K.R. Exch. Serv. Inc v. Fuerst

• Decision Date: 20 October 2010
• Docket Number: No. 3D09-1733,No. 09-7713,3D09-1733,09-7713
• Parties: K.R. Exchange Services, Inc., a foreign corporation, Appellant, v. Fuerst, Humphrey, Ittleman, PL, et al., Appellees.
• Court: Florida District Court of Appeals

K.R. Exchange Services, Inc., a foreign corporation, Appellant,

v.Fuerst, Humphrey, Ittleman, PL, et al., Appellees.

No. 3D09-1733

No. 09-7713

Third District Court of appeal State of Florida

July Term, A.D., 2010

Opinion filed October 20, 2010.

Not final until disposition of timely filed motion for rehearing.

An Appeal from the Circuit Court for Miami-Dade County, Peter Adrien, Judge.

Louis C. Arslanian (Hollywood), for appellant.

Cole Scott & Kissane and Scott A. Cole and Alejandro Perez, for appellees Fuerst, Humphrey, Ittleman, PL, and Andrew Ittleman.

Before WELLS, ROTHENBERG, and LAGOA, JJ.

LAGOA, J.

K.R. Exchange Services, Inc. ("K.R.-Israel") appeals a final judgment dismissing with prejudice its legal malpractice claim against the law firm Fuerst, Humphrey, Ittleman ["FHI"] and attorney Andrew Ittleman. We affirm the trial court's dismissal of the complaint, however, we reverse the order to the extent it dismisses the complaint with prejudice.

I. FACTUAL AND PROCEDURAL HISTORY

K.R.-Israel, an Israeli corporation, and K.R. Services USA, LLC ("K.R.-USA"), a Florida corporation, were engaged in a money services business relationship.¹ K.R.-USA is a consultant for K.R.-Israel. In order to cash its checks, K.R-Israel deposited the checks in K.R.-USA's account at Regions Bank. For this service, K.R.-Israel paid a commission to K.R.-USA.

This business relationship was interrupted when Regions Bank informed K.R.-USA that it would no longer accept checks from K.R.-Israel. As a result, K.R.-Israel was required to outsource this service; K.R.-USA no longer received commissions, and K.R.-Israel paid significantly higher fees to third parties in order to process the checks.

In an effort to resolve this problem for both companies, Michael Elmaleh, K.R.-USA's president, individually, and on behalf of K.R.-USA, retained FHI. The engagement letter/retainer agreement stated that the nature of the legal service is for "a written opinion concerning whether your business-KR Services USA-is required to register in the state of Florida as a money transmitting business, check cashing service, or other similarly regulated entity. We will also advise youon how to most effectively restructure and reorganize your various entities so as to create stronger relationships with banking institutions and regulatory authorities worldwide." Ittleman provided the legal services for FHI under the agreement.

When the legal representation proved unsatisfactory, K.R.-Israel and K.R.-USA attempted to file a single legal malpractice action against FHI and Ittleman.² In addition to the above-noted allegations, the complaint alleges that K.R.-Israel was an intended third-party beneficiary of FHI's and Ittleman's legal services to K.R.-USA, that FHI and Ittleman breached their duties to K.R.-Israel in their efforts to solve the business difficulties that ensued when Regions Bank would no longer accept deposits from K.R.-Israel, and that as a result, plaintiffs suffered monetary damages. The engagement letter/retainer agreement was attached to the complaint as an exhibit.

FHI and Ittleman sought dismissal of the claim, arguing that K.R.-Israel and K.R.-USA failed to state a cause of action for legal malpractice and that K.R.-Israel lacked standing because it was not an intended third-party beneficiary to theretainer agreement. Following a hearing, the trial court granted FHI's and Ittleman's motion and dismissed K.R.-Israel's complaint with prejudice.³ The order of dismissal does not indicate the ground upon which the trial court based its ruling. This appeal ensued.⁴

II. ANALYSIS

To assert a legal malpractice action, a plaintiff must allege the following three elements: "1) the attorney's employment; 2) the attorney's neglect of a reasonable duty; and 3) the attorney's negligence as the proximate cause of loss to the client." Law Office of David J. Stern, P.A. v. Sec. Nat'l Servicing Corp., 969 So. 2d 962, 966 (Fla. 2007) (quoting Law Office of David J. Stern, P.A. v. Sec. Nat'l Servicing Corp, 916 So. 2d 934, 936 (Fla. 4th DCA 2006)); Sure Snap Corp. v. Baena, 705 So. 2d 46, 48-49 (Fla. 3d DCA 1997); Maillard v. Dowdell, 528 So. 2d 512, 514 (Fla. 3d DCA 1988). To withstand dismissal, however, a plaintiff must allege more than the "naked legal conclusion" that the law firm and attorneys have negligently rendered legal services. Rios v. McDermott, Will & Emery, 613 So. 2d 544 (Fla. 3d DCA 1993) (quoting Arky, Freed, Stearns, Watson, Greer, Weaver & Harris v. Bowmar Instrument Corp., 527 So. 2d 211, 212 (Fla. 3d DCA 1987), disapproved on other grounds, 537 So. 2d 561 (Fla. 1988)); see also Bankers Trust Realty. Inc. v. Kluger, 672 So. 2d 897, 898 (Fla. 3d DCA 1996). "Florida's pleading rule [1.110(b)(2)] forces counsel to recognize the elements of their cause of action and determine whether they have or can develop the facts necessary to support it, which avoids a great deal of wasted expense to the litigants and unnecessary judicial effort." Horowitz v. Laske, 855 So. 2d 169, 172-73 (Fla. 5th DCA 2003); see also Arky, Freed, 537 So. 2d at 563 (concluding that "litigants at the outset of a suit must be compelled to state their pleadings with sufficient particularity for a defense to be prepared"). Applying these principles, we agree with the trial court and hold that the complaint does not properly state a cause of action for legal malpractice against FHI and Ittleman.

A. Failure to Comply With Minimum Pleading Requirement

At the outset, we note that K.R.-Israel has failed to comply with Florida Rule of Civil Procedure 1.110. A party should plead each distinct claim in a separate count, rather than plead the various claims against all of the defendants together.⁵ See Fla. R. Civ. P. 1.110(f); Pratus v. City of Naples, 807 So. 2d 795, 797 (Fla. 2d DCA 2002); see also Aspsoft, Inc. v. Webclay, 983 So. 2d 761, 768 (Fla. 5th DCA 2008) (holding that plaintiff's complaint set forth defective claims by "impermissibly comingling separate and distinct claims" in a single count); Dubus v. McArthur, 682 So. 2d 1246, 1247 (Fla. 1st DCA 1996) (stating that the "task of the trial court was made more difficult because the appellants' amended complaint improperly attempts to state in a single count separate causes of action"). In so doing, the plaintiff also must comply with Florida Rule of Civil Procedure 1.110(b)(2), which requires that the complaint contain "a short and plain statement of the ultimate facts showing that the pleader is entitled to relief." See also Goldschmidt v. Holman, 571 So. 2d 422, 423 (Fla. 1990); Horowitz, 855 So. 2d at 172.

In this case, the complaint, which purports to allege legal malpractice claims against FHI and Ittleman, fails to comply with the basic rules of pleading. The complaint consists of forty-seven numbered paragraphs containing factual allegations and legal conclusions concerning the malpractice claims against FHI and Ittleman, as well as the claims against CRA and Guido, concerning the implementation of the compliance program. The claims against the various defendants are not divided into separate counts, titled "legal malpractice" or otherwise. Instead, the complaint randomly intersperses the factual allegations and legal conclusions against FHI and Ittleman among the allegations against the otherdefendants without denoting the separate claims. In addition, numerous paragraphs contain allegations and legal conclusions that improperly refer to FHI and Ittleman (as well as CRA and Guido) collectively as "defendants" and do not differentiate among the various defendants' actions and statements. Furthermore, in violation of Rule 1.110(b), the complaint improperly contains rambling allegations stating in general terms K.R.-Israel's dissatisfaction and frustration with FHI and Ittleman's legal performance. "To say merely that this complaint is not well pleaded is an understatement. It lacks minimal organization and coherence." Pratus, 807 So. 2d at 796. Accordingly, we find that the complaint does not comply with Rule 1.110, and dismissal is warranted on this ground.

B. Failure to State a Cause of Action for Legal Malpractice

Addressing the substance of the allegations themselves, we hold that the complaint does not state a cause of action for legal malpractice against FHI and Ittleman. First, K.R.-Israel has failed to properly allege that it has standing to bring this action. Conceding that it is not in privity with FHI, K.R.-Israel contends that the complaint alleges that K.R.-Israel fits within a narrow exception to this requirement-it is an intended third-party beneficiary of FHI's legal representation of K.R.-USA. ⁶ See Espinosa v. Sparber, Shevin, Shapo, Rosen & Heilbronner, 612 So. 2d 1378, 1379 (Fla. 1993); Angel, Cohen & Rogovin v. Oberon Inv., N.V., 512 So. 2d 192, 194 (Fla. 1987). This contention is without merit as the retainer agreement attached to the complaint is inconsistent with those allegations. It is well settled that the court must consider an exhibit attached to the complaint together with the complaint's allegations, and that the exhibit controls when its language is inconsistent with the complaint's allegations. See Blue Supply Corp. v. Novos Electro Mech., Inc., 990 So. 2d 1157 (Fla. 3d DCA 2008); Ginsberg v. Lennar Fla. Holdings, Inc., 645 So. 2d 490, 494 (Fla. 3d DCA 1994); Harry Pepper & Assocs., Inc. v. Lasseter, 247 So. 2d 736, 736 (Fla. 3d DCA 1971).

Here, the retainer agreement does not mention K.R.-Israel and is directed to Elmaleh, individually and on behalf of K.R.-USA. It states that FHI will provide legal services by offering a written opinion whether "your business KR Services USA" is required to register in Florida and to advise "you" how to restructure "your various entities." (Emphasis added). There is no basis to conclude that K.R.-Israel falls within the purview of the phrase "your various entities." The complaint merely alleges that K.R.-USA is a consultant for K.R.-Israel...