Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-2_14-cv-01953/USCOURTS-alnd-2_14-cv-01953-0/pdf.json

Nature of Suit Code: 380
Nature of Suit: Other Personal Property Damage
Cause of Action: 28:1332 Diversity - Legal Malpractice

---

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

SAN FRANCISCO RESIDENCE CLUB,

INC.; THOMAS O’SHEA, as Trustee of

the Trust of Thomas and Anne O’Shea; 

ANNE O’SHEA, as Trustee of the Trust of

Thomas and Anne O’She a; KATE

LARKIN DONAHUE; GRANDVIEW

CREDIT, L.L.C.,

Plaintiffs,

vs.

LEADER, BULSO & NOLAN, P.L.C.;

EUGENE N. BULSO,

Defendants.

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

CASE NO. 2:14-CV-1953-SLB

LEADER, BULSO & NOLAN, P.L.C.,

Counter Claimant,

vs.

SAN FRANCISCO RESIDENCE CLUB,

INC.; THOMAS O’SHEA, as Trustee of

the Trust of Thomas and Anne O’Shea;

ANNE O’SHEA, as Trustee ofthe Trust of

Thomas and Anne O’Shea; KATE

LARKIN DONAHUE; GRANDVIEW

CREDIT, L.L.C.,

Counter Defendants.

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

MEMORANDUM OPINION

FILED

 2015 Sep-28 PM 03:32

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 1 of 10
This case is presently pending before the court on defendants’ Motion to Dismiss Count I of

Complaint. (Doc. 7.)

1 Plaintiffs have sued defendants alleging breach of fiduciary duty,Count I, and

violation of the Alabama Legal Services Liability Act [ALSLA], Count II, arising out of defendants’

representation of plaintiffs in San Francisco Residence Club v. Park Tower, LLC, Case Number:

5:08-CV-1423-AKK [hereinafter Park Tower litigation]. (See generally doc. 1.) Defendants ask

the court to dismiss Count I of plaintiffs’ Complaint “[b]ecause the remedy provided by the ALSLA

is Plaintiffs’ sole and exclusive remedy for Defendants’ alleged breaches of duty as legalservices

providers.” (Doc. 7 ¶ 4.) Upon consideration of the record, the submissions of the parties, the

arguments of counsel, and the relevant law, the court is of the opinion that defendants’ Motion to

Dismiss Count I of Complaint, (doc. 7), is due to be granted in part and denied in part.

I. MOTION TO DISMISS STANDARD

Defendants have moved to dismiss Count I of plaintiffs’ Complaint “pursuant to Fed. R. Civ.

P. 12(b)(6).” (Doc. 7 at 1.) Rule 12(b) provides: “Every defense to a claimfor relief in any pleading

must be asserted in the responsive pleading if one is required. But a party may assert the [12(b)(6)

defense of failure to state a claim upon which relief can be granted] by motion . . . . A motion

asserting [this] defense[ ] must be made before pleading if a responsive pleading is allowed.” Fed.

R. Civ. P. 12(b). However, the defense of “[f]ailure to state a claim upon which relief can be granted

. . . may be raised: (A) in any pleading allowed or ordered under Rule 7(a); (B) by a motion under

1Reference to a document number, [“Doc. ___”], refers to the number assigned to each

document as it is filed in the court’s record.

2

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 2 of 10
Rule 12(c); or (C) at trial.” Fed. R. Civ. P. 12(h)(2). Because this Motion to Dismiss was filed after

defendants filed their Answer, it is not a Motion to Dismiss “pursuant to Rule 12(b)(6),” (doc. 7 at

1); rather, it is properly considered a Motion for Judgment on the Pleadings pursuant to Fed. R. Civ.

P. 12(c).

Rule 12(c) provides, “After the pleadings are closed – but early enough not to delay trial –

a party may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). “Judgment on the

pleadings is appropriate where there are no material facts in dispute and the moving party is entitled

to judgment as a matter of law. In determining whether a party is entitled to judgment on the

pleadings,[the court must] accept as true allmaterialfacts alleged in the non-moving party’s pleading,

and [it must] view those facts in the light most favorable to the non-moving party.” Perez v. Wells

Fargo N.A., No. 13-13853, 2014 WL 7229271, *4 (11th Cir. Dec. 18, 2014)(quoting Cannon

v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001)(citing Hawthorne v. Mac

Adjustment, Inc., 140 F.3d 1367, 1370 (11th Cir. 1998)))(internal quotations and citations

omitted). “Judgment on the pleadings is proper when no issues of materialfact exist and the moving

party is entitled to judgment as a matter of law based on the substance of the pleadings and any

judicially noticed facts.” Interline Brands, Inc. v. Chartis Specialty Ins. Co., 749 F.3d 962, 965

(11th Cir. 2014)(internal citations and quotations omitted).

3

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 3 of 10
II. STATEMENT OF FACTS

Plaintiffs’ Complaint contains the following allegations of fact, which the court has accepted

as true for purposes of deciding defendants’ Motion to Dismiss/Motion for Judgment on the

Pleadings:

9. [Defendants] represented Plaintiffs astheir legal[counsel]. Due to the trust

and confidence afforded [Defendants] by the Plaintiffs and at the recommendation of

[Defendants], the representation was general and resulted in litigation in courts in

Alabama, Hawaii and California . . . .

10. During the course of [Defendants’] representation of Plaintiffs,

[Defendants] failed in San Francisco Residence Club, Inc. et al v. Park Tower,

LLC, United States District Court, Northern District of Alabama, Case Number:

5:08-cv-01423-AKK (“Park Tower”), by, inter alia, failing to properly, timely and

adequately disclose significant amounts of damages suffered by Plaintiffs. In fact,

[Defendants,] unreasonably and without justification, objected to discovery requests

regarding Plaintiffs’ damages. The deficient disclosures and unreasonable objections

were held to be in violation of the Federal Rules of Civil Procedure and as a result,

the Court sanctioned [Defendants] and excluded millions of dollars of damages from

Plaintiffs’ recovery. [Defendants’] failure to follow theRules ofCivilProcedure failed

to comply with the duty of care owed Plaintiffs. Plaintiffs relied upon [Defendants’]

expertise as a legalservice provider, to their detriment, and were damaged as a result.

11. Moreover,following the Order of the Court restricting Plaintiffs’ damages

in Park Tower, [Defendants] misled and did not properly advise Plaintiffs as to the

impact of the Court’s sanction Order, causing Plaintiffs to expend hundreds of

thousands of dollars towards [Defendants’] inflated legal bills pursuing the litigation.

[Defendants] misrepresentedthe status of the litigation and misrepresented toPlaintiffs

that they had claims worth several millions of dollars despite [Defendants’] superior

knowledge of the effect of the sanctions against [Defendants]. A reasonable lawyer

under the circumstances would not have disguised or failed to properly advise

Plaintiffs of the impact of the Court’s sanction. Furthermore, [Defendants] failed to

properly advise Plaintiffs of the conflict of interest created by the Court’s Order.

4

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 4 of 10
12. During the course of [Defendants’] representation of Plaintiffs,

[Defendants] failed, to properly and adequately state causes of action on behalf of

Plaintiff Grandview Credit, LLC, and to join Plaintiff Grandview Credit, LLC, in

causes of action [Defendants] pursued for other Plaintiffs in that action, causing

dismissal of all of Grandview Credit, LLC’s claims. Defendants’ failure to properly

assert claims on behalf of Grandview Credit, LLC, along with other improper actions

and/or omissions listed herein, was unreasonable. [Defendants] did not exercise the

reasonable care and skill as would have been exercised by an attorney in the location

and area involved. Grandview Credit, LLC, relied on Defendants’ touted abilities as

legalservice providers, to their detriment, and Plaintiffs were damaged as a result.

13. During the course of [Defendants’] representation of Plaintiffs,

[Defendants] overcharged Plaintiffs for services and, upon information and belief,

billed Plaintiffs for time that was not spent, reasonable, necessary or authorized.

Within a twenty-four month period,Bulso and one associate charged Plaintiffs nearly

$2,000,000 (some minor charges were allegedly incurred by a few other lawyers or

staff). [Defendants] represented to Plaintiffs that Plaintiffs’ claims were worth the

funds charged, plus millions, yet after millions of dollars were billed and paid to

[Defendants], [they] abandoned Plaintiffs and recommended Plaintiffs settle for

“whatever amount they could get,” even suggesting Plaintiffs accept $150,000 in full

and finalsettlement. With full knowledge of the sanctions and failures listed above,

[Defendants] concealed the true status of the cases with the intention of billing

Plaintiffs as much money as they could afford to borrow or pay. Bulso put his interest

before the interest of his clients, thereby breaching the duty of loyalty. After

misrepresenting to Plaintiffs the events caused by Bulso that weakened their cases,

[Defendants] simply walked away and sought liens against any funds Plaintiffs might

achieve. Defendants acted in their own best interests rather than representing the

[interests] of Plaintiffs.

14. [Defendants] also improperly asserted liens in federal court in Alabama,

for services performed outside of Alabama and for which [Defendants have] no right

to a lien.

2

[Defendants] also improperly asserted a lien on money far in excess what

was even allegedly owed by each and/or certain Plaintiffs.

. . .

2

See San Francisco Residence Club, Inc., v. Park Tower, LLC, Case No. 5:08-CV1423-AKK, doc. 292.

5

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 5 of 10
16. [Defendants were] Plaintiff’s fiduciar[ies] and thereby owed a duty of

care and loyalty to Plaintiffs as Plaintiffs’ counsel. . . . [Defendants’] breaches of duty

in Alabama are set forth under the Alabama Legal Services Liability Act.

(Doc. 1 ¶¶ 9-14, 16 [footnote added].)

III. DISCUSSION

Defendants argue, “The Complaint asserts two legal claims arising out of [the] alleged

breaches of duty: breach of fiduciary duty (Count I) and violation of the ALSLA (Count II). [(Doc.

1 at 7, 8.)] Because the remedy provided by the ALSLA is Plaintiffs’ sole and exclusive remedy for

Defendants’ alleged breaches of duty as legalservices providers, Count I of the complaint should be

dismissed.” (Doc. 7 ¶ 4.) Plaintiffs contend, “Discovery is necessary to assure Plaintiffs do not

inadvertently waive their right to pursue claims that are discovered to have arisen from services

provided outside of Alabama or if it is discovered that Defendants duties arose from the common

law, rather than from Defendants’ representation of Plaintiffs in Alabama.” (Doc. 10 ¶ 3.) 

Therefore, they state, “If discovery reveals that Plaintiffs[‘] breach of fiduciary duty claims arise

entirely from Defendants’ failure to meet the stand[ard] of care while performing legalservices in

Alabama, the same claims are merely encompassed within the [ALSLA] and dismissal of Count[ ]

I . . . is a mere technicality without any substantive effect.” (Id. ¶ 5.)

According to the Alabama Supreme Court:

Section 6-5-573, Ala. Code 1975, [ALSLA] provides: “There shall be only one

form and cause of action against legal service providers in courts in the State of

Alabama and it shall be known as the legalservice liability action and shall have the

meaning as defined herein.”

6

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 6 of 10
Section 6-5-572(2), Ala. Code 1975, defines a “legalservice provider” as

“[a]nyone licensed to practice law by the State of Alabama or engaged in the

practice of law in the State of Alabama. The term legal service provider

includes professional corporations, associations, and partnerships and

members of such professional corporations, associations, and partnerships

and the persons, firms, or corporations either employed by or performing

work or services for the benefit of such professional corporations,

associations, and partnerships including, without limitation, law clerks, legal

assistants, legalsecretaries, investigators, paralegals, and couriers.”

Section 6-5-572(1), Ala. Code 1975, defines “legal service liability action”

as

“[a]ny action against a legalservice provider in which it is alleged that some

injury or damage was caused in whole or in part by the legal service

provider’s violation of the standard of care applicable to a legal service

provider. A legal service liability action embraces all claims for injuries or

damage[ ] or wrongful death whether in contract or in tort and whether based

on an intentional or unintentional act or omission. A legal services liability

action embraces any form of action in which a litigant may seek legal redress

for a wrong or an injury and every legal theory of recovery, whether common

law or statutory, available to a litigant in a court in the State of Alabama now

or in the future.”

Roberts v. Lanier, 72 So. 3d 1174, 1180-81 (Ala. 2011).

“The [ALSLA] is very broad. It creates one form of action against any ‘legal service

provider’ and exclusively governs any and all actions brought against a legal service provider for

damages. [It] embraces all claims, based on either contract or tort, and supersedes any inconsistent

provisions of the law.” Mississippi Valley Title Ins. Co. v. Hooper, 707 So. 2d 209, 217 (Ala.

1997)(Bryan, Special Justice, concurring in the result). However, the definition of legal services

provider is limited. The Alabama Supreme Court has held, “The plain language of § 6-5-572(2), as

7

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 7 of 10
well as that of the other portions of the ALSLA, clearly indicates that the Legislature intended for the

ALSLA to apply only to lawyers and to entities that are composed of members who are licensed to

practice law within the State of Alabama.” Alabama Educ. Ass’n v. Nelson, 770 So. 2d 1057,

1059 (Ala. 2000). Also, an attorney not licensed to practice law in Alabama, but associated with

an Alabama attorney,may “meet[ ] that part of the definition of a ‘legalservice provider’ that includes

‘the persons, firms, or corporations either employed by or performing work or services for the

benefit of such professional corporations, associations, and partnerships . . . ,” if the relationship

between the foreign attorney or firm and the Alabama attorney or firm constitutes a joint venture.

Wachovia Bank, N.A. v. Jones, Morrison & Womack, P.C., 42 So. 3d 667, 678 (Ala.

2009)(citing 46 Am. Jur. 2d Joint Ventures § 50 (2006))(emphasis in Wachovia Bank).

Moreover, the ALSLA covers claims encompassing legal services provided by an attorney while

admitted pro hac vice. See Lanier, 72 So. 3d at 1183 n.6 (“It seems clear that, after he obtained

pro hac vice status, [defendant, a foreign attorney,] qualified as a ‘legal-service provider’ under the

ALSLA.”) Alabama has declined to decide whether “claims aris[ing] out of alleged misconduct that

is said to have occurred before [a foreign attorney] obtained [pro hac vice] status,” are subject to

the ALSLA. Id. And, this court has found no case discussing the applicability of the ALSLA to a

legal-services liability action based on a breach of the standard of care arising after a foreign legal

services provider has withdrawn from his representation in an Alabama proceeding in which they

were granted pro hac vice status. Given the Alabama courts’ holding limiting the application of the

8

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 8 of 10
ALSLA with regard to foreign attorneys, the court finds that the ALSLA does not apply to claims

against a foreign attorney or firm, not working for the benefit of a licensed Alabama attorney, based

on acts or omissions occurring before or after the foreign attorney’s pro hac vice representation of

his client in an Alabama proceeding.

Defendant Bulso is an attorney licensed to practice law in Tennessee. He and Steven Nieters,

both attorneys with defendant Leader, Bulso & Nolan, were admitted pro hac vice on February 24,

2009, in the Park Tower litigation. See Park Tower, Case No. 5:08-CV-1423-AKK, doc. 43.

On October 28, 2011, Bulso and Nieters moved to withdraw from both the Park Tower and the

Baswell-Guthrie cases; their motions were granted on November 3, 2011. See Park Tower, Case

No. 5:08-CV-1423-AKK, doc. 291 and stamp ruling of November 3, 2011; Baswell-Guthrie,

Case No. 5:09-CV-0421-CLS, doc. 177 and stamp ruling of November 3, 2011.

Therefore, the court finds that defendants’ Motion to Dismiss/Motion for Judgment on the

Pleadings,(doc. 7), will be granted in part and denied in part. Defendants’ Motion to Dismiss Count

I will be granted as to claims based on defendants’ alleged wrongdoing arising out of the

attorney/client relationship during the time defendants appeared in this court pro hac vice and will be

denied as to claims based on wrongdoing arising out of the attorney/client relationship before

defendants appeared in this court pro hac vice and after they withdrew fromrepresenting the plaintiffs

in the Park Tower litigation.

9

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 9 of 10
DONE this 28th day of September, 2015.

SHARON LOVELACE BLACKBURN

SENIOR UNITED STATES DISTRICT JUDGE

10

Case 2:14-cv-01953-KOB Document 15 Filed 09/28/15 Page 10 of 10