Lucky Capital Management, LLC v. Miller & Martin, PLLC

Case: 16-16161 Date Filed: 07/03/2018 Page: 1 of 24

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 16-16161

________________________

D.C. Docket No. 1:14-cv-00193-MHC

LUCKY CAPITAL MANAGEMENT, LLC,

Plaintiff - Appellant,

versus

MILLER & MARTIN, PLLC,

Defendant - Appellee.

________________________

Appeal from the United States District Court

for the Northern District of Georgia

________________________

(July 3, 2018)

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Before TJOFLAT and JORDAN, Circuit Judges, and HUCK, ∗ District Judge.

HUCK, District Judge:

Plaintiff-Appellant Lucky Capital Management, LLC (“Lucky”), was a

member and investor in nValeo, LLC (“nValeo”). In early 2014, Lucky brought

suit against nValeo’s counsel, Miller & Martin, PLLC (“Miller & Martin”),

asserting six causes of action. Lucky’s claims against Miller & Martin included a

legal malpractice claim Lucky obtained from nValeo by assignment in 2012

(Count One), tort claims for aiding and abetting or procuring a breach of fiduciary

duty (Counts Two and Three), a fraudulent concealment claim (Count Four), a

civil conspiracy claim (Count Five), and a claim for statutory damages pursuant to

O.C.G.A. § 13-6-11 (Count Six).1

The district court dismissed Lucky’s legal malpractice claim, holding it

“ar[o]se out of an alleged fraud perpetrated on the assignor” and therefore was not

assignable under O.C.G.A. § 44-12-24. The district court also dismissed Lucky’s

fraudulent concealment and civil conspiracy claims for failing to state a claim. The

tort claims for aiding and abetting or procuring a breach of fiduciary duty survived

Miller & Martin’s motion to dismiss, and discovery proceeded accordingly. At the

∗

Honorable Paul C. Huck, United States District Judge for the Southern District of Florida,

sitting by designation.

1

Lucky’s First Amended Complaint mistakenly included two “Count Five[s].” For clarity, the

Court refers to the claim for statutory damages as “Count Six.”

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close of discovery, Miller & Martin moved for summary judgment as to those

claims, which the district court granted. Lucky appeals.

I. FACTS AND PROCEDURAL BACKGROUND

In April 2010, nValeo engaged Miller & Martin to perform legal services.

Miller & Martin did not act as general counsel to nValeo, and it billed nValeo for

its legal services on an hourly basis. Jeffrey Ritchie was the managing member of

nValeo. W. Scott McGinness, Jr. and R. Tyler Hand were among the Miller &

Martin attorneys who worked on nValeo matters.

In May 2010, principals of what was to become Lucky began negotiations

with nValeo for Lucky to purchase a membership interest in nValeo. Lucky

conducted these negotiations through its counsel and nValeo did the same through

Miller & Martin. The parties reached an agreement, which culminated in nValeo

and Lucky entering into a Membership Interest Purchase Agreement (the “MIPA”)

on June 7, 2010. Pursuant to the MIPA, Lucky paid $500,000 for a 2%

membership interest in nValeo.

On July 26, 2010, Lucky and nValeo entered into an Amended and Restated

Membership Interest Purchase Agreement (the “AMIPA”). Under the AMIPA,

Lucky acquired an additional 9% membership interest in nValeo by making four

$500,000 investments in the company. In addition, the AMIPA imposed limits on

compensation of nValeo’s officers and prohibited the payout of officers’ bonuses.

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The AMIPA did not contain any prohibition on nValeo making loans to its

officers.

The MIPA and AMIPA contained identical provisions disclosing the lack of

a financial track record for nValeo and the “substantial investment risks” in

purchasing the membership interests. Despite this, Lucky did not inspect nValeo’s

books before investing.

Between July and December 2010, Lucky invested a total of $2 million in

nValeo. The parties acknowledge that almost immediately after Lucky’s funds

were deposited in nValeo’s bank account Ritchie began withdrawing those funds

for his own personal use.

On September 6, 2010, nValeo’s Chief Operations Officer, Buddy Poole,

sent an email to Hand, copying McGinness, stating:

Tyler I need to get the paperwork to record Jeff [Ritchie]

taking out loans from the company which he has needed

to do from time to time to get moved to Austin, Tx.

Please give me a call on Tuesday so we can discuss the

details. Thanks.

On September 28, 2010, Hand sent Poole a Revolving Line of Credit

Promissory Note (the “Promissory Note”) for Ritchie’s signature. The Promissory

Note purported to allow nValeo to loan Ritchie up to $2 million.

In March 2011, Chad Smith, one of Lucky’s principals, reviewed the

financial records of nValeo for the first time. He saw Ritchie’s withdrawals, which

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Poole had recorded. Smith confronted Ritchie about the withdrawals, and Ritchie

admitted that he took over $800,000 and used at least part of the money for

personal use. nValeo never brought a product to market and went out of business.

When the company failed, Lucky lost its investment. Lucky sued nValeo for its

damages and, as part of the settlement of that litigation, nValeo assigned to Lucky

any legal malpractice claim it might have against Miller & Martin. The underlying

litigation followed.

Lucky filed its original complaint on January 22, 2014. After Miller &

Martin filed a motion to dismiss, Lucky filed its First Amended Complaint

(“FAC”) on April 4, 2014. The FAC alleged six causes of action against Miller &

Martin: (a) Legal Malpractice (Count One); (b) Aiding and Abetting a Breach of

Fiduciary Duty (Count Two); (c) Procuring a Breach of Fiduciary Duty (Count

Three); (d) Fraudulent Concealment (Count Four); (e) Civil Conspiracy (Count

Five); and (f) Statutory Damages under O.C.G.A. § 13-6-11 for bad faith (mis-

labeled Count Five).

Miller & Martin moved to dismiss the FAC (the “Motion to Dismiss”), and

on February 10, 2015, the district court granted the Motion to Dismiss in part and

denied it in part. Specifically, the district court dismissed Lucky’s (a) Legal

Malpractice claim; (b) Fraudulent Concealment claim; (c) Civil Conspiracy claim;

and (d) bad faith litigation claim under O.C.G.A. § 13-6-11. The district court

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declined to dismiss Lucky’s claim for aiding and abetting a breach of fiduciary

duty, and it ruled that the claim for procuring a breach of fiduciary duty was

indistinct from and, therefore, subsumed in the aiding and abetting claim.

Following discovery, Miller & Martin filed its Motion for Summary

Judgment regarding Lucky’s remaining aiding and abetting a breach of fiduciary

duty claim. After the motion was fully briefed, the district court granted summary

judgment in Miller & Martin’s favor. Final Judgment was entered on August 19,

2016, which Lucky timely appealed.

II. STANDARD OF REVIEW

“We review de novo the district court’s grant of a motion to dismiss under

Rule 12(b)(6) for failure to state a claim, accepting the allegations in the complaint

as true and construing them in the light most favorable to the plaintiff.” Mills v.

Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir. 2008) (citations and internal

punctuation omitted).

This Court “reviews a district court’s grant of summary judgment de novo,

applying the same legal standards used by the district court.” Seff v. Broward Cty.,

691 F.3d 1221, 1222 (11th Cir. 2012) (internal quotation marks omitted). “We will

affirm if, after construing the evidence in the light most favorable to the non-

moving party, we find that no genuine issue of material fact exists and the moving

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party is entitled to judgment as a matter of law.” Id. at 1223 (internal quotation

marks omitted).

III. DISCUSSION

A. Whether the district court erred in dismissing Lucky’s legal malpractice

claim

nValeo assigned to Lucky any legal malpractice claim nValeo might have

against Miller & Martin. In Count One, Lucky asserted nValeo’s assigned legal

malpractice claim against Miller & Martin, alleging:

Pursuant to its contract with nValeo, the Defendant

Miller & Martin had a duty to exercise ordinary care,

skill, prudence and diligence in carrying out its work.

This included a duty to comply with the general

standards and procedures of the legal profession. The

Defendant Miller & Martin failed to exercise the

required degree of care, skill, prudence and diligence

required in the profession by failing to report to its client

the defalcations of Ritchie and by drafting a Promissory

Note for Ritchie, which led Ritchie to believe that he

could continue to misappropriate nValeo’s assets under

the guise that said takings were “loans.” These actions

and omissions of Miller & Martin constitute legal

malpractice, and were the proximate cause of financial

injury to nValeo. As assignee of nValeo’s legal

malpractice claims against Miller & Martin, Lucky is

entitled to recover from Miller & Martin the damages to

nValeo arising from this legal malpractice.

Although as a procedural requirement O.C.G.A. § 9-11-

9.1 does not apply in this Court, Plaintiff as stated above

nonetheless filed with the complaint an affidavit of

expert witness Thomas Scott, Esq., who is competent to

testify, and who set forth “specifically at least one

negligent act or omission claimed to exist and the factual

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basis” for such claim of professional negligence as

against Miller & Martin, which is incorporated herein by

reference.

(emphases added).2

The district court dismissed this claim, holding that O.C.G.A. § 44-12-24

prohibited the assignment of nValeo’s legal malpractice claim and, thus, Lucky did

not have standing to assert the legal malpractice claim against Miller & Martin.

The district court’s ruling was predicated on its finding that “because Plaintiff’s

alleged injuries arise out of fraud to nValeo, Plaintiff was barred from bringing this

claim under O.C.G.A. § 4-12-24 as it read in 2011.” At the time of nValeo’s

assignment of its claims against Miller & Martin, O.C.G.A. § 44-12-24 provided in

relevant part:

Except for those situations governed by Code Sections

11-2-210 and 11-9-406, a right of action is assignable if it

involves, directly or indirectly, a right of property. A

right of action . . . for injuries arising from fraud to the

assignor may not be assigned.3

Lucky appeals that decision, arguing that its legal malpractice claim sounds

in professional negligence and is therefore assignable under Georgia law.

2

While substantial background facts and fraud allegations are enumerated in the “Facts” section

that precedes the claims, none of those facts or allegations are re-alleged in Count One, or in any

other count.

3

After Lucky’s assignment, but before the dismissal of Count One, Georgia amended O.C.G.A.

§ 44-12-24 to prohibit the assignment of legal malpractice claims. The district court pretermitted

the issue of whether O.C.G.A. § 44-12-24 in its current form applies retroactively to disallow the

assignment in this case. Neither party has discussed on appeal whether the amended version of

O.C.G.A. § 44-12-24 applies retroactively.

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Lucky argues that nValeo’s claim was assignable because it is based not on

Ritchie’s fraud on nValeo, but upon a claim that Miller & Martin was negligent in

failing to report to nValeo Ritchie’s misappropriation of funds and in drafting a

Promissory Note for Ritchie, which allegedly led Ritchie to believe that he could

continue to misappropriate nValeo’s assets. That is, Lucky contends that its claim

is based upon the loss to nValeo by virtue of Miller & Martin’s professional

negligence.

A close examination of Lucky’s malpractice claim shows that it is assignable

because it is based on Miller & Martin’s alleged professional negligence. The

claim alleges that Miller & Martin “failed to exercise the required degree of care,

skill, prudence and diligence required in the profession,” and that this failure

“constitute[d] legal malpractice, and [was] the proximate cause of financial injury

to nValeo.” Nowhere in Count One does Lucky mention, much less specifically

allege, the elements of a fraud claim against Miller & Martin. Under Georgia law,

the five elements of a fraud claim are: (1) a false representation or omission of a

material fact; (2) scienter; (3) intention to induce the party claiming fraud to act or

refrain from acting; (4) justifiable reliance; and (5) damages. Meyer v. Waite, 606

S.E.2d 16, 20 (Ga. Ct. App. 2004). None of these elements are included in Count

One.

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In support of the claim, Lucky attached as Exhibit 6 to the original

complaint an affidavit of its expert witness Thomas Scott, 4 which sets forth

“specifically at least one negligent act or omission claimed to exist and the factual

basis” for the claim. Thus, a fair reading of Count One reveals that it is a rather

straightforward malpractice claim and is not premised on fraud on nValeo.

A legal malpractice action may, as here, be based upon the breach of a duty

imposed by the contract of employment between the attorney and the client, and

sounds in contract when it alleges negligence or lack of professional care. Jones,

Day, Reavis & Pogue v. Am. Envirecycle, 456 S.E.2d 264, 266 (Ga. Ct. App.

1995). A legal malpractice claim may therefore qualify as an assignable cause of

action under O.C.G.A. § 44-12-24. See Villanueva v. First Am. Title Ins. Co., 740

S.E.2d 108, 110 (Ga. 2013). “[H]ere, the alleged legal malpractice is not based on

fraud and does not involve an injury to the person, to the reputation, or to

feelings.” Villanueva v. First Am. Title Ins. Co., 721 S.E.2d 150, 155 (Ga. Ct. App.

2011). It is therefore assignable under O.C.G.A. § 44-12-24, and the district court

erred in dismissing Lucky’s legal malpractice claim for lack of standing.

4

Georgia law requires an affidavit to accompany a charge of professional malpractice asserted in

state court against a professional licensed by the State of Georgia. O.C.G.A. § 9-11-9.1 Lucky

alleged that such an affidavit was not required in this federal case but filed Scott’s affidavit out

of an abundance of caution and incorporated the affidavit into its legal malpractice claim.

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B. Whether the district court properly dismissed Lucky’s fraudulent

concealment claim.

Lucky next contends that the district court improperly dismissed Count Four

when it “erroneously and improperly concluded that as a matter of law ‘there was

no legal duty for Defendant [Miller & Martin] to disclose any information to

Plaintiff [Lucky].’” Because Lucky cannot establish that Miller & Martin owed a

duty to disclose information to Lucky, a third party to its professional relationship

with nValeo, the district court did not err in dismissing Lucky’s fraudulent

concealment claim.

The five elements of a fraud claim also apply to a fraudulent concealment

claim. Meyer, 606 S.E.2d at 20. Count Four does not allege that Miller & Martin

made a false representation of a material fact to Lucky. Rather, Lucky relies on an

omission of a material fact to meet the first element of its fraudulent concealment

claim. Lucky asserts that Miller & Martin was aware of Ritchie’s

misappropriations, had a duty to inform Lucky them, but failed to do so.

As the district court recognized below, to allege an actionable “omission of a

material fact” to satisfy the first fraud element, the plaintiff must show that the

defendant had a legal duty to disclose that fact. Infrasource, Inc. v. Hahn Yalena

Corp., 613 S.E.2d 144, 146 (Ga. Ct. App.. 2005) (“Georgia law is abundantly clear

that an obligation to disclose must exist before a party may be held liable for fraud

based upon the concealment of material facts.”) (internal brackets and quotation

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marks omitted); Lilliston v. Regions Bank, 653 S.E.2d 306, 310 (Ga. Ct. App.

2007) (“A party can be held liable for fraudulently concealing a material fact only

if the party has a duty to disclose or communicate the fact.”).

Lucky contends that Miller & Martin had a duty to disclose Ritchie’s

misappropriation to Lucky, a non-client, relying on American Bar Association

Model Rule 1.13 and Scott’s affidavit. However, Lucky’s reliance is not justified

under Georgia law. As the district court correctly observed, “[t]he existence of a

legal duty is a question of law for the court,” and “an expert affidavit does not, and

cannot, create a legal duty where none existed before.” Garner & Glover Co. v.

Barrett, 738 S.E.2d 721, 723 (Ga. Ct. App. 2013) (citation and internal quotation

marks omitted). Likewise, Model Rule 1.13 is legally insufficient to create a duty

owed to non-client Lucky. Davis v. Findley, 422 S.E.2d 859, 861 (Ga. 1992)

(“[W]hile the Code of Professional Responsibility provides specific sanctions for

the professional misconduct of the attorneys whom it regulates, it does not

establish civil liability of attorneys for their professional misconduct, nor does it

create remedies in consequence thereof.”); Allen v. Lefkoff, Duncan, Grimes &

Dermer, P.C., 453 S.E.2d 719, 720 (Ga. 1995) (“[A]n alleged violation of the Code

of Professional Responsibility . . . standing alone, cannot serve as a legal basis for

a legal malpractice action.”) (internal citation omitted). Because neither Model

Rule 1.13 nor Scott’s Affidavit creates a legal duty for Miller & Martin to disclose

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to a third party, a duty to disclose to Lucky must arise from some other source not

alleged here. The district court properly dismissed Lucky’s fraudulent concealment

claim against Miller & Martin.

C. Whether the district court erred in dismissing Lucky’s civil conspiracy

claim.

The district court properly noted that conspiracy does not, of itself, furnish a

cause of action. Cook v. Robinson, 116 S.E.2d 742, 744–45 (Ga. 1960). Rather, a

conspiracy only exists if there is an underlying cause of action which is the subject

of the conspiracy. Id. at 745 (citing Mills v. Moseley, 179 S.E. 159, 161 (Ga. Ct.

App. 1935)). The district court dismissed Count Five, ruling that there was no

underlying cause of action because it had already “ruled that Plaintiff failed to state

a claim for fraudulent concealment [committed by Miller & Martin as to Lucky].”

Lucky challenges this ruling, claiming that the district court did not take into

account its allegations that Ritchie defrauded Lucky, that Ritchie fraudulently

concealed his misappropriation of funds from Lucky, and that Miller & Martin

conspired with Ritchie to assist Ritchie in his fraud. In essence, Lucky argues that

Ritchie’s actions provide the underlying tort, in which Miller & Martin conspired,

and Miller & Martin can therefore be held liable for conspiring with Ritchie. We

agree.

As noted above, the district court properly dismissed Lucky’s fraudulent

concealment claim because Miller & Martin did not owe a duty to disclose

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Ritchie’s misappropriations to Lucky, a non-client. However, Lucky’s civil

conspiracy claim does not suffer from the same inadequacy. This is because Lucky

alleges a different underlying, actionable claim—Ritchie’s defrauding Lucky—

which is the subject of the alleged conspiracy.

Count Five alleges that Miller & Martin “entered into an unlawful civil

conspiracy with Ritchie and Poole to conceal Ritchie’s fraud and to induce Lucky

to continue to make purchase payments to nValeo that Ritchie would

misappropriate.” Lucky alleges a civil conspiracy predicated on Ritchie’s

underlying fraud and fraudulent concealment, not Miller & Martin’s fraudulent

concealment. Thus, there is no requirement that Miller & Martin have a legal duty

to disclose to Lucky.

To state a conspiracy claim, Lucky must first allege that Ritchie defrauded

Lucky and then that Miller & Martin conspired with Ritchie to do so. Under

Federal Rule of Civil Procedure 9(b), fraud-based allegations must be pleaded

“with particularity.” Rule 9(b) is satisfied by identifying the specific statements,

representations, or omissions; the time and place of such statement and the person

responsible; the content of the statement and how it misled the plaintiff; and what

the defendant obtained as a result of the fraud. Brooks v. Blue Cross & Blue Shield

of Fla., Inc., 116 F.3d 1364, 1371 (11th Cir. 1997). Lucky has generally alleged

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these facts. 5 In particular, Lucky alleges that “[a]lthough Ritchie represented that

additional funds were necessary for nValeo to meet its business objectives, Ritchie

was soliciting funds from Lucky so that he could misappropriate them. Further

negotiations ensued, which, with the participation of Miller & Martin as counsel

for nValeo, culminated in the execution of an Amended and Restated Membership

Interest Purchase Agreement dated July 26, 2010.” This allegation identifies the

statement, its content, when it occurred (prior to the parties’ execution of the

AMIPA), the person responsible, and how the statement misled Lucky into

investing in nValeo. Lucky also alleges that “[p]ursuant to said Amended and

Restated Membership Interest Purchase Agreement, Lucky made investments in

nValeo totaling $2,000,000 between July and December, 2010.” Finally, Lucky

alleges that “Ritchie succeeded in draining off the assets of nValeo such that the

company failed and Lucky lost the entire sum it had invested in nValeo.” These

two statements identify what Ritchie obtained as a result of his fraud and, once

again, how Lucky was misled. Therefore, Lucky has adequately pleaded the

underlying tort to support Lucky’s conspiracy claim. 6

5

To the extent that Lucky has alleged insufficient specifics of Ritchie’s fraud, those specifics

could be provided by amending this conspiracy count.

6

Notably, Miller & Martin repeatedly refers to “Mr. Ritchie’s improper withdrawals” and

acknowledges that Ritchie “improperly took funds from nValeo.” Miller & Martin apparently

concedes that Ritchie misappropriated nValeo funds and does not appear to dispute that Lucky

relied on Ritchie’s misrepresentations when it invested in nValeo. Regardless, since the

district court dismissed Lucky’s civil conspiracy claim pursuant to Miller & Martin’s motion to

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Next, Lucky must sufficiently allege that Miller & Martin entered into the

civil conspiracy with Ritchie. “A conspiracy upon which a civil action for damages

may be founded is a combination between two or more persons either to do some

act which is a tort, or else to do some lawful act by methods which constitute a tort

. . . The gist of the action, if a cause of action exists, is not the conspiracy alleged,

but the tort committed against the plaintiff and the resulting damage.” Metro

Atlanta Task Force for the Homeless, Inc. v. Ichthus Cmty. Tr., 780 S.E.2d 311,

318 (Ga. 2015) (citing Cook, 116 S.E.2d at 744–45). The essential element of a

civil conspiracy is a common design. Cook, 116 S.E.2d at 745.

Here, Lucky has sufficiently pleaded that Miller & Martin entered into a

conspiracy with Ritchie to defraud Lucky and conceal Ritchie’s fraud. For

example, Lucky alleges that “[e]ven though Defendant knew that Ritchie had

misappropriated and was misappropriating Lucky’s investment funds . . .

Defendant continued to conceal from Lucky Ritchie’s misappropriation and breach

of his fiduciary duties to induce Lucky to continue to purchase membership

interests in nValeo characterize his wrongful takings from nValeo as ‘loans.’”

Lucky also alleges that Miller & Martin conspired with Ritchie by “drafting a

Promissory Note for Ritchie’s signature with the object and intent to

dismiss, the Court is required to accept the allegations in the complaint as true and construe them

in the light most favorable to Lucky. Mills v. Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir.

2008).

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mischaracterize Ritchie’s misappropriations as ‘loans,’ and by continuing a

business-as-usual relationship with Lucky to exclude suspicion or prevent inquiry.”

Although these allegations are minimal, the existence of a conspiracy may “be

inferred from the nature of the acts done, the relation of the parties, the interests of

the alleged conspirators, and other circumstances.” Nottingham v. Wrigley, 144

S.E.2d 749, 751 (Ga. 1965) (citation omitted).

The district court erred in dismissing Lucky’s civil conspiracy claim. As the

district court noted, “Plaintiff alleges that Defendant conspired with Mr. Ritchie

and Mr. Poole to fraudulently conceal Mr. Ritchie’s unlawful activity.” According

to the district court, Lucky’s inability to bring a fraudulent concealment claim

against Miller & Martin because Miller & Martin did not owe a duty to Lucky

precluded Lucky’s civil conspiracy claim. However, the district court overlooked

the fact that Ritchie owed a duty to Lucky because of Lucky’s status as an investor

in, and member of, nValeo. Lucky alleges that Miller & Martin conspired in

assisting Lucky’s breach of that duty. Whether Miller & Martin had a duty to

Lucky is irrelevant to the conspiracy claim alleged here. Because Ritchie’s alleged

fraud and fraudulent concealment serves as the underlying tort for the civil

conspiracy claim against Miller & Martin, Lucky sufficiently pleaded a claim for

civil conspiracy.

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D. Whether the district court properly granted summary judgment on the

aiding and abetting a breach of fiduciary duty claim.

Lucky alleges that Miller & Martin is liable for aiding and abetting a breach

of fiduciary duty. In Georgia, a claim for aiding and abetting a breach of fiduciary

duty requires a showing of each of the following elements:

(1) through improper action or wrongful conduct and

without privilege, the defendant acted to procure a breach

of the primary wrongdoer’s fiduciary duty to the

plaintiff; (2) with knowledge that the primary wrongdoer

owed the plaintiff a fiduciary duty, the defendant acted

purposely and with malice and the intent to injure; (3) the

defendant’s wrongful conduct procured a breach of the

primary wrongdoer’s fiduciary duty; and (4) the

defendant’s tortious conduct proximately caused damage

to the plaintiff.

Insight Tech., Inc. v. FreightCheck, LLC, 633 S.E.2d 373, 379 (Ga. Ct. App. 2006)

(footnotes and citations omitted).

The district court held that Lucky failed to present evidence that Miller &

Martin undertook any act to procure a breach of a fiduciary duty or, even if it did,

that Miller & Martin did so with the requisite malice and intent to injure. In

particular, the district court noted that Lucky presented no evidence that Miller &

Martin was aware of the impropriety of Ritchie’s withdrawals and that Miller &

Martin “simply was requested to prepare a promissory note and not to audit any

documents or determine the propriety of nValeo’s actions.” Lucky challenges these

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findings, asserting that it presented sufficient evidence to draw an inference in its

favor on a question of material fact.

In support, Lucky references two pieces of evidence that support its

assertion that a question of material fact is presented. First, Lucky asserts that

Buddy Poole, nValeo’s Chief Operating Officer, admitted that he shared with

Miller & Martin “three basic points:” that Ritchie (1) was taking money to which

he was not entitled; (2) was concerned about that money being construed as salary

or income to him in terms of his divorce proceeding; and (3) intended to pay the

money back. Lucky supports this assertion with the following testimony by Poole:

Q: Did you share that information or those three basic

points with the lawyers at Miller & Martin, Mr. Hand and

Mr. McGinness?

A: Yeah, I don’t recall the conversation.

Q: Okay.

A: I mean I’m reading this. I had a conversation it clearly

says, because he said Buddy called today. I don’t

remember the conversation, though.

According to Lucky, the word “[y]eah” before the repeated statements that Poole

did not remember the conversation establishes that Poole informed Miller &

Martin of the impropriety of Ritchie’s withdrawals. We reject Lucky’s

interpretation based, in part, on Poole’s further clarifying testimony:

Q. Do you believe that Mr. Hand understood that Ritchie

had taken money that he shouldn’t have taken?

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A. I don’t have any idea. I don’t know.

Q. Okay. What about Mr. McGinness?

A. I don’t know.

Q: Well, do you think you concealed from Mr. Hand and

Mr. McGinness that Mr. Ritchie had taken money that he

wasn’t entitled to?

A: I don’t recall ever talking to them about the amounts,

dates, or when, to the -- I don’t recall the conversations at

all, frankly. But I’m sure, reading this and these other

things that I knew he had taken money and he had to pay

it back. . . .

Contrary to Lucky’s interpretation, Poole’s testimony indicates that he did not

recall telling Miller & Martin that Ritchie made improper withdrawals. As such,

Lucky has failed to create an issue of material fact based on Poole’s testimony. 7

Lucky next relies on a voicemail message from nValeo’s outside accountant,

Pam Duggar, to Hand in its attempt to establish that Miller & Martin was aware of

Ritchie’s improper withdrawals of nValeo’s funds. The voicemail stated that “Jeff

Ritchie has taken a lot of money out of this company, umm, in the last seven (7)

months and it just. . . . The numbers just don’t fit with what they are doing and I’m

7

Further, the “three basic points” of the original question posed to Poole included whether Poole

told Miller & Martin that Ritchie “intended to pay the money back.” Even assuming that Poole

gave Miller & Martin this information, and there is no direct evidence that he did, nValeo could

properly make loans to its executives. Thus, Poole’s testimony would not create a question of

material fact as to whether Miller & Martin was aware that the withdrawals were improper even

under Lucky’s proposed interpretation.

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not sure what to do with all this money he’s taken.” Duggar testified that her

voicemail was merely intended to determine how to classify money (as revenue or

a capital contribution) nValeo received from investors prior to the investment by

Lucky; she did not mention the dates, amounts, or, most importantly, the alleged

impropriety of any withdrawals.

According to Lucky, Duggar’s vague voicemail, combined with an

agreement that allowed nValeo to loan money to Ritchie, must have made Miller &

Martin aware of the fact that Ritchie was misappropriating nValeo’s money. Such

an unsupported assumption does not defeat summary judgment.

Finally, Lucky relies on Post-Confirmation Comm. for Small Loans, Inc. v.

Martin, No. 1:13-cv-195 WLS, 2016 WL 1274124 (M.D. Ga. March 31, 2016) for

the proposition that nValeo’s $20,000 payment to Miller & Martin for past legal

services before Miller & Martin would prepare the Promissory Note creates a

reasonable inference that Miller & Martin must have known of Ritchie’s

misappropriations, and that knowledge caused Miller & Martin to demand the

$20,000 payment. Lucky’s reliance on Martin is misplaced. In Martin the court

determined that a trustee’s negotiation of the sale of “virtually worthless” stock for

$39,000 constituted an act to procure a breach of fiduciary duty on the part of the

buyer. Id. at *2, 7. According to the Martin court, “[i]t could be inferred that [the

trustee’s] negotiation of $39,000 for worthless stock with the knowledge of [the

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company’s] deteriorating financial condition could constitute an act to procure [a]

breach of fiduciary duties . . .” Id. at *7. Martin is not analogous to the present

situation. Here, nValeo paid a debt it owed to Miller & Martin for past legal

services. That nValeo paid its bills does not create an inference that Miller &

Martin was aware of Ritchie’s misappropriations, particularly where, as here,

Ritchie was not involved in the payment. Further, even assuming that Miller &

Martin insisted on the payment before drafting the Promissory Note, 8 that would

not create an inference that Miller & Martin was aware of Ritchie’s

misappropriations. Instead, and unlike Martin, it would simply imply that the

attorneys at Miller & Martin insisted on being paid for their past work before

providing any additional work product to their client, a commonplace and

reasonable position.

Lucky has failed to provide any evidence that Miller & Martin was aware of

Ritchie’s misappropriations. Without even knowing that Ritchie was stealing

money from nValeo, Miller & Martin cannot be held liable for aiding and abetting

a breach of fiduciary duty. Moreover, Lucky has failed to establish that Miller &

Martin acted with malice and the intent to injure. See White v. Shamrock Bldg.

Sys., Inc., 669 S.E.2d 168, 171–72 (Ga. Ct. App. 2008) (focusing on whether the

defendants charged with aiding and abetting took “any affirmative steps to

8

Lucky has presented no evidence to support this.

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encourage” the alleged wrongdoing); Insight Tech., 633 S.E.2d at 379 n.13 (“The

act [undertaken to procure a breach] is malicious when the thing done is with the

knowledge of plaintiff’s rights, and with the intent to interfere therewith.”) (citing

Arford v. Blalock, 405 S.E.2d 698, 704 (Ga. Ct. App. 1991)). The district court

properly granted summary judgment on Lucky’s claim for aiding and abetting a

breach of fiduciary duty.

CONCLUSION

The district court improperly dismissed Count One, Lucky’s legal

malpractice claim based on Miller & Martin’s professional negligence, as

unassignable under O.C.G.A. § 44-12-24. The district court properly dismissed

Count Four, Lucky’s fraudulent concealment claim against Miller & Martin,

because Miller & Martin did not owe a duty to disclose information to non-client

Lucky. The district court improperly dismissed Count Five, Lucky’s civil

conspiracy claim against Miller & Martin, because Ritchie’s fraudulent activities

and fraudulent concealment provided the underlying tort for the claim and Lucky

adequately pleaded Miller & Martin’s involvement in the civil conspiracy. Finally,

the district court properly granted summary judgment on Counts Two and Three,

Lucky’s claim for aiding and abetting a breach of fiduciary duty because Lucky

identified no evidence that Miller & Martin was aware of Ritchie’s

misappropriations or acted with malice and intent to injure Lucky. Therefore, the

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Court REVERSES the dismissal of Count One and Count Five for legal

malpractice and civil conspiracy, respectively, and AFFIRMS the district court’s

dismissal of Count Four for fraudulent concealment and grant of summary

judgment as to Counts Two and Three for aiding and abetting a breach of fiduciary

duty.

24