Northwest Public Communications Council et al et al
Filing
63
Opinion and Order: The Court GRANTS Defendants Request 48 for Judicial Notice and DENIES Defendants Motion 45 for Summary Judgment. The Court also directs the parties to confer and to submit a Joint Status Report no later than October 17, 2014, to present their recommendations for case-management procedures and their proposed dates for the efficient resolution of this matter within a reasonable time. See attached Opinion and Order for full text. Signed on 09/23/2014 by Judge Anna J. Brown. (bb)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
COMMUNICATION MANAGEMENT
SERVICES, LLC, et al.,
Plaintiff,
v.
BROOKS L. HARLOW, Attorney at
Law,
Defendants.
FRANKLIN G. PATRICK
P.O. Box 231119
Portland, OR 97281
(503) 245-2828
Attorney for Plaintiffs
JEFFREY M. PETERSON
STEVEN K. BLACKHURST
Ater Wynne, LLP
1331 N.W. Lovejoy Street
Suite 900
Portland, OR 97209-2785
(503) 226-8635
Attorneys for Defendant
1 - OPINION AND ORDER
3:12-cv-01923-BR
OPINION AND ORDER
BROWN, Judge.
This matter comes before the Court on Defendant Brooks L.
Harlow’s Request (#48) for Judicial Notice and Motion (#45) for
Summary Judgment.
For the reasons that follow, the Court GRANTS Defendant’s
Request (#48) for Judicial Notice and DENIES Defendant’s Motion
(#45) for Summary Judgment.
BACKGROUND
The following facts are undisputed and taken from the
parties’ submissions on summary judgment.
I.
Underlying Litigation Background
In 1996 Congress passed the Telecommunications Act of 1996
(TCA), which amended the Federal Communications Act of 1934 and
substantially modified the regulatory scheme governing the
payphone industry and directed the Federal Communications
Commission (FCC) to issue regulations implementing the provisions
of this new law.
Telecommunications Act of 1996, Pub. L. No.
104-104, 110 Stat. 56 (codified as amended in scattered sections
of 47 United States Code).
The FCC adopted regulations that
required carriers such as Qwest to set payphone service rates
that were based on the actual cost of providing the service
together with a reasonable amount for overhead.
Northwest Public Communications Council (NPCC) is a regional
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trade association representing companies providing public
payphone services in Idaho, Montana, Oregon, and Washington.
Plaintiffs are Payphone Service Providers (PSPs) and are current
or former members of NPCC who purchased network payphone services
from Qwest Communications Corporation.
Those services included
Public Access Line services (PAL) and fraud-protection services
(CustomNet).
Defendant is an attorney and former partner of the Miller
Nash law firm who represented NPCC when he was at Miller Nash.
Defendant also represented individual members of NPCC in various
matters, including litigation against Qwest in the Western
District of Washington.
See Davel Commc’ns, Inc. v. Qwest Corp.,
460 F.3d 1075 (9th Cir. 2006).
In December 1995 the Oregon Public Utilities Commission
(PUC) opened a general rate case (the Rate Case) to establish new
rates for all of Qwest’s Oregon telecommunications services,
including its payphone services.
Three months after the commencement of the Rate Case,
Congress enacted the TCA pursuant to which payphone owners were
to be compensated for all calls made from their payphones,
including calls using 800 numbers, credit cards, and other
mechanisms that permitted calls without depositing coins into the
payphones.
Under the TCA intrastate payphone rates were subject
to federal regulations for the first time, and the TCA required
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such rates to be compliant with the “new services test” (NST).
Thus, the enactment of the TCA fundamentally changed the
regulation of payphones during the pendency of the Rate Case.
In May 2001 NPCC (represented by Defendant) filed a
complaint with the PUC seeking refunds of PAL rates that
allegedly were in excess of those permitted by the TCA and
certain FCC orders (the Refund Case).
Although the Refund Case
was filed separately from the Rate Case, it would be affected by
the outcome of the Rate Case.
Thus, the PUC immediately stayed
the Refund Case in accordance with an agreement between the
parties.
In September 2001 the PUC concluded the Rate Case and set
rates that it believed were compliant with the 1996 amendments to
the FCA.
In March 2002 Defendant represented NPCC in an appeal of the
PUC’s final determination in the Rate Case.
In 2003 Qwest implemented lower rates for the PAL and
CustomNet services that it provided to PSPs.
In 2004 the Oregon Court of Appeals ruled in favor of NPCC
and rejected the PUC’s rate order as to payphone services,
remanded the administrative proceeding to the PUC, and directed
the PUC to reconsider the proposed rates in light of recent FCC
orders.
In 2005 while the Rate Case was pending on remand, the
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administrative law judge assigned to the Refund Case abated that
action in light of pending additional guidance from the FCC about
the application of one of the FCC’s orders.
In 2007 the PUC adopted a stipulation between Qwest and NPCC
that the lower rates adopted by Qwest in 2003 complied with the
FCC’s orders and regulations, which effectively ended the Rate
Case.
In February 2009 the PUC reactivated the Refund Case at
NPCC’s request when it became evident that further guidance from
the FCC was not forthcoming.
In part because NPCC in the
original Refund Case complaint only pled claims for refunds of
PAL rates, NPCC moved to amend its complaint to add claims
related to CustomNet refunds.
In May 2009 the PUC denied NPCC’s motion to amend to include
claims for CustomNet refunds on the ground that the CustomNet
claims did not relate back to the initial claim for PAL refunds
and, therefore, those claims were barred by the statute of
limitations.
On approximately July 22, 2009, NPCC and the individual PSPs
hired Plaintiffs’ current counsel, Frank Patrick, to replace
Defendant.
Prior to assuming representation, Patrick told
Plaintiffs that they needed to file a case in the FCC or the
United States District Court to protect claims that were not
before the PUC (i.e., to obtain refunds) and that they had much
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larger claims for damages against Qwest that Defendant had not
asserted on their behalf.
Patrick also specifically informed
Plaintiffs that he was concerned the PUC did not have
jurisdiction over the Refund Case claims because he believed the
FCC or United States District Court had exclusive jurisdiction
over claims arising under the TCA.
After being retained by Plaintiffs, Patrick conducted a full
review of the complex history of the litigation before the PUC.
On completion of this review, Patrick informed Plaintiffs in
October 2009 that:
1)
In addition to the refund claims, there were other
claims for damages and a potential federal antitrust
claim;
2)
A number of state-law claims existed that provided
independent bases for recovery, including recovery of
the unpled CustomNet overcharges;
3)
State-law damage claims exceeded the potential federal
damage claims; and
4)
If the PUC did not have jurisdiction over the claims in
the Refund Case, such claims must be filed before the
FCC or the United States District Court no later than
November 15, 2009, to avoid a two-year statute of
limitations.
Patrick also told Plaintiffs that any
applicable statute of limitations would be tolled under
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equitable principles even if the statutory period had
run.
Accordingly, on November 13, 2009, NPCC and Plaintiffs filed
an action in this Court asserting federal and state-law claims
against Qwest (the Federal Action).
See N.W. Pub. Commc’ns
Council v. Qwest Corp., No. 3:09-cv-01351-BR.
Also in November 2009 Plaintiffs, represented by Patrick,
again moved to amend their complaint before the PUC to add claims
for CustomNet refunds, but the PUC denied their motion in
February 2010.
Plaintiffs appealed that ruling to the Oregon
Court of Appeals, but the appellate court dismissed the
interlocutory appeal on September 9, 2010, on the ground that the
PUC ruling was not an appealable final order.
On October 25, 2010, this Court dismissed Plaintiffs’
federal-law claims on statute of limitations grounds; declined to
exercise supplemental jurisdiction over Plaintiffs’ state-law
claims; and, accordingly, dismissed the Federal Action in its
entirety.
See N.W. Pub. Commc’ns Council v. Qwest Corp., No.
3:09-cv-01351-BR (#66), 2010 WL 4260341 (D. Or. Oct. 25, 2010).
Plaintiffs moved the Court to reconsider its dismissal of the
Federal Action on November 22, 2010.
On March 16, 2011, the
Court issued an Order in which it adhered to its October 25, 2010
decision.
The Ninth Circuit Court of Appeals affirmed the
Court’s decision.
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Shortly after the Court issued its October 25, 2010,
decision in the Federal Action, Patrick advised Plaintiffs to
obtain malpractice counsel.
At this time Patrick advised
Plaintiffs that Patrick was uncertain whether the malpractice
claims had accrued yet because the damages under the state-law
claims exceeded the potential damages in the dismissed federallaw claims.
Plaintiffs believed they could not afford
malpractice counsel, however, so Patrick agreed to undertake a
limited effort to attempt to reach a tolling agreement with
Defendants.
The PUC issued a final order in the Refund Case in 2011,
which Plaintiffs appealed to the Oregon Court of Appeals.
That
appeal remains pending.
On January 13, 2014, Plaintiffs instituted an action against
Qwest in Oregon state court (the State Action) in pursuit of the
state-law claims over which this Court declined to exercise
supplemental jurisdiction in the Federal Action.
Qwest removed
the State Action to this Court on February 13, 2014, and the
State Action is now pending before this Court.
See Commc’ns
Mgmt. Servs., LLC v. Qwest Corp., No. 3:14-cv-00249-BR.
II.
Malpractice Action Background
On October 25, 2012, two years after the Court’s Order
dismissing the Federal Action, Plaintiffs filed this legal
malpractice action against Defendant.
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In their Third Amended
Complaint (TAC), Plaintiffs allege Defendant was negligent in
connection with his representation of Plaintiffs “in many
different matters concerning claims under Oregon law and the
Federal Telecommunications Acts before the [PUC] and the [FCC]
and the Courts of Washington and Oregon.”
TAC at ¶ 12.
See also
TAC ¶¶ 21-27.
Specifically, Plaintiffs allege:
(1)
Defendant failed to timely file all the
Plaintiffs’ claims under the TCA against the PUC
and Qwest in appropriate fora and as a result all
Plaintiffs’ claims under the TCA were deemed time
barred;
(2)
Defendant failed to assert any of Plaintiffs’
claims under Oregon law in the Refund Case or to
seek payment of refunds under Oregon law in the
Rate Case once the final rates were established
that were lower than the challenged rates. As a
result, efforts to amend the complaint in the
Refund Case were denied and some of Plaintiffs’
Oregon law claims may be time barred if amendment
is not allowed on appeal;
(3)
Defendant failed to adequately plead the claims of
the Plaintiffs for recovery at the PUC in the Rate
Case and the Refund Case [by failing] to assert
refund claims under Oregon law [,]. . . other
claims related to discriminatory access to Qwest’s
telecommunications network in violation of the TCA
and Oregon law[,] and . . . claims in federal
and/or state court that were outside the subject
matter jurisdiction of the PUC;
(4)
Defendant failed to advise Plaintiffs about the
appropriate laws on the statute of limitations of
[their claims]; and
(5)
Defendant failed to advise Plaintiffs of the
implications of Defendant’s failed efforts.
TAC at ¶¶ 23-27.
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On September 6, 2013, Plaintiffs filed a Motion (#35) to
Stay this action until the State Action and Plaintiffs’ pending
appeal of the PUC order before the Oregon Court of Appeals are
resolved.
By Order (#42) on October 30, 2013, this Court denied
the Motion to Stay without prejudice for the purpose of
permitting litigation of the statute-of-limitations issues and
limited discovery relevant to those issues.
On March 28, 2014, Defendant filed his Motion (#45) for
Summary Judgment and Request (#48) for Judicial Notice.
Defendant’s Motion and Request were fully briefed on May 27,
2014.
On July 25, 2014, the Court directed the parties to
supplement their briefing to address more specifically the
question whether, as Plaintiffs assert, their legal malpractice
claims are not ripe, and, therefore, Defendant’s Motion for
Summary Judgment is premature.
After the parties’ supplemental briefing (#55, #56) the
Court heard oral argument on August 27, 2014, after which the
Court permitted the parties to submit additional supplemental
memoranda.
DEFENDANT’S REQUEST (#48) FOR JUDICIAL NOTICE
Defendant requests the Court to take judicial notice
pursuant to Federal Rule of Evidence 201(b) of a number of
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documents filed in a number of actions before the PUC as well as
this Court that are attached to the Declaration (#49) of Jeff M.
Peterson in Support of Defendant’s Motion for Summary Judgment
and Request for Judicial Notice.
Plaintiffs do not object to
Defendant’s request.
Pursuant to Federal Rule of Evidence 201 a court may take
judicial notice of a fact that is not subject to reasonable
dispute because it:
(1)
is generally known within the trial court’s
territorial jurisdiction; or
(2)
can be accurately and readily determined from
sources whose accuracy cannot reasonably be
questioned.
The Court concludes the documents that are the subject of
Defendant’s Request meet the criteria of Rule 201 and, therefore,
the Court GRANTS Defendant’s Request (#48) for Judicial Notice.
DEFENDANT’S MOTION (#45) FOR SUMMARY JUDGMENT
I.
Standards
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”
Washington Mut. Ins. v. United
States, No. 09-36109, 2011 WL 723101, at *8 (9th Cir. Mar. 3,
2011).
See also Fed. R. Civ. P. 56(a).
The moving party must
show the absence of a dispute as to a material fact.
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Rivera v.
Philip Morris, Inc., 395 F.3d 1142, 1146 (9th Cir. 2005).
In
response to a properly supported motion for summary judgment, the
nonmoving party must go beyond the pleadings and show there is a
genuine dispute as to a material fact for trial.
burden is not a light one . . . .
Id. “This
The non-moving party must do
more than show there is some ‘metaphysical doubt’ as to the
material facts at issue.”
In re Oracle Corp. Sec. Litig., 627
F.3d 376, 387 (9th Cir. 2010)(citation omitted).
A dispute as to a material fact is genuine “if the evidence
is such that a reasonable jury could return a verdict for the
nonmoving party.”
Villiarimo v. Aloha Island Air, Inc., 281 F.3d
1054, 1061 (9th Cir. 2002)(quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)).
The court must draw all
reasonable inferences in favor of the nonmoving party.
v. Verity, Inc., 606 F.3d 584, 587 (9th Cir. 2010).
Sluimer
“Summary
judgment cannot be granted where contrary inferences may be drawn
from the evidence as to material issues.”
Easter v. Am. W. Fin.,
381 F.3d 948, 957 (9th Cir. 2004)(citing Sherman Oaks Med. Arts
Ctr., Ltd. v. Carpenters Local Union No. 1936, 680 F.2d 594, 598
(9th Cir. 1982)).
A “mere disagreement or bald assertion” that a genuine
dispute as to a material fact exists “will not preclude the grant
of summary judgment.”
Deering v. Lassen Cmty. Coll. Dist., No.
2:07-CV-1521-JAM-DAD, 2011 WL 202797, at *2 (E.D. Cal., Jan. 20,
12 - OPINION AND ORDER
2011)(citing Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir.
1987)).
See also Jackson v. Bank of Haw., 902 F.2d 1385, 1389
(9th Cir. 1990).
When the nonmoving party’s claims are factually
implausible, that party must “come forward with more persuasive
evidence than otherwise would be necessary.”
LVRC Holdings LLC
v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009)(citing Blue Ridge
Ins. Co. v. Stanewich, 142 F.3d 1145, 1149 (9th Cir. 1998)).
The substantive law governing a claim or a defense determines
whether a fact is material.
Miller v. Glenn Miller Prod., Inc.,
454 F.3d 975, 987 (9th Cir. 2006).
If the resolution of a
factual dispute would not affect the outcome of the claim, the
court may grant summary judgment.
II.
Discussion
A.
Jurisdiction
Although Defendant previously argued in his Response (#39)
in Opposition to Plaintiffs’ Motion to Stay that he believed the
Court may not have jurisdiction over this matter, after having
the benefit of discovery Defendant now concedes the Court has
diversity jurisdiction over this legal malpractice matter
pursuant to 28 U.S.C. § 1332.
Accordingly, the only remaining
issue in Defendant’s Motion for Summary Judgment is whether
Plaintiff’s legal malpractice claims are time-barred.
B.
Legal Malpractice Statute of Limitations
To prevail on a claim for legal malpractice in Oregon a
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plaintiff must prove:
conduct.
(1) harm, (2) causation, and (3) tortious
Kaseberg v. Davis Wright Tremaine, LLP, 351 Or. 270,
277 (2011).
“In the legal malpractice context . . . a plaintiff
must show ‘not only that the attorney was negligent, but also
that the result would have been different except for the
negligence.’”
Watson v. Meltzer, 247 Or. App. 558, 565-66
(2011)(quoting Harding v. Bell, 265 Or. 202, 205 (1973)).
An action for legal malpractice in Oregon must be commenced
within two years from the date the claim accrues.
§ 12.110(1).
(1993).
Or. Rev. Stat.
See also Stevens v. Bispham, 316 Or. 221, 223
Oregon courts employ the following discovery rule to
determine when a claim for legal malpractice accrues:
“The
statute of limitations begins to run when the plaintiff knows or,
in the exercise of reasonable care, should have known facts that
would make a reasonable person aware of a substantial possibility
that each of the elements of a claim exists.”
at 278.
Kaseberg, 351 Or.
Thus, pursuant to this discovery rule a malpractice
claim accrues when “the plaintiff is, in fact, harmed and knows,
or in the exercise of reasonable care, should know that the
damage suffered was caused by the defendant's tortious conduct.”
Cairns v. Dole, 195 Or. App. 742, 744-45 (2004)(quoting Stevens,
316 Or. at 227.
It is not necessary, however, that the plaintiff know of all
possible harm because a claim accrues for statute-of-limitations
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purposes “when the plaintiff is aware that he or she has suffered
some harm as a result of the defendant’s alleged negligence.
It
is immaterial that the plaintiff may not have known the full
extent of the damages.”
in original).
Cairns, 195 Or. App. at 751-52 (emphasis
Nonetheless, “‘[t]he threat of future harm, not
yet realized, is not enough.’”
Davies v. United States Nat’l
Bank of Oregon, 274 Or. 663, 668 (1976)(quoting Prosser, The Law
of Torts 143-44 (4th ed. 1971)).
“Application of the discovery
rule presents a factual question for determination by a jury
unless the only conclusion that a jury could reach is that the
plaintiff knew or should have known the critical facts at a
specified time and did not file suit within the requisite time
thereafter.”
Kaseberg, 351 Or. at 278.
In their Third Amended Complaint Plaintiffs allege they have
suffered economic damages, including attorneys’ fees paid to
Defendant, as follows:
(1)
The loss of rights, remedies, and damages against
Qwest to be determined by a jury, for lost refunds
and interest accrued as provided under the TCA and
Oregon Law;
(2)
For the loss of profits and prospective business
revenues from the premature termination of
operations and accrued interest;
(3)
For the loss of profits and prospective business
revenues from the discriminatory denial of access
to Qwest’s telecommunications network in Oregon
and accrued interest; and
15 - OPINION AND ORDER
(4)
Attorney fees and costs paid by Plaintiffs to
Defendant, in an amount to be determined by a
jury.
TAC at ¶ 30.
As noted, Plaintiffs filed this legal malpractice action on
October 25, 2012.
Thus, to be entitled to summary judgment on
the ground that Plaintiffs’ claims are barred by the two-year
statute of limitations, Defendant must demonstrate as a matter of
undisputed fact and law that Plaintiffs’ legal malpractice claim
accrued before October 25, 2010.
Plaintiffs contend Defendant’s statute-of-limitations
defense fails because Plaintiffs have not yet suffered harm.
In
particular, Plaintiffs assert their legal malpractice claims have
not yet accrued and will not accrue unless and until they lose
their state-law claims in the State Action, which, as noted, has
been removed to and remains pending in this Court.
Plaintiffs
also assert they will not know whether they have been harmed by
Defendant’s alleged negligence until those state-law claims have
been finally adjudicated because the state-law claims provide
independent bases for recovery.
Although Defendant does not dispute all of Plaintiffs’
substantive damages may be recovered through his state-law
claims, he nevertheless contends Plaintiffs knew they were
16 - OPINION AND ORDER
injured no later than October 2009 when Patrick informed them of
his view of Defendant’s alleged negligence.
In particular,
Defendant argues Plaintiffs incurred economic harm in the form of
attorneys’ fees when Plaintiffs paid those fees to Defendant
during the course of his representation of them and, in any
event, prior to July 2009 when Patrick replaced Defendant as
Plaintiffs’ counsel.
The Court notes Plaintiffs’ alleged harms are divisible into
two general categories which raise different time-limitation
issues:
(1)
The deprivation of the substantive relief they
should have received from the claims that Defendant allegedly
litigated improperly, the claims that Defendant failed to plead
before the PUC, and the business damages that accrued as a
consequence of Defendant’s alleged negligence; and
(2)
The attorneys’ fees that Plaintiffs paid to
Defendant during the time that Defendant allegedly negligently
represented Plaintiffs.
1.
Substantive Relief
For purposes of their malpractice claim, the Court
concludes on this record that Defendant has not established as a
matter of undisputed fact and law that Plaintiffs were harmed
before October 25, 2010, as to the substantive relief that they
17 - OPINION AND ORDER
have been seeking in the underlying litigation before the PUC,
Oregon Court of Appeals, and this Court.
Although Plaintiffs may
have known Defendant acted negligently by the time Patrick shared
with Plaintiffs the results of his review of the case in October
2009, Plaintiffs still have not suffered a harm caused by that
negligence because Plaintiffs may still be able to recover those
same refunds and damages via the state-law claims and from their
pending appeal.
In other words, when Patrick advised Plaintiffs
of the alleged deficiencies in Defendant’s representation in
October 2009, Plaintiffs only were aware of the threat of future
harm with respect to the substantive relief they sought because
it had not been established in any proceeding that the claims
were not timely and, based on Patrick’s advice, they believed
such relief might still be recoverable through the State Action
or the Federal Action.1
On this record, therefore, the Court concludes
Defendant has not established as a matter of undisputed fact that
Plaintiffs’ knowledge of Defendant’s alleged legal errors was
sufficient to trigger accrual of Plaintiffs’ legal malpractice
1
The Court does not make any finding as to whether it was
reasonable for Plaintiffs to believe that their relief could be
obtained through the various actions Patrick filed. Such a
factual determination is inappropriate on summary judgment. See
Cairns, 195 Or. App. at 745.
18 - OPINION AND ORDER
claim as to the substantive relief they seek more than two years
before they commenced this action.
2.
See Davies, 274 Or. at 668.
Attorneys’ Fees
As noted, Plaintiffs also seek to recover the
attorneys’ fees that they paid to Defendant in the course of his
allegedly negligent representation.
Unlike the substantive
relief that Plaintiffs seek, at least some of the attorneys’ fees
that Plaintiffs paid to Defendant do not appear to be recoverable
through any other means.
Nevertheless, attorneys’ fees paid to
the defendant in a legal malpractice action are only recoverable
harm if the plaintiff establishes the fees would not have been
paid but for the defendant attorneys’ negligence.
Rowlett v.
Fagan, 262 Or. App. 667, 697 (2014).
Although Defendant’s alleged negligence here may be a
“but for” cause for some fees paid by Plaintiffs to Defendant
(such as fees paid to litigate the motion to amend before the
PUC), there is not any evidence in the summary-judgment record
that establishes the amount of fees that Plaintiffs paid to
Defendant nor that identifies the services for which those fees
were paid.
At a minimum, therefore, a genuine dispute of
material fact exists as to whether Defendant’s negligence was the
cause of Plaintiffs incurring attorneys’ fees and as to when
Plaintiffs became aware or should have become aware of this
19 - OPINION AND ORDER
particular form of alleged harm.
In summary, the Court concludes Defendant has failed to show
as a matter of undisputed fact and law that Plaintiffs’ legal
malpractice claim accrued before October 25, 2010.
Accordingly,
the Court concludes summary judgment as to Defendant’s statuteof-limitations defense is inappropriate.
CONCLUSION
For these reasons, the Court GRANTS Defendant’s Request
(#48) for Judicial Notice and DENIES Defendant’s Motion (#45) for
Summary Judgment.
The Court also directs the parties to confer and to submit a
Joint Status Report no later than October 17, 2014, to present
their recommendations for case-management procedures and their
proposed dates for the efficient resolution of this matter within
a reasonable time.
IT IS SO ORDERED.
DATED this 23rd day of September, 2014.
/s/ Anna J. Brown
____________________________
ANNA J. BROWN
United States District Judge
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