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Henry Law Firm v. Cuker Interactive, LLC

United States District Court, W.D. Arkansas, Fayetteville Division

October 10, 2018

HENRY LAW FIRM PLAINTIFF/COUNTER-DEFENDANT
v.
CUKER INTERACTIVE, LLC and ADEL ATALLA DEFENDANTS/COUNTER-PLAINTIFFS and CUKER INTERACTIVE, LLC, and ADEL ATALLA THIRD PARTY PLAINTIFFS
v.
PILLSBURY WINTHROP SHAW PITTMAN, LLP; CALLIE BJURSTROM; and MARK MURPHEY HENRY THIRD PARTY DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE.

         Now pending before the Court are the following:

• Plaintiff/Counter-Defendant Henry Law Firm's ("HLF") and Third Party Defendant Mark Murphey Henry's joint Motion to Dismiss (Doc. 39) and Brief in Support (Doc. 40), Defendants/Counter-Plaintiffs/Third Party Plaintiffs Cuker Interactive, LLC's ("Cuker") and Adel Atalla's Amended Response in Opposition (Doc. 57) and Amended Brief in Support (Doc. 58), and HLF's and Henry's Reply (Doc. 64);
• Third Party Defendants Pillsbury, Winthrop, Shaw, Pittman, LLP's ("Pillsbury") and Callie Bjurstrom's Motion to Dismiss (Doc. 60) and Brief in Support (Doc. 61); and
• Cuker's and Atalla's Notice of Voluntary Dismissal of Third Party Defendants Pillsbury and Bjurstrom (Doc. 67).

         The Court will begin by addressing Cuker's and Atalla's Notice of Voluntary Dismissal of Pillsbury and Bjurstrom, pursuant to Fed.R.Civ.P. 41(a)(1)(A)(i). The Court finds the Notice to be in order, and Pillsbury and Bjurstrom are therefore DISMISSED WITHOUT PREJUDICE from the case. The Clerk of Court is DIRECTED to terminate Pillsbury and Bjurstrom as parties to this action. In light of this dismissal, Pillsbury's and Bjurstrom's Motion to Dismiss (Doc. 60) is now MOOT.

         The only issue that remains for the Court to resolve at this time is HLF's and Henry's joint Motion to Dismiss the Amended Counterclaim and Third Party Complaint. Cuker and Atalla contend that HLF and Henry committed legal malpractice when representing Cuker in Wal-Mart Stores, Inc. v. Cuker Interactive, LLC, No. 5:14-CV-5262 ("the Walmart case"). The undersigned presided over that case, which eventually went to trial and resulted in a multi-million dollar jury verdict in Cuker's favor on its counterclaims against Walmart. A summary of the facts of the Walmart case appears in the Court's Order at Doc. 15, so the Court sees no particular need to restate those facts here. Suffice it to say that after Cuker prevailed on its counterclaims, Cuker then successfully petitioned the Court for an award of attorneys' fees on behalf of its lead trial counsel, Mr. Henry, and on behalf of the attorneys and staff of HLF who worked on the case.

         Soon after the Walmart trial concluded, the Court also issued a ruling on Walmart's pending Rule 50(b) motion, effectively reducing Cuker's damages award from over $10, 000, 000.00 to $745, 021.00. Cuker filed a notice of appeal as to the reduction in damages (as well as other issues), and Walmart filed a cross-appeal. The appeal and cross-appeal are still awaiting resolution by the Eighth Circuit. In the meantime, HLF filed the instant Complaint, alleging that Cuker has refused to pay HLF's legal bills. In response, Cuker maintains that Henry and HLF owe them damages for committing legal malpractice, due to their alleged negligent handling of the Walmart case. They ask the Court to first adjudicate their Amended Counterclaim/Third Party Complaint for legal malpractice, and then offset any award they may receive on that claim against what they still-admittedly- owe HLF. See Doc. 32, p. 3 ("Defendants admit the allegations in paragraph 11 of the Complaint that Cuker has not paid the amounts demanded Defendants assert they are entitled to a defense of setoff, arising from damages sustained by Cuker, and proximately caused by the actions of Plaintiff, as alleged in the Amended Counterclaim hereinafter asserted.").

         II. LEGAL STANDARD

         To survive a motion to dismiss, a pleading must provide "a short and plain statement of the claim that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The purpose of this requirement is to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atl.. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Court must accept as true all factual allegations set forth in the complaint by the plaintiff, drawing all reasonable inferences in the plaintiffs favor. See Ashley Cnty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009).

         However, the complaint "must contain 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). "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 pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertions' devoid of 'further factual enhancement.'" Id. In other words, "the pleading standard Rule 8 announces does not require 'detailed factual allegations,' but it demands more than an unadorned, the- defendant-unlawfully-harmed-me accusation." Id.

         III. DISCUSSION

         Since the Amended Counterclaim and Third Party Complaint allege a single cause of action for legal malpractice, the Court will begin its discussion by defining the contours of that claim under Arkansas law. According to the Arkansas Supreme Court:

An 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. In order to show damages and proximate cause, the plaintiff must show that but for the alleged negligence of the attorney, the result in the underlying action would have been different. 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 ...

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