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Fulgham v. Morgan & Morgan, PLLC

Court of Appeals of Mississippi

December 17, 2019

WILLIAM WES FULGHAM AND FULGHAM LAW FIRM, PLLC APPELLANTS
v.
MORGAN & MORGAN, PLLC AND MORGAN & MORGAN, P.A. APPELLEES

          DATE OF JUDGMENT: 11/16/2017

          HINDS 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

         EN BANC.

          J. WILSON, P.J.

         ¶1. 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.

         ¶2. 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.

         ¶3. 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.

         FACTS AND PROCEDURAL HISTORY

         ¶4. 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.

         ¶5. 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 Arbitration."

         ¶6. 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.

         ¶7. 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."

         ¶8. 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 corporation.[1]

         ¶9. 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.[2] The document was admitted into evidence over Fulgham's objection. Notably, the 2013 contract does not contain an arbitration provision.

         ¶10. 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.[3]Bosseler concluded his testimony on direct examination by confirming that P.A./PLLC were asking the court to enter an order compelling arbitration.

         ¶11. 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."

         ¶12. 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.

         ¶13. 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.

         ¶14. 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 Retention Agreement.

Fulgham filed a notice of appeal.[4]

         ANALYSIS

         ¶15. "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.[5] We do address the chancery court's order sealing the entire case in Part III, infra.

         I. P.A. cannot maintain this action because it failed to obtain a certificate of authority to transact business in Mississippi.

         ¶17. "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. ยง 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 ...


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