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VSE Corp. v. Koretzky

United States District Court, E.D. Louisiana

December 20, 2019

VSE CORPORATION
v.
HAROLD KORETZKY AND CARVER, DARDEN, KORETZKY, TESSIER, FINN, BLOSSMAN & AREAUX, L.L.C.

         SECTION “R” (4)

          ORDER AND REASONS

          SARAH S. VANCE UNITED STATES DISTRICT JUDGE.

         The Court has received the motion to dismiss for failure to state a claim from defendants Harold Koretzky and Carver, Darden, Koretzky, Tessier, Finn, Blossman & Areaux, L.L.C.[1] Because plaintiff VSE Corporation failed to file its suit against defendants within the peremptive period, the Court grants the motion.

         I. BACKGROUND

         This case arises from alleged legal malpractice. Plaintiff retained defendants to draft a Collective Bargaining Agreement with the International Association of Machinists and Aerospace Workers, AFL-CIO.[2] Plaintiff alleges that defendant Koretzky recommended that plaintiff include in the Agreement a provision requiring mandatory unpaid breaks.[3] Plaintiff and the machinists' union signed the Agreement in January 2017.[4] But the requirement for unpaid breaks allegedly violated the Fair Labor Standards Act.[5] Consequently, plaintiff was sued in the Eastern District of Texas.[6]

         Plaintiff received service of the Texas suit on April 23, 2018.[7] On August 10, 2018, plaintiff allegedly notified defendants of the Texas suit.[8]Not until May 30, 2019, though, did plaintiff file the current action against defendants.[9]

         In the current suit, plaintiff alleges that it is entitled to damages as a result of defendants' negligent legal advice.[10] Defendant responded with a motion to dismiss, arguing that plaintiff's claims are perempted.[11]

         II. LEGAL STANDARD

         To overcome a Rule 12(b)(6) motion, a party must plead “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A court must “accept all factual allegations in the complaint as true” and “must also draw all reasonable inferences in the plaintiff's favor.” Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).

         A legally sufficient complaint must establish more than a “sheer possibility” that the party's claim is true. See Iqbal, 556 U.S. at 678. It need not contain “detailed factual allegations, ” but it must go beyond “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action.'” See Id. (quoting Twombly, 550 U.S. at 555). In other words, “[t]he complaint (1) on its face (2) must contain enough factual matter (taken as true) (3) to raise a reasonable hope or expectation (4) that discovery will reveal relevant evidence of each element of a claim.” Lormand, 565 F.3d at 257 (citations omitted). The claim must be dismissed if there are insufficient factual allegations “to raise a right to relief above the speculative level, ” Twombly, 550 U.S. at 555, or if it is apparent from the face of the complaint that there is an insuperable bar to relief, see Jones v. Bock, 549 U.S. 199, 215 (2007).

         “In considering a motion to dismiss for failure to state a claim, a district court must limit itself to the contents of the pleadings, including attachments thereto.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). That said, courts may also rely on “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). Otherwise, though, if “matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d).

         III. DISCUSSION

         Defendants argue that plaintiff filed this claim outside the applicable peremptive period, and thus the Court should dismiss it.[12] Because the Court's jurisdiction is based on the parties' diversity of citizenship, [13] the Court applies “federal procedural law and state substantive law.” Vincent v. A.C. & S., Inc., 833 F.2d 553, 555 (5th Cir. 1987) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). “And state statutes of limitations are considered substantive for purposes of Erie analysis.” Id. (citing Guaranty Tr. Co. v. York, 326 U.S. 99 (1945)). The Court therefore applies Louisiana law on peremption. See id.[14]

         To state a claim for legal malpractice under Louisiana law, “a plaintiff must prove: 1) the existence of an attorney-client relationship; 2) negligent representation by the attorney; and 3) loss caused by that negligence.” Hamilton v. Burns, 202 So.3d 1177, 1182 (La.App. 4 Cir. 2016) (citing Teague v. St. Paul Fire & Marine Ins. Co., 974 So.2d 1266, 1272 (La. 2008)).

         Even if a plaintiff meets all these elements, though, he must bring his claim within the applicable limitations period in order to state a claim. Louisiana law provides a “peremptive” period for legal malpractice actions.[15] The peremption statute states:

No action for damages against any attorney . . . shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered; however, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect.

La. R.S. 9:5605. In other words, a claim must be filed within one year of the date that the legal malpractice occurred. If the malpractice is not discovered at its time of occurrence, the claim can be filed within a year of the date that it was discovered, or should have been discovered. But even so, the claim cannot be filed more than three years after the date the malpractice occurred. See Jenkins v. Starns, 85 So.3d 612, 626 (La. 2012) (identifying these three peremptive periods).

         Here, the “alleged act, omission, or neglect” was defendants' provision of “negligent advice regarding unpaid breaks, ”[16] which plaintiff's Collective Bargaining Agreement subsequently mandated.[17] Although the complaint does not identify the exact date defendants allegedly advised plaintiff regarding unpaid breaks, the final agreement containing this provision was signed in January 2017.[18] Consequently, given that the current suit was filed in May 2019-over two years later-the parties do not appear to dispute that the complaint would fall outside the one-year peremption period, if calculated based on the date the malpractice allegedly occurred.

         Rather, the parties dispute whether the current suit was filed within one year of the discovery of the alleged malpractice. Defendants claim that the “one-year peremptive period began with the April 23, 2018 service of the [Texas] Suit.”[19] Defendants also note that Plaintiff's attorneys in that case had made an appearance by May 10, 2018.[20] Plaintiff, on the other hand, argues that its “knowledge of a lawsuit does not establish that plaintiff was aware their hired counsel committed negligence when drafting the [Agreement].”[21]

         If plaintiff had discovered or should have discovered defendants' alleged malpractice by April 23, 2018, the complaint is perempted on its face, as plaintiff did not file the current suit until May 30, 2019-over a year after that date. As an initial matter, therefore, the Court examines whether service of the Texas suit triggers the discovery-based peremption period.

         “Put . . . simply, the date of discovery is the date the negligence was discovered or should have been discovered by a reasonable person in the plaintiff's position.” Teague, 974 So.2d at 1275. A party need not necessarily have actual knowledge of the negligence; rather, constructive knowledge- “whatever notice is enough to excite attention and put the injured party on guard and call for inquiry”-can start the peremptive period. Id. (quoting Campo v. Correa, 828 So.2d 502, 510-11 (La. 2012)). That said, “a claimant's mere apprehension that something may be wrong is insufficient to commence the running of peremption unless the claimant knew or should have known through the exercise of reasonable diligence that his problem may have been caused by acts of malpractice.” Id. at 1276.

         Under this test, the date a plaintiff receives notice of a legal filing triggered by alleged malpractice provides the date of discovery. For example, in Gibsland Bank & Trust Co. v. Kitchens, Benton, Kitchens & Black (APLC), 114 So.3d 529 (La.App. 2 Cir. 2013), the Louisiana Court of Appeal for the Second Circuit considered the type of legal activity necessary to trigger the discovery date. There, a lawyer told a bank that a property title was clean. See Id. at 530-31. Based on this opinion, the bank issued a loan to the property owner, with the property as security. See Id. at 531. Unbeknownst to the bank, though, a third party had a preexisting mortgage. See Id. When the third party attempted to seize the property, the bank intervened. See Id. The bank later filed a malpractice suit against the lawyer who had checked the title. See Id. at 530-31.

         Based on these facts, the Louisiana Court of Appeal determined that “[t]he critical inquiry . . . [wa]s the date upon which [the bank] discovered or should have discovered the law firm's mistake.” Id. at 533. And the court found that this discovery date occurred when the bank became aware of the third party's suit. Specifically, the court held that “the one-year peremptive period began to run . . . when [the bank] received notice that [the third party] had filed suit and was seizing the . . . property based upon his claim that his mortgage outranked the bank's security interest.” Id. at 534. Because more than a year passed after the bank received notice of the third party's suit before the bank filed its malpractice suit, the court dismissed the claim as perempted. See Id. at 535.

         Applying the holding in Gibsland to the facts of the current case reveals that plaintiff's suit falls outside this peremptive period. Here, plaintiff was alerted to defendants' alleged malpractice based on the filings in the Texas case. Specifically, plaintiff was served with the complaint more than a year before the current lawsuit was filed.[22] And this complaint states that plaintiff's “illegal policy or practice [of] providing . . . employees with two 15-minute unpaid rest breaks each day . . . violated the FLSA and its implementing regulations.”[23] Indeed, plaintiff acknowledges in its own complaint that “[t]his lawsuit alleges that [plaintiff] violated the FLSA by requiring unpaid fifteen minute breaks and associated overtime pay.”[24] That is, plaintiff represents that the exact advice allegedly given by defendants led to plaintiff's being sued for contravening federal law.[25] Moreover, not ...


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