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Fowler v. McCarter, Catron & East, PLLC

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

March 16, 2017

BRIAN JARRAT FOWLER, Plaintiff,
v.
McCARTER, CATRON & EAST, PLLC; GILBERT WAYNE McCARTER, II; JOHN DOE PERSONS A-M; and JOHN DOE ENTITIES N-Z, Defendants.

          MEMORANDUM

          ALETA A. TRAUGER United States District Judge

         Before the court is the Motion to Dismiss (Doc. No. 27) filed by defendants McCarter, Catron & East, PLLC (“McCarter law firm”) and Gilbert Wayne McCarter (“McCarter”) (collectively, “defendants”). In his Response to the Motion to Dismiss (Doc. No. 44), the plaintiff requests that the defendants' Rule 12(b)(6) motion be converted into a Rule 56 motion, that he be permitted to conduct discovery, and that the court stay consideration of the defendants' motion pending such discovery. As set forth herein, the plaintiff's requests will be denied, and the defendants' motion will be granted on the grounds that the plaintiff's claims against these defendants are barred by the statute of limitations.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In the First Amended Complaint (Doc. No. 3), plaintiff Brian Fowler alleges generally that the McCarter law firm is based in Murfreesboro, Tennessee and that Gilbert McCarter is an attorney practicing law in Murfreesboro, Tennessee at the McCarter law firm. (Id. ¶¶ 2-3.) Fowler contracted with the defendants to represent him in a divorce action against his former wife in 2012. (Id. ¶ 8.) McCarter was lead attorney and attorney of record. (Id.) A Final Decree of Divorce (“Divorce Decree”) was entered by the Circuit Court of Rutherford County, Tennessee on April 24, 2013. (Id. ¶ 9.) The Divorce Decree adopted and incorporated by reference a Permanent Parenting Plan Order (“Parenting Plan”) and Marital Dissolution Agreement (“MDA”). (Id. ¶ 10.)

         During the divorce proceedings and at the time the Divorce Decree was entered, Fowler and his then-wife and minor children lived in Murfreesboro, Tennessee. McCarter knew, and the Parenting Plan reflected, that Fowler's ex-wife intended to relocate to Mississippi shortly after the divorce became final and that Fowler might also eventually move to Mississippi. (Id. ¶ 5; see also MDA ¶ 6, Doc. No. 19-1; Parenting Plan at 1, Doc. No. 19-13.) Both parties, in fact, moved to Mississippi at some point after their divorce became final.

         In August 2012, prior to the filing of the Petition for Divorce, Fowler and his then-wife filed a legal action in Indiana against a third party (“Indiana lawsuit”), alleging that the medical negligence of the defendant in that action had rendered the plaintiff paralyzed. (Am. Compl., Doc. No. 3 ¶ 12.) The Indiana lawsuit was still pending when the Divorce Decree was entered in Tennessee in 2013. The plaintiff alleges generally that McCarter engaged in legal malpractice when he advised the plaintiff concerning how to handle the eventual proceeds (“Settlement Proceeds”) from the Indiana lawsuit in the divorce action. He alleges that he relied on McCarter to protect his interest in any potential Settlement Proceeds. (Id. ¶ 13.) According to Fowler, McCarter “specifically represented to Plaintiff that his ex-spouse's claim to the Settlement Proceeds would be limited only to the loss of consortium damages she could prove in a court of law.” (Id.) McCarter allegedly assured the plaintiff that his ex-wife's loss of consortium claim was worth “little or no money” and, therefore, that she would have “essentially no claim” to the Settlement Proceeds. (Id.) McCarter was also aware at the time the MDA was negotiated and signed that the Indiana lawsuit was likely worth the Indiana statutory limit of $1.25 million, considerably more than the value of the remainder of the marital property. (Id. ¶ 14.)

         Based on McCarter's advice, Fowler signed the MDA. The MDA provided that the Settlement Proceeds would be “divided according to Indiana law or the agreement reached by the parties in the event of settlement or based upon the jury verdict, should there be a trial” and that court costs would also “be divided in accordance with Indiana law on a pro rata share of the proceeds or by agreement.” (Id. ¶ 15 (citing MDA ¶ 5).) Fowler alleges that McCarter included language in the MDA stating that Indiana law would control the disposition of the Settlement Proceeds and represented to him that it would be in Fowler's best interest if Indiana law were applied, even though McCarter was not licensed in Indiana, did not consult with an attorney licensed to practice law in Indiana, and did not research what effect such language would have on the plaintiff's rights to, and interest, in the Settlement Proceeds. (Id. ¶¶ 17-19.)

         Fowler alleges that, if McCarter had researched Indiana law, he would have learned that potential proceeds from a pending personal injury lawsuit, as a contingent asset, did not need to be included in the MDA. However, because the MDA incorporated reference to the Settlement Proceeds, it converted the contingent asset into marital property to be divided pursuant to Indiana law governing the division of marital property. (Id. ¶ 19.) Because the asset was included in the MDA, Fowler's ex-wife had a colorable claim to 50% of the Settlement Proceeds, rather than the nominal amount Fowler expected based on McCarter's advice. Fowler alleges that McCarter breached the applicable standard of care by including the proceeds from the pending lawsuit, worth approximately $1.25 million, in the MDA, when such inclusion was not legally required. (Id.)

         The Indiana lawsuit was settled in August 2014 for $1.25 million. After subtracting attorneys' fees and expenses, the Settlement Proceeds available for distribution totaled $711, 780. (Id. ¶ 20.) Fowler's efforts to reach an agreement with his ex-wife as to the share of the Settlement Proceeds due to her were unsuccessful, because the ex-wife “was advised that, due to the language in the MDA, she had a legitimate claim for one-half of the net proceeds . . . pursuant to Indiana law.” (Id. ¶ 21.) Fowler claims that he was “shocked to learn for the first time that his ex-wife had a potentially legitimate claim to one-half of the proceeds” from the Indiana lawsuit. (Id. ¶ 22.) “Prior to this time, Plaintiff had no knowledge of the negligence and misconduct of Defendants and had no reason to know of the negligence and misconduct of Defendants.” (Id.)

         Allegedly as a result of McCarter's negligence, Fowler was “forced” to retain legal counsel in Mississippi, where he was living by that time, to represent his interests in the division of the Settlement Proceeds. (Id. ¶ 23.) Fowler does not specifically allege in his Amended Complaint when his ex-wife filed suit, but she apparently did file suit in the Chancery Court of Rankin County, Mississippi (“Mississippi lawsuit”) in early 2015, seeking a declaration that she was entitled to 50% of the Settlement Proceeds.[1] In the course of the Mississippi lawsuit, the Settlement Proceeds were interpleaded into the registry of the Rankin County Chancery Court on February 9, 2015. (Id. ¶ 25.) On April 8, 2015, Fowler's ex-wife filed a Motion for Summary Judgment in the Mississippi lawsuit, seeking a judicial determination that she was entitled to one-half of the Settlement Proceeds. “Her argument was that Indiana law required that the lawsuit proceeds b[e] divided on a 50/50 basis, since the proceeds were converted into a marital asset by their inclusion in the MDA.” (Id. ¶ 26.)

         “[D]ue to the legitimate threat of Plaintiff's ex-spouse being awarded one-half of the overall lawsuit proceeds, ” Fowler was allegedly “forced” to settle the dispute with his ex-wife at a mediation that took place in July 2015. (Id. ¶ 27.) In the settlement, he agreed that his ex-wife would receive $187, 500 of the total $711, 780. (Id. ¶ 27.)

         The plaintiff filed his original Complaint (Doc. No. 1) in this action on April 25, 2016, in the United States District Court for the Southern District of Mississippi. Rather than answering, the defendants filed a Motion to Dismiss and supporting Memorandum (Doc. Nos. 11 & 12), asserting that the Mississippi court lacked jurisdiction over them and, in the alternative, that the case had been filed in the wrong venue. In the Order ruling on that motion (Doc. No. 22), the Mississippi court rejected the plaintiff's argument that the case was properly heard in the Southern District of Mississippi and transferred the action to the Middle District of Tennessee as the appropriate venue on November 3, 2016, without addressing the question of jurisdiction.

         Now pending is the defendants' second Motion to Dismiss, asserting a defense based on the statute of limitations. Along with his Response in Opposition to the Motion to Dismiss, the plaintiff has submitted numerous documents (most of which were also previously submitted with his response to the first Motion to Dismiss), including a lengthy Affidavit detailing the communications between Fowler and various McCarter law firm employees after the plaintiff had moved to Mississippi; copies of emails between the plaintiff and McCarter law firm employees exchanged after Fowler had moved to Mississippi; the MDA; the Parenting Plan; the January 22, 2015 Complaint for Declaratory Judgment, Injunctive Relief and for an Accounting filed by Fowler's ex-wife in the Mississippi lawsuit, seeking a determination of her rights regarding the distribution of the Settlement Proceeds and demanding 50% of such proceeds under Indiana law; and the ex-wife's Motion for Summary Judgment in the Mississippi lawsuit. Fowler argues that the Motion to Dismiss should be converted into one for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. He also asks for permission to take discovery and that the defendants' motion be stayed pending discovery. The defendants filed a Reply, arguing that the only matters outside the pleading on which they rely are documents incorporated by reference into the Amended Complaint that may be considered without converting their motion into a summary judgment motion.

         II. STANDARD OF REVIEW

         “[A]s a general rule, matters outside the pleadings may not be considered in ruling on a 12(b)(6) motion to dismiss unless the motion is converted to one for summary judgment under Fed.R.Civ.P. 56.” In re Fair Fin. Co., 834 F.3d 651, 656 n.1 (6th Cir. 2016) (citations omitted), reh'g denied (Sept. 23, 2016). However, “when a document is referred to in the pleadings and is integral to the claims, it may be considered without converting a motion to dismiss into one for summary judgment.” Id. (citation omitted).

         In ruling on the motion in this case, the court need consider only the allegations in the Amended Complaint and those documents filed by the plaintiff that are expressly referenced in the Amended Complaint and integral to the plaintiff's claims, including the Divorce Decree, the MDA, the Parenting Plan, and the Motion for Summary Judgment filed by the plaintiff's ex-wife in the Mississippi action. The court therefore denies the plaintiff's request to convert the defendants' Rule 12(b)(6) motion into a Rule 56 motion.

         In deciding a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court will “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Directy, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007); Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir. 2002). The Federal Rules of Civil Procedure require that a plaintiff provide “‘a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed.R.Civ.P. 8(a)(2)). The court must determine whether “the claimant is entitled to offer evidence to support the claims, ” not whether the plaintiff can ultimately prove the facts alleged. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

         The complaint's allegations, however, “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). To establish the "”facial plausibility” required to “unlock the doors of discovery, ” the plaintiff cannot rely on “legal conclusions” or “[t]hreadbare recitals of the elements of a cause of action”; instead, the plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         III. DISCUSSION

         The defendants argue that the plaintiff's Amended Complaint should be dismissed because the plaintiff's legal malpractice claims are barred by Tennessee's one-year statute of limitations governing such claims, Tenn. Code Ann. § 28-3-104(c)(1). Fowler, besides arguing that the motion should be converted into a Rule 56 motion, insists that he needs discovery in order to properly respond to the defendants' allegations concerning (1) when he knew or should have known that the defendants committed legal malpractice; (2) when he suffered a cognizable injury as a result of the defendants' malpractice; (3) when he knew or should have known he suffered a cognizable injury as a result of the defendants' malpractice; (4) whether the defendants fraudulently concealed his cause of action by the communications surrounding the relevant provisions of the MDA; and (5) whether Mississippi has a more significant relationship to the facts than Tennessee such that Mississippi's statute of limitations pertaining to legal malpractice actions should apply. (Doc. No. 44, at 13-14.) Fowler asserts that documents ...


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