Jackpot

A big hit on a Deepwater Horizon claim led to an attorney's departure from his law firm, post-departure litigation and a remand of a decision favoring the law firm by the Mississippi Supreme Court

The Circuit Court of Washington County granted law firm Campbell DeLong, LLP, a declaratory judgment against a former partner of the firm, Britt Virden, who had alleged breach of contract, among other claims. Virden appealed, and the Court of Appeals affirmed. Virden v. Campbell DeLong, LLP, No. 2021-CA-00478-COA, 2022 WL 4478393, at *11(Miss. Ct. App. Sept. 27, 2022). On certiorari review, we find that Virden’s pre-withdrawal claims are not precluded by a signed agreement, which only comes into operation in the event of death, termination, withdrawal, or retirement of a partner.

                                            FACTS AND PROCEDURAL HISTORY

Britt Virden practiced law in Greenville, Mississippi, with Campbell DeLong, LLP, since 2001. Although Campbell DeLong, LLP, has operated as a law firm for nearly twenty-five years, it has never had a written partnership agreement that controlled the compensation paid to its partners. The only document signed among the partners was a Restated and Amended Memorandum Agreement, which governed the “withdrawal, termination, or retirement of any of the partners from the firm.”

According to Virden, Campbell DeLong never compensated its partners as a traditional partnership in which the partners share equally in all expenses as well as profits. Rather, Campbell DeLong practiced a partner compensation strategy of “eat what you kill,” meaning after an individual partner contributes from his revenue an equal share of the operating expenses of the law firm for calendar year, he or she keeps the remainder as his own personal income.

In 2018, Virden worked on a case for the Deepwater Horizon oil spill that settled for $12.3 million. Attorneys’ fees were $3.1 million. Virden emailed his partners about the settlement’s result, making his recommendation for distribution. The partners did not immediately respond to Virden’s request. When Virden asked the firm’s bookkeeper for a distribution of a special draw of his claimed portion to the fee, however, he was denied.

The partners then called for a meeting at which the allocation was discussed. The firm asserts that there is an implied contract between the partners that the firm’s compensation committee would decide how to split any profits. The firm allocated Virden $1.9 million and each of the five other partners $277,000. Virden immediately sent a written objection to the distribution and demanded the amounts be reconsidered and recalculated to allocate the fee pursuant to the normal and customary method.

A month later, Virden gave notice he was withdrawing from the firm. Virden then sued the firm for breach of contract, unjust enrichment, conversion, breach of fiduciary duties, violation of the Mississippi Partnership Act, and other claims. Virden alleged that the firm breached an implied contract among the partners by allocating to themselves a share of a significant fee that Virden generated.

The firm and its partners filed their answer and affirmative defenses, which included a motion for declaratory relief, a request to stay discovery, and a counterclaim. In the firm’s motion for declaratory judgment, it sought a ruling that all of Virden’s claims were encompassed by the Agreement Virden had signed in 2001.

After a hearing, the circuit court granted the motion for declaratory judgment, stating “that paragraphs 7, 12, 13 and 14 of the Agreement” controlled the outcome of the case.

The firm prepared an order, but the parties could not agree on the language. As a result, both Virden and the firm submitted proposed orders.

The order Virden drafted was brief, holding that the circuit court had jurisdiction over the parties, that the motion for declaratory judgment was granted, and that all discovery was stayed.

The firm’s order was lengthier and explained that the Agreement sets forth “[t]he payment obligations in paragraphs 7, 12, and 13 and are the only payment obligations that the [law firm] owed to Virden upon Virden’s voluntary withdrawal from the Firm on March 7, 2019.”

The firm’s order declared the Agreement was enforceable and said, “Virden is estopped from claiming entitlement to any monetary amount from the [law firm] for acts and/or events which occurred when Virden was a Partner in the Firm except to Virden’s entitlement to the amount of Virden’s Working Capital Account at the time of his withdrawal.”

Lastly, “Virden has a legal and binding contractual obligation to convey his entire interest in the Firm and in Campbell DeLong Properties, LLC, and in their respective assets to the Firm and Campbell DeLong Properties, LLC . . . .” 

The circuit court signed both orders, and both were then stamped filed by the circuit court clerk. Virden moved for reconsideration. The circuit court denied the motion, and Virden appealed. The Court of Appeals affirmed, and we granted certiorari review. Virden, 2022 WL 447893, at *11.

Majority holding

We reverse the judgments of the Court of Appeals and of the Washington County Circuit Court, and we remand the case to the circuit court to allow Virden an opportunity to maintain an action against his former firm for breach of an implied contract regarding partner compensation.

Difference of opinion

RANDOLPH, C.J., KITCHENS, P.J., CHAMBERLIN AND ISHEE, JJ., CONCUR. GRIFFIS, J., CONCURS IN RESULT ONLY WITH SEPARATE WRITTEN OPINION JOINED BY COLEMAN, J. MAXWELL, J., DISSENTS WITH SEPARATE WRITTEN OPINION. KING, P.J., NOT PARTICIPATING.

Concurring in result only

I have read the pleadings, motions and responses, the transcript of the argument of counsel, the circuit court judgments, and the record. As a result, I tend to agree that Campbell DeLong, LLP, and the individual defendants may be entitled to a declaratory judgment that the agreement governs the compensation or amount owed to Britt Virden as a withdrawing partner. The circuit court, the Court of Appeals, and now this Court’s majority reach a similar conclusion.

There is a fundamental error with this type of cursory review. There is a fundamental error with the decisions of the circuit court, the Court of Appeals, and now this Court’s majority. This Court should not affirm a circuit court’s judgment on the merits based only on unsworn pleadings, documents attached to unsworn pleadings, and argument of counsel. This review is not based on procedure authorized by the Mississippi Rules of Civil Procedure. Therefore, I am of the opinion the circuit court judgment and the decision of the Court of Appeals should be reversed. I would remand this case for further proceedings consistent with the Mississippi Rules of Civil Procedure.

Dissent

I disagree that this case should be reversed and remanded. Instead, for the reasons set forth by the Court of Appeals in its opinion affirming the trial court’s judgment, I would affirm.

(Mike Frisch)