The Healing Chair, Inc. v. Logan, Logan & Watson, L.C.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

THE HEALING CHAIR, INC., )

)

Plaintiff(s), )

)

vs. ) Case No. 4:22-CV-327 SRW

)

LOGAN LOGAN & WATSON, et al., )

)

Defendant(s). )

MEMORANDUM AND ORDER

This matter comes before the Court on Defendants’ Motion to Dismiss Plaintiff’s Petition

(ECF No. 4). The motion is fully briefed and ready for disposition. The parties have consented to

the jurisdiction of the undersigned United States Magistrate Judge pursuant to Title 28 U.S.C. §

636(c). For the following reasons, Defendants’ Motion will be granted; however, Plaintiff will be

granted twenty-one days to file an amended petition.

I. BACKGROUND

Plaintiff The Healing Chair, Inc. filed suit against Defendants Logan Logan & Watson,

L.C. and Andrew Logan in the Circuit Court of St. Louis County alleging Defendants committed

legal malpractice when they drafted new bylaws that allowed an outside group to take control of

The Healing Chair and damage its mission. Defendants removed the matter to this Court and

now seek dismissal of the Petition.

For purposes of considering this motion, the Court accepts the following facts as alleged

in the Petition as true:

The Healing Chair is a nonprofit corporation, and Carol Mullenix is the founder, sole

member, and president of The Healing Chair. In 2010, Mullenix was diagnosed with breast

cancer and underwent a bilateral mastectomy. During her recovery, severe pain prevented her

from getting into a comfortable position. Two friends bought her an electric lift chair which

made it easier for her to rest and raise herself to a standing position. Mullenix credits the lift

chair as one of the keys to her recovery.

In 2013, Mullenix filed Articles of Incorporation with the Missouri Secretary of State

creating The Healing Chair to provide similar electronic lift chairs to other breast cancer

survivors. The Healing Chair’s mission was, and remains, supporting women fighting breast

cancer by raising funds for, among other things, purchasing electronic “healing chairs” which are

provided to breast cancer survivors for in-home healing. At the time, Mullenix also adopted

bylaws and created the initial board of directors. The initial board included her husband, Gregory

Mullenix, and Molly and Charlie Vitale. These directors designated Mullenix as The Healing

Chair’s president, and her husband as secretary.

In 2015, Mollie and Charlie Vitale left the board. Mullenix and her husband appointed

Thomas Niemann to fill one of the vacancies. The remaining vacancy has never been filled.

During this period, The Healing Chair applied for and was granted status as a 501(c)(3) tax-

exempt charitable organization. It also began to establish a presence in Texas, Arkansas,

Maryland, and Minnesota. Amy Taitt contacted Mullenix and encouraged her to also establish a

presence in Kansas City, Missouri. Taitt indicated she and a group of friends, who she identified

as Janette Slusher and Marcia Maroney (“the KC group”), were impressed with The Healing

Chair and its mission. Mullenix agreed to allow the KC group to volunteer their time to create a

presence in Kansas City, Missouri and Wichita, Kansas. This included promoting The Healing

Chair in those communities, collecting donations, acquiring chairs, and lending those chairs to

women in need.

As The Healing Chair expanded into other cities and its presence in Kansas City grew,

the KC group began to seek more involvement in and control of The Healing Chair. Mullenix

and the other members of the board considered this, along with The Healing Chair’s legal

counsel, Niemann. The Healing Chair’s board was open to the idea of the KC group, as well as

other volunteers, expanding their roles but wanted to ensure these individuals could not take

overall control from Mullenix or force her out. Prior to inviting the KC group into management

roles, in July 2016, Mullenix sought to protect The Healing Chair’s name by filing a trademark

application with the U.S. Patent and Trademark Office for the name “The Healing Chair.” The

trademark was approved and registered in August 2017.

Mullenix also asked Niemann to review The Healing Chair’s corporate documents to

ensure management control would remain with Mullenix. In March 2017, the board approved

The Healing Chair’s First Amended and Restated Articles of Incorporation and First Amended

and Restated Bylaws. These documents authorized The Healing Chair to have members and

designated Mullenix as the sole member. The Healing Chair has no other nonprofit members.

Unbeknownst to Mullenix and the other directors, the KC group also sought legal advice from

Defendants in connection with their decision to volunteer for The Healing Chair.

Without disclosing their relationship with Defendant Andrew Logan, the KC group

invited Mullenix to meet with them and Logan in late 2017, to discuss The Healing Chair’s

possible engagement of Defendants, who were held out to Mullenix and The Healing Chair as

experts in Missouri nonprofit law. Defendants were to undertake a comprehensive review of The

Healing Chair’s organizational structure, governing documents, and state filings and then

propose changes to ensure The Healing Chair was following applicable laws. Mullenix agreed to

retain Defendants on behalf of The Healing Chair to perform a comprehensive review,

recommend and clearly explain any changes, and prepare the documents recommended.

Defendants did not ask Mullenix or Niemann, who Logan knew was The Healing Chair’s

long-standing attorney, for a copy of The Healing Chair’s then existing Bylaws. Defendants

made no effort to reconcile The Healing Chair’s formal public filings that identified Mullenix as

president, Gregory Mullenix as secretary, and The Healing Chair’s board of directors with

statements made by the KC group that they were duly and lawfully elected directors and/or

officers of The Healing Chair, or could otherwise serve as officers and/or directors. Defendants

also did not ask Mullenix or Niemann to confirm if The Healing Chair had appointed any

members.

Without having performed a comprehensive review of all of The Healing Chair’s

organizing documents, in November 2017, Logan invited the KC group and Mullenix to a

meeting at his office in Kansas City where he purported to convene what he described as a

meeting of the directors of The Healing Chair for the purpose of approving a document he had

prepared and titled, “Bylaws of The Healing Chair, Inc.” Prior to executing the new bylaws,

Mullenix privately conferred with Logan to confirm there was nothing in the bylaws that would

allow the KC group to wrest control of The Healing Chair from her or force her out. Logan

assured her there was no way for the KC group to remove her or oust her from management. In

reliance on this representation, Mullenix and the KC group executed the bylaws purportedly as

The Healing Chair’s directors. Just three months before, The Healing Chair had filed its August

2017 Annual Registration report which identified Mullenix, Gregory Mullenix, and Niemann as

directors.

Over the next 18 months, conflicts between the KC group and Mullenix developed over

the future direction of The Healing Chair. Mullenix wanted to continue to operate as an all-

volunteer organization while the KC group wanted to grow the nonprofit and use increased

donations to pay themselves six-figure salaries. In June 2019, the KC group threatened to remove

Mullenix from management pursuant to the terms of the new bylaws. Distraught, Mullenix

contacted Niemann to advise him of the developments. When Niemann contacted Logan in June

2019 to request copies of all documents in his possession concerning The Healing Chair, Logan

refused citing privilege, even though Mullenix, as The Healing Chair’s president, had approved

release of the documents to Niemann.

When asked to explain how he had concluded that members of the KC group were lawful

directors and authorized to take corporate action on behalf of The Healing Chair, Defendant

Logan refused to answer. Instead, he responded by email stating, “Our firm was engaged by all

these individuals and acted in good faith to address organizational governance matters in October

2017.” The Healing Chair’s board learned for the first time Defendants had undertaken to

prepare new bylaws purporting to name the KC group as officers and directors without any

consultation with or effort to make inquiry of the existing board or The Healing Chair’s counsel,

Niemann.

The Healing Chair had no remedy but to file suit against the KC group to obtain a

declaratory judgment stating the new bylaws were improperly and unlawfully adopted and none

of the KC group were officers or directors of The Healing Chair. The KC group pursued a

“scorched earth” defense strategy, making false allegations and intentionally interfering with the

operations of The Healing Chair. This included an effort to have the Missouri Attorney General

act against The Healing Chair after it purchased an Apple MacBook for Mullenix to use in its

operations, refusing to relinquish control of The Healing Chair’s website and social media

accounts, misdirecting emails and other inquiries from prospective donors and breast cancer

survivors, and claiming ownership of The Healing Chair’s funds on deposit in a Kansas City

bank account they had opened in The Healing Chair’s name. The KC group also filed a

discovery motion misrepresenting that The Healing Chair was refusing to permit payment of

company debts when The Healing Chair had merely asked the KC group to provide copies of

invoices they had refused to hand over. Consequently, the court appointed a receiver, sua sponte.

At the urging of the KC group’s counsel, the receiver declared his intention to sell all of The

Healing Chair’s assets and “shut the company down.” He later revised the plan to split the assets

between Mullenix and the KC group.

In the interim, the KC group started their own nonprofit corporation, now known as

“Peace Out Cancer,” with a similar mission to The Healing Chair’s. However, the KC group still

refused to relinquish whatever rights they believed they had to control The Healing Chair,

continued their efforts to pressure the receiver to award their new nonprofit half of The Healing

Chair’s assets, and continued to damage The Healing Chair’s business and its mission by

refusing to relinquish control of The Healing Chair’s website and other social media accounts.

The Healing Chair could not operate while a receiver was in place, but the KC group could freely

operate their Peace Out Cancer nonprofit while The Healing Chair was crippled by their actions.

The Healing Chair had no choice but to file a second lawsuit against the KC group for

breach of fiduciary duties they owed to The Healing Chair as purported officers and directors of

The Healing Chair. Finally, the KC group came to the settlement table and disposed of both

lawsuits, which was necessary to allow The Healing Chair to rebuild from the damage done to it

by the KC group. The Healing Chair then filed this lawsuit against Defendants for legal

malpractice.

In its legal malpractice claim, The Healing Chair alleges Defendants breached their duty to

The Healing Chair by:

a. failing to disclose a conflict of interest arising from its prior representation of the KC

group in matters related to The Healing Chair;

b. failing to perform an investigation into The Healing Chair’s organizational history to

confirm The Healing Chair was acting in compliance with applicable laws;

c. failing to review and disclose the contents of documents in Defendants’ possession

that revealed The Healing Chair already had a board of directors that did not include

anyone in the KC group;

d. failing to review and disclose the contents of documents in Defendants’ possession

confirming The Healing Chair had previously adopted bylaws;

e. failing to inquire into or resolve discrepancies between what the KC group told

Defendants concerning their management roles in The Healing Chair and what The

Healing Chair’s organizing documents and publicly available state records stated;

f. failing to make any effort to contact The Healing Chair’s long-standing St. Louis

counsel when Defendants were unable to obtain The Healing Chair’s bylaws;

g. falsely assuring and representing to The Healing Chair the new bylaws did not

provide a mechanism for the KC group to remove Mullenix from overall management

and control of The Healing Chair;

h. failing to exercise reasonable care in preparing the new bylaws by:

i. Not including any recitals confirming the record of The Healing Chair’s

formation and organization, including its adoption of prior bylaws;

ii. Misidentifying The Healing Chair’s place of business in the preamble as “the

City of St. Louis, County of St. Louis”;

iii. Providing in Article II that The Healing Chair could not have members even

though The Healing Chair’s articles of incorporation, amended and restated

four months previously, expressly provide The Healing Chair would have

members;

iv. Including the following provisions about members, even though it states there

will be no members:

A. in Article III, Section 2, a director of the corporation need not be a

member;

B. in Article III, Section 4, directors of the corporation would serve

until the next meeting of members;

C. in Article III, Section 6, directors of the corporation could be

removed without cause at a meeting of the members, upon notice

to the members;

D. in Article IV, Section 5, the president of The Healing Chair would

preside at all meetings of the members;

E. in Article IV, Section 8, the secretary of The Healing Chair would

keep minutes of the meetings of members;

F. in Article V, Section 3, each member of any board committee

would serve until the next annual meeting of the members;

G. in Article VII, the corporation shall keep minutes of the

proceedings of its members and records of names and addresses of

members entitled to vote;

v. Providing in Article III, Section 2, the incorporator would fix the number of

directors when the Annual Registration Reports and other documents on file

with the Missouri Secretary of State showed The Healing Chair already had a

board consisting of three directors;

vi. Providing in Article III, Section 4, directors of the corporation would be

elected at meetings of the members, while Article III, Section 3 provided

directors would be elected at meetings of the directors;

vii. Providing in Article III, Section 4, vacancies in director positions would be

filled at the next meeting of the members, while Article III, Section 5

provided vacancies would be filled by the board of directors;

viii. Providing in Article IV, Section 2, officers will be elected annually by the

board at the regular annual meeting of the board even though Article III,

Section 9 provides separately for an annual, regular, and special meeting with

different notice requirements;

ix. Not including any provision limiting The Healing Chair’s purpose to the

exempt purposes set forth in Section 501(c)(3) of the Internal Revenue Code;

x. Not including any provision stating The Healing Chair’s assets must be

permanently dedicated to exempt purposes under Section 501(c)(3) of the

Internal revenue Code and upon dissolution, the assets must be distributed

only for such exempt purposes, or to the federal, state, or local government for

a public purpose;

xi. Not providing a conflict-of-interest provision despite Defendants’ knowledge

the KC group wanted to pay themselves six-figure salaries from tax-exempt

funds received by The Healing Chair, which Defendants allowed in Article II,

Section 11 via vote of a majority of directors.

The Healing Chair alleges it was damaged as a result of Defendants’ negligence because

it had to forgo assets, incur costs to pay a receiver, incur attorney’s fees and other costs, and lose

donation opportunities. Defendants seek dismissal of the claims asserting The Healing Chair has

not properly alleged Defendants proximately caused the harm The Healing Chair incurred.

II. STANDARD

The purpose of a motion to dismiss for failure to state a claim is to test the legal

sufficiency of the complaint. As the Supreme Court held in Bell Atlantic Corp. v. Twombly, 550

U.S. 544 (2007), a complaint must be dismissed pursuant to Rule 12(b)(6) for failure to state a

claim upon which relief can be granted if it does not plead “enough facts to state a claim to relief

that is plausible on its face.” Id. at 570. A plaintiff need not provide specific facts in support of

his allegations, Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam), but must include

sufficient factual information to provide the “grounds” on which the claim rests, and “to raise a

right to relief above a speculative level.” Twombly, 550 U.S. at 555 & n.3; see also Schaaf v.

Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008). This obligation requires a plaintiff

to plead “more than labels and conclusions, and a formulaic recitation of the elements of a cause

of action will not do.” Twombly, 550 U.S. at 555. A complaint “must contain either direct or

inferential allegations respecting all the material elements necessary to sustain recovery under

some viable legal theory.” Id. at 562 (quoted case omitted). On a motion to dismiss, the Court

accepts as true all of the factual allegations contained in the complaint, and reviews the

complaint to determine whether its allegations show that the pleader is entitled to relief. Id. at

555–56; Fed. R. Civ. P. 8(a)(2).

III. DISCUSSION

In their motion to dismiss, Defendants assert The Healing Chair has not pled any facts

establishing “but for” or proximate causation. According to Defendants, The Healing Chair

incurred damages because its president, as admitted by The Healing Chair, approved and

executed the new bylaws, and a receiver was appointed sua sponte by the state court, as a result

of the KC group’s misrepresentations and scorched earth defense strategy. Defendants argue the

Petition’s allegations do not claim Defendants’ alleged negligence, rather than the actions of

Mullenix, the KC group, and the state court, caused The Healing Chair to have no choice but file

a lawsuit or sell assets. Instead, the allegations show other actors and events caused the alleged

damages.

To establish a legal malpractice action in Missouri, a plaintiff must show “(1) an

attorney-client relationship; (2) negligence or breach of contract by the defendant; (3) proximate

causation of plaintiff’s damages; and (4) damages to plaintiff.” Klemme v. Best, 941 S.W.2d 493,

495 (Mo. 1997). In legal malpractice cases, causation in fact “requires proof that, but for the

attorney’s negligence, the result would have been different.” Nail v. Husch Blackwell Sanders,

LLP, 436 S.W.3d 556, 562 (Mo. 2014). Proximate causation requires a plaintiff to show the

injury was “a reasonable and probable consequence of the defendant’s negligence.” Id. In legal

malpractice cases, the two types of causation often collapse into one another. “By proving that

the result of the underlying proceeding would have been different but for the attorney’s

negligence, the plaintiff also proves that the damages – the difference between what the result

would have been and what it was – were the reasonable and probable consequence of the

defendant’s negligence.” Id.

Whether proximate cause exists usually raises a jury question. SKMDV Holdings, Inc. v.

Green Jacobson, P.C., 494 S.W.3d 537, 546 (Mo. Ct. App. 2016) (citing Coin Acceptors, Inc. v.

Haverstock, Garrett & Roberts LLP, 405 S.W.3d 19, 24 (Mo. Ct. App. 2013)). The issue

presented in this motion to dismiss is only whether The Healing Chair adequately alleged the

issue of proximate cause. The Court finds The Healing Chair failed to properly allege causation.

The Petition does not specifically allege “but for” or proximate cause. It only alleges The

Healing Chair has been damaged “as a result of Defendants’ negligence.” (ECF No. 6 at 15).

However, The Healing Chair does not state how the outcome would have been different had

Defendant not been negligent.

The Healing Chair includes conclusory allegations but no facts to support those

conclusions. For example, The Healing Chair alleges Defendants did not ask Mullenix or

Niemann for a copy of The Healing Chair’s then-existing bylaws. But there is no accompanying

allegation stating how The Healing Chair’s injuries would have been avoided had Defendants

asked for a copy of the then-existing bylaws. In another example, the Petition alleges Defendants

failed to disclose a conflict of interest, but it does not also include an allegation The Healing

Chair would not have hired Defendants had they disclosed the conflict of interest.

Additionally, the Petition does not identify how the new bylaws Defendants created

allowed the KC group to assert the control it allegedly did. Nor does it include any allegations

stating how the bylaws, if written differently, could have prevented the KC group from asserting

control. See SKMDV Holdings, Inc., 494 S.W.3d at 547 (To establish causation, plaintiff must

show that but for the attorney’s negligence in drafting the agreement, the plaintiff would be

better off and have an agreement more favorable to the plaintiff); see also Nail, 436 S.W.3d at

566, n.10 (same). The Petition also alleges a number of relatively minor mistakes which have no

bearing on the KC group’s actions, such as the allegation the new bylaws misidentify The

Healing Chair’s place of business. The Petition alleges various ways in which Defendants were

negligent but does not take the final step of showing how those actions resulted in The Healing

Chair’s injuries. Instead, it expects the Court to imply what would have happened had

Defendants not been negligent. This is not enough; The Healing Chair must allege each and

every element of its cause of action, including causation.

Accordingly,

IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss Plaintiff's Petition

(ECF No. 4) is GRANTED. Plaintiff has twenty-one (21) days from the date of this order to file

an amended complaint. If Plaintiff chooses not to file an amended complaint, this matter will be

DISMISSED, without prejudice.

So Ordered this 10th day of May, 2022. Sad | ) /

STEPHEN RO WELBY

UNITED STATES MAGISTRATE JUDGE

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