Simpson v. James

903 F.2d 372 (1990)

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Nature of the Case

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Facts

P hired Oliver to sell her corporation, H.P. Enterprises. Oliver practiced with the firm known as Keeney, Anderson & James. He had represented P's husband for many years in matters relating to H.P. Enterprises and in personal matters. A group of investors approached Oliver to inquire into purchasing H.P. Enterprises. Oliver formed a corporation for the investors, Tide Creek, and drew up the legal documents to transfer the assets of H.P. Enterprises to Tide Creek. The price agreed upon was $500,000, of which $100,000 was paid at the execution of the sale. As security, Oliver provided for a lien on the stock of Tide Creek, personal guarantees of the buyers on the corporation's $400,000 note to the sellers, and certain restrictions on operation of the business. After the transaction, Oliver's firm continued to represent P in estate and tax matters. A fire destroyed Tide Creek's commissary. David James (D), a partner in Oliver's firm, represented Tide Creek in recovering over $200,000 in insurance proceeds. In October 1984, Oliver left the firm to practice in Houston. The firm was renamed Keeney, Anderson, & James. An associate in the firm, Fred Norton, took over tax and estate work for P. A $ 200,000 note by Tide Creek in favor of P became due on November 18, 1984. Tide Creek failed to pay. P visited D at his office. D told them that Tide Creek was having financial difficulties and that the company could pay them only $50,000 at that time. D restructured the note between the parties. In the Fall of 1985, P heard rumors of Tide Creek's impending bankruptcy. D advised P that her interests were in conflict with those of Tide Creek. He told her that she should find another lawyer to represent her; D was representing Tide Creek. P received a payment from Tide Creek on October 1, 1985. Tide Creek then filed for bankruptcy. Ps received nothing in bankruptcy. P filed suit against the three partners of Keeney, Anderson, and James alleging a conflict of interest that prevented them from acting in P's best interests. The jury found that Oliver was negligent in his representation of P and awarded them $ 100,000 damages. It also found d liable for negligence for his role in restructuring the delinquent note and awarded $100,000. Ds moved for a judgment notwithstanding the verdict, or in the alternative, for a new trial. The court denied both motions. Ds appealed.