Crews & Associates, Inc. v. City of Port Gibson, Mississippi et al
Filing
46
ORDER denying 22 Motion to Dismiss; denying 11 Motion to Dismiss. Signed by Honorable David C. Bramlette, III on November 12, 2014. (AA)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
CREWS & ASSOCIATES, INC.
VS.
PLAINTIFF
CIVIL ACTION NO: 5:14-cv-37-DCB-MTP
CITY OF PORT GIBSON, MISSISSIPPI;
GUYDON LOVE, LLP; EDSEL J. GUYDON;
and JWON NATHANIEL
DEFENDANTS
ORDER DENYING MOTIONS TO DISMISS
This matter is before the Court on Defendants’, Guydon Love,
LLP, Edsel J. Guydon, and Jwon Nathaniel, Motion to Dismiss [docket
entry no. 11] Joint Motion to Dismiss [docket entry no. 22]. Having
considered the motions and responses, applicable statutory and case
law, and being otherwise fully informed in the premises, the Court
finds as follows:
I. Factual and Procedural Background
This case arises out of a contract dispute between Plaintiff
Crews & Associates, Inc., (“Crews”) and Defendant City of Port
Gibson. Defendant Guydon Love, LLP, a Virginia law firm, was
retained to represent Port Gibson in the contract negotiations.
Defendant Edsel J. Guydon is employed by Guydon Love, and Defendant
Jwon Nathaniel was retained as local counsel. Most of the facts
concerning the agreement are irrelevant to these motions as Guydon
Love, Guydon, and Nathaniel (collectively, “attorney defendants”)
1
have moved to dismiss only the claims for legal malpractice.
Crews entered into a lease purchase agreement with Port Gibson
to “financ[e] the purchase of new computer equipment, new police
cars, water and sewer upgrades, and for paying down existing debt.”
Compl.
¶
10,
ECF
No.
1.
During
negotiations,
the
attorney
defendants “provided various legal opinions” to Port Gibson. Answer
Crossclaim Counterclaim (“Crossclaim”) p. 9-10, ¶¶ 2-4, ECF No. 17.
These opinions included interpretations of Mississippi law relevant
to the agreement. Crossclaim p. 11 ¶ 6. As part of the agreement,
the attorney defendants issued an opinion letter to Crews, stating
that Port Gibson’s intended uses for the financing complied with
Mississippi law. Compl. ¶¶ 25-26. Crews alleges that the issuance
of this letter was a material condition of the agreement and that
it confirmed the validity of the terms of the agreement. See Mem.
Opp. p. 1, ECF No. 19; Compl. ¶ 26. Crews claims it foreseeably
relied on the opinion letter to its detriment, and the attorney
defendants breached a professional duty of care owed to Crews
because
they
“failed
to
determine
accurately
whether
the
transaction was consistent with Mississippi law.” Compl. ¶¶ 28, 72,
74-75. In August of 2013, Port Gibson filed suit in the Circuit
Court of Claiborne County declaring the loan to be void and the
city in default. Compl. ¶ 23.1 Port Gibson has not made any
1
Between the consummation of the agreement and the filing
of the suit, Port Gibson elected a new mayor. See Compl. ¶ 18.
The current mayor of Port Gibson had, during his campaign for
2
payments under the agreement since January of 2012.2 Compl. ¶ 21.
Port Gibson alleges that the attorney defendants misled the city
and its administration about the validity of the terms of the
agreement. Crossclaim p. 12 ¶ 8.
II. Analysis
The attorney defendants have moved to dismiss both claims for
legal malpractice for failure to state a claim under Federal Rule
of Civil Procedure Rule 12(b)(6). “To survive a motion to dismiss,
a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation
omitted). The plaintiff must plead sufficient facts so that the
court may reasonably infer the defendant’s liability for the
alleged misconduct. Id. “[A] plaintiff armed with nothing more than
conclusions
cannot
unlock
the
doors
of
discovery.”
Doe
v.
office, expressed his opinion that the agreement was void by
filing suit against the then-mayor and the City Board of
Aldermen, challenging the validity of the agreement. Compl. ¶ 30.
2
In its crossclaim, Port Gibson argues that the agreement
was never consummated and is void ab initio. Crossclaim p. 10, 12
¶¶ 6, 8. This allegation is irrelevant to the city’s claim for
malpractice, and the Court will ignore it in favor of finding
Crews’s allegation that a contract existed should be treated as
true for this order. This Court’s order should not be read as
rendering a final decision on the validity of the Lease Purchase
Agreement. However, the Court will note that Crews attached to
its complaint an exhibit purporting to be the Lease Purchase
Agreement signed by the then-mayor of Port Gibson and FNSB
Investment, Inc., Crews’s predecessor in interest. See Compl. Ex.
E, p. 12, ECF No. 1-6.
3
Robertson, 751 F.3d 383, 393 (5th Cir. 2014) (internal quotations
omitted).
To state a claim for legal malpractice, a plaintiff must plead
“(1) an attorney-client relationship; (2) the attorney’s negligence
in handling the client’s affairs; and (3) proximate cause of the
injury.” Great Am. E & S Ins. Co. v. Quintairos, Prieto, Wood &
Boyer, P.A., 100 So. 3d 420, 424 (Miss. 2012).
A. Crews’s Claim
The attorney defendants argue Crews’s claim fails because
Crews did not sufficiently allege the existence of an attorneyclient relationship. Mem. Supp. p. 3, ECF No. 12. Crews makes three
alternative arguments: (1) the complaint does sufficiently plead
the existence of an attorney-client relationship, (2) such a
relationship need not be shown in this case, or (3) the Court
should allow Crews to amend its complaint. Mem. Opp. p. 2, 17, 18,
ECF No. 19.
Taking up Crews’s first argument, the Mississippi Supreme
Court has held:
An attorney-client relationship exists when:
(1) A person manifests to a lawyer the
person’s intent that the lawyer provide legal
services for the person; and
(2)(a) The lawyer manifests to the person
consent to do so, or (b) fails to manifest
lack of consent to do so, knowing that the
person reasonably relies on the lawyer to
provide the services, or (c) a tribunal with
power to do so appoints the lawyer to provide
the services.
As such, fee payment by the client to the attorney is not
4
required.
Baker Donelson Bearman Caldwell & Berkowitz, P.C. v. Seay, 42 So.
3d 474, 485 (Miss. 2010) (citations omitted). The Mississippi
Supreme
Court
further
explained
that
“the
existence
of
a
professional, attorney-client relationship is fact-specific.” Id.,
42 So. 3d at 487 n.28. Thus, to survive the motion to dismiss,
Crews must plead (1) that it made known to the attorney defendants
its intent to receive legal services from the attorney defendants
and (2) that either (a) the attorney defendants agreed to provide
legal services or (b) the attorney defendants did not refuse to
provide legal services, knowing that Crews would still rely on the
attorney defendants to provide legal services.3
As to the first element, Crews argues that the plain language
of the agreement requiring an opinion letter from the attorney
defendants manifested its intent to received legal services. Mem.
Opp. p. 18. The attorney defendants assert they “had neither a
legal duty nor a contractual obligation to provide a legal opinion”
to Crews and shared the opinion letter “‘as a courtesy, with no
expectation of an attorney-client relationship.’” Mem. Supp. p. 3-4
(quoting Quintairos, 100 So. 3d at 424-25).
The Fifth Circuit has referred to the elements of an attorney-
3
The Court finds, and Crews does not argue, that the
attorney defendants have not been appointed by a court to provide
legal services to Crews. The Court’s discussion below thus
ignores this prong of the second element.
5
client relationship in Mississippi as a “simple formula,” and more
often than not it is. See Hopper v. Frank, 16 F.3d 92, 95 (5th Cir.
1994). Thus, little guidance has been given as to what is required
to manifest the intent to receive legal services.4 One district
court has held that “[t]he relationship is not formed by passivity;
rather it comes about by the actions of both the client and the
attorney. The client must request the services of the attorney. .
. .” Hood v. Cent. United Life Ins. Co., No. 2:07cv164, 2008 WL
2593787, at *1 (N.D. Miss. Jun 27, 2008). The Mississippi courts
have found that an attorney-client relationship can arise when the
elements are less discrete. See Seay, 42 So. 3d at 485 (finding
attorney-client
relationship
“coexisted
with
[a]
personal
relationship” as lifelong friends based on prior conduct by the
4
The Court draws on Mississippi’s unauthorized practice of
law jurisprudence to define “legal services.” The Mississippi
Supreme Court has defined the practice of law to include:
the drafting or selection of documents, the giving of
advice in regard to them, and the using of an informed
or trained discretion in the drafting of documents to
meet the need of the person being served. So any
exercise of intelligent choice in advising another of
his legal rights and duties brings the activity within
the practice of the legal profession.
Darby v. Miss. State Bd. Of Bar Admissions, 185 So.2d 684, 687
(Miss. 1966) (emphasis added). And the Mississippi Supreme Court
recently reaffirmed the Darby definition. Forbes v. St. Martin,
145 So. 3d 1184, 1196 (Miss. Ct. App. 2013) (finding the Darby
definition had been reaffirmed in In re Williamson, 838 So. 2d
226, 234 (Miss. 2002)), judgment reversed on other grounds,
Estate of St. Martin v. Hixon, 145 So. 3d 1124 (Miss. 2014). The
opinion letters meet the above definition and, therefore, qualify
as a legal service.
6
attorney: referring to plaintiff as his client in correspondence,
advising plaintiff, and attending a deposition). The comments to
the Third Restatement of The Law Governing Lawyers5 provide some
further insight. “A client’s manifestation of intent that a lawyer
provide legal services to the client may be explicit” or it “may be
manifest
from
surrounding
facts
and
circumstances.”
Third
Restatement § 14, comment c (2000). The comments provide two
examples
that
would
not
give
rise
to
the
attorney-client
relationship: (1) “the fact of receiving some benefit of the
lawyer’s service, for example when the lawyer represents a coparty” and (2) when a lawyer “answer[s] a general question about
the law, for instance in a purely social setting.” Id. These
examples are inapposite to the facts of this case.
Crews attached to its complaint copies of the agreement and
three opinion letters it received from the attorney defendants. See
Compl. Exs. D, E, F, and G. In ruling on a motion to dismiss, the
Court
“generally
‘must
limit
itself
5
to
the
contents
of
the
The court in Baker Donelson quoted from a footnote in an
earlier Mississippi Supreme Court case to announce the elements
of an attorney-client relationship. See Baker Donelson, 42 So. 3d
at 485 (quoting Singleton v. Stegall, 580 So. 2d 1242, 1244 n.2
(Miss. 1991)). The Singleton court quoted a preliminary draft of
the American Law Institute’s Restatement of the Law: The Law
Governing Lawyers § 26. This preliminary draft has since been
adopted without material change by the American Law Institute in
the Third Restatement. See Restatement (Third) of Law Governing
Law (“Third Restatement”) § 14 (2000). Thus, this Court finds the
comments to that section instructive to Mississippi’s
interpretation of the law.
7
pleadings, including attachments thereto.’ The [C]ourt may also
consider documents attached to either a motion to dismiss or an
opposition to that motion when the documents are referred to in the
pleadings and are central to a plaintiff’s claims.” Brand Coupon
Network, LLC v. Catalina Mktg. Corp, 748 F.3d 631, 635 (5th Cir.
2014) (quoting Collins v. Morgan Stanley Dean Witter, 224 F.3d 496,
498 (5th Cir. 2000)) (footnotes omitted). Thus, the Court may
consider the agreement and the opinion letters.
The agreement states, in pertinent part:
(b) Lessee represents, and will provide an opinion of its
counsel in substantially the form attached hereto to the
effect that it has full power and authority to enter into
this Agreement; that this Agreement has been duly
authorized, executed, and delivered by Lessee, and is a
valid and binding obligation of Lessee enforceable in
accordance with its terms; that Lessee is a political
subdivision of the State within the meaning of Section
103(a) of the Code; all requirements for execution,
delivery and performance of this Agreement have been, or
will be, complied with in a timely manner; and the
interest on this Agreement is exempt from federal income
taxes.
Compl. Ex. E p. 2, ECF No. 1-6. Prior to consummation of the
agreement, Crews inquired about the legality of the agreement,
prompting the inclusion of the above contract provision. Compl. ¶
24. The Court finds that this inquiry combined with the above
contract provision satisfies the first element of the test for an
attorney-client relationship. Crews affirmatively sought legal
services, in the form of an opinion letter about the legality of
the agreement, from the attorney defendants.
8
As to the second element, Crews argues that the attorney
defendants
impliedly
manifested
their
consent
by
issuing
the
opinion letters and “failed to manifest their lack of consent
knowing that Crews would reasonably rely on the attorney defendants
to provide their legal opinion.” Mem. Opp. p. 18. The Court finds
that the attorney defendants fulfilled the second element under
either prong.6 The comments to the Third Restatement provide that
a lawyer may manifest consent in myriad ways: explicit agreement,
implied by action, or through an agent with authority (apparent,
express,
or
implied)
to
act
for
the
lawyer
in
undertaking
representation. Third Restatement § 14, comment e. It further
provides that the lawyer’s manifestation of intent can come before
the client’s and that “the acts of each often illuminate those of
the other.” Id. It can certainly be seen that Port Gibson acted
with
apparent
authority
to
bind
the
attorney
defendants
to
providing the legal opinion to Crews.
As to failure to express a lack of consent, the attorney
defendants were involved in the contract negotiation, and it would
strain credulity to believe they were unaware of the pertinent
contract provision when they advised Port Gibson to sign the
agreement. Therefore, the attorney defendants were presented with
6
Because the prongs are expressed in terms of an
affirmative act - expressing consent - and a negative act - not
expressing lack of consent - the Court finds that the elements
are not mutually exclusive.
9
an opportunity to object to providing the letter and declined to do
so. As to reliance, the form letter attached to the contract
concludes with the sentence: “This opinion may be relied upon by
the addressee hereof and its successors and assignees of interests
in the Agreement, but only with regard to matters specifically set
forth herein.” Compl. Ex. E p. 55, ECF No. 1-6 (emphasis added).
Moreover,
the
third
opinion
letter
issued
by
the
attorney
defendants contained an identical concluding sentence. See Compl.
Ex. H p. 2, ECF No. 1-9. Crews was clearly meant to rely on the
opinion letters. Therefore, the Court finds that Crews has pled the
second element of an attorney-client relationship.
The Court’s analysis is bolstered by the existence of a
contract in this case. Mississippi courts have long held that
attorneys owe three duties to their clients: “(a) the duty of care,
(b) a duty of loyalty, and (c) duties provided by contract.”
Singleton v. Stegall, 580 So. 2d 1242, 1244 (Miss. 1991). The
Mississippi Supreme Court has held that a malpractice action may
lie for the lawyer’s breach of those duties secured by contract.7
Id., at 1245.
Because the Court finds that Crews sufficiently pled an
attorney-client relationship, the Court does not reach the question
7
After some modest search, the Court is unable to find a
case on this point. It appears that clients more often bring
actions for breach of contract, though these three sources of
duty are still good law and frequently repeated.
10
whether such a relationship must be pled in this cause of action.
Further,
the
Court
finds
Crews’s
request
to
amend
wholly
unnecessary at this time.
B. Port Gibson’s Claim
The attorney defendants have moved to dismiss Section III and
Count II8 of Port Gibson’s crossclaim against them. They argue that
Port Gibson has not put forward a legal theory to support the
attorney defendants’ liability. Mem. Supp. p. 5, ECF No. 23. Port
Gibson argues that this Court has already determined in a prior
case whether the claim for legal malpractice can survive a Rule 12
(b)(6) motion. See City of Port Gibson v. FNBS Investments, Inc.,
No. 5:13cv121, 2014 WL 896770, at *4 (S.D. Miss. Mar. 6, 2014).
Accordingly, the Court must determine whether issue preclusion
applies in this case.
Federal common law governs the preclusive effect given to
issues decided by a prior federal judgment when considered by a
federal court sitting in diversity. Rabo Agrifinance, Inc. v. Terra
8
The Court first finds that the attorney defendants’
request to dismiss Count II appears to be in error. Count II
relates to damages flowing from Port Gibson’s claim against the
former mayor and others. See Crossclaim p. 13-17. Port Gibson’s
crossclaim against the attorney defendants contains its own
section related to damages. See Crossclaim p. 13 ¶ 9. Further,
Section three of Port Gibson’s answer appears to relate
exclusively to its claim for malpractice against the attorney
defendants, and Port Gibson makes no other claim against them.
Therefore, the Court will construe the motion as one to dismiss
just the claim made against the attorney defendants.
11
XXI, Ltd., 583 F.3d 348, 353 (5th Cir. 2009). “The parties to the
suits need not be completely identical, so long as the party
against whom estoppel applies had the full and fair opportunity to
litigate the issue in the previous lawsuit.” Id.
[Issue preclusion] is appropriate where four conditions
are met: (i) [t]he issue under consideration in a
subsequent action must be identical to the issue
litigated in a prior action; (ii) [t]he issue must have
been fully and vigorously litigated in the prior action;
(iii) [t]he issue must have been necessary to support the
judgment in the prior case; and (iv) [t]here must be no
special circumstance that would render [issue preclusion]
inappropriate or unfair. The fourth element, special
circumstances rendering [issue preclusion] unfair,
applies only to the use of offensive (non-mutual) [issue
preclusion] by the plaintiff.
Kariuki v. Tarango, 709 F.3d 495, 506 (5th Cir. 2013) (internal
quotations omitted).
The Court finds that the argument fails to meet the third
element of issue preclusion: that the issue was necessary to the
judgment. “If a judgment of a court of first instances is based on
determinations
of
two
issues,
either
of
which
standing
independently would be sufficient to support the result, the
judgment is not conclusive with respect to either issue standing
alone.” Restatement (Second) of Judgments § 27, comment i (1982).
Because the Court’s prior remand order found that claims had been
stated against multiple in-state defendants to nullify complete
diversity of the parties, the determination that a claim had been
stated against one of the attorney defendants was not necessary to
12
the
judgment.
See
FNBS
Investments,
2014
WL
896770,
at
*4.
Therefore, the Court must undertake a Rule 12(b)(6) analysis of the
claim once again.
As stated above, the elements of a legal malpractice claim are
(1) an attorney-client relationship, (2) negligent conduct by the
attorney, and (3) proximate cause. Quintairos, 100 So. 3d at 424.As
to the first element, the Court finds that it has been adequately
pled. As to the second element, Port Gibson alleges that the
attorney defendants misled the city and its administration about
the legality of the terms of the agreement and did not disclose
certain conflicts of interest, violations of the duties of care and
loyalty. As to the third element, Port Gibson alleges that it is
now liable on a contract it would not otherwise have entered into.
Based on the above allegations, the Court finds that Port
Gibson
has
adequately
stated
a
claim
against
the
attorney
defendants for legal malpractice. Therefore, the joint motion to
dismiss will be denied.
II. Order
IT IS HEREBY ORDERED that the Defendants’, Guydon Love LLP,
Edsel J. Guydon, and Jwon Nathaniel, Motion to Dismiss [docket
entry no. 11] is DENIED.
FURTHER ORDERED that the Defendants’, Guydon Love LLP, Edsel
J. Guydon, and Jwon Nathaniel, Joint Motion to Dismiss [docket
13
entry no. 22] is DENIED.
SO ORDERED this the 12th day of November 2014.
/s/ David Bramlette
UNITED STATES DISTRICT JUDGE
14
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