Pettis v. Simrall

JAMES L. PETTIS, III v. JOHN KARSTEN SIMRALL

No. 2021-IA-01253-SCT

Supreme Court of Mississippi

January 19, 2023

DATE OF JUDGMENT: 10/19/2021

COURT FROM WHICH APPEALED: WARREN COUNTY CHANCERY COURT, HON. VICKI R. BARNES TRIAL JUDGE

TRIAL COURT ATTORNEYS: J. LAWSON HESTER PENNY B. LAWSON JASON E DARE EUGENE A. PERRIER TRAVIS T. VANCE, JR.

ATTORNEYS FOR APPELLANT: JASON E. DARE ROBERT A. BIGGS, III

ATTORNEY FOR APPELLEE: TRAVIS T. VANCE, JR.

BEFORE KING, P.J., CHAMBERLIN AND ISHEE, JJ.

CHAMBERLIN, JUSTICE

¶1. This case presents an issue of first impression: whether an attorney's representation of a general partnership creates an implied attorney-client relationship between the attorney and the individual members of the general partnership, and, if so, whether the Mississippi Rule of Professional Conduct prohibiting communication by a lawyer with an individual represented by other legal counsel was violated. James L. Pettis, III, attorney for the plaintiff appeals an order of the chancery court disqualifying him for a violation of Mississippi Rule of Professional Conduct 4.2, which prohibits a lawyer from communicating with a person they know to be represented about the subject of the representation. After a careful review of the law, this Court reverses the chancery court's order, renders a judgment in favor of Pettis, and remands for further proceedings.

FACTS AND PROCEDURAL HISTORY

¶2. Newell Simrall, IV ("Newell"), John Karsten Simrall ("Karsten") and Catherine Rea Leist n/k/a Catherine Rea Ray ("Rea") are siblings and shareholders in the closely held Mississippi corporation B.N. Simrall &Son, Inc. ("the Corporation"). On April 1, 2010, Karsten and Rea, along with Dorman Dewayne Leist, entered into an amended partnership agreement for the general partnership Simrall &Simrall ("the Partnership"). In December of 2012, Newell, represented by J. Lawson Hester ("Hester"), filed a lawsuit ("the underlying litigation") in the chancery court of Warren County, naming as defendants Karsten, the Corporation, the Partnership, and several other entities connected to Karsten.^[1] Penny Lawson ("Lawson") represented all named defendants in the underlying litigation.

¶3. James L. Pettis, III ("Pettis"), was the law partner of Hester and had represented Newell in various matters over the years. In 2011, prior to the commencement of the underlying litigation, Pettis represented Newell in the negotiation of a stock purchase and land-transfer agreement ("the Agreement") with Karsten. The alleged breach of the Agreement formed part of the basis for the underlying litigation. Although Pettis was involved in the negotiation of the Agreement, he was not retained to represent, nor did he enter an appearance on behalf of Newell in the underlying litigation.

¶4. On January 1, 2017, Rea withdrew from the Partnership while the litigation was pending. The Partnership was one of the named defendants in the underlying litigation filed by Newell in 2012, although Rea was not personally named as a defendant. In anticipation of the upcoming trial of the underlying litigation, Lawson met with Rea for several hours on March 20, 2019, to review checks signed by Rea on behalf of the Partnership.

¶5. Sometime in 2019, two years after Rea had disassociated from the Partnership, Rea became aware that Karsten was attempting to sell land belonging to the Corporation. At Newell's request, Rea and Newell met with Pettis on April 8, 2019, in his office to discuss the attempted sale. On April 11, 2019, Rea spoke with Lawson via telephone and informed her that she had met with Pettis. Pettis met Rea a second time when he attended the meeting of the shareholders and board of directors of the Corporation at Rea's home on April 15, 2019. At both meetings with Rea, Pettis asked whether she was represented by Lawson or any other attorney in the underlying litigation. Rea responded on both occasions that she was not represented by anyone, nor did she wish to seek representation in connection with the underlying litigation. Both Rea and Pettis submitted affidavits stating they only discussed how to prevent the sale of the Corporation's land by Karsten and that Rea was not represented by counsel in connection with the underlying litigation.

¶6. Prior to meeting with Rea, on March 15, 2019, Pettis sent a letter to Lawson, as Karsten's legal representative, informing her that a special meeting of the board and shareholders was being called and requesting information regarding Karsten's attempt to sell corporate land. Lawson did not respond to the letter, and neither Lawson nor Karsten attended the meeting at Rea's home on April 15, 2019. After the April 15 meeting took place, Pettis brought a copy of the meeting minutes to Lawson's office. When Pettis delivered the minutes to Lawson, she informed him that she represented Rea and that Pettis should not have met with Rea without counsel present.

¶7. The trial for the underlying litigation was set for April 30, 2019. On April 16, 2019, Lawson, as the legal representative of Karsten and all named defendants in the underlying litigation, filed a Motion to Disqualify Counsel for the plaintiff for a violation of Rule 4.2 of the Mississippi Rules of Professional Conduct and a Motion to Withdraw as Counsel for the defendants for a perceived conflict of interest between the named defendants and Rea. On April 29, 2019, Newell filed a response to both motions. The chancery court entered an agreed order granting Lawson's motion to withdraw on September 11, 2019.

¶8. The chancery court held a hearing on the motion to disqualify on September 11, 2019, November 30, 2020, and December 1, 2020.^[2] On October 19, 2021,^[3] the chancellor entered a judgment disqualifying both Pettis and Hester as counsel for the plaintiff. Specifically, the chancellor found that Rea "was a partner [of the Partnership] when Plaintiff's complaint was filed in 2012[,] . . . that Penny Lawson represented the general partnership and its individual members," and "that when [Pettis] was a law partner of [Hester], he violated the Rules of Mississippi Professional Conduct by conducting meetings with [Rea], a represented person." Following this judgment, Pettis filed a motion for reconsideration on October 29, 2021, which was denied on November 22, 2021. While his motion for reconsideration was still pending, Pettis timely filed a petition for writ of prohibition with this Court. On December 14, 2021, this Court granted Pettis's petition and ordered that it be treated as a petition for an interlocutory appeal pursuant to Rule 21(d) of the Mississippi Rules of Appellate Procedure.

ISSUES PRESENTED

¶9. Pettis raises the following issues in his petition:

I. Whether the chancery court's disqualification of Pettis pursuant to Mississippi Rule of Professional Conduct 4.2 was improper.

II. Whether the chancery court had the authority and/or jurisdiction to disqualify Pettis.

STANDARD OF REVIEW

¶10. "Little case law exists in Mississippi with regard to the standard of review of a trial court's decision of a motion to disqualify an attorney." Newsome v. Shoemake, 234 So.3d 1215, 1227 (Miss. 2017) (internal quotation marks omitted) (quoting Byrd v. Bowie, 933 So.2d 899, 906 (Miss. 2006)). This Court adopts the approach of the United States Court of Appeals for the Fifth Circuit that when reviewing the grant or denial of a motion to disqualify counsel, "[t]he proper standard of review. . . is an abuse of discretion standard." Fed. Deposit Ins. Corp. v. U.S. Fire Ins. Co., 50 F.3d 1304, 1311 (5th Cir. 1995); see also State ex rel. Cannizzaro v. First Jud. Dist. Ct., 466 P.3d 529, 531 (Nev. 2020) (applying the Fifth Circuit's standard of review for attorney disqualification (citing In re Dresser Indus., Inc., 972 F.2d 540, 543 (5th Cir. 1992))). As always, the manifest error standard applies to appellate review of a chancellor's findings of fact. Newsome, 234 So.3d 1215 at 1217. (quoting Williams v. Bell, 793 So.2d 609, 611 (Miss. 2001)). Review of conclusions of law, however, is de novo. Shope v. Winkelmann, 328 So.3d 641, 643 (Miss. 2021) (quoting Belmont Holding, LLC v. Davis Monuments, LLC, 253 So.3d 323, 326 (Miss. 2018)).

DISCUSSION

I. The chancery court's disqualification of Pettis pursuant to Mississippi Rule of Professional Conduct 4.2 was improper.

¶11. Rule 4.2 of the Mississippi Rules of Professional Conduct reads as follows: "In representing a client, a lawyer shall not communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so." The chancery court found "that Penny Lawson represented the general partnership and its individual members" and that Pettis "violated the Rules of Mississippi Professional Conduct by conducting meetings with [Rea], a represented person." Based on these findings, the court ordered that "[Pettis] and [Hester] should be disqualified as counsel for Newell Simrall, IV."^[4] ¶12. Pettis argues that the disqualification was improper because 1) no attorney-client relationship existed between Lawson and Rea, 2) presuming such a relationship did exist, Pettis did not violate Rule 4.2 of the Mississippi Rules of Professional Conduct, and 3) Pettis's fundamental right to counsel of choice outweighs the appearance of impropriety.

¶13. Karsten argues that Pettis was fully aware of the alleged attorney-client relationship between Lawson and Rea due to his involvement as Hester's law partner. Karsten submits that an actual attorney-client relationship between Lawson and Rea exists and is apparent from evidence of prior representation in other matters and the fact that...