OF JUDGMENT: 11/16/2017
COUNTY CHANCERY COURT, FIRST JUDICIAL DISTRICT. HON. J.
DEWAYNE THOMAS TRIAL JUDGE
ATTORNEYS FOR APPELLANTS: WILLIAM W. FULGHAM (PRO SE) LEVOY
BRYANT AGNEW IV
ATTORNEYS FOR APPELLEES: MATTHEW THOMPSON ROBERT FARLEY
WILKINS CHAD KENNETH KING
This is a dispute between a law firm and a departing lawyer
about the lawyer's rights to contact and continue to
represent the firm's clients, as well as the
attorneys' fees and expenses related to those
clients' cases. More specifically, though, this appeal
involves the firm's efforts to compel the departing
lawyer to arbitrate the dispute.
For purposes of this case, "the firm" is actually
two separate entities: Morgan & Morgan P.A., a Florida
corporation (hereinafter, "P.A."), and Morgan &
Morgan PLLC, a Mississippi professional limited liability
company (hereinafter, "PLLC"). P.A. and PLLC filed
an action in Hinds County Chancery Court to enforce the
arbitration provision of the employment agreement (the
"Attorney Retention Agreement") between P.A. and
the departing lawyer, Wes Fulgham. The chancery court ruled
that the arbitration provision was valid and enforceable and
that the parties' dispute was within the scope of the
provision. Accordingly, the court entered an order requiring
the parties' to arbitrate their disputes over clients,
fees, and expenses. Fulgham appealed.
For the reasons that follow, we reverse and render the order
compelling arbitration and remand the case for further
proceedings. We hold that P.A. is barred from maintaining
this action because it never obtained a certificate of
authority to transact business in Mississippi. See
Miss. Code Ann. § 79-4-15.02(a) (Rev. 2013). We also
hold that PLLC cannot enforce the Attorney Retention
Agreement's arbitration provision because it is not a
party to the Agreement and failed to show that it is a
third-party beneficiary of the Agreement. Finally, we vacate
the chancery court's order sealing the entire case. On
remand, the court may determine what, if any, specific parts
of the record should be redacted or sealed.
AND PROCEDURAL HISTORY
Fulgham was employed as an attorney with Morgan & Morgan
from 2013 until he left the firm on May 10, 2017. When he
left Morgan & Morgan, Fulgham established Fulgham Law
Firm PLLC, and he contacted certain clients that he had
previously represented at Morgan & Morgan and offered to
continue to represent them at his new firm. At least some of
those clients chose to follow Fulgham to his new firm.
On May 11, 2017, P.A. and PLLC filed a complaint in Hinds
County Chancery Court for a temporary restraining order (TRO)
and other relief. As stated in the introduction, P.A. is a
Florida corporation, while PLLC is a Mississippi professional
limited liability company. P.A. and PLLC alleged in their
complaint that Fulgham had solicited Morgan &
Morgan's clients in violation of his July 30, 2015
employment contract with P.A. (the "Attorney Retention
Agreement"). P.A. and PLLC also alleged that Fulgham had
"agreed to binding Arbitration" pursuant to that
Agreement, and they sought an order "requiring Specific
Performance . . . and that this matter be Ordered to
The same day that the complaint was filed, following a brief
ex parte hearing, the chancery court entered a TRO without
notice to Fulgham. The court enjoined Fulgham "from
contacting any and all [PLLC/P.A.] current and active
clients" and ordered that the arbitration provision of
the Attorney Retention Agreement should "be specifically
complied with." The court also "sealed" the
case and set a hearing for May 22, 2017, on the issues of
"injunctive relief and specific performance." By
subsequent agreement, the TRO was extended, and the hearing
was continued until June 20, 2017.
At the hearing, Fulgham testified that he worked under an
oral contract with PLLC beginning in 2013 and signed a
written contract (the "Attorney Retention
Agreement") with P.A. in July 2015. Fulgham testified
that he worked for and was paid by PLLC pursuant to his
original oral contract and that he never actually received
any compensation from P.A. pursuant to the Attorney Retention
Agreement. In response to Fulgham's testimony, Morgan
& Morgan's attorney interjected and argued to the
court that there was "no difference" between P.A.
and PLLC "as far as Mr. Fulgham is concerned."
Counsel further represented to the court, "Just
generally speaking, contracts [between] Morgan & Morgan
[and its] clients are both with the P.A. and the PLLC.
There's no distinction."
Fulgham went on to testify that attorneys in Morgan &
Morgan's Jackson office were required to sign contracts
with P.A. in 2015 in response to a threatened legal
malpractice lawsuit. Fulgham maintained that his contract
with P.A. only applied to "class action work or any
other work outside of Mississippi." He claimed that
Mississippi clients were all considered clients of PLLC, not
P.A. Fulgham testified that although he was employed by PLLC,
he was actually paid by Morgan & Morgan Mississippi
Management Inc., which is a Florida
Fulgham was also cross-examined about a March 4, 2013
contract that he signed with "Morgan & Morgan."
That contract did not specify whether "Morgan &
Morgan" was P.A. or PLLC, but Fulgham testified that it
was a proposed contract with PLLC. Fulgham acknowledged that
he signed the document, but he asserted that it was "not
a contract." Fulgham's attorney argued that a
contract was "never . . . fully executed" because
no one ever signed the document on behalf of Morgan &
Morgan. The document was admitted into evidence
over Fulgham's objection. Notably, the 2013 contract does
not contain an arbitration provision.
Greg Bosseler, the managing partner in Morgan &
Morgan's Jackson office, also testified at the hearing.
Bosseler testified that there was no "difference"
or "distinction" between P.A. and PLLC "in
this context" or for purposes of this case. Bosseler
stated the P.A. was "the parent corporate entity"
and that PLLC operates "here in Mississippi," but
he did not elaborate or provide any concrete explanation or
documentation of the relationship between the two entities.
Bosseler further testified that Morgan & Morgan's
Jackson attorneys were compensated pursuant to their
agreements with P.A. The firm's Jackson attorneys also
signed pleadings identifying P.A. as their firm. Bosseler
also testified that at least one of the clients at issue in
this case had a signed attorney-client agreement with P.A. In
fact, Bosseler estimated that Fulgham had handled "well
over fifty" Mississippi cases in which the client had
contracted with P.A., not PLLC. Bosseler disputed
Fulgham's claim that his contract with P.A. applied only
to "class action" and other non-Mississippi
work.Bosseler concluded his testimony on direct
examination by confirming that P.A./PLLC were asking the
court to enter an order compelling arbitration.
At the conclusion of the hearing, the court gave the parties
time to submit additional arguments and authorities in
writing. P.A./PLLC submitted proposed findings of fact and
conclusions of law in which they argued that P.A. and PLLC
were both entitled to enforce the Attorney Retention
Agreement's arbitration provision because P.A. was a
party to the Agreement, and PLLC was a "third-party
beneficiary." In response, Fulgham denied that PLLC was
a third-party beneficiary. Fulgham also argued that the
Attorney Retention Agreement and its arbitration provision
did not apply to the dispute because the clients at issue
were all clients of PLLC. Fulgham also alleged that certain
provisions of the Attorney Retention Agreement (all related
to communications with clients, sharing of attorneys'
fees, and responsibility for case expenses) were inconsistent
with the Mississippi Rules of Professional Conduct; however,
Fulgham did not expressly argue that the arbitration
provision was unenforceable for that reason. In their
rebuttal, P.A./PLLC argued that Fulgham had signed numerous
pleadings and other documents in Mississippi cases as an
employee of P.A., and they again asked the court to
"immediately order the entirety of this employment
dispute to arbitration."
Fulgham also filed a separate "Motion to Dismiss Morgan
& Morgan, P.A. for Want of Jurisdiction." Fulgham
argued that P.A. could not maintain the action against him
because it had failed to obtain a certificate of authority to
do business in Mississippi as a foreign corporation.
See Miss. Code Ann. § 79-4-15.02(a). In
response, P.A./PLLC argued (1) that Fulgham's argument
was "judicially estopped" because Fulgham
previously conceded that the chancery court had jurisdiction,
(2) that P.A. was not doing business in Mississippi, and (3)
that PLLC could maintain the action regardless.
Finally, Fulgham also filed a motion asking the chancery
court to unseal the case. He argued that the order sealing
the case was unwarranted and that courts and court records
should be open to the public.
On November 16, 2017, the chancery court entered an order
granting P.A./PLLC's request to compel arbitration. The
court's order stated in part:
[Fulgham] assert[s] that the Attorney Retention Agreement is
invalid. This Court disagrees. It is evident to the Court
that there is a valid arbitration agreement and that the
parties' dispute is within the scope of the arbitration
agreement. See Gulf Ins. Co. v. Neel-Schaeffer,
Inc., [904 So.2d 1036] (Miss. 2004). Accordingly, this
Court finds that all disputes, specifically
including reimbursement of client costs and division of
attorney's fees[, ] should be resolved through binding
arbitration as provided in the Agreement.
For the foregoing reasons, the Court finds that the
arbitration agreement signed by [Fulgham] and [P.A.] is valid
and enforceable. There is no proof before the Court that the
arbitration agreement is unconscionable or that [P.A. and
PLLC] waived their rights to arbitration. Therefore, the
request to compel arbitration is granted. . . . The parties
are hereby directed to submit all claims in this matter to
binding arbitration in accordance with the signed Attorney
Fulgham filed a notice of appeal.
"The grant or denial of a motion to compel arbitration
is reviewed de novo." East Ford Inc. v. Taylor,
826 So.2d 709, 713 (¶9) (Miss. 2002); accord Miss.
State Port Auth. at Gulfport v. S. Indus. Contractors
LLC, 271 So.3d 742, 747 (¶11) (Miss. Ct. App.
2018). ¶16. On appeal, Fulgham makes four general
arguments, which can be summarized as follows: (1) P.A.
cannot maintain this action because it failed to obtain a
certificate of authority to do business in Mississippi; (2)
PLLC is not a third-party beneficiary of the Attorney
Retention Agreement and therefore cannot enforce the
arbitration provision; (3) the Agreement and its arbitration
provision do not apply to Fulgham's Mississippi cases or
the present dispute; and (4) certain provisions of the
Agreement (other than the arbitration provision) are void
because they violate the Mississippi Rules of Professional
Conduct. We agree with Fulgham's first two points and
hold that P.A. cannot maintain this action and that PLLC is
not a third-party beneficiary and has no right to enforce the
arbitration provision. On those two grounds, we reverse and
render the order compelling arbitration. Accordingly, we need
not address Fulgham's third and fourth arguments on
appeal. We do address the chancery court's
order sealing the entire case in Part III, infra.
P.A. cannot maintain this action because it failed to
obtain a certificate of authority to
transact business in Mississippi.
"A foreign corporation may not transact business in this
state until it obtains a certificate of authority from the
Secretary of State." Miss. Code Ann. §
79-4-15.01(a) (Rev. 2013). A foreign corporation that fails
to comply with this law is liable for civil penalties and
will be denied access to Mississippi courts. Id.
§ 79-4-15.02(a), (d). Pursuant to Mississippi Code
subsection 79-4-15.02(a), sometimes called the corporate
"door closing" statute, "[a] foreign
corporation transacting business in this state without a
certificate of authority may not maintain a proceeding in any
court in this state until it obtains a certificate of
authority." Id. § 79-4-15.02(a). Here, it
is undisputed that P.A. is a foreign corporation (a Florida
corporation) and that it has never obtained a ...