Thomas v. Peabody, DOCKET NO. CV-09-22

• Decision Date: 07 February 2011
• Docket Number: DOCKET NO. CV-09-22
• Parties: RICHARD J. THOMAS, et al., Plaintiffs, v. EATON PEABODY, et al., Defendants.
• Court: Maine Supreme Court

RICHARD J. THOMAS, et al., Plaintiffs,

v.EATON PEABODY, et al., Defendants.

DOCKET NO. CV-09-22

Supreme Judicial Court of Maine

Date: February 7, 2011

ORDER ON DEF AND ANTS' 12(B)(6) MOTION TO DIMISS

Before the Court is the Defendants' Motion to Dismiss Counts I, III, IV and IV, of the Plaintiff's complaint pursuant to M.R. Civ. P. 12(b)(6). The court has reviewed the parties' filings in the matter, and considered their oral presentations. The Defendants Motion to Dismiss is granted, in part, and denied, in part.

I. PROCEDURAL BACKGROUND

On March 16, 2009, Plaintiffs Robert J. Thomas, individually and as Trustee for the Ichabod Trust, and Richard A. Thomas, individually, filed suit against the defendants Eaton Peabody, PA ("Firm"), and three attorneys employed by the Firm, Christine Burke-Worthen, Calvin E. True, and Nathaniel S. Putnam, respectively. On March 16, 2009, the defendants served the plaintiffs with a timely responsive pleading and the M.R. Civ. P 12(b)(6) motion to dismiss Counts I, III, IV, and V of the Complaint. The Firm then served the plaintiffs with an amended pleading setting forth three counterclaims: (1) breach of contract; (2) unjust enrichment; and (3) services rendered. The Firm's counterclaims stem from the plaintiffs' failure to pay for the legal services it rendered in connection with the representing Robert Thomas, Richard Thomas, and the Trust.

Subsequently, the plaintiffs moved to stay all proceedings pending the outcome of an appeal Richard Thomas filed with United States Court of Appeals for the First Circuit on June 1, 2009. As part of the motion to stay the proceedings, the plaintiffs summarily denied "the Defendants' arguments in their defense of Counts I, III, IV, and V." (Plaintiff's Mot. to Stay Proceedings ¶ 4.) This Court denied the plaintiffs motion to stay proceedings on June 25, 2009. Consequently, the Firm's 12(b)(6) motion to dismiss Counts I, III, VI and V of the Complaint is ripe for review.

II. FACTUAL BACKGROUND

The facts relevant to this motion to dismiss are set forth in the Complaint. At some point in 1997, the plaintiffs formed the Ichabod Trust with plaintiff Richard J. Thomas and Joan M. Thomas designated as beneficiaries. (Compl. ¶ 8.) On February 5, 2005, the Internal Revenue Service ("IRS") made tax assessments against Richard Thomas for allegedly failing to pay federal income taxes during the years 1995 and 1996. (Id. at ¶ 9.) On June 19, 2006, Plaintiff Robert A. Thomas, Trustee of the Ichabod Trust ("Trust"), engaged attorney Calvin True of Eaton Peabody, PA, to provide legal advice concerning the validity of the Trust. (Id. at ¶ 11.) At the time of that meeting, Plaintiff Richard Thomas was involved in a separate criminal proceeding in federal district court on charges of tax evasion. (Id. at ¶ 13.) On March 12, 2007, the IRS placed a jeopardy levy in the amount of $52,000.00 on the Penobscot County Federal Credit Union account holding the Trust assets. (Id. at ¶ 19.) Shortly thereafter, Robert Thomas hired Calvin True to defend the Trust against the jeopardy levy imposed by the IRS. (Id. at ¶ 20.) On April 5, 2007, Richard Thomas signed a form giving True and Burke-Worthen Power ofAttorney to represent him.¹ (Id. at ¶ 21.) Burke-Worthen then requested an administrative hearing to review the actions of the IRS regarding the jeopardy levy imposed on the Trust account. (Id. at ¶ 22.)

On May 7, 2007, the IRS delivered to Burke-Worthen notice of a second jeopardy levy on the Trust account identical to the one previously received by the plaintiffs on March 12, 2007. (Id. at ¶ 26.) Burke-Worthen then filed a request with the IRS for a Collections Due Process ("CDP") hearing on May 21, 2007. (Id. at 27.) The IRS held a CDP hearing on July 10, 2007. (Id. at 28.) The Firm did not initiate proceedings seeking judicial review of the jeopardy levy in United State District Court pursuant to 26 U.S.C § 7429. (Id. at ¶ 29.) On August 7, 2007, the IRS issued a Notice of Determination upholding the jeopardy levy imposed on the Trust. (Id. at ¶ 30.) Burke-Worthen then advised Richard Thomas that she would appeal the decision of the Tax Court to uphold the jeopardy levy on the Trust provided the plaintiffs could pay the fees necessary to continue representation. (Id. at ¶ 31.) As the plaintiffs were unable to procure additional funds to retain the Firm for the purposes of appealing the jeopardy levy on the Trust, the Firm did not file an appeal for "wrongful levy" on behalf of the Trust or its Trustee within the nine months required by 26 U.S.C. § 6532(c). (Id. at ¶ 33.)

III. STANDARD OF REVIEW

On a motion to dismiss, facts are not adjudicated. Instead, the court evaluates the allegations in the complaint in relation to any cause of action that may reasonably be inferred from the complaint. The court considers the facts stated in the complaint as if they were admitted. Libner v. Me. County Comm'rs Ass'n, 2004 ME 39, ¶ 7, 845 A.2d570, 572; Napieralski v. Unity Church of Greater Portland, 2002 ME 108, ¶ 4, 802 A.2d 391, 392. Evaluating the complaint in the light most favorable to the plaintiff, the court determines whether the complaint "sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to relief pursuant to some legal theory." In re Wage Payment Litig., 2000 ME 162, ¶ 3, 759 A.2d 217, 220. "Dismissal is warranted when it appears beyond a doubt that the plaintiff is not entitled to relief under any set of facts that he might prove in support of his claim." Johanson v. Dunnington, 2001 ME 169, ¶ 5, 785 A.2d 1244, 1246.

IV. DISCUSSION

A. Count I: Negligence

The Firm essentially concedes that it owed Robert Thomas, both individually and as Trustee of the Trust, a duty of care to provide competent legal advice concerning the validity of the Trust. (Def.'s Mot. to Dismiss 3.) Even assuming a breach of the standard of care, however, the Firm moves to dismiss Count I on the grounds that any such breach could not have proximately caused the injuries the Robert Thomas alleges in the Complaint. To prove a claim for professional negligence, or civil malpractice, "the plaintiff must show (1) a breach by the defendant attorney of the duty owed to the plaintiff to conform to a certain standard of conduct; and (2) that the breach of the duty proximately caused an injury or loss to the plaintiff." Corey v. Norman, Hanson & Detroy, 1999 ME 196, ¶ 10, 742 A.2d 933, 938-39.

Robert Thomas alleges that an attorney-client relationship existed at the time True rendered legal advice concerning the validity of the Trust, the advice True gave to Robert Thomas was "negligent," and as a result of True's "negligent" advice, RobertThomas suffered damage to his reputation and suffered loss of customers and business. (Compl. ¶¶ 37-40.) Crediting the facts alleged in the Complaint as true, the Firm argues that the plaintiffs have failed to plead facts sufficient to demonstrate a causal connection between the negligent act, rendering "negligent" advice concerning the validity of the Trust, and the injury alleged, harm to Robert Thomas' reputation and loss of customers and business. This Court agrees.

The Law Court has noted "[p]roximate cause exists in professional malpractice cases where evidence and inferences that may reasonably be drawn from the evidence indicate that the negligence played a substantial part in bringing about or actually causing the injury or damage and that the injury or damage was either a direct result or a reasonably foreseeable consequence of the negligence." Niehoff v. Shankman & Assocs. Legal Ctr., P.A., 2000 ME 214, ¶ 8, 763 A.2d 121, 124) (quoting Merriam v. Wanger, 2000 ME 159, ¶ 8, 757 A.2d 778, 780-81) (quotation marks omitted). Generally, the issue of proximate cause is a question of fact for the jury. Klingerman v. SOL Corp of Me. 505 A.2d 474. However, the Court may wrest the proximate cause inquiry from jury determination "when the matter remains one of pure speculation or conjecture...[and] a defendant is entitled to judgment." Merriam, 2000 ME 159, ¶ 8, 757 A.2d at 781.

In this case, Robert Thomas alleges that True's negligent advice concerning the validity of the Trust is somehow connected to a loss of reputation and business clientele. There are no facts in the Complaint suggesting the Trust was integrally related to Robert Thomas' consulting business. Furthermore, the Complaint fails to either set forth elements of a defamation claim, or allege facts that would entitle him to relief pursuant to a defamation theory. See, e.g., Withers v. Hackett, 714 A.2d 798, 801 (Me. 1998) (notingthat a common law defamation claim requires the plaintiff to prove a false and defamatory statement concerning another, unprivileged publication to a third party, fault amounting to at least negligence on the part of the publisher, and either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication) (citation omitted).

The proximate cause analysis applicable to attorney malpractice actions demonstrates that the loss of reputation and business injury claimed by Robert Thomas is wholly unrelated to any advice True rendered concerning the validity of the Ichabod Trust. Simply put, the Court fails to find any correlation between the advice given, even if "negligent" as the plaintiff claims, and Robert Thomas' ability to maintain clients in his professional capacity as an investment, tax, and accounting advisor. The injury the Robert Thomas claims is not a foreseeable consequence of the allegedly negligent advice rendered by True concerning the validity of the Trust, but rather, subject to "pure speculation or conjecture." Merriam, 2000 ME 159, ¶ 8, 757 A.2d at 781.

The plaintiff has thus failed to plead facts sufficient to demonstrate the causal connection between the advice concerning the trust and the defamation-like injury Robert Thomas claims to have suffered. Moreover, the Court...