Goney v. SuttonPark Capital LLC

Background

Rodney and Lori Goney, and Trevin Noell, sued SuttonPark Capital LLC, SuttonPark Structured Settlements LLC, and Edward Stone. The complaint principally concerned Lyndsy Noell, who was not a plaintiff. It alleged that Lyndsy was seriously injured in a 2005 car accident when she was 13, later received a structured settlement consisting of a $1,000,000 John Hancock annuity after expenses, and later sold the annuity for $273,556 under allegedly exploitative conditions.

The complaint alleged that Sutton and related entities took advantage of Lyndsy’s addiction and need for money. It also alleged that Stone, whom the Goneys hired as their lawyer in 2016, had a conflict of interest, handled the matter ineffectively, and refused to release the case files unless the Goneys paid $74,000, apparently based on an attorney’s lien. Lyndsy later settled with Sutton, although the complaint did not specify when or on what terms.

Motions and Claims

Sutton moved to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), failure to state a legally sufficient claim under Rule 12(b)(6), and to strike allegedly scandalous and irrelevant allegations under Rule 12(f). Stone moved to dismiss under Rules 12(b)(1), 12(b)(6), and 9(b). The plaintiffs moved to strike allegations in the defendants’ motions and to seal.

The court said the complaint, which contained 118 paragraphs and 26 exhibits extending beyond 125 pages, did not provide the short and plain statement required by Rule 8(a). The court declined to consider material outside the pleadings under Rule 12(d). It also said the allegations targeted by the motions to strike were not described clearly enough for a responsive ruling. The court therefore denied the motions to strike and seal without prejudice to renewal.

Standing and Claims Against Sutton

Standing is the legal requirement that a person bringing a lawsuit have the right to assert the particular claim. The court held that Sutton was correct that the Goneys lacked standing to sue Sutton for alleged wrongs committed against Lyndsy. The court said the Goneys could not substitute themselves for Lyndsy, who was an adult and had not been found incompetent, and the Goneys had not been appointed guardians with authority to sue on her behalf.

The court also held that the Goneys lacked standing to sue Sutton on Trevin’s behalf. Trevin was a minor, but the complaint did not allege that the Goneys were acting as his guardians, and they had not moved for appointment as his guardian ad litem, a representative appointed to protect a minor’s interests in a lawsuit. Because the plaintiffs lacked standing, the court said it was unnecessary to decide the merits of Sutton’s Rule 12(b)(6) motion.

Claims Against Stone

The court held that the Goneys had standing to sue Stone because they had hired him and he owed them a lawyer’s duty. Trevin did not have standing to sue Stone. On the merits, however, the court found that the Goneys’ claims against Stone lacked merit. The court explained that a lawyer is not negligent merely because negotiations are unsuccessful, and that Stone did not violate a duty or act negligently by asserting a lien on client papers while seeking payment of fees.

The court concluded that the complaint did not plead facts sufficient to raise the Goneys’ malpractice claim above a speculative level. The court therefore dismissed the complaint, canceled the scheduled oral argument, directed the clerk to close the listed motions, and marked the case closed. Judge Hellerstein did not state that the dismissal was with or without prejudice.