In 1984, Richard F. Scruggs and William Roberts Wilson, Jr. agreed to associate one another in a number of asbestos-related personal injury cases. Accordingly, they formed an intermediary corporation in 1985 known as Asbestos Group, P.A. In 1986, Asbestos Group hired Alwyn H. Luckey as a staff attorney.
In 1984, Merkel & Cocke (”Merkel”) was retained to pursue claims on behalf of the heirs of William H. Scott for injuries sustained by Scott as a result of his exposure to asbestos. Thereafter, Charles Merkel approached Wilson and discussed the possibility of associating him to assist with the technical aspects of the case. Wilson agreed to the association. Wilson then asked Luckey to work on the Scott case with him and Merkel.
Ultimately, the Scott case was settled with various defendants and resulted in a recovery of attorneys’ fees and expense reimbursements under Merkel’s contingency fee contract with the Scotts. Prior to 1994, these funds were processed by Merkel and distributed to Wilson, Luckey, and the Asbestos Group. In 1994, Merkel received additional settlement proceeds from the Scott litigation. This time, however, Merkel distributed the two payments, in the amounts of $9,850 and $3,284, to Wilson alone. That same year, Luckey was terminated by the Asbestos Group. Thereafter, Luckey retained Merkel to represent him in anaction against Scruggs, Scruggs, P.A., Asbestos Group, Wilson, and Wilson, P.A., to recover his share of asbestos fees which he argued were wrongfully withheld.
In September of 1997, SMBD, as an assignee of rights from Scruggs, P.A. and Asbestos Group, P.A, filed an action against Merkel in Jackson County, seeking damages from Merkel’s alleged mishandling and conversion of the 1994 Scott fees. Additionally, the complaint sought an accounting of all fees generated from the Scott litigation. In 1996, and again in 1998, Merkel received additional settlement funds from the Scott litigation. Merkel paid itself its claimed percentage of these fees and retained the balance in the firm’s escrow accounts. On March 26, 1998, Merkel filed the instant action in the Chancery Court of Coahoma County, seeking to interplead the share being held in escrow. The Coahoma County Chancery Court granted Merkel’s request for interpleader on January 22, 1999. The court further discharged Merkel from any and all liability related to either the funds interplead or the handling of the funds from the time of their receipt.
In September of 1997, Scruggs, Millette, Bozeman & Dent, P.A. (”SMBD”) filed a lawsuit in the Jackson County Chancery Court against Merkel & Cocke, P.A. (”Merkel”), Charles Merkel, Cynthia Mitchell, William Roberts Wilson, Jr., P.A., and Asbestos Group, P.A. This lawsuit placed at issue the alleged mishandling of attorneys’ fees received by Merkel in 1994. These fees were derived from the Scott case, a wrongful death action against the asbestos industry.
Approximately 6 months later, on March 26, 1998, Merkel filed the instant action in the Chancery Court of Coahoma County seeking to interplead a share of the 1996 and 1998 attorneys’ fees received from the Scott litigation. SMBD responded by filing a Motion to Dismiss Merkel’s complaint, primarily stating that the complaint should be barred by the doctrine of priority jurisdiction because the fees were already an issue in the Jackson County Chancery Court action. Richard F. Scruggs, Richard F. Scruggs, P.A., and Asbestos Group, P.A., (hereafter collectively referred to as “Scruggs”) also filed a motion to dismiss upon similar grounds. The Chancellor denied both motions to dismiss and granted the interpleader relief, finding Merkel to be a disinterested stakeholder with respect to the $4,953.43 of attorney’s fees.