LJH, Ltd. v. Comerica Incorporated et al

Filing 82

MEMORANDUM OPINION AND ORDER - It is therefore ORDERED that Defendants Ira J. Jaffe and Jaffe, Raitt, Heuer & Weiss, P.C.'s Motion to Dismiss Plaintiff's Second Amended Complaint Pursuant Fed. R. Civ. P. 12(b)(6) (Dkt. 74 ) is hereby GRANTED IN PART AND DENIED IN PART. It is further ORDERED that LJH, Ltd.'s claims against Jaffe, Raitt, Heuer & Weiss, P.C. are DISMISSED with prejudice. Signed by Judge Amos L. Mazzant, III on 2/2/2017. (baf, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

LJH, LTD.
v.
IRA J. JAFFE; and JAFFE, RAITT, HEUER
& WEISS, P.C.

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Civil Action No. 4:15-CV-00639
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants Ira J. Jaffe and Jaffe, Raitt, Heuer & Weiss,
P.C.’s Motion to Dismiss Plaintiff’s Second Amended Complaint Pursuant to Fed. R. Civ. P.
12(b)(6) (Dkt. #74). After reviewing the relevant pleadings, the Court determines the motion
should be granted in part and denied in part.
BACKGROUND
This case concerns the sale and purchase of realty and equipment between LJH, Ltd.
(“LJH”) and three entities, Go Frac, LLC (“Go Frac”), WRB Trucking Company, LLC, and GF
Cambridge, LLC (collectively, the “Sellers”) (Dkt. #74 at p. 2). In July 2015, Ira Jaffe (“Jaffe”),
acting on behalf of Jaffe, Raitt, Heuer & Weiss, P.C. (the “Jaffe Firm,” collectively with Jaffe,
the “Jaffe Defendants”) made one or more telephone calls to Lacy Harber (“Harber”). Jaffe
contacted Harber seeking to sell oil fracking equipment and real estate. The equipment and real
estate that Jaffe and Harber discussed were owned by one or more entities of which Jaffe was
“an owner and authorized representative” (Dkt. #73 at p. 9). Jaffe drafted contracts for the sale
of the real estate and equipment, and Harber signed them. Harber, acting as representative for
LJH, acquired an equitable lien on the real estate and equipment, advancing to the Sellers
$20,000,000 for the equipment and $4,000,000 for the real estate. On or about July 27, 2015,
Jaffe travelled to Grayson County, Texas, where he met with Harber and Harber’s accountant “to

negotiate new terms relating to the sale of the equipment and real property” (Dkt. #73 at p. 5).
At this meeting, Jaffe disclosed issues related to the sale that caused LJH to back out of the deal.
On August 4, 2015, LJH filed its Original Petition in the 15th Judicial District Court of
Grayson County, Texas, against the Jaffe Defendants, alleging a number of claims including
fraud, negligent misrepresentation, conversion, conspiracy, and money had and received. LJH
also seeks actual and punitive damages, and a constructive trust over the relinquished funds due
to principles of unjust enrichment (Dkt. #3). On September 18, 2015, the Jaffe Defendants
removed the case to this Court alleging diversity pursuant to 28 U.S.C. § 1332 and removal
pursuant to 28 U.S.C. § 1441 (Dkt. #1).
On July 28, 2016, the Court withdrew its previous order addressing Defendants’ Motion
to Dismiss First Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(2) and (6) (Dkt. #72).
The Court allowed LJH to file a Second Amended Complaint to assert facts to overcome the
Jaffe Defendants’ assertion of the attorney immunity doctrine. LJH filed its Second Amended
Complaint on August 11, 2016 (Dkt. #73). On August 26, 2016, the Jaffe Defendants filed their
Motion to Dismiss the Second Amended Complaint (Dkt. #74). On September 12, 2016, LJH
filed its response (Dkt. #75). On September 22, 2016, the Jaffe Defendants filed a reply (Dkt.
#76). On October 3, 2016, LJH filed its sur-reply (Dkt. #77).
LEGAL STANDARD
The Federal Rules of Civil Procedure require that each claim in a complaint include a
“short and plain statement . . . showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). Each claim must include enough factual allegations “to raise a right to relief above the
speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

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A Rule 12(b)(6) motion allows a party to move for dismissal of an action when the
complaint fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
When considering a motion to dismiss under Rule 12(b)(6), the Court must accept as true all
well-pleaded facts in plaintiff’s complaint and view those facts in the light most favorable to the
plaintiff. Bowlby v. City of Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court may
consider “the complaint, any documents attached to the complaint, and any documents attached
to the motion to dismiss that are central to the claim and referenced by the complaint.” Lone
Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). The Court
must then determine whether the complaint states a claim for relief that is plausible on its face.
‘“A claim has facial plausibility when the plaintiff pleads factual content that allows the [C]ourt
to draw the reasonable inference that the defendant is liable for the misconduct alleged.’”
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)). “But where the well-pleaded facts do not permit the [C]ourt to infer more than the mere
possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader
is entitled to relief.’” Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency
of a complaint in the context of a Rule 12(b)(6) motion. First, the Court should identify and
disregard conclusory allegations, for they are “not entitled to the assumption of truth.” Iqbal,
556 U.S. at 664. Second, the Court “consider[s] the factual allegations in [the complaint] to
determine if they plausibly suggest an entitlement to relief.” Id. “This standard ‘simply calls for
enough facts to raise a reasonable expectation that discovery will reveal evidence of the
necessary claims or elements.’” Morgan v. Hubert, 335 F. App’x 466, 470 (5th Cir. 2009)

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(citation omitted). This evaluation will “be a context-specific task that requires the reviewing
[C]ourt to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.”’ Id. at 678
(quoting Twombly, 550 U.S. at 570).
ANALYSIS
The Jaffe Defendants argue the conduct alleged by LJH in the Second Amended
Complaint was made in the course of representing the Sellers in an asset sale transaction. As
such, the Jaffe Defendants assert LJH’s claims should be dismissed based on the attorney
immunity doctrine. LJH responds that Jaffe was not acting in his capacity as an attorney when
he negotiated the terms of the “Equipment Purchase Agreement” with Harber. Specifically, LJH
contends the July 10, 2015 Equipment Purchase Agreement listed Jaffe as an authorized
representative for Go Frac and WRB Trucking Company, LLC and not as an attorney for those
entities. Further, LJH maintains the Jaffe Firm is liable for ratifying Jaffe’s actions.
The attorney immunity doctrine provides that attorneys are “immune from civil liability
to a non-client ‘for actions taken in connection with representing a client in litigation.’” Cantey
Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015) (quoting Alpert v. Crain, Caton &
James, P.C., 178 S.W.3d 398, 405 (Tex. App.—Houston [1st Dist.] 2005, pet. denied)). “Even
conduct that is ‘wrongful in the context of the underlying suit’ is not actionable if it is ‘part of
the discharge of the [attorney’s] duties in representing his or her client”’ and not “entirely
foreign to the duties of an attorney.” Id. at 481–82 (citations omitted). The purpose of the
doctrine is to allow attorneys broad latitude “to practice their profession, to advise their clients
and interpose any defense or supposed defense, without making themselves liable for damages.”

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Id. at 481 (quoting Kruegel v. Murphy, 126 S.W. 343, 345 (Tex. Civ. App.—Dallas 1910, writ
ref’d)). Accordingly, providing immunity ensures “loyal, faithful, and aggressive representation
by attorneys employed as advocates.” Id. (quoting Mitchell v. Chapman, 10 S.W.3d 810, 812
(Tex. App.—Dallas 2000, pet denied)). The dispositive question is whether the conduct was
“‘the kind in which an attorney engages when discharging his duties to a client.’” Id. at 482
(quoting Dixon Fin. Servs., Ltd. v. Greenberg, Peden, Siegmyer & Oshman, P.C., No. 01-0600696-CV, 2008 WL 746548, at *9 (Tex. App.—Houston [14th Dist.] 2000, pet. denied)).
The Second Amended Complaint indicates the following facts the Court must accept as
true and view in the light most favorable to LJH. Bowlby, 681 F.3d at 219. Harber and Jaffe
communicated regarding the realty and equipment at issue (Dkt. #73 at p. 9). Jaffe was an
“owner and authorized representative” of one or more of the entities that owned the equipment
and realty (Dkt. #73 at p. 9). Harber signed three contracts based on the Jaffe Defendants’
representations and disclosures, and afterwards, at the request of Jaffe, sent a $20,000,000
advance for the equipment and a $4,000,000 advance for the realty, which were held in trust by
the Jaffe Defendants (Dkt. #73 at pp. 3–4). On or about July 27, 2015, Jaffe flew to Grayson
County, Texas, and met with Harber, and Harber’s accountant, Jim Keller, on behalf of LJH, to
negotiate new terms relating to the sale (Dkt. #73 at p. 4). At this meeting, Jaffe disclosed issues
to Harber, including: (1) he was an attorney; (2) he was a minor partner, with other individuals,
in Go Frac; (3) Go Frac was insolvent; (4) Defendants needed to accelerate the closing date; (5)
other claimants existed regarding the equipment LJH was to receive; (6) that future lawsuits
could result from the sale and purchase; and (7) Jaffe and his law firm would represent Harber
and/or LJH in a proceeding (Dkt. #73 at p. 5).

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At the Rule 12(b)(6) stage, the Court cannot conclusively establish that Jaffe was acting
in his capacity as an attorney when the underlying transaction with Harber occurred. Although
Jaffe’s alleged conduct appears to be that of an attorney, Jaffe was also a minor partner in Go
Frac and was listed as its “owner and authorized representative” (Dkt. #73 at pp. 9, 14).
Attorney immunity bars an attorney’s liability to a non-client when the attorney acts in his legal
capacity. Cantey Hanger, 467 S.W.3d at 481. However, such immunity does not apply when
the attorney acts outside of his legal capacity. Id. at 482. Here, it is possible, based on the
allegations in the Second Amended Complaint, that Jaffe was acting based upon his ownership
interest in Go Frac and not solely as an attorney. Therefore, the Court refuses to grant Jaffe
attorney immunity at this time.
Further, even if Jaffe was acting only in his ownership capacity of Go Frac, the Jaffe
Firm would have been providing legal representation for the duration of the transaction between
Harber and the Sellers. LJH alleges that Jaffe, acting on behalf of the Jaffe Defendants, made
one or more calls to, and had conversations with, Harber regarding the sale of oilfield and
fracking equipment and related realty (Dkt. #73 at p. 9). When determining the applicability of
the attorney immunity doctrine, the Court examines the kind and not the nature of the attorney’s
conduct. Chapman Children’s Tr. v. Porter & Hedges, L.L.P., 32 S.W.3d 429, 442 (Tex. App.—
Houston [14th Dist.] 2000, pet. denied). Contacting a potential buyer about a significant sale of
property and equipment is not conduct that would be “foreign to the duties of an attorney.”
Cantey Hanger, 467 S.W.3d at 482. LJH also alleges that Jaffe negotiated and prepared the
contracts related to the sale (Dkt. #73 at p. 3). This conduct would not be “foreign to the duties
of an attorney.” Cantey Hanger, 467 S.W.3d at 482.

The Jaffe Firm did not have a personal

stake in the sale of the equipment and realty, and thus, if it was involved in the transaction at all,

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its actions were purely those of legal representation, which must be protected under the attorney
immunity doctrine.1
In another argument, LJH asserts that attorney immunity does not apply in a nonlitigation context, and the Jaffe Defendants’ conduct occurred during a business transaction
rather than in an adversarial proceeding (Dkt. #75 at p. 5). The Court disagrees because that
“stance is not in line with Texas law.” Iqbal v. Bank of Am., N.A., 559 F. App’x 363, 365–66
(5th Cir. 2014). The Texas Supreme Court in Cantey Hanger noted that “[t]he majority of Texas
cases addressing attorney immunity arise in the litigation context [,] [b]ut that is not universally
the case.” 467 S.W.3d at 482 n.6. The high court cited two cases “as examples of cases in
which courts have applied attorney immunity (or indicated that it could apply) outside the
litigation context.” Id.; Campbell v. Mortg. Elec. Registration, No. 03-11-00429-CV, 2012 WL
1839357, at *5–6 (Tex. App.—Austin, May 18, 2012, pet. denied) (applying attorney immunity
to dismiss claims against attorney defendants in a foreclosure proceeding); Reagan Nat’l Advert.
of Austin, Inc. v. Hazen, No. .03-05-00699-cv, 2008 WL 2938823, at *8 (Tex. App.—Austin,
July 29, 2008, no pet.) (mem. op.) (noting that while “many of the cases addressing the attorneyimmunity doctrine arise in the context of pending litigation, neither case law, nor the doctrine’s
underlying policy rationales, are limited to that setting”). Thus, the attorney immunity doctrine
is not limited to only litigation.
After reviewing the Second Amended Complaint, the Court concludes that LJH has
stated plausible claims against Jaffe to defeat a Rule 12(b)(6) motion to dismiss. The Court
further concludes, based upon the facts alleged, the Jaffe Firm was acting solely within its legal
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The Court finds that if Jaffe was acting solely based on his personal interest in Go Frac, his actions could not
implicate the Jaffe Firm, as they would be outside the scope of his actions as an attorney. Additionally, other
evidence might demonstrate that Jaffe was acting in his capacity as an attorney during the transaction with Harber.
At this time, the Court cannot conclusively make its determination based upon LJH’s allegations in the Second
Amended Complaint.

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capacity during the entirety of the Harber transaction, and thus claims against the Jaffe Firm
must be dismissed under the attorney immunity doctrine.
CONCLUSION
It is therefore ORDERED that Defendants Ira J. Jaffe and Jaffe, Raitt, Heuer & Weiss,

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P.C.’s Motion to Dismiss Plaintiff’s Second Amended Complaint Pursuant Fed. R. Civ. P.
12(b)(6) (Dkt. #74) is hereby GRANTED IN PART AND DENIED IN PART.
It is further ORDERED that LJH, Ltd.’s claims against Jaffe, Raitt, Heuer & Weiss, P.C.
are DISMISSED with prejudice.

SIGNED this 2nd day of February, 2017.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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