Case 4:15-cv-00639-ALM Document 82 Filed 02/02/17 Page 1 of 8 PageID #: 1501
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`MEMORANDUM OPINION AND ORDER
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`LJH, LTD.
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`v.
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`IRA J. JAFFE; and JAFFE, RAITT, HEUER
`& WEISS, P.C.
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`Civil Action No. 4:15-CV-00639
`Judge Mazzant
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`Pending before the Court is Defendants Ira J. Jaffe and Jaffe, Raitt, Heuer & Weiss,
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`P.C.’s Motion to Dismiss Plaintiff’s Second Amended Complaint Pursuant to Fed. R. Civ. P.
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`12(b)(6) (Dkt. #74). After reviewing the relevant pleadings, the Court determines the motion
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`should be granted in part and denied in part.
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`BACKGROUND
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`This case concerns the sale and purchase of realty and equipment between LJH, Ltd.
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`(“LJH”) and three entities, Go Frac, LLC (“Go Frac”), WRB Trucking Company, LLC, and GF
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`Cambridge, LLC (collectively, the “Sellers”) (Dkt. #74 at p. 2). In July 2015, Ira Jaffe (“Jaffe”),
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`acting on behalf of Jaffe, Raitt, Heuer & Weiss, P.C. (the “Jaffe Firm,” collectively with Jaffe,
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`the “Jaffe Defendants”) made one or more telephone calls to Lacy Harber (“Harber”). Jaffe
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`contacted Harber seeking to sell oil fracking equipment and real estate. The equipment and real
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`estate that Jaffe and Harber discussed were owned by one or more entities of which Jaffe was
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`“an owner and authorized representative” (Dkt. #73 at p. 9). Jaffe drafted contracts for the sale
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`of the real estate and equipment, and Harber signed them. Harber, acting as representative for
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`LJH, acquired an equitable lien on the real estate and equipment, advancing to the Sellers
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`$20,000,000 for the equipment and $4,000,000 for the real estate. On or about July 27, 2015,
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`Jaffe travelled to Grayson County, Texas, where he met with Harber and Harber’s accountant “to
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`negotiate new terms relating to the sale of the equipment and real property” (Dkt. #73 at p. 5).
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`At this meeting, Jaffe disclosed issues related to the sale that caused LJH to back out of the deal.
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`On August 4, 2015, LJH filed its Original Petition in the 15th Judicial District Court of
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`Grayson County, Texas, against the Jaffe Defendants, alleging a number of claims including
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`fraud, negligent misrepresentation, conversion, conspiracy, and money had and received. LJH
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`also seeks actual and punitive damages, and a constructive trust over the relinquished funds due
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`to principles of unjust enrichment (Dkt. #3). On September 18, 2015, the Jaffe Defendants
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`removed the case to this Court alleging diversity pursuant to 28 U.S.C. § 1332 and removal
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`pursuant to 28 U.S.C. § 1441 (Dkt. #1).
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`On July 28, 2016, the Court withdrew its previous order addressing Defendants’ Motion
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`to Dismiss First Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(2) and (6) (Dkt. #72).
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`The Court allowed LJH to file a Second Amended Complaint to assert facts to overcome the
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`Jaffe Defendants’ assertion of the attorney immunity doctrine. LJH filed its Second Amended
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`Complaint on August 11, 2016 (Dkt. #73). On August 26, 2016, the Jaffe Defendants filed their
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`Motion to Dismiss the Second Amended Complaint (Dkt. #74). On September 12, 2016, LJH
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`filed its response (Dkt. #75). On September 22, 2016, the Jaffe Defendants filed a reply (Dkt.
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`#76). On October 3, 2016, LJH filed its sur-reply (Dkt. #77).
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`LEGAL STANDARD
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`The Federal Rules of Civil Procedure require that each claim in a complaint include a
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`“short and plain statement . . . showing that the pleader is entitled to relief.” Fed. R. Civ. P.
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`8(a)(2). Each claim must include enough factual allegations “to raise a right to relief above the
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`speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
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`A Rule 12(b)(6) motion allows a party to move for dismissal of an action when the
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`complaint fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
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`When considering a motion to dismiss under Rule 12(b)(6), the Court must accept as true all
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`well-pleaded facts in plaintiff’s complaint and view those facts in the light most favorable to the
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`plaintiff. Bowlby v. City of Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court may
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`consider “the complaint, any documents attached to the complaint, and any documents attached
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`to the motion to dismiss that are central to the claim and referenced by the complaint.” Lone
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`Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). The Court
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`must then determine whether the complaint states a claim for relief that is plausible on its face.
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`‘“A claim has facial plausibility when the plaintiff pleads factual content that allows the [C]ourt
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`to draw the reasonable inference that the defendant is liable for the misconduct alleged.’”
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`Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
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`(2009)). “But where the well-pleaded facts do not permit the [C]ourt to infer more than the mere
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`possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader
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`is entitled to relief.’” Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
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`In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency
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`of a complaint in the context of a Rule 12(b)(6) motion. First, the Court should identify and
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`disregard conclusory allegations, for they are “not entitled to the assumption of truth.” Iqbal,
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`556 U.S. at 664. Second, the Court “consider[s] the factual allegations in [the complaint] to
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`determine if they plausibly suggest an entitlement to relief.” Id. “This standard ‘simply calls for
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`enough facts to raise a reasonable expectation that discovery will reveal evidence of the
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`necessary claims or elements.’” Morgan v. Hubert, 335 F. App’x 466, 470 (5th Cir. 2009)
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`(citation omitted). This evaluation will “be a context-specific task that requires the reviewing
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`[C]ourt to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
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`Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual
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`matter, accepted as true, to ‘state a claim to relief that is plausible on its face.”’ Id. at 678
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`(quoting Twombly, 550 U.S. at 570).
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`ANALYSIS
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`The Jaffe Defendants argue the conduct alleged by LJH in the Second Amended
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`Complaint was made in the course of representing the Sellers in an asset sale transaction. As
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`such, the Jaffe Defendants assert LJH’s claims should be dismissed based on the attorney
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`immunity doctrine. LJH responds that Jaffe was not acting in his capacity as an attorney when
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`he negotiated the terms of the “Equipment Purchase Agreement” with Harber. Specifically, LJH
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`contends the July 10, 2015 Equipment Purchase Agreement listed Jaffe as an authorized
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`representative for Go Frac and WRB Trucking Company, LLC and not as an attorney for those
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`entities. Further, LJH maintains the Jaffe Firm is liable for ratifying Jaffe’s actions.
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`The attorney immunity doctrine provides that attorneys are “immune from civil liability
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`to a non-client ‘for actions taken in connection with representing a client in litigation.’” Cantey
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`Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015) (quoting Alpert v. Crain, Caton &
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`James, P.C., 178 S.W.3d 398, 405 (Tex. App.—Houston [1st Dist.] 2005, pet. denied)). “Even
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`conduct that is ‘wrongful in the context of the underlying suit’ is not actionable if it is ‘part of
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`the discharge of the [attorney’s] duties in representing his or her client”’ and not “entirely
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`foreign to the duties of an attorney.” Id. at 481–82 (citations omitted). The purpose of the
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`doctrine is to allow attorneys broad latitude “to practice their profession, to advise their clients
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`and interpose any defense or supposed defense, without making themselves liable for damages.”
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`Id. at 481 (quoting Kruegel v. Murphy, 126 S.W. 343, 345 (Tex. Civ. App.—Dallas 1910, writ
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`ref’d)). Accordingly, providing immunity ensures “loyal, faithful, and aggressive representation
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`by attorneys employed as advocates.” Id. (quoting Mitchell v. Chapman, 10 S.W.3d 810, 812
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`(Tex. App.—Dallas 2000, pet denied)). The dispositive question is whether the conduct was
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`“‘the kind in which an attorney engages when discharging his duties to a client.’” Id. at 482
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`(quoting Dixon Fin. Servs., Ltd. v. Greenberg, Peden, Siegmyer & Oshman, P.C., No. 01-06-
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`00696-CV, 2008 WL 746548, at *9 (Tex. App.—Houston [14th Dist.] 2000, pet. denied)).
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`The Second Amended Complaint indicates the following facts the Court must accept as
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`true and view in the light most favorable to LJH. Bowlby, 681 F.3d at 219. Harber and Jaffe
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`communicated regarding the realty and equipment at issue (Dkt. #73 at p. 9). Jaffe was an
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`“owner and authorized representative” of one or more of the entities that owned the equipment
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`and realty (Dkt. #73 at p. 9). Harber signed three contracts based on the Jaffe Defendants’
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`representations and disclosures, and afterwards, at the request of Jaffe, sent a $20,000,000
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`advance for the equipment and a $4,000,000 advance for the realty, which were held in trust by
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`the Jaffe Defendants (Dkt. #73 at pp. 3–4). On or about July 27, 2015, Jaffe flew to Grayson
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`County, Texas, and met with Harber, and Harber’s accountant, Jim Keller, on behalf of LJH, to
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`negotiate new terms relating to the sale (Dkt. #73 at p. 4). At this meeting, Jaffe disclosed issues
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`to Harber, including: (1) he was an attorney; (2) he was a minor partner, with other individuals,
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`in Go Frac; (3) Go Frac was insolvent; (4) Defendants needed to accelerate the closing date; (5)
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`other claimants existed regarding the equipment LJH was to receive; (6) that future lawsuits
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`could result from the sale and purchase; and (7) Jaffe and his law firm would represent Harber
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`and/or LJH in a proceeding (Dkt. #73 at p. 5).
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`At the Rule 12(b)(6) stage, the Court cannot conclusively establish that Jaffe was acting
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`in his capacity as an attorney when the underlying transaction with Harber occurred. Although
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`Jaffe’s alleged conduct appears to be that of an attorney, Jaffe was also a minor partner in Go
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`Frac and was listed as its “owner and authorized representative” (Dkt. #73 at pp. 9, 14).
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`Attorney immunity bars an attorney’s liability to a non-client when the attorney acts in his legal
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`capacity. Cantey Hanger, 467 S.W.3d at 481. However, such immunity does not apply when
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`the attorney acts outside of his legal capacity. Id. at 482. Here, it is possible, based on the
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`allegations in the Second Amended Complaint, that Jaffe was acting based upon his ownership
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`interest in Go Frac and not solely as an attorney. Therefore, the Court refuses to grant Jaffe
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`attorney immunity at this time.
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`Further, even if Jaffe was acting only in his ownership capacity of Go Frac, the Jaffe
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`Firm would have been providing legal representation for the duration of the transaction between
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`Harber and the Sellers. LJH alleges that Jaffe, acting on behalf of the Jaffe Defendants, made
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`one or more calls to, and had conversations with, Harber regarding the sale of oilfield and
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`fracking equipment and related realty (Dkt. #73 at p. 9). When determining the applicability of
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`the attorney immunity doctrine, the Court examines the kind and not the nature of the attorney’s
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`conduct. Chapman Children’s Tr. v. Porter & Hedges, L.L.P., 32 S.W.3d 429, 442 (Tex. App.—
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`Houston [14th Dist.] 2000, pet. denied). Contacting a potential buyer about a significant sale of
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`property and equipment is not conduct that would be “foreign to the duties of an attorney.”
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`Cantey Hanger, 467 S.W.3d at 482. LJH also alleges that Jaffe negotiated and prepared the
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`contracts related to the sale (Dkt. #73 at p. 3). This conduct would not be “foreign to the duties
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`of an attorney.” Cantey Hanger, 467 S.W.3d at 482. The Jaffe Firm did not have a personal
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`stake in the sale of the equipment and realty, and thus, if it was involved in the transaction at all,
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`its actions were purely those of legal representation, which must be protected under the attorney
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`immunity doctrine.1
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`In another argument, LJH asserts that attorney immunity does not apply in a non-
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`litigation context, and the Jaffe Defendants’ conduct occurred during a business transaction
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`rather than in an adversarial proceeding (Dkt. #75 at p. 5). The Court disagrees because that
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`“stance is not in line with Texas law.” Iqbal v. Bank of Am., N.A., 559 F. App’x 363, 365–66
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`(5th Cir. 2014). The Texas Supreme Court in Cantey Hanger noted that “[t]he majority of Texas
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`cases addressing attorney immunity arise in the litigation context [,] [b]ut that is not universally
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`the case.” 467 S.W.3d at 482 n.6. The high court cited two cases “as examples of cases in
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`which courts have applied attorney immunity (or indicated that it could apply) outside the
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`litigation context.” Id.; Campbell v. Mortg. Elec. Registration, No. 03-11-00429-CV, 2012 WL
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`1839357, at *5–6 (Tex. App.—Austin, May 18, 2012, pet. denied) (applying attorney immunity
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`to dismiss claims against attorney defendants in a foreclosure proceeding); Reagan Nat’l Advert.
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`of Austin, Inc. v. Hazen, No. .03-05-00699-cv, 2008 WL 2938823, at *8 (Tex. App.—Austin,
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`July 29, 2008, no pet.) (mem. op.) (noting that while “many of the cases addressing the attorney-
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`immunity doctrine arise in the context of pending litigation, neither case law, nor the doctrine’s
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`underlying policy rationales, are limited to that setting”). Thus, the attorney immunity doctrine
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`is not limited to only litigation.
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`After reviewing the Second Amended Complaint, the Court concludes that LJH has
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`stated plausible claims against Jaffe to defeat a Rule 12(b)(6) motion to dismiss. The Court
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`further concludes, based upon the facts alleged, the Jaffe Firm was acting solely within its legal
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`1 The Court finds that if Jaffe was acting solely based on his personal interest in Go Frac, his actions could not
`implicate the Jaffe Firm, as they would be outside the scope of his actions as an attorney. Additionally, other
`evidence might demonstrate that Jaffe was acting in his capacity as an attorney during the transaction with Harber.
`At this time, the Court cannot conclusively make its determination based upon LJH’s allegations in the Second
`Amended Complaint.
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`capacity during the entirety of the Harber transaction, and thus claims against the Jaffe Firm
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`must be dismissed under the attorney immunity doctrine.
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`CONCLUSION
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`It is therefore ORDERED that Defendants Ira J. Jaffe and Jaffe, Raitt, Heuer & Weiss,
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`P.C.’s Motion to Dismiss Plaintiff’s Second Amended Complaint Pursuant Fed. R. Civ. P.
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`12(b)(6) (Dkt. #74) is hereby GRANTED IN PART AND DENIED IN PART.
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`It is further ORDERED that LJH, Ltd.’s claims against Jaffe, Raitt, Heuer & Weiss, P.C.
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`are DISMISSED with prejudice.
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`8
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