Attorneys – Tort/Negligence – Legal Malpractice Claim – Standard of Care – Ethics Professor – Professional Conduct Rules – Breach of Fiduciary Duty – Interference With Prospective Economic Advantage

Inland American Winston Hotels, Inc. v. Winston. (Lawyers Weekly No. 10-15-1122, 19 pp.) (Ben Tennille, Ch.J.) N.C. Bus. Ct. Click here for the full text of the opinion.

Holding: An ethics professor who has no experience in commercial real estate and who has never been licensed to practice in North Carolina is not qualified to testify as to the standard of care applicable to the defendant-attorney in this case.

Summary judgment for the defendant-attorney and the defendant-law firm.

Facts

The defendant-attorney served as counsel to Winston Hotels, Inc. Winston Hotels was in the business of acquiring, developing and constructing hotels. Kenneth Crockett was one of the attorney’s primary contacts in connection with his representation of Winston Hotels.

In 2007, Winston Hotels merged with another company to form plaintiff. Plaintiff is also in the business of acquiring, developing and constructing hotels.

During the final merger negotiations, Crockett was in danger of losing a chance to develop a hotel in Research Triangle Park to a competitor. In order to expedite the deal, Crockett removed plaintiff’s name from the contract and substituted Winston Hospitality, a Winston-Crockett entity.

The parties intended for Crockett’s pre-merger deals to benefit plaintiff; in fact, the parties back-dated their merger agreement to encompass the dates of Crockett’s negotiations and contract for the RTP property.

Ultimately, the RTP property was not assigned to plaintiff; instead, it was sold to a third party.

Plaintiff alleges claims of legal malpractice, breach of fiduciary duty, and tortious interference with prospective economic advantage against the defendant-attorney and law firm.

Discussion

In an effort to demonstrate a breach of the duty of care by the defendant-attorney, plaintiff offers the testimony of Thomas Metzloff, a Duke University law professor with a background in ethics. Metzloff determined that the attorney “violated the standard of care by assisting Winston, Crockett, or entities controlled by them with respect to the [RTP] development project.”

Metzloff is not a practicing attorney. He has not been licensed to practice law for over 25 years, and he has never been licensed to practice law in North Carolina.

Metzloff has never conducted any real estate transactions as a lawyer or represented any individual or organization in any real estate transaction. He does not consider himself to be an expert in the practice of real estate development or the practice of law related to real estate developments. He does not know everything that a real estate lawyer does in representing a developer, putting together deals, and seeing them through to closing.

Metzloff lacks the qualifications to give a competent opinion as to whether the attorney’s actions with regard to the RTP contract were within the applicable standard of care for a commercial real estate transactional attorney practicing in the Research Triangle area or a similar community.

Metzloff does claim expertise in the N.C. Rules of Professional Conduct, and those rules are Metzloff’s only articulated basis for his opinion that the attorney’s actions or omissions fell short of the standard.

However, the N.C. Rules of Professional Conduct cannot be used to establish civil liability.

When a plaintiff fails to offer testimony or affidavits of attorneys in the area of practice in the defendant’s legal community, dismissal is proper.

The circumstances of this case and the complexities of the relationships between the parties are such that a determination of a breach of the standard of care cannot be determined by an ethics professor who does not practice law in commercial real estate. Likewise, the applicable standard of care cannot be determined, as plaintiff suggests, by lay persons. Plaintiff must have a competent expert to provide evidence of a breach of the standard of care.

There is no admissible evidence from plaintiff of the standard by which the attorney’s actions and alleged omissions are to be weighed. Thus, plaintiff has failed to forecast competent evidence that the attorney violated the applicable standard of care.

Where the parties’ merger agreement was made retroactive to July 1, 2007, Crockett had the actual authority to act to preserve the RTP opportunity for the parties’ joint venture.

Furthermore, Crockett’s communication of plaintiff’s assurances to the attorney gave the attorney a reasonable and actual belief that plaintiff had granted Crockett the authority to change the name on the RTP contract to Winston Hospitality in order to close the deal. Even if Crockett had no actual authority to change the name, he had the apparent authority to act to preserve the opportunity for the joint venture.

Based on Crockett’s actual and apparent authority, the attorney did not violate any standard of care in following Crockett’s instructions as to the name change.

As to plaintiff’s tortious interference claim, it has forecast no evidence that the attorney acted with malicious design to injure plaintiff. Moreover, it was Crockett who changed the name on the contract. Finally, the evidence indicates that the seller likely would not have entered into the contract absent the participation of Crockett and Robert Winston.

Motion granted.