Hays v. Page Perry, LLC et al

Filing 39

ORDER denying 30 Motion for Reconsideration. Signed by Judge Thomas W. Thrash, Jr on 3/17/2015. (ss)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
S. GREGORY HAYS
Receiver for Lighthouse Financial
Partners, LLC,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:13-CV-3925-TWT

PAGE PERRY, LLC, et al.,
Defendants.

OPINION AND ORDER
This is a legal malpractice case arising out of services provided by the
Defendants to Lighthouse Financial Partners, LLC. The Receiver claims that Page
Perry lawyers committed legal malpractice by not informing regulatory authorities of
regulatory violations by their client. The Court granted the Defendants’ Motion to
Dismiss based upon the total absence of any authority to support such a strange
perversion of lawyers’ professional responsibilities to their clients: to maintain in
confidence all information gained in the professional relationship. It is now before the
Court on the Plaintiff’s Motion for Reconsideration [Doc. 30]. For the reasons set
forth below, the Plaintiff’s Motion for Reconsideration [Doc. 30] is DENIED.

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I. Background
On February 1, 2013, Benjamin DeHaan – the former manager and majority
owner of Lighthouse Financial Partners, LLC – pled guilty to one count of wire fraud.1
Lighthouse was in the business of providing investment services to its clients,
including investment of client funds. For years, DeHaan misappropriated funds from
Lighthouse’s clients.2 To accomplish this, he made several misrepresentations to
federal and state regulatory authorities. To avoid stringent regulations, Lighthouse
would report that it was not taking custody of its clients’ funds.3 Lighthouse stated that
the funds were immediately being transferred to qualified broker-dealers that served
as custodians.4 Two specific broker-dealers were listed: Interactive Brokers and TD
Ameritrade.5 However, Lighthouse was taking custody of its clients’ funds.6
Lighthouse – at DeHaan’s direction – opened a bank account called the “Client
Holding – Pass Through” Account (“Pass Through Account”).7 Lighthouse
1

Compl. ¶ 28.

2

Compl. ¶ 17.

3

Compl. ¶ 16.

4

Compl. ¶ 16.

5

Compl. ¶ 16.

6

Compl. ¶ 17.

7

Compl. ¶ 18.

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represented that the Pass Through Account operated merely as a conduit between
Lighthouse clients and the broker-dealers.8 However, the funds placed in this Pass
Through Account were being stolen by DeHaan for his personal use.9
From 2008 until 2012, the Defendant Page Perry, LLC represented
Lighthouse.10 Pursuant to a retainer agreement, Page Perry agreed to “advise
[Lighthouse] regarding all registration, licensing, and regulatory requirements,
including, as applicable, the requirements of the Securities and Exchange Commission
and all state securities and investment advisor regulators.”11 The agreement made clear
that Page Perry’s responsibilities did not include “[c]ompliance matters, except as
expressly identified.”12 In July of 2010, J. Steven Parker – a partner at Page Perry –
performed a mock audit of Lighthouse, which included a review of Lighthouse’s
records and financial statements.13 The 2010 financial statements referenced the Pass
Through Account.14 Parker sent DeHaan an e-mail, which read: “I re-checked the
8

Compl. ¶ 41.

9

Compl. ¶ 17.

10

Compl. ¶ 32.

11

Compl. ¶ 36.

12

Compl., Ex. 2.

13

Compl. ¶¶ 43-45.

14

Compl. ¶ 46.

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Georgia custody rule. You can receive checks made payable to ‘third parties,’ but not
checks made payable to you. If you receive checks payable to Lighthouse, you still do
not have custody if you return them within 3 business days. You should return the
check ASAP and get a replacement payable to [Interactive Brokers].”15
Another mock audit took place in August of 2011.16 To assist, Parker hired Em
Walker, a former staff attorney for the Georgia Securities Commission.17 When
Walker visited the Lighthouse office on September 1, 2011, DeHaan was unable to
produce most of the documents that he had been asked for in advance, including bank
statements and client account statements.18 Walker recommended that Page Perry
investigate whether Lighthouse’s clients were receiving periodic statements from the
custodians Interactive Brokers and TD Ameritrade.19 Parker wrote to Interactive
Brokers and asked for assurances that Interactive Brokers was sending quarterly
account statements to Lighthouse’s clients.20 On October 4, 2011, Parker met with

15

Compl., Ex. 10 (emphasis added).

16

Compl. ¶ 53.

17

Compl. ¶ 53.

18

Compl. ¶ 55.

19

Compl. ¶ 58.

20

Compl. ¶ 60.

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DeHaan and informed DeHaan that Lighthouse was not in compliance with custody
requirements because Interactive Brokers had not been providing account statements
to Lighthouse’s clients.21 On November 18, 2011, Page Perry issued its mock audit
report which stated that “[c]lient transaction records were not available at time of
audit.”22
On December 14, 2011, Lighthouse received notice that the Georgia Securities
Commissioner planned to audit Lighthouse’s records. The Commissioner’s office
asked to see the client account statements from Interactive Brokers or TD Ameritrade.
On February 23, 2012, Lighthouse asked Parker for assistance. Parker drafted an email that Lighthouse sent to the auditor. This e-mail indicated that “DeHaan had been
unable to obtain the client statements because TD Ameritrade had provided
Lighthouse with the wrong phone numbers.”23 Additionally, Parker instructed DeHaan
to close the Pass Through Account and have it audited by April of 2012.24 Then, on
March 30, 2012, the SEC issued a subpoena to DeHaan. DeHaan appeared before the
SEC on April 3, 2012, and he was represented by two Page Perry partners, the

21

Compl. ¶ 61, Ex. 16.

22

Compl. ¶ 63.

23

Compl. ¶ 80.

24

Compl., Ex. 29.

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Defendants Robert D. Terry and Daniel I. MacIntyre. On June 14, 2012, Page Perry
withdrew as counsel for Lighthouse.25 With DeHaan’s consent, Page Perry then
reported his criminal activity to the SEC.26
The SEC filed a civil enforcement action against Lighthouse and DeHaan.27
Lighthouse’s assets were frozen, and the Plaintiff S. Gregory Hays was appointed as
Receiver for Lighthouse. The Plaintiff filed this lawsuit, arguing that the Defendants
knew, or should have known, that Lighthouse had custody of its clients’ funds and that
DeHaan was converting those funds for personal use. The Plaintiff further argues that
the Defendants should have notified regulatory authorities of these violations, and that
such notification could have mitigated the ensuing damage. The Plaintiff asserted
claims for professional malpractice, breach of fiduciary duty, and breach of contract.28
On June 10, 2014, the Court dismissed the Plaintiff’s claims.29 The Plaintiff now
moves for reconsideration.

25

Compl. ¶ 93.

26

Compl. ¶ 94.

27

Compl. ¶ 27.

28

The Plaintiff seeks to hold Alan R. Perry, Jr. and the Estate of J. Boyd
Page liable on a theory of supervisory liability.
29

[Doc. 27].

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Remarkably, in the briefing on the Motion for Reconsideration, the Plaintiff
now argues that Page Perry had “knowledge of DeHaan’s theft and assisted in and
perpetuated his criminal conduct.”30 In this regard, the Plaintiff’s Motion for
Reconsideration goes one step further in reliance upon what the Court characterized
in its initial Order as “wild exaggerations, implausible inferences and selective
quotations from e-mails ....” The Complaint does not even allege that Page Perry had
actual knowledge of DeHaan’s ongoing theft of client funds until the very end of the
attorney-client relationship. This new claim of actual knowledge of the theft of client
funds during the ongoing attorney-client relationship is totally contradicted by the 168
pages of exhibits attached to the Plaintiff’s Complaint.

30

Mot. for Reconsideration, at 3.

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II. Legal Standard
Local Rule 7.2 provides that motions for reconsideration are not to be filed “as
a matter of routine practice,” but only when “absolutely necessary.”31 A party may
move for reconsideration only when one of the following has occurred: “an
intervening change in controlling law, the availability of new evidence, [or] the need
to correct clear error or prevent manifest injustice.”32 Further, a party “may not
employ a motion for reconsideration as a vehicle to present new arguments or
evidence that should have been raised earlier, introduce novel legal theories, or
repackage familiar arguments to test whether the Court will change its mind.”33

31

L.R. 7.2E.

32

Godby v. Electrolux Corp., No. 1:93-CV-0353-ODE, 1994 WL 470220,
at *1 (N.D. Ga. May 25, 1994).
33

Brogdon v. National Healthcare Corp., 103 F. Supp. 2d 1322, 1338 (N.D.
Ga. 2000); see also Godby, 1994 WL 470220, at *1 (“A motion for reconsideration
should not be used to reiterate arguments that have previously been made ... ‘[It is an
improper use of] the motion to reconsider to ask the Court to rethink what the Court
[has] already thought through-rightly or wrongly.’”) (quoting Above the Belt, Inc. v.
Mel Bohannan Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va.1983)) (alterations in
original); In re Hollowell, 242 B.R. 541, 542-43 (Bankr. N.D. Ga. 1999) (“Motions
for reconsideration should not be used to relitigate issues already decided or as a
substitute for appeal ... Such motions also should not be used to raise arguments which
were or could have been raised before judgment was issued.”).
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III. Discussion
The Plaintiff argues that the Court erred in dismissing his claim for legal
malpractice. For a legal malpractice claim, “the plaintiff must establish three elements:
(1) employment of the defendant attorney, (2) failure of the attorney to exercise
ordinary care, skill and diligence, and (3) that such negligence was the proximate
cause of damage to the plaintiff.”34 Additionally, “the element of breach of duty in a
legal malpractice case – the failure to exercise ordinary care, skill, and diligence –
must relate directly to the duty of the attorney, that is, the duty to perform the task for
which he was employed.”35 And the question of “[w]hat duty a defendant owes to a
plaintiff is a question of legal policy to be decided as an issue of law.”36 The Plaintiff
argues that the Defendants committed malpractice in three ways: (1) by failing to
report Lighthouse’s regulatory noncompliance and DeHaan’s criminal activity to
outside authorities, (2) by conducting an inadequate mock audit, and (3) by
representing DeHaan before the SEC. The Court will discuss each in turn.

34

Allen v. Lefkoff, Duncan, Grimes & Dermer, P.C., 265 Ga. 374, 375
(1995) (internal quotation marks omitted).
35

Tante v. Herring, 264 Ga. 694, 695 (1994) (emphasis added).

36

National Foundation Co. v. Post, Buckley, Schuh & Jernigan, Inc., 219
Ga. App. 431, 433 (1995).
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A. Failure to “Report Out”
The Plaintiff argues that the Defendants knew, or should have known, that
Lighthouse was impermissibly in custody of client funds. The Plaintiff claims that the
Defendants were duty-bound to report these violations to a regulatory agency. If they
had done so, the argument goes, DeHaan’s theft could have been limited. In the initial
Order, the Court dismissed this claim because the Plaintiff had failed to establish the
existence of the legal duty that the Defendants allegedly breached. As noted, under
Georgia law, attorneys have a duty to exercise appropriate care and skill in performing
the specific services for which they are employed.37 Here, the Defendants were hired
to perform an advisory role. In arguing that the Defendants should have reported
Lighthouse’s regulatory noncompliance or DeHaan’s misconduct, the Plaintiff is not
claiming that the Defendants were negligent in providing legal advice. He is arguing,
rather, that the Defendants had a separate obligation independent of the service that
they agreed to perform. Yet the Plaintiff does not cite to a single Georgia statute or
state court case – not one – imposing such a duty on attorneys. Nevertheless, the
Plaintiff argues that the Court committed “clear error of law” in dismissing his claim.
First, the Plaintiff argues that the duty may be found in multiple provisions of the
Georgia Rules of Professional Conduct (“GRPC”). Second, the Plaintiff – responding

37

See Tante, 264 Ga. at 694-95.

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to the public policy discussion in the Court’s initial Order – argues that the asserted
“reporting out” duty does not require attorneys to violate their duty of confidentiality.
1. Georgia Rules of Professional Conduct
To establish a “reporting out” duty, the Plaintiff refers to several provisions of
the Georgia Bar Rules. In rejecting this argument, the Court first noted that although
“the Code of Professional Responsibility provides specific sanctions for the
professional misconduct of the attorneys whom it regulates, it does not establish civil
liability of attorneys for their professional misconduct, nor does it create remedies in
consequence thereof.”38 In Allen v. Lefkoff, Duncan, Grimes & Dermer, P.C.,39 the
Georgia Supreme Court reiterated that “an alleged violation of the Code of
Professional Responsibility . . . or the Standards of Conduct . . . standing alone, cannot
serve as a legal basis for a legal malpractice action.”40 The Georgia Supreme Court
clarified that the Bar Rules may be relevant, if at all, to “the standard of care in a legal
malpractice action.”41

38

Davis v. Findley, 262 Ga. 612, 613 (1992).

39

265 Ga. 374 (1995).

40

Id. at 374 (internal quotation marks omitted).

41

Id. at 376 (emphasis added).

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In response, the Plaintiff argues that the “Bar Rules are evidence of the standard
of care” and that the “Defendants’ failure under these circumstances to comply with
Bar Rules 1.13, [etc.] . . . fell below the minimum standard of care for securities
compliance counsel.” But for the Bar Rules to be relevant evidence, they must speak
to the standard of care for the particular duty at issue.42 This is why the Georgia
Supreme Court stated that not “all of the Bar Rules [will] necessarily be relevant in
every legal malpractice action.”43 Here, none of the Bar Rules cited by the Plaintiff
speak to the level of skill and care required when advising a company over its
regulatory compliance. They are simply general ethical guidelines. In fact, Justice
Benham of the Georgia Supreme Court – in his concurring opinion in Allen –
expressed concern that parties may improperly use the Bar Rules in precisely this
manner: to convert ethical rules into legal duties.44 He noted: “Although the main
opinion might contemplate that the Code of Professional Responsibility will make a
cameo appearance in malpractice cases, I fear that experience will show that it will
play a leading role and the cast of horrors that will attend the allowance of such

42

See Allen, 265 Ga. at 376.

43

Id. at 377.

44

See id. at 378 (Benham, J., concurring).

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evidence will be legion.”45 The Plaintiff’s litigation strategy exemplifies this concern.
In lieu of citing to any binding law, the Plaintiff has instead strung together multiple
ethical rules in the hopes of creating a legal duty where one did not previously exist.
Accordingly, the Bar Rules cited by the Plaintiff do not salvage his malpractice claim.
But even putting that to one side, the Plaintiff’s claim still fails. The Plaintiff
primarily relies upon Bar Rule 1.13(b), which states:
If a lawyer for an organization knows that an officer . . . is engaged in
action, intends to act or refuses to act in a matter related to the
representation that is a violation of a legal obligation to the organization,
or a violation of law that reasonably might be imputed to the
organization, and that is likely to result in substantial injury to the
organization, then the lawyer shall proceed as is reasonably necessary in
the best interest of the organization. Unless the lawyer reasonably
believes that it is not necessary in the best interest of the organization to
do so, the lawyer shall refer the matter to higher authority in the
organization, including, if warranted by the circumstances, to the highest
authority that can act on behalf of the organization as determined by
applicable law.46
Based on the Complaint and the attached exhibits, the Defendants fully
complied with this rule.47 The Defendants notified DeHaan – who was, at the time, the
45

Id. at 381 (Benham, J., concurring) (emphasis added).

46

Rule 1.13 Organization As Client, GEORGIA RULES OF PROFESSIONAL
C O N D U C T
( J a n .
1 ,
2 0 0 1 ) ,
http://www.gabar.org/barrules/handbookdetail.cfm?what=rule&id=97.
47

Although the Plaintiff alleges otherwise in his Complaint, the attached
exhibits expressly contradict these allegations. And “when the exhibits contradict the
general and conclusory allegations of the pleading, the exhibits govern.” Griffin
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highest authority at Lighthouse – that Lighthouse may not retain client funds. For
example, after the initial audit, Parker sent DeHaan an e-mail instructing him to return
checks made payable to Lighthouse. In fact, the Plaintiff himself acknowledges that
the Defendants advised DeHaan against maintaining custody of client funds.48
DeHaan’s theft was possible only because he ignored this advice. Thus, the
Defendants certainly “referr[ed] the matter to . . . the highest authority that [could] act
on behalf of” Lighthouse. In arguing otherwise, the Plaintiff makes a litany of
arguments that lack merit.
First, the Plaintiff points out that Rule 1.13(b) – in its introductory sentence –
states that “lawyer[s] shall proceed as is reasonably necessary in the best interest of
the organization.” The Plaintiff argues that, because notifying a regulatory agency
would have been in Lighthouse’s “best interest,” the Defendants were obligated to do
so. But the clause quoted by the Plaintiff – which is vague in isolation – is given
meaning by the specific provisions that follow it. As noted, Rule 1.13(b) indicates that
an attorney may be obligated to refer the matter to a higher authority within an
organization. By contrast, Rule 1.13(c) states that notifying an external agency is

Indus., Inc. v. Irvin, 496 F.3d 1189, 1206 (11th Cir. 2007).
48

See, e.g., Pl.’s Br. in Resp. to Page Perry, Parker, and Terry’s Motion to
Dismiss, at 33-34 (“Parker . . . advised [DeHaan] that he should not accept checks
payable to Lighthouse.”).
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permissive, but not mandatory: “if . . . the highest authority that can act on behalf of
the organization . . . fails to address . . . an action . . . that is clearly a violation of law,
and . . . the lawyer reasonably believes that the violation is reasonably certain to result
in substantial injury to the organization, then the lawyer may reveal information
relating to the representation . . ..”49 That the drafters used the word “shall” in Rule
1.13(b), but not in Rule 1.13(c), suggests that only the former is compulsory.
Second, the Plaintiff argues that the Defendants should have notified Anatoly
Melamud, who “held an indirect interest in Lighthouse, incident to which he was
actively involved in the activity of Lighthouse.”50 There is no support for this
assertion. The Plaintiff acknowledges that DeHaan was the highest authority within
Lighthouse, not Melamud. Third, the Plaintiff renews his argument that the “highest
authority” that could act on behalf of Lighthouse was the Securities and Exchange
Commission because it had the power to “seize [Lighthouse’s] assets, and ultimately
have a receiver appointed to take over and liquidate the firm.”51 This argument fails.
That the Receiver may now act on behalf of Lighthouse is immaterial. The Receiver

49

Rule 1.13 Organization As Client, GEORGIA RULES OF PROFESSIONAL
C O N D U C T
( J a n .
1 ,
2 0 0 1 ) ,
http://www.gabar.org/barrules/handbookdetail.cfm?what=rule&id=97.
50

Mot. for Reconsideration, at 13.

51

Mot. for Reconsideration, at 15.

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did not have such authority when there was an attorney-client relationship between the
Defendants and Lighthouse. Accordingly, based upon the Complaint and the attached
exhibits, the Defendants did not violate Bar Rule 1.13.
The Plaintiff also argues, for the first time, that the Defendants violated Rules
4.1 and 1.2(d) as well.52 But “[a] motion for reconsideration cannot . . . include[] new
arguments that were previously available, but not pressed.”53 In his original Response
Brief, the Plaintiff cited Rules 4.1 and 1.2 in only two sentences, and simply argued
that they “must be read in conjunction with Rule 1.13.”54 Thus, the Plaintiff may not
pursue this argument here.
2. Attorney-Client Confidentiality
In its initial Order, the Court explained how the duty asserted by the Plaintiff
– which would require an attorney to divulge confidential information in the name of
protecting the client – would have dire consequences for the attorney-client
relationship. Under the Plaintiff’s proffered duty, the risk of civil penalties would
cause attorneys, out of self-preservation, to err on the side of disclosure when in
doubt. Consequently, such a rule could even deter potential clients from seeking
52

Mot. for Reconsideration, at 16-21.

53

Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 957 (11th Cir. 2009).

54

Pl.’s Br. in Resp. to Page Perry, Parker, and Terry’s Motion to Dismiss,

at 43.
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advice from a lawyer. The Plaintiff responds with two arguments. Before addressing
them, the Court notes that even if the Plaintiff’s arguments had merit, it would not
change the disposition of this case. The Plaintiff’s claim was dismissed because the
asserted duty does not exist as a matter of law, not just because it raises public policy
concerns.
First, the Plaintiff argues that the Defendants would not have violated their duty
of confidentiality by reporting DeHaan because DeHaan was not their client;
Lighthouse was. But this argument incorrectly assumes that the Defendants could
have reported DeHaan without reporting Lighthouse. The Complaint makes clear that
DeHaan’s theft was made possible due to Lighthouse’s noncompliance with custody
regulations. Indeed, the SEC ultimately brought an action against both DeHaan and
Lighthouse, and even referred to Lighthouse as DeHaan’s “alter ego.”55
The Plaintiff then argues that there are no confidentiality issues due to the
crime-fraud exception to the attorney-client privilege. This is absurd. The Plaintiff
claims that, because the Defendants’ services allegedly facilitated DeHaan’s
fraudulent activity, the information acquired by the Defendants was not confidential.
The Plaintiff conflates attorney-client confidentiality with the attorney-client

55

Complaint at 1, Securities And Exchange Commission v. Dehaan et al.,
No. 12-CV-1996 (N.D. Ga. June 9, 2012).
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evidentiary privilege.56 The attorney-client privilege allows a party to prevent the
discovery of certain pieces of evidence during a judicial proceeding.57 If an exception
is established – e.g., the crime-fraud exception – then the privilege becomes
inapplicable.58 Obviously, neither this privilege nor its exceptions are relevant here.
That certain confidential information may be discoverable does not mean that
attorneys may volunteer such information outside of a judicial proceeding, much less
be required to do so under the threat of civil penalties.59 They could be disbarred for
disclosing confidential information. For these reasons, the Plaintiff’s malpractice

56

See Tenet Healthcare Corp. v. Louisiana Forum Corp., 273 Ga. 206, 209
(2000) (“An attorney’s ethical and contractual duty to maintain client secrets is
distinguishable from the attorney-client privilege.”).
57

See NationsBank, N.A. v. SouthTrust Bank of Georgia, N.A., 226 Ga.
App. 888, 896 (1997) (“[T]he attorney-client privilege bars revelation, discovery, and
testimony of a lawyer except when waived by the client or in very limited
circumstances.”).
58

See In re Fulton County Grand Jury Proceedings, 244 Ga. App. 380, 382
(2000) (“[T]he attorney-client privilege does not extend to communications which
occur before perpetration of a fraud or commission of a crime and which relate
thereto.”).
59

“[I]f a court determines that particular information is not covered by the
attorney-client privilege, it still may be covered by the lawyer’s ethical duty of
confidentiality.” Confidentiality, Privilege: A Basic Value in Two Different
Applications, CENTER FOR PROFESSIONAL RESPONSIBILITY (May 2007),
h t t p : / / w w w . a m e r i c a n b a r . o r g / c o n t e n t /
dam/aba/administrative/professional_responsibility/confidentiality_or_attorney.aut
hcheckdam.pdf.
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claim based upon the Defendants’ failure to report DeHaan’s and Lighthouse’s
violations was properly dismissed.
B. Inadequate Audit and Conflict of Interest
The Plaintiff claims that the Defendants breached their duty to Lighthouse in
two additional ways. First, the Plaintiff asserts that the Defendants performed
inadequate mock audits. But to recover for legal malpractice, “the alleged negligence
of the attorney must be the proximate cause of the damage to the client.”60 Here, as the
Court noted in its initial Order, the Plaintiff has failed to state a causal link between
the allegedly inadequate mock audits and Lighthouse’s damages. To the contrary, the
Complaint makes clear that neither Lighthouse’s compliance issues nor DeHaan’s
theft was caused by inadequate legal advice. They were caused by DeHaan’s
deliberate choice to flout applicable regulations, lie to his attorneys, and continue his
fraudulent scheme. In response, the Plaintiff argues that there is a causal link “because
the financial records that Defendants failed to properly review and evaluate were the
very documents that ultimately led to the discovery of the Ponzi scheme by the
SEC.”61 But this still does not explain how a more thorough audit, in itself, would
have stopped DeHaan’s theft. To be sure, despite the allegedly inadequate audits, the

60

Rogers v. Norvell, 174 Ga. App. 453, 457 (1985).

61

Mot. for Reconsideration, at 23.

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Defendants ultimately gave DeHaan correct legal advice – e.g., to return the checks
that were made payable to Lighthouse – and DeHaan ignored it.
The Plaintiff also argues that the Defendants committed malpractice when they
represented DeHaan before the SEC. In particular, the Plaintiff argues that this created
a conflict of interest. But again, the Plaintiff does not state how the Defendants’
representation of DeHaan – which occurred well after DeHaan began his fraudulent
scheme – proximately caused any damages to Lighthouse.62 In response, the Plaintiff
points out that DeHaan continued to steal money after the Defendants represented him
at the SEC hearing. However, it is rudimentary logic that simply because one event
follows another in time does not mean that they are causally related. The Plaintiff
again fails to explain how, but for the Defendants’ representation of DeHaan before
the SEC, Lighthouse would not have suffered additional harm. Even more, according
to the Complaint, the Defendants ultimately reported DeHaan’s criminal activity to
the SEC shortly after the hearing.63 Thus, the Plaintiff’s legal malpractice claim was
properly dismissed.

62

Cf. De La Maria v. Powell, Goldstein, Frazer & Murphy, 612 F. Supp.
1507, 1518-19 (N.D. Ga. 1985) (“With the exception of . . . two allegations, the
plaintiff has failed to demonstrate how Mr. Gornall’s alleged conflict of interest
manifested itself to the detriment of . . . the plaintiff.”).
63

Compl. ¶¶ 87, 94.

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IV. Conclusion
The Defendants were hired to provide legal advice which they did. Securities
lawyers are not informants for the SEC. The Plaintiff’s legal theory is profoundly
flawed. The Plaintiff’s Motion for Reconsideration [Doc. 30] is DENIED.
SO ORDERED, this 17 day of March, 2015.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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