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Jones v. Mackey Price Thompson

Jones v. Mackey Price Thompson, 2020 UT 25 (Lee, A.C.J.), 2020 UT App 75 (Pohlman, J.)

Torts

An attorney sued a law firm and its partners, asserting that the firm did not pay him fees that he was entitled to after the firm settled a large lawsuit. At trial, the attorney’s expert testified—over the law firm’s objections—about fee-splitting agreements. At the end of trial, the law firm moved for a directed verdict on the attorney’s claims for breach of fiduciary duty and fraudulent transfer and his request for punitive damages. The jury awarded the attorney over $600,000 on his remaining claims. The district court then denied the attorney’s request to impose a constructive trust on the judgment. After the judgment, the law firm’s partners created two other law firms, and the attorney sough to have the new law firms added to the judgment. The district court added one new law firm to the judgment but not the other new law firm. Both the attorney and the law firms appealed. The Utah Supreme Court affirmed in part, reversed in part, holding:

  • The district court properly granted a directed verdict on the attorney’s fiduciary duty claim. The attorney argued that when the law firm put the lawsuit settlement funds in a trust account, the law firm created a trust and breached a fiduciary duty when it paid out the funds rather than waiting for a jury verdict. But a party cannot unilaterally create a trust and make himself a beneficiary of that trust by the simple expedient of claiming an interest in a pot of money and having another agree to keep him apprised of any distributions. Directed verdict on the fiduciary duty claim was proper. 
  • The district court improperly granted a directed verdict on the attorney’s fraudulent transfer claim. Under the Utah Fraudulent Transfer Act, Utah Code § 25-6-5, a plaintiff may carry his burden of showing that a defendant had actual intent to hinder, delay, or defraud without showing that it was the defendant’s sole or primary motivation. Here, there was ample circumstantial evidence in the record to support a jury determination that at least one of the law firm’s motives in disbursing the settlement funds was to hinder or delay the attorney’s recovery of those funds. 
  • The district court improperly granted a directed verdict on the attorney’s punitive damages claim. Punitive damages can be awarded if the tortfeasor’s actions are the result of willful and malicious or intentionally fraudulent conduct. Because the Utah Supreme Court reinstated the fraudulent transfer claim—a claim that rests on fraudulent or malicious conduct—it reinstated the punitive damages claim.
  • The district court improperly rejected the attorney’s request for a constructive trust because of language in a prior appeal. The prior appeal did not foreclose the availability of a constructive trust. In fact, case law supports the availability of equitable remedies (constructive trust) in support of the collection of damages on a legal claim. The Supreme Court remands to have the district court consider whether a constructive trust is appropriate in this case.
  • The district court properly concluded that the attorney’s post-judgment attempts to bring new claims against the one of the new law firms was contrary to Brigham Young University v. Tremco Consultants, 2007 UT 17, 156 P.3d 782. The attorney sought to do more than label the new law firm as a successor in interest to the law firm; rather, the attorney was trying to bring substantive common-law and statutory claims against the new law firm.
  • The district court did not abuse its discretion in allowing the testimony of the attorney’s expert. The attorney’s disclosure of the expert testimony was adequate, and the expert did not testify outside the scope of his report or deposition.
  • The district court incorrectly added the new law firm to the amended judgment as a successor-in-interest to the law firm without affording the new law firm a chance to challenge the assertion that it was in fact a successor law firm. Although the attorney filed a notice of appeal months before the district court added the new law firm to the amended judgment, that notice of appeal was not effective (and did not deprive the district court of jurisdiction) until after the district court decided the outstanding post-judgment motion and filed the amended judgment. The attorney could seek at add the new law firm as a successor-in-interest under Utah R. Civ. P. 21 and 25, without initiating a new proceeding and serving and summons and complaint. But once the district court determined that it had jurisdiction over the new law firm, it should have required the attorney to show that the new law firm was in fact a successor-in-interest to the law firm; the district court should not have taken the new law firm’s silence during a special appearance as a concession or endorsement of the attorney’s position.

Read the full court opinion

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