You are the owner of this article.
You have permission to edit this article.
Edit
Lawyer banked $100K in partners' neglected stock proceeds; high court says only one plaintiff is due damages

Lawyer banked $100K in partners' neglected stock proceeds; high court says only one plaintiff is due damages

Only $5 for 5 months

A lengthy dispute over tens of thousands of dollars in stock proceeds left a Roanoke attorney owing more than $400,000 to the estates of his former law partners, but a recent Virginia Supreme Court decision has directed that damages should go to just one plaintiff.

The case began with a civil suit filed in 2015, which claimed that G. Nelson Mackey Jr. had concealed and converted long-overlooked stock, belonging to a trio of his past business colleagues, by quietly selling the shares after their deaths and keeping nearly $100,000.

Following a bench trial in Roanoke Circuit Court in 2017, retired Judge Humes Franklin issued a ruling in favor of the plaintiffs and ordered Mackey to pay $259,000 in compensatory damages and $100,000 in punitive damages, plus about $52,000 in interest, to the three former partners’ estates.

Franklin based the compensatory damages on the value of the stock in 2015, when its conversion was discovered.

Mackey appealed to the state Supreme Court, and an opinion issued May 28 upheld most of Franklin’s decisions but found that only one of the partners’ survivors was entitled to receive damages.

It is not yet clear exactly how that restructuring will affect the overall award.

Attorney Tim Kirtner, who represents Mackey, said Wednesday he could not yet discuss the case because he recently filed a petition for a rehearing on the matter.

Justice William Mims’ opinion offered a lengthy overview of the case:

Mackey joined a local firm in 1987 and later became a partner, but he left in 1995, following disagreements over finances. His three former colleagues — Griffith Dodson, Richard Pence and Richard Viar — soon reformed without him.

In 1997, the firm’s health insurance provider before, during and after Mackey’s tenure — Trigon Health Care — became an investor-owned company and distributed tens of millions of shares of stock to its policyholders. Dodson, Pence and Viar received 683 shares, issued in the business’ old name (which included Mackey’s name), plus $20,000 cash in merger consideration.

Across the next few years, Pence and Dodson died and, in 2002, Viar became aware of the stock’s existence. He wrote his bank and discovered it was worth about $64,000. Within a few months, he died, too.

Mims’ overview says that as the law firm was being dismantled, Mackey came into possession of the stock documents, as well as Viar’s more recent correspondence with the bank. Soon after, he changed the firm’s mailing address to his own home address, a move that he acknowledged during the trial but which he argued was simply done for convenience.

The following year, 2003, Michael Quinn, a lawyer working with Viar’s widow, asked Mackey about a bank letter he’d found that mentioned the stock but not its value. Mackey reportedly told him: “I have looked into it. There is not enough money involved.”

“I trusted Mr. Mackey,” Quinn told the judge at the trial. “She was a widow of a former partner and I was trying to help her. That’s what I thought Mr. Mackey was trying to do.”

Years later, in 2009, the summary said Mackey wrote to the company that handled the stock and sold it. His request was sent on paper that bore the letterhead “Dodson, Pence, Viar, Woodrum & Mackey” but carried his own personal contact information.

He received two checks — $77,995.90 from the stock sale and $20,513 for the merger consideration — and banked them but did not notify his former partners’ estates, the summary says.

In 2015, Quinn discovered the liquidation, and all three estates sued Mackey.

“What makes you think you’re entitled to the entire proceeds of that stock?” Franklin asked him in court.

Mackey said he had brought the firm hundreds of thousands of dollars in business but soon learned that the division of profits was “weighted heavily in favor of the older partners.”

“I was beating my head against the wall,” he said of his frustration, which ultimately led to his departure. “I know I left far more on the table than the value of that stock.”

The issues at hand were whether Mackey had committed conversion, or improperly exercised ownership over the assets. There were also the questions of whether his false statements to Quinn about the stock’s value affected the other plaintiffs’ rights of recovery, and whether Mackey’s actions, before obtaining the stock, had extended the statute of limitations for them to file a lawsuit.

Franklin found that Mackey’s misrepresentation of the value “involved moral turpitude” and had deterred Quinn and Viar’s widow from looking into the matter further. The judge also determined that Mackey intentionally concealed his plans to convert the stock “from each of its rightful owners” and ruled in favor of all three plaintiffs.

But in its decision in the appeal, the state Supreme Court found that “Mackey’s misrepresentation ... was directed only to Quinn, who represented Mrs. Viar,” and that he never had contact on the matter with the estates of Dodson or Pence. Silence by a person who is liable is not concealment, the opinion read.

“We affirm the trial court’s ruling as to Mrs. Viar, reverse as to the other executors, and remand for further proceedings consistent with this opinion,” Mims wrote.

Court records show that the total judgment against Mackey was $411,154. Since 2018, he has paid down $17,883, based on a statement filed in February. He remains in good standing with the Virginia State Bar, according to online records.

The business news you need

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

Get up-to-the-minute news sent straight to your device.

Topics

Breaking News

Sports Breaking News

News Alert