Title: Walter Price, Jr. v. Edward Roland Ragland et al. (Appeal from Madison Circuit Court: CV-96-1959). Reversed And Remanded. 1040265 (consolidated) Walter Price, Jr. v. Edward Roland Ragland et al.
Citation: N/A
Docket Number: 1040251
State: Alabama
Issuer: Alabama Supreme Court
Date: March 16, 2007

REL:03/16/07pricev.ragland
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
242-4621), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2006-2007
_________________________
1040251 and 1040265
_________________________
Walter J. Price, Jr.
v.
Edward Roland Ragland et al.
_________________________
1040314 and 1040336
_________________________
Edward Roland Ragland et al.
v.
Walter J. Price, Jr.
 
Appeals from Madison Circuit Court
(CV-96-1959 and CV-96-1972)
BOLIN, Justice.  
1040251, 1040265, 1040314, 1040336
2
Walter J. Price, Jr., the defendant in this legal-
malpractice action, appeals a judgment entered against him in
the Madison Circuit Court; Edward Roland Ragland and the other
plaintiffs in that action cross-appeal. We reverse and remand
in the appeals (cases no. 1040251 and no. 1040265), and we
dismiss the cross-appeals (cases no. 1040314 and no. 1040336).
FACTS AND PROCEDURAL HISTORY
The claims against Price arose after Turner Beverage
Company ("TBC"), a closely held corporation that operated a
beer-distribution business, redeemed a substantial percentage
of its stock in 1986.  T.O. Turner, Jr. ("Tully"), was a
proprietor of the business before it was incorporated in 1978.
Price, Tully's lawyer and a friend of the Turner family,
performed the legal services to incorporate the business.  TBC
issued 5,000 shares of stock at the time of its incorporation;
Tully, the president of TBC, received 3,300 of those shares,
and his mother, Ruby Turner, held the remaining 1,700.
In 1981 Price assisted Ruby Turner with her estate
planning.  In order to minimize potential estate taxes, Ruby
Turner transferred her 1,700 shares of TBC stock for the
benefit of Tully's four children -– Gordon Sims ("Buddy"),
1040251, 1040265, 1040314, 1040336
If Tully resigned as trustee or died and failed to
1
designate a successor trustee, the trust instrument stated
that Price could become the successor trustee. 
3
Laura, Gregory, and Sue Jennie.  Buddy was Tully's oldest son
and worked in the family business; Ruby Turner transferred 612
shares of her TBC stock to Buddy in 1981.  The balance of her
TBC stock –- 1,088 shares -– was transferred to the Second
T.O. Turner, Jr.  Children's Trust, a trust of which Tully's
children, excepting Buddy, i.e., Laura, Gregory, and Sue
Jennie, were the beneficiaries ("the children's trust").
Those beneficiaries were not active in the operation of TBC.
Ruby Turner appointed Tully as the trustee of the children's
trust.1
Tully suffered a brain aneurism in 1983.  Immediately
before undergoing surgery, Tully signed a durable power of
attorney that gave Buddy -- then an officer of TBC -– the
authority to handle Tully's business and personal affairs
until he recovered.  Following the brain surgery, however,
Tully had two massive strokes, was severely incapacitated, and
was unable to work or handle any of his personal affairs for
the remainder of his life.  After the strokes, a substantial
1040251, 1040265, 1040314, 1040336
4
and steady income source was needed to pay for Tully's medical
and personal-care expenses.  
By 1986 Buddy had replaced Tully as the president of TBC.
Buddy consulted 
Price and Robert Bibb, TBC's outside
accountant, 
about 
potential 
methods 
to 
generate 
the
significant income needed for Tully's care without incurring
adverse tax consequences. Buddy accepted a recommendation from
Price and Bibb that TBC redeem a large percentage of its
outstanding shares of stock in order to generate income for
Tully and his children; in exchange for the stock, TBC would
execute unsecured promissory notes payable in installments to
Tully and the children's trust.
Because TBC stock was not publicly traded, a valuation of
the outstanding shares was necessary before the stock
redemption occurred.  The accounting firm of Coopers & Lybrand
was retained to perform that valuation.  Based on information
it received from TBC, Coopers & Lybrand prepared a draft
report in July 1986 in which it estimated the value of TBC
stock as $496 per share.  Assuming a $500 value for each
share, the following transactions occurred in 1986:
1.  TBC purchased all of Tully's 3,300 shares.  In
that transaction, Buddy acted in his capacities as
1040251, 1040265, 1040314, 1040336
At the jury trial of the legal-malpractice claim against
2
Price, the evidence was disputed as to whether Price also
represented the children's trust in the stock redemption.  
5
the attorney-in-fact for Tully (the transferor) and
as the president of TBC (the transferee). As
consideration for Tully's shares, TBC executed a
promissory note in which it agreed to pay Tully the
principal amount of $1.65 million plus interest
calculated at a rate of 7.75% annually, in 300 equal
monthly installments; and 
2. TBC purchased the 1,088 shares of TBC stock held
in the children's trust.  Buddy, acting in his
capacity as attorney-in-fact for Tully -- the
original 
trustee 
of 
the 
children's 
trust 
--
purportedly effected this transaction on behalf of
the children's trust.  As consideration for this
purchase, TBC executed a promissory note in which it
agreed to pay the children's trust the principal sum
of $544,000, plus interest at a rate of 7.75%
annually in 300 equal monthly installments. 
(Both transactions are referred to hereinafter collectively as
"the stock redemption.")  Because Buddy did not sell his 612
shares to TBC in 1986, he was the sole shareholder of TBC
after the stock redemption.  
Price prepared certain documents to effect the stock
redemption, and he represented the interests of TBC and Tully
in that transaction.  There is no evidence indicating that,
2
before the stock redemption was completed, Price, Buddy,  or
any other party involved in that transaction sought approval
or otherwise consulted with the beneficiaries of the
1040251, 1040265, 1040314, 1040336
6
children's trust (i.e., Buddy's siblings) concerning the
redemption by TBC of the 1,088 shares owned by that trust.
Tully died testate in 1991.  His will designated Edward
Roland Ragland (Tully's brother-in-law) and Myra S. Turner
(Tully's wife) as coexecutors of his estate ("the estate").
Two trusts were created by Tully's will: (1) a marital trust
for Myra; and (2) a family trust in which Tully's four
children (Buddy, Laura, Gregory, and Sue Jennie) were the
beneficiaries ("the family trust").  Ragland retained Price to
provide legal services in connection with the probate of the
estate. 
After the estate filed its federal tax return, the
Internal Revenue Service ("the IRS") in 1994 contested the
valuation of the TBC stock at $500 per share used for the
stock redemption.  The IRS preliminarily determined that the
value of the TBC stock was $1,422 per share when Tully sold
his 3,300 shares to TBC.  The IRS contended that the
difference between the $500 value used in the stock redemption
and the actual value of the stock constituted a gift by Tully
of approximately $3 million, thereby resulting in additional
estate-tax liability exceeding $1 million.
1040251, 1040265, 1040314, 1040336
7
After the IRS dispute arose, Ragland met with Buddy in
August 1994 and notified him that, because TBC had assigned
the $500 value to the stock in 1986, his expectation was that
the corporation was responsible for the financial consequence
to the estate of any undervaluation of the stock.  Ragland
also asked Price (the lawyer for the estate) to challenge the
IRS's determination and to help resolve the IRS dispute.
Price then took several steps to protect the interests of the
estate.  First, he associated an attorney with expertise in
handling similar disputes with the IRS. Second, Price
contacted Coopers & Lybrand, which had valued the stock in
1986 at $496 per share, to retain their firm's services.
Price later secured the services of another accountant who
opined that, in 1986, the value of the TBC stock was $451 per
share.  Price also worked closely with Bibb (TBC's outside
accountant) on matters related to the IRS dispute.
Price sent numerous letters concerning the IRS dispute to
members of the Turner family. On November 22, 1994, Price
wrote a letter addressed to the coexecutors, "Mr. Gordon Sims
Turner, President, Turner Beverage Company," and "Mr. Gordon
Sims Turner, Trustee of T.O. Turner, Jr. Second Children's
1040251, 1040265, 1040314, 1040336
8
Trust" to advise those parties as to the status of the
dispute; in that letter, he noted that the coexecutors of the
estate and the trustee of the children's trust owed fiduciary
duties to their respective devisees and beneficiaries.  In
pertinent part, that letter stated: 
"The purpose of this letter is to set forth, in
writing, the course of action to be taken regarding
the [IRS dispute] which has arisen as a result of
the audit of the Estate Tax Return ....  As you are
aware, the basic issue ... is the valuation of the
stock which represent[ed] a principal asset in the
[estate] 
and 
also 
[was] 
the 
corpus 
of 
the
[children's trust].  This valuation made in 1986 was
done for the purpose of assuring the fairest and
most equitable distribution in favor of [Tully] and
his family and a reevaluation of that stock would
result in substantial complications in addition to
increased estate taxes.
"As you are probably aware, the executors [of
Tully's estate] and the trustee [of the children's
trust] owe a fiduciary duty to their devisees and
beneficiaries.  This fiduciary duty is at least
twofold; it at least requires an ultimately full
disclosure to the devisees and beneficiaries of what
has happened with regard to the share valuation [of
the stock redeemed by TBC] and the effect on the
estates and their expectancies.  Additionally, if
the stock purchase of 1986 is revalued as to share
value, the executors and trustees owe the duty to
their devisees and beneficiaries to seek and require
an adjustment of the value of the trust and the
estate by seeking and obtaining an amount equal to
the difference in the share value of the valuations.
Since 
the 
stock 
[transferred 
in 
the 
stock
redemption] is now held as treasury stock by [TBC],
the trustee and the executors must look to the
1040251, 1040265, 1040314, 1040336
Price had also written Buddy about the children's trust
3
on June 7, 1994.  That correspondence stated that Buddy had
undertaken to act as trustee of the children's trust pursuant
to the power of attorney from Tully, the original trustee; it
also noted that the trust instrument required a writing to
nominate a successor trustee and that such an instrument did
not exist.
9
corporation for increased capital in accordance with
the resulting valuation, or face personal liability
in the event of a claim made by the devisees or
beneficiaries.
"....
"The central issue is the valuation of the stock
in [TBC] owned by [Tully] on July 22, 1986 and the
value of the shares of stock held by the [children's
trust] at approximately the same time.  As you are
aware, Coopers & Lybrand's valuation at that time,
though apparently only in draft form, was $49[6].00
a share. ...  Mr. Gary Saliba, [an accountant Price
consulted], has presented a valuation, again at this
time in draft, which shows the stock to have been
worth $451.00 a share [in 1986].  The IRS draft, as
prepared by the IRS engineer, arrived at a valuation
of $1,422.00 per share.  It is this divergence of
valuations resulting from what we believe to be an
unreasonable valuation by the IRS that necessitates
this letter and the action steps set forth in it.
...
"By way of conclusion, let us reiterate what has
been said on several occasions and that is that we
believe the IRS valuation to be clearly erroneous
and clearly excessive.  We believe that ample
evidence exists to sustain our position as to the
excessiveness and we believe that the estate, and
therefore the corporation, should ultimately be
successful in [contesting the IRS valuation]."
(Emphasis supplied.)   
3
1040251, 1040265, 1040314, 1040336
Buddy acted as the president of TBC and the attorney-in-
4
fact for Tully, and he purported to act as trustee of the
children's trust when TBC redeemed its stock in 1986.
10
In a March 27, 1995, memorandum to his file and to Bibb,
Price described his strategy for settling the IRS dispute:
"If we [negotiate a settlement with the IRS based on
$550 a share], we would succeed in two ways:
"1.  The ultimate additional [estate] tax would
be ... approximately $70,000.  This is an
amount equal to or less than the legal fees
involved in pursuing the matter to court;
"2.  Additionally, [an] agreed-upon share value
[of $550] then would be no more than 10%
[greater] than the Coopers [& Lybrand] share
value and the action we took based upon it at
the time of the acquisition of Tully's shares.
A 10% variance in value is certainly within
acceptable limits and therefore the children of
[Tully] should have no cause of action against
Buddy as president [of TBC], or against Buddy
as attorney-in-fact nor against [TBC] for the
valuation and purchase.  Nor should anyone have
any particular grounds for objecting to the
personal representatives [of the estate] having
compromised the matter at such a price."
(Emphasis supplied.)
 
In 1995 Ragland, one of the coexecutors of the estate,
asked Price whether a variation between the valuation of the
stock used for the stock redemption and the subsequent IRS
valuation would give rise to a claim by the estate and the
beneficiaries of the children's trust against Buddy.   Price
4
1040251, 1040265, 1040314, 1040336
11
answered that question affirmatively and gave the following
legal advice in a confidential legal memorandum to Ragland
dated April 11, 1995:
"Under 
Alabama law, it is clear that 
a
discrepancy between [the] sales price and an
ultimate valuation of stock will not ordinarily give
rise to a cause of action.  This is particularly
true where there is an arm's-length negotiation
between 
the 
parties 
and 
free 
access 
to 
the
information upon which to base a valuation of the
stock.  However, this [is] not true in the instant
case, where the primary beneficiary of the bargain,
[Buddy], was the attorney in fact for the seller.
... 
Unlike 
an 
arm's-length 
transaction, 
the
buyer/seller 
cannot 
argue 
that 
[the 
stock
redemption] was freely bargained for and thereby
shield himself from liability.  A purchase of stock
at 
a 
price 
that 
is 
later 
determined 
to 
be
inadequate, when sold by the attorney-in-fact for
the seller, would therefore appear to be voidable.
"....
"There are other considerations beyond whether
there was a breach of fiduciary duty [by Buddy
acting in the capacity of attorney-in-fact for the
sellers in the stock redemption].  A cause of action
could also arise for fraud or misrepresentation
under Ala. Code [1975,] § 6-5-101. ... In the
instant case, where the facts upon which the
valuation was made were provided by the person who
benefitted most by the sale of the stock, and the
stock was closely-held and without a ready market
upon which to base an opinion, [a] statement of an
opinion on valuation would probably be considered
actionable if relied upon.  In addition, the fact
that the independent appraisal of the value of [TBC]
could not be certified [by Coopers & Lybrand]
primarily 
due 
to 
an 
unwillingness 
[of 
TBC
1040251, 1040265, 1040314, 1040336
12
management] 
to 
disclose information needed to
properly appraise the company is also a factor to
consider in making a determination as to whether a
cause of action for fraud existed.
"CONCLUSION: Should the stock be determined by
the IRS and the Court to have been sold at an
inadequate 
price, 
both 
the 
estate 
and 
the
beneficiaries of the children's trust would have a
cause of action for breach of fiduciary duty and a
cause of action for fraud."
(Emphasis supplied.) In the cover letter that accompanied the
memorandum, Price further advised Ragland:
"The nature of the resulting causes of action for
'breach of fiduciary responsibility' and 'fraud' are
the types of assertions which, when made, make the
accused very defensive and generally uncooperative.
We, therefore, will leave to your discretion how and
when, 
and, 
indeed, 
if 
the 
contents 
of 
this
memorandum will ever be acted upon." 
Recognizing that a legal action against TBC was not in the
estate's interest during the pendency of the IRS dispute,
Ragland instructed Price to cooperate with Buddy and TBC to
resolve that dispute on terms acceptable to the estate and
TBC.  In that spirit, TBC agreed to pay the legal fees that
Price and counsel he associated incurred in connection with
the IRS dispute. 
Shortly after Price’s April 1995 confidential memorandum
to Ragland, Price further advised other interested parties of
1040251, 1040265, 1040314, 1040336
13
developments in the dispute.  In a May 1, 1995, letter
addressed to Buddy as the trustee of the children's trust,
Price stated that the IRS was willing to settle in the range
of $663 a share, but suggested that $550 per share was more
appropriate.  After the IRS rejected the estate's settlement
offers, in May 1995 it sent the estate its formal notice of
tax deficiency.  In a May 31, 1995, letter addressed to Buddy
as president of TBC, Price detailed the adverse consequences
to TBC and Buddy personally if the IRS prevailed:
"If the facts and figures as submitted by
Coopers & Lybrand are correct, or even reasonably
close to correct, then there is no immediate
consequence to you personally and slight consequence
to the corporation.  If, on the other hand, the IRS'
[valuation of the stock at $1422 per share] is to be
accepted and sustained, then that presents a
substantial problem to perhaps both you and the
corporation.
"... If the IRS' position [that the stock was
undervalued in July 1986] is to be accepted, then a
gift [of over $3 million] was made to you to the
detriment of the estate of your father and perhaps
to your mother and your brothers and sisters.  If
the same valuation is used [for the transfer of TBC
stock by the children's trust], then it could be
contended that your brother and sisters, [the
beneficiaries of the children's trust], were perhaps
directly mistreated in the position of the trust
stock.
"These are of course serious sounding things and
they could have some serious results.  We all know
1040251, 1040265, 1040314, 1040336
14
that at the time of the transfers in 1986 reliance
was made upon the work of independent experts and
every effort was made by all concerned  to make that
a true valuation with a resulting 'arms' length
transaction.  Nevertheless, the action taken by the
IRS in [its] valuation, which we believe erroneous
to the point of being ridiculous, does present some
possible unpleasant contingencies for the company
and for you individually.  Both Ed Ragland and I
thought ... that we should reiterate some of the
unpleasant potential consequences which might occur
should the IRS [position] be sustained. ..."
(Emphasis supplied.)
 
On September 28, 1995, Price further advised in a letter
to Buddy in his capacity as president of TBC:
"Previously, [Coopers & Lybrand has] raised
questions to me about the existence of a conflict of
interest that could be said to have existed when
you, as attorney-in-fact for your father on one
hand, and the President of the corporation and sole
surviving shareholder on the other hand, arranged
the evaluation to achieve the [stock redemption].
... [E]veryone knew that something had to be done,
certainly in Tully's case, but there still exists
the apparent conflict.  A similar, but in [Coopers
& Lybrand's view] a more persuasive conflict,
existed in the purchase of the shares of the
[children's trust] of which you were the Trustee.
These were the principal reasons that ... [Coopers
& Lybrand] never ... issued a final report.  
"... [Coopers & Lybrand was also concerned in
1986] that the cash flow and profit figures [of TBC]
were lower than with other distributorships with
like volume. [Coopers & Lybrand was] interested to
learn whether or not money was being used for the
acquisitions of non-corporate property of a real
and/or personal nature. ... [Because you did not
1040251, 1040265, 1040314, 1040336
15
provide Coopers & Lybrand the data it requested,
that firm] terminated [its engagement] without a
final signed report being submitted."
Although Price advised and communicated with multiple parties
to the IRS dispute whose interests were conflicting, he did
not disclose to the coexecutors, TBC, Buddy in his individual
capacity, Buddy as the purported trustee of the children's
trust, or the beneficiaries of the children's trust that he
was representing parties with conflicting interests, nor did
he obtain waivers of any conflicts from those parties. 
Price ceased working on the IRS dispute and left the
practice of law in the spring of 1996. The total legal fees
earned by Price in his years of work on the IRS dispute were
no more than $27,000.  After Price's withdrawal, Ragland
retained new counsel for the estate in the spring of 1996; he
then also advised the beneficiaries of the children's trust
(his nieces and nephews) about the pendency of the IRS
dispute.
The IRS dispute was settled in September 1996.  At that
time, the estate agreed to pay federal taxes calculated on the
assumption that Tully's stock was worth $665 per share when
TBC purchased his 3,300 shares in July 1986 ("the IRS
1040251, 1040265, 1040314, 1040336
16
settlement").  The beneficiaries of the children's trust did
not participate in the negotiations that led to that
settlement.  By entering into the settlement, the estate
incurred additional tax liability of approximately $210,000,
and lost $76,000 of its unified credit.
Shortly after the IRS settlement in 1996, the estate and
the children's trust filed two separate actions that were
related to the stock redemption.  On November 12, 1996, the
coexecutors 
and 
devisees 
of 
the 
estate 
(hereinafter
collectively "the estate claimants") sued Buddy, TBC, Bibb,
Bibb & Associates (Bibb's accounting firm), and Price (case
no. CV-96-1959). Among other allegations related to the
transfer of Tully’s 3,300 shares to TBC and the alleged
undervaluation of those shares, the estate claimants alleged
that Buddy was not authorized under the power of attorney to
transfer those shares in 1986; that Price knew that Buddy
lacked  authority to effect the stock redemption but concealed
that fact; that Buddy breached his obligations under the power
of attorney given him by Tully to act in his father’s best
interests; that both Price and Bibb breached their respective
professional responsibilities by representing and performing
1040251, 1040265, 1040314, 1040336
The estate claimants in the November 12, 1996, action
5
(CV-96-1959) were the coexecutors; Ragland and Myra Turner, as
trustees of the marital trust; Ragland and Myra Turner, as
trustees of the family trust; and Myra Turner, individually.
  
17
services for parties with conflicting interests without
disclosing those conflicts; that Bibb had valued the stock
based on inaccurate information and had prepared deficient
estate-tax returns; that the defendants breached their
fiduciary duties by self-dealing; and that all the defendants
"joined together, planned and conspired" to commit a
conversion (of the TBC stock) and fraud upon the estate
claimants to place exclusive control of TBC in Buddy's hands,
to conceal the true value of the stock that was redeemed, and
to convert the stock at an undervalued price. The estate
claimants sought the following relief in their complaint:  a
5
judgment declaring void the transfer of Tully’s 3,300 shares
to TBC and the rescission of that transfer, restoration of
ownership of Tully’s 3,300 shares to the estate, and
reimbursement of the estate claimants for their pro rata
shares of dividends and other distributions by TBC between
1986 and 1996. They asserted the following claims: a
conspiracy claim against all defendants; against Buddy, claims
1040251, 1040265, 1040314, 1040336
The trust claimants were Donald Weir, as the trustee for
6
the children's trust, and Buddy's siblings -- Laura, Gregory,
and Sue Jennie.  Cecil Bishop was the trustee at the time of
trial. 
18
of breach of contract, fraud, breach of fiduciary duties, and
conversion; against TBC, claims of conversion and breach of
contract and the imposition of a constructive trust, related
to TBC's obligations under the promissory notes delivered to
the claimants in 1986; against Price, fraud, negligence, and
wantonness in failing to disclose that he represented parties
with conflicting interests between 1986 and November 1996 and
that Buddy was without legal authority to complete the stock
redemption; and against Bibb and his firm, negligence and
wantonness in Bibb's work for the estate and on the valuation
of the stock.
Two days later, on November 14, 1996, the trustee of the
children's trust and its three beneficiaries (hereinafter
collectively "the trust claimants") filed another complaint
against the same defendants (case no. CV-96-1972).   Although
6
the factual allegations in the second action related to the
transfer of 1,088 shares of TBC stock held by the children’s
trust to TBC in 1986, not the transfer of Tully’s 3,300
shares, the claims and legal theories advanced by the trust
1040251, 1040265, 1040314, 1040336
The claims against Bibb and Bibb & Associates were
7
settled by a separate agreement.
19
claimants in the November 14, 1996, complaint -– declaratory
judgment, rescission, conspiracy, fraud, breach of fiduciary
duty, professional negligence -– were strikingly similar to
those asserted by the estate claimants.  The trust claimants
specifically alleged in their complaint that Price knew, but
concealed, that the power of attorney given by Tully (the
trustee of the children’s trust) to Buddy did not authorize
Buddy to transact business for the children's trust or to
transfer its shares in 1986.  The trust claimants also alleged
that Price should have advised them that, after Tully became
incapacitated, they had a right under the trust instrument to
the designation of an independent successor trustee.
The  trial court consolidated the two actions.  Following
extensive discovery, in April 2001 the estate claimants and
the 
trust 
claimants 
(hereinafter 
collectively 
"the
plaintiffs") entered into a comprehensive agreement to settle
their claims against Buddy and TBC ("the settlement").  The
settlement preserved the right of the plaintiffs to maintain
their claims against Price.   The components of the settlement
7
were as follows:
1040251, 1040265, 1040314, 1040336
This promissory note replaced the $544,000 unsecured
8
promissory note given to the children’s trust at the time of
the stock redemption in 1986. The total principal and interest
payments made to the trust claimants between 1986 and 1996 on
that initial note was $353,549.    
This 
settlement 
note 
replaced the $1.65 million 
unsecured
9
promissory note given to Tully at the time of the stock
redemption in 1986.  The total principal and interest payments
made to Tully, and then to his estate following his death,
between 1986 and 1996 on that initial note was $1,579,926.  
20
1. The plaintiffs relinquished their ownership
claims in the stock TBC redeemed in 1986, and
dismissed their requests to rescind or declare the
stock redemption invalid. In so settling these
claims, the plaintiffs waived any equity interest in
TBC 
and 
recognized 
that 
Buddy 
was 
the 
sole
shareholder of TBC;
2. The plaintiffs relinquished their claims to any
pro 
rata 
share 
of 
any 
dividends, 
salary,
distribution, or other payment by TBC after 1986 for
the benefit of Buddy or its other officers and
managers;
3. (a) TBC and Buddy paid the trust claimants $2
million 
and 
(b) 
TBC 
executed 
a 
new 
secured
promissory note in their favor for the principal sum
of $2,098,916, plus interest.  The principal amount
of this settlement note, plus $289,649 in interest,
was paid in full by 2004;8
4. TBC executed a new secured promissory note in
favor of the estate claimants for the principal sum
of $1,887,184, plus interest.  The principal amount
of this settlement note, plus $260,430 in interest,
was paid in full by 2004;  and
9
5. Buddy relinquished any rights he might have had
as a beneficiary of his father’s estate.  In waiving
1040251, 1040265, 1040314, 1040336
Price presented evidence at trial that, excluding the
10
approximately $2 million in payments received on the initial
promissory notes, the total value that the plaintiffs received
in the settlement and other payments made by TBC on their
behalf approximated $8 million.   
21
these rights, an estimated $1.45 million benefit
accrued to the estate (whose beneficiaries were his
siblings and mother).
The undisputed evidence at trial was that the total financial
value to the plaintiffs of the settlement approximated $6
million.10
After the settlement, the plaintiffs amended their
complaints to acknowledge the resolution of their claims as to
Buddy and TBC. In those amendments, they alleged that Price,
acting alone as an attorney and in combination with the former
defendants in the case, had inflicted harm, but that they had
not recovered damages for that harm in the settlement. In
addition to the damages previously sought from Price in their
complaints, they further alleged in the amendments that had
Price disclosed his conflicts at the outset of the IRS dispute
and advised his clients of legal options other than contesting
the IRS dispute, (1) the legal actions would not have been
filed, (2) they would not have incurred attorney fees and
litigation expenses in prosecuting their legal actions, and
1040251, 1040265, 1040314, 1040336
Buddy’s three siblings, the beneficiaries of the
11
children’s trust, dismissed their individual claims against
Price before trial. 
In 1986 Price did not disclose to Tully, TBC, the
12
beneficiaries of the children's trust, or Buddy that he was
representing parties with conflicting financial interests or
obtain waivers of any conflicts from those parties.
22
(3) at the time of the settlement, they would have received
more consideration from the settling defendants if those
parties had not incurred their own litigation expenses in
defending the actions between November 1996 and 2001 (damages
sought based on items 2 and 3 are hereinafter referred to as
"the litigation damages"). 
The claims against Price were tried to a jury in May
2004.
 Evidence was presented indicating that Price was
11
engaged to perform legal services on two matters that affected
the plaintiffs: (1) the stock redemption; and (2) the IRS
dispute.  Mark Hoffman, the plaintiffs' expert on the standard
of care for lawyers engaged in professional conduct, testified
that at the time of the stock redemption Tully, TBC, and the
children's trust had conflicting financial interests and that
Price represented all those parties.12
 The plaintiffs also presented evidence indicating that
they had conflicting interests in 1994 when the IRS dispute
1040251, 1040265, 1040314, 1040336
During the pendency of the IRS dispute, the interests of
13
TBC, Buddy, and the estate were to some extent aligned; that
is, a settlement with the IRS in which the valuation of TBC
stock was close as possible to the $500 value used in the
stock redemption would mitigate the estate's obligation to pay
taxes and the potential liabilities of Buddy and TBC arising
from the 1986 transactions.  However, a higher valuation of
the stock was advantageous to the devisees of the estate in
other regards and generally would benefit the beneficiaries of
the children's trust. 
Evidence of Price's representation of multiple parties
14
included his November 22, 1994, correspondence to the
coexecutors, TBC, and Buddy, as the purported trustee of the
children's trust, in which Price noted the fiduciary duties
the coexecutors owed the devisees of the estate and the
trustee owed the beneficiaries of the children's trust; his
April 1995 confidential memorandum to Ragland detailing
Buddy's potential liabilities to the estate and the children's
trust; and his May 31, 1995, letter to Buddy and TBC
describing the "potential unpleasant consequences" of claims
by the estate and the children's trust if the IRS prevailed in
the stock-valuation dispute.          
23
arose.
  After Ragland retained Price to represent the estate
13
in the IRS dispute, Price also advised Buddy individually, TBC
(through Buddy, its president), and Buddy as the purported
trustee of the children's trust, on developments, strategies,
and the potential liabilities of the parties to each other
related to the IRS dispute.
 Hoffman testified that before
14
representing clients with conflicting interests in the IRS
dispute, Price should have disclosed those conflicting
interests to his clients and obtained from them waivers of any
1040251, 1040265, 1040314, 1040336
24
conflict. If those waivers were not secured, Hoffman
testified, Price should have withdrawn from representing any
of those parties. Because Price failed to disclose his
conflicts and to obtain waivers in his work on the stock
redemption and the IRS dispute, Hoffman concluded, Price
breached the standard of care for a lawyer. According to
Hoffman, the conflicts that marred Price's work on the stock
redemption continued during the IRS dispute.
Furthermore, 
the 
plaintiffs 
presented 
substantial
evidence indicating that, while the IRS dispute was pending,
Price advised them that their most prudent course was to
contest the valuation of TBC stock assigned by the IRS.
According to Hoffman, Price committed legal malpractice
because he did not counsel the plaintiffs on other options --
particularly the right to seek rescission of the stock
redemption –-  that were then available to resolve the IRS
dispute. 
Finally, 
the 
plaintiffs 
also 
presented 
evidence
indicating that Price's dealings in which Buddy was acting in
the capacity of the trustee of the children's trust fell below
the standard of care for a lawyer. Hoffman testified that, in
1040251, 1040265, 1040314, 1040336
25
those dealings, Price was aware that a legal issue existed as
to whether Buddy, in his capacity as the attorney-in-fact for
Tully, had authority to act on behalf of the children's trust
and was also aware that Buddy had not been duly appointed as
successor trustee for that trust. According to the plaintiffs,
Price had superior knowledge of those issues and concealed
them in order to protect the interests of his favored clients,
TBC and Buddy.
The plaintiffs claimed damages based on two types of
injury. First, they presented evidence indicating that Price's
legal malpractice had caused them to lose control of their
interests in TBC; as a result, they argue, they did not
receive their respective shares of corporate dividends,
profits, and distributions and lost the right to control its
management ("the loss-of-control damages"). TBC paid no
dividends before the stock redemption; between 1988-1996,
Buddy, 
then 
the 
sole 
shareholder 
of 
TBC, 
received
approximately 
$5 
million 
in 
dividends. 
In 
the 
years
immediately preceding the filing of these actions, TBC paid
Buddy dividends of $574,209 in 1994, $971,967 in 1995, and
$1,162,470 in 1996.  The plaintiffs also showed that, during
1040251, 1040265, 1040314, 1040336
26
1982-1985, Tully's annual compensation as president of TBC
averaged approximately $195,000; on average, Buddy's annual
salary as president of TBC between 1986 and 1996 was
approximately $275,000. In the years immediately preceding
these actions, Buddy's annual salary as president was $325,000
in 1994, $300,000 in 1995, and $350,000 in 1996. According to
the plaintiffs, had they not lost control of their interests
in TBC because of Price's malpractice, they would have
received 88% (their collective ownership interest in the stock
of TBC before the stock redemption) of all distributions
(including dividends and alleged excessive salary payments) by
TBC.
 Second, Hoffman testified that had Price fully advised
the plaintiffs of the benefits of rescinding the stock
redemption rather than contesting (and ultimately settling)
the IRS dispute, a different course of events would have
occurred.  According to the plaintiffs, had they fully
understood the rescission option when the IRS dispute arose,
the stock-valuation dispute and related disputes among members
of the Turner family could have been more fairly and justly
resolved, and the plaintiffs could have avoided the protracted
1040251, 1040265, 1040314, 1040336
27
litigation and resulting litigation damages that followed the
settlement ("the different-course damages").
On May 28, 2004, the jury returned a verdict for the
plaintiffs on their legal-malpractice claims against Price and
awarded the plaintiffs $400,000 compensatory damages and
$700,000 punitive damages. Price filed motions in the trial
court for a judgment as a matter of law ("JML"), or, in the
alternative, a new trial.  
The trial court subsequently conducted a hearing to
consider the appropriateness of the punitive-damages award in
view of the factors articulated by this Court in Hammond v.
City of Gadsden, 493 So. 2d 1374 (Ala. 1986), and Green Oil
Co. v. Hornsby, 539 So. 2d 1374 (Ala. 1989).  Finding the
punitive-damages award of $700,000 excessive because of
Price's 
dire 
financial 
condition, 
the 
trial 
court
conditionally denied Price's motion for a new trial if the
1040251, 1040265, 1040314, 1040336
Evidence was presented at the Hammond hearing indicating
15
that Price, who was then over 70 years old, was no longer
engaged in the practice of law.  Other evidence indicated
that, after Price surrendered his law license in 1996, he had
been convicted and incarcerated for crimes unrelated to these
actions; there were unsatisfied judgments still pending
against him; his estate had a negative net worth; he had paid
his assets into court to satisfy outstanding claims unrelated
to the plaintiffs' actions; he was employed by a nonprofit
organization in a low-paying position; his liability insurer
had attempted to rescind any malpractice coverage related the
plaintiffs' claims; and, even if his insurer's rescission
action failed, his malpractice coverage had been depleted to
approximately $141,000.  
The plaintiffs argue that the trial court erred in
16
ordering the remittitur because, they argue, all the Hammond
factors other than Price's financial condition supported the
punitive-damages award.  They also contend that, in evaluating
Price's ability to pay punitive damages, the trial court
should have considered that the initial amount of Price's
malpractice liability coverage was $1 million before the
insurer invested in Price's defense, that the plaintiffs had
offered to settle within the limits of  Price's malpractice
coverage, and that Price had a potential bad-faith claim
against his insurer for its failure to settle these claims.
28
plaintiffs 
remitted 
that 
entire award.
 
The 
plaintiffs 
elected
15
the remittitur.
On November 12, 2004, Price appealed the adverse judgment
entered 
by 
the 
trial 
court 
on 
the 
jury's 
$400,000
compensatory-damages award. 
On 
November 
23, 
2004, 
the
plaintiffs 
cross-appealed 
the 
trial 
court's 
remittitur 
order.16
For the reasons discussed below, we reverse the judgment
1040251, 1040265, 1040314, 1040336
29
against Price because his posttrial motion for a JML was
meritorious.
ANALYSIS
Standard of Review
The following standard applies in reviewing the trial
court's denial of Price's motion for a JML: 
"When reviewing a ruling on a motion for a JML,
this Court uses the same standard the trial court
used initially in deciding whether to grant or deny
the motion for a JML. ... Regarding questions of
fact, the ultimate question is whether the nonmovant
has presented sufficient evidence to allow the case
to 
be 
submitted 
to 
the 
jury 
for 
a 
factual
resolution. ... The nonmovant must have presented
substantial evidence in order to withstand a motion
for a JML. ... A reviewing court must determine
whether the party who bears the burden of proof has
produced substantial evidence creating a factual
dispute requiring resolution by the jury. ... In
reviewing a ruling on a motion for a JML, this Court
views the evidence in the light most favorable to
the 
nonmovant 
and 
entertains 
such 
reasonable
inferences as the jury would have been free to draw.
... Regarding a question of law, however, this Court
indulges no presumption of correctness as to the
trial court's ruling."
Waddell & Reed, Inc. v. United Investors Life Ins. Co., 875
So. 2d 1143, 1152 (Ala. 2003). 
Nature of Claims
 
Price was a licensed attorney at all times pertinent to
the plaintiffs' claims. Although the plaintiffs asserted
1040251, 1040265, 1040314, 1040336
The Legal Services Liability Act is codified at § 6-5-
17
570 et seq., Ala. Code 1975. Price was a legal-service
provider pursuant to  § 6-5-572(2). Section 6-5-572(1) states
that a legal-service-liability action is one in which the
"injury or damage was caused in whole or part by the legal
service provider's violation of the standard of care," and
that such an action embraces "all claims for injuries or
damage[] or wrongful death whether in contract or in tort and
whether based on an intentional or unintentional act or
omission," and "any form of action in which a litigant may
seek legal redress for a wrong or an injury and every legal
theory of recovery ...."  
In Ex parte Panell, 756 So. 2d 862 (Ala. 1999), a
18
plurality decision, the lead opinion stated that Michael had
misconstrued § 6-5-574 and that a legal-service-liability
action arises at the time of the act or omission giving rise
to the claim, not at the time an injury is sustained. 756 So.
2d at 869. According to that nonbinding opinion, the "act or
omission principle" in Panell applies only to actions brought
30
claims of conspiracy, fraud, negligence, and wantonness
against Price, all actions against him -- or any licensed
attorney -- that arise in whole or part from the performance
of legal services are governed by the Legal Services Liability
Act.
 See §§ 6-5-572(1) and 6-5-574, Ala. Code 1975.  
17
A two-year limitations period applies in legal-service-
liability actions. § 6-5-574, Ala. Code 1975. This Court held
in Michael v. Beasley, 583 So. 2d 245 (Ala. 1991), that the
limitations period begins to run when the claimant sustains an
injury.  583 So. 2d at 251-52.  The "injury principle" from
Michael applies here.18
1040251, 1040265, 1040314, 1040336
after its release.
Ragland also retained Price to probate Tully's estate
19
after Tully's death in 1991. The plaintiffs do not contend
that Price's work in that regard was deficient.
31
Issues
Price does not contest the jury's determination that he
breached the standard of care for professional conduct by a
lawyer. Instead, according to Price, the plaintiffs may not
recover for two principal reasons: (1) their claims were time-
barred; or (2) even if their claims were timely, the
plaintiffs did not present substantial evidence indicating
that they incurred damages within the two-year period
preceding litigation ("the statutory period") that resulted
from malpractice by Price that was actionable.  The plaintiffs
do not dispute that their recovery for compensatory damages is
limited to damages within the statutory period.  However, they
argue that they presented substantial evidence from which the
jury could have found that Price's malpractice caused them
$400,000 compensatory damages during that period.
As noted above, Price performed legal services on two
distinct matters: (1) the stock redemption in 1986, and (2)
the IRS dispute in the 1990s.
  According to Hoffman, Price
19
1040251, 1040265, 1040314, 1040336
32
first breached the standard of care when working on the stock
redemption, and he continued to breach that standard during
the pendency of the IRS dispute.  In evaluating this evidence
of malpractice on both engagements, we first note that § 6-5-
574 states in pertinent part that "in no event may [a legal-
service-liability] action be commenced more than four years
after [the] act or omission or failure giving rise to" the
claim.  Accordingly, any claims based on damage caused by
Price's service on the stock redemption in 1986 were time-
barred by November 1996 (the month the actions were filed)
pursuant to the four-year limitation in § 6-5-574.  
The statute-of-limitations issue and the issues of
damages and proof here are similar to those considered in
Serra Chevrolet, Inc. v. Edwards Chevrolet, Inc., 850 So. 2d
259 (Ala. 2002).  In Serra the plaintiff, a dealer in new
motor vehicles, alleged that General Motors Corporation ("GM")
had violated Alabama's Motor Vehicle Franchise Act ("the
MVFA") by favoring another Birmingham-area dealer when GM
distributed new vehicles.  A four-year statute of limitations
applies to claims under the MVFA.  § 8-20-12, Ala. Code 1975.
The alleged wrongful allocation occurred in 1991; according to
1040251, 1040265, 1040314, 1040336
33
the testimony of plaintiff's expert, damage continuously
resulted from that wrongful act in 1991 until the plaintiff
filed its action on April 8, 1998.  850 So. 2d at 275.  There
was no evidence indicating that GM had improperly  distributed
new vehicles to its dealers in the four years that preceded
the filing of the action. Considering what damages could be
recovered under those facts in view of the four-year
limitations period in the MVFA, this Court stated:
"'In Garrett v. Raytheon Co., [368 So. 2d 516
(Ala. 1979),] the Court stated the principal rule of
law thusly:
"'"....
"'"'We have held that the statute
begins to run whether or not the full
amount of damages is apparent at the time
[the cause of action accrues]. In Kelly v.
Shropshire, 199 Ala. 602, 75 So. 291, 292
(Ala. 1917), the rule was stated as
follows:
"'"'If the act of which the injury is
the natural sequence is of itself a legal
injury to plaintiff, a completed wrong, the
cause of action accrues and the statute
begins to run from the time the act is
committed, be the actual damage (then
apparent) however slight, and the statute
will operate to bar a recovery not only for
the 
present 
damages 
but 
for 
damages
developing subsequently and not actionable
at the time of the wrong done; for in such
a case the subsequent increase in the
1040251, 1040265, 1040314, 1040336
34
damages resulting gives no new cause of
action. ...'"
"'368 So. 2d at 518-19.' 
"Moon v. Harco Drugs, Inc., 435 So. 2d 218, 220
(Ala. 1983)(emphasis added). We conclude that this
rationale applies here, where Serra did not appeal
the trial court's ruling that the limitations period
in the MVFA bars any claim by Serra based on acts by
GM that occurred before April 8, 1994. Accordingly,
claims for any damage sustained by Serra as a result
of any violation of the MVFA by GM before April 8,
1994, and any subsequent damage resulting from such
a pre-April 8 violation, would be barred by the
MVFA's statute of limitations."
 
850 So. 2d at 270-71.  The plaintiff's proof in Serra that
damage was first sustained in 1991 and continued into the
four-year period before the action was filed was insufficient
to support the jury's award of compensatory damages. 850 So.
2d at 278-79. Accordingly, the Serra Court reversed a judgment
for the plaintiff because of the absence of evidence of events
occurring in the applicable statutory period from which the
jury could have reasonably inferred that GM had violated the
MVFA.
Considering Price's work over a 10-year period and his
statute-of-limitations 
defense, 
and 
applying 
the 
principles 
in
Michael and Serra, we conclude that the jury's compensatory-
damages award is sustainable (1) if the plaintiffs filed their
1040251, 1040265, 1040314, 1040336
35
actions within two years after they initially incurred damages
from Price's malpractice on the IRS dispute, and (2) if, as a
result of that malpractice, they incurred damages within that
period.  See Michael, 583 So. 2d at 251; Ladner v. Inge, 603
So. 2d 1012, 1015 (Ala. 1992) (limitations period for legal-
service-liability action caused by use of unsecured promissory
notes ran from date of the first injury, which was the date of
the delivery of those notes); and Serra, 850 So. 2d at 278-79.
Drawing all reasonable inferences the jury could have drawn in
favor of the plaintiffs, we now consider Price's statute-of-
limitations argument and whether there was substantial
evidence on which the jury could have based its $400,000
compensatory-damages award.
A.  Timeliness of Complaints
Price argues this Court should reverse the judgment
because, if the plaintiffs sustained any injury, that injury
was sustained before the statutory period.  The IRS dispute
arose by March 1994.  Ragland advised Buddy in August 1994
that the estate intended to hold TBC responsible for any
financial loss caused by the stock valuation in 1986.  Hoffman
testified that when Price began his work on the IRS dispute,
1040251, 1040265, 1040314, 1040336
36
Price was representing parties who had conflicting financial
interests; according to Hoffman, those conflicts existed
during Price's service on the stock redemption and continued
into 1994.  Price argues that the plaintiffs' actions filed in
November 1996 were untimely because, he says, he represented
parties with conflicting interests no later than August 1994
–- more than two years before the actions were filed. We
conclude that the actions were not time-barred.  
Although Price performed services on the IRS dispute
before the statutory period, there was substantial evidence
from which the jury could have inferred that, under the
plaintiffs' 
theory, 
their 
first 
injury 
from 
Price's
malpractice in relation to the IRS dispute occurred within the
statutory period.  Price initially represented the estate in
the IRS dispute.  Thereafter, he complied with Ragland's
instructions to consult representatives of TBC on matters of
mutual interest to the estate and TBC. Most significantly,
however, the record indicates that, in Price's November 22,
1994, correspondence, he advised the estate, TBC, and the
children's trust (through Buddy, whom Price was treating as
trustee) about their respective obligations concerning the IRS
1040251, 1040265, 1040314, 1040336
The record is devoid of evidence indicating that Price
20
had dealt with or communicated to the children's trust about
the IRS dispute before his November 22, 1994, letter.  
37
dispute.  In that letter he also first suggested a strategy
that all parties contest the position taken by the IRS in that
stock-valuation 
dispute.
 
 
Under the plaintiffs' theory, 
their
20
actions were not facially time-barred because the jury could
have found that the plaintiffs first suffered injury in
relation to the IRS dispute as a result of the advice Price
rendered on November 22, 1994 -- a point within the statutory
period. 
B. Proof of Damages
We next consider whether the plaintiffs presented
substantial evidence of damages.  As discussed above, that
evidence falls into two categories: (1) loss-of-control
damages and (2) different-course damages.  
1. Loss-of-control damages
In considering loss-of-control damages, we recognize
that, among other remedies, the plaintiffs 
sought to
invalidate or rescind the stock redemption when they sued in
1996.  Had Tully not transferred his 3,300 shares to TBC in
1986 or had that transfer been invalidated, he (and later his
1040251, 1040265, 1040314, 1040336
38
estate) would have remained the majority shareholder in TBC.
Further, the children's trust, which before the stock
redemption owned more shares of TBC stock than Buddy, would
have exercised a substantial role in the management of TBC had
the transfer of its 1,088 shares not occurred or had that
transaction been rescinded.
According 
to 
Hoffman's 
testimony 
and 
documentary
evidence, had Price's malpractice not caused the plaintiffs to
surrender their TBC stock, they would have received 88% (their
aggregate ownership interests in the stock of TBC before the
stock redemption) of all distributions by TBC during the
statutory 
period. 
Assuming 
the 
plaintiffs 
owned 
the
controlling shareholder interests they held before the stock
redemption, their pro rata shares of the dividends paid to
Buddy within the statutory period ($574,209 in 1994, $971,967
in 1995, and $1,162,470 in 1996) well exceeded, and alone
constituted 
substantial 
evidence 
of, 
the 
$400,000
compensatory-damages award.  The plaintiffs also proved that
the salaries paid to Buddy as the president of TBC during the
statutory period ($325,000 in 1994, $300,000 in 1995, and
$350,000 in 1996) exceeded those paid to Tully before the
1040251, 1040265, 1040314, 1040336
The plaintiffs did not, however, present evidence
21
indicating that those salaries were excessive in view of the
scope of TBC's business, the risks attendant to its operation
in the mid-1990s, or the work performed by Buddy.  
TBC paid its first dividend to Buddy in 1988.  In 1987,
22
TBC paid Buddy a salary as president that exceeded the highest
annual salary previously paid to Tully.  
39
stock redemption.
 Further, it is undisputed that the
21
plaintiffs could have managed TBC, steered its corporate
direction, and enjoyed other benefits of ownership had they
continued to control TBC after 1986. 
However, the plaintiffs initially lost control of TBC
when the corporation redeemed its stock in 1986.
 Evidence
22
that damage continued within the statutory period from a wrong
that first caused injury outside that period will not support
an award of compensatory damages based on that wrong.  See
Serra, 850 So. 2d at 270-71, 278-79.  Although the plaintiffs
proved that they incurred loss-of-control damage within the
statutory period, their claim based on that damage was
untimely under § 6-5-574, Ala. Code 1975, because it was not
proximately related to any injury within the statutory period
that resulted from Price's malpractice in his work on the IRS
dispute. 
2. Different-course damages
1040251, 1040265, 1040314, 1040336
40
The plaintiffs presented substantial evidence indicating
that, during the statutory period, Price's service on the IRS
dispute fell below the professional standard of care for a
lawyer in three respects: (i) he failed to disclose that he
was simultaneously representing parties whose interests were
conflicting; (ii) he knew, but failed to disclose to the
parties he was representing, that Buddy lacked authority to
complete the stock redemption on behalf of the children's
trust; and (iii) he advised his clients to contest the IRS's
stock valuation but did not fully advise them about other
options that were available when the IRS dispute arose in
1994.  Particularly, the plaintiffs proved that Price was
derelict in his duty to advise his clients of their option to
seek to rescind the stock redemption.  According to the
plaintiffs, Price's malpractice forced them on the following
course to protect their interests:  (a) settling the IRS
dispute in September 1996; (b) suing all the defendants in
November 1996; and (c) finally, settling their claims against
TBC and Buddy in 2001. Hoffman opined that, had Price fully
disclosed his conflicts and his clients' options when the IRS
dispute 
arose 
in 
1994, 
events 
could 
have 
transpired
1040251, 1040265, 1040314, 1040336
41
differently. With those disclosures, the plaintiffs assert
that the stock-valuation dispute could have been settled
earlier on more just, fair, and less acrimonious terms, and
that the litigation and resulting litigation damage would have
been avoided.
The plaintiffs' claims for different-course damages
relate to Price's work on the IRS dispute; accordingly, the
recovery of damages for that harm is not time-barred because,
if proven by substantial evidence, the harm occurred within
the statutory period.  For the following reasons, however, we
find that the plaintiffs did not satisfy that burden. 
First, the plaintiffs alleged, but did not prove, what
"different course" would have been taken had Price made full
disclosures and provided impartial advice to them in 1994.
There is no probative evidence indicating that the plaintiffs
would have pursued the rescission option and not followed the
chosen course if they had been fully apprised of that option
in 1994 when the IRS dispute arose.  Indeed, Price advised
Ragland in April 1995 that the estate might have the right to
rescind the stock redemption, but the estate did not then
1040251, 1040265, 1040314, 1040336
In Price's confidential April 11, 1995, legal memorandum
23
to Ragland, Price analyzed Buddy's potential liability to the
plaintiffs:
 
"Unlike 
an 
arm's-length 
transaction, 
the
buyer/seller 
cannot 
argue 
that 
[the 
stock
redemption] was freely bargained for and thereby
shield himself from liability.  A purchase of
stock at a price that is later determined to be
inadequate, when sold by the attorney-in-fact
for the seller, would therefore appear to be
voidable." 
42
pursue that remedy.
 Had the estate elected the rescission
23
option in 1994, the following consequences would have
followed:
1. The estate would have been obligated to return
approximately $1.5 million in consideration that TBC
had paid to it and Tully for his stock between 1986-
1996; 
2. The estate would have incurred federal estate tax
liability based on the inclusion of the total value
of Tully's 3,300 shares in his estate at his death
in 1991, not merely the difference between the
assumed $500 per share value and $665 valuation used
to settle the IRS dispute. There is no evidence in
the record indicating the value of Tully's shares at
the estate valuation date in 1991; and
3. The income tax treatment for Tully (and the
estate) for payments received from TBC in the years
preceding the rescission would have been revisited.
 
Further, Ragland testified that the estate's acceptance of the
IRS's position in the valuation dispute would have bankrupted
the estate.  Instead of agreeing to pay taxes based on a
1040251, 1040265, 1040314, 1040336
For purposes of this appeal, we assume that the trust
24
was unaware of the rescission option until 1996, the year it
filed its action.  On November  22, 1994, Price advised Buddy,
the purported trustee, of his fiduciary obligations to the
beneficiaries of the children's trust.  However, the record
contains evidence indicating that Price knew that the power of
attorney Tully had given to Buddy did not authorize Buddy to
act as the trustee of the children's trust. When that evidence
is viewed in the light most favorable to the plaintiffs,
Price's communication to an unauthorized trustee was not an
effective means to advise the children's trust of its rights.
    
43
substantially higher valuation of TBC stock or rescinding the
stock redemption in 1994, the estate cooperated with TBC and
Buddy, contested the stock-valuation dispute, and settled that
dispute on the assumption that, albeit undervalued, the
transfer of Tully's 3,300 shares to TBC in 1986 was valid.  
Moreover, there is no substantial evidence indicating
that the children's trust would not have followed the course
it followed if, in 1994, Price had advised that trust of its
right to claim rescission.
 Had an independent trustee of the
24
children's trust evaluated the rescission option in 1994, an
analysis of multiple factors would have been necessary before
the trust elected to rescind the transfer of its 1,088 shares
to TBC.  First, that trust would have been obligated to return
approximately $350,000 paid by TBC in consideration for those
shares from 1986-1996.  Further, the  beneficiaries of the
1040251, 1040265, 1040314, 1040336
44
children's trust were also the beneficiaries of the family
trust that was one of the devisees of Tully's will.  If both
the children's trust and the estate had rescinded the stock
redemption in 1994, the benefit to the beneficiaries of the
trust from rescission would, to an extent not quantified in
the record, have been mitigated because the value of the
estate would have been reduced by the estate's increased tax
liability and its refund of the consideration that the estate
and Tully received from TBC for Tully's 3,300 shares.
Moreover, even after the plaintiffs asserted their
rescission claims in 1996, they relinquished them in 2001 and
ratified the stock redemption in the settlement of their
claims 
against 
TBC 
and 
Buddy. 
Considering 
all 
these
circumstances, we conclude that the plaintiffs did not prove,
and it is speculative to assume, that they would have embarked
on a "different course" had Price fully disclosed his
conflicts and their legal options when the IRS dispute arose
in 1994.
Additionally, even assuming that Price's malpractice on
the IRS dispute caused the plaintiffs' to pursue an imprudent
1040251, 1040265, 1040314, 1040336
45
course, their different-course damages were not quantified.
Hoffman testified as follows on cross-examination at trial:
"Q:  But as you sit here today, you're not prepared
to share with us any kind of analysis that you've
done to be able to tell these ladies and gentlemen,
boy, 
if 
they'd 
undone that [stock-redemption]
transaction here's how all that would have come out.
You haven't done that work?
"A:  No, I haven't.  I can tell you for a fact
though that the beneficiaries, other than Buddy
Turner, because of their interests in the trust and
being the only beneficiaries of the [children's]
trust, and their three-quarter interest as residual
beneficiaries in the estate would have come out much
better had [the stock redemption] been undone.  I
can't say as to what the effect of Mr. Buddy Turner
would have been. 
"Q: Okay. And you haven't --
"A: But I can't map that out for you dollar for
dollar. 
"....
"Q: But you haven't taken all this information
[about corporate distributions] and done the kind of
analysis that we just talked about in terms of being
able to tell us specifically what the economic
consequences or damages would have been had the
[stock-redemption] transaction been undone?
"A: With absolute specifics?  No sir, I have not."
On redirect examination by plaintiffs' counsel, Hoffman
further testified: 
1040251, 1040265, 1040314, 1040336
The litigation damages were a type of different-course
25
damages.  The litigation damages were not based on an
employment contract, or other agreement under which Price
agreed to pay litigation-related expenses if he violated his
duties.  The record does not indicate that the plaintiffs
quantified the litigation damages, or that they showed by
substantial evidence that the litigation they brought against
TBC, Buddy, and other defendants in November 1996 would not
have transpired had Price not committed malpractice in his
46
"Q: [Price's counsel] showed you these distributions
from [TBC].  You don't have to do a lot of
calculation.  But if this stock transaction was
nullified from '94 through '96, we know [the
plaintiffs] had 88 percent of the stock, don't we?
"A: The combination of the estate and the trust,
that's correct.
"Q: So you could just calculate 88 percent of these
numbers [on distributions] in here and calculate
what the estate and the trust lost by not having
this stock back there, can't you?
"A: That's correct.  That's very simple math.
That's not complicated." 
Considering this testimony, the plaintiffs did not attempt to
calculate the financial consequences of a "different course"
had Price made full disclosures in 1994.  Instead, their proof
focused on the distributions they did not receive as a result
of selling their shares in 1986 and losing control of TBC --
a claim that is time-barred for the reasons stated above.
Under these circumstances, the plaintiffs did not prove their
different-course damages by substantial evidence.
 
25
1040251, 1040265, 1040314, 1040336
work on the IRS dispute.
47
CONCLUSION
The plaintiffs presented probative evidence at trial
indicating that Price committed legal malpractice in his work
on the IRS dispute.  They did not, however, prove by
substantial evidence that they were injured during the
statutory period as a proximate result of that malpractice.
Although the loss-of-control damages in the statutory period
exceeded the $400,000 amount in compensatory damages awarded
by the jury, the recovery of the compensatory damages was
time-barred by § 6-5-574 because they resulted and continued
from a wrong (i.e., Price's work on the stock redemption) that
first caused injury outside the statutory period.  Moreover,
although 
the 
different-course 
damages 
claimed 
by 
the
plaintiffs related to the IRS dispute and the actions based on
it were not time-barred under the plaintiffs' theories, their
proof of those damages was deficient and speculative.
Because the plaintiffs did not present substantial
evidence indicating that Price's breach of his professional
duty in his legal service on the IRS dispute caused them
injury, their malpractice claims fail because they did not
1040251, 1040265, 1040314, 1040336
Our holding also pretermits consideration of Price's
26
arguments for a new trial on the grounds (1) that the trial
court erroneously charged the jury concerning the time period
over which compensatory damages could be awarded, or (2) that
the trial court should have instructed the jury to set off the
approximate $6 million received by the plaintiffs in
settlements from other defendants against any compensatory-
damages award against Price, or itself should have reduced
that award to "$0" because of those settlements. 
48
prove an essential element of their action -- damages.
Accordingly, the judgment against Price is reversed and the
cases are remanded for proceedings consistent with this
opinion. In view of our holding, we do not consider the
plaintiffs' 
cross-appeals 
concerning 
the 
remittitur 
of
punitive damages.  See Alabama Pattern Jury Instructions:
Civil 11.03 (award of compensatory or nominal damages is a
prerequisite to the recovery of punitive damages). The cross-
appeals are therefore dismissed as moot.26
1040251 and 1040265 –- REVERSED AND REMANDED.
1040314 and 1040335 –- APPEALS DISMISSED.
Lyons, Woodall, Stuart, Smith, Parker, and Murdock, JJ.,
concur.
Cobb, C.J., and See, J., concur in the result.