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Dec. 19 --A lawyer may go to trial on her claim that a client engaged in tortious interference by pressuring the lawyer's firm to oust her as a partner due to her personal conflict arising from a land use disagreement with the client, the Indiana Court of Appeals decided Dec. 11 (Drake v. Dickey, 2013 BL 345010, Ind. Ct. App., No. 29A02-1302-CT-152, 12/11/13).
A jury could find that the client's alleged interference with the lawyer's contractual relationship with the firm was not justified by the client's concern over the lawyer's personal conflict, the court said. Ethics rules do not excuse a client's tortious behavior toward an attorney, Judge Edward W. Najam Jr. declared.
The factfinder could conclude, the court said, that the client intentionally induced the firm to eject the lawyer by threatening to take its business elsewhere unless the lawyer backed off in her personal dispute with the client. Intentional interference with an individual's contractual relationship is actionable even when the person is a lawyer whose status as a partner can be terminated at will by a majority vote of other partners, the court ruled.
Carol Sparks Drake was a partner in the law firm of Parr Richey Obremskey & Morton when one of the firm's clients, Duke Realty Corp., announced plans to develop land adjacent to a farm Drake owned.
When Drake refused to sell the farm to Duke Realty, Parr Richey stopped representing the company in regard to the project; however, after Drake and Duke Realty entered into a land use agreement that limited how the company could develop the property, Parr Richey resumed the representation.
Drake and Duke Realty had numerous disagreements after executing the land use agreement. Shortly after Drake sent Duke Realty a letter outlining the company's alleged breaches of the agreement, Duke Realty representatives met with Parr Richey partners and informed them that if Drake protested or filed a complaint on the land use agreement, Parr Richey's attorney-client relationship with Duke Realty would be terminated.
A Parr Richey partner then told Drake that “this could be your job … if you don't sell your farm to Duke Realty.” Two other partners told her she would be terminated from the partnership unless she sold the farm to Duke Realty. When Drake still refused to sell, the Parr Richey partners held a meeting and removed her as a partner.
Drake sued Duke Realty for tortious interference with her partnership agreement with Parr Richey. The trial court granted Duke Realty's motion for summary judgment, and Drake appealed.
The appeals court concluded that Drake is entitled to a trial on her tortious interference claim.
Duke Realty argued that even if it interfered with Drake's partnership agreement, it had a legitimate business justification due to her personal conflict.
The company pointed out that under Indiana Rule of Professional Conduct 1.7(a)(2), a lawyer cannot permit her personal interests to have an adverse effect on a client's representation, and that under Rule 1.10(a) one lawyer's conflict of interest is generally imputed to that lawyer's entire firm.
The court did not agree that Drake's personal conflict of interest necessarily excused the alleged interference. “[O]ur Rules of Professional Conduct do not justify a client's tortious behavior toward an attorney,” Najam wrote.
While the company had an unqualified right to terminate its attorney-client relationship with Parr Richey, it could have exercised that right without issuing a threat or ultimatum regarding Drake, the court said.
“A client's first-party right to terminate an attorney-client relationship does not include a corresponding third-party right to interfere with an attorney's partnership agreement,” it declared.
“Our Rules of Professional Conduct do not justify a client's tortious behavior toward an attorney.”
Indiana Court of Appeals
The court also said that Duke Realty's justification argument ignored evidence indicating that Drake's personal-interest conflict may not have presented a significant risk of materially limiting other Parr Richey lawyers' representations of Duke Realty under Rule 1.10(a).
It is for the jury, the court said, to weigh the evidence and determine whether Duke Realty's threat to withdraw all of its business from the firm was merely an expression of a client's legitimate concern about a conflict of interest.
The court also said it is up to a jury to determine whether Duke Realty intentionally induced the Parr Richey partners to remove Drake from the firm. Even if Duke Realty did not intend for the firm to expel Drake, the company could be liable for tortious interference if its conduct was substantially certain to bring about that consequence, Najam said.
In allowing Drake's claim to proceed, the court relied heavily on an Indiana Supreme Court case which held that a claim for tortious interference with an employment relationship can be maintained upon a contract terminable at will if the interferer acts intentionally and without a legitimate business purpose.
That case recognized, Najam said, that a claim of tortious interference with an employment contract can survive summary judgment even where the decision to terminate the contract is at the discretion of the employer. Similarly, Drake may pursue her claim against Duke Realty even if her status as partner could be terminated by a majority vote of the partners for any reason, the court found.
Barry A. Macey and Quincy E. Sauer of Macey Swanson & Allman, Indianapolis, represented Drake.
Duke Realty was represented by Julia Blackwell Gelinas and Maggie L. Smith of Frost Brown Todd LLC, Indianapolis, and James W. Riley Jr. and Stephanie S. Chaudhary of Riley Bennett & Egloff LLP, Indianapolis.
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Copyright 2014, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
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