Friday, October 16, 2020

Dismissed Malpractice Claim Revived

The Tennessee Court of Appeals reversed the grant of judgment on the pleadings to a defendant law firm in a legal malpractice action

In this legal malpractice action, the trial court granted judgment on the pleadings in favor of the defendants, determining that the plaintiff had waived any conflict of interest in his signed engagement letter. The court also ruled that the plaintiff’s legal malpractice claims were barred by the applicable statute of limitations. The plaintiff has appealed. Upon our review of the pleadings and acceptance as true of all well-pleaded facts contained in the plaintiff’s complaint and the reasonable inferences that may be drawn therefrom, we determine that the plaintiff has pled sufficient facts in support of his claim of legal malpractice. We therefore reverse the trial court’s grant of judgment on the pleadings with regard to the plaintiff’s legal malpractice claim.

The allegations

In his amended complaint, Mr. Culpepper explained that he was employed as the Chief Financial Officer for Provectus from 2004 until sometime in 2016 when he was named interim Chief Executive Officer. Mr. Culpepper maintained that position with Provectus until his employment termination effective December 28, 2016. According to Mr. Culpepper, Defendants represented him concerning matters before the United States Securities and Exchange Commission (“SEC”) on August 4, 2016, and August 11, 2016. Mr. Culpepper alleged that on August 15, 2016, Defendants met with an independent forensic accountant and discussed Mr. Culpepper “with respect to the SEC and other attorney-client privileged and confidential matters WITHOUT his knowledge” (emphasis in original).

Additionally, Mr. Culpepper alleged that Defendants discussed matters regarding Mr. Culpepper and the SEC with Provectus’s Board of Directors in 2016, without Mr. Culpepper’s knowledge, while simultaneously representing Mr. Culpepper. Mr. Culpepper further averred, inter alia, that Defendants presented fabricated documentation to support his ultimate termination for cause by Provectus in December 2016.

The response

On August 13, 2019, Defendants filed a motion for judgment on the pleadings, asserting, inter alia, that Mr. Culpepper had waived any conflicts of interest in his August 31, 2016 engagement letter and had consented to Defendants’ continued representation of Provectus, even if such representation was ultimately adverse to Mr. Culpepper’s interests. Defendants also asserted that expiration of the applicable one-year statute of limitations barred Mr. Culpepper’s malpractice claims.

The court recites the conflicts waiver in the engagement letter but concludes

In the case at bar, Mr. Culpepper executed an acknowledgement stating that he had “carefully read” the engagement letter and had “considered all information necessary and useful in determining whether or not to consent to the representations” stated therein. Mr. Culpepper further acknowledged that he had been encouraged to consult with independent counsel regarding his consent to representation. Mr. Culpepper affirmed that he had, upon “reasoned reflection,” “voluntarily consent[ed] to the representations by Baker Donelson as outlined above.”

The question that remains unanswered, however, is whether Mr. Culpepper was provided information concerning “the implications of the common representation, including possible effects on loyalty, confidentiality and the attorney-client privilege” or “the potential ill effects of continued representation by counsel of record” such that he could “fully understand[] the nature of the conflict and its effect.” See Frazier, 303 S.W.3d at 683-84; RPC 1.7, cmt. 18.

That could not be resolved on the pleadings.

As to statute of limitations

Based solely on the facts alleged in Mr. Culpepper’s amended complaint, which must be taken as true, we determine that the trial court erred in granting judgment in favor of Defendants with regard to Mr. Culpepper’s legal malpractice claim predicated upon the statute of limitations and in failing to determine that the discovery rule could be applied. We therefore reverse this portion of the trial court’s judgment as well.

The resolution to the SEC matter is described in this press release. (Mike Frisch)

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