Wright v. Linebarger Goggan Blair & Sampson, LLP

Filing 37

ORDER DENYING 8 Motion to Stay; GRANTING IN PART AND DENYING IN PART 9 Motion to Dismiss; DENYING 15 Motion to Dismiss; GRANTING 30 Motion to Substitute; DENYING 32 Motion to Dismiss. Signed by Judge Samuel H. Mays, Jr., on 03/22/2011. (Mays, Samuel)

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION

DARRELL L. WRIGHT, SR. AS THE ADMINISTRATOR OF THE ESTATE OF LENORA S. WRIGHT, DECEASED, on behalf of itself and all similarly situated persons and entities, Plaintiffs, v. LINEBARGER GOOGAN BLAIR & SAMPSON, LLP, a Texas limited liability partnership, Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No.

10-2304

ORDER ON MOTIONS

Plaintiff

Darrell

L.

Wright,

Sr.

("Plaintiff"),

administrator of the Estate of Lenora S. Wright ("Estate"), in his representative situated, capacity alleges and that on behalf of all others Googan

similarly

Defendant

Linebarger

Blair & Sampson, LLP ("Linebarger") violated Tennessee law by charging delinquent "City"). unlawfully property high taxes attorney's owed to the fees City for of collecting (the

Memphis

(First Am. Compl. ¶ 9, ECF No. 5.)

Five motions are

now before the Court. On May 14, 2010, Linebarger filed a motion to stay the case pending the resolution of a similar state court action. (See

Mot. to Stay Proceeding Pending Resolution of Parallel State Court Action, ECF No. 8.) June 2, 2010. Plaintiff responded in opposition on

(See Pl.'s Resp. in Opp'n to Def.'s Mot. to Stay

Proceeding Pending Resolution of Parallel State Court Action, ECF No. 17 ("Pl.'s Resp. to Mot. to Stay").) Linebarger replied

on June 4, 2010, and Plaintiff filed a sur-reply on June 11, 2010. (See Def.'s Reply to Pls.' Resp. in Opp'n to Def.'s Mot.

to Stay Proceeding Pending Resolution of Parallel State Court Action, ECF No. 19; Pl.'s Surreply in Opp'n to Def.'s Mot. to Stay Proceeding Pending Resolution of Parallel State Court

Action, ECF No. 20.) On May 14, 2010, Linebarger filed a motion to dismiss. (See Mot. to Dismiss, ECF No. 9.) After a Court-approved (See

extension of time, Plaintiff responded on June 24, 2010.

Pl.'s Unopposed Mot. for Extension of Time and Mem. in Supp., ECF No. 23; Order Granting Pl.'s Unopposed Mot. for Extension of Time, ECF No. 24; Pl.'s Resp. in Opp'n to Def.'s Mot. to

Dismiss, ECF No. 28.)

Linebarger filed a supplemental motion to (See Supplemental Mot. to Dismiss,

dismiss on July 23, 2010. ECF No. 32.)

Although Plaintiff has not responded, that motion

is now before the Court. On May 24, 2010, Linebarger filed a motion to dismiss for lack of standing. ECF No. 15.) On (See Mot. to Dismiss for Lack of Standing, June 30, 2010, Plaintiff responded in

2

opposition,

and

Darrell

L.

Wright,

Sr.,

Brenda

J.

Wright

Youngblood, Robert L. Wright, Jr., Christine L. Wright, Larry D. Wright, and Jacquelyn Wright Johnson (collectively, "Movants") filed a motion for leave to substitute themselves as party

plaintiffs.

(See Pl.'s Resp. in Opp'n to Def.'s Mot. to Dismiss

for Lack of Standing, ECF No. 29; Mot. for Leave to Substitute as Party Pls., ECF No. 30.) Linebarger responded in opposition (See Def.'s Resp. to Movant's

to Movants' motion to substitute.

[sic] Mot. for Leave to Substitute as Party Pls. and to Grant Def.'s Renewed Mot. to Dismiss, ECF No. 31.) For the following reasons, the Court DENIES Linebarger's supplemental motion to dismiss, DENIES Linebarger's motion to stay, GRANTS IN PART and DENIES IN PART Linebarger's motion to dismiss, DENIES Linebarger's motion to dismiss for lack of

standing, and GRANTS Movants' motion for leave to substitute as party plaintiffs. I. Background1 is Texas-based law firm that specializes in

Linebarger

collecting unpaid personal and property taxes for governmental entities. (First Am. Compl. ¶¶ 7, 9.) In March 2004, the City

contracted with Linebarger to collect delinquent property taxes from individuals and entities whose real property was within the

1

Unless otherwise stated, all facts in this part come from Plaintiff's First Amended Complaint. (See First Am. Compl., ECF No. 5.)

3

City's jurisdiction for taxation purposes.

(Id. ¶¶ 10, 17.)

Based on its contract, Linebarger has calculated the back taxes owed by City property owners, informed the property owners of those back taxes, and, in some cases, sued them, earning more than $16.5 million in attorney's fees. (Id.) In collecting

taxes, however, Linebarger charged an attorney's fee equal to twenty percent of a person's back taxes, rather than the maximum ten percent permitted by Tennessee law. In 2009, Real Plaintiff Property received Tax a (Id. ¶ 11.) Notice (the of Lawsuit and from

Delinquent

Statement

"Notice")

Linebarger about property located on Sun Valley Drive in Memphis that had been owned by Lenora S. Wright ("Wright") before her death (the "Property"). (Id. ¶ 18.) The Notice stated that

Wright had been sued in Chancery Court by the City for $960.33 in back taxes and other charges for the year 2007. (Id. ¶ 19.)

Plaintiff paid the $960.33 requested in the Notice to have the Property removed from the Chancery Court suit and avoid any tax lien on the Property. Plaintiff alleges (Id. ¶¶ 20-23.) that the amount he paid to the City

included an unlawful twenty-percent attorney's fee.

(Id. ¶ 22)

The amount of back taxes on Wright's Property was only $537.87, which would have permitted Linebarger to recover an attorney's fee of approximately $53.98. Notice, however, Linebarger (Id. ¶ 22.) had informed Before sending the the City that the

4

Property

was

to

be

assessed

a

total

of

$203.96

in

"Other

Charges," which included a twenty-percent attorney's fee equal to $107.97. (Id. ¶ 22.) (Id.) The City recorded that amount as owed According to Plaintiff, after he had

on the Property.

paid the City, the City remitted to Linebarger the full twentypercent attorney's fee. (Id. ¶¶ 23, 25.)

Based on the conduct alleged, Plaintiff filed this action on April 22, 2010.2 violation Tenn. of the Ann. (See Compl., ECF No. 1.) Tennessee §§ Consumer Plaintiff alleges Act ("TPCA"), unjust a

Protection

Code

47-18-104(a), and

47-18-104(b); and

enrichment;

negligence;

conversion;

requests

constructive trust, compensatory damages, and punitive damages as relief. (See id. ¶¶ 34-53, 56-57.) Plaintiff alleges that

Linebarger's conduct injured not only the Estate, but thousands of others in Tennessee. (Id. ¶ 26.) Under Federal Rule of

Civil Procedure 23, he seeks to certify a class of individuals who, after March 25, 2005, received similar notices from

Linebarger that included an unlawful attorney's fee and who paid that fee, "the amount of which was (Id. ultimately ¶ 28.) received According by" to

Linebarger

("Class

Members").

Plaintiff, joinder is impracticable, common legal and factual issues predominate, his claims are typical of the Class Members'

Plaintiff amended his original complaint on May 14, 2010. (See First Am. Compl.) This Order relies on the allegations in the First Amended Complaint and refers to that document as the Complaint.

2

5

claims, and he adequately represents those Class Members. id. ¶¶ 29-33.) II. Jurisdiction and Choice of Law asserts that the Class Action Fairness

(See

Plaintiff

Act

("CAFA"), 28 U.S.C. § 1332(d), provides this Court with original jurisdiction over his purported class action. CAFA provides federal courts with original (Comp. ¶¶ 2-3.) jurisdiction over

certain class actions.

See 28 U.S.C. § 1332(d)(2).

Under CAFA,

a "class action" is any civil action filed under Rule 23 of the Federal Rules of Civil Procedure. See id. § 1332(1)(B).

Plaintiff alleges claims on behalf of various Class Members and specifically invokes Rule 23. (See First Am. Compl. ¶ 28.)

Therefore, this Court has original jurisdiction over his class action under 28 U.S.C. § 1332(d)(2) if the other requirements of that provision are satisfied. CAFA alters the jurisdictional rules for actions that, if brought in federal court individually, would otherwise be based on the general grant of diversity jurisdiction provided by 28 U.S.C. § 1332. Paper Prods., See 28 U.S.C. § 1332(d); Freeman v. Blue Ridge Inc., 551 F.3d 405, 407-08 (6th Cir. 2008)

(explaining that CAFA was adopted to ensure that federal court jurisdiction could not be avoided by artful pleading or other strategic gamesmanship) entity is (citations generally a omitted). citizen of Although every an

unincorporated

state

6

where its members are citizens, for purposes of a class action, an unincorporated place See entity of is a citizen and of the whose state laws of it its is

principal organized.

business

under

28 U.S.C. § 1332(d)(10); Ferrell v. Express

Check Advance of SC LLC, 591 F.3d 698, 705 (4th Cir. 2010) (concluding "that the term `unincorporated association' in §

1332(d)(10) refers to all non-corporate business entities"); cf. Abrego v. Dow Chemical Co., 443 F.3d 676, 684 (9th Cir. 2006) (explaining that CAFA's minimal diversity requirement broadened federal omitted). liability court jurisdiction Linebarger organized of is class an actions) (citations limited its

Because

unincorporated Texas law,

partnership

under

with

principal place of business in Austin, Texas, it is a citizen of Texas. See 28 U.S.C. § 1332(d); (First Am. Compl. ¶ 2). does not alter the general rule that a legal

CAFA

representative of a decedent's estate is a citizen of the same state as the decedent. Wright was a Tennessee See 28 U.S.C. § 1332(c)(2). citizen at the time of her Because death,

Plaintiff is a Tennessee citizen for purposes of this action. See id.; (First are Am. Compl. of is ¶ 2). Because states, See Plaintiff CAFA's 28 and

Linebarger diversity

citizens

different satisfied.

minimal §

requirement

U.S.C.

1332(d)(2)(A).

7

CAFA provides federal jurisdiction in class actions where "the matter in controversy exceeds the sum or value of

$5,000,000, exclusive of interest and costs."

See 28 U.S.C. §

1332(d)(2); Everett v. Verizon Wireless, Inc., 460 F.3d 818, 822 (6th Cir. 2006) (citations omitted). Plaintiff alleges that

"the aggregate amount of the Class Members' claims substantially exceeds $5,000,000." (First Am. Compl. ¶ 3.) Linebarger argues

that Plaintiff has failed to meet CAFA's amount in controversy requirement for two reasons. In its supplemental motion to dismiss, Linebarger argues that this Court lacks jurisdiction because Plaintiff has not alleged that any individual Class Member has suffered an injury of more than $75,000. (See Supplemental Mot. to Dismiss; Mem.

of Law in Supp. of Supplemental Mot. to Dismiss 2, ECF No. 32-1 ("Supplemental Mem.") Linebarger relies on a decision by the

Court of Appeals for the Eleventh Circuit holding that, "in a CAFA action originally filed in federal court, at least one of the plaintiffs must allege an amount in controversy that

satisfies the current congressional requirement for diversity jurisdiction provided in 28 U.S.C. § 1332(a)." See Cappuccitti v. DirecTV, Inc., Mem. 611 F.3d 1252, After 1256 (11th Cir. 2010); its

(Supplemental

8-11).

Linebarger

had

filed

motion, however, the Eleventh Circuit vacated that decision and concluded that "CAFA's text does not require at least one

8

plaintiff in a class action to meet the amount in controversy requirement of 28 U.S.C. § 1332(a)." Inc., 623 F.3d 1118, 1120 (11th Cappuccitti v. DirecTV, Cir. 2010) ("Subsequent

reflection has led us to conclude that our interpretation was incorrect.") For class actions originally filed in federal

courts, CAFA's text does not support requiring at least one plaintiff requirement requirement. is not to of meet 28 both U.S.C. the § $75,000 1332(a) amount and in controversy $5,000,000

CAFA's

See 28 U.S.C. § 1332(d)(2). The supplemental

Linebarger's argument motion to dismiss is

well-taken.

DENIED. Linebarger alternatively argues that Plaintiff's asserted amount in controversy that the depends on fees the it unsupported collected legal

conclusion

attorney's

violated

Tennessee law.

(See Mem. of Law in Supp. of Mot. to Dismiss 17("Def.'s Mem. in Supp. of Mot. to Dismiss")

18, ECF No. 9-1.)

For that reason, Linebarger argues that the asserted amount is not plausible under the motion to dismiss standard stated in Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). Supp. of Mot. to Dismiss 17-18.) The plausibility standard does not apply to a plaintiff's allegations about the amount in controversy. See Schultz v. (See Def.'s Mem. in

General R.V. Ctr., 512 F.3d 754, 756 (6th Cir. 2008) (citation

9

omitted). action in

"It is well-settled that `if a plaintiff brings an federal court and a defendant seeks dismissal on

amount-in-controversy grounds, the case will not be dismissed unless it appears that the plaintiff's assertion of the amount in controversy was made in bad faith.'" Id. (quoting Gafford v. Bad faith

Gen. Elec. Co., 997 F.2d 150, 157 (6th Cir. 1993)).

is established only if it appears "to a legal certainty" that the claim is for less than the jurisdictional amount. See id.;

Freeman, 551 F.3d at 409 (applying legal certainty test to the $5 million amount in controversy requirement under CAFA). It does not appear to a legal certainty that the Class Members cannot recover that the asserted amount in controversy. million in

Plaintiff

alleges

Linebarger

earned

$16.5

attorney's fees for collecting back taxes for the City and, in doing so, required Class Members to pay attorney's fees twice the legal limit. (See First Am. Compl. ¶¶ 11, 25.) Assuming

those allegations to be true, they suggest that Linebarger's total unlawful gain could that be Class $8.25 million. Therefore, claims

Plaintiff's

assertion

Members'

aggregated

amount to more than $5,000,000 has not been made in bad faith, and the amount in controversy requirement is satisfied. Schultz, Plaintiff 28 U.S.C. § 1332(d)(2); the 512 F.3d at of 756. 28 See

Because U.S.C. §

has

satisfied

requirements

1332(d)(2)(A), this Court has original jurisdiction.

10

In a diversity action, state substantive law governs. R.R. Co. v. Tompkins, 304 U.S. 64 (1938).

Erie

A federal district

court is required to apply the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 "Otherwise the accident of diversity of disturb equal administration of

U.S. 487, 496 (1941). citizenship would

constantly

justice in coordinate state and federal courts sitting side by side." Id. Where the underlying basis for CAFA jurisdiction is See

diversity, the forum state's choice of law rules apply.

Savedoff v. Access Group, Inc., 524 F.3d 754, 760 n.5, 762 (6th Cir. where 2008) (applying forum state's was choice of on law 28 provisions U.S.C. §

federal

jurisdiction

premised

1332(d)(2)(A)).

Therefore, Tennessee choice of law rules apply.

Plaintiff alleges violation of the TCPA, unjust enrichment, negligence, and conversion. 57.) (See First Am. Compl. ¶¶ 34-53, 56For tort claims, Tennessee

His claims sound in tort.

follows the "most significant relationship" rule, which provides that "the law of the state where the injury occurred will be applied unless some other state has a more significant

relationship to the litigation." Hataway v. McKinley, 830 S.W.2d 53, 59 (Tenn. 1992). The alleged injuries in this case, the

payment of illegal attorney's fees to Linebarger for collecting back property taxes owed to the City, occurred in Tennessee. Plaintiff and Linebarger assume that Tennessee substantive law

11

applies. significant

Neither

alleges to

that the

another

state

has

a

more the

relationship

litigation.

Therefore,

Court will apply Tennessee substantive law. III. Motion to Stay Linebarger has filed a motion urging this Court to stay this action pending the resolution of a state court action. (See Mot. to Stay; Mem. of Law in Supp. of Mot. to Stay

Proceeding Pending Resolution of Parallel State Court Action, ECF No. 8-1 ("Mem. in Supp. of Stay").) When Linebarger's

motion was filed, Holland v. City of Memphis (the "State Court Action"), was pending before the Chancery Court of Shelby

County, Tennessee.

(See Mot. to Stay 1.)

Linebarger argues

that the doctrine of Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976) favors abstention, pending resolution of the State Court Action. Stay 2-3.) (See Mem. in Supp. of

Plaintiff argues that the State Court Action is no (See

bar to proceeding with the action now before the Court. Pl.'s Resp. to Mot. to Stay.) A. Standard of Review

A pending state court action is generally no bar to federal proceedings. omitted). See Colo. River, 424 U.S. at 817 (citations

In "exceptional" circumstances, however, the Colorado

River doctrine permits a federal court to stay an action pending resolution of a similar state action based on judicial economy

12

and federal-state comity. doctrine unflagging provides a

Id. at 817-18. exception federal

When it applies, the to the to "virtually the

narrow of the

obligation

courts

exercise

jurisdiction given them."

Id. at 817; see Caudill v. Eubanks

Farms, Inc., 301 F.3d 658, 660 (6th Cir. 2002) ("Abstention is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it.")

(internal quotation marks and citation omitted). When considering whether the Colorado River doctrine

applies, courts first ask whether there are parallel proceedings in state court. Bates v. Van Buren Twp., 122 F. App'x 803, 806

(6th Cir. 2008) (citing Crawley v. Hamilton Cnty. Comm'rs, 744 F.2d 28, 31 (6th Cir. 1984)); Romine v. Compuserve Corp., 160 F.3d 337, 340 (6th Cir. 1998) (referring to whether cases are parallel as a threshold question). If there are parallel

proceedings, courts consider the factors articulated in Colorado River, as modified by subsequent cases. See Romine, 160 F.3d at

340-41 (collecting factors from Colorado River, 424 U.S. at 81819, Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23-26 (1978), and Will v. Calvert Fire Ins. Co., 437 U.S. 655, 663-67 (1978)). Courts balance those factors to determine

whether abstention is proper based on the particular facts of the case before it. B. Analysis Id. at 341. (citations omitted).

13

Federal and state court proceedings are parallel if they are "substantially similar." Bates, 122 F. App'x at 806;

Romine, 160 F.3d at 340. not required. at 340

Exact identity between the cases is

See Bates, 122 F. App'x at 806; Romine, 160 F.3d omitted). involve As the a same general rule, however, the

(citations

"parallel

proceedings

plaintiff

against

same defendant."

Total Renal Care, Inc. v. Childers Oil Co.,

___F. Supp. 2d.___, No. 10-33-ART, 2010 WL 3871908, at *4 (E.D. Ky. 2010) (citations omitted) (emphasis in original). In the State Court Action, Plaintiffs Charles F. "Frank" Holland, Tredway, Mary and Lou Martha Holland, D. William Bartholomew, (the Donald B.

"Betty"

Tredway

"Named

State

Plaintiffs") allege that they paid unlawful attorney's fees to the City when paying delinquent property taxes. Action Compl. ¶¶ 10-18, ECF No. 17-1 (See Am. Class Compl.").)

("State

Although the class alleged in the State Court Action consists of persons who have paid attorney's fees to the City since 2001, while the purported class in this action consists of persons who received a notice from Linebarger and who have paid unlawful attorney's fees to Linebarger or the City since March 24, 2004, both classes are defined as individuals and entities who paid unlawful attorney's fees for collecting back taxes owed to the City. (Compare First Am. Compl. ¶¶ 11, 24-26, 28-33, with State In substance, the class in the State Court

Compl. ¶¶ 19-27.)

14

Action would include all Class Members in this action, except those who paid back taxes and the accompanying attorney's fees without first receiving a notice from Linebarger. Am. Compl. ¶ 28; State Compl. ¶ 20.) Despite the overlap between the purported classes, the (See First

named plaintiffs and the defendants differ. named plaintiff in the State Court Action. 4-6.)

Plaintiff is not a (Cf. State Compl. ¶¶

The City is the sole defendant in the State Court Action. Linebarger is the sole defendant in

(See State Compl. ¶ 7.) this action.

(See First Am. Compl. ¶¶ 4, 7.)

Although generally "parallel proceedings involve the same plaintiff against the same defendant," Total Renal Care, 2010

WL 3871908, at *4, the Sixth Circuit has also concluded that, where there is "congruence of both interests and allegations in . . . duplicative class actions, the nonidentity of the named representatives determination parallel." should that Romine, the 160 in no way in at undermine question 340. "If are the a court's otherwise rule were

suits F.3d

otherwise, the Colorado River doctrine could be entirely avoided by the simple expedient of naming additional parties." Id.

(quoting Lumen Constr., Inc. v. Brant Constr. Co., Inc., 780 F.2d 691, 695 (7th Cir. 1985)). Considering two securities class actions in Romine, the

Sixth Circuit concluded that, although the underwriters of the

15

securities offering were defendants in the federal action only and not in the state action, and the named plaintiffs in the actions differed, the two actions were "substantially similar" and therefore parallel. See id. Romine stands for the

proposition that, where there are "class actions in state and federal court involving coextensive plaintiff classes, advancing identical theories of recovery, and seeking the same relief," the two actions are parallel, even if there are different class representatives and defendants in each. See Total Renal Care,

2010 WL 3871908, at *4 (distinguishing Romine, 160 F.3d at 340). Under adding Romine, a plaintiff defendants cannot and distinguish recasting his action "by

different

his

claims

using

additional legal theories."

Bell v. Countrywide Home Loans,

Inc., No. 5:08-cv-167-JHM, 2009 WL 260805, at *3 (W.D. Ky. Feb. 04, 2009) (citing Romine, 160 F.3d at 340). Unlike the dueling class actions in Romine, there is no overlap between the defendants in the State Court Action and the defendants in the action before this Court. sole defendant in the State Court Action. 7.) The City is the

(See State Compl. ¶ (See

Linebarger is the sole defendant in this action.

First Am. Compl. ¶¶ 4, 7.)

Neither Romine nor any other Sixth

Circuit authority stands for the proposition that, where there is no overlap between defendants in state and federal actions, the presence of different parties is irrelevant. Indeed, other

16

Sixth

Circuit

authority

suggests

that

the

identity

of

the

parties is relevant. Appeals, 15 F.3d 569,

See Baskin v. Bath Twp. Bd. of Zoning 572 (6th Cir. 1994) (explaining that

because "the state and federal actions . . . [did] not possess the required identity of parties and issues," they were not parallel); different Crawley, in F.2d at that 31 (noting that parties were

concluding

actions

were

not

parallel).

Therefore, that Linebarger is the only defendant in this action and the City is the only defendant in the State Court Action suggests that the two proceedings are not parallel. Two actions are not parallel merely because they arise out of the same basic facts. See Baskin, 15 F.3d at 572; Total If a state court action and

Renal Care, 2010 WL 3871908, at *5.

a federal action are truly parallel, resolution of the state court action will also resolve all issues in the federal action. See Baskin, 15 F.3d at 572 (explaining that "in deciding whether a state action is parallel for abstention purposes, the district court must compare the issues in the federal action to the

issues actually raised in the state court action, not those that might have been raised"); Kopacz v. Hopkinsville Surface and Storm Water Utility, 714 F. Supp. 2d 682, 688 (W.D. Ky. 2010) ("Although the parties are nearly identical and the cases arise from largely the same facts, these cases are not parallel since there are claims that will not be decided by the state court.");

17

cf. Iron Workers of W. Penn. Pension Plan v. Caremark RX, Inc., No. 3:06-1097, 2007 WL 60927, at *3 (M.D. Tenn. Jan. 5, 2007) (explaining that, under Sixth Circuit precedent, "it is the

claims and issues which must be parallel, and not the parties"). "If there is any substantial doubt that the parallel

litigation will be an adequate vehicle for the complete and prompt resolution of the issues between the parties, it would be a serious abuse of discretion for the district court to stay or dismiss a case in deference to the parallel litigation."

Chellman-Shelton v. Glenn, 197 F. App'x 392, 394 (6th Cir. 2006) (quoting TruServ Corp. v. Flegles, Inc., 419 F.3d 584, 592 (7th Cir. 2005)). might be The question is not whether the state court action to make it substantially similar to the

modified

federal one, but whether the state court action "as it currently exists is a parallel, state-court proceeding." F.2d at 31 (emphasis in original). Crawley, 744

Although "one cannot merely

advance a different legal theory to obtain a remedy and counter abstention," Kopacz, 714 F. Supp. 2d at 688, "when the state and federal cases present different theories of recovery, courts do not generally characterize the proceedings as parallel," Gentry v. Wayne Cnty., No. 10-cv-11714, 2010 WL 4822749, at *2 (E.D. Mich. Nov. 22, 2010) (internal quotation marks and citations omitted).

18

Although the claims of the Plaintiff and the Named State Plaintiffs center on the payment of allegedly illegal attorney's fees for collecting back taxes owed to the City, the theories of liability differ. violation of the The Named State Plaintiffs allege claims for City charter and code and for unjust (See

enrichment, requesting a declaratory judgment and damages. State Compl. ¶¶ 28-39.)

Plaintiff alleges violation of the

TCPA, unjust enrichment, negligence, and conversion, requesting a constructive trust, compensatory damages, and punitive

damages.

(See First Am. Compl. ¶¶ 34-62.)

To resolve the claims against the City in the State Court Action, the Chancery Court must decide whether the attorney's fees the Named State Plaintiffs paid to the City exceeded the limits established by Tennessee law. That decision will not

resolve the issues and claims in the action before this Court. For example, in this action, Plaintiff brings a negligence claim against Linebarger. (See First Am. Compl. ¶¶ 51-53.) Because

Linebarger is not a defendant in the State Court Action and the Named State Plaintiffs have not alleged a negligence theory, even if the Chancery Court were to conclude that the attorney's fees were unlawful, it would have no reason to decide whether Linebarger owed and breached any duty to Plaintiff and the Class Members. The same would be true of the conversion and TCPA (See First Am. Compl.

claims against Linebarger in this action.

19

¶¶ 34-47, 56-57.)

Regardless of the Chancery Court's decision

in the State Court Action, these issues will remain unresolved. Because resolution of the State Court Action will not

resolve the issues and claims in this action, the actions are not parallel. 2d at 688. See Baskin, 15 F.3d at 572; Kopacz, 714 F. Supp.

On that basis alone, abstention under the Colorado

River doctrine would be improper, and the Court must exercise jurisdiction. See Chellman-Shelton, 196 F. App'x at 396;

Baskin, 15 F.3d at 572; Total Renal Care, 2010 WL 3871908, at *5. That the City is the sole defendant in the State Court and Linebarger is the sole defendant in this action

Action

further suggests that abstention would be improper. 15 F.3d at 572 Crawley, F.2d at 31. is DENIED. IV. Motion to Dismiss

See Baskin,

Linebarger's motion to stay

Although Linebarger argues that Plaintiff's action should be dismissed for multiple reasons, the Court need only address three: the Tax Injunction Act, failure to join a party under Rule 19, and failure to state a claim. Supp. of Mot. to Dismiss.) A. Tax Injunction Act The Tax Injunction Act ("TIA") provides that "district (See Def.'s Mem. in

courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain,

20

speedy and efficient remedy may be had in the courts of such State." 28 U.S.C. § 1341.

Linebarger argues that Plaintiff's action would impede the City's ability to collect taxes and that, because Tennessee has a plain, speedy, and efficient remedy to resolve disputes about state taxes, this Court lacks jurisidiction. in Supp. of Mot. to Dismiss 4-12.) (See Def.'s Mem.

Plaintiff counters that the

TIA is inapplicable because Linebarger is a private party, not a governmental entity; Plaintiff challenges Linebarger's

attorney's fees, not the City's property taxes; and Plaintiff seeks damages, not injunctive relief. (See Pl.'s Resp. in Opp'n ("Pl.'s Resp. to

to Def.'s Mot. to Dismiss 6-13, ECF No. 28.) Def.'s Mot. to Dismiss")

Linebarger has not cited any authority for the proposition that the TIA insulates a private party from suit in federal court, and the limited authority available suggests the

opposite.

See Tomaiolo v. Transamerica Corp., 131 F. Supp. 2d In Tomaiolo, plaintiffs brought suit

280, 295 (D.R.I. 2001).

under 42 U.S.C. § 1983 against a municipality, its agents, and a private bank, alleging that they had conspired to violate the plaintiffs' constitutional rights by requiring them to pay their property taxes as a lump sum rather than quarterly. 284. See id. at

Although the district court concluded that the TIA removed

jurisdiction over plaintiffs' claims against the municipality

21

and

its

agents, claims

the

court the

exercised bank,

jurisdiction had held

over the

plaintiffs'

against

which

plaintiffs' payments in escrow.

See id. at 286, 291, 295-99.

The district court's distinction suggests that the TIA does not insulate private parties from suit. That the TIA does not See id. jurisdiction for actions

remove

against private parties engaged in the tax collection process accords with Sixth Circuit precedent that the TIA "applies only when a claimant seeks to `enjoin' or otherwise hinder `the

assessment, levy or collection' of a state tax."

BellSouth

Telecomms., Inc. v. Farris, 542 F.3d 499, 501 (6th Cir. 2008). The Supreme Court has construed the TIA to apply "only in cases . . . in which state taxpayers seek federal-court orders

enabling them to avoid paying state taxes."

Id. (explaining

that the Supreme Court "has permitted lawsuits that do not seek to avoid paying taxes, and it has barred lawsuits that do") (citations and internal quotation marks omitted) (emphasis in original). The TIA does not "apply whenever a taxpayer seeks to

enjoin a law that happens to be part of a tax bill" and "does not strip federal courts of jurisdiction over all claims that might, after this or that happens, have some negative impact on local revenues. Id. at 503-04 (concluding that the TIA did not

prevent telecommunications providers from challenging a state law that barred them from stating on their customers' bills that

22

the customers' increased rates were due to an increase in state taxes on the providers). Plaintiff's Complaint does not allege that he or the Class Members are not liable for paying property taxes to the City. Plaintiff alleges that he paid delinquent property taxes to the City to end a legal proceeding and that, in the course of paying those taxes, he also paid illegal attorney's fees that were transferred to Linebarger. Nothing about Plaintiff's for the (See First Am. Compl. ¶¶ 18-23.) lawsuit "seeks tax, relief whether from legal an

responsibility

underlying

through

injunction or otherwise." 504.

See BellSouth Telecomms, 542 F.3d at

For that reason, the TIA does not bar Plaintiff's action. B. Required Joinder Federal Rule of Civil Procedure 12(b)(7) permits dismissal

for "failure to join a party under Rule 19." P. 12(b)(7).

See Fed. R. Civ.

Rule 19(a) provides that a person must be joined

if doing so will not destroy subject matter jurisdiction and the person is a necessary party. party is necessary if, in See Fed. R. Civ. P. 19(a). that person's absence, the A

court

cannot accord complete relief among the parties or the person claims an interest in the action and, in that person's absence, she might be unable to protect her interest or might suffer inconsistent obligations. Fed. R. Civ. P. 19(a)(1). Where

those conditions are met but joinder is not feasible because it

23

would destroy subject matter jurisdiction, Rule 19(b) requires a court to "determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed" and states factors to aid in that determination. 19(b). When considering whether joinder is required under Rule 19, a court applies a three-step test. See Glancy v. Tabuman Ctrs., "First, the court must Id.

373 F.3d 656, 666 (6th Cir. 2004).

determine whether the person or entity is a necessary party under Rule 19(a)." U.S. 5, 8 (1990)). Id. (citing Temple v. Synthes Corp., 498 "Second, if the person or entity is a

necessary party, the court must then decide if joinder of that person or entity will deprive the court of subject matter

jurisdiction." not feasible

Id. (citations omitted). because it would

Third, if joinder is subject matter

eliminate

jurisdiction, "the court must analyze the Rule 19(b) factors to determine conscience' whether the court should `in equity the and good is

dismiss

the

case

because

absentee

indispensable."

Id. (citations omitted).

Because the City has not claimed an interest in the subject of this action, the only issue is whether the City is necessary for the Court to accord complete relief. Linebarger while collected the allegedly work unlawful a See id. Because fees the

attorney's with

performing

collections

under

contract

24

City,

Linebarger

argues

that

the

City

is

a

necessary

party

because it is unclear what the City and Linebarger knew about the provisions of Tennessee law at issue in this case; if

Linebarger is not at fault, the City may be; and the City may make claims on Linebarger for indemnification if the City is liable. (See Def.'s Mem. in Supp. of Mot. to Dismiss 12-16.) these arguments suggest that the City and

Although

Linebarger might have claims against each other if either were found liable in this case or in the State Court Action, they do not show that the City is necessary for the Court to accord complete violation conversion. relief of to Plaintiff. TCPA, unjust Plaintiff asserts claims for and

the

enrichment,

negligence,

(See First Am. Compl. ¶¶ 34-53, 56-57.)

Because

those claims sound in tort, the City is no more than a potential joint tortfeasor. Because complete relief can be satisfied by

either of two jointly and severally liable tortfeasors, joint tortfeasors are not necessary parties under Rule 19(a). See

PaineWebber, Inc. v. Cohen, 276 F.3d 197, 204 (6th Cir. 2001) (explaining that "a person's status as a joint tortfeasor does not make that person a necessary party, much less an

indispensable party") (citing Temple v. Synthes Corp., 498 U.S. 5, 7-8 (1990)). Linebarger without The Court can order complete relief against more than indirectly affecting the City's

25

interests.

Therefore, Linebarger's argument that the City is a

necessary party is not well-taken. C. Failure to State a Claim 1. Standard of Review In addressing a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), the Court must construe the complaint in the light most favorable to the plaintiff and accept all well-pled factual allegations as true. League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007). A plaintiff can support a claim "by

showing any set of facts consistent with the allegations in the complaint." (2007). Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563

This standard requires more than bare assertions of Bovee v. Coopers & Lybrand C.P.A., 272 F.3d "[A] formulaic recitation of the Twombly, 550 U.S.

legal conclusions.

356, 361 (6th Cir. 2001).

elements of a cause of action will not do." at 555.

Any claim for relief must contain "a short and plain

statement of the claim showing that the pleader is entitled to relief." curiam). Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per

"Specific facts are not necessary; the statement need

only `give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" U.S. at 555). Id. (citing Twombly, 550

Nonetheless, a complaint must contain sufficient

facts "to `state a claim to relief that is plausible on its

26

face'" to survive a motion to dismiss.

Ashcroft v. Iqbal, 129

S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). "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." U.S. at 556). of action, Id. (citing Twombly, 550

"Threadbare recitals of the elements of a cause by mere conclusory statements, do not

supported

suffice." facts and

Id. at 1949 (citation omitted). "armed with nothing more than

A plaintiff with no conclusions" cannot

"unlock the doors of discovery." 2. Analysis

Id. at 1950.

In arguing that Plaintiff has failed to state a claim, Linebarger isolates particular paragraphs within the Complaint and argues that they are legal conclusions, not plausible, or otherwise insufficient under the standard established by Iqbal and Twombly. 18-27.) (See, e.g., Def.'s alone, Mem. some in of Supp. the of Mot. to of

Dismiss

Standing

paragraphs

Plaintiff's Complaint might be legal conclusions or implausible, but Iqbal and Twombly do not require courts to conduct a

paragraph-by-paragraph review of a plaintiff's complaint.

Those

cases simply require that a complaint contain well-pleaded facts sufficient to state a facially plausible claim for relief. Iqbal, 129 S. Ct. at 1949. See

Rather than address Linebarger's

27

paragraph-by-paragraph

arguments,

the

Court

will

consider

Plaintiff's complaint in its entirety. i. TCPA

"The Tennessee Consumer Protection Act prohibits `[u]nfair or deceptive acts or practices affecting the conduct of any trade or commerce,' and in particular, `any . . . act or

practice which is deceptive to the consumer or to any other person.'" Conner v. Hardee's Food Sys., Inc., 65 F. App'x 19,

25 (6th Cir. 2003) (citations omitted); see Tenn. Code Ann. § 47-18-104(b); Timoshchuk v. Long of Chattanooga Mercedes-Benz, No. E2008-01562-COA-R3-CV, 2009 WL 3230961, at *3 (Tenn. Ct. App. Apr. 15, 2009). Linebarger argues that Plaintiff has

failed to state a claim for a violation of the TCPA because Tennessee courts have concluded that the TCPA does not apply to attorneys. (See Def.'s Reply to Pl.'s Resp. in Opp'n to Def.'s

Mot. to Stay, ECF No. 19.) When professionals like lawyers and doctors practice their professions outside their roles as businessmen or entrepreneurs, they do not engage in trade or commerce under the TCPA. See

Schmidt v. Nat'l City Corp., No. 3:06-CV-209, 2008 WL 597687, at *3 (E.D. Tenn. Mar. 4, 2008) (concluding that "the TCPA does not apply to lawyers practicing law because the practice of law is a profession and is not trade or commerce as defined in the

TCPA"); Constant v. Wyeth, 352 F. Supp. 2d 847, 853 (M.D. Tenn.

28

2003) (explaining that, "because the actual practice of medicine does not affect trade or commerce," medical malpractice claims may not be brought under the TCPA). That said, the TCPA does See Pagliara

not include a blanket exemption for professionals.

v. Johnson Barton Proctor & Rose, LLP, No. 3:10-cv-00679, 2010 WL 3940993, at *10 (M.D. Tenn. Oct. 6, 2010) (explaining that "professionals do not enjoy blanket immunity from TCPA claims") (citations omitted). practices in the Allegations of unfair or deceptive acts or of the entrepreneurial or business

conduct

aspect of a professional's practice may be brought under the TCPA. See Constant, 352 F. Supp. 2d at 853 n.10. Plaintiff Linebarger to bases his TCPA which City, claim on the Notice the back sent by

Plaintiff, client, the

stated

that in

Wright taxes

owed and

Linebarger's

$960.33

associated fees and penalties, an amount that Plaintiff alleges included an unlawful twenty-percent attorney's fee. Am Compl. ¶¶ 18-23, 40, 45.) (See First

The issue is whether, in sending

the Notice, Linebarger was practicing law. In regulating attorney conduct, Tennessee has defined the "practice of law" by statute. 101(3). That statute states: See Tenn. Code Ann. § 23-3-

"Practice of law" means the appearance as an advocate in a representative capacity or the drawing of papers, pleadings or documents or the performance of any act in such capacity in connection with proceedings pending or prospective before any court, commissioner,

29

referee or any body, board, committee or commission constituted by law or having authority to settle controversies, or the soliciting of clients directly or indirectly to provide such services. Id. (emphasis added). Although there is limited authority in

the TCPA context, one district court has concluded that, "[w]hen a lawyer is negotiates and drafts a settlement law." agreement, 2010 the WL

lawyer

undoubtedly

practicing

Pagliara,

3940993, at *11. In essence, the Notice Linebarger sent to Plaintiff was a post-filing demand letter. Wright owed the City, the In addition to stating the amount Notice stated that the City had

brought suit against Wright in Chancery Court to collect back taxes. that, (See First Am. Compl. ¶ 19.) if the total ask amount the due, The Notice also stated were to not paid, default

$960.33, Court

Linebarger

would

Chancery

enter

judgment in favor of the City.

(See id. ¶¶ 19-20.)

The Notice

further stated, however, that, if the amount were paid in full, Linebarger "would cause the subject property to be `removed from this lawsuit.'" (Id. ¶ 20.)

The facts alleged demonstrate that, when Linebarger sent the Notice, acts it in was practicing law as defined in Tennessee. proceedings

Because

connection

with

pending

court

constitute the practice of law, see Tenn. Code Ann. § 23-3101(3), and the Notice informed Plaintiff of the claim against

30

Wright

in

Chancery

Court,

Linebarger

sent

the

Notice

"in

connection with proceedings pending or prospective before any court." See Tenn. Code Ann. § 23-3-101(3). Notice also included what amounts to a

Linebarger's settlement offer.

(See First Am. Compl. ¶ 20.)

Because the

negotiation of a settlement also constitutes the practice of law, the fact that the Notice stated that Linebarger would cause the Property to be "removed from this lawsuit" and a tax lien would be avoided further suggests that, in sending the Notice, Linebarger was practicing law. at *11. In arguing that it has stated on S.W.3d a TCPA claim v. against See Pagliara, 2010 WL 3940993,

Linebarger, Orthopaedic 2008).

Plaintiff Group, P.C.,

relies 270

Proctor 56, 60

Chattanooga Ct. App.

(Tenn.

In that case, the Tennessee Court of Appeals concluded

that a patient had stated a claim against a medical doctor who had allegedly performed one surgical procedure on the patient, but had billed the patient's insurer for a more expensive

procedure.

See id. at 58.

The court concluded that the patient

had stated a claim for deceptive business practices under the TCPA by alleging that the doctor had misled him to keep his business and had billed for a more expensive procedure than the one actually performed. See id. at 60. Those acts occurred in Id.

the business aspects of the doctor's practice.

31

Unlike context of

Proctor, an

Plaintiff

does

not

allege

that,

in

the

attorney-client

relationship,

Linebarger

misleadingly convinced him to retain it as his attorney and eventually billed Plaintiff for legal work different from the legal work it performed. Cf. id. at 57-58, 60. Linebarger had

no attorney-client relationship with Plaintiff, Wright, or the Estate and did not bill Plaintiff for legal work different from the work Linebarger performed. Cf. id. at 57-58, 60. Wright

was the opposing party in an action brought by Linebarger's client, the City. Plaintiff of a When Linebarger sent the Notice, it informed action in Chancery Court and made a

pending

settlement offer.

Therefore, when Linebarger sent the Notice,

it was practicing law, not engaging in trade or commerce as defined by the TCPA. See Tenn. Code Ann. § 23-3-101(3);

Pagliara, 2010 WL 3940993, at *10-11; Schmidt, 2008 WL 597687, at *3; Constant, 352 F. Supp. 2d at 853. Even if Linebarger's sending the Notice to Plaintiff were not practicing law, that act would be better characterized as a debt collection than a business aspect of Linebarger's legal practice. The TCPA does not reach debt collection activity

unless that activity stems from an underlying transaction that constitutes trade or commerce. Compare Hunter v. Washington

Mut. Bank, No. 2:08-CV-069, 2008 WL 4206604, at *5-6 (E.D. Tenn. Sept. 10, 2008) (stating that the TCPA does not apply to debt

32

collection activities associated with a home foreclosure) and Pursell v. First Am. Nat'l Bank, 937 S.W.2d 838, 841-42 (Tenn. 1996) (concluding that repossession of collateral securing a

loan does not affect "the advertising, offering for sale, lease or rental, or distribution of any goods, services, or property" as required by the TCPA), with Searle v. Harrah's Entertainment, Inc., No. M2009-02045-COA-R3-CV, 2010 WL 3928632, at *11 (Tenn. Ct. App. Oct. 6, 2010) (concluding that a casino's efforts to collect consumer a debt "clearly involve[d] the trade, commerce, had gone and to a

transaction"

because

plaintiff

the

casino to gamble, which was the casino's trade, and the casino had provided him with cash in exchange for his $500 check so that he could engage in the casino's trade, gambling). Linebarger's Notice related to a debt Wright owed to the City, her back taxes. (See First Am. Compl. ¶¶ 18-23.) That

debt resulted from Wright's failure to pay property taxes she owed the City before she died. Linebarger's effort to collect

that debt on behalf of the City did not affect "the advertising, offering for sale, lease or rental, or distribution of any

goods, services, or property." 42. Therefore, if

See Pursell , 937 S.W.2d at 841debt collection activity,

considered

Linebarger's sending the Notice would not be covered by the TCPA. See Hunter, 2008 WL 4206604, at *5-6; Pursell, 937 S.W.2d

at 841-42.

33

Whether Linebarger was practicing law or collecting a debt when it sent the Notice to Plaintiff, it was not engaged in trade or commerce, and the TCPA does not reach its activities. See Pagliara, 2010 WL 3940993, at *10-11; Schmidt, 2008 WL

597687, at *3; Hunter, 2008 WL 4206604, at *5-6; Constant, 352 F. Supp. 2d at 853; Pursell, 937 S.W.2d at 841-42. TCPA does to not apply a to Linebarger's for conduct, for Because the has See

Plaintiff TCPA.

failed

state

claim

violation

the

Pagliara, 2010 WL 3940993, at *11; Hunter, 2008 WL 4206604, at *6. Therefore, Plaintiff's claim for violation of the TCPA is

DISMISSED.3 ii. Unjust Enrichment

Under Tennessee law, plaintiffs must prove three elements to recover for unjust enrichment: (1) "[a] benefit conferred upon the defendant by the plaintiff," (2) "appreciation by the defendant of such benefit," and (3) "acceptance of such benefit under such circumstances that it would be inequitable for him to retain the benefit without payment of the value thereof."

Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512, 525 (Tenn. 2005) (quoting Paschall's, Inc. v. Dozier, 407 S.W.2d 150, 155 (Tenn. 1966)). Linebarger argues that Plaintiff has

failed to state a claim for unjust enrichment because Plaintiff

3

Because the Court concludes that Plaintiff has not stated a claim for relief under the TCPA, it need not consider whether a TCPA claim may be brought collectively as a class action in federal court.

34

has not alleged factual support for each element. Law in Supp. of Mot. to Dismiss 25-26.)

(See Mem. of

Plaintiff's claim for unjust enrichment incorporates the factual allegations asserted elsewhere in his Complaint. First Am. Compl. ¶ 48.) (See

Plaintiff alleges that, on behalf of

the Estate, he paid the $960.33 requested in the Notice to have the Property removed from the lawsuit Linebarger had filed on behalf of the City in Chancery Court. (See id. ¶ 23.)

Plaintiff further alleges that the City remitted to Linebarger the entire twenty-percent attorney's fee included in that

amount.

(See id. ¶¶ 23, 25.)

Therefore, there is no real

question that Plaintiff conferred a benefit on Linebarger that Linebarger appreciated. See Freeman Indus., 172 S.W.3d at 525

("A benefit is any form of advantage that has a measurable value including the advantage of being saved from an expense or

loss.") (citations omitted). key to an unjust

At issue is the third element--the claim. See id. ("The most

enrichment

significant requirement of an unjust enrichment claim is that the benefit to the defendant be unjust.") (citations omitted). Tennessee law bars an attorney collecting unpaid property taxes on behalf of a governmental entity from receiving

compensation greater than ten percent of all delinquent land taxes collected. See Tenn. Code Ann. § 67-5-2404. Tennessee

law also provides that the ten percent penalty imposed on back

35

taxes "shall be computed on the base amount of delinquent taxes, not including accrued interest or penalties." 2410(b)(1). City, See id. § 67-5-

If, in the course of collecting back taxes for the charged is an attorney's fee greater the than ten

Linebarger that

percent,

fee

plausibly

unlawful

under

statutes.

Therefore, if Linebarger accepted an unlawfully high attorney's fee, it plausibly accepted those funds "under such circumstances that it would be inequitable for [it] to retain" them. Freeman Indus., 172 S.W.3d at 525. showing a plausible claim for See

Plaintiff has alleged facts unjust enrichment, and

Linebarger's motion to dismiss that claim is not well-taken and is DENIED. iii. Negligence To establish a claim for negligence under Tennessee law, a plaintiff must show "(1) a duty of care owed by the defendant to the plaintiff; (2) conduct falling below the applicable standard of care amounting to a breach of that duty; (3) an injury or loss; (4) causation in fact; and (5) proximate, or legal cause." Bradshaw v. Daniel, 854 S.W.2d 865, 869 (Tenn. 1993) (citing McClenahan v. Cooley, 806 S.W.2d 767, 774 (Tenn. 1991) and

Lindsey v. Miami Dev. Corp., 689 S.W.2d 856, 858 (Tenn. 1985)). Linebarger argues that, because it had no duty to Plaintiff, Plaintiff's negligence claim must fail. in Supp. of Mot. to Dismiss 26-27.) (See Def.'s Mem. of Law

36

Plaintiff alleges that Linebarger had a duty to Plaintiff "to ensure that the amounts that it sought to collect [for the City] were at all times correct and lawful." Compl. ¶ 52.) According to Plaintiff, that (See First Am. duty "included

notifying Plaintiff and the Class Members of and collecting only those attorney['s] fee[s] which were permitted by law." id.) (See

Plaintiff alleges that Linebarger breached its duty and

therefore caused Plaintiff and others similarly situated to pay delinquent taxes and fees they did not owe. (See id.)

Linebarger sent the Notice to Plaintiff in the course of its representation of the City in a suit the City had brought for back taxes. (See First Am. Compl. ¶¶ 18-23.) Therefore,

the gravamen of Plaintiff's claim is that, under Tennessee law, although Linebarger represented the adverse party in a suit

against Plaintiff's decedent, Linebarger had a duty to inform Plaintiff correctly of the total amount of back taxes Wright owed, the attorney's fees authorized by law, and the total

amount due to settle the matter and release the Property from any possible tax lien. Plaintiff's brief cites no authority for

that duty and, in fact, makes no argument in favor of imposing that duty. Whether "a defendant owed or assumed a duty of care to a plaintiff is a question of law." Downs ex rel. Downs v. Bush, 263 S.W.3d 812, 819 (Tenn. 2008) (citing West v. E. Tenn.

37

Pioneer Oil Co., 172 S.W.3d 545, 550 (Tenn. 2005); Stewart v. State, 33 S.W.3d 785, 793 (Tenn. 2000)). defendant has a duty in a particular To determine whether a case, courts apply a

balancing test.

Id. at 479.

A defendant has "a duty to act

with due care if the foreseeable probability and gravity of harm posed by defendant's conduct outweigh the burden upon defendant to engage in alternative conduct that would have prevented the harm." Id. (quoting McCall v. Wilder, 913 S.W.2d 150, 153

(Tenn. 1995)).

In making that determination, courts consider

the foreseeable probability of the harm or injury occurring; the possible magnitude of the potential harm or injury; the importance or social value of the activity engaged in by defendant; the usefulness of the conduct to defendant; the feasibility of alternative, safer conduct and the relative costs and burdens associated with that conduct; the relative usefulness of the safer conduct; and the relative safety of alternative conduct. McCall, 913 S.W.2d at 153 (citing Restatement (Second) of Torts §§ 292-93 (1964)). As a general rule, "an attorney is not liable for

negligence to third parties who are not clients and are not in privity of contract with the attorney." Stinson v. Brand, 738

S.W.2d 186, 190 (Tenn. 1987) (citations omitted).

However, "an

attorney may be liable to a third person, even an adverse party in litigation, for malicious prosecution and abuse of process." Id. (citing Peerman v. Sidicane, 605 S.W.2d 242, 245 (Tenn. Ct. App. 1980)). An attorney may also have duties to non-clients

38

when

engaged

in

business

transactions.

See

id.

(citing

Restatement (Second) of Torts 2d § 552 (1977)); see also Cont'l Land Co., Inc. v. Inv. Props. Co., No. M1998-00431-COA-R3-CV, 1999 WL 1129025, at *7 (Tenn. Ct. App. Dec. 10, 1999). Tennessee courts have concluded that, in the context of business transactions, "an attorney's duty to use due care in supplying information may extend to third parties with whom the attorney is not in privity." See Robinson v. Omer, No. 01A01-

9510-CV-00434, 1996 WL 274406, at *3 (Tenn. Ct. App. May 24, 1996) (citing Collins v. Binkley, 750 S.W.2d 737, 739 (Tenn. 1988) and Stinson, 738 S.W.2d at 191). When an attorney

negligently prepares deeds in a real estate transaction, knowing that third parties will rely on those deeds, he may be liable to the third parties. that an attorney to prepare See Collins, 750 S.W.2d at 739 (concluding had a a duty to non-clients that purchasing be valid real for

estate

warranty

deed

would

purposes of notice registration); Stinson, 738 S.W.2d at 191 (concluding that attorneys could be held liable to non-clients for negligence in preparing two deeds and a deed of trust in a real estate transaction). in the course of An attorney may also be liable when, his client in a transaction, the

advising

attorney knows that his advice will be used and relied on by a third party transacting with the client. See Robinson, 1996 WL

274406, at *3 (concluding that an attorney who had advised his

39

client that secretly videotaping the client's sexual encounters was "legally permissible" had a duty of care to the client's cameraman because the attorney knew that some third party would film the client's encounters). Although the Tennessee Rules of Professional Conduct do not define the standard of care in actions for professional

negligence, they are persuasive in determining a lawyer's duties to non-clients in the context of litigation. See Lazy Seven

Coal Sales, Inc. v. Stone & Hinds, P.C., 813 S.W.2d 400, 405 (Tenn. 1991) (noting that the Rules may provide guidance in determining lawyers' obligations). Under the Rules, an attorney For example,

has some duties to persons other than his client.

in the course of representing a client, "a lawyer shall not knowingly make a false statement of material fact or law to a third person." Id. 4.1(a). When dealing with an unrepresented

person, a lawyer "shall not state or imply that the lawyer is disinterested." In contrast Id. 4.3. to the expansive, fiduciary duties that an

attorney owes to his client and that comprise the bulk of the Rules, an attorney's duties to others are limited. Because a

lawyer has a duty to avoid entering into situations that might give rise to a conflict of interest, that limitation is

necessary.

See id. 1.7. 1.8.

If an attorney's duties to others

were broadly defined, they would lead to conflicts and place an

40

attorney client.

in

danger

of

violating

his

fiduciary

duty

to

his

There is no authority for the proposition that, in the context of litigation, Tennessee law imposes a duty of care on attorneys supplying information to non-clients. The limited

nature of an attorney's ethical duties to non-clients persuades the Court that, in litigation, the social value of an attorney's zealous representation of his client's interests outweighs any factor that might favor imposing a tort duty requiring an

attorney to act with due care when providing information to a party adverse to his client. See McCall, 913 S.W.2d at 153.

Therefore, when Linebarger provided information to Plaintiff, it did not have a duty to act with reasonable care, and Plaintiff cannot establish the first element of a negligence claim. Bradshaw, 854 S.W.2d at 869. For that reason, See

Plaintiff's

negligence claim is DISMISSED. iv. Under Tennessee Conversion conversion is the appropriation of

law,

another's property to one's own use or benefit, in exclusion or defiance of the owner's rights. See Ralston v. Hobbs, 306 S.W.3d 213, 221 (Tenn. Ct. App. 2009) (citations omitted); see also Permobil v. Am. Express Travel Related Servs. Co., Inc., 571 F. Supp. 2d 825, 840 (M.D. Tenn. 2008) (citing Barger v. Webb, 391 S.W.2d 664, 665 (Tenn. 1965)). "Conversion is an intentional

41

tort, and a party seeking to make out a prima facie case of conversion must prove (1) the appropriation of another's

property to one's own use and benefit, (2) by the intentional exercise of dominion over it, (3) in defiance of the true

owner's rights." CV, 2009 WL

Thompson v. Thompson, No. W2008-00489-COA-R3at *14 (Tenn. Ct. App. Mar. 12, 2009)

637289,

(citation omitted); see also Kinnard v. Shoney's, Inc., 100 F. Supp. 2d 781, 797 (M.D. Tenn. 2000). Linebarger argues that Plaintiff has asserted that it

exercised dominion over Plaintiff's property without offering facts to describe that "improper dominion." Supp. of Mot. to Dismiss 25.) (See Mem. of Law in

Linebarger also argues that any

attorney's fees it accepted were governed by its contract with the City and, therefore, Plaintiff cannot bring claims sounding in tort challenging the collection of those funds. (See id.)

In his conversion claim, Plaintiff incorporates the factual allegations alleged elsewhere in the Complaint. Compl. ¶ 56.) Plaintiff alleges that (See First Am. was the

Linebarger

ultimate recipient of the allegedly unlawful attorney's fee he paid to the City. (See id. ¶¶ 23, 25.) That fact alone

demonstrates that Linebarger appropriated and exercised dominion over Plaintiff's funds. The issue is whether Linebarger took

Plaintiff's funds in defiance of his rights.

42

Tennessee law bars an attorney collecting unpaid property taxes on behalf of a governmental entity from receiving

compensation greater than ten percent of all delinquent land taxes collected. See Tenn. Code Ann. § 67-5-2404. Tennessee

law also provides that the ten percent penalty imposed on back taxes "shall be computed on the base amount of delinquent taxes, not including accrued interest or penalties." 2410(b)(1). City, See id. § 67-5-

If, in the course of collecting back taxes for the charged is an attorney's fee greater the than ten

Linebarger that

percent,

fee

plausibly

unlawful

under

statutes.

Therefore, if Linebarger sought and accepted an unlawfully high attorney's fee, it plausibly exercised dominion over that fee in violation of Plaintiff's true rights. at 221. See Ralston, 306 S.W.3d

Plaintiff has alleged facts showing a plausible claim

for conversion, and Linebarger's motion to dismiss that claim is not well-taken and is DENIED. v. Other Counts

Plaintiff asserts two additional counts in his Complaint: for constructive trust and for punitive damages. Compl. ¶¶ 54-55, 58-62.) (See First Am.

A constructive trust and punitive

damages are remedies that might be imposed if Linebarger were found liable to Plaintiff. See, e.g., Memphis Light, Gas &

Water Div. v. Starkey, 244 S.W.3d 344, 355 (Tenn. Ct. App. 2007) (describing punitive damages as an award intended to punish the

43

wrongdoer and deter wrongful conduct); Story v. Lanier, S.W.3d 167, 184 (Tenn. Ct. App. 2004) (describing

166 the

constructive trust as an "equitable device[] used by courts to avoid unjust enrichment"). Linebarger has moved to dismiss (See

these counts as if they were independent causes of action. Mem. in Supp. of Mot. to Dismiss 26-27.) Plaintiff has stated claims for unjust enrichment

and

conversion against Linebarger. Because a constructive trust

See supra at IV.C.ii, IV.C.iv. or punitive damages might be

appropriate if Linebarger were liable on either of those claims, its argument to dismiss the remedies is not well-taken. V. Linebarger's Motion to Dismiss for Lack of Standing & Movants' Motion for Leave to Substitute

Linebarger has filed a separate motion to dismiss arguing that Plaintiff lacks standing to bring the claims asserted in the Complaint. (See Mot. to Dismiss for Lack of Standing; Mem.

of Law in Supp. of Mot. to Dismiss for Lack of Standing, ECF No. 15-1 ("Def.'s Standing Mem.").) argues that Linebarger's motion In response, Plaintiff first to dismiss is procedurally

defective.

(See Pl.'s Resp. in Opp'n to Def.'s Mot. to Dismiss

for Lack of Standing, ECF No. 29 ("Pl.'s Resp. to Standing").) Plaintiff relies on Federal Rule of Civil Procedure 12, which provides that "a party that makes a motion under this rule must not make another motion under this rule raising a defense or

44

objection that was available to the party but omitted from its earlier motion." Fed. R. Civ. P. 12(g)(2). Because

Linebarger's earlier motion to dismiss did not raise standing, Plaintiff argues that Linebarger has waived that defense. Pl.'s Resp. to Standing 3-4.) Although called a motion to dismiss for lack of standing, the essence of Linebarger's argument is that Plaintiff is not the real party in interest, not that Plaintiff lacks standing under Article III of the Constitution. See Zurich Ins. Co. v. (See

Logitrans, Inc., 297 F.3d 528, 532 (6th Cir. 2002) (explaining that the real from v. party the in interest of concept is related to but

different Firestone

concept 976 and

standing) 279,

(citations 283 (6th the

omitted); 1992) of

Galbreath, attorneys

F.2d courts

Cir.

("Frequently,

confuse

concepts

standing with that of capacity to sue and with the real party in interest principle.") (citations omitted). The purpose of the

real-party-in-interest principle is to "to identify the person who possesses the right sought to be enforced." 976 F.2d at 283 (citation omitted); See Firestone, Interested

Certain

Underwriters v. Layne, 26 F.3d 39, 42-43 (6th Cir. 1994) ("The real party in interest is the person who is entitled to enforce the right asserted under the governing substantive law.")

(citations omitted).

By contrast, the purpose of standing is to

determine "whether the plaintiff can show an injury in fact

45

traceable omitted).

to

the

conduct

of

the

defendant."

Id.

(citation

The premise of Linebarger's motion is that the Estate never had an interest in the Property because, under Tennessee law, it passed by operation of law to Wright's heirs at the time of her death. to the (See Def.'s Standing Mem. 2-3.) real-party-in-interest That argument speaks not Article III

principle,

standing.

See Firestone, 976 F.2d at 283.

"The federal rules do not contain a specific procedure for raising an objection that plaintiff is not the real party in interest. Nor do they indicate when the challenge should be made." 6A Charles Alan Wright & Arthur R. Miller, Federal

Practice & Procedure § 1554 (3d ed. 2010); see Signal Int'l LLC v. Miss. Dep't of Transp., 579 F.3d 478, 487-88 (5th Cir. 2009) (explaining that a defendant must raise a real-party-in-interest defense "in time to allow the opportunity for joinder of the ostensible real party in interest" and that "the defense may be waived if the defendant does not timely object") raise (citations

omitted). interest

Although objections

parties in

frequently to

real-party-inRule 12(b),

motions

dismiss

under See

there is no requirement that they do so.

5C Wright &

Miller, Federal Practice & Procedure § 1554 (citations omitted). A defendant's objection is timely as long as substitution or joinder of the real party in interest remains "practical and

46

convenient." omitted).

See Signal Int'l LLC, 579 F.3d at 488 (citations

Linebarger

could

have

raised

the

real-party-in-interest See 5C Wright & Miller, (citations dismiss for omitted). lack of

issue in its initial motion to dismiss. Federal Because Practice Linebarger & Procedure its § 1554

filed

motion

to

standing just ten days after its initial motion to dismiss, substitution or joinder remains "practical and convenient." See

Signal Int'l LLC, 579 F.3d at 488; (Mot. to Dismiss; Mot. to Dismiss for Lack of Standing). Therefore, Plaintiff's argument

that the issue has been waived by operation of Rule 12(g) is not well-taken. In his response, Plaintiff essentially admits that he is not the real party in interest but argues that, rather than dismiss the action, the Court should grant the motion to

substitute filed concurrently.

(See Pl.'s Resp. to Standing 5;

Mot. for Leave to Substitute as Party Pls., ECF No. 30 ("Mot. to Substitute"); Movants' Mem. in Supp. of their Mot. for Leave to Substitute Linebarger substitute. as has Party Pls., ECF in No. 30-1 ("Movants' to the Mem.") to

responded

opposition

motion

(See Def.'s Resp. to Movant's [sic] Mot. for Leave

to Substitute as Party Pls., ECF No. 30; Mem. of Law in Supp. of Def.'s Response to Movant's [sic] Mot. for Leave to Substitute

47

as

Party

Pls.,

ECF

No.

31-1

("Def.'s

Resp.

to

Mot.

to

Substitute").) Under Federal Rule of Civil Procedure 17, a "court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action." 17(a)(3). See Fed. R. Civ. P.

"After ratification, joinder, or substitution, the

action proceeds as if it had been originally commenced by the real party in interest." Id. "In deciding whether to allow a

real party in interest to substitute into an action for the named plaintiff, the Court considers whether there has been an honest mistake as opposed to tactical maneuvering, unreasonable delay, or undue prejudice to the non-moving party." Tool-Plas

Systems, Inc. v. Camaco, LLC, No. 09-12003, 2010 WL 1347686, at *2 (E.D. Mich. Mar. 31, 2010) (citing Esposito v. United States, 368 F.3d 1271, 1275-76 (10th Cir. 2004); Jordan v. Fox,

Rothschild, O'Brien, & Frankel, 20 F.3d 1250, 1278 (3d Cir. 1994)). "A Rule 17(a) substitution of plaintiffs should be

liberally allowed when the change is merely formal and in no way alters the original complaint's factual allegations as to the events or the participants." Zurich, 297 F.3d at 534 (Gilman,

J., concurring) (quoting Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 20 (2d Cir. 1997)); see Kazee v.

48

Rosenberg, No. 10-55-ART, 2011 WL 720822, at *3 (E.D. Ky. Feb. 22, 2011) (noting Rule 17(a)'s "liberal policy of allowing

opportunities for substitution"). Movants argue that, because the Property on which back

taxes were paid was still listed in Wright's name at the time of filing, they made an honest mistake by allowing Plaintiff to file the action as administrator of the Estate. Mem 5.) Plaintiffs (See Movants'

According to Movants, "other than the name of the in this action, the allegations contained in the In

First Amended Complaint will remain the same." response, "outside Linebarger the scope of argues that Plaintiff's mistakes

(See id.) mistake which

falls courts

`understandable'

will allow to be rectified through a lenient application of Rule 17(a)." (See Def.'s Resp. to Mot. to Substitute 11.) suggests of the that Estate Plaintiff's was mere initially filing as

Nothing administrator

"tactical

maneuvering." This is not a

See Tool-Plas Systems, 2010 WL 1347686, at *2.

case in which an action was filed on behalf of a plaintiff simply to toll the statute of limitations without any knowledge of whether the plaintiff was actually a real party in interest. Cf. Fed. R. Civ. P. 17 Notes of Advisory Committee on 1966 amendments (describing an example in which, following a plane crash, an attorney files an action in the name of a fictitious person named as personal representative of another fictitious

49

person, hoping that he might later substitute a real personal representative of a real victim). Rather, the mistake appears

to have resulted from a misunderstanding about whether Plaintiff was permitted to sue as administrator of the Estate, as Rule 17(a) generally permits. See Fed. R. 17(a)(1) (providing that

an administrator may sue in his own name without joining those for whose benefit the action is brought). Nothing suggests that

filing the action in Plaintiff's name rather than Movants' names was anything other than an understandable mistake, and

Linebarger's argument to the contrary is not well-taken. Nor is there any showing of "unreasonable delay" or "undue prejudice" to Linebarger. See id. Linebarger filed its motion (See Mot. to

to dismiss for lack of standing on May 24, 2010. Dismiss for Lack of Standing.)

On June 30, 2010, Movants filed

the motion to substitute themselves as party plaintiffs under Rule 17. (See Mot. to Substitute.) Movants have asserted that

the essential factual allegations in the Complaint will remain unchanged. See Zurich, 297 F.3d at 534; (Movants' Mem. 5).

Therefore, substitution is proper. Linebarger makes several additional arguments in opposition to Movants' motion to substitute. Substitute.) Linebarger argues (See Def.'s Resp. to Mot. to that, even if they were to

substitute for Plaintiff, Movants would lack standing because they would not be Class Members as defined in the Complaint.

50

(See id. at 4-7.)

The gravamen of that argument is that none of

the Movants was an individual "to whom Defendant sent or caused to be sent a Notice," as required for membership in the class defined by the Complaint. Comp. ¶ 28.) as The (See id. at 6; see also First Am. about whether speaks Movants to the are Class of

argument in the

Members

defined

Complaint

issue

representativeness for class certification, not whether they may assert the claims Plaintiff originally brought. Therefore, the

argument that the Movants cannot be substituted because they would not be members of the class alleged in the Complaint is not well-taken. Linebarger next argues that the Movants lack Article III standing and, therefore, that they should not be permitted to substitute. 13.) (See Def.'s Resp. to Mot. to Substitute 7-9. 11-

Article III requires only that a plaintiff "demonstrate

that it has suffered a concrete and particularized injury that is either actual or imminent, that the injury is traceable to the defendant, and that it is likely that a favorable decision will redress that injury." Massachusetts v. Envtl. Prot.

Agency, 549 U.S. 497, 517 (2007) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)); Zurich, 297 F.3d at 231 (citations omitted). Linebarger appears to argue that the

Movants, if substituted, would not be able to show that they suffered an injury fairly traceable to Linebarger's alleged

51

receipt of unlawful attorney's fees in collecting back taxes for the City. The (See id. at 8-9.) Complaint alleges that Plaintiff received a Notice

stating that back taxes were due on the Property previously owned by Wright (see First Am. Compl. ¶ 18); that, if Plaintiff paid a certain amount, the Property would be released from a pending suit in Chancery Court (see id. ¶ 20); that the amount stated included an unlawful attorney's fee (see id. ¶¶ 21-22); and that, on behalf of "decedent Lenora Wright and her heirs," Plaintiff paid the total amount stated in the Notice, including the unlawful attorney's fee (see id. ¶ 23). show that Plaintiff suffered an injury Those allegations traceable to

fairly

Linebarger--specifically, the payment of an unlawful attorney's fee to avoid a possible tax lien on the Property and discharge a pending suit in Chancery Court. those allegations, if the (See id. ¶¶ 18-23.) Movants were Based on for

substituted

Plaintiff, the factual allegations in the Complaint would show that they too had suffered an injury fairly traceable to

Linebarger. volunteered

Although Linebarger argues that the Movants merely to pay the back taxes on the Property, the

allegations demonstrate that they were required to pay those taxes immediately if they wanted to enjoy the Property they had inherited as Wright's heirs. (See id. ¶ 20.) If, as they

allege, the Movants paid Linebarger an unlawful attorney's fee

52

when paying back taxes, they have suffered an injury fairly traceable to Linebarger. Therefore, Linebarger's argument that

the Movants lack Article III standing is not well-taken. Linebarger has challenged Plaintiff's status as a real

party in interest, and Movants have properly responded within a reasonable time by filing a motion to substitute themselves for Plaintiff, as required by Rule 17. Linebarger's motion to

dismiss for lack of standing is DENIED, and Movants' motion to substitute is GRANTED. VI. Conclusion this motion Court to the has jurisdiction, for lack Action of is Linebarger's is

Because supplemental DENIED.

dismiss State

jurisdiction not

Because

Court

parallel,

Linebarger's motion to stay is DENIED.

Because the Complaint

states claims for conversion and unjust enrichment, but not for violation of the TCPA or negligence, Linebarger's motion to

dismiss is GRANTED on the TCPA and negligence claims and DENIED on the conversion and unjust enrichment claims. Although

Plaintiff is not a real party in interest, Movants have properly moved to substitute. Therefore, Linebarger's motion to dismiss

for lack of standing is DENIED, and Movants' motion for leave to substitute is GRANTED. So ordered this 22d day of March, 2011.

53

s/ Samuel H. Mays, Jr. SAMUEL H. MAYS, JR. UNITED STATES DISTRICT JUDGE

54