High court rules in Phelps v. Frampton

By RICHARD HANNERS / Whitefish Pilot

Whitefish attorney Sean Frampton can keep his share of a sizable referral fee stemming from a tragic motor vehicle accident in June 2000, according to the Montana Supreme Court.

Frampton was sued by his past law partner, John Phelps, over how the money was distributed. Both were partners at the Hedman, Hileman & Lacosta law firm at the time of the accident.

A mother and her three children were heading north to Whitefish for the Memorial Day weekend when their 1990 Hyundai was struck by a southbound 1984 Chevrolet pickup truck that crossed the center line on U.S. Highway 93 at Majestic Valley Arena.

The pickup's side-saddle gas tank exploded, and all four members of the family died. The driver of the pickup was thrown from the vehicle and died when his vehicle landed on him.

The mother and grandmother of the family, Vivian Meyer was a Whitefish City Court clerk at the time. Sherry Bradstreet, the mother's sister, had been a Whitefish police dispatcher.

In his initial filing, Phelps claimed the partners at Hed-man, Hileman & Lacosta met in a strategy session to discuss ways to persuade Meyer to become their client.

One partner suggested that Phelps, who worked as the contract city attorney, and Frampton, who worked as the contract city prosecutor, could use their relationship with the city to contact Meyer and get her to sign on with the firm.

Phelps also noted that Hedman, Hileman & Lacosta had no experience in such a complex product liability case, and so it eventually turned to law firms in Montana and Georgia to handle the case.

Butler, Wooten, Fryhofer, Daugherty & Sullivan, of Columbus, Ga., had experience in suing General Motors and did most of the legal work. The case settled in April 2002, and the Georgia firm paid Hedman, Hileman & Lacosta a $1.8 million referral fee, which Phelps said was the largest fee ever generated by the Whitefish law firm at that time.

Hedman, Hileman & Lacosta divided up the fee according to its partnership agreement. Frampton got 55 percent, and William Hileman got 45 percent. Frampton was cut a check for $903,863.

Frampton and Hileman then contributed $100,000 apiece to the firm's partnership pool, which was the maximum required by the partnership agreement. They also gave bonuses to Phelps, Donald Hedman and other law firm employees.

Phelps and Hedman each received $25,000, but Phelps returned his bonus. He claimed his share should have been $120,000, and he retained counsel in his fee dispute with Frampton and Hileman.

Phelps eventually settled with Hileman and released the law firm from further claims, but he reserved any claims against Frampton. Phelps asserted six claims in his March 2003 lawsuit against Frampton.

In his initial response to Phelps' claims, Frampton denied a strategy session ever took place to acquire Meyer as a client, and he claimed other law partners confirmed no such meeting ever took place.

Frampton argued that Phelps' lawsuit should have been filed against Hedman, Hileman & Lacosta, not him, since it was the law firm that distributed the referral fee. He also asserted a counterclaim for "abuse of process."

In September 2004, Flathead County District Court Judge Stewart Stadler granted summary judgment in favor of Frampton on all six of Phelps' claims.

Phelps appealed the district court ruling to the Montana Supreme Court, which issued its ruling on Oct. 22, 2007. The court agreed that Stadler was correct on all six counts, but that he had reached the proper conclusion on one count despite a misstatement about the partnership agreement.

The high court agreed with Frampton that Phelps should have sued Hedman, Hileman & Lacosta, not Frampton, because the firm distributed the referral fee. But since Phelps released the firm from further claims when he settled with Hileman, he was now barred from pursuing that avenue, the court noted.

The court also cited the role played by Whitefish City Court Judge Bradley Johnson. In a January 2004 affidavit, Johnson described his initial advice to Meyer.

"I recommended that (Meyer) contact Sean Frampton, who she knew by virtue of his position as the Whitefish city prosecutor," Johnson said. "(Meyer) generally distrusted lawyers, but I knew that she needed to have a legal representative to protect her rights and interests during a very unsettling time."

Johnson said he also spoke with Frampton.

"I felt that Sean had the legal acumen and the personal relationship with (Meyer) that was appropriate to the matters," Johnson said. "I did not refer the case generally to the Hedman, Hileman & Lacosta law firm because (Meyer) did not like some of the other members of the firm. She did express her like for and trust in Sean, individually."

Phelps' claim that the partnership agreement was ambiguous also did not sway the court. An ambiguity does not exist simply because the parties or their attorneys have opposing interpretations, the court said.

The high court was also not persuaded by Phelps' claim that the Georgia firm did "virtually" all the work on the case, and Frampton did not earn his large share.

Phelps did not work on the case either, the court noted, and "he offers nothing more than his opinion that Frampton's work was so minimal that it does not qualify as 'earning' any of the fee."