Dallas’ 5th Court of Appeals has decided that a suit a contract lawyer filed against a firm and five of its clients over allegedly unpaid wages can go forward — an opinion the plaintiff’s counsel says merits the attention of all Texas firms and attorneys who hire contract lawyers.

As a result of the 5th Court ruling, 191st District Judge Gena Slaughter issued Feb. 13 orders reopening Malcolm Pipes v. D. Hemingway, et al. and setting a Sept. 4, 2012, trial date.

In its Jan. 19 opinion, the 5th Court sets out the following allegations: Pipes alleges he began employment with the Law Offices of D. Scott Hemingway in Dallas in 2000 and originally was paid $125,000 in annual salary. In March 2007, he became an independent contractor and his salary changed to $125 an hour on each project billed, and he was to be paid “after the clients paid for the work.”

Pipes quit his job in October 2007 “due to new employment and problems with his compensation,” the 5th Court wrote. In 2007, he filed a wage claim with the Texas Workforce Commission (TWC) seeking unpaid wages from the firm of $30,562, based on a rate of $125 an hour. On June 4, 2009, the TWC ordered the firm to pay Pipes $6,902 for wages covering the time period from June 2007 through November 2007.

On July 2, 2009, Pipes sought judicial review of the TWC ruling from Dallas’ 14th District Court in Malcolm Pipes v. D. Hemingway, d.b.a. The Law Offices of D. Scott Hemingway. Pipes’ lawyer Kevin Wiley Jr., of counsel at Dallas’ Gant & Hicks, says Pipes sought review alleging the TWC had given him only a fraction of the money he believed he is owed.

On Oct. 15, 2009, the 14th District Court entered a final judgment finding “it did not have jurisdiction over Pipes’s appeal because the appeal had not been timely filed,” the 5th Court wrote.

On Nov. 30, 2009, Pipes filed Malcolm Pipes v. D. Hemingway, et al. in Dallas’ 191st District Court alleging conversion against defendants D. Scott Hemingway, doing business as the Law Offices of D. Scott Hemingway, and five of the firm’s clients, the 5th Court wrote. Pipes alleges the clients paid fees to Hemingway’s firm that Pipes should have received.

The defendants filed a motion to dismiss Pipes’ petition. In it, they argued, among other things, that Pipes’ claim was barred by res judicata; the trial court did not have jurisdiction over the claim because Pipes filed his petition more than 30 days after the TWC’s final decision; the statute of limitations barred Pipes’ claim because none of the clients he sued had paid Hemingway or the firm any fees during the two years preceding Pipes’ petition; and Pipes accepted the $6,902 TWC award as an employee, and therefore was precluded, based on his election of remedies, from seeking a second recovery as an independent contractor, the 5th Court wrote.

The trial court granted the defendants’ motion to dismiss on Oct. 14, 2010, dismissing the suit and finding Pipes “is precluded from obtaining any requested relief or past wages.” Pipes filed a motion for reconsideration and a motion for new trial, but on Feb. 7, 2011, the 191st District Court signed an order granting the defendants’ request to strike Pipes’ motion, the 5th Court wrote.

Election of Remedies

Pipes appealed to the 5th Court, which wrote, “The trial court properly concluded Pipes elected a remedy as to past wages for the time period considered by the TWC in determining Pipes’ wage claim.” But his election of those remedies did not bar Pipes’ cause of action for past wages “based on client payments received” by the firm. [See related documents: the opinion, the reinstatement order, the scheduling order.]

In an opinion written by Justice Robert M. Fillmore and joined by justices David Bridges and Michael O’Neill, the 5th Court affirmed in part and reversed and remanded in part the trial court’s dismissal of Pipes’ petition. The 5th Court sent back to the trial court the conversion cause of action Pipes asserted against all the defendants. But because Pipes already had elected the remedies that the TWC had offered, the 5th Court limited his cause of action before the trial court to the time period not considered by the TWC — the nine months before early September 2008.

The 5th Court noted that Hemingway, the firm and the five clients “offered no evidence addressing whether any payments for Pipes’s work was made or received during the approximately nine-month period between the conclusion of the time period considered by the TWC,” and later in 2008 when Pipes no longer worked at the firm.

Wiley says he agrees with the 5th Court’s opinion but wishes it had characterized the money Pipes alleges he’s owed as “fees” rather than “wages.” Pipes believes he is owed fees that were paid to the firm for his work, not wages.

“Clearly this opinion has ramifications for all lawyers or firms who hire contract associates,” Wiley says.

“If I were a client and I knew or should know a firm is using contracted attorneys” and if the clients are paying for work only after they approve and accept it, as Pipes alleges, then “I would want some assurances from the firm that I hired that those contract employees are getting paid,” Wiley says.

Hemingway declines comment. Online court records list Hemingway as representing all the defendants in Malcolm Pipes v. D. Hemingway, et al.