Rudin et al v. Williams Coulson Johnson Lloyd Parker & Tedesco, Llc et al

MOTION to dismiss for failure to state a claim

M.D. Fla.March 13, 2017

1 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION ARLENE RUDIN et al., Plaintiffs, v. Case No. 8:17-cv-350-T-23JSS WILLIAMS COULSON JOHNSON LLOYD PARKER & TEDESCO, LLC, et al. Defendants. / MOTION TO DISMISS Defendants Williams Coulson Johnson Lloyd Parker & Tedesco, LLC d/b/a Williams Coulson, LLC and Michael E. Lloyd (collectively, “Williams Coulson”) move to dismiss the Complaint (Dkt. 2) for failure to state a claim under Rule 12(b)(6). Legal malpractice is an inherently personal claim. Only plaintiffs with particular, individualized grievances against an attorney can sue. So clients have standing to sue, as do intended third-party beneficiaries of the attorney’s work. Here, it is impossible to tell if any of the four Plaintiffs fall into those two categories. The Complaint lumps all four Plaintiffs’ claims together, obscuring standing, and does not allege any particularized harm. In doing so, the Complaint violates Rule 8(a)’s commandment that Defendants have “fair notice” of the claims against them, as well as Florida’s requirement of particularized legal malpractice allegations. Without specific allegations of privity, standing, and resulting damages for each Plaintiff, the Complaint fails to state a cause of action and must be dismissed. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 1 of 18 PageID 155 2 INTRODUCTION Jerome Rudin died intestate with substantial assets.1 Dkt. 2 ¶ 46. This case arises out of the probate of his estate, and the resulting dispute over those assets between his wife, Arlene Rudin, and his daughter from an earlier marriage, Michelle Romp. A. JEROME AND FORDHAM INVESTMENTS RETAIN WILLIAMS COULSON. In early 2001, Arlene and Jerome met with Randy Nye and John Nye to discuss rolling Jerome’s IRA into a qualified pension plan. Id. ¶¶ 8, 47, 59. On the Nyes’ advice, Jerome enlisted Defendant Michael Lloyd of the Pittsburgh firm Williams Coulson to prepare the documents establishing the qualified pension plan. Id. at ¶ 10. Jerome also hired a Florida lawyer named William Namack to prepare estate planning documents and create the Florida business that would operate the qualified pension plan. Id. ¶¶ 9, 28. Neither Namack nor the Nyes are defendants. Lloyd sent Jerome an engagement agreement in April 2001. Dkt. 2-2; see Dkt. 2 ¶ 12. It was addressed to and signed by Jerome only. Dkt. 2-2; Dkt. 2 ¶ 13. Lloyd sent a second engagement agreement to Fordham Investments, Inc., which Jerome also executed.2 See Dkt. 2-3. Fordham Investments is allegedly the predecessor in interest to Plaintiff Oliver Bailey, LLC. Dkt. 2 ¶ 4. The engagement agreements with Jerome and Fordham Investments are the 1 Attached as Exhibit 1 is the docket from the probate of Jerome’s Estate. Courts may take judicial notice of state and federal court dockets. See Nguyen v. United States, 556 F.3d 1244, 1259 n.7 (11th Cir. 2009) (citing United States v. Glover, 179 F.3d 1300, 1302 n.5 (11th Cir. 1999)); Boyd v. Georgia, 512 F. App’x 915, 917 (11th Cir. 2013). 2 The Complaint does not allege why Lloyd sent a second engagement agreement, although the exhibits create a reasonable inference that the purpose of the second engagement agreement was to halve the cost of Williams Coulson’s services. See Dkts. 2-2, 2-3. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 2 of 18 PageID 156 3 only two alleged or attached to the Complaint. Accordingly, the only clients of Williams Coulson were Jerome and Fordham Investments. The engagement agreements limited Williams Coulson’s services to: • Preparation of the qualified pension plan, pension plan trust, and a summary plan description. • Review of existing qualified plan documents for rollover to the qualified pension plan. • Preparation of a determination letter request to the IRS regarding the qualification of the pension plan specific to Fordham Investments. Dkt. 2-3 at 1; Dkt. 2 ¶ 16. These services were to be part of a “collaborative effort to put together an estate plan.” Dkt. 2 ¶ 26. Other attorneys had other responsibilities. As part of the “collaborative effort,” Namack drafted the Jerome Rudin Irrevocable Trust No. 1, Dated April 9, 2002. Id. Although named as a Plaintiff, the Irrevocable Trust is never mentioned in the Complaint. Along with preparing the Irrevocable Trust, Namack was also tasked with forming and “consult[ing]” on the administration of Fordham Investments, and with preparing “such other” business, estate planning, and tax documents as may be required. Id. ¶ 28; Dkt. 2-5 at 1-2. B. WILLIAMS COULSON PREPARED THE FORDHAM INVESTMENTS RETIREMENT PLAN, AND OBTAINED A FAVORABLE DETERMINATION LETTER FROM THE IRS. Fulfilling his narrow role, Lloyd prepared several documents, including the Fordham Investments, Inc. Retirement Plan (the “Plan”) (Dkt. 2-7), the Fordham Investment, Inc. Retirement Plan Trust (the “Plan Trust”) (Dkt. 2-9), and several IRS documents. Dkt. 2 ¶ 30. The Plan was to be administered through an active business run by Fordham Investments. Dkts. 2-7, 2-9. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 3 of 18 PageID 157 4 As required by its engagement agreement with Fordham Investments, Williams Coulson then sought and obtained a favorable determination letter from the IRS. See Dkts. 2- 11, 2-12. The IRS “made a favorable determination” that the Plan was qualified, but “[c]ontinued qualification of the plan under its present form [was dependent] on its effect in operation.” Dkt. 2-12 at 1. The IRS added, “This letter may not be relied on with respect to whether the plan satisfies the requirements of section 401(a) of the Code.” Id. at 1-2 (emphasis added). In essence, the determination letter did not guarantee future qualification. After obtaining the favorable determination letter, Lloyd sent a bill to his client, Fordham Investments. See Dkt. 2-13 at 1; Dkt. 2 ¶ 42. An invoice to his other client, Jerome, was included. See Dkt. 2-13 at 4. There are no allegations that Arlene, the Irrevocable Trust, the Plan, or the Plan Trust were clients of Williams Coulson, had engagement agreements with Williams Coulson, or were billed by Williams Coulson. C. AFTER JEROME’S DEATH, THE PROBATE COURT FOUND THE PLAN ASSETS WERE ASSETS OF JEROME’S INTESTATE ESTATE BECAUSE FORDHAM INVESTMENTS NEVER OPERATED. Jerome died in 2007. Arlene became the personal representative of his Estate. See Exh. 1. Michelle Romp, Jerome’s daughter from a previous marriage, filed an adversary proceeding against Arlene in the probate. Id. She sought an order finding that the assets Jerome initially rolled into the Plan were assets of Jerome’s intestate Estate. After substantial litigation, the probate court agreed, finding the Plan was not a qualified plan under ERISA or Section 401(a) of the Internal Revenue Code. See Exhibit 2 (Order granting Michelle partial final summary judgment). Central to that conclusion was the finding that Fordham Investments “never engaged in commerce, was never an employer, and no one was ever its Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 4 of 18 PageID 158 5 employee.” Id. at 4. In other words, the Court concluded that the Plan never existed because Arlene and Jerome never actually operated Fordham Investments. Arlene appealed, and the Second District Court of Appeal affirmed. Rudin v. Romp, 158 So. 3d 583 (Fla. 2d DCA 2014) (Table) (per curiam affirmed). D. FOUR SEPARATE PLAINTIFFS SUED FOR IDENTICAL WRONGDOING RELATED TO THE PLAN. This lawsuit is brought by four Plaintiffs: (1) Arlene, as Personal Representative of Jerome’s Estate; (2) Arlene, individually; (3) Oliver Bailey, as successor in interest to Fordham Investments; and (4) Arlene, as Trustee of the Irrevocable Trust. Rather than alleging harm specific to each Plaintiff, the Complaint lumps them together throughout. See, e.g., Dkt. 2 ¶ 21 (“Plaintiffs relied . . . .); id. ¶ 48 (“The Plaintiffs were lead [sic] to believe . . . .”); id. ¶ 54 (“Defendants failed to advise Fordham Investments, Inc., the Rudins or the Trustee . . . .”); id. ¶ 58 (“[T]he Pension Plan was being used by the Plaintiffs as a way of deferring tax . . . .”). The Complaint contains a list of ways Williams Coulson allegedly breached its duties. See id. ¶¶ 60, 61. Reduced to their core, Plaintiffs (collectively) allege Fordham Investments and the Plan were set up as part of an estate plan designed to defer or reduce taxes, and Defendants committed malpractice by failing to adequately advise them (collectively) of the requirements of operating a business and qualified plan. Id. ¶¶ 53, 58, 59, 53-61. This failure prevented Fordham Investments from operating, which eventually led the Probate Court to conclude the Plan was not a qualified plan, converting the Plan assets Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 5 of 18 PageID 159 6 into assets of the Estate. Plaintiffs allege the inclusion of assets in the Estate was “contrary to the express written directions of Jerry,” though the allegation is made without attaching any “express written directions of Jerry.” Id. ¶ 61; see id. ¶¶ 53-61. The Complaint has two counts, one for legal malpractice and another for breach of contract. See id. ¶¶ 62-79. Both are based on the same allegations. Plaintiffs also appear to allege four separate categories of damages: (1) loss of Plan assets that passed into the Estate (id. ¶ 66); (2) attorneys’ fees and costs defending the validity of the Plan in the Probate Court (id. ¶ 67); (3) penalties, interest, and taxes that might be paid to the IRS (id. ¶ 68); and (4) the “loss of half of the remaining assets in the Pension Plan.” Id. ¶ 67. STANDARD A. A COMPLAINT MUST CONTAIN ENOUGH FACTUAL ALLEGATIONS TO MAKE THE CLAIMS FACIALLY “PLAUSIBLE.” A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). This Rule does not require detailed factual allegations, but it demands more than unadorned, conclusory accusations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint must contain enough facts to make a claim for relief “plausible on its face.” Resnick v. AvMed, Inc., 693 F.3d 1317, 1324-25 (11th Cir. 2012). A claim is “plausible” when the plaintiff pleads factual content allowing the court to draw the “reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. In assessing whether a “plausible” claim is alleged, the Court must accept as true all of the allegations. Id. But this tenet is “inapplicable to legal conclusions,” which “must be supported by factual allegations.” Id. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 6 of 18 PageID 160 7 Complaints must also give defendants “fair notice” of the relief sought and the grounds on which the claims rest. Liebman v. Deutsche Bank Nat’l Trust Co., 462 F. App’x 876, 878 (11th Cir. 2012) (citing Erickson v. Pardus, 551 U.S. 89, 93 (2007)). A complaint does not give “fair notice” if plaintiffs or defendants are lumped together. Waithe v. Arrowhead Clinic, Inc., 491 F. App’x 32, 38 (11th Cir. 2012); Hu v. Windhaven Ins. Co., No. 8:15-cv-277-T-35TGW, 2015 WL 12835683, at *1 (M.D. Fla. Mar. 16, 2015). B. THE SCOPE OF THE DISTRICT COURT’S REVIEW INCLUDES (1) THE FOUR CORNERS OF THE COMPLAINT, (2) EXHIBITS TO THE COMPLAINT, (3) EXTRINSIC DOCUMENTS CENTRAL TO PLAINTIFFS’ CLAIMS, AND (4) JUDICIALLY NOTICED OR PUBLIC RECORD INFORMATION. On a Rule 12(b)(6) motion to dismiss, the scope of the court’s review is generally limited to the four corners of the complaint. Speaker v. U.S. Dep’t of Health & Human Servs., Ctrs. for Disease Control & Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010). But there are exceptions. The district court can also consider any exhibits attached to the complaint. Hoefling v. City of Miami, 811 F.3d 1271, 1277 (11th Cir. 2016). And if the allegations of the complaint conflict with the contents of an exhibit, the exhibit controls. Id. The district court’s review is not limited to just the complaint and exhibits, however. It may also consider an extrinsic document if “it is (1) central to the plaintiff’s claim, and (2) its authenticity is not challenged.” SFM Holdings, Ltd. v. Banc of Am. Secs., LLC, 600 F.3d 1334, 1337 (11th Cir. 2010). And finally, courts may consider matters that are judicially noticeable or of public record. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). All of these documents may be considered on a Rule 12(b)(6) motion to dismiss without converting it to a motion for summary judgment. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 7 of 18 PageID 161 8 C. LEGAL MALPRACTICE CLAIMS IN FLORIDA MUST BE PLEADED WITH AN ADDITIONAL DEGREE OF CAUSAL SPECIFICITY. Florida substantive law provides an additional standard of review for legal malpractice claims, which the Court should consider in evaluating whether Plaintiffs give Williams Coulson “fair notice” of the claims. Legal malpractice allegations must be made “with particularity”3 by “illuminat[ing] . . . the specifics of the alleged malpractice.” Elkind v. Bennett, 958 So. 2d 1088, 1092 (Fla. 4th DCA 2007); K.R. Exch. Servs. v. Fuerst, Humphrey et al., 48 So. 3d 889, 895 (Fla. 3d DCA 2010). A plaintiff also must allege specific facts supporting “a causal connection between the alleged acts that the attorneys committed and the alleged damages suffered” by the plaintiff. Bankers Trust Realty, Inc. v. Kluger, 672 So. 2d 897, 898 (Fla. 3d DCA 1996); Dillard Smith Constr. Co. v. Greene, 337 So. 2d 841, 843 (Fla. 1st DCA 1976). These requirements have been developed and explained by Florida’s appellate courts in opinions that affirm dismissals for failure to comply with them. For example, in Elkind, the court found the complaint did not state a cause of action because, in part, the plaintiff failed to allege how the breach damaged the plaintiff. 958 So. 2d at 1092. Bankers Trust held the complaint insufficient because there were no allegations as to what injury the plaintiff sustained, nor how the injury was causally related to the attorneys’ actions. 672 So. 2d at 898. Finally, Dillard Smith held the allegations lacked “specificity as well as causative relation to appellant’s loss.” 337 So. 2d at 843. 3 This is not the same “particularity” as is required to allege a claim of fraud under Rule 9(b). Williams Coulson is not arguing the Rule 9(b) standard applies to claims for legal malpractice and breach of contract. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 8 of 18 PageID 162 9 Faithfully applying these standards to the Complaint, one reaches the unavoidable conclusion that it must be dismissed. DISCUSSION A. LEGAL MALPRACTICE CLAIMS ARE RESTRICTED TO CLIENTS IN STRICT PRIVITY WITH THE ATTORNEY, EXCEPT IN ONE “NARROW” EXCEPTION. Evaluation of Plaintiffs’ claims requires an understanding of the elements of a claim for legal malpractice. To state the claim, a plaintiff must plead (1) the attorney’s employment; (2) the attorney’s neglect of a reasonable duty; and (3) the attorney’s negligence as the proximate cause of the client’s loss. Law Office of David J. Stern, P.A. v. Sec. Nat’l Servicing Corp., 969 So. 2d 962, 966 (Fla. 2007). As reflected in the first element, an attorney’s liability is generally limited to clients in privity of contract. Espinosa v. Sparber, Shevin, Shapo, Rosen & Heilbronner, 612 So. 2d 1378, 1379 (Fla. 1993); Dingle v. Dellinger, 134 So. 3d 484, 487 (Fla. 5th DCA 2014). There is one “narrow exception” to this general rule. Dingle, 134 So. 3d at 490. Intended third-party beneficiaries of the engagement agreement or a transaction related to the engagement may have standing to pursue a claim for legal malpractice. Id.; Angel, Cohen & Rogovin v. Oberon Inv., N.V., 512 So. 2d 192 (Fla. 1987). A third party is an intended beneficiary “only if the parties to the contract clearly express, or the contract itself expresses, an intent to primarily and directly benefit the third party.” Dingle, 134 So. 3d at 488. To assert a claim on behalf of an intended third-party beneficiary, the complaint must allege: (1) a contract; (2) an intent that the contract “primarily and directly benefit” the third party; (3) breach of the contract; and (4) resulting damages to the third party. Id. When applying these factors and determining whether a third party states a claim for legal Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 9 of 18 PageID 163 10 malpractice, one must remember the exception is “narrow”; an attorney owes a duty to a third party only if “the attorney was hired for the purpose of benefitting [the] third party.” Id. at 491. That third-party benefit must be the “direct and primary object” of the engagement. Bochese v. Town of Ponce Inlet, 405 F.3d 964, 982 (11th Cir. 2005) (emphasis added). Absent clearly expressed intent, a third party is merely an incidental beneficiary who does not have a legally enforceable right in the contract, even if she “‘might derive some incidental or consequential benefit from its enforcement.’” Fed. Deposit Ins. Corp. v. Amos, 2013 WL 12099849, at *3 (N.D. Fla. Nov. 18, 2013) (quoting Bochese, 405 F.3d at 981-82). B. THE COMPLAINT MUST BE DISMISSED BECAUSE PLAINTIFFS ARE LUMPED TOGETHER IN VIOLATION OF RULE 8(a), MAKING IT IMPOSSIBLE TO DETERMINE WHO HAS STANDING TO PURSUE THIS CLAIM AND WHO WAS HARMED. That background begs the question: Do all four Plaintiffs have standing to pursue a claim against Williams Coulson as a client or intended third-party beneficiary? It is impossible to tell. The Complaint lumps together the claims of all four Plaintiffs in a shotgun pleading that fails to give Williams Coulson “fair notice,” fails to demonstrate standing, and fails to allege the causal relationship of each Plaintiff to the alleged damages. It must be dismissed. Under the pleading standard of Rule 8(a), each Plaintiff must plead the elements of a legal malpractice claim individually. That means each Plaintiff must plausibly allege (1) that Plaintiff has standing (by employing Defendants or as an intended third-party beneficiary); (2) Defendants neglected a duty owed to that Plaintiff; and (3) the negligence is the proximate cause of harm or loss to that Plaintiff. Stern, 969 So. 2d at 966. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 10 of 18 PageID 164 11 That is not done. Instead, all four Plaintiffs lump their claims together and allege standing, duty, and loss collectively. See Dkt. 2 ¶¶ 60, 67, 68, 70. See also id. ¶¶ 21, 22, 41, 44, 54, 55, 58, 59, 74-79. The Complaint is akin to a “shotgun” pleading “in that it lumps multiple claims together in one count.” Ledford v. Peeples, 657 F.3d 1222, 1239 (11th Cir. 2011). It must be dismissed. Paylor v. Hartford Fire Ins. Co., 748 F.3d 1117, 1125-28 (11th Cir. 2014). Accord Hu, 2015 WL 12835683, at *1 (dismissing plaintiffs’ FLSA claims for failure to allege each individual plaintiffs respective job duties or responsibilities to establish non-exempt status); EEOC v. Gargiulo, Inc., No. 2:05-cv-460-FtM-29SPC, 2006 WL 752825, at *2 (M.D. Fla. Mar. 22, 2006) (“plaintiff cannot simply lump its individual assertions together in a group pleading”). Legal malpractice is an inherently individual and personal inquiry, requiring delineation of who has standing to pursue what claims for how much. The shotgun Complaint does not adequately plead its claims and must be dismissed. C. THE CLAIMS BROUGHT BY EACH PLAINTIFF IN COUNT I MUST BE DISMISSED BECAUSE THEY FAIL TO ALLEGE STANDING AND COGNIZABLE, CAUSALLY RELATED HARM. The lumped allegations are symptoms of a greater ill: the basic deficiency of Plaintiffs’ claims. The reason standing and damages are not pleaded individually is because each Plaintiff lacks standing, causally related damages, or both. 1. Arlene, as Personal Representative of Jerome’s Estate, Fails to Allege Causally Related Harm. The Complaint is unclear as to the exact capacity in which Arlene brings these claims on behalf of the Estate. Assuming she is asserting a claim that Jerome would otherwise hold Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 11 of 18 PageID 165 12 (which the Estate now holds as a result of his passing), she may have standing because Jerome was a client of Williams Coulson. The problem is that Jerome’s Estate cannot plausibly claim any damages. The gist of Plaintiffs’ claim is that money should not have reverted to the Estate; it should have remained in the Plan or been distributed according to the Plan. The Probate Court’s decision complained of by Plaintiffs was not a loss for the Estate, but a windfall. Moreover, Jerome’s Estate would never be entitled to any money from the Plan. The Plan specified that Jerome’s benefits would be paid as a joint and survivor annuity.4 Dkt. 2-7 at 22 § 4.02; id. at 24-25 § 4.07(a). Once he died, his spouse or another designated beneficiary would receive the benefit until they died. Id. at 22 § 4.02; id. at 24-25 § 4.07(a); id. at 28 § 4.08(2).5 Jerome could instead elect a single life annuity, in which case he would receive a benefit until he died, when all benefit payments would cease. Id. at 28 § 4.08(1). But in either case, nothing in the Plan allowed benefits to revert to the Estate.6 If Plaintiffs are attempting to allege some other harm incurred by the Estate, although inconceivable, it is obfuscated by the failure to particularly allege individual harm on behalf of the Estate. No matter how the issue is considered, the Estate can never allege particularized harm. 4 “A joint and survivor annuity pays benefits to the plan participant for life and, if the participant is survived by a spouse, continues to provide benefits during the lifetime of the spouse. A single life annuity, by contrast, pays greater sums during the participant’s life only.” Hearn v. W. Conf. of Teamsters Pension Fund Trust, 68 F.3d 301, 303 n.1 (9th Cir. 1995). 5 The outcome would be essentially the same if Jerome died before he retired from the company. See id. at 40 §§ 6.01(a), 6.02(a), 6.04(a). 6 Plaintiffs do not allege that the Plan was terminated, but if it had been, only the Plan participants or their beneficiaries would be entitled to distributions. Id. at 53 § 10.03(a). Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 12 of 18 PageID 166 13 2. Arlene, Individually, Fails to Allege Standing and Causally Related Harm. Plaintiffs do not allege that Arlene was a client of Williams Coulson. Indeed, the attached engagement agreements are with Jerome and Fordham Investments, not her, and they control. See Dkts. 2-2, 2-3; Hoefling, 811 F.3d at 1277. The only other way for Arlene to have standing is as an intended third-party beneficiary of Williams Coulson’s work. To allege third-party standing, she must allege specific facts demonstrating she was an intended third-party beneficiary of an engagement agreement or transaction. Koens v. Royal Caribbean Cruises, Ltd., 774 F. Supp. 2d 1215, 1223 (S.D. Fla. 2011); Gomer ex rel. Gomer v. Philip Morris Inc., 106 F. Supp. 2d 1262, 1268 (M.D. Ala. 2000). She has not, impeded again by Plaintiffs’ collective, shotgun pleading. The Complaint also fails to allege how Arlene, individually, was harmed by the alleged negligence. There are no allegations that Arlene lost money or did not receive money to which she would otherwise have been entitled. In fact, the Complaint inexplicably fails to identify the beneficiaries of the Plan, Jerome’s Estate, the purported “estate plan” (Dkt. 2 ¶ 53), or any other instrument at issue. The only allegations of harm are generalized as to all four Plaintiffs. 3. Oliver Bailey, as Successor to Fordham Investments, Fails to Allege Standing and Causally Related Harm. a. Oliver Bailey Lacks Standing. The Complaint does not allege how Oliver Bailey has standing to bring a claim. The fourth paragraph alleges that Oliver Bailey is the “successor” to Fordham Investments, but that legal conclusion need not be accepted as true. Iqbal, 556 U.S. at 678. Other than Paragraph 4, there are no factual allegations establishing how Oliver Bailey succeeded to the Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 13 of 18 PageID 167 14 attorney-client relationship Fordham Investments had with Williams Coulson. See Reina v. Gingerale Corp., 472 So. 2d 530, 531 (Fla. 3d DCA 1985) (setting out the four ways a successor company acquires the liabilities of a predecessor company). Even if Oliver Bailey somehow succeeded to Fordham Investments’ rights, this claim would still be barred as an assigned legal malpractice claim. Florida generally does not allow legal malpractice claims to be assigned. Stern, 969 So. 2d at 969-70; see, e.g., Weiss v. Leatherberry, 863 So. 2d 368, 371-72 (Fla. 1st DCA 2003) (disallowing legal malpractice claims based on assignment of rights in a settlement agreement); Nat’l Union Fire Ins. Co. v. Salter, 717 So. 2d 141 (Fla. 5th DCA 1998) (disallowing legal malpractice claim based on insurer’s right of subrogation). And courts in other states with similar assignment policies have not allowed successor corporations to bring the legal malpractice claims of their predecessors. See, e.g., MNC Credit Corp. v. Sickels, 497 S.E.2d 331, 332-34 (Va. 1998) (successor corporation could not assert predecessor’s legal malpractice claim); Earth Sci. Labs, Inc. v. Adkins & Wondra, P.C., 523 N.W.2d 254, 800-02 (Neb. 1994) (successor corporation cannot bring legal malpractice claim obtained solely through purchase and assignment of predecessor’s assets). Oliver Bailey’s claim belongs to Fordham Investments, if anyone, and should be barred as an assigned claim. Assuming Oliver Bailey succeeded to Fordham Investments’ rights and was allowed to prosecute an assigned claim, Oliver Bailey would still lack standing because Fordham Investments never had the corporate authority to pass the claim to Oliver Bailey. Contrary to the Complaint’s allegations, Fordham Investments was administratively dissolved for failure Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 14 of 18 PageID 168 15 to file an annual report. Exhibit 3.7 A company administratively dissolved for failure to file an annual report cannot file a lawsuit based on a cause of action that accrued after its dissolution. § 607.1622(8), Fla. Stat.; Trans Health Mgmt. Inc. v. Nunziata, 159 So. 3d 850, 856 (Fla. 2d DCA 2014). Accord Levine v. Levine, 734 So. 2d 1191, 1197 (Fla. 2d DCA 1999) (“Arguably, however, section 607.1622(8) would preclude an administratively dissolved corporation’s suit on a cause of action accruing after its dissolution . . . for failing to file its annual report.”); Fedonics W. Hollywood Corp. v. Barnett Bank of S. Fla., N.A., 450 So. 2d 322, 324 (Fla. 4th DCA 1984) (holding dissolved corporations incapable of accruing a cause of action after the date of dissolution). Oliver Bailey cannot bring a claim that Fordham Investments could not have brought. b. The Complaint Fails to Allege Causally Related Harm. Another obstacle for Oliver Bailey is alleging damages. The Complaint contains no individualized allegations of harm to Oliver Bailey, probably because there cannot be any. No money at issue ever entered, left, or could have conceivably ended up with Oliver Bailey or Fordham Investments. Jerry rolled his IRA over to the Plan Trust, and those assets were to be distributed according to the Plan. There are no allegations that Oliver Bailey or Fordham Investments would have received distributions, and neither company ever held an interest or right in the assets of the Plan. See Dkt. 2-7 at 52 § 10.02 (“[T]he assets of the Trust Fund . . . shall never inure to the benefit of the Employer.”); id. at 53 § 10.03(a) (“The excess amount 7 The Court may take judicial notice of public records from a Secretary of State or Division of Corporations. Allstate Ins. Co. v. Estate of Robert M. Levesque, Case No. 8:08-cv-2253-T-33EAJ, 2010 WL 2978037, at *1 (M.D. Fla. July 19, 2010) (taking judicial notice of Division of Corporations records); Al-Rayes v. Willingham (In re Willingham), Adv. Case No. 3:11-ap-00269-JAF, 2014 WL 3697556, at *2 (Bankr. M.D. Fla. July 18, 2014) (taking judicial notice of annual corporate reports and public records from the Secretary of state and Division of Corporations). Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 15 of 18 PageID 169 16 shall under no condition be returned to the Employer.”). In fact, the Plan prohibited such an interest or right. Id. The Complaint simply does not allege any way that Fordham Investments or its alleged successor, Oliver Bailey, could have ever been harmed by assets in the Plan passing to Jerome’s Estate. Claims brought by Oliver Bailey should be dismissed. 4. Arlene, as Trustee of the Irrevocable Trust, Fails to Allege Standing and Causally Related Harm. The Irrevocable Trust is mentioned by name exactly once in the Complaint-in the introductory, unnumbered paragraph. After that, the only allusion to the Irrevocable Trust is the collective allegation that Defendants failed to advise “Fordham Investments, Inc., the Rudins or the Trustee.” Dkt. 2 ¶¶ 54, 55. But it is unclear whether that allusion is supposed to refer to the Irrevocable Trust; it could refer to the trustee of the Plan Trust. See Dkt. 2-9. There are no other allegations about the Irrevocable Trust, and certainly none related to standing or damages. Absent any pertinent factual allegations, claims by Arlene in her capacity as Trustee of the Irrevocable Trust must be dismissed. See Richards v. Georgia, 2016 WL 7638480, at *2 (S.D. Ga. Nov. 22, 2016) (dismissing claims against purported defendant not mentioned in the statement of claim); Cooley v. Doty, 2010 WL 1462282, at *1 (S.D. Fla. Apr. 13, 2010) (dismissing defendants with no allegations against them). 5. Conclusion. None of the four Plaintiffs plausibly allege both standing and causally related harm. Along with the shotgun allegations, these deficiencies are fatal to the Complaint. It must be dismissed. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 16 of 18 PageID 170 17 D. COUNT II MUST BE DISMISSED. 1. A Breach of Contract Claim with the Same Foundational Allegations as a Legal Malpractice Claim is Superfluous and Should Be Dismissed. Counts I and II are duplicative. Although a party may plead causes of action in the alternative, the breach of contract claim is “superfluous,” not alternative. Dingle, 134 So. 3d at 488 n.1. Count II should be dismissed. Cf. Brevard Cnty., Fla. v. Priceline.com, Inc., No. 6:09-cv-1695-Orl-31KRS, 2010 WL 680771, at *5 (M.D. Fla. Feb. 24, 2010) (“Absent, then, some additional remedy or other distinction between Count I and Count II, Count II is superfluous and should therefore be dismissed.”). But see Brenner v. Miller, 2009 WL 1393420, at *1 (S.D. Fla. May 18, 2009) (allowing plaintiff to plead legal malpractice, breach of fiduciary duty, and breach of contract claims based on same allegations). 2. For the Same Reasons as Count I, the Claims of All Four Defendants Must Be Dismissed as to Count II. Like legal malpractice, bringing a claim for breach of contract requires privity of contract or standing as an intended third-party beneficiary. Bre/Cocoa Beach Owner, L.L.C. v. Rolyn Cos., Inc., 2012 WL 12905849, at *6 (M.D. Fla. Nov. 30, 2012). The analysis is essentially the same. Only Arlene, as Personal Representative of Jerome’s Estate (assuming the Estate holds such a claim) was party to an engagement agreement. The other three plaintiffs have not alleged standing. And for the same reasons as the legal malpractice analysis, none of the four Plaintiffs can demonstrate causally related harm. Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 17 of 18 PageID 171 18 9678518v1 CONCLUSION The Complaint fails to make individualized, particular allegations with respect to each Plaintiff, none of whom can state a claim for legal malpractice. If the Complaint is not dismissed, the parties will be forced to engage in discovery on standing and the damages incurred by each of the four Plaintiffs. Dismissing the Complaint will enable the Court and the parties to narrow this proceeding, streamlining discovery and the path to resolution. See Paylor, 748 F.3d at 1127 (warning of a “discovery goat rodeo” if a shotgun complaint is allowed to persist, and encouraging defendants to narrow the case up front). The Complaint should be dismissed. DATED this 13th day of March, 2017. /s/ J. Logan Murphy Dennis P. Waggoner (FBN 509426) dennis.waggoner@hwhlaw.com J. Logan Murphy (FBN 72241) logan.murphy@hwhlaw.com Kristina A. Gandre (FBN 112499) kristina.gandre@hwhlaw.com Hill, Ward & Henderson, PA 101 E. Kennedy Blvd., Suite 3700 Tampa, Florida 33602 Telephone: (813) 221-3900 Facsimile: (813) 221-2900 Attorneys for Defendants CERTIFICATE OF SERVICE I certify that on March 13, 2017, a true and correct copy of the forgoing was filed with the Clerk, U.S. District Court, using the CM/ECF electronic filing service, which will send service to all counsel of record. /s/ J. Logan Murphy J. Logan Murphy Case 8:17-cv-00350-SDM-JSS Document 9 Filed 03/13/17 Page 18 of 18 PageID 172 Case 8:17-cv-00350-SDM-JSS Document 9-1 Filed 03/13/17 Page 1 of 7 PageID 173 Case 8:17-cv-00350-SDM-JSS Document 9-1 Filed 03/13/17 Page 2 of 7 PageID 174 Case 8:17-cv-00350-SDM-JSS Document 9-1 Filed 03/13/17 Page 3 of 7 PageID 175 Case 8:17-cv-00350-SDM-JSS Document 9-1 Filed 03/13/17 Page 4 of 7 PageID 176 Case 8:17-cv-00350-SDM-JSS Document 9-1 Filed 03/13/17 Page 5 of 7 PageID 177 Case 8:17-cv-00350-SDM-JSS Document 9-1 Filed 03/13/17 Page 6 of 7 PageID 178 Case 8:17-cv-00350-SDM-JSS Document 9-1 Filed 03/13/17 Page 7 of 7 PageID 179 Case 8:17-cv-00350-SDM-JSS Document 9-2 Filed 03/13/17 Page 1 of 5 PageID 180 Case 8:17-cv-00350-SDM-JSS Document 9-2 Filed 03/13/17 Page 2 of 5 PageID 181 Case 8:17-cv-00350-SDM-JSS Document 9-2 Filed 03/13/17 Page 3 of 5 PageID 182 Case 8:17-cv-00350-SDM-JSS Document 9-2 Filed 03/13/17 Page 4 of 5 PageID 183 Case 8:17-cv-00350-SDM-JSS Document 9-2 Filed 03/13/17 Page 5 of 5 PageID 184 Case 8:17-cv-00350-SDM-JSS Document 9-3 Filed 03/13/17 Page 1 of 2 PageID 185 Case 8:17-cv-00350-SDM-JSS Document 9-3 Filed 03/13/17 Page 2 of 2 PageID 186