Seed Company Limited v. Westerman

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SEED COMPANY, LTD. et al., :
:
Plaintiffs, : Civil Action No.: 08-0355 (RMU)
:
v. : Re Document Nos.: 34, 35
:
WILLIAM F. WESTERMAN et al., :
:
Defendants. :
MEMORANDUM OPINION
DENYING WITHOUT PREJUDICE THE WESTERMAN DEFENDANTS’ MOTION FOR SUMMARY
JUDGMENT; DENYING WITHOUT PREJUDICE THE KRATZ DEFENDANTS’ MOTION FOR
SUMMARY JUDGMENT; GRANTING THE PLAINTIFFS’ REQUEST FOR DISCOVERY
I. INTRODUCTION
This matter is before the court on the defendants’ respective motions for summary
judgment, as well as the plaintiffs’ request for discovery. The plaintiffs, Seed Company Ltd. and
Shigeru Tamai, (collectively, “Seed”), bring claims of legal malpractice against the two law
firms and individual lawyers who represented them in a prior patent dispute. The plaintiffs assert
that the defendants acted negligently when they allegedly (1) failed to file an English translation
of the plaintiffs’ Japanese patent application with a particular motion in their patent litigation,
and (2) provided erroneous legal advice that led the plaintiffs to reject two settlement offers
related to that same patent litigation.
The defendants now move for summary judgment. 1 The plaintiffs, in response, ask that
the court allow a period of discovery before ruling on the defendants’ motions for summary
judgment. Because the court determines that discovery should proceed prior to ruling on the
defendants’ motions, the court grants the plaintiff’s request and denies without prejudice the
defendants’ respective motions.
II. BACKGROUND
A. Factual Background
On July 31, 1991, Seed filed a patent application (“JP 371”) with Japan’s patent office
authority. Am. Compl. ¶ 13. On July 24, 1992, Seed filed an international patent application
under the Patent Cooperation Treaty (“PCT”) in Japan. Id. ¶ 14. The subject matter of both of
these patent documents was a correction tape dispenser created by one of the plaintiffs, Shigeru
Tamai. Id. ¶ 15.
In March 1993, Seed retained the law firm of Kratz, Quintos, & Hanson, LLP (“the Kratz
firm”) to file a patent application for Tamai’s correction tape dispenser in the United States. Id.
¶ 16. On March 29, 1993, the Kratz firm filed an initial U.S. patent application (“183
application”) on behalf of Seed. Id. ¶ 17. The following year, on February 15, 1994, the Kratz
firm filed an additional patent application (“839 application”), which was a partial continuation
of the 183 application. Id. ¶ 18.
1
The defendants style their motions as motions to dismiss, or, in the alternative, for summary
judgment. Because the parties have presented materials outside of the pleadings and because the
court has not excluded that material in making its rulings, the court treats these motions as
motions for summary judgment. Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156,
165 (D.C. Cir. 2003) (observing that when resolving a motion to dismiss for failure to state a
claim and “matters outside the pleading are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment and disposed of as provided in Rule 56”).
2
Around the same time, on February 10, 1993, an individual named Christopher Stevens
(“Stevens”) filed a patent application in the United Kingdom for a correction tape dispenser. Id.
¶ 19. While Seed’s U.S. patent application was pending, Stevens had filed a patent application
for the correction tape dispenser in the United States. Id. ¶ 21. Approximately two years later,
on February 28, 1995, the United States Patent and Trademark Office (“USPTO”) issued Stevens
a patent for his design. Id. ¶ 19.
Detecting that Seed’s pending 839 application and Stevens’ U.S. patent involved
potentially similar subject matter, the USPTO declared an “interference” to determine the
relative priority of the two. 2 Id. ¶ 20. Stevens petitioned the U.S. Board of Patent Appeals and
Interferences (“the Board”) to have his U.S. patent application backdated to the date that he filed
his United Kingdom patent application. Id. ¶ 21. The Board granted his request, allowing
Stevens’ U.S. patent application to be considered filed as of February 10, 1993. Id.
The Kratz firm filed a similar motion with the Board requesting that Seed receive the
benefit of the PCT and JP 371 applications filed in Japan and dated July 24, 1992 and July 31,
1991, respectively. Id. ¶ 22. With the motion, the Kratz firm included an English language
translation of the JP 371 application, but did not include an English language translation of the
PCT application. Id.
In June 2002, the Board granted Seed’s request to receive the benefit of the July 31, 1991
date associated with the JP 371 application (“Board’s June 2002 decision”). Id. ¶ 23. The Board
did not, however, afford Seed the benefit of the July 24, 1992 date associated with its PCT
application because Seed failed to include an English language translation of its Japanese PCT
2
“Whenever an application is made for a patent which . . . would interfere with any pending
application, or with any unexpired patent, an interference may be declared. . . . The Board of
Patent Appeals and Interferences shall determine questions of priority of the inventions and may
determine questions of patentability.” 35 U.S.C. § 135.
3
application with its motion, as required by 37 C.F.R. § 637(f) and § 1.647. Id. Nevertheless,
because Seed’s JP 371 application, dated July 31, 1991, was filed in Japan prior to Stevens’
United Kingdom application, dated February 10, 1993, the Board assigned priority to Seed with
respect to the correction tape dispenser patent in the United States. Id.
In July 2002, the Kratz firm filed a motion for reconsideration with the Board, arguing
that Seed should receive the benefit of the PCT application date notwithstanding the lack of an
English translation filing. Westerman Defs.’ Mot. for Summ. J. (“Westerman Def.’s Mot.”) at 6-
7. The Kratz firm argued that a translation of the PCT application was not necessary because
one had already been included with the 183 application. Id. The Board denied this motion for
reconsideration, reiterating its earlier ruling that a separate English translation was required for
Seed to receive the benefit of its PCT application date. Id. at 8. Seed nevertheless retained the
benefit of the date associated with the JP 371 application date and hence priority over Stevens’
patent. Id.
In May 2003, Stevens filed an appeal with the Federal Circuit regarding the Board’s June
2002 decision that had awarded priority to Seed for the correction tape dispenser patent. Am.
Compl. ¶ 24. Although the Kratz firm continued to represent Seed with respect to this appeal,
id., around October 1, 2003, some of the attorneys handling Seed’s case – specifically William
Westerman, John Kong, and Ed Kenehan – left the Kratz firm to establish their own law firm
under the name Westerman, Hattori, Daniels and Adrian, LLP (“the Westerman firm”), id. ¶ 27.
The Westerman firm took over Seed’s representation regarding the correction tape dispenser
patent in the United States. Id.
In January 2004, while Stevens’ appeal was pending in the Federal Circuit, Stevens
submitted a settlement offer to Seed that would have granted each party a royalty-free, non-
4
exclusive license that included the right to sublicense for the other party’s patent rights. Id. ¶ 28.
According to the plaintiffs, the Westerman firm subsequently advised Seed that even if the
Federal Circuit reversed the Board’s decision granting Seed priority, Seed’s patent application
would “be returned to the [patent e]xaminer,” at which point Seed would be permitted to “add or
amend claims.” Id. ¶ 29. Seed claims that it acted in reliance upon this advice in choosing to
decline the settlement offer. Id. ¶ 30.
On May 4, 2004, the Federal Circuit reversed the Board’s decision to give Seed’s patent
application priority over Stevens’ patent. Id. ¶ 31. More specifically, the Federal Circuit held
that under 35 U.S.C. § 119(a), a patent application may only receive the benefit of the date of a
previous filing made in a foreign country if the application in the United States is filed within
one year of the foreign application filing date. Id. Because Seed’s JP 371 application in Japan
was filed more than one year before its U.S. patent application, Seed was not awarded priority.
Id. Further, the Federal Circuit affirmed the Board’s decision that Seed was not entitled to the
benefit of the PCT application’s filing date because of Seed’s failure to include an English
language translation with its motion to the Board. Id.Seed petitioned the Federal Circuit for a panel rehearing and for rehearing en banc, but
on June 10, 2004, the Federal Circuit denied these petitions. Pls.’ Opp’n to Westerman Def.’s
Mot. at 21. Stevens offered to settle again in July 2004, this time offering Seed a mutual cross-
license without a right to sublicense. Am. Compl. ¶ 32. Seed turned down this offer as well,
allegedly in reliance on the Westerman firm’s negligent advice. Id.In December 2006, the Westerman defendants allegedly informed Seed that contrary to
its prior advice, the Federal Circuit’s ruling on priority was final and Seed would not be able to
pursue its patent application in the United States. Id. ¶ 39. Seed and the Westerman defendants
5
subsequently entered into an agreement to toll the running of the statute of limitations on any
legal malpractice claims; the effective date of this agreement was May 3, 2007. Id. ¶ 41. Seed
and the Kratz defendants entered into an identical agreement which went into effect on May 10,
2007. Id. Although both agreements expired on December 31, 2007, they included a provision
that allowed the plaintiffs to receive the benefit of the tolling agreement if they filed a claim
within sixty days of the expired tolling agreement. Id.B. Procedural Background
On February 28, 2008, the plaintiffs commenced this action against the Kratz defendants 3
and the Westerman defendants 4 (collectively, “the defendants”). See generally Compl. The
plaintiffs allege that the defendants committed legal malpractice by (1) failing to file an English
translation with the PCT application (“failure to file claim”), and by (2) erroneously informing
the plaintiffs that if the Federal Circuit did not find in their favor, the plaintiffs would still be
able to pursue a U.S. patent for their correction tape dispenser (“erroneous advice claim”). Id. ¶
33-43.
The Westerman and Kratz defendants have previously moved for summary judgment.
See generally Westerman Defs.’ Mot. for Summ. J.; Kratz Defs.’ Mot. for Summ. J. (“Kratz
Def.’s Mot.”). The plaintiffs, however, amended their complaint in May 2008, to include two
“contingent” legal malpractice claims against the Kratz defendants. The plaintiffs wish to pursue
these two contingent claims only if the court were to dismiss the failure to file claim based on
statute of limitations grounds. Am. Compl. ¶ 53-66. After the amended complaint was filed, the
3
The Kratz defendants include the law firm of Kratz, Quintos, & Hanson, LLP, as well as James
Armstrong III, who is now deceased and represented by his estate’s personal representative, John
Harmon.
4
The Westerman defendants include the law firm of Westerman, Hattori, Daniels & Adrian, LLP,
as well as the individual defendants – William F. Westerman, Ed Kenehan and John Kong.
6
Westerman and Kratz defendants subsequently renewed their respective motions for summary
judgment. See generally Westerman Defs.’ Renewed Mot. for Summ. J. (“Westerman Defs.’
Renewed Mot.”); Kratz Defs.’ Renewed Mot. for Summ. J. (“Kratz Defs.’ Renewed Mot.”). The
parties have not yet engaged in discovery. With the defendants’ motions ripe for review, the
court turns to the parties’ arguments and the applicable legal standards.
III. ANALYSIS
A. Legal Standard for Summary Judgment
Summary judgment is appropriate when the pleadings and evidence show “that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” FED. R. CIV. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);
Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C. Cir. 1995). To determine which facts are
“material,” a court must look to the substantive law on which each claim rests. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “genuine dispute” is one whose resolution
could establish an element of a claim or defense and, therefore, affect the outcome of the action.
Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 248. In ruling on a motion for summary
judgment, the court must draw all justifiable inferences in the nonmoving party’s favor and
accept the nonmoving party’s evidence as true. Anderson, 477 U.S. at 255. A nonmoving party,
however, must establish more than “the mere existence of a scintilla of evidence” in support of
its position. Id. at 252. To prevail on a motion for summary judgment, the moving party must
show that the nonmoving party “fail[ed] to make a showing sufficient to establish the existence
of an element essential to that party’s case, and on which that party will bear the burden of proof
at trial.” Celotex, 477 U.S. at 322. By pointing to the absence of evidence proffered by the
nonmoving party, a moving party may succeed on summary judgment. Id.7
The nonmoving party may defeat summary judgment through factual representations
made in a sworn affidavit if he “support[s] his allegations . . . with facts in the record,” Greene v.
Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999) (quoting Harding v. Gray, 9 F.3d 150, 154 (D.C. Cir.
1993)), or provides “direct testimonial evidence,” Arrington v. United States, 473 F.3d 329, 338
(D.C. Cir. 2006). Indeed, for the court to accept anything less “would defeat the central purpose
of the summary judgment device, which is to weed out those cases insufficiently meritorious to
warrant the expense of a jury trial.” Greene, 164 F.3d at 675.
B. Legal Standard for a Request for Additional Discovery Under Rule 56(d)
Under Rule 56(d), a court “may deny a motion for summary judgment or order a
continuance to permit discovery if the party opposing the motion adequately explains why, at
that timepoint, it cannot present by affidavit facts needed to defeat the motion.” Strang v. U.S.
Arms Control & Disarmament Agency, 864 F.2d 859, 861 (D.C. Cir. 1989); Londrigan v. Fed.
Bureau of Investigation, 670 F.2d 1164, 1174 (D.C. Cir. 1981). “[T]he purpose of Rule 56(d) is
to prevent railroading the non-moving party through a premature motion for summary judgment
before the non-moving party has had the opportunity to make full discovery.” Dickens v. Whole
Foods Market Group, Inc., 2003 WL 21486821, at *2 n.5 (D.D.C. Mar. 18, 2003) (citing Celotex
Corp. v. Catrett, 477 U.S. 317, 326 (1986)). Whether the circumstances warrant a continuance
to permit discovery is a decision that falls within the discretion of the district court. Stella v.
Mineta, 284 F.3d 135, 147 (D.C. Cir. 2002).
A non-moving party seeking the protection of Rule 56(d) “must state by affidavit the
reasons why he is unable to present the necessary opposing material.” Cloverleaf Standardbred
Owners Ass=n, Inc. v. Nat=l Bank of Wash., 699 F.2d 1274, 1278 n.6 (D.C. Cir. 1983); see also
Hotel & Rest. Employees Union, Local 25 v. Attorney Gen., 804 F.2d 1256, 1269 (D.C. Cir.
8
1986) (noting that this affidavit requirement helps “prevent fishing expeditions”), vacated on
other grounds, 808 F.2d 847 (D.C. Cir. 1987). The non-moving party bears the burden of
identifying the facts to be discovered that would create a triable issue and the reasons why the
party cannot produce those facts in opposition to the motion. Byrd v. Envtl. Prot. Agency, 174
F.3d 239, 248 n.8 (D.C. Cir. 1999). The non-moving party must show a reasonable basis to
suggest that discovery would reveal triable issues of fact. Carpenter v. Fed. Nat=l Mortgage
Ass=n, 174 F.3d 231, 237 (D.C. Cir. 1999). “It is well settled that conclusory allegations
unsupported by factual data will not create a triable issue of fact.” Byrd, 174 F.3d at 248 n.8
(internal citations omitted); see also Exxon Corp. v. Crosby-Miss. Res., Ltd., 40 F.3d 1474, 1488
(5th Cir. 1995) (holding that Rule 56(d) may not defeat summary judgment “where the result of a
continuance to obtain further information would be wholly speculative”).
C. The Court Denies Without Prejudice the Defendants’ Respective Motions for Summary
Judgment Regarding the Plaintiffs’ Failure to File Claim and
Grants the Plaintiffs’ Request for Discovery
The Westerman and Kratz defendants move for summary judgment on the grounds that
the plaintiffs’ failure to file claim is barred by the applicable statute of limitations. 5 Westerman
5
The Kratz defendants “fully adopt and incorporate the factual assertions, choice of law analysis,
and arguments (including all exhibits referenced)” advanced by the Westerman defendants
regarding the plaintiffs’ failure to file claim. Kratz Def.’s Mot. at 7. For ease, the court refers to
the Westerman and Kratz defendants as “the defendants” in discussing the plaintiffs’ failure to
file claim.
9
Defs.’ Mot. at 10. 6 The defendants argue that the plaintiffs’ three-year limitations period began
to run in July 2002 when the plaintiffs incurred legal fees as a result of the defendants’ failure to
file an English translation with the PCT application. Id. at 15. According to the defendants, the
Board’s June 2002 decision put the plaintiffs on “inquiry notice” of the defendants’ failure to file
the translation. Id. at 11-12. The defendants further reason that the plaintiffs would have known
of the detrimental ramifications of their failure to file the translation because the defendants filed
a motion to reconsider with the Board, and the plaintiffs were billed for this motion by the Kratz
firm. Id. at 12. The defendants conclude that the plaintiffs should have therefore filed their
failure to file claim by July 2005, or within three years of July 2002.
The plaintiffs counter with three alternative arguments regarding the statute of
limitations, and they urge the court to allow a period of discovery before ruling on this matter.
Pls.’ Opp’n to Westerman Def.’s Mot. at 17-18, 45. First, the plaintiffs argue that they did not
know of the harm that the defendants’ failure to file an English translation caused them until, at
the earliest, June 10, 2004, when the Federal Circuit denied Seed’s petitions for a panel rehearing
and for a rehearing en banc. Id. In making their argument, the plaintiffs rely in large part on the
fact that the Board initially granted Seed priority over Stevens, which they allege gave them the
impression that the failure to file did not detrimentally affect the plaintiffs’ pending patent
application. Id. at 19. Second, the plaintiffs assert that the defendants are estopped from
6
The court refers to the Westerman defendants’ original motion for summary judgment instead of
the renewed motion for summary judgment because the Westerman defendants by and large
responded to the plaintiffs’ amended complaint by simply referring the court to their original
motion. See generally Westerman Defs.’ Renewed Mot. The court pauses here to remind both
parties that “[Local Civil Rule 7(h)(1)] places the burden on the parties and their counsel, who are
most familiar with the litigation and the record, to crystallize for the district court the material
facts and relevant portions of the record.” Jackson v. Finnegan, Henderson, Farabow, Garrett &
Dunner, 101 F.3d 145, 151 (D.C. Cir. 1996) (citing Twist v. Meese, 854 F.2d 1421, 1425 (D.C.
Cir. 1988)). The parties’ piecemeal efforts to broadly incorporate a variety of legal theories and
arguments in separate filings undermines the purpose of Local Civil Rule 7(h)(1), as it leaves the
court to guess which arguments are relevant to the instant motions.
10
asserting the statute of limitations because of the “lulling doctrine,” which a plaintiff invokes
when a defendant takes affirmative steps to conceal from that plaintiff an injury that he or she
may have sustained. Id. at 28. Third, the plaintiffs argue that the fact that the same attorneys
continued to represent them until December 2006 extends the start of the statute of limitations
under the “continuous representation rule.” Id.
In their reply, the defendants assert that the lulling doctrine does not affect the
commencement of the running of the statute of limitations. Westerman Defs.’ Reply to Pls.’
Opp’n to Westerman Def.’s Mot. at 7-8. The defendants further argue that the continuous
representation rule does not apply to the representation of a client during subsequent appeals, and
thus contend that the rule does not apply here because the defendants only continued to represent
Seed during the appellate review of the Board’s decision. 7 Id. at 9. The defendants do not
respond to the plaintiffs’ request for discovery. See id.
The statute of limitations for legal malpractice claims in the District of Columbia is three
years “from the time [that] the right to maintain the cause of action accrues.” Wagner v.
Sellinger, 847 A.2d 1151, 1154 (D.C. 2004); see D.C. CODE § 12-301 (1981). In the
conventional negligence claim, where the fact of injury is clearly evident, the statute of
limitations begins to run at the time that the injury actually occurs. Burns v. Bell, 409 A.2d 614,
615 (D.C. 1979). If, however, the fact of injury is unclear, as is sometimes the case in legal
malpractice claims, courts apply the “discovery rule” to determine when the statute of limitations
7
The Kratz defendants claim that because their representation ended in October 2003 (before any
of the alleged lulling occurred), the plaintiffs’ arguments regarding lulling and continuous
representation are inapplicable to them. Kratz Defs.’ Reply to Pls.’ Opp’n to Kratz Defs.’ Mot. at
2-6. Because, however, the date that the cause of action accrued is not evident at this point, the
court declines to address the Kratz defendants’ additional arguments at this time. Instead, the
court believes the more prudent course is to allow the parties to partake in discovery and proceed
to first resolve whether the plaintiffs’ failure to file an English translation claim survives the
defendants’ statute of limitations defense.
11
begins to run. Knight v. Furlow, 553 A.2d 1232, 1234 (D.C. 1989). For a cause of action to
accrue under the discovery rule, the defendant must prove the plaintiff knew, or by the exercise
of reasonable diligence should have known of (1) the existence of the injury, (2) its cause in fact
and (3) some evidence of wrongdoing. Id. at 1234. Even under this rule, the point in time at
which the plaintiff knew or reasonably should have known is normally a question of fact for a
jury, and a trial judge should only make this determination as a matter of law if no reasonable
person could disagree on this date. Byers v. Burleson, 713 F.2d 856, 861 (D.C. Cir. 1983).
To succeed on their statute of limitations arguments, the defendants must show that –
more than three years prior to the date that they filed their claims – the plaintiffs knew or had
reason to know of an injury caused by the failure to file an English translation of the PCT
application. Knight, 553 A.2d at 1234. Due to the tolling agreements between the parties, the
plaintiffs’ claims are deemed to be filed in May 2007. 8 As such, the pivotal question is whether
the plaintiffs’ claims accrued before May 2004 (or stated otherwise, whether the claims accrued
more than three years from when the plaintiffs “filed” their suit). If so, then the plaintiffs’ claims
would be barred by the applicable three-year statute of limitations.
According to the defendants, the plaintiffs knew or had reason to know as early as July
2002 that the defendants’ failure to file the translation had caused the plaintiffs’ injury.
Westerman Defs.’ Mot. at 12. The plaintiffs, however, argue that they did not have any
knowledge of any injury resulting from the failure to file until, at the earliest, June 10, 2004,
8
Although the plaintiffs did not commence suit until February 2008, the parties entered into tolling
agreements that allowed the plaintiffs to bring claims against the defendants within six months of
the expiration of those tolling agreements. In other words, the parties waived for purposes of the
statute of limitations the time that elapsed from the date that the parties entered into the tolling
agreements until the plaintiffs filed their claims. Therefore, the court determines that the proper
date to consider as the filing of the plaintiffs’ suit is the date that the respective tolling agreement
was entered into: May 3, 2007 with regard to the Westerman defendants, and May 10, 2007, with
regard to the Kratz defendants.
12
when the Federal Circuit denied their petition for a panel rehearing. Pls.’ Opp’n to Westerman
Defs.’ Mot. at 24. As evidence to support their argument, the plaintiffs provide the court with
several letters that the defendants sent them after the Board’s initial decision, which attempted to
assure the plaintiffs that the failure to file a translation should not affect their pending patent
application. Id. at 20-21.
“A decision by summary judgment is disfavored when additional development of facts
might illuminate the issues of law requiring decision.” Barnes v. District of Columbia, 2007 WL
896282, at *3 (D.D.C. Mar. 26, 2007) (citing Nixon v. Freeman, 670 F.2d 346, 362 (D.C. Cir.
1982)). The parties here have yet to engage in discovery, and given the factual ambiguities
surrounding the commencement of the statute of limitations, the court is persuaded that a period
of discovery is warranted prior to ruling on the defendants’ motions. See Americable Int’l, Inc.
v. Dep’t of Navy, 129 F.3d 1271, 1274 (D.C. Cir. 1998) (holding that neither the Circuit nor the
district court was “in a position to decide as a matter of law whether there [was] a genuine
dispute . . . because the district court did not permit [the plaintiff] any discovery before issuing
its ruling”); First Chi. Int’l v. United Exchange Co., 836 F.2d 1375, 1380 (D.C. Cir.1988)
(observing that, ordinarily, “summary judgment is proper only after the plaintiff has been given
adequate time for discovery”). Accordingly, the court denies without prejudice the defendants’
respective motions for summary judgment and grants the plaintiffs’ request for discovery with
respect to the failure to file an English translation claim.
D. The Court Denies Without Prejudice the Defendants’ Respective Motions for Summary
Judgment on the Plaintiffs’ Erroneous Legal Advice Claim
1. Legal Standard for Legal Malpractice Claim
To establish a prima facie case of legal malpractice in the District of Columbia, a party
must prove that (1) there was an attorney-client relationship, (2) the attorney neglected a
13
reasonable duty and (3) the attorney’s negligence resulted in and was the proximate cause of a
loss to the client. Herbin v. Hoeffel, 806 A.2d 186, 194-95 (D.C. 2002). The plaintiff must first
establish that an attorney-client relationship existed, which gives rise to a duty or standard of
care. Hinton v. Rudasill, 624 F. Supp. 2d 48, 53 (D.D.C. 2009). Although the plaintiff must
prove causation, this element is usually a question for the jury and only an issue of law if there
are no facts or circumstances from which a jury could reasonably determine that such negligence
was the proximate cause of injury. Bragg v. Owens-Corning Fiberglas Corp., 734 A.2d 643,
648 (D.C. 1999). Finally, although actual, not speculative, damages are required to succeed on a
legal malpractice claim, see, e.g., Poole v. Lowe, 615 A.2d 589, 593 (D.C. 1992), the court has
discretion to postpone a ruling on a summary judgment motion if a party requests discovery to
prove damages, Vermont Elec. Power Co. v. Hartford Steam Boiler Inspection & Ins. Co., 72 F.
Supp. 2d 441, 447-48 (D. Vt. 1999) (granting the plaintiff’s request for additional discovery in
order to ascertain facts regarding damages).
2. The Court Declines at this Juncture to Rule on the Westerman Defendants’
Summary Judgment Arguments Concerning Causation
The Westerman defendants argue that they should be granted summary judgment on the
plaintiffs’ erroneous legal advice claim. More specifically, the Westerman defendants contend
that the plaintiffs do not proffer any evidence from which a reasonable fact-finder could
determine that the plaintiffs forfeited the settlement offers as a result of the Westerman
defendants’ erroneous legal advice. Westerman Defs.’ Mot. at 14. Instead, the Westerman
defendants insist that the plaintiffs turned down the settlement offers because the offers provided
no value to
14
Seed. 9 See Westerman Defs.’ Renewed Mot.
The plaintiffs, on the other hand, insist that the defendants’ erroneous legal advice led the
plaintiffs to believe that they could obtain a U.S. patent regardless of the Federal Circuit’s
ultimate ruling, thereby prompting the plaintiffs to reject the settlement offers from Stevens.
Pls.’ Opp’n to Westerman Defs.’ Renewed Mot. at 7-8. The plaintiffs assert that “[a]s a direct
consequence [of turning down the settlement offers], Seed has lost the revenue” that it would
have received from licensing its correction tape dispenser for sale in the United States. Id. The
plaintiffs further argue that the Westerman defendants’ causation arguments are merely attacks
on their credibility. Id. at 9.
Under Rule 56(d), “the district court may defer ruling on a summary judgment motion
and permit further discovery so that the nonmoving party may obtain the information necessary
to show an issue of material fact in dispute.” First Chi. Int’l, 836 F.2d at 1380. Typically, the
nonmoving party is expected to file an affidavit to ensure that the protections of Rule 56(d) are
being invoked in good faith and “to afford the trial court the showing necessary to assess the
merit of a party’s opposition.” Id. The court may determine, however, that a filing, such as an
opposition, “suffices to alert the district court of the need for further discovery and thus serve[s]
as the functional equivalent of an affidavit.” Id.
Here, the plaintiffs assert in their opposition to the Westerman defendants’ motion for
summary judgment that they acted in reliance on the defendants’ erroneous legal advice when
they declined the settlement offers. Pls.’ Opp’n to Westerman Defs.’ Renewed Mot. at 7-8. The
court is bewildered as to why the plaintiffs would not attach any declaration that would support
9
The Westerman defendants also argue that the plaintiffs have not provided the court with
sufficient evidence to establish actual damages. Westerman Defs.’ Renewed Mot. at 3. Because
the court grants the Westerman defendants’ motion on causation grounds, it does not address the
issue of damages.
15
this argument. Notably, the plaintiffs have responded to other summary judgment arguments by
point to supporting evidence such as e-mail correspondence and declarations pursuant to Rule
56(d). See generally id. Yet in addressing the issue of causation, the plaintiffs neither presented
affidavits that would support their arguments for causation, nor indicated why further discovery
would be necessary to acquire such evidence. See FED. R. CIV. P. 56(d).
Notwithstanding the lack of supporting declarations, the court believes that a ruling on
the Westerman defendants’ summary judgment motion would be premature at this juncture. The
plaintiffs make a general plea for further discovery pursuant to Rule 56(d) before the court
considers the Westerman defendants’ motion for summary judgment. See Pls.’ Opp’n to
Westerman Defs.’ Renewed Mot. at 10. The court has no reason to believe that the existence of
such evidence on causation is speculative. Thus, the court agrees that the plaintiffs should be
afforded an opportunity to present evidence raising a genuine dispute of fact regarding causation.
Stella v. Mineta, 284 F.3d 135, 147 (D.C. Cir. 2002) (noting that the district court may in its
discretion permit additional discovery before resolving a motion for summary judgment).
Accordingly, the court denies without prejudice the Westerman defendants’ summary judgment
arguments with respect to causation, and grants the plaintiffs’ request for further discovery on
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this issue. 10
3. The Court Declines at this Juncture to Rule on the Kratz Defendants’ Summary
Judgment Arguments Concerning the Duty Element
The Kratz defendants argue that the plaintiffs’ erroneous legal advice claim must fail
because the alleged malpractice occurred after the Kratz defendants had terminated their
representation of the plaintiffs with respect to the patent at issue. Kratz Defs.’ Mot. at 4; see also
id., Ex. A. The plaintiffs respond that the Kratz defendants, as well as the Westerman
defendants, are liable for Seed’s “loss of valuable settlement opportunities” because the Kratz
defendants provided “incorrect and misleading legal advice,” even before the Westerman
defendants left the Kratz firm. Pls.’ Opp’n to Kratz Defs.’ Mot. at 25. Such advice, the plaintiffs
contend, “naturally informed Seed’s decision in rejecting Stevens’ settlement offers.” Id. The
plaintiffs insist that the Kratz defendants are liable because the erroneous legal advice that was
given by the Westerman defendants was consistent with the incorrect and misleading advice that
10
According to the Westerman defendants, the plaintiffs must demonstrate that if they had accepted
the settlement offer,“they would have made more money than they lost.” Westerman Defs.’
Renewed Mot. at 3. The Westerman defendants further insist that the plaintiffs were required but
failed to allege that “any new or amended claims” which could have been added at the patent
examiner level would have had an “estimated economic value exceeding the value of either or
both settlement offers.” Id. Requiring such factual showings, however, is not appropriate at the
pre-discovery stage of this litigation. See Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511-14
(2002) (noting that it is not necessary for the plaintiff to plead all elements of his prima facie case
in the complaint); Krieger v. Fadely, 211 F.3d 134, 136 (D.C. Cir. 2000) (recognizing that a
plaintiff need not “plead law or match facts to every element of a legal theory” (internal quotation
marks and citation omitted)). The plaintiffs here have sufficiently alleged that they lost money
(an injury) as a result of their reliance on erroneous legal advice (causation). See Herbin, 806
A.2d at 194-95 (describing the elements of a legal malpractice claim). While the Westerman
defendants’ arguments may eventually prove persuasive, nothing more is required from the
plaintiffs at this procedural juncture.
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the Kratz defendants had previously given. 11 Id.To eventually succeed on their legal malpractice claim against the Kratz defendants, the
plaintiffs must point to an act (or omission) by the Kratz defendants that resulted in a loss to the
plaintiffs. See Herbin, 806 A.2d at 194-95. The Kratz defendants, moreover, are not
accountable for those actions taken by the Westerman defendants once the Westerman
defendants took over the plaintiffs’ representation. See Bloome v. Wiseman, Shaikewitz,
McGivern, Wahl, Flavin & Hesi, P.C., 279 Ill. App. 3d 469, 477 (Ill. App. Ct. 1996) (dismissing
a legal malpractice claim against one attorney for the alleged malpractice of another attorney
who took over the case).
In their complaint, the plaintiffs allege that their decision to decline the first settlement
offer was made in reliance on the defendants’ advice “regarding, among other things, [Seed’s]
ability to protect its invention in the United States despite Defendants’ failure to file an English
language translation of the PCT application; its chance of success in the appeal pending [at the
time] before the Federal Circuit Court of Appeals; and its ability to raise new or amended claims
before the patent examiner.” Am. Compl. ¶ 30. The plaintiffs argue that they “would surely
have [] pursued a settlement with Stevens if [the Kratz defendants had] given [the plaintiffs]
correct advice regarding the ramifications of the Board’s refusal to consider its PCT application
in awarding it priority.” Pls.’ Opp’n to Kratz Defs.’ Mot. at 26. Thus, the plaintiffs point to
11
The plaintiffs further argue that the Kratz defendants breached their fiduciary duties by
encouraging Seed to allow the Westerman defendants to handle their patent. Id. at 26. The
plaintiffs, however, have not alleged a breach of fiduciary duty claim against the Kratz defendants
in their complaint. A plaintiff cannot amend its complaint by asserting new claims in a
responsive pleading to survive a motion for summary judgment. See, e.g., Lemmons v.
Georgetown Univ. Hosp., 431 F. Supp. 2d 76, 91 n.16 (D.D.C. 2006). As the plaintiffs raise
these claims for the first time in their opposition, the court declines to entertain their breach of
fiduciary duty claim.
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advice (or lack thereof) given by the Kratz defendants to the plaintiffs during the time that Kratz
was representing them.
Although the Kratz defendants cannot be held accountable for the advice that was offered
by the Westerman defendants, the plaintiffs point to specific advice allegedly offered by the
Kratz defendants that contributed to the plaintiffs’ decision not to settle and their subsequent
loss. Accordingly, the court deems that it would not be appropriate at this stage to grant
summary judgment to the Kratz defendants with respect to the plaintiffs’ erroneous legal advice
claim, and denies their motion without prejudice in order to allow the parties to develop a factual
record regarding this claim. See Stella, 284 F.3d at 147.
IV. CONCLUSION
For the foregoing reasons, the court denies the defendants’ respective motions for
summary judgment. An Order consistent with this Memorandum Opinion is separately and
contemporaneously issued this 5th day of January, 2011.
RICARDO M. URBINA
United States District Judge
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