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Rich Realty, Inc. v. Meyerson & O'Nneill

Superior Court of Delaware, New Castle

April 14, 2014

RICH REALTY, INC., and CARSON M.GRAY, Plaintiffs,
v.
MEYERSON & O'NEILL, SHELSBY & LEONI, P.A., JACK MEYERSON and GILBERT F. SHELSBY, Defendants.

Submitted: February 20, 2014

Upon Defendants’ Motion to Dismiss GRANTED

Jeffrey S. Cianciulli, Esquire, Steven E. Angstreich, Esquire (Argued), Weir & Partners LLP, Attorneys for Plaintiffs

John A. Elzufon, Esquire (Argued), Peter C. McGivney, Esquire, Elzufon Austin Tarlov & Mondell, Attorneys for Defendants Meyerson & O'Neill and Jack Meyerson, John D. Balaguer, Esquire, White and Williams LLP, Attorney for Defendants Shelsby & Leoni, P.A. and Gilbert F. Shelsby

OPINION

MARY M. JOHNSTON, J.

FACTUAL AND PROCEDURAL CONTEXT

Rich Realty, Inc. ("RRI") and Carson M. Gray ("Gray") (collectively "Plaintiffs") filed a Complaint in the Delaware Superior Court on June 26, 2013, against the above-captioned attorneys and their respective law firms (collectively "Defendants"). Plaintiffs seek compensation for alleged legal malpractice. This action is based on the Defendants' representation of Plaintiffs in a previous legal malpractice action litigated from 2009 through 2011.

Defendants have moved to dismiss the Complaint pursuant to Superior Court Civil Rule 12(b)(6).

Parties

RRI is a Delaware corporation with its principal place of business in Newark, Delaware. RRI was created on July 3, 1997, for the purpose of acquiring a Newark, Delaware property, where it subsequently constructed a manufacturing facility. Gray was issued 29 shares of RRI upon its creation in 1997. Gray was of the age of majority at all relevant times.

Meyerson & O'Neill is a partnership and law firm with its principal place of business in Philadelphia, Pennsylvania. Jack Meyerson is the managing partner of Meyerson & O'Neill. Shelsby & Leoni, P.A. is a professional association and law firm with its principal place of business in Wilmington, Delaware. Gilbert F. Shelsby is a partner with Shelsby & Leoni.

Previous Litigation

In April 2009, Defendant Meyerson & O'Neill was hired to represent Plaintiffs and others ("PAC Litigation Plaintiffs") in a legal malpractice action against Potter Anderson & Corroon LLP and Harold I. Salmons, III, Esquire ("PAC Litigation Defendants"). Shortly thereafter, Meyerson & O'Neill contacted Defendant Shelsby & Leoni for the purpose of having Shelsby & Leoni act as Delaware counsel for the PAC Litigation Plaintiffs.

In its December 30, 2009 complaint, Defendants (on behalf of PAC Litigation Plaintiffs) alleged that PAC Litigation Defendants committed legal malpractice by drafting corporation creation documents that issued common stock directly to minors, rather than pursuant to the Uniform Transfer to Minors Act. As a result, B.F. Rich & Co. ("BFR"), which was issued approximately 2.5% of RRI stock, assumed total control over the affairs of RRI. It also was alleged that PAC Litigation Defendants committed legal malpractice by drafting a lease for the property in Newark, and representing both PAC Litigation Plaintiffs and BFR without obtaining a conflict of interest waiver.

On December 3, 2010, PAC Litigation Defendants moved to dismiss the 2009 complaint. Subsequently, PAC Litigation Plaintiffs amended their complaint. In response, PAC Litigation Defendants amended their motion to dismiss on the grounds that the PAC Litigation Plaintiffs' claims were barred by the statute of limitations. The Court heard oral argument on December 16, 2010.

In an Opinion dated February 21, 2011, the Court found, inter alia, that the legal malpractice claims regarding the lease transaction with BFR were wholly derivative, thus only available to RRI as a corporation. The Court also found that because PAC Litigation Defendants drafted the corporate documents and lease agreement in 1997, RRI's and Gray's claims of legal malpractice were barred by the three-year statute of limitations under 10 Del. C. § 8106(a). Finally, the Court found that the statute of limitations was not tolled. The PAC Litigation Plaintiffs failed to allege facts with sufficient specificity, which would establish that any party was blamelessly ignorant of PAC Litigation Defendants alleged malpractice. The Court granted PAC Litigation Defendants' motion to dismiss as to PAC Litigation Plaintiffs. The Court denied the motion to dismiss as to a group of minor plaintiffs' claims.

On March 2, 2011, PAC Litigation Plaintiffs filed a motion to amend the complaint.[1] The amendment sought to add language in the complaint to correct the deficiencies the Court noted in the February 21, 2011 Opinion. The amended language added facts about Gray's attempts to obtain information about RRI from BFR and from PAC Litigation Defendants. The Court heard oral argument on this motion on April 7, 2011.

In an Opinion dated April 26, 2011, the Court denied the motion to amend the complaint. The Court found that as a result of the dismissal of their claims in the February 21, 2011 Opinion, RRI and Gray did not have standing to file a motion to amend. However, in the interest of judicial economy, the Court analyzed the proposed amendment. The Court found that the additional facts still were not sufficient for a prima facie case of blameless ignorance that would toll the statute of limitations. The Court noted that the same result would have occurred even if these facts had been included in the complaint prior to the motion to dismiss. Further, the Court found that the newly-alleged facts illustrated that Gray was at least on inquiry notice of PAC Litigation Defendants' alleged malpractice prior to the three-year statute of limitations period. The Court denied the PAC Litigation Plaintiffs' motion to amend the complaint.

Current Litigation

Plaintiffs filed a Complaint in this legal malpractice action on June 26, 2013. In response, Defendants moved pursuant to Rule 12(b)(6) to dismiss the Complaint for failure to ...


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