and the Disciplinary
Board of the Alabama State Bar have exclusive disciplinary
jurisdiction over attorneys admitted to practice law in
Alabama and that "the only claim made by the plaintiffs –-
that ELG is engaging in professional misconduct by charging
excessive fees –- falls outside the [circuit] court's
jurisdiction."
On November 20, 2013, the circuit entered an order
denying the plaintiffs' motion to reconsider its June 19 order
and dismissing the case with prejudice. The plaintiffs timely
filed a notice of appeal. On appeal, the plaintiffs argue
that the circuit court erred in dismissing their complaint
because, they say, the allegations in their complaint
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articulated a breach-of-contract claim against ELG and because
their complaint was not an ethics complaint against ELG,
which, they contend, would have been subject to the exclusive
jurisdiction of the Alabama State Bar. In response, ELG
asserts that the circuit court properly dismissed the
plaintiffs' complaint because, ELG says, the circuit court did
not have subject-matter jurisdiction over the plaintiffs'
complaint.
Discussion
In Newman v. Savas, 878 So. 2d 1147 (Ala. 2003), this
Court set forth the standard of review of a ruling on a motion
to dismiss for lack of subject-matter jurisdiction:
"A ruling on a motion to dismiss is reviewed without
a presumption of correctness. Nance v. Matthews,
622 So. 2d 297, 299 (Ala. 1993). This Court must
accept the allegations of the complaint as true.
Creola Land Dev., Inc. v. Bentbrooke Housing,
L.L.C., 828 So. 2d 285, 288 (Ala. 2002).
Furthermore, in reviewing a ruling on a motion to
dismiss we will not consider whether the pleader
will ultimately prevail but whether the pleader may
possibly prevail. Nance, 622 So. 2d at 299."
878 So. 2d at 1148-49.
ELG argued below, and maintains on appeal, that the Court
of Civil Appeals' decision in B.W.T. v. Haynes & Haynes, P.C.,
supra, required the dismissal of the plaintiffs' complaint for
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lack of subject-matter jurisdiction. The plaintiffs argued
below, and they maintain on appeal, that B.W.T. is
distinguishable from the present case.
In B.W.T., B.W.T., the client and an attorney, entered
into a fee agreement with Haynes & Haynes, P.C. ("the law
firm"), which had agreed to represent B.W.T. in an employment-
discrimination case. Pursuant to the fee agreement, the law
firm was entitled to 45% of all amounts recovered as a result
of a judgment or settlement in favor of B.W.T., plus expenses
incurred by the law firm. In addition, the law firm was
entitled to 100% of any attorney-fee award assessed against
the adverse party. In the employment-discrimination action,
the jury returned a verdict in favor of B.W.T., and B.W.T. was
awarded attorney fees in the trial court and on appeal; the
total award to be divided between B.W.T. and the law firm was
$437,920. When the law firm proposed to give B.W.T. only
$127,034.82 as his portion of the recovery, B.W.T. objected
and sent the law firm several opinions from other
jurisdictions holding that an attorney is not entitled to
recover a contingency fee in addition to court-ordered
attorney fees provided by statute.
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The law firm subsequently filed a complaint in the
Jefferson Circuit Court requesting a judgment declaring that
the fee agreement between the law firm and B.W.T. was valid
and enforceable. In his answer, B.W.T. alleged that the issue
in the case was whether the law firm's retention of
$310,885.18 constituted a double recovery and was, therefore,
a violation of Rule 1.5, Ala. R. Prof. Cond., which provides:
"A lawyer shall not enter into an agreement for, or charge, or
collect a clearly excessive fee." B.W.T. further alleged that
only the Alabama State Bar had jurisdiction to determine
whether the law firm had violated Rule 1.5. The law firm
moved for a summary judgment, arguing that the fee agreement
was valid and enforceable and that the proposed distribution
of the award was consistent with the fee agreement and did not
violate Rule 1.5. According to the Court of Civil Appeals,
the law firm recognized "that the crux of the matter did not
actually relate to the existence of a contract but, rather, to
the question whether the fee agreement violated Rule 1.5." 20
So. 3d at 818. Thus, the law firm argued that "the fee it
charged B.W.T. for its work on his behalf was reasonable under
the circumstances presented by B.W.T.'s case and, as a result,
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did not violate Rule 1.5." Id. B.W.T. maintained that the
action should be dismissed but argued, in the alternative,
that the circuit court should enter a judgment in his favor
because "'any contingent fee contract that awards [to] an
attorney fees and expenses of nearly 71% of the total recovery
is unfair, excessive, and unconscionable under the Rules of
Professional Conduct.'" Id. The circuit court granted the
law firm's motion and entered a summary judgment in its favor.
Because the law firm had sought a judgment declaring whether
the fee agreement violated Rule 1.5 and because B.W.T. had
argued that issue extensively in his response, the Court of
Civil Appeals "interpret[ed] the [circuit] court's judgment as
holding that the fee agreement [did] not violate Rule 1.5,
Ala. R. Prof. Cond." 20 So. 3d at 819.
In concluding that the appeal was due to be dismissed as
having been taken from a void judgment, the Court of Civil
Appeals stated:
"The legislature has conferred on the [Alabama]
State Bar's Board of Commissioners the power 'to
formulate rules governing the conduct of all persons
admitted to practice and to investigate, or cause to
be investigated, and to pass upon all complaints
that may be made concerning the professional conduct
of any person who has been, or may hereafter be,
admitted to the practice of the law.' §
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34-3-43(a)(3)[, Ala. Code 1975]. As to the
investigation and prosecution of complaints against
attorneys for, among other things, violations of the
Rules of Professional Conduct, the legislature has
empowered the Board of Commissioners of the
[Alabama] State Bar '[t]o appoint one or more
committees from the membership of the board, or from
the membership of the entire bar, or partly from one
and partly from the other, to take evidence in
connection with any complaint filed against any
attorney and forward the same to the board.' §
34-3-43(a)(5). That subsection further provides:
"'The district attorney of the circuit in
which such accused attorney resides shall
prosecute any such charge or case,
interrogate the witnesses, introduce the
evidence in support of such charges and,
when requested by any member of the board,
argue the matter before the board. The
board shall administer such discipline, by
public or private reprimand, suspension
from the practice of law or exclusion and
disbarment therefrom, as the case shall, in
its judgment, warrant.'
"Id. Thus, as it relates to the present case, the
legislature authorized the State Bar to create Rule
1.5, and the legislature has committed to the State
Bar the authority to enforce that rule.
"... [A] declaratory judgment is binding only on
the parties to the action in which the judgment was
sought. The State Bar was not made a party to this
action. As a result, the trial court's determination
as to whether the fee agreement violates Rule 1.5 is
not binding on the State Bar. Thus, the State Bar,
which is charged with enforcing Rule 1.5, is free to
interpret and enforce Rule 1.5 with regard to the
fee agreement at issue in this case without regard
to the trial court's judgment, and without regard to
any disposition by this court of the appeal from
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that judgment. The trial court's judgment, and any
disposition by this court that affirms or reverses
that judgment, is, as a result, merely advisory.
"Because this case presents a dispute that is
not justiciable and for which any judgment
constitutes merely an advisory opinion, the trial
court never obtained subject-matter jurisdiction
over the action; its judgment is therefore void. See
Stamps [v. Jefferson Cnty. Bd. of Educ.], 642 So. 2d
[941,] 945 [(Ala. 1994)]. Because a void judgment
will not support an appeal, we are left with no
choice but to dismiss the appeal and to instruct the
trial court to dismiss the action. Id."
20 So. 3d at 821-22.
In the present case, unlike B.W.T., the "crux" of the
plaintiffs' case is not whether ELG's fee arrangement with the
plaintiffs violated Rule 1.5, Ala. R. Prof. Cond. Although
ELG attempted to make that issue the crux of the plaintiffs'
case, the plaintiffs did not ask the circuit court to
determine whether ELG had violated Rule 1.5, and a
determination of whether ELG violated Rule 1.5 is not
necessary to the resolution of the plaintiffs' claims.3 Thus,
unlike B.W.T., the circuit court in this case has not been
asked to determine only whether ELG has violated the Alabama
Rules of Professional Conduct. The "crux" of the plaintiffs'
3
We note that ELG, in its initial motion to dismiss,
stated: "The plaintiffs make allegations which essentially
assert a simple breach of contract."
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claims is that ELG breached the attorney-employment agreement
by allegedly taking as an attorney fee more than 40% of the
settlement proceeds. Thus, unlike B.W.T., there is no reason
that the Alabama State Bar should have been a party to this
action, nor would a judgment on the claims presented by the
plaintiffs constitute merely an "advisory opinion" to the
Alabama State Bar. Thus, we conclude that B.W.T. is
distinguishable from the present case and does not require
dismissal of the plaintiffs' action for lack of subject-matter
jurisdiction.
The claims brought by the plaintiffs fall within the
subject-matter jurisdiction of the circuit court.
Accordingly, the circuit court's judgment dismissing the
plaintiffs' complaint with prejudice is reversed, and the
cause is remanded for further proceedings.
ELG filed a motion to dismiss the plaintiffs' appeal,
arguing that this Court does not have subject-matter
jurisdiction over the plaintiffs' appeal because "[o]nly the
Alabama State Bar has jurisdiction to resolve the dispute
between the parties." In light of our conclusion in this
case, we deny ELG's motion to dismiss.
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MOTION TO DISMISS DENIED; REVERSED AND REMANDED.
Moore, C.J., and Bolin, Murdock, and Main, JJ., concur.
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