Gaddy Engineering Co. v. Bowles Rice McDavid Graff & Love, LLP
231 W. Va. 577
W. Va.2013Background
- Gaddy alleges a fee-sharing agreement with Bowles Rice through J. Thomas Lane concerning claims against Columbia Natural Resources for royalty underpayments.
- The parties jointly evaluated potential claims; Bowles Rice would handle legal work and Gaddy would provide litigation support, with a flat combined fee of $1,750 for evaluation.
- Twelve land companies employed Bowles Rice to pursue litigation; the Tawney class action was involved and later certified, with potential opt-out deadlines in 2004.
- Gaddy submitted invoices (Bullock 2000–2006) and (McCullough 2004) for work; Lane declined the Bullock invoice and required a March 2004-restricted invoice; Bowles Rice paid the McCullough invoice but Gaddy refused payment.
- Gaddy filed suit in 2010 asserting breach of contract, professional negligence, negligence, gross negligence, negligent misrepresentation, fraud, conversion, promissory estoppel, unjust enrichment, and quantum meruit; the circuit court granted summary judgment in favor of Bowles Rice in 2011 and 2012.
- The Supreme Court of Appeals affirmed, applying impracticability and other doctrinal analyses, and the concurrence and dissent argued the illegality/public policy of fee-sharing should have been addressed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Impracticability as defense to fee-sharing | Gaddy contends impracticability excused performance. | Defendants argue the class action joining made performance impracticable and excused. | Summary judgment proper; impracticability upheld. |
| Existence of attorney-client relationship | Gaddy asserts an attorney-client relationship with Bowles Rice. | No client-lawyer relationship existed between Gaddy and Defendants. | No attorney-client relationship; summary judgment on related claims affirmed. |
| Fraud as basis for misrepresentation | Gaddy claims Defendants made false promises to share fees. | No intentional misrepresentation of a past/existing fact; promise-based contention inappropriate for fraud. | Fraud claim rejected; contract-based analysis governs. |
| Gist of the action (contract vs tort) | Fraud/tort claims independent of contract. | Gaddy’s tort claims mirror contract duties; not independent. | Tort claims dismissed as duplicative of contract claims. |
| Quantum meruit recovery | Gaddy seeks additional compensation beyond McCullough invoice. | Limited verifiable work; no further quantum meruit support. | Award of $74,275 and dismissal of broader quantum meruit relief. |
Key Cases Cited
- Waddy v. Riggleman, 216 W.Va. 250 (2004) (modern impracticability test with four-part factors)
- Croston v. Emax Oil Co., 195 W.Va. 86 (1995) (fraud requires misrepresentation of a past/existing fact; promissory and future intents insufficient)
- Love v. Teter, 24 W.Va. 741 (1884) (elements of fraud; reliance and damages required)
- Lengyel v. Lint, 167 W.Va. 272 (1981) (elements of fraud and reliance; gist of the action addressed)
- Martello v. Santana, 713 F.3d 309 (2013) (fee-sharing with nonlawyer void against public policy; enforceability denied)