The U.S. District Court for the Middle District of Florida has dismissed a legal malpractice action, while granting leave to file a second amended complaint. In Mengle v. Goldsmith, a real estate investor brought an action against an attorney who represented the non-party real estate developer. The Chicago law firm drafted documents and performed legal services, assisting the developer to raise $11 million from investors in order to acquire and sell six Florida properties.
The venture failed, resulting in foreclosure or losses on sale of the properties. The investor then filed an action against the developer’s law firm, alleging that it had negligently prepared documents, which caused him losses and that he was an intended third party beneficiary of the law firm’s services.
The law firm moved to dismiss the complaint for lack of personal jurisdiction and failure to state a claim. Personal jurisdiction arises either through general or specific jurisdiction. The federal court found no general jurisdiction because the law firm had not engaged in substantial and non-isolated activities within Florida that showed “a general course of business activity in the [s]tate for pecuniary benefit.” The court relied on the fact that all of the firm’s services were performed in Chicago and an attorney for the firm had attended a single meeting in Florida.
With respect to specific jurisdiction under Florida law, jurisdiction will attach if the defendant transacts business in the state or commits a tort in the state. However, the court first must find that the allegations in the complaint state a cause of action.
One of the necessary elements to a legal malpractice action is an attorney’s employment by the client, demonstrated by the existence of a contract or where the client intends to benefit a third party. In this case, the court found that the complaint failed to state that the attorney’s services here were specifically intended to benefit the investor. Thus, the court dismissed the complaint for failure to state a claim, but granted leave for the investor to file a second amended complaint to overcome the deficiencies in the first complaint.
Decision: Mengle v. Goldsmith