Date: December 20, 2017
MEMORANDUM AND ORDER ON DEFENDANTâS MOTION TO
P. Leibensperger, Justice
legal malpractice action the defendant law firm moves to
dismiss on the ground that the plaintiff, Accutrax, LLC, was
not the firmâs client. There is no question, however, that
the law firm was engaged to perform the legal services
described in the First Amended Complaint (FAC). There is also
no question that the FAC adequately pleads a claim for
professional malpractice and the other related claims,
assuming that the plaintiff is the client of Finnegan. Thus,
the issue presented is whether the sole plaintiff, Accutrax,
LLC, has standing as a client to assert the claims.
following facts are taken from the First Amended Complaint
(FAC), and the documents attached to the FAC as exhibits.
individuals acted as partners, or joint venturers, to patent
and market a razor utility knife. They agreed to form a
Delaware LLC to pursue the project. One partner, Kildevaeld
agreed to assign his ownership and patent rights to the LLC
in exchange for contributions by the other two partners,
Billado and Cumings, to commercialize and market the knife.
The three partners went to defendant, Finnegan, Henderson,
Farabow, Garrett & Dunner, LLP (Finnegan) to obtain legal
counsel for their enterprise.
partners informed Finnegan that they intended to form a
Delaware LLC with the name " Contractor Trusted,
LLC." They informed Finnegan that the LLC had not yet
been formed. Nevertheless, Finnegan prepared an engagement
letter for the legal representation, designating the client
as " Contractor Trusted, LLC." The engagement
letter, dated March 4, 2013, was signed by Billado on behalf
of Contractor Trusted, LLC. The engagement letter made it
clear that Finneganâs client was Contractor Trusted, LLC and
not any officer, director, shareholder or employee of the
LLC. The engagement letter attached an invoice for $5, 000.
On March 6, 2013, the invoice was paid by a check from
partners intended to market the knife under the name
Accutrax. When they finally incorporated the anticipated LLC,
they decided to name the corporation Accutrax, LLC, instead
of Contractor Trusted, LLC. Accutrax, LLC was formed on June
6, 2013. No entity by the name of Contractor Trusted, LLC was
ever formed. All three partners became members of Accutrax,
LLC. " Finnegan had actual as well as constructive
knowledge that Kildevaeld, Billado, and Cumings used the name
Accutrax, LLC instead of Contractor Trusted, LLC for their
LLC." FAC Â¶ 35.
proceeded to perform legal services. Billado provided to
Finnegan a prior art search result that he had from another
attorney. Invoices for April and May 2013 were sent by
Finnegan to " Contractor Trusted, LLC" for attorney
time and disbursements in connection with the patent
application for, as noted on the bills, "
Accutrax." The invoices were promptly paid by Billado.
Accutrax, LLC alleges that " [b]etween March 2013 and
August 2013, Billado paid Finnegan approximately $15, 000 on
behalf of the LLC for the engagement." FAC Â¶ 38.
LLC alleges that, counter to the understanding when the
partners engaged Finnegan, Finnegan prosecuted the patent
application on behalf of Kildevaeld, not the LLC. A patent
for the knife was issued to Kildevaeld, individually.
Finnegan did not prepare and obtain an assignment of the
patent rights from Kildevaeld to the LLC.
time later, after Accutrax LLC was formed, Finnegan took the
position that it represented Kildevaeld, individually, not
Accutrax, LLC. Finnegan denied that it represented any
corporation in connection with the patent application for the
knife. The three partners continued as members of Accutrax,
LLC to seek marketing opportunities for the knife. In October
2014, Kildevaeld asserted that the patent belonged to him,
and began to negotiate for a deal in his own right. Accutrax,
LLC alleges that Finnegan assisted Kildevaeld with respect to
his claim of ownership of the patent rights, in violation of
Finneganâs fiduciary duty to the LLC. The dispute between
Accutrax, LLC and Kildevaeld caused Accutrax, LLC to be
unable to secure marketing contracts, thereby causing damage
to Accutrax, LLC.
indicates that Kildevaeld is no longer a member of Accutrax,
LLC. At oral argument, reference was made to litigation (in
another county in Massachusetts) between the original
partners who formed Accutrax, LLC.
survive a motion to dismiss, a complaint must set forth the
basis for the plaintiffâs entitlement to relief with "
more than labels and conclusions." Iannacchino v.
Ford Motor Co.,451 Mass. 623, 636, quoting Bell A.
Corp. v. Twombly,550 U.S. 544, 555 (2007). At the
pleading stage, Mass.R.Civ.P. 12(b)(6) requires that the
complaint set forth " factual âallegations plausibly
suggesting (not merely consistent with)â an entitlement to
relief ..." quoting Bell A. Corp., 550 U.S. at
557. The court must, however, accept as true the allegations
of the ...