Jerry Lipps, Inc. v. Postell

Full title: JERRY LIPPS, INC. v. POSTELL et al

Court: Court of Appeals of Georgia

Date published: Sep 8, 1976

139 Ga. App. 595 (Ga. Ct. App. 1976)

229 S.E.2d 78

Opinion

52365.

ARGUED JULY 14, 1976.

DECIDED SEPTEMBER 8, 1976. REHEARING DENIED SEPTEMBER 22, 1976.

Legal ethics. Fulton Superior Court. Before Judge Holt.

Levine, D'Alessio Cohn, Sam F. Lowe, Jr., for appellant.

Long, Weinberg, Ansley Wheeler, W. Meade Burns, Jr., Dan B. Wingate, Louis F. McDonald, John D. Jones, for appellees.

The relationship of attorney and client is fiduciary in character, but this does not extend beyond the subject matter for which the services of the lawyer have been retained. Where it appears that certain legal specialists in ICC work were employed by a motor carrier strictly on a case by case basis, and where the attorneys had never been informed that the corporation was interested in acting on certain route information furnished it, an agreement to represent an employee desirous of going into business for himself in regard to the subject matter of nonconfidential information furnished several months previously, in which the corporation had manifested no interest, and after the attorney-client relation terminated, was not a breach of a fiduciary duty.

ARGUED JULY 14, 1976 — DECIDED SEPTEMBER 8, 1976 — REHEARING DENIED SEPTEMBER 22, 1976 — CERT. APPLIED FOR.

The appellees Postell and Hall are attorneys who specialize in motor carrier appearances and litigation, among their clients being Jerry Lipps, Inc., a corporation largely owned by Jerry Lipps and specializing in large multi-state trucking operations. Between November, 1969, and March, 1971, the corporation had employed the firm in a number of representations involving legal fees of approximately $37,000. The representation was on a case by case basis, it being understood that the corporation first offered its business to a Chicago firm and, on declination, then turned the specific problem over to the appellees, and also it was understood that they in turn were at liberty to represent other motor carriers.

This litigation started when the attorneys sued their former corporate client for a balance on the fee. Jerry Lipps, Inc. then filed a superior court action against Postell, Hall and Jerry Todd (the latter a managerial employee of the company), alleging a conspiracy between them to create a new competing business within Lipps' territory by forming a Florida corporation, obtaining for themselves assignments of operating authorities Lipps was attempting to purchase through the defendants as his agents for the use of the competing firm, failing to negotiate for him in good faith, and otherwise breaching their fiduciary duties as his agents. A restraining order was granted as to the civil court case. Postell and Hall thereafter moved for and were granted summary judgment, and the appeal is from this adjudication.

DEEN, Presiding Judge.

The record in this case runs over 2,000 pages, including lengthy depositions by all parties concerned, and it is clear that there was a full airing of all the facts. We will therefore not concern ourselves with the generally conclusory allegations of the verified complaint. Resolute Ins. Co. v. Norbo Trading Corp., 118 Ga. App. 737 ( 165 S.E.2d 441). As we view the case, any liability on the part of the attorneys, the only defendants here involved, depends on the simple question of whether they breached a fiduciary duty arising out of their relationship with Jerry Lipps, Inc. which resulted in damage to the latter. This in turn depends primarily on a chronological statement of events to ascertain whether these defendants, while acting as agents for Lipps, acted for themselves to the detriment of their client (Code § 4-204; Smith v. Pennington, 192 Ga. 478 ( 15 S.E.2d 727)) in such manner as to make a profit for themselves from the relationship.

The facts are simple. Postell and Hall also represented Superior Trucking Company of Atlanta, which held various "operating authorities" or licenses to carry certain cargo to various locations. Still another firm requested information concerning possible assignment of the unused portion of the authority. Nothing developed from this. On April 14 and April 20, 1970, the attorneys wrote Todd, with a copy to Lipps, that certain Superior authority might be purchasable, stating the writer felt it would not be worth over $35,000 and possibly an offer of $25,000 might be made. Postell and Hall swear no interest was expressed, and in May or June Lipps stated he was not interested. Lipps admitted he put the letters in the drawer and did nothing about them for some time, but that in "late 1970" he instructed his employee Todd to make a $5,000 offer. Affidavits of the Superior management show positively that such an offer, if made, would have been ignored. Todd did not relay Lipps' interest to anyone, and not until January, 1971, did Lipps apparently tell Hall he wanted to offer the $5,000 by coming on the line during a telephone conversation between Hall and Todd.

Meanwhile, according to uncontradicted testimony, Lipps called Hall in October or November to protest a bill and inform the firm it might finish pending cases but would receive no new business. No new business was ever offered, and the last of the old business was finished up in April, 1971.

Around the first of December Todd asked Postell about the availability of the Superior authority, and gave him to understand he intended setting out in business for himself. Postell at this time indicated he would recommend an offer of $50,000 which was made and refused, and Todd then made a $75,000 offer which was accepted. A sales agreement was drawn up at the beginning of January, 1971. The attorneys referred Todd to a Florida lawyer who chartered Specialized Truck Services, Inc. for him as of February 3, and Hall and Postell, on Todd's behalf, filed an Interstate Commerce Commission application for assignment of the authority on February 4. Early in March, Todd was still telling Lipps, according to the latter, that he wanted to stay with the Lipps firm. The Federal Register carried notice of the license application in its March 2 issue, thus alerting Lipps to his intention, and on March 20 Todd was fired. The authority was in fact not granted by the ICC until the following October.

Although there is some dispute as to when certain conversations took place, and above all the motives for the actions of the various parties, the evidence as a whole demands a finding that the attorneys only worked for Lipps on matters especially entrusted to them and were completely free to represent any other client on any matter for which they had not been previously retained. It is clear that, whatever Lipps' intentions, and regardless of what instructions he may have given his employee Todd (even disregarding Hall's affidavit that Lipps told him in May or June he had no interest in purchasing), neither Todd nor Lipps communicated any interest in acquiring these rights to Hall or Postell until after October or November when Lipps informed them he would seek other attorneys, and after December when Todd indicated his desire to be represented by them in starting his own business. As to the telephone conversation in which Lipps, according to his testimony, instructed Hall in January, 1971, to offer $5,000 (in other words, at just the time Todd was making his sales agreement with Superior for $75,000), if this occurred as contended by Lipps subtle ethical problems might arise as to the duty of Hall to explain to Lipps that he was in fact now representing Todd in the matter. But nothing indicates that Lipps had ever engaged the attorneys to represent himself, and the facts, as well as affidavits from the management of Superior, affirm that at no time, and particularly not at that time, would they have paid the slightest consideration to an offer of $5,000 for licensing authorities worth fifteen times that sum. It thus appears that the defendant attorneys did not, while acting as the agents of Lipps, take any action contrary to his interest in any matter in which they had been employed.

We agree with the statement in Arey v. Davis, 233 Ga. 951, 955 ( 213 S.E.2d 837): "All transactions between an attorney and his client are closely scrutinized by the courts, and the attorney's duty in these circumstances is a much higher duty than is required in ordinary business dealings where the parties trade at arms length." In that case the question is whether an attorney who had previously represented a client should, when their interests became adverse, have advised him to seek other counsel. Here the peculiar contract relationship between the law firm and Lipps left them free at the outset to seek any employment not involved in pending representation. Acceptance of the representation of Todd eight or nine months after the offer had been made to Lipps, and he had either indicated no interest or definitely refused the opportunity, was not a breach of the legal contract between the parties. The fiduciary relationship of the parties must be confined to the subject matter of the contract. Hardin v. Baynes, 198 Ga. 683 (2-c) ( 32 S.E.2d 384); Grand Isle Campsites, Inc. v. Cheek, 249 So.2d 268, 273.

The grant of the summary judgment was not error.

Judgment affirmed. Quillian and Webb, JJ., concur.