Thursday, January 28, 2021

Reply brief in $75-million lawsuit from former Drummond exec focuses on attorney-client issues that, with correct rulings, will put Balch back under the gun

David Roberson

An Alabama trial-court judge unlawfully dismissed a former Drummond Company executive's claims against Balch and Bingham by wrongfully finding David Roberson had an attorney-client relationship with the law firm, according to a reply brief filed yesterday with the Alabama Supreme Court. (The full brief is embedded at the end of this post.)

The brief, by Orange Beach attorney Houston Howard, focuses on several points we addressed in an Oct. 26 post. Jefferson County Circuit Judge Tamara Harrison Johnson's primary error came from her holding that Roberson's claims against Balch fall under the Alabama Legal Services Liability Act (ALSLA) and its tight two-year statute of limitations. But Johnson went off track on at least two key points, as we wrote in December:

Case law holds that a claim falls under the ALSLA only when there is an attorney-client relationship. The Robersons' complaint plainly states that David Roberson had no such relationship with Balch's Joel Gilbert or Drummond in-house counsel Blake Andrews, the two lawyers who allegedly gave him false or incomplete information, essentially making him the fall guy and leading to his conviction in the North Birmingham Superfund bribery scandal. As a result, David Roberson lost his job, and the Robersons lost their house and many of their possessions. The Roberson conviction currently is under appeal.Per Ex parte Austal USA (2017), Johnson was obligated to take the Robersons' allegations as true; she did not. She also was obligated to find, as a matter of law at this early stage in the litigation, that the Robersons' claims did not fall under the ALSLA, and thus were not time-barred; she did not. That means her finding has almost no chance of holding up on an appeal.

In his reply brief, Howard focuses heavily on these same points, noting with irony that both parties had admitted before the trial court that Roberson was not Balch's client:

In applying the ALSLA, Judge Johnson first held that “[a]n attorney-client relationship is an essential element of a claim under the Legal Services Liability Act”. She then held that Roberson had created an attorney-client relationship with Balch by asking Gilbert a single question.

In his opening brief, Roberson asked the Court to reverse the dismissal because (1) both parties had admitted that Balch was not Roberson’s attorney and (2) the facts alleged in the complaint did not establish an attorney-client relationship. 

In its brief, Balch admits Roberson was not its client, but argues that Judge Johnson erred in holding that an attorney-client relationship is required. “[W]hile Roberson personally is not, and was not Balch’s client, the fact is not determinative because the ALSLA does not require an attorney-client relationship.” Balch then devotes twelve pages to arguing that “[t]he ALSLA does not require an attorney-client relationship.”

 This leads into some heavy-duty legal argument -- and Howard's brief nails it:

Nevertheless, Balch never mentions Judge Johnson’s holding—and never says that her holding is erroneous. Nor does Balch acknowledge the decisions on which Judge Johnson relied:

 “An attorney-client relationship is an essential element of a claim under the [ALSLA] ...” Ex parte Daniels, 264 So. 3d 865, 869 (Ala., 2018).

“An attorney-client relationship is an essential element of a claim under the Legal Services Liability Act ...” Brackin v. Trimmier Law Firm, 897 So. 2d 207, 229 (Ala. 2004).

“An essential element of a claim under the ALSLA is the existence of an attorney-client relationship.” Bryant v. Robledo, 938 So. 2d 413, 418 (Ala. Civ. App. 2005).

Can the Alabama Supreme Court possibly uphold the Balch dismissal? It's hard to see how, as Howard makes clear:

Because Balch has admitted that Roberson was not its client, Judge Johnson’s application of the ALSLA may be affirmed only if these cases are overruled. Yet, Balch does not acknowledge these holdings or ask the Court to overrule them. Consequently, this case is due to be reversed based on Judge Johnson’s erroneous finding that Roberson was Balch’s “client.” See American Bankers Ins. Co. of Florida v. Tellis, 192 So. 3d386, 392 n.3 (Ala. 2015) (the Court follows “controlling precedent” unless “invited to” overrule it).

Ouch. That seems to put the state's high court -- and Balch -- into somewhat of a box. That doesn't mean Balch's lawyers won't try to squirm out of it, with the help of some clever lawyering -- the kind Howard spotlights in his brief:

Balch asserts that “[c]ourts in Alabama have applied the ALSLA in cases where a non-client sought recovery for common law tort claims.”

Balch then quotes from San Francisco Residence Club Inc. v. Baswell-Guthrie, 897 F Supp. 2d 1122 (N.D. Ala. 2012)—but deletes the court’s finding that the plaintiff was a client. 

 That's not all the clever lawyering that Howard spots:

Balch asserts, “The ALSLA is properly invoked because Roberson’s claims arise out of Balch’s provision of legal services to its corporate client, Drummond.” Balch did not make this argument in the trial court, and it has no merit.

First, considering the allegations of the complaint, as the Court must, there is no basis for holding that “Roberson’s claims arise of Balch’s provision of legal services to ... Drummond.” The complaint alleges, “Balch and Bingham was not functioning as Drummond’s legal counsel for or concerning the acts or omissions on which the plaintiff’s claims are based.”

Second, Roberson alleges that Gilbert’s misrepresentations were made in response to specific questions that he (Roberson) asked Gilbert: “[T]he Plaintiff asked Gilbert if he had inquired with the ethics lawyers at Balch & Bingham whether the Plan was legal and ethical.” “In June 2016 ... the Plaintiff again asked Gilbert if Balch’s in-house ethics attorneys had any ‘problem’ with the Plan or his association with it ...” There is no allegation that Roberson asked the questions on behalf of Drummond.

Third, Balch cites no authority that the ALSLA applies to suits by corporate employees against the corporation’s attorney. Consequently, it has waived the argument. Ala. R. App. P. 28(a)(10) & (b).

Finally, if the ALSLA applies to suits by corporate employees against the corporate attorney, then that would require the employee to be a third-party beneficiary of the corporation’s attorney-client relationship. But this Court has held that third-party beneficiary concepts do not apply to the ALSLA: “[A]n intended beneficiary has no standing to bring a legal-malpractice action against an attorney ...” Robinson v. Benton, 842 So. 2d 631, 634 (Ala. 2002).

Thus, if the ALSLA does not provide a remedy for a corporate employee, such as Roberson, then it cannot be his “exclusive remedy,” as Balch argues. Fogarty v. Parker, Poe, Adams & Bernstein, LLP, 961 So.2d 784, 789 (Ala. 2006).

The reply brief addresses a number of other issues raised in the trial court. But if the Alabama Supreme Court gets it right on the attorney-client matter -- and forces Judge Johnson to get it right -- those other issues won't matter much. Correct findings on this one issue will mean Balch is back in the Roberson lawsuit -- as it should be, under the law.

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