Trice v. Napoli Shkolnik PLLC

Background

Bridget Trice, acting as trustee for the heirs and next of kin of her deceased daughter, Devyn Bolton, brought a legal-malpractice lawsuit against Napoli Shkolnik PLLC (NS), Hunter J. Shkolnik, and Paul Napoli Law PLLC (PNL). The claims concern legal representation in Trice’s earlier lawsuit against Toyota arising from the crash that injured Bolton. Trice alleges that the lawyers made an unauthorized settlement demand and failed to disclose the full amount of Bolton’s medical expenses during discovery. The earlier lawsuit resulted in a jury verdict for Trice, but the court prevented her from recovering medical expenses that had not been disclosed.

Trice originally sued NS and Shkolnik. After defense counsel stated that the earlier law firm, Napoli Bern Ripka Shkolnik (NBRS), had split and that the Toyota lawsuit had been assigned to PNL, Trice amended her complaint to add PNL. She alleged that PNL was a successor in interest to NBRS and that NS was also a successor because it had sought fees based on NBRS’s engagement and had assumed responsibility for liabilities arising from that engagement.

Motion to Dismiss

NS and PNL moved under Federal Rule of Civil Procedure 12(b)(2) for dismissal for lack of personal jurisdiction and under Rule 12(b)(6) for failure to state a claim. They argued that they had no relationship to the alleged malpractice because they did not exist when the alleged conduct occurred, and that NBRS was the only appropriate law-firm defendant.

The court denied the motion. As to NS, the court found a sufficient initial showing of specific personal jurisdiction because NS had actively pursued a fee claim in Minnesota based on the same representation that formed the basis of the malpractice lawsuit. The court also found that NBRS’s Minnesota contacts could support personal jurisdiction over NS and PNL under a successor-liability theory. The court relied in part on NS’s prior statements that it was NBRS’s successor and on a declaration stating that PNL was the assignee of the Toyota lawsuit.

The court also held that Trice had adequately pleaded successor liability. Under Minnesota law, a successor may be liable when it expressly or impliedly agrees to assume the earlier entity’s debts. The court found that Trice’s allegations that NS had assumed responsibility for liabilities arising from her engagement of NBRS were sufficient as to NS. It likewise found sufficient the allegations that PNL received the Toyota lawsuit after NBRS’s split and was a successor in interest and assignee.

The court rejected the argument that Trice could simply sue NBRS because NBRS remained an active New York limited liability partnership and had insurance coverage. The allegations that NBRS had split, that PNL had received the Toyota lawsuit, and that NS had assumed responsibility for related liabilities made dismissal premature. The court stated that additional discovery was needed to determine whether NBRS was viable and whether NS or PNL had expressly or impliedly assumed NBRS’s liabilities.

Motion to Amend

Trice also sought leave to file a further amended complaint adding NBRS as a defendant. NS and PNL did not oppose adding NBRS, although they argued that the claims against them remained futile for the reasons stated in their dismissal motion.

The court granted leave to amend. It found that adding NBRS was not futile because NBRS represented Trice in the Toyota lawsuit, and that the proposed amended complaint continued to state plausible successor-liability claims against NS and PNL. The court also found no undue delay or prejudice because the amendment was within the scheduling order’s deadline and defendants had received notice of Trice’s intent to seek leave to add NBRS.

Disposition

The court ordered that NS and PNL’s Rule 12 motion to dismiss was DENIED. It ordered that Trice’s motion for leave to amend the complaint was GRANTED. The opinion did not decide whether NS, PNL, or NBRS ultimately committed malpractice or will be liable; it allowed the case to proceed and permitted Trice to add NBRS as a defendant.