It’s Not Over Till It’s Over

The Arkansas Court of Appeals has remanded a fee dispute among lawyers that dates back to litigation initiated in 2006

This appeal from Cleburne County Circuit Court arises from a breach-of-contract action involving an attorney-fee dispute brought by appellant David A. Couch, PLLC (hereinafter “Couch, PLLC”), against appellee Grayson & Grayson, P.A. (hereinafter “Grayson”), in 2009. Significant to this appeal, a separate but related attorney-fee dispute between the parties was previously initiated by Grayson in 2006 in Pulaski County Circuit Court, wherein Grayson sued both David A. Couch, individually (hereinafter “Couch”) and Couch, PLLC for an alleged breach of contract of a global fee-sharing agreement and unjust enrichment for the alleged failure to split fees collected in settling numerous nursing-home cases. In the Pulaski County proceeding, Couch, PLLC filed a counterclaim alleging breach of contract of a specific attorney/client employment agreement as a result of Grayson’s alleged failure to equally divide the attorney’s fees Grayson had received in a separate nursing-home case—Leister Dewey v. Beverly Enterprises—which the parties had jointly referred to another attorney (this claim is referred to herein as the “Dewey claim”). For reasons not disclosed in either record, Grayson failed to serve process on Couch, PLLC. On April 9, 2009, the Pulaski County Circuit Court dismissed Grayson’s complaint against Couch, PLLC for want of service. Because Couch, PLLC was no longer a party to the litigation, the trial court also dismissed Couch, PLLC’s counterclaim against Grayson without prejudice as well as a third-party complaint Couch, PLLC had filed against Keith Grayson, individually, and Melanie Grayson, individually.  The dismissal of Couch, PLLC as a party from the Pulaski County litigation paved the way for the present litigation. Twelve days after its dismissal from the Pulaski County litigation, Couch, PLLC, on April 21, 2009, filed a complaint in Cleburne County Circuit Court. Couch, PLLC’s complaint against Grayson alleged a breach of contract of the specific attorney/client employment agreement in the Dewey matter as a result of Grayson’s alleged failure to equally divide the attorney’s fees in that case.

The Pulaski County litigation involving Grayson’s claims against Couch individually was resolved by a final judgment entered by the Pulaski County Circuit Court on December 10, 2019, wherein the court rejected both of Grayson’s claims against Couch, individually. Thereafter, in the Cleburne County litigation, Grayson and Couch, PLLC filed crossmotions for summary judgment, with each alleging that the Pulaski County order acted as res judicata and that each was entitled to judgment as a matter of law on Couch, PLLC’s breach-of-contract claim. The Cleburne County Circuit Court entered an order granting Grayson’s summary-judgment motion on the basis that the ruling in the Pulaski County case acted as res judicata and barred further litigation of the breach-of-contract action brought by Couch, PLLC in the instant matter. The Cleburne County Circuit Court denied Couch, PLLC’s motion for summary judgment.

Couch, PLLC now appeals, arguing that the Cleburne County Circuit Court erred in granting Grayson’s motion for summary judgment and further erred in denying Couch, PLLC’s motion for summary judgment. We conclude that the Cleburne County Circuit Court erred in finding that res judicata barred litigation of Couch, PLLC’s breach-of-contract claim in the Cleburne County proceedings and in entering summary judgment for Grayson on that basis. However, we find no error in the Cleburne County Circuit Court’s denial of Couch, PLLC’s motion for summary judgment. Essentially, we find that there are genuine issues of material fact relative to both parties’ allegations of fact and conclusions of law. Therefore, we reverse the summary judgment entered in favor of Grayson, and we remand for further proceedings.

(Mike Frisch)