The Calwell Practice, PLLC and Calwell Luce diTrapano, PLLC v. James F. Humphreys & Associates, L.C.

IN THE INTERMEDIATE COURT OF APPEALS OF WEST VIRGINIA
FILED
THE CALWELL PRACTICE, PLLC and May 23, 2024
CALWELL LUCE DITRAPANO, PLLC, ASHLEY N. DEEM, DEPUTY CLERK
INTERMEDIATE COURT OF APPEALS
Defendants Below, Petitioners
OF WEST VIRGINIA

v.) No. 23-ICA-220 (Cir. Ct. Putnam Cnty. Case No. CC-40-2004-C-465)

JAMES F. HUMPHREYS & ASSOCIATES, L.C.,
Plaintiff Below, Respondent

MEMORANDUM DECISION

Petitioners The Calwell Practice, PLLC and Calwell Luce diTrapano, PLLC
(collectively “Calwell”) appeal the May 2, 2023, order of the Circuit Court of Putnam
County. In that order, the circuit court granted summary judgment in favor of Respondent
James F. Humphreys & Associates, L.C. (“Humphreys”) and against Calwell regarding a
dispute over a fee sharing agreement between the parties. Humphreys filed a response.1
Calwell filed a reply.

This Court has jurisdiction over this appeal pursuant to West Virginia Code § 51-
11-4 (2022). After considering the parties’ arguments, the record on appeal, and the
applicable law, this Court finds that there is no error in the circuit court’s order and no
substantial question of law. For these reasons, a memorandum decision affirming the
circuit court’s order is appropriate under Rule 21 of the Rules of Appellate Procedure.

This matter concerns a fee sharing agreement between the parties. Beginning in
2004, the Monsanto Company (“Monsanto”) was the subject of approximately fifty-five
civil suits in West Virginia alleging toxic exposure from its plant in Nitro, West Virginia.
At the inception of the Monsanto litigation, the parties herein served as co-counsel and
their work and fee sharing arrangement was memorialized by a Memorandum of
Understanding that involved equal sharing of both costs and potential attorneys’ fees that
would be awarded.

In January of 2012, the parties agreed to terminate Humphreys’ involvement in the
Monsanto litigation. To that end, the parties entered into a fee sharing agreement whereby
Humphreys agreed to withdraw from the litigation in exchange for Calwell’s agreement

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Calwell is represented by R. Booth Goodwin II, Esq., Benjamin B. Ware, Esq.,
Stephanie H. Daly, Esq., and L. Dante’ diTrapano, Esq. Humphreys is represented by J.
Zak Ritchie, Esq., Michael B. Hissam, Esq., and Andrew C. Robey, Esq.
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that in the event of a settlement or favorable verdict, Humphreys would receive 12.5% of
any settlement or verdict up to $110,000,000.00. The fee sharing agreement states, in
relevant part:

In addition to the Expenditure Reimbursement Amount described herein,
solely in the event of a settlement or a favorable verdict, JH shall further be
entitled to receive a negotiated share of Attorney’s fees (“Attorney’s fees”)
of 12.5% of Attorney’s fees calculated as a percentage of any settlement or
verdict up to $110,000,000.00. By way of example, if the case is awarded a
judgment or is settled for $110,000,000.00 or less, JH shall be entitled to
receive an amount equal to 12.5% of any attorney’s fees awarded.

In February of 2012, the Monsanto litigation settled. The terms of settlement were
memorialized in two separate agreements: the Property Class Settlement Agreement and
the Medical Monitoring Class Settlement Agreement, both of which were approved by the
circuit court in January of 2013. Under those agreements, Monsanto agreed to pay up to
$84,000,000.00 for medical monitoring claims and $9,000,000.00 for property cleanup. In
consideration of this settlement, the circuit court awarded Calwell attorneys’ fees and
expenses in the amount of $20,000,000.00. As required by the fee sharing agreement,
Calwell paid Humphreys the 12.5% negotiated share of this initial fee award.

The then-presiding judge of the circuit court, the Honorable Derek C. Swope, also
approved a potential additional $9,500,000.00 for future attorneys’ fees, the receipt of
which was contingent upon the satisfaction of certain milestones. These future fee awards
would be paid out of an interest-bearing escrow account (referred to as the “Contingent
Attorney’s Fees Fund”), which was funded exclusively by Monsanto. From that fund,
Calwell would receive $200.00 in attorneys’ fees for each class member to register and
qualify for property cleanup. Calwell would also receive $500.00 in attorneys’ fees for
each class member to register and qualify for medical monitoring. These periodic awards
were commonly referred to as “periodic incentive awards.” Again, in recognition of the fee
sharing agreement, Calwell paid Humphreys the 12.5% negotiated share of these periodic
incentive awards.

The Medical Monitoring Class Settlement Agreement also contained a “triggering
event,” which was tantamount to a final incentive award. If one hundred class members
registered to participate in serum dioxin screening and 25% of those participants presented
with defined levels of dioxin in their system, then additional benefits would be provided to
the class. And, in consideration of those additional benefits, Calwell would be awarded the
remaining $6,500,000.00 from the Contingent Attorney’s Fees Fund when and if the
triggering event occurred.

On June 23, 2014, Humphreys filed a charging lien against the settlement fund. This
lien was eventually the subject of a June 2014 hearing in circuit court. Following the

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hearing, the circuit court entered what the parties refer to as the “2014 Order.” That order
states, in relevant part:

The Court FINDS and ORDERS that Mr. Calwell and Mr. Humphreys have
agreed that Mr. Humphreys shall receive twelve (12) and a half percent from
the attorney’s fees Mr. Calwell receives as Class Counsel in both the property
and medical monitoring class settlements. The Court further ORDERS that
Mr. Humphreys receive twelve (12) and half percent of any incentive
payments Mr. Calwell receives for the number of Class Members who
register for medical monitoring or property clean-up benefits. Once a level
of five hundred (500) participants are registered, the Court will release the
incentive fee payments to Mr. Calwell in the amounts of Five Hundred
Dollars ($500) for each medical monitoring participants and Two Hundred
Dollars ($200) for each property remediation participants. These fees will be
released at each interval of 500 persons registered and at the end of the
Registration Period. Finally, the Court ORDERS that Mr. Humphreys
receive twelve (12) and a half percent of any attorney’s fee payments that
Mr. Calwell receives based upon the occurrence of the triggering event. Mr.
Calwell must also reimburse Mr. Humphreys for his costs.

At some point thereafter, it became evident that the “triggering event” would not
occur. The serum dioxin screening was unlikely to yield the necessary results to satisfy the
triggering event. Calwell then questioned the reliability of those screening results. As a
result, Monsanto and Calwell agreed to amend the Medical Monitoring Class Settlement
Agreement, resulting in the Modified Medical Monitoring Class Settlement Agreement. In
that modified agreement, Monsanto and Calwell agreed that, despite the non-occurrence of
the “triggering event,” the class would nonetheless be afforded additional screening and
Calwell would instead be awarded $3,000,000.00 (rather than $6,500,000.00) from the
Contingent Attorney’s Fees Fund.

Relevant to Calwell’s arguments on appeal, prior to the circuit court’s approval of
the modified agreement, Humphreys filed for Chapter 11 bankruptcy. See In re James F.
Humphreys & Assocs., L.C., 554 B.R. 355 (Bankr. S.D. W. Va. 2016). In February of 2016,
Humphreys filed its Schedule of Assets and Liabilities and Statement of Financial Affairs.
There, Humphreys disclosed “referral/joint representation agreements” as one of the
various classes of assets available for administration. In November of 2016, Humphreys
filed its Combined Plan of Reorganization and Disclosure Statement, which proposed,
among other things, that the reorganized firm assume all “Co-Counsel Agreements” as a
part of its reorganization. In February of 2017, the bankruptcy court approved Humphreys’
disclosure statement, finding that it contained “adequate information,” and confirmed the
plan of reorganization. During the bankruptcy proceeding, Humphreys received a payment
from Calwell for the Monsanto litigation, which Humphreys directed be paid to a debtor
entity rather than Humphreys personally.

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In September of 2017, the circuit court approved the modified agreement, and
awarded Calwell $3,000,000.00 as a final fee award. But, unlike the earlier fee awards,
Calwell failed to remit to Humphreys the 12.5% negotiated share. This final fee award is
the subject of the present dispute.

On May 20, 2020, Humphreys filed its underlying complaint in the Circuit Court of
Kanawha County alleging a single count of breach of contract. Eventually, the case was
transferred to the Circuit Court of Putnam County which presided over the Monsanto
litigation. The matter was then reassigned from Judge Swope, who presided over the
Monsanto litigation, to the Honorable Joseph Reeder due to Judge Swope’s obligations on
the Mass Litigation Panel regarding on-going opioid litigation. Thereafter, the parties filed
dueling motions for summary judgment.

On May 2, 2023, the circuit court granted summary judgment in favor of Humphreys
against Calwell. In that order, the circuit court held that there is no dispute that under the
fee sharing agreement, Humphreys is entitled to 12.5% of fees awarded in the Monsanto
litigation and further, there can be no dispute that the $3,000,000.00 in question are fees
awarded in the Monsanto litigation and therefore, Humphreys is entitled to 12.5%. The
circuit court further held that nothing in the fee agreement limited Humphreys’ recovery to
a “triggering event.” Lastly, the circuit court declined to step into the shoes of the
bankruptcy court regarding the sufficiency of Humphreys’ disclosures. The circuit court
held that Calwell had presented no evidence that suggested that the fee sharing agreement
was intentionally concealed from the bankruptcy court and, therefore, Humphreys was not
judicially estopped for asserting his claim for breach of contract. It is from this order that
Calwell appeals.

This Court accords a plenary review to the circuit court’s order granting summary
judgment: “[a] circuit court’s entry of summary judgment is reviewed de novo.” Syl. Pt. 1,
Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994). In conducting our de novo
review, we apply the same standard for granting summary judgment that is applied by the
circuit court. Under that standard,
[s]ummary judgment is appropriate where the record taken as a whole could
not lead a rational trier of fact to find for the nonmoving party, such as where
the nonmoving party has failed to make a sufficient showing on an essential
element of the case that it has the burden to prove.

Id. at 190, 451 S.E.2d at 756, syl. pt. 4.

On appeal, Calwell first asserts that the circuit court erred by refusing to hold that
the 2014 Order bars Humphreys from receiving 12.5% of the $3,000,000.00 because the
2014 Order specifically conditioned Humphreys’ right to share in future fees upon the
occurrence of the “triggering event,” which never occurred. We disagree. There is no

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assertion that the fee sharing agreement is invalid. Likewise, there is no genuine dispute
that the fees in question were awarded in the Monsanto litigation and therefore subject to
the fee sharing agreement. The 2014 Order merely interpreted the fee sharing agreement
within the context of the Monsanto litigation as it stood at that point in time. The fact that
Calwell was later able to negotiate the removal of the triggering event for a lesser fee does
not remove that lesser fee award from the scope of the fee sharing agreement. Accordingly,
the circuit court did not err in refusing to hold that the 2014 Order bars Humphreys from
receiving 12.5% of the fee.

Next, Calwell asserts that the circuit court erred by refusing to hold that Humphreys
was judicially estopped from sharing in the fee because Humphreys’ bankruptcy
disclosures were insufficient. Again, we disagree. In West Virginia:

Judicial estoppel bars a party from re-litigating an issue when: (1) the party
assumed a position on the issue that is clearly inconsistent with a position
taken in a previous case, or with a position taken earlier in the same case; (2)
the positions were taken in proceedings involving the same adverse party; (3)
the party taking the inconsistent positions received some benefit from his/her
original position; and (4) the original position misled the adverse party so
that allowing the estopped party to change his/her position would injuriously
affect the adverse party and the integrity of the judicial process.

Syl. Pt. 2, W. Va. Dept. of Transp., Div. of Highways v. Robertson, 217 W.Va. 497, 618
S.E.2d 506 (2005). Here, Humphreys’ assertion of a claim for breach of contract is not
clearly inconsistent with the position taken in the bankruptcy proceedings. Humphreys
disclosed “referral/joint representation agreements” as one of the various classes of assets
available for administration and “Co-Counsel Agreements” that the reorganized firm
would assume. Further, the bankruptcy court approved the disclosure statement and found
that it contained “adequate information” enabling creditors to make an informed decision
on the proposed reorganization plan. Just as the circuit court held, this Court declines “to
step into the shoes of the bankruptcy court and second guess the sufficiency of that
disclosure.” Accordingly, the circuit court did not err by refusing to hold that Humphreys
was judicially estopped.

Accordingly, we affirm the May 2, 2023, order of the Circuit Court of Putnam
County.

Affirmed.

ISSUED: May 23, 2024

CONCURRED IN BY:

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Chief Judge Thomas E. Scarr
Judge Charles O. Lorensen
Judge Daniel W. Greear

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