The opinion of the court was delivered by: JAMES MOODY, District Judge
Pending is Defendants' motion for summary judgment. (Docket
#6). Plaintiffs have responded. For the reasons set forth herein,
Defendants' motion is granted.
In December 1999, Plaintiffs opened a Command Account with
Prudential Securities, Inc. ("Prudential"). This was a margin
account that permitted short selling and option trading. On
November 13, 2000, Plaintiffs hired Defendants to pursue claims
against Prudential and Jimmy Earl Power, Jr. ("Power").
Defendants contend that after interviewing the Plaintiffs and
researching the law, they determined that the Plaintiffs had two
meritorious claims against Power and Prudential for broker
negligence and wrongful liquidation of account. Plaintiffs
contend that Defendants were negligent in failing to pursue a
claim for margin call manipulations and unauthorized trades.
Defendants argue that despite their professional advice that
these additional claims lacked merit and detracted from
Plaintiffs' stronger claims, Plaintiff Chetty Mamandur insisted
on presenting the margin call claim as a part of his testimony
and power point presentation at the arbitration. The arbitration
panel ruled against Plaintiffs and in favor of Prudential's
counterclaim. Plaintiffs filed the instant suit claiming that the
Defendants committed professional negligence in failing to include the
margin call claim in arbitration. Defendants contend that summary
judgment is proper at this time.
Standard for Summary Judgment
Summary judgment is appropriate only when there is no genuine
issue of material fact, so that the dispute may be decided solely
on legal grounds. Holloway v. Lockhart, 813 F.2d 874
1987); Fed.R.Civ.P. 56. The Supreme Court has established
guidelines to assist trial courts in determining whether this
standard has been met:
The inquiry is the threshold inquiry of determining
whether there is a need for trial whether, in other
words, there are genuine factual issues that properly
can be resolved only by a finder of fact because they
may reasonably be resolved in favor of either party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242
, 250 (1986).
The Eighth Circuit Court of Appeals has cautioned that summary
judgment should be invoked carefully so that no person will be
improperly deprived of a trial of disputed factual issues.
Inland Oil & Transport Co. v. United States, 600 F.2d 725 (8th
Cir. 1979), cert. denied, 444 U.S. 991 (1979). The Eighth
Circuit set out the burden of the parties in connection with a
summary judgment motion in Counts v. M.K. Ferguson Co.,
862 F.2d 1338 (8th Cir. 1988):
[T]he burden on the moving party for summary judgment
is only to demonstrate, i.e., `[to] point out to
the District Court,' that the record does not
disclose a genuine dispute on a material fact. It is
enough for the movant to bring up the fact that the
record does not contain such an issue and to identify
that part of the record which bears out his
assertion. Once this is done, his burden is
discharged, and, if the record in fact bears out the
claim that no genuine dispute exists on any material
fact, it is then the respondent's burden to set forth
affirmative evidence, specific facts, showing that
there is a genuine dispute on that issue. If the
respondent fails to carry that burden, summary
judgment should be granted. Id. at 1339. (quoting City of Mt. Pleasant v. Associated Elec.
Coop., 838 F.2d 268, 273-274 (8th Cir. 1988) (citations omitted)
(brackets in original)). Only disputes over facts that may affect
the outcome of the suit under governing law will properly
preclude the entry of summary judgment. Anderson,
477 U.S. at 248.
The Arkansas Supreme Court has held that "[a]n attorney is
negligent if he or she fails to exercise reasonable diligence and
skill on behalf of the client. . . . In order to prevail on a
claim of legal malpractice, a plaintiff must prove that the
attorney's conduct fell below the generally accepted standard of
practice and that such conduct proximately caused the plaintiff
damages." Pugh v. Griggs, 327 Ark. 577, 581, 940 S.W.2d 445,
447 (1997). "However, an attorney is not liable to a client when,
acting in good faith, he or she makes mere errors of judgment. . . .
Moreover, attorneys are not, as a matter of law, liable for a
mistaken opinion on a point of law that has not been settled by a
court of highest jurisdiction and on which reasonable attorneys
may differ." Johnson v. Daggett, Van Dover, Donovan & Perry,
PLLC, 99 F.Supp.2d 1008, 1012 (E.D.Ark.,2000) citing, Pugh, at
581-82, 940 S.W.2d at 447. This defense is often referred to as
"judgmental immunity." Id.
Defendants argue that they evaluated the margin call claim
suggested by Plaintiffs and made the professional judgment that
the Plaintiffs' suggested claim lacked merit. Plaintiffs contend
that Defendants failed to act in good faith by failing to include
every available claim before the arbitration panel.
In Gans v. Mundy, 762 F. 2d 338 (3rd Cir. 1985) the Court
evaluated a professional negligence suit alleging that an
attorney and his law firm were negligent in failing to include a claim against a potential party in the plaintiff's personal
injury suit. The Third Circuit applying Pennsylvania law,
affirmed the district court's grant of summary judgment noting
that "an attorney's considered decision involving at a minimum
the requisite exercise of `ordinary skill and capacity,' and
which is an `informed judgment' does not constitute malpractice.
An attorney's conscious exercise of such judgment, `even if
subsequently proved to be erroneous, is not negligence.'" Id.
at 341, citations omitted.
Plaintiffs have failed to present sufficient evidence to create
a genuine issue of material fact as to whether the conduct of the
Defendants fell below the generally accepted standard of
practice. Further, even if reasonable attorneys would differ as
to the inclusion or omission of the margin call claim, the good
faith determination made by these attorneys does not amount to
malpractice. Further, considering the fact that Plaintiff, Chetty
Mamandur, included the claim in his testimony and power point
presentation before the arbitration panel, Plaintiffs have failed
to present sufficient evidence that the failure of his attorneys
to include the claim proximately caused them damages.
Accordingly, Defendants' motion for summary judgment, docket
#6, is GRANTED, Plaintiffs' complaint is dismissed, ...