Bar Processing Corp. v. Barnes
| Decision Date | 28 April 2022 |
| Docket Number | 21-3814 |
| Court | U.S. Court of Appeals — Sixth Circuit |
| Parties | BAR PROCESSING CORPORATION, Plaintiff-Appellant, v. KEVIN D. BARNES; TAFT STETTINIUS & HOLLISTER LLP, Defendants-Appellees. |
NOT RECOMMENDED FOR PUBLICATION
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO
Before: BATCHELDER, COLE, and GIBBONS, Circuit Judges.
In a prior lawsuit, Bar Processing Corporation sued one of its former employees, a former corporate customer, and a newly formed competitor company after learning that the employee stole confidential information from it and provided the information to the other defendants. The parties settled that lawsuit.
Bar Processing now sues its former law firm and one of the firm's attorneys, claiming that the attorney committed malpractice and breached his fiduciary duties by providing business-related legal services to the defendants in the now-settled lawsuit. The district court disagreed and granted summary judgment against Bar Processing. We affirm.
Bar Processing operates a steel-bar processing business. In 2011 it purchased the assets of a competitor company in Wickliffe Ohio. That company's then-general manager, Dennis Perrino, joined Bar Processing after the transaction and became the manager of Bar Processing's new Wickliffe facility. In that role, Perrino worked closely with various Bar Processing customers, including Jade-Sterling Steel Co., Inc.
After years of working with Perrino, in February 2018, Jade decided to start a new entity called Great Lakes Steel that would perform Jade's steel-processing work in-house, rather than relying on Bar Processing. Jade asked Perrino to join its new business, hoping that he could bring several Bar Processing customers along with him.
To help it get started, Jade sought advice from Kevin Barnes, an attorney at Taft Stettinius & Hollister, LLP, whom Jade had retained as counsel in finance and business matters since the 1990s. Unbeknownst to Barnes, another Taft attorney had been representing Bar Processing from 2007 to 2019 in workers' compensation matters. Barnes ran a conflict check for Great Lakes, Jade, and each of Jade's principals-but not for Bar Processing or Perrino-and it identified no conflicts. Then, at some point in early April 2018, and while still working for Bar Processing, Perrino downloaded confidential information from his work computer onto a storage device and gave it to Jade.
Later that month, on April 24, 2018, Jade informed Barnes that it wanted Great Lakes to hire Perrino from one of Jade's current steel vendors. Barnes informed Jade that it "should not and could not obtain any confidential information regarding [Perrino's] current employer." After confirming that Perrino was not subject to a noncompete clause under his employment agreement with Bar Processing, Barnes drafted a proposed employment offer letter from Great Lakes to Perrino. Barnes did not run a new conflict check at that time despite Perrino's employment agreement's naming Bar Processing as his employer.
In the offer letter, Barnes repeated his advice that Perrino could neither take nor disclose any confidential information from his current employer to Great Lakes. Barnes maintains that he was unaware that Perrino had at that time already supplied Jade with confidential Bar Processing information. Between April and August 2018, Barnes assisted Jade entities to purchase machinery and real estate, prepare formation paperwork and operating agreements, and obtain financing for their new venture.
Bar Processing soon discovered what Perrino had done and sued him, Jade, and Great Lakes. Barnes ran a new conflict check that included Bar Processing and Perrino to determine whether Taft could represent Jade and Great Lakes in the suit. Due to an unidentified "glitch," the system revealed no conflicts. Nevertheless, Bar Processing notified Barnes that another Taft attorney had been representing it in workers' compensation matters. Neither Barnes nor any other Taft attorney represented any party in the litigation. The parties ultimately settled the suit, with Bar Processing agreeing to pay Great Lakes $4 million to purchase its machinery and real estate.
Following the settlement, Bar Processing sued Taft and Barnes in federal court.[1] Count I alleges that Barnes committed legal malpractice, and Count II alleges that he breached his fiduciary duties to Bar Processing. For both claims, Taft is claimed to be vicariously liable.
After discovery, Barnes and Taft moved for summary judgment, and the district court granted it in their favor. The court held that the legal malpractice claims failed because Bar Processing and Barnes had no attorney-client relationship, and the breach-of-fiduciary-duties claims were, in substance, legal malpractice claims, which failed for the same reason. Bar Processing appeals, disputing only the district court's judgment on the breach-of-fiduciary-duties claims.
We review de novo a district court's grant of summary judgment, viewing the evidence in the light most favorable to the non-moving party. Fisher v. Nissan N. Am., Inc., 951 F.3d 409, 416 (6th Cir. 2020). Summary judgment is appropriate when "no genuine dispute as to any material fact" exists and the moving party "is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a).
Bar Processing argues that the district court erred by concluding that its breach-of-fiduciary-duties claims were actually legal malpractice claims in disguise. Bar Processing insists that it has a distinct claim that Barnes owed it fiduciary duties-because another Taft attorney had an ongoing attorney-client relationship with Bar Processing-and breached those duties when he agreed to represent clients with interests adverse to Bar Processing. In Bar Processing's view, it matters greatly that its breach-of-fiduciary-duties claims do "not allege Barnes negligently rendered legal services to [it]."
However, under Ohio law, tort claims, such as breach-of-fiduciary-duty claims, against an attorney for his good faith representation of a client are considered legal malpractice claims. Omega Riggers & Erectors, Inc. v. Koverman, 65 N.E.3d 210, 219 (Ohio Ct. App. 2016). There is no "independent claim for breach of fiduciary duty against an attorney acting in his capacity as attorney and counselor." Id. at 223. Such a claim is considered to be a legal malpractice claim because it relates to the manner in which an attorney represented a client. Muir v. Hadler Real Est. Mgmt. Co., 446 N.E.2d 820, 822 (Ohio Ct. App. 1982) (); see, e.g., Omlin v. Kaufman & Cumberland Co., L.P.A., 8 Fed.Appx. 477, 479 (6th Cir. 2001) (); Ill. Nat'l Ins. Co. v. Wiles, Boyle, Burkholder & Bringardner Co., L.P.A., 2010-Ohio-5872, ¶¶ 15-17, 2010 WL 4926572, *3-4 (Ohio Ct. App. Dec. 2, 2010) ().
If the "gist of the complaint" sounds in malpractice, then the claim must be treated as duplicative of malpractice. Hibbett v. Cincinnati, 446 N.E.2d 832, 836 (Ohio Ct. App. 1982). But not all attorney-related tort claims are necessarily legal malpractice claims. When an attorney's alleged misconduct is "distinct" from the conduct underlying the malpractice claim, a separate tort claim may proceed. Pierson v. Rion, 2010-Ohio-1793, ¶ 14, 2010 WL 1636049, *2 (Ohio Ct. App. Apr. 23, 2010).
Here Bar Processing's claims sound...
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