Hammervold v. Beckwith

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MARK HAMMERVOLD, Plaintiff, v. LARRY BECKWITH, Defendant.

No. 3:22-cv-001053

United States District Court, M.D. Tennessee, Nashville Division

May 25, 2023

MEMORANDUM

ALETA A. TRAUGER, United States District Judge

Before the court is defendant Larry Beckwith's Motion to Dismiss (Doc. No. 21), supported by a Memorandum of Law (Doc. No 22). Plaintiff Mark Hammervold opposes the motion (Doc. No 24), and the defendant has filed a Reply in further support of his position (Doc. No. 27). For the reasons set forth herein, the Motion to Dismiss will be denied.

I. FACTUAL ALLEGATIONS

Mark Hammervold's Complaint (Doc. Nos. 1 (redacted), 5 (sealed)), filed on December 22, 2022, alleges as follows. Hammervold is an attorney licensed to practice law in Tennessee, among other states. He became licensed in 2012. In 2015, he started his own independent law practice, but he also, during that period of time, associated with the law firm of Cummings Manookian PLC as co-counsel.

Defendant Larry Beckwith is the majority shareholder in a successful company called LBDB Holdings, LLC (“LBDB”). For reasons that are not germane to this lawsuit, Beckwith discovered on July 28, 2014 that he had a “meritorious and highly valuable” malpractice claim against the accounting firm Lattimore Black, Morgan & Cain, PC (“Lattimore”), based on a breach of a duty of confidentiality owed to Beckwith personally and potentially to LBDB as well. The statute of limitations on the claim, under Tennessee law, was set to expire one year later, on July 28, 2015. Beckwith and his then-counsel, who is not involved in this lawsuit, entered into a series of agreements with Lattimore to toll the running of the statute of limitations while the parties attempted to settle Beckwith's claim. The final agreement extended the tolling through January 22, 2016, thus leaving Beckwith an additional sixty days, until March 23, 2016, to file his accounting malpractice lawsuit against Lattimore.^[1]

In January 2016, Beckwith contacted attorney Brian Manookian about retaining him to prosecute the accounting malpractice claim against Lattimore on a contingency fee basis. The plaintiff alleges “upon information and belief” that Manookian expressed interest in taking the case but also explained to Beckwith that he would want to bring in Hammervold as co-counsel, with whom Manookian would split the contingency fee. Beckwith understood and agreed. On January 18, 2016, Beckwith and Manookian, on behalf of Cummings Manookian PLC, executed a written Attorney-Client Agreement (“Agreement”) that states, in relevant part:

It is our firm's practice to enter into engagement letters with our clients. This letter serves the general purpose of setting forth the basis on which we will represent you ....

Client and Scope of Representation

Our client will be you in your individual capacity ....We will represent you in the matter involving [Lattimore's] breach of duties and contract arising out of a valuation performed in 2011.

All work on this matter will be done by Brian Manookian or Mark Hammervold....

Contingency Fee

Our fees for work on this case will be on a contingency basis.... If you do not receive a settlement, judgment, or award, we do not receive a fee. The contingency fee rate is the scale we previously agreed upon [and handwritten by Beckwith in the space provided]....

Additionally, I occasionally split my portion of contingency fees with Mark Hammervold when I have him assist in a case. I may have him assist in this case, and if so, you agree to my sharing of my fee with him. All compensation to Mr. Hammervold is out of my already agreed upon fee and does not cost you anything additional.

Costs and Expenses

There will likely be costs and expenses involved in pursuing this case.... We will advance those costs and expenses ....You remain responsible for the costs and expenses.... ....

Termination of Professional Relationship

You have the right to change attorneys to another attorney or firm at any time by sending us a letter to that effect. This right to “discharge” this firm as your representative requires that you remain responsible for all costs and expenses incurred prior to receipt of your letter. If you terminate the representation before the conclusion of the matter, we will additionally be entitled to receive from the proceeds of any recovery a reasonable fee for the work we have performed, based upon the amount of time required, the complexity of the matter, the time frame within which the work was performed, our experience, ability, reputation, the responsibility involved and the results obtained.

We may choose to withdraw from representing you and request, in writing, that you obtain another attorney or firm to represent you. A “withdrawal” by this firm does not relieve you of the responsibility to pay advance costs.

(Doc. No. 1-2, at 1-2.)

Following execution of the Agreement, Hammervold spent hundreds of hours representing Beckwith over the course of three years. During this time, Hammervold filed a timely complaint in the Circuit Court for Williamson County, Tennessee, asserting accounting malpractice claims against Lattimore. The trial court erroneously dismissed the case on statute of limitations grounds, and Hammervold pursued a successful appeal of that decision. Hammervold “took over near exclusive responsibility in representing Beckwith” in connection with a motion to alter or amend in the Circuit Court and then with the appeal. (Compl. ¶ 48.)

Beckwith and LBDB's in-house counsel, Harold Donnelly, unbeknownst to Hammervold, reached out to counsel for Lattimore as early as November 2016 about suing Manookian and Hammervold for malpractice and settling directly with Lattimore. Counsel for Lattimore informed Hammervold of the conversation, because he did not feel comfortable discussing settlement without Hammervold's permission. As of January 2017, however, Donnelly told Hammervold that Beckwith wanted Hammervold and Manookian to continue to represent him but wanted to “toll” any potential malpractice claim against them in the event the appeal of the erroneous order of dismissal was not successful. (Id. ¶ 54.) Hammervold, Manookian, and Beckwith entered into such a tolling agreement on January 31, 2017, providing that the claim was tolled indefinitely, until any party “provided a notice to terminate the agreement.” (Id. ¶ 55.)

In April 2017, the Williamson County Circuit Court entered an order largely denying the motion to alter or amend judgment. Beckwith, through LBDB's General Counsel, Bill Hankins, instructed Hammervold to proceed with pursuing an appeal. Hammervold, who was designated as lead counsel on the appeal, worked diligently over the next several months on drafting the appellate brief, while Beckwith, Hankins, and Donnelly all remained extremely involved in the process of formulating the arguments to be raised on appeal, allegedly insisting on the inclusion of legally unsupportable arguments and generally increasing the amount of time it took for Hammervold to complete the appellate brief.

In August 2017, just prior to the deadline for filing the appellate brief, Beckwith and his in-house attorneys also sought to include as attorney of record another attorney with whom Manookian often associated, whose name had been on the initial complaint but who had not participated in any way in the drafting or filing of the complaint, the motion to alter or amend, or the appellate brief. Manookian interpreted the push to include this other attorney as an attempt to “manufactur[e] some basis to include [the attorney] as a defendant in a legal malpractice claim that Beckwith had previously threatened, even though [he] had no involvement whatsoever in the case.” (Compl. ¶ 68.) The effort was upsetting to both Hammervold and Manookian, who fired off a late-night email on August 18, 2017 responding to the request to include the attorney. Although the email was sent to Beckwith, Donnelly, and Hankins as well as Hammervold and the other attorney, it was apparently intended only for the latter two. Aside from expressing irritation at the repeated demands made by Beckwith “and his revolving third-tier ‘in-house counsel,'” Manookian indicated a desire to “discuss whether continuing any relationship with these individuals makes sense under the circumstances.” (Id. ¶ 71.) When Beckwith responded, again reiterating that the third attorney was one of his lawyers and needed to be included on the brief, Manookian wrote back, stating in no uncertain terms that the attorney “is not your lawyer in this matter, nor is he participating in this appeal.” (Compl. ¶ 72.) He concluded: “Let's talk next week about my role going forward. I intend to pursue the appeal in this matter, but I will withdraw at its conclusion ....” (Id.)

According to Hammervold, no one understood these “late-night emails” to signal a termination or modification of the Agreement, and Beckwith, Donnelly, and Hankins expected Manookian and Hammervold to continue to represent Beckwith in the case. (Id. ¶ 73.) In any event, Hammervold proceeded with finalizing the appellate brief, which was filed on August 21, 2017. Hammervold traveled from Chicago, where he lived at the time, to Nashville for the oral argument before the Tennessee Court of Appeals on December 6, 2017. Following oral argument, Hammervold continued to respond regularly to Beckwith's requests for updates on the status of the appeal.

The appeal remained pending for over a year after oral argument. In the interim, Manookian was suspended from the practice of law on September 21, 2018. (Id. ¶ 95.) Hammervold, however, remained on the case. During that time period, besides responding to Beckwith's requests for updates, Hammervold reviewed and researched...