Alabama Supreme Court
A former Drummond Company executive's lawsuit against Balch & Bingham has new life after the Alabama Supreme Court reversed itself on Friday and found a Jefferson County circuit judge wrongfully dismissed David Roberson's claims against the Birmingham law firm. Drummond failed in its efforts to be dismissed from the lawsuit, so Friday's ruling means Roberson's $75-million lawsuit will move forward against both the coal giant and its law firm.
The new order replaces a ruling dated July 23, 2021, which upheld dismissal of Roberson's Balch claims based on the tight two-year statute of limitations in the Alabama Legal Services Liability Act (ALSLA). With Friday's ruling, the state's highest court found the ALSLA did not apply to Roberson's claims, so they are not time-barred; essentially the court wound up saying, "Oops, we screwed up back in July. Sorry. Our bad." That might not build public confidence in the Alabama Supreme Court, but at least, the justices did get it right -- finally.
How do we know? We've been reporting since December 2020 that the Roberson-Balch matter boils down to two simple legal issues -- both of which are well-established in Alabama -- so it should be an easy call for the Supreme Court to reverse the trial court's dismissal of Roberson's claims. Why did the appeal hang in limbo for much longer than it should have, and why was the screwed-up original appellate ruling ever issued? That brings us to a number of oddities about the high court's handling of this case:
(1) The original appellate ruling never made sense -- and clearly ran contrary to Alabama precedent; a reasonable observer might wonder: Why did the justices not see that the first time around? What caused them to change their minds?
(2) What about the revolving cast of characters? Six justices (Bolin, Shaw, Wise, Bryan, Sellers, and Mitchell) recused themselves in the Roberson-Balch matter. Four justices (Stewart, Main, Lyons, and Welch) came out of retirement to serve as special justices for the Roberson case. Why so many conflicts of interest? Do they involve connections to Balch?
(3) Friday's ruling covered 67 pages, including a dissent. Why was so much ink spilled on an opinion that could have been spelled out in 3-4 pages?
(4) The high court's machinations give the impression this was a tortured process on an exceedingly close call. It should have been neither.
Here's how we described the basic issues on Dec. 20, 2020, under the headline "Alabama Supreme Court should have an easy call in reversing trial court and restoring Balch Bingham to David Roberson's $75-million fraud lawsuit." Our analysis plainly shows where Jefferson County Circuit Judge Tamara Harris Johnson went off the tracks:
The Roberson brief is 80 pages long and touches on a host of issues that indicate Balch Bingham should be brought back into the lawsuit to join codefendant Drummond, which had Circuit Judge Tamara Harris Johnson deny its motion to dismiss. . . .
The appeal, however, probably can boil down to two dispositive issues:
(1) Judge Johnson erred in failing to accept as true Roberson's factual allegation that he did not have an attorney-client relationship with Balch Bingham --
Johnson apparently found this allegation was conclusory and improperly pled, but that runs contrary to Alabama Supreme Court precedent, as found in a case styled Ex parte Austal USA (2007). From our post on the Austal finding:
In Austal, several employees were injured while using a "Miller saw," and they alleged that Austal intentionally injured them, asserting a claim for fraud and stating, "Austal “intentionally made false statements regarding the safety of the Miller Saw” and that those statements were made “with the conscious and deliberate intent to injure its workmen, including plaintiffs, with the Miller Saw so that it could build its ships without having to incur the costs associated with finding a safer alternative method to perform the work. . . .” Austal fraudulently “suppressed, concealed, hid or withheld important facts from the Plaintiffs regarding the known safety hazards associated with the Miller Saw ․ and that Austal knew the tool was unsafe and had made the conscious and deliberate decision to intentionally injure its workmen with the tool so that it could build its ships without having to incur the costs associated with finding a safer alternative method to perform the work.”
Austal labeled the allegations "conclusory" and claimed the injuries were accidental, the kind for which the company was immune from tort liability. The trial court denied Austal's Motion to Dismiss, and the Alabama Supreme Court denied the company's petition for mandamus review.
The factual allegations in Austal, particularly those involving reliance on false statements, are similar to those in the Roberson case. The Supreme Court's reasoning on denial of a Motion for Dismiss also is instructive for Roberson:
Austal urges this Court to look only to the specific factual allegations pleaded in the plaintiffs' complaint concerning how the injuries occurred and the alleged business motivations Austal had for requiring the plaintiffs to work with a dangerous tool. Those allegations, Austal contends, describe precisely the type of workplace accidental injuries for which it is immune from tort liability. . . .
At the motion-to-dismiss stage, however, a court's ability to pick and choose which allegations of the complaint to accept as true is constrained by Alabama's broad and well settled standard for the dismissal of claims under Rule 12(b)(6). In this case, there is no question that the plaintiffs have pleaded that Austal “made the conscious and deliberate decision to intentionally injure its workmen.” That allegation -- that a company would deliberately injure multiple specific employees -- is so shocking that it invites skepticism. Moreover, we agree with Austal that a specific intent or desire to cause injury to its employees is not particularly consistent with the alleged cost-saving motivation for causing such injuries. Nevertheless, our standard of review does not permit this Court to consider the plausibility of the allegations. Rather, in considering whether a complaint is sufficient to withstand a motion to dismiss, we must take the allegations of the complaint as true, Ussery v. Terry, 201 So. 3d 544, 546 (Ala. 2016); we do not consider “'whether the pleader will ultimately prevail but whether the pleader may possibly prevail,”' Daniel v. Moye, [Ms. 1140819, November 10, 2016] ___ So. 3d ___, ___ (Ala. 2016) (quoting Newman v. Savas, 878 So. 2d 1147, 1149 (Ala. 2003) (emphasis added)); and “[w]e construe all doubts regarding the sufficiency of the complaint in favor of the plaintiff.” Daniel, ___ So. 3d at ___. Furthermore, a Rule 12(b)(6) dismissal is proper “'only when it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief.”' Knox v. Western World Ins. Co., 893 So. 2d 321, 322 (Ala. 2004) (quoting Nance v. Matthews, 622 So. 2d 297, 299 (Ala. 1993)).
In this case, regardless of our view on the likelihood of the plaintiffs' ultimate ability to establish the truth of the intent-to-injure allegations, or even to survive the summary-judgment stage, we cannot deny that there is at least some possibility that those allegations are true. Accordingly, the plaintiffs are entitled to at least limited discovery on the issue whether their claims are subject to the exclusivity provision of the LHWCA.5 Thus, Austal has not shown a clear legal right to a Rule 12(b)(6) dismissal.
In Austal, the plaintiffs' allegations clearly could be labeled as conclusory; in fact, they border on mind reading. But the Alabama Supreme Court made two central findings:
(a) Despite the unlikely nature of the plaintiffs' claims, they had to be taken as true for purposes of a motion to dismiss.
(b) All doubts about the sufficiency of the complaint must be construed in favor of the plaintiff at the motion-to-dismiss stage.
Johnson failed to apply these standards in the Roberson matter, so her dismissal of Balch & Bingham should be reversed on those grounds alone.
Those, however, are not the only grounds for reversal:
What about the second dispositive issue? Here's how we explained it in the earlier post:
(2) Judge Johnson erred in finding the Alabama Legal Services Liability Act (ALSLA), and its tight statute of limitations, applied to Balch Bingham even if Roberson had no attorney-client relationship with the firm.
Again, this runs afoul of Alabama Supreme Court precedent as stated in Mississippi Valley Title Ins. Co. v. Hooper, 707 So. 2d 209 (Ala., 1997) From our post on the Mississippi Valley finding.
Alabama law is clear that ALSLA -- and its tight statute of limitations, which could make the Roberson complaint time-barred -- applies only where there is an attorney-client relationship. Circuit Judge Tamara Harris Johnson correctly stated the law in her recent order dismissing the Balch & Bingham law firm from the Roberson case, citing a case styled Mississippi Valley Title Ins. Co. v. Hooper, 707 So. 2d 209 (Ala., 1997). Harris wrote:The Court held further that “an attorney-client relationship is an essential element of a claim under the Legal Services Liability Act... To create an attorney-client relationship,there must be an employment contract ‘either express or implied’ between an attorney and the party for whom he purports to act or someone authorized to represent such party. . . . ”
The Court in Mississippi Valley, supra, further held, “The test for determining the existence of [an attorney-client] relationship is a subjective one and ‘hinges upon the client’s belief that he is consulting a lawyer in that capacity and his manifested intention is to seek professional legal advice.”
In our view, Johnson correctly stated the law in the Balch dismissal, but she applied it incorrectly -- and her order should be reversed by the Alabama Supreme Court, where it stands on appeal.
To summarize:
(1) Roberson must have had an attorney-client relationship with Balch & Bingham for his complaint to fall under ALSLA and be time-barred.
(2) Roberson said in his complaint that he had no such relationship with anyone at Balch, and that must be taken as true. On top of that, the record shows no sign of an employment contract, "express or implied," between Roberson and any lawyer at Balch. Finally, there is no hint that Roberson believed he was consulting a lawyer in the capacity of being a client. In fact, the words of Roberson's complaint, which must be taken as true, show just the opposite -- that he had no such belief.
For the reasons cited above, the Alabama Supreme Court should have an easy call in reversing Johnson and bringing Balch Bingham back into the Roberson lawsuit.
Moving ahead to Friday's order, the court turned on page 33 to a case that probably is more analogous to Roberson-Balch than any other case on record. From the opinion (some citations omitted for ease of reading):
In Fogarty v. Parker, Poe, Adams & Bernstein, L.L.P., 961 So. 2d 784 (Ala. 2006), the nonclients sued attorneys asserting, among other things, fraud, alleging that the attorneys had "misrepresented to [the nonclients]AlabamalawbystatingthatunderAlabamalawthe [nonclients] were not entitled to review the books and records" of a majority shareholder in a venture in which the nonclients were minority shareholders. . . The venture was failing and the nonclients had become suspicious of the activities of the majority shareholder.The attorneys represented the majority shareholder and, as noted above,denied the nonclients access to the books and records.The attorneys moved to dismiss the nonclients' complaint on the ground that "the [nonclients'] claims arose out of the rendition of legal services" and that the ALSLA provided their exclusive remedy.. . They also asserted, however, that since "the [nonclients] were not clients ... [the attorneys] owed no legal duty to the [nonclients]." This Court rejected those arguments and held that the nonclients' fraud claims were not legal-malpractice claims. The Court held: "The ALSLA applies only to allegations of legal malpractice, i.e., claims against legal-service providers that arise from the performance of legal services . . . ." This Court in Fogarty also noted: "After a thorough examination of the language of the entire act, this Court [in Cunningham v. Langston, Frazer, Sweet & Freese, P.A., 727 So. 2d 800, 804 (Ala. 1999),] held that 'the ALSLA does not apply to an action filed against a "legal service provider" by someone whose claim does not arise out of the receipt of legal services. . . .' "Consequently, this Court held, the lack of an attorney-client relationship did not bar the nonclients' fraud claims asserted independently of the ALSLA. . . .
That statement from Fogarty essentially was the court's final word on Roberson-Balch. Roughly three paragraphs later the justices concluded with this:
Thetrialcourt'sorderdismissingRoberson'sthirdamended complaint against Balch is reversed, and the cause is remanded for further proceedings consistent with this opinion.
Those words probably ensured a few folks at Balch & Bingham would have an unpleasant weekend. The call was not as easy as it should have been. But to its credit, the high court got it right in the end.
