Court Opinion

ID: 2763000
Source: CourtListenerOpinion
Date Created: 2014-12-19 17:02:10.491148+00
Date Added: 2024-06-11T10:44:05.280802
License: Public Domain

REL:12/12/2014

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) 229-
0649), 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, 2014-2015
                            ____________________

                                    1131216
                             ____________________

                         Ex parte WMS, LLC, et al.

                       PETITION FOR WRIT OF MANDAMUS

                         (In re: Keri Donald Simms

                                           v.

                               WMS, LLC, et al.)

                 (Chambers Circuit Court, CV-13-900050)

MOORE, Chief Justice.

      William Mudd, John Whitaker, Phillip Luke, and David

Wells, and the law firm in which they were members, Whitaker,
1131216

Mudd,   Simms,   Luke,   &   Wells,   LLC   ("WMSLW")   (hereinafter

referred to collectively as "the defendants"),1 petition this

Court for a writ of mandamus directing the Chambers Circuit

Court either to dismiss this case for lack of subject-matter

jurisdiction based on improper venue or to transfer the case

from Chambers County to Jefferson County based on venue being

improper in Chambers County or on the doctrine of forum non

conveniens. We grant the petition and direct the Chambers

Circuit Court to transfer the case to the Jefferson Circuit

Court because, for the reasons discussed below, venue is not

proper in Chambers County. Because of our disposition of this

petition, we pretermit a discussion of the subject-matter-

jurisdiction argument and the forum non conveniens argument.

                  Facts and Procedural History

    Keri Donald Simms is a resident of Jefferson County and

a practicing attorney in Birmingham, where all the law firms

named as petitioners either have been located or were created.

Effective May 10, 2012, Simms either resigned from WMSLW or

    1
     Also named as petitioners are the former law firm of
which some of the individual defendants were members, WMS,
LLC, and the current law firm, now known as Whitaker, Mudd,
Luke, & Wells, LLC, referred to by the defendants as WMLW,
LLC.
                                  2
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his membership in the limited-liability company was terminated

by the other members of WMSLW.2 Before Simms's departure,

WMSLW had been suffering financial troubles. Some of the

members of WMSLW had been arguing over their respective

capital accounts and discussing a possible merger with another

law firm. Simms alleges that, at unspecified times before his

departure, the individual defendants had been making secret

payments to themselves, above the amounts they were due under

their membership arrangement. He alleges that the defendants

prepared faulty income statements, concealed from him the true

liabilities and debts of WMSLW, concealed from him the details

of the proposed merger,3 and refused to provide him with

copies of WMSLW's state and federal tax returns.

    After Simms's departure from the firm, in letters dated

May 10, 2012, WMSLW offered Simms's clients the option to

remain with WMSLW or to continue with Simms as their attorney

    2
     The parties present differing accounts about whether
Simms resigned or was forced out of the limited-liability
company. Simms's complaint refers at one point to a "forced
buy out" of his membership interest.
    3
     An e-mail from Simms to the defendants dated December 11,
2009, stated that Simms was "in the dark on the details of the
merger" and asked if "someone [could] bring me [Simms] up to
speed."
                              3
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at his new place of employment, Webster, Henry, Lyons, White,

Bradwell & Black, P.C. ("WHLWBB"), another Alabama law firm.

Simms alleges that his relationship with the defendants began

to deteriorate when an unspecified number of his clients

informed WMSLW of their intent to remain clients of Simms and

not of WMSLW. He says that he enlisted the services of the

Alabama State Bar to force the defendants to release his

clients' case files to him. According to Simms, between May

14, 2012, and May 17, 2012, WMSLW4 mailed to him the files of

his clients who opted to stay with him.

    One of Simms's clients is his cousin, Angie Smith of

Georgia, who had suffered burn injuries in an accident in

Georgia on July 23, 2011; Smith's injuries were the subject of

litigation in Georgia pending at the time of Simms's departure

from WMSLW. Smith had been consulting with Simms since her

accident   and   became   a   client   of   WMSLW,   by   contract,   on

September 7, 2011. Simms was her attorney at WMSLW. In July

2011, Simms discussed Smith's case with his friend Claud E.

"Skip" McCoy, Jr., while the two men were at a wedding in

    4
     We recognize that the name of the law firm changed at
some point after Simms's departure. However, for ease of
reference, we continue to refer to WMSLW.
                                  4
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Chambers County, Alabama. McCoy, a resident of Chambers County

who is licensed to practice law in both Georgia and Alabama,

agreed to assist Simms with the case as cocounsel. McCoy

helped Simms retain the Georgia law firm of Pope, McGlamry,

Kilpatrick, Morrison & Norwood, P.C. ("PMKMN"), with which

McCoy and Simms (on behalf of WMSLW) entered into a fee-

sharing agreement.

       Simms    was   working     with       McCoy   and    PMKMN       on   Smith's

litigation at the time of his departure from WMSLW. He alleges

that    WMSLW    never   mailed    Smith       the   May    10,    2012,      letter

informing her of her option to remain with WMSLW or to

continue with Simms at WHLWBB. Smith and her husband Charles

Smith claim in an affidavit that, "[h]ad we been provided an

ethical    client     notification       letter      or    communication        from

anyone associated with [WMSLW], including Defendant Wells, we

would have immediately terminated that entity" as Smith's

legal counsel. Smith's file was one of those turned over to

Simms between May 14, 2012, and May 17, 2012.

       WMSLW operated as a limited-liability company in which

each    member    contributed      income        based     on     the    operating

agreement of WMSLW. Each member of WMSLW not only received

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draws, which were based on the revenue he or she generated for

WMSLW, but also served as a guarantor on a line of credit

financed by ServisFirst Bank and available to WMSLW. Simms's

departure   involved   a   dispute   over   $146,834,   a   figure

representing the negative balance in Simms's capital account

with WMSLW.5 On May 11, 2012, Wells e-mailed Simms to say that

"we [the individual defendants] have no objection to your

guarantee being released and we will work with the bank on

this." By May 25, 2012, however, Wells had reversed course,

stating that WMSLW was not willing to release Simms from his

guarantee on the line of credit with ServisFirst Bank until he

made a financial contribution toward the line of credit in an

amount roughly equal to $146,834, the negative balance of his

capital account. The defendants allegedly informed Simms that,

in exchange for this contribution, they would release him as

a guarantor on the line of credit with ServisFirst Bank. In an

e-mail dated July 27, 2012, Wells averred that the defendants

had initially been amenable to releasing Simms as a guarantor

    5
     Only one of the individual defendants, Mudd, had a
positive balance. His capital account consisted of $60,238.
Whitaker's capital account consisted of a negative balance of
$54,162; Luke's consisted of a negative balance of $50,442;
and Wells's consisted of a negative balance of $4,456.
                                6
1131216

until they discovered some unspecified deception on Simms's

part regarding fees owed to WMSLW.

    The individual defendants and Simms discussed a variety

of payment-plan options for Simms, who, according to the

defendants, agreed that he and WHLWBB would transfer to WMSLW

a percentage of the contingency fee Simms earned from the

litigation       involving       Smith.6       The    defendants      allege      that,

despite        entering      into   this       agreement    with        them,     Simms

instructed PMKMN to pay the contingency fee from the Smith

litigation directly to Simms rather than to WMSLW and that

Simms, once he received the Smith contingency fee, refused to

transfer that fee to WMSLW. Simms alleges that, in fact, WMSLW

was not entitled to any of the Smith contingency fee because,

he argues, WMSLW had, by contract, discharged the Smith case

to Simms or, alternatively, WMSLW had abandoned the file when

it turned it over to Simms between May 14, 2012, and May 17,

2012.     It     is    undisputed    that        the    amount     of       the   Smith

contingency           fee   is   $54,000,       the    result    of     a    $600,000

settlement of a portion of Smith's litigation in Georgia. The

    6
     Because no evidence of this agreement appears in the
record, this Court cannot verify its existence.
                                           7
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defendants became aware of the Smith contingency fee when

McCoy and attorneys at PMKMN inadvertently e-mailed Simms at

his   former      WMSLW      e-mail   address   regarding    the   $600,000

settlement.

      After receiving this inadvertent e-mail from McCoy and

attorneys        at   PMKMN,    the    defendants   contacted      PMKMN     by

telephone in June 2012 regarding the Smith contingency fee. A

member of PMKMN followed up with the defendants by e-mail on

June 22, 2012, stating that PMKMN had been previously unaware

of any disagreement between Simms and WMSLW regarding the

Smith     case    but   that    the   Smith   contingency   fee    had     been

deposited in PMKMN's trust account pending resolution of the

dispute between Simms and WMSLW. Smith contacted WMSLW by

letter     dated      June     26,    2012,   indicating    that   she      was

terminating her relationship with WMSLW because she wanted

Simms to continue representing her.7 Simms contends that this

June 26, 2012, letter was Smith's first opportunity to declare

      7
     Simms alleges that, to create a situation in which WMSLW
could benefit financially from the Smith litigation, WMSLW
deliberately failed to mail Smith the May 10, 2012, letter
allowing clients to choose to remain with WMSLW or to continue
with Simms at WHLWBB.
                                         8
1131216

her intent to remain Simms's client and to terminate her

relationship with WMSLW.

     On May 1, 2013, Simms sued the defendants in the Chambers

Circuit Court, alleging defamation, libel, oppression of a

minority shareholder, misrepresentation, the tort of outrage,

deceit,    fraud,     tortious       interference           with     business

relationships,      breach      of       contract,     and         accounting

irregularities. He sought declaratory and injunctive relief

and requested the appointment of a receiver, an accounting, or

a dissolution of the limited-liability company. On May 12,

2014, he amended his complaint to add a count alleging civil

conspiracy and to dismiss his requests for injunctive relief,

an   accounting,    and   a   dissolution.    On     June    4,    2013,   the

defendants moved to dismiss the case for lack of subject-

matter jurisdiction and improper venue or, in the alternative,

to transfer the case to Jefferson County, where, they said,

venue was proper. The defendants also moved to strike the

amended complaint, arguing that the original complaint, not

the amended complaint, controlled the disposition of the

motion to dismiss. On May 14, 2014, the trial court held a

hearing on the pending motions and denied the motion for a

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1131216

change of venue. The defendants now petition this Court for a

writ of mandamus directing the Chambers Circuit Court to

dismiss the case or to transfer it from Chambers County to

Jefferson County.

                     Standard of Review

         "'The proper method for obtaining review of a
    denial of a motion for a change of venue in a civil
    action is to petition for the writ of mandamus.' Ex
    parte Alabama Great Southern R.R., 788 So. 2d 886,
    888 (Ala. 2000). 'Mandamus is a drastic and
    extraordinary writ, to be issued only where there is
    (1) a clear legal right in the petitioner to the
    order sought; (2) an imperative duty upon the
    respondent to perform, accompanied by a refusal to
    do so; (3) the lack of another adequate remedy; and
    (4) properly invoked jurisdiction of the court.' Ex
    parte Integon Corp., 672 So. 2d 497, 499 (Ala.
    1995). Moreover, our review is limited to those
    facts that were before the trial court. Ex parte
    National Sec. Ins. Co., 727 So. 2d 788, 789 (Ala.
    1998).

         "'The burden of proving improper venue is on the
    party raising the issue and on review of an order
    transferring or refusing to transfer, a writ of
    mandamus will not be granted unless there is a clear
    showing of error on the part of the trial judge.' Ex
    parte Finance America Corp., 507 So. 2d 458, 460
    (Ala. 1987). In addition, this Court is bound by the
    record, and it cannot consider a statement or
    evidence in a party's brief that was not before the
    trial court. Ex parte American Res. Ins. Co., 663
So. 2d 932, 936 (Ala. 1995)."

Ex parte Pike Fabrication, Inc., 859 So. 2d 1089, 1091 (Ala.

2002). We further note that, "[w]hen ruling on a motion to

                             10
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transfer, the trial court must determine whether venue was

proper at the time the action was filed," Ex parte Canady, 563
So. 2d 1024, 1025 (Ala. 1990), and that, "[i]f venue is not

proper at the commencement of an action, then, upon motion of

the defendant, the action must be transferred to a court where

venue would be proper." Ex parte Overstreet, 748 So. 2d 194,

196 (Ala. 1999).

                               Discussion

       This   case   does    not   involve     the   merits   of   Simms's

complaint against the defendants. It involves only one issue:

Whether venue in Chambers County is proper. The defendants are

four    individuals    and    WMSLW,     a   limited-liability     company

("LLC"). In Alabama the proper venue for an action against an

LLC and its members is governed by § 6-3-2, Ala. Code 1975,

which governs lawsuits against individual defendants. Ex parte

Miller, Hamilton, Snider & Odom, LLC, 942 So. 2d 334, 336-38

(Ala. 2006)(holding that the defendant law firm, an LLC, was

a partnership for purposes of venue and was governed by § 6-3-

2(a)(3)); Ex parte Burr & Forman, LLP, 5 So. 3d 557, 565 (Ala.

2008)("The statute governing venue for individuals, § 6-3-2,

Ala. Code 1975, also governs venue for partnerships. For

                                    11
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purposes of venue, a partnership is deemed to reside where its

partners reside."). Therefore, venue in the present case is

governed by § 6-3-2(a), which provides:

         "(a) In proceedings of a legal nature against
    individuals:

               "(1) All actions for the recovery of
          land, of the possession thereof or for a
          trespass thereto must be commenced in the
          county where the land or a material part
          thereof lies.

               "(2) All actions on contracts, except
          as may be otherwise provided, must be
          commenced in the county in which the
          defendant or one of the defendants resides
          if such defendant has within the state a
          permanent residence.

               "(3) All other personal actions, if
          the defendant or one of the defendants has
          within the state a permanent residence, may
          be commenced in the county of such
          residence or in the county in which the act
          or omission complained of may have been
          done or may have occurred."

(Emphasis added.) Accordingly, venue is proper in Chambers

County only if one of the individual defendants resides in

Chambers County or any of the acts or omissions of which Simms

complains occurred in Chambers County. It is undisputed that

each of the individual defendants resides in Jefferson County,

not Chambers County; therefore, we must determine whether the

                              12
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parties' briefs and the materials before us reveal any act or

omission in Chambers County that would give rise to venue

there.

      Although Simms was raised in Chambers County and has

family there, he is not a resident of Chambers County. McCoy,

who is not a party to this lawsuit, is a resident of Chambers

County. In August 2011 Simms and McCoy attended a wedding in

Chambers County at which they agreed to jointly represent

Smith. The Smith litigation took place in Troup County,

Georgia, which is adjacent to Chambers County; however, that

litigation took place entirely in Georgia. Simms alleged in

his   original   complaint   that   the    defendants   conveyed

intentionally false information to McCoy in Chambers County.

The record indicates that this allegedly false communication

appeared in an e-mail from Mudd to McCoy dated January 18,

2013, concerning the Smith case, Simms's departure from WMSLW,

and the contingency fee being held in     PMKMN's trust account.

There is no evidence indicating that McCoy received this e-

mail while in Chambers County.

      Simms insists that Chambers County is "the purposeful

climatic [sic] place of defendants' tortious conduct targeted

                              13
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against Simms," but the only discernible evidence for this

claim is the January 18, 2013, e-mail from Mudd to McCoy, who

may or may not have opened the e-mail in Chambers County.

There is no showing that this allegedly defamatory e-mail was

ever opened in Chambers County or that any injury resulting

from it occurred in Chambers County. Even if Simms had shown

that the e-mail was opened in Chambers County, venue still

would not be proper there because "an individual who makes an

allegedly   defamatory   statement   should   be   sued   where   the

defamatory remark was made," not where a recipient possibly

opened an e-mail or otherwise received the defamatory remark.

Ex parte Windom, 840 So. 2d 885, 889 (Ala. 2002).

    Although Simms suggests that the defendants intended "to

use the [Smith] case as a means to an end in Chambers County

and [to] conceal the secret payments made among them while

Simms was a minority member of [WMSLW]"; that the defendants

"chose Chambers County and Simms' personal attachment to the

Smith case as the final location of their means to attempt to

keep secret their accounting irregularities and payments made

among them while Smith was a minority member of [WMSLW]"; and

that the defendants "used Chambers County and the Smith case

                               14
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to extract the most harm to Simms," "to claim all of the

disputed fee" from the Smith settlement, "to interfere with

Simms'     economic   interest     in    the    fee,"    "to    damage      his

profession[al] reputation related to the case," and "to use

the one case [to which] he had the most emotional attachment,

his family's case, to distract him in hopes he would not

discover    the   self-dealing     secret      payments,"      there   is   no

evidence showing that the defendants acted in Chambers County.

Simms's general claims about the defendants' intent to "use"

Chambers    County    are   not   substantiated     by    any    particular

evidence indicating that the defendants ever carried out their

alleged intent. Simms contends that McCoy and the Smith family

possess "documentary evidence in Chambers County and [in]

nearby LaGrange, Georgia," but no such evidence appears in the

petition, briefs, or materials before us. Nor do the parties

specifically or unambiguously name, describe, or identify that

evidence.

    Simms has not proffered evidence of a nexus with Chambers

County that would justify his filing this lawsuit there. The

fact that Chambers County and Troup County, Georgia, are

contiguous does not satisfy the jurisdictional requirements of

                                    15
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§ 6-3-2(a) when there is no specific indication that any act

or omission occurred within Chambers County. Likewise, the

fact that McCoy, a nonparty to the action, might have opened

an e-mail within Chambers County will not suffice to establish

jurisdiction in Chambers County. The act complained of –-

sending the e-mail –- occurred in Jefferson County, from where

Mudd sent the e-mail, not in Chambers County, where the e-mail

was possibly received. See               § 6-3-2(a)(3); Windom, 840 So. 2d

at 889.

      Because no individual defendant is a resident of Chambers

County and no identifiable act or omission occasioning this

litigation took place in Chambers County, there is no basis

for   venue   in     Chambers      County      under    §   6-3-2(a),     and    the

defendants        have    a    clear     legal   right      to   have    the    case

transferred        from       Chambers    County       to   Jefferson     County.

Overstreet, 748 So. 2d at 197 (holding that the chosen forum

was   "not    a    proper      venue     for   [the]    action,    and    it    was,

therefore, an abuse of discretion for the trial judge to deny

[the] motion for a change of venue"). There being no nameable

or observable connection under the law to the venue in which

Simms filed his lawsuit, we grant the petition for the writ of

                                          16
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mandamus. By doing so, we pretermit any discussion of the

defendants' request to transfer the case based on the doctrine

of forum non conveniens, see § 6-3-21.1, Ala. Code 1975,

because the doctrine of forum non conveniens "has a field of

operation only where the action is commenced in a county in

which venue is appropriate." Ex parte Townsend, 589 So. 2d
711, 714 (Ala. 1991). Here, the action was commenced in a

county in which venue was inappropriate; therefore, the trial

court   had   an   imperative   duty   to   transfer   the   action   to

Jefferson County, where venue was appropriate. Overstreet, 748
So. 2d at 197. In light of the foregoing, we direct the trial

court to transfer the action to Jefferson County.

    PETITION GRANTED; WRIT ISSUED.

    Stuart, Parker, Shaw, and Wise, JJ., concur.

                                  17