Tolson Firm, LLC v. Sistrunk

338 Ga.App. 25

789 S.E.2d 265

The Tolson Firm, LLC, et al.

v.Sistrunk, Jr. et al.

A16A0536

Court of Appeals of Georgia.

July 12, 2016

John David Hadden, F. Carlton King Jr., Katherine Thrower Parvis, Atlanta, for Appellant.

Angela Rene Fox, Darren Summerville, Atlanta, for Appellee.

Boggs, Judge.

This case involves a dispute between law partners, Hezekiah Sistrunk, Jr., and Jane Sams, a general partnership, d/b/a Cochran, Cherry, Givens, Smith, Sistrunk & Sams, P.C. a/k/a The Cochran Firm, Atlanta (collectively “the Cochran Firm” or “the plaintiffs”) and a former associate attorney, Audrey Tolson, and her law firm, the Tolson Firm, LLC (collectively “Tolson” or “the defendants”), following Tolson's departure from the Cochran Firm. The plaintiffs allege that Tolson took eight cases with her when she terminated her employment with the Cochran firm and that five of the cases subsequently settled for a cumulative sum of almost three million dollars.

The defendants assert on appeal that trial court erred by denying summary judgment in their favor on the Cochran Firm's claims for breach of duty of loyalty, tortious interference with contract, unjust enrichment, breach of fiduciary duty, quantum meruit, and money had and received. Audrey Tolson also asserts that the trial court erred by granting summary judgment in favor of the Cochran Firm on her counterclaim for quantum meruit and unjust enrichment. For the reasons explained below, we affirm the trial court's denial of summary judgment to the defendants on the plaintiffs' claims for breach of fiduciary duty and duty of loyalty, as well as quantum meruit, but reverse the trial court's denial of summary judgment to the defendants on the plaintiffs' claims for money had and received, unjust enrichment, and tortious interference with contract. We also reverse the trial court's grant of summary judgment to the plaintiffs on Audrey Tolson's counterclaim for quantum meruit and unjust enrichment.

“Summary judgment is appropriate when no genuine issues of material fact remain and the movant is entitled to judgment as a matter of law. On appeal, we review the grant or denial of summary judgment de novo, construing the evidence and all inferences in a light most favorable to the nonmoving party.” (Citation and punctuation omitted.) Seki v. Groupon, Inc. , 333 Ga.App. 319, 775 S.E.2d 776 (2015). Based upon the particular facts necessary to analyze the various theories of recovery at issue in this case, we will outline the pertinent facts below as they become relevant.

1. Money Had and Received . In its complaint, the Cochran Firm asserted: “By receiving fees that were largely derived from the Cochran Firm's efforts, and by refusing to pay any portion of those fees to the Cochran Firm, Defendants have received into their possession funds, that ... the Cochran Firm is entitled to recover and which the Defendants are not entitled in good conscience to retain.” In their response to the defendants' summary judgment motion and in their brief on appeal, the Cochran Firm conceded that the defendants were entitled to summary judgment in their favor on this portion of its complaint. Based upon this Court's opinion in William N. Robbins, P.C. v. Burns , 227 Ga.App. 262, 265, 488 S.E.2d 760 (1997), the Cochran Firm rightly conceded this issue. A claim for money had and received can only be asserted by the “true owner” of money for a refund. Id. As in Robbins, the “[Cochran] firm was not the ‘true owner’ of the money which the clients paid [Tolson].” Id. The trial court therefore erred by failing to grant summary judgment to Tolson on this theory of recovery in the Cochran Firm's complaint.

2. Audrey Tolson's Liability for Breach of Loyalty or Fiduciary Duty. It is well-established that “a cause of action against an [at-will] employee for breach of loyalty must be based upon a fiduciary duty owed by the employee and must rise and fall with any claim for breach of fiduciary duty.” (Footnote omitted.) Physician Specialists in Anesthesia v. Wildmon , 238 Ga.App. 730, 735, 521 S.E.2d 358 (1999).

A fiduciary or confidential relationship arises where one party is so situated as to exercise a controlling influence over the will, conduct, and interest of another or where, from a similar relationship of mutual confidence, the law requires the utmost good faith, such as the relationship between partners, principal and agent, etc. OCGA § 23–2–58. Such relationship may be created by law, contract, or the facts of a particular case. Moreover, since “a confidential relationship may be found whenever one party is justified in reposing confidence in another, the existence of a confidential or fiduciary relationship is generally a factual matter for the jury to resolve.”

(Citations and punctuation omitted.) Wright v. Apartment Investment and Management Co. , 315 Ga.App. 587, 592 (2) (a), 726 S.E.2d 779 (2012).

In this case, the Cochran Firm asserts Tolson owed a fiduciary duty based upon her status as its agent. In support of this assertion, a partner submitted an affidavit averring that: Audrey Tolson was the “primary point of contact at the Firm for many cases, including the ones at issue in this litigation”; that she had authority to enter into client engagement agreements on behalf of the law firm without prior approval; that she had authority to accept or reject cases; and solicited business on the law firm's behalf. This evidence creates a genuine issue of material fact as to whether Audrey Tolson was a fiduciary owing a duty of loyalty. See id. at 593 (2) (a), 726 S.E.2d 779.

The relation of principal and agent is a fiduciary one, and the latter can not make advantage and profit for himself out of the relationship, or out of knowledge thus obtained, to the injury of his principal; and the agency being established, the agent will be held to be a trustee as to any profits, advantages, rights, or privileges under any contract made and obtained within the scope and reason of such agency....

(Citations and punctuation omitted.) Smith v. Pennington , 192 Ga. 478, 481, 15 S.E.2d 727 (1941). Accordingly, we have held that an agent “cannot engage in acts in direct competition with the employer's business before the employment relationship ends [Cit.],” Fine v. Communication Trends , 305 Ga.App. 298, 309, 699 S.E.2d 623 (2010) (physical precedent only) or “solicit customers for a rival business before the end of his employment.” Sitton v. Print Direction , 312 Ga.App. 365, 372–373, 718 S.E.2d 532 (2011). See also Hanson Staple v. Eckelberry , 297 Ga.App. 356, 359, 677 S.E.2d 321 (2009). With regard to a departing attorney's solicitation of an employer's clients, the Restatement 3rd provides consistent authority:

Absent an agreement with the firm providing a more permissive rule, a lawyer leaving a law firm may solicit firm clients:

(a) prior to leaving the firm:

(i) only with respect to firm clients on whose matters the lawyer is actively and substantially working; and

(ii) only after the lawyer has adequately and timely informed the firm of the lawyer's intent to contact firm clients for that purpose; and

(b) after ceasing employment in the firm, to the same extent as any other nonfirm lawyer.

Restatement (Third) of Laws, The Law Governing Lawyers § 9 (3) (2000).

Here, the trial court properly concluded that Audrey Tolson was not entitled to summary judgment in her favor because genuine issues of material fact exist as to whether she acted in direct competition with the Cochran Firm and solicited existing clients before her employment ended. Audrey Tolson testified that she told the Cochran Firm's office manager at the end of the day on Friday, May 6 “that [she] was leaving.” She explained that she did not tell the office manager where she would be going because “I didn't know where I was going to go, so ... I didn't tell her that. I just told her that I was leaving.” She told no one else at the Cochran Firm that Friday that she intended to leave, and she did not take any personal items from her office home with her other than possibly her laptop.

The office manager testified that Audrey Tolson told her on Friday “that she made up her mind that she was going to go,” but asked her not tell anyone. Tolson testified, “I don't know that I ... told her one way or the other. I didn't—I don't think she asked me if she could tell anybody, but I don't think I told her not to tell anybody.”

The following Monday, Audrey Tolson did not report for work and sent an email to a managing partner stating, in part:

Because I won't be accepting a partnership in another big plaintiffs['] firm like I anticipated, I will be taking 7 of my clients with me, per the clients ['] request. Just so you know, I have only notified a small number of my clients. All of the ones I notified are either cases that I brought in or that I have done most or all of the work on and am their primary point of contact with the firm.... I made sure that they were aware that, per the bar association rules, they have the right to choose whether they want to stay with the firm or go with me, and that I would be good with either decision. I did not attempt to persuade any of my clients to go with me and I hope that you or no one in the office would attempt to dissuade those who have decided to do so.... I am leaving 20+ cases behind and would like to submit a joint letter so that the rest of my clients are aware of my departure and won't hold me responsible in their cases going forward and won't think I abandoned their case without any notice.... The clients in the following cases have authorized me to pick up their files from the office.... I told all of the clients I spoke to that, given our history, I didn't think they would need to sign anything and that it would probably be okay with you for me send a letter indicating that I have picked the original files up so that they would not have to incur copying cost. I hope I didn't speak out of turn, but I did not want to

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