McAllister v. Watkins et al

Filing 31

AMENDED ORDER, re moot 8 Defendant Travis W. Watkins Motion to Dismiss ; denying 9 Defendant Travis W. Watkins, P.C.s Motion to Dismiss ; denying 19 Defendant Travis W. Watkins Motion to Dismiss Plaintiffs Amended Complaint. Signed by Honorable Robin J. Cauthron on 7/15/15. (lg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
CAMRON McALLISTER,
Plaintiff,
vs.
TRAVIS W. WATKINS, and
TRAVIS W. WATKINS, P.C.,
Defendants.

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Case Number CIV-15-371-C

AMENDED MEMORANDUM OPINION AND ORDER
Before the Court are Defendant Travis W. Watkins’ Motion to Dismiss Plaintiff’s
Amended Complaint (Dkt. No. 19) and Defendant Travis W. Watkins, P.C.’s Motion to
Dismiss (Dkt. No. 9). Plaintiff filed Responses (Dkt. Nos. 15 & 26), and Defendants have
replied (Dkt. Nos. 17 & 28). The Motions are at issue.
I. BACKGROUND
Plaintiff Camron McAllister was the sole member of National Sales, L.L.C., a
canceled limited liability company. Defendant Travis W. Watkins is an attorney and the
owner of Defendant Travis W. Watkins, P.C. (“Watkins, P.C.”). In or around August 2012,
Plaintiff hired Defendants to perform legal services on tax-related matters. At that time, the
Parties entered into an Engagement Agreement. On April 7, 2015, Plaintiff filed the original
Complaint (Dkt. No. 1) against Defendants, alleging breach of contract and professional
negligence. Plaintiff filed the Amended Complaint (Dkt. No. 13) after Defendants each filed
a Motion to Dismiss (Dkt. Nos. 8 & 9). Because Watkins has filed a Motion to Dismiss
Plaintiff’s Amended Complaint, Watkins’ original Motion to Dismiss (Dkt. No. 8) is moot.

The Court will construe Watkins, P.C.’s Motion to Dismiss (Dkt. No. 9) as a motion to
dismiss the amended complaint. Defendants argue for dismissal under Fed. R. Civ. P.
12(b)(6) for failure to state a claim. Watkins argues Plaintiff’s claims must fail because
Watkins is not a party to, and is not personally bound to, the Engagement Agreement.
Watkins, P.C. argues that Plaintiff has improperly fused tort and contract remedies and that
Plaintiff cannot recover punitive damages for breach of contract. Both Defendants assert that
Plaintiff cannot establish a claim of legal negligence and that Plaintiff caused his own
injuries.
II. STANDARD OF REVIEW
The Supreme Court has made clear that to survive a motion to dismiss, a complaint
must contain enough allegations of fact which, taken as true, “state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged. The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a
defendant has acted unlawfully.
Iqbal, 556 U.S. at 678 (internal citations omitted). At the dismissal stage, the Court will
accept all of Plaintiff’s well-pleaded factual allegations as true and view them in the light
most favorable to Plaintiff. Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir.
2007). However, “conclusory allegations that lack ‘supporting factual averments are
insufficient to state . . . claim[s] on which relief can be based.’” In re Marsden, 99 F. App’x
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862, 866 (10th Cir. 2004) (quoting Hall v. Bellmon, 935 F.2d 1106, 1109-10 (10th Cir.
1991)).
III. LEGAL ANALYSIS
A. Breach of Contract
Watkins asserts that he signed the Engagement Agreement solely as a representative
of Watkins, P.C., is not a party to the contract, and consequently cannot be held liable for any
breach of the contract. Watkins argues the language in the first paragraph and in the
signature line of the Engagement Agreement support this assertion. Watkins also asserts that
the actions complained of exceed the scope of representation provided under the terms of the
contract. However, viewing the language of the Engagement Agreement and making
determinations on its meaning and scope would exceed the Court’s authority at the dismissal
stage. “The court’s function on a Rule 12(b)(6) motion is not to weigh potential evidence
that the parties might present at trial, but to assess whether the plaintiff’s complaint alone is
legally sufficient to state a claim for which relief may be granted.” Miller v. Glanz, 948 F.2d
1562, 1565 (10th Cir. 1991). To establish a breach of contract claim, Plaintiff must prove:
“1) formation of a contract; 2) breach of the contract; and 3) damages as a direct result of the
breach.” Dig. Design Grp., Inc. v. Info. Builders, Inc., 2001 OK 21, ¶ 33, 24 P.3d 834, 843.
In the Amended Complaint1, Plaintiff alleges that he and National Sales, through the

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Plaintiff’s Amended Complaint (Dkt. No. 13) uses headings to clearly designate both a
breach of contract claim and a professional negligence claim. Each headed section contains
additional allegations specific to the claim asserted. These changes have rendered moot Watkins,
P.C.’s argument that Plaintiff has improperly fused tort and contract remedies.
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Engagement Agreement, hired both Defendants to represent Plaintiff and National Sales in
a tax dispute with the Internal Revenue Service (“IRS”). Plaintiff further alleges that
Watkins was the signator and the only provider of legal services actually named in the
contract; that Watkins, P.C. is liable as Watkins’ employer; that Plaintiff paid a $50,000 fee
but Defendants failed to perform the work required by the contract; and that Defendants’
actions harmed Plaintiff by increasing the amount of debt owed to the IRS and causing the
continuation of an IRS lien. Viewing these allegations as true and in a light most favorable
to Plaintiff, the Court finds Plaintiff has sufficiently pleaded a claim of breach of contract
against both Defendants.
B. Professional Negligence
To establish a claim of professional negligence against an attorney, Plaintiff must
prove the following:
(1) the existence of an attorney-client relationship; (2) breach of a lawyer’s
duty to the client; (3) facts constituting the alleged negligence; (4) a causal
nexus between the lawyer’s negligence and the resulting injury (or damage);
and (5) but for the lawyer’s conduct, the client would have succeeded in the
action.
Manley v. Brown, 1999 OK 79, ¶8, 989 P.2d 448, 452 (emphasis omitted). Watkins asserts
that Plaintiff “has failed to plausibly establish” that Watkins owed Plaintiff any legal duty
because Watkins was not a party to the contract and did not agree to provide services to
Plaintiff. (Def.’s Watkins Br., Dkt. No. 19, at 8.) Both Defendants assert that Plaintiff, and
not the Defendants, caused the alleged injuries.

These arguments require factual

determinations that exceed the Court’s authority at the dismissal stage. Miller, 948 F.2d at
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1565. As discussed above, the Court’s function at this stage is to assess whether Plaintiff’s
allegations, accepted as true, state a plausible claim for relief. Plaintiff alleges the following:
that Defendants and Plaintiff maintained an attorney-client relationship; that Defendants
provided legal advice to Plaintiff and promised to take action on behalf of Plaintiff; that
Defendants breached their duties to provide Plaintiff with competent and diligent
representation by abandoning a valid liability defense; that the resulting injuries, including
the increase in Plaintiff’s debt owed to the IRS, were foreseeable; and that but for
Defendants’ conduct that debt would have been entirely or substantially reduced. These
allegations are sufficient to state a claim of professional negligence against both Defendants.
C. Punitive Damages
Watkins, P.C. asserts that Plaintiff’s claim for punitive damages must be dismissed
because punitive damages cannot be recovered for breach of contract. Watkins, P.C.’s
argument is procedurally improper under Fed. R. Civ. P. 12(b)(6). See SAB One, Inc. v.
Travelers Indem. Co. of Conn., No. CIV-14-1085-D, 2014 WL 6901741, at *2 (W.D. Okla.
Dec. 5, 2014) (unpublished order) (“A Rule 12(b)(6) motion tests the sufficiency of a claim
rather than a prayer for relief.”) However, the Court will construe Watkins, P.C.’s motion
as a motion to strike immaterial matter from the pleading under Fed. R. Civ. P. 12(f).
Watkins, P.C. is correct that “[g]enerally, Oklahoma law prohibits the award of punitive
damages in a contract action.” Zenith Drilling Corp. v. Internorth, Inc., 869 F.2d 560, 565
(10th Cir. 1989). However, Plaintiff has sufficiently pleaded a professional negligence claim
and, if successful, may recover punitive damages under that tort claim. See Okla. Stat. tit.
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23, § 9.1 (“In an action for the breach of an obligation not arising from contract, the jury, in
addition to actual damages, may . . . award punitive damages.”) Thus, punitive damages are
available in this case only if Plaintiff prevails on the professional negligence claim, and
Plaintiff’s request for punitive damages should not be stricken from the Amended Complaint.
D. Personal Liability of Watkins
Watkins argues that he cannot be held liable for the actions of Watkins, P.C. because
officers and employees of a corporation generally are not liable to third persons for acts of
the corporation. Even assuming arguendo that Watkins is not party to the Engagement
Agreement, Watkins’ argument is without merit. Watkins relies on Am. Nat’l Bank & Trust
Co. of Shawnee v. Clark & Van Wagner, Inc., 1984 OK CIV APP 37, 692 P.2d 61.
However, the Oklahoma Court of Civil Appeals in that case rejected an argument that the
professional corporation shielded the individual attorneys from liability to repay an excessive
fee. Id. at ¶¶ 25-35, 692 P.2d at 66-68. The Oklahoma Court of Civil Appeals held “the
professional corporation was never intended as a shield to protect individual attorneys from
liability for their actions.” Id. at ¶29, 692 P.2d at 67; see also Okla. Stat. tit. 18, § 812
(stating that Oklahoma’s Professional Entity Act “does not alter any law applicable to the
relationship between a person rendering professional services and a person receiving such
services, including liability arising out of such professional services”). Plaintiff has
sufficiently pleaded claims of breach of contract and professional negligence against
Watkins, and the existence of the professional corporation does not automatically shield
Watkins from potential liability under those claims.
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IV. CONCLUSION
Accordingly, Defendant Travis W. Watkins’ Motion to Dismiss Plaintiff’s Amended
Complaint (Dkt. No. 19) is DENIED. Defendant Travis W. Watkins, P.C.’s Motion to
Dismiss (Dkt. No. 9) is DENIED. Defendant Travis W. Watkins’ Motion to Dismiss (Dkt.
No. 8) is MOOT.
IT IS SO ORDERED this 15th day of July, 2015.

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