United States District Court, S.D. Indiana, Indianapolis Division
ORDER DENYING MOTION TO DISMISS
Jane Magnus-Stinson, Chief Judge United States District Court
Hill Fulwider, P.C. ("Hill Fulwider"),
initiated this litigation against
Defendants/Counter-Claimants Swindell-Dressier International
Company and Travelers Indemnity Company (collectively,
"SDIC"), alleging various legal claims seeking to
recover almost $300, 000 in attorney's fees that Hill
Fulwider claims to be owed. [Filing No. 1.] In
response, SDIC asserted counterclaims against Hill Fulwider
for legal malpractice and breach of fiduciary duty.
[Filing No. 55.] Hill Fulwider has filed a Motion to
Dismiss SDIC's breach of fiduciary duty claim, arguing
that it is duplicative of the legal malpractice claim based
on the facts alleged. [Filing No. 38.] For the
reasons that follow, the Court denies Hill Fulwider's
Motion to Dismiss. [Filing No. 55.]
Rule of Civil Procedure 8(a)(2) "requires only 'a
short and plain statement of the claim showing that the
pleader is entitled to relief.'" Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (quoting Fed. R. Civ.
Pro. 8(a)(2)). "Specific facts are not necessary, the
statement need only 'give the defendant fair notice of
what the . . . claim is and the grounds upon which it
rests.'" Erickson, 551 U.S. at 93 (quoting
Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)).
motion to dismiss asks whether the complaint "contain[s]
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
Twombly, 550 U.S. at 570). In reviewing the
sufficiency of a complaint, the Court must accept all
well-pled facts as true and draw all permissible inferences
in favor of the plaintiff. See Active Disposal, Inc. v.
City of Darien, 635 F.3d 883, 886 (7th Cir. 2011). The
Court will not accept legal conclusions or conclusory
allegations as sufficient to state a claim for relief.
See McCauley v. City of Chicago, 671 F.3d 611, 617
(7th Cir. 2011). Factual allegations must plausibly state an
entitlement to relief "to a degree that rises above the
speculative level." Munson v. Gaetz, 673 F.3d
630, 633 (7th Cir. 2012). This plausibility determination is
"a context-specific task that requires the reviewing
court to draw on its judicial experience and common
relevant background is set forth from the allegations of SDIC
and Travelers' Amended Counterclaim, [Filing No.
55], which the Court must accept as true pursuant to the
applicable standard of review at this stage of the
proceedings. The Court emphasizes that these
allegations are considered to be true only for purposes of
deciding the pending motion.
Fulwider initiated this litigation in October 2015, seeking
to recover almost $300, 000 in attorney's fees that it
claims to be owed for previous legal representation of SDIC.
[Filing No. L] In response, SDIC asserted
counterclaims against Hill Fulwider based on the alleged
actions of a Hill Fulwider attorney-Keith Hays-who
represented SDIC in asbestos litigation in Indiana and
Illinois. [Filing No. 55 at 11.] Mr. Hays
settled at least three cases against SDIC without SDIC's
knowledge or consent. [Filing No. 55 at 11-12.] Mr.
Hays also failed to advise SDIC that he had entered into
those settlements. [Filing No. 55 at 12.] SDIC
incurred sanctions as a result of Mr. Hays' misconduct,
was forced to pay settlements to which it did not agree, and
incurred attorney's fees it otherwise would not have
incurred. [Filing No. 55 at 13.] Hill Fulwider knew
that Mr. Hays had settled at least one unrelated case for
another client without authority to do so, but it did not
supervise, monitor, or otherwise prevent Mr. Hays'
misconduct with regard to SDIC. [Filing No. 55 at
13.] Hill Fulwider was also aware that Mr. Hays was the
subject of a disciplinary complaint. [Filing No. 55 at
14.] Despite this, Mr. Hays and Hill Fulwider continued
to represent SDIC in multiple asbestos cases without
disclosing the prior settled cases. [Filing No. 55 at
14.] SDIC "should have been dismissed from most or
all of the cases because it did not manufacture or sell the
product which allegedly caused plaintiffs' damages."
[Filing No. 55 at 14-15.] SDIC asserts counterclaims
for legal malpractice and breach of fiduciary duty against
Hill Fulwider. [Filing No. 55 at 11-15.] Hill
Fulwider has moved to dismiss the breach of fiduciary duty
claim as duplicative of the legal malpractice claim.
[Filing No. 38; Filing No. 59.] SDIC
opposes that motion, [Filing No. 44; Filing No.
60], and the Court will now address the merits of the
Fulwider asks this Court to dismiss SDIC's breach of
fiduciary duty counterclaim against it because that
counterclaim allegedly relies on the same substantive
allegations as the legal malpractice counterclaim.
[Filing No. 39 at 4-7.] Hill Fulwider emphasizes
that the breach of fiduciary duty claim relies on the
"case within a case" analysis that also must be
done for the legal malpractice claim. [Filing No. 39 at
8-9.] Hill Fulwider argues that it does not matter if
SDIC seeks different relief for each claim. [Filing No.
39 at 9-11.] Although Hill Fulwider concedes that SDIC
"slightly modified the factual allegations" in
response to the pending motion after being granted leave to
do so, it still contends that the amended breach of fiduciary
duty counterclaim is legally deficient because it relies on
the same example of alleged malpractice as the legal
malpractice claim. [Filing No. 59.]
response to the pending motion, SDIC argues that the breach
of fiduciary duty counterclaim is not duplicative of the
legal malpractice claim. [Filing No. 44.] It
emphasizes that under Indiana law, it can seek disgorgement
as a remedy for the equitable breach of fiduciary claim and
it cannot seek that remedy under the legal malpractice claim.
[Filing No. 44 at 2-3.] Additionally, in contrast to
a legal malpractice claim, a breach of fiduciary duty claim
does not require the plaintiff to prove financial harm from
the agent's misconduct. [Filing No. 44 at 2.]
SDIC emphasizes that the breach of fiduciary duty claim is
based on additional allegations that go beyond what is
necessary for legal malpractice, specifically that Mr. Hays,
while employed by Hill Fulwider, continued to represent SDIC
in the settled cases and other asbestos cases while
continuing to conceal the settlements from SDIC. [Filing
No. 60 at 4.] Finally, SDIC emphasizes that this case is
still in its early stages and that it should be allowed to
conduct discovery on the pending claims. [Filing No. 44
at 5-6; Filing No. 60 at 5.] The Court is
exercising diversity jurisdiction over this action. 28 U.S.C.
§ 1332. Federal courts deciding state law claims ...