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Allied Waste North America, Inc. v. Lewis, King, Krieg & Waldrop, P.C.

United States District Court, M.D. Tennessee, Nashville Division

March 20, 2015

ALLIED WASTE NORTH AMERICA, INC., a Delaware corporation; and BFI WASTE SERVICES, LLC, a Delaware limited liability company, Plaintiffs,
LEWIS, KING, KRIEG & WALDROP, P.C., a Tennessee professional corporation; LINDA HAMILTON MOWLES, an individual; DEBORAH STEVENS, an individual; LEVINE, ORR & GERACIOTI, PLLC, a Tennessee limited liability company; ROBERT ORR, JR., an individual; WEINBERG, WHEELER, HUDGINS, GUNN & DIAL, LLC, a Georgia limited liability company; and TERRANCE SULLIVAN, an individual, Defendants

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For Allied Waste North America, Inc., BFI Waste Services, LLC, Plaintiffs: Carrie Pixler Ryerson, LEAD ATTORNEY, Fennemore Craig, P.C., Phoenix, AZ; Douglas C. Northup, LEAD ATTORNEY, PRO HAC VICE, Fennemore Craig, P.C., Phoenix, AZ; James W. White, Jones Hawkins & Farmer, PLC, Nashville, TN.

For Lewis, King, Krieg & Waldrop, P.C., Linda Hamilton Mowles, Deborah Stevens, Defendants: Darrell G. Townsend, LEAD ATTORNEY, Howell & Fisher, Nashville, TN.

For Levine, Orr & Geracioti, PLLC, A Tennessee Limited Liability Company, Robert Orr, Jr., Defendants: Darryl G. Lowe, Gregory Brown, LEAD ATTORNEYS, Lowe Yeager & Brown, Knoxville, TN.

For Weinberg, Wheeler, Hudgins, Gunn & Dial, LLC, A Gerogia Limited Liability Company, Terrance Sullivan, Defendants: David B. Scott, LEAD ATTORNEY, Thomas William A. Caldwell, Ortale, Kelley, Herbert & Crawford, Nashville, TN.

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This a legal malpractice, breach of contract, and breach of fiduciary duty case that arose from underlying state court litigation which led to a $7.2 million jury verdict against Plaintiffs Allied Waste North America, Inc., and BFI Waste Services, LLC (collectively, " Allied/BFI" ). Defendants are three law firms (and some of their Members) (collectively " the law firms" ), two of which were hired to help remedy problems that the first allegedly created. This Memorandum addresses the five pending motions (Docket Nos. 53, 73, 79, 80 & 85)[1] that were the subject of oral argument on February 9, 2015.


Leaving aside the literally hundreds of paragraphs and pages setting forth the parties' respective " concise" statements of facts and responses thereto, briefing on the pending motions nears 325 pages. To give some general context to the arguments addressed below, the Court begins by summarizing the factual allegations, which will later be expanded upon where necessary to discuss the arguments raised in specific motions.

On May 23, 2002, fire destroyed the Nashville Thermal Transfer Facility, a waste-to-energy facility, owned by the Metropolitan Government of Nashville and Davidson County (" Metro" ). Thereafter, in a case filed in the Davidson County Circuit Court styled Nashville and Davidson County, et al. v. BFI Waste Services, LLC, et al., Case Number 05C390T-5, Metro and its insurer sued multiple defendants, including Allied/BFI, for various causes of action related to the fire.

Allied/BFI retained Defendant Levine, Orr & Geracioti, PLLC (" Levine Orr" ), and two of its Members, Defendants Robert Orr, Jr. (" Orr" ) and Michael A. Geracioti (" Geracioti" ), to defend the suit. Plaintiffs allege that these Defendants failed to exercise reasonable care and breached their retainer contract by making numerous mistakes and missteps in the underlying litigation, but the following three are the most egregious.

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First, even though Allied/BFI gave the Levine Orr Defendants the name of the individual who could testify about Allied/BFI's policies and procedures, those Defendants failed to timely designate and produce the witness in accordance with the requirements of Rule 30.02(6) of the Tennessee Rules of Civil Procedure. Instead, the individual was disclosed just before trial.

The failure to make a timely designation led to a sanctions hearing on September 27, 2010, during which Orr allegedly told the trial court that the discovery failure was his fault and that he had " screwed up," not Allied/BFI. As a consequence of the untimely disclosure, the trial court sanctioned Allied/BFI by giving an adverse inference instruction at trial which advised the jury that it could infer that Allied/BFI's policies and procedures and Rule 30.02(6) witness testimony were unfavorable to their defense.

Second, during discovery Allied/BFI learned that Metro had already intended to stop using the facility before the fire occurred. This made the facility's fair market value a key issue at trial. The Levine Orr Defendants retained an expert named Jonathan Held (" Held" ) to offer expert testimony on the facility's fair market value and to testify about the diminution in value of the facility due to its obsolescence (making the value of the property far lower than the cost of repairs that were never going to be made).

However, Metro moved to exclude Held's testimony under Tennessee Code Annotated (T.C.A.) § 62-39-103 on the ground that he was not a licensed appraiser and was thus prevented from offering an " appraisal report." Metro also argued that, under Tennessee law, the only measure of damages was repair cost, and given that Held was Allied/BFI's only evidence that the value of the facility was far less than the cost of repairs, the plan to discontinue use of the facility was irrelevant. The trial judge, Joseph Binkley, agreed with Metro's position, found Held not qualified to offer valuation opinions, and prohibited him from testifying regarding the future plans for the facility and its obsolescence.

Third, and related to the second, regardless of whether the trial court was correct or not, the Levine Orr Defendants were ineffective. If the court was right in prohibiting Held from testifying, they should have retained an expert who was actually qualified to offer the necessary opinion as to the market value of the facility. If the trial court was wrong, then the Levine Orr Defendants should have taken the necessary steps to prepare and introduce other evidence that the value was far less than the cost of repair.

The alleged shortcomings and mistakes were not limited to the Levine Orr Defendants. Nor were they limited to pretrial proceedings and the trial, which concluded on October 5, 2010 with the return of the $7.2 million verdict, and the entry of final judgment against Allied/BFI on December 3, 2010, at which point interest began accruing.

Before trial, Allied/BFI retained the law firm Lewis, King, Krieg & Waldrop (" Lewis King" ) and two of its Members Linda Hamilton Mowles (" Mowles" ) and Deborah Stevens (" Stevens" ) as appellate specialists to monitor the trial and take appropriate measures to preserve any and all potential appellate issues for Allied/BFI. In fact, the Lewis King Defendants sat through the trial, and provided daily trial reports and analysis. At some point after the jury returned its verdict, Plaintiffs contend, the scope of the Lewis King Defendants' representation was expanded to include providing assistance with the appropriate post-trial motions, as well as an appeal

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through the Tennessee appellate court system.

In addition to the two firms and four lawyers already mentioned, Allied/BFI retained the law firm Weinberg, Wheeler, Hudgins, Gunn & Dial, LLC (" Weinberg Wheeler" ) and two of its Members, Defendants Scott A. Witzigreuter (" Witzigreuter" ) and Terrance Sullivan (" Sullivan" ), to provide post-verdict representations. The Weinberg Wheeler Defendants entered an appearance on October 28, 2010, and were tasked with preparing post-trial motions relating to, among other things, the exclusion of evidence, and preparing to retry the case if post-trial motions were successful.

On January 3, 2011, counsel for Allied/BFI filed a Motion for Judgment Notwithstanding the Verdict, Motion for New Trial, and Motion for Suggestion of Remittur (" Motion for New Trial" ). That motion was prepared by both Levine Orr and Weinberg Wheeler Defendants, but the Lewis King Defendants are also alleged to have been heavily involved in the drafting, reviewing, and revising of the motion.

The Motion for New Trial was denied in its entirety. On March 9, 2011, the Lewis King Defendants filed a notice of appeal.

The Tennessee Court of Appeals issued an opinion on March 22, 2012, affirming the rulings of the trial court. Metro. Govt. of Nashville & Davidson Cnty. v. BFI Waste Serv., 2012 WL 1018946 (Tenn. Ct.App. Mar. 22, 2012). In doing so, the Court of Appeals found that the issue surrounding the exclusion of Head's valuation testimony was waived because Held was " not named in Defendants' motion for new trial or supporting memorandum nor is the exclusion of his valuation testimony expressly alleged as an error in either," and " objection to jury instructions and requests for offers of proof" did not " preserve[] the issue of the exclusion of Mr. Held's valuation testimony for appeal." [WL]at *6. The Court of Appeals also upheld the giving of the negative inference instruction " because the burden was on Defendants to designate" the corporate representative and even though a witness testified in a deposition some two years before trial that her co-employee Eileen Shuler could answer the questions, Metro could not " be responsible for failing to identify Ms. Shuler as the appropriate corporate representative when Defendants, themselves, were admittedly unaware that she was the appropriate designee." [WL] at *11.

Leave to take a discretionary appeal to the Tennessee Supreme Court was obviated in July 2012, when the adjusters decided to settle the case for $8 million. This lawsuit followed with the filing of the Complaint on March 30, 2013.


All Defendants move for summary judgment and raise two primary arguments: this litigation is barred by the statute or limitations, and their actions (even if malpractice) were not the cause of injury to Allied/BFI. They also seek summary judgment on the amount of damages to which Plaintiffs may be entitled. Because the statute of limitations is a primary focus of the briefing and it is potentially dispositive of the entire matter, the Court turns to that issue first.

A. Statute of Limitations

" Defenses based on a statute of limitations are particularly amenable to summary judgment motions" because " [m]ost often the facts material to a statute of limitations defense are not in dispute." Cherry v. Williams, 36 S.W.3d 78, 83 (Tenn. Ct.App. 2000). " When the facts and the inferences reasonably drawn from the facts are not disputed, the courts

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themselves can bring to bear the applicable legal principles to determine whether the moving party is entitled to a judgment as a matter of law." Id.

The relevant statute of limitations for legal malpractice claims (codified at Tenn. Code Ann. § 28-3-104(a)(2) at the time this suit was filed) provides:

Actions and suits against licensed public accountants, certified public accountants, or attorneys for malpractice shall be commenced within one (1) year after the cause of action accrued, whether the action or suit is grounded or based in contract or tort.

Tenn. Code Ann. § 28-3-104(c)(1). " A cause of action for legal malpractice accrues and the statute of limitations is triggered when: 1) the defendant committed negligence; 2) the defendant's negligence caused the plaintiff to suffer a 'legally cognizable' or actual injury; and 3) the plaintiff knows, or in the exercise of reasonable care and diligence should have known, that the injury was caused by the defendant's negligence." Hartman v. Rogers, 174 S.W.3d 170, 173 (Tenn. Ct.App. 2005) (citing Carvell v. Bottoms, 900 S.W.2d 23, 28, 30 (Tenn. 1995)).

As with some other claims including medical malpractice, Tennessee law applies the discovery rule to legal malpractice claims. The Tennessee Supreme Court thoroughly discussed the rule's application to legal malpractice as follows:

In legal malpractice cases, the discovery rule is composed of two distinct elements: (1) the plaintiff must suffer legally cognizable damage--an actual injury--as a result of the defendant's wrongful or negligent conduct, and (2) the plaintiff must have known or in the exercise of reasonable diligence should have known that this injury was caused by the defendant's wrongful or negligent conduct. . . . An actual injury occurs when there is the loss of a legal right, remedy or interest, or the imposition of a liability. . . . An actual injury may also take the form of the plaintiff being forced to take some action or otherwise suffer " some actual inconvenience," such as incurring an expense, as a result of the defendant's negligent or wrongful act. . . . However, the injury element is not met if it is contingent upon a third party's actions or amounts to a mere possibility.
The knowledge component of the discovery rule may be established by evidence of actual or constructive knowledge of the injury. . . . Accordingly, the statute of limitations begins to run when the plaintiff has actual knowledge of the injury as where, for example, the defendant admits to having committed malpractice or the plaintiff is informed by another attorney of the malpractice. Under the theory of constructive knowledge, however, the statute may begin to run at an earlier date -- whenever the plaintiff becomes aware or reasonably should have become aware of facts sufficient to put a reasonable person on notice that an injury has been sustained as a result of the defendant's negligent or wrongful conduct. . . . We have stressed, however, that there is no requirement that the plaintiff actually know the specific type of legal claim he or she has, or that the injury constituted a breach of the appropriate legal standard. . . . Rather, " the plaintiff is deemed to have discovered the right of action if he is aware of facts sufficient to put a reasonable person on notice that he has suffered an injury as a result of wrongful conduct." . . . " It is knowledge of facts sufficient to put a plaintiff on notice that an injury has been sustained which is crucial." . . . A plaintiff may not, of course, delay filing suit until all the injurious effects or consequences of the alleged wrong are actually known to the

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plaintiff. . . Allowing suit to be filed once all the injurious effects and consequences are known would defeat the rationale for the existence of statutes of limitations, which is to avoid the uncertainties and burdens inherent in pursuing and defending stale claims.

John Kohl & Co., P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 532-33 (Tenn. 1998) (internal citations and parenthetical quotations omitted).

The parties agree with the general law governing legal malpractice claims. Not surprisingly, however, they disagree on its application in this case.

Plaintiffs argue that the shot triggering the statute of limitations was the decision of the Court of Appeals. If that is the case, then this litigation is timely because ...

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