# San Francisco Residence Club, Inc. v. Baswell-Guthrie > District Court, N.D. Alabama · September 13, 2012 · 897 F. Supp. 2d 1122 URL: https://www.frixlaw.com/law-library/cases/8702765 ## Case - **Full name:** SAN FRANCISCO RESIDENCE CLUB, INC. v. Cheryl BASWELL-GUTHRIE - **Court:** District Court, N.D. Alabama - **Decided:** September 13, 2012 - **Citations:** 897 F. Supp. 2d 1122; 2012 U.S. Dist. LEXIS 130717; 2012 WL 4339316 - **Precedential status:** Published - **Opinion:** Opinion of the court - **Cited by:** 20 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/8702765 ## How later opinions describe it (automated extraction) - finding that where an out-of-state expert has done little apply or learn the standards for practice in a jurisdiction, they may not be qualified to opine - finding that the plaintiffs were barred from raising a new theory or argument at the motion for summary judgment stage ## Opinion text Table of Contents Topic Page No. I. Introduction .........................................................1128 II.The Basic Requirements for a Deferred, Like-Kind Exchange Under Section 1031........................................................1130 III. The Plaintiffs, Defendants, and Other, Non-Party Players..............1139 A. Plaintiffs ........................................................1139 B. The Wilmer & Lee Defendants.....................................1141 C. The Baswell-Guthrie Defendants ..................................1141 D. The McDermott Defendants .......................................1141 1. The resolution and dismissal of plaintiffs’ claims against the McDermott Defendants......................................1142 E. Non-Parties Involved in Some Transactions.........................1142 IV. The Replacement Property Acquisitions ...............................1144 1. The Moquin transaction.......................................1145 2. The Fountain transaction......................................1147 A. The Moquin and Fountain Acquisitions.............................1147 B. The Corporate Drive Acquisition...................................1148 C. The Old Madison Pike Acquisition.................................1149 D. The Quality Circle Acquisition.....................................1150 V. Acquisitions Closed by the Wilmer & Lee Defendants...................1151 A. Acquisition of the “Moquin Drive” and “Fountain” Properties.......1151 1. Samuel Givhan’s involvement..................................1153 2. The “Ireland conference call”..................................1153 3. WaMu forwards funds and forms to Givhan.....................1154 B. Acquisition of the “Corporate Drive” Property......................1157 C. The Role of California Attorney Jeffrey Weiss.......................1159 D. Reformation of Titles to the Properties Closed by Givhan............1160 E. The Issue of the $50,000 Check.....................................1161 VI. Acquisitions Closed by the Baswell-Guthrie Defendants................1161 A. Lead-Up to Old Madison Pike and Quality Circle Acquisitions .......1161 B. Old Madison Pike (a/k/a “Tech Point”).............................1162 C. Quality Circle....................................................1165 D. Possible Conflict of Interest.......................................1169 E. Dispute With McDermott..........................................1169 VII.Choice of Governing Law.............................................1170 A. The Public Policy Exception to the Rule of Lex Loci Delicti..........1172 *1127 1. The Alabama Legal Services Liability Act.......................1172 2. Plaintiffs’ argument that non-clients can assert common-law claims against Alabama attorneys............................1174 a. Cunningham v. Langston, Frazer, Sweet & Freese, P.A., 727 So.2d 800 (Ala.1999)...................................1174 b. Fogarty v. Parker, Poe, Adams & Bernstein, L.L.P., 961 So.2d 784 (Ala.2006)......................'................1174 c. Smith v. Math, 984 So.2d 1179 (Ala.Civ.App.2007)..............1175 d. Line v. Ventura, 38 So.3d 1 (Ala.2009)........................1176 3. Analysis of the cases relied upon by plaintiffs, and their application to public policy...................................1178 VIII.Inconsistencies Among the Allegations of the Complaint, the Uncontested Facts, and Arguments in Briefs..........................1180 A. Claims Against the Wilmer & Lee Defendants.......................1180 1.Variance between the factual allegations and Count 3 of the complaint, on the one hand, and uncontested facts on the other.......................................................1181 B. Claims Against the Baswell-Guthrie Defendants....................1182 C. The Omissions of Counsel.........................................1182 IX. Analysis of the Claims Brought Against the Wilmer & Lee Defendants____1183 A. Alabama Securities Violation (Count 2) ............................1183 1. Beyond Foster................................................1185 a. CFT Seaside Investment Limited Partnership v. Hammet, 868 F.Supp. 836 (D.S.C.1994) ..............................1185 b. Ward v. Bullís, 748 N.W.2d 397 (N.D.2008)....................1186 c. San Francisco Residence Club, Inc., et al. v. Park Tower, LLC, et al., Civil Action No. 08-1423-NE-AKK (N.D.AIa. Jan. 12, 2012)............................................1187 2. Application of the ratio decidendi of the preceding decisions to the issues raised in the present action......................1188 B. Claims Asserted Against the Wilmer & Lee Defendants Under the Alabama Legal Services Liability Act (Count 3)...................1190 1. Plaintiffs’ proposed expert witness .............................1191 a. Crockett’s qualifications...................................1191 b. Analysis..................................................1192 C. The Claim for Thomas O’Shea’s $50,000 Check (Count 3).............1195 X. Analysis of the Claims Brought Against the Baswell-Guthrie Defendants.........................................................1195 A. Existence of an Attorney-Client Relationship Between Plaintiffs and Baswell-Guthrie............................................1196 B. The Old Madison Pike Acquisition.................................1197 1. Expert testimony on the standard of care, and the “common knowledge and experience” exception.........................1197 2. Damages.....................................................1199 C. The Quality Circle Acquisition.....................................1200 1. Gilmour v. Gates, McDonald & Co., 382 F.3d 1312 (11th Cir. 2004).......................................................1200 2. Davis v. Coca-Cola Bottling Co. Consol., 516 F.3d 955 (11th Cir.2008)....................................................1201 3. Application...................................................1202 D. Escrow Liability of One Source Title & Escrow L.L.C. (Count 11).... 1204 XI.Analysis of Counterclaims Asserted by the Baswell-Guthrie Defendants.........................................................1205 A. Motion for Partial Summary Judgment: Fraud Counterclaim........1205 B. Motion for Partial Summary Judgment: Breach of Contract Counterclaim...................................................1209 *1128 C. Motion to Dismiss the Counterclaim...............................1210 1. Standard of review............................................1210 2. Discussion....................................................1212 XII. Miscellaneous Motions...............................................1214 A. Plaintiffs’ Motion to Compel ......................................1214 B. The Baswell-Guthrie Defendants’ Motion to Quash Subpoena........1217 C. Defendants’ Joint Motion to Compel ...............................1217 1. Attorney communications........•..............................1217 a. Factual background.......................................1217 b. Waiver of the attorney-client privilege ......................1217 c. Application of the privilege in this case .....................1219 2. Attorneys’ fees................................................1222 D. The Baswell-Guthrie Defendants’ Motion to Strike..................1223 XIII. Conclusions..........................................................1225 A. Choice of Law and Counts 4,11, and 10.............................1225 1. Count 4 ......................................................1225 2. Count 11 .....................................................1226 3. Count 10 .....................................................1226 B. Remaining Counts................................................1226 1. Count 2 ......................................................1226 2. Count 3 ......................................................1226 a. ALSLA and the Wilmer & Lee defendants...................1227 b. ALSLA and the Baswell-Guthrie defendants.................1227 C. The Baswell-Guthrie Defendants’ Counterclaims....................1228 1. Counterclaim count 1: Fraud..................................1228 2. Counterclaim count 2: Breach of contract ......................1228 D. The Miscellaneous Discovery Motions..............................1229 I. INTRODUCTION This action grew out of a series of real-estate acquisitions that occurred in Huntsville, Alabama during 2007. Section 1031 of the Internal Revenue Code — a provision that allows a property owner to defer taxation of profits generated from the exchange of property held for productive use in a trade or business or for investment in property of a “like kind” — lies at the heart of the controversy. See 26 U.S.C. § 1031 (a)(1). 1 The plaintiffs intended to effect transactions under that provision by selling income-producing properties located in California and Mississippi, and then utilize the profits derived from those transactions to purchase replacement commercial properties in Huntsville, Alabama. This action — as well as three similar cases assigned to other judges on this same court, 2 and a spate of state-court *1129 suits spawned by the plaintiffs’ investments in Huntsville real estate 3 — arose when the plaintiffs’ acquisitions of Huntsville real estate allegedly were not structured in a manner that made the investments eligible for favorable tax treatment under Section 1031. The failure to do so exposed plaintiffs to potentially significant, and negative, tax consequences — an outcome that they, nevertheless, avoided by falsely stating on their respective 2007 income tax returns that each of the acquisitions qualified for Section 1031 treatment. Plaintiffs compounded their misrepresentations to the Internal Revenue Service by commencing this action, in which even their Second Amended Complaint — that is, their third attempt to plead claims upon which relief arguably might be granted— continues to perpetuate a confusing muddle of facts, claims, and remedies that, at times, can only be described as bewildering. Regrettably, plaintiffs’ attorneys have provided scant assistance to this court’s comprehension of difficult issues by way of briefs or oral argument. Perhaps that was intentional: a tactical decision that scattering claims, contentions, and defenses might be more efficacious than targeted shots. If so, that “does great disservice to the administration of civil justice.” 4 For such reasons, the following opinion represents this court’s best effort at hacking a path through the tangled allegations, arguments, and evidentiary materials pre *1130 sented in connection with the disposition of ten pending motions, 5 and an attempt to determine whether some harmonizing themes may be discerned among the admitted and undisputed facts. The discussion will begin, however, as it must, with a summary of the basic requirements for structuring a deferred, like-kind exchange under Section 1031. II. THE BASIC REQUIREMENTS FOR A DEFERRED, LIKE-KIND EXCHANGE UNDER SECTION 1031 Normally, when real property is sold, the owner must recognize either a gain or loss 6 If it is a gain, the amount is subject to taxation. 7 If the property has a low basis, 8 and the gain from the sale will be high, 9 the taxpayer often will attempt to structure the transaction in a manner that will minimize his tax liability. Internal Revenue Code Section 1031 is the primary means of accomplishing that objective. The primary clause of that statute provides that: No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment. 26 U.S.C. § 1031 (a)(1). Because Section 1031 provides an exception to the general rule found in I.R.C. § 1001(c), requiring “recognition” (ie., taxation) of the entire amount of the gain on the sale of property, the statutory and regulatory requirements for such transactions are complex, nuanced, and strict. Some of those requirements are fundamental to an understanding of the transactions at issue in this case, and they, along with relevant terms, are discussed below. Exchanger (sometimes referred to as an “Exehangor”): 10 An individual or entity *1131 performing an exchange under Section 1031. 11 Relinquished property: The property an exchanger transfers in a Section 1031 exchange. Replacement property: The property an exchanger identifies and ultimately receives in a Section 1031 exchange. Exchange requirement: Treasury Regulations provide that, “[o]rdinarily, to constitute an exchange, the transaction must be a reciprocal transfer of property, as distinguished from a transfer for a money consideration only.” 12 In other words, to satisfy the “exchange” requirement of Section 1031, the transaction must involve a transfer of property by the exchanger and the receipt of property by the exchanger. The transactions cannot be transfers of property for the receipt of money. 13 “Like-kind” property requirements: The relinquished and replacement properties must be of a “like-kind.” The term “like-kind” is not specifically defined in the Internal Revenue Code. Section 1031 provides only that the property subject to “exchange” must be “property held for productive use in a trade or business or for investment.” 14 Treasury Regulations provide some, but not a great deal of, guidance when stating that the term refers to “the nature or character of the property and not to its grade or quality.” 15 For example, unimproved real estate is deemed to be of a “like-kind” with improved real property since the existence of the improvements relates only to the grade or quality of the property, and not to its nature or character. 16 Like-kind ownership interests — The nature of the exchanger’s ownership interests in the exchanged properties also are subject to the “like-kind” requirement. In other words, title to the replacement property must be vested in the same persons or entities, and with the same forms of ownership interests — e.g., “tenants in common,” “joint tenants with right of survivor-ship” 17 — as was the case with the relinquished property. Even so, the relative percentage of a taxpayer-exchanger’s own *1132 ership interest in a replacement property does not have to be equal to the exchanger’s ownership percentage in the relinquished property; instead, it can be either greater or less, but the nature of the ownership interest must be the same. 18 For example, if an exchanger owned a 25% interest in a relinquished property as a tenant in common with two other persons or entities, the exchanger could use the proceeds from the sale of the relinquished property to acquire any other fractional proportion of a tenancy in common interest in the replacement property. The key factors in this example are that the exchanger owned an undivided interest as a tenant in common in both the relinquished property and the replacement property. The exchanger also must be “on the title” of both the relinquished and replacement properties. That is, the taxpayer owning an interest in real property that is to be exchanged under Section 1031 — and regardless of whether the taxpayer is an individual, a corporation, limited liability company, or some other entity — must be “on the title” to both the relinquished and replacement properties. For example, if a husband and wife held fee-simple title to a relinquished property as tenants in common, then title to the replacement property must vest in both spouses in the same form of ownership as was the case with the relinquished property. Similarly, a corporation, partnership, limited liability company, trust, or any other entity holding an ownership interest in the relinquished property must be “on the title” of the replacement property. It follows, therefore, that an exchanger who sold his, her, or its share in a relinquished property in which the nature of the exchanger’s title was as a tenant in common, and then purchased a membership in a multi-member, limited liability company (“L.L.C.”) that acquired title to a replacement property, would not be entitled to defer recognition of the taxable gain from the sale of the relinquished property — even if the exchanger’s share in the L.L.C. was equal to the share of the title the exchanger had possessed in the relinquished property under a tenancy in common arrangement. 19 The key factor in this example is that the exchanger would not be “on the title” of the replacement *1133 property owned by the L.L.C.; instead, title would be vested in the L.L.C., as opposed to the individual members of the L.L.C. For that reason, the taxpayer-exchanger could not claim that he, she, or it had received “like-kind” property in the exchange. The requirement for an exchanger to be “on the title” of the replacement property lies at the center of all the claims asserted in the present action. The plaintiffs contend that defendants failed to structure the replacement property acquisitions at issue in compliance with the requirements for deferred tax treatment under Section 1031. The intended replacement properties were purchased by limited liability companies, rather than by the plaintiff-exchangers. Plaintiffs allege that the remaining defendants — i.e., the Wilmer & Lee Defendants and the Baswell-Guthrie Defendants — committed tortious acts in the process of structuring the transactions. “Safe harbors”: As a practical matter, a taxpayer rarely engages in a transaction in which he and another party literally exchange the titles to relinquished and replacement properties on the same day, back-to-back. 20 Instead, almost all Section 1031 exchanges are non-simultaneous: that is, in tax parlance, “deferred” exchanges. 21 Treasury Regulations define a deferred exchange as one in which, pursuant to an agreement, the taxpayer transfers property held for productive use in a trade or business or for investment (the “relinquished property”) and subsequently receives property to be held either for productive use in a trade or business or for investment (the “replacement property”). 26 C.F.R. § 1.1031 (k)-l(a). That is what occurred in each transaction at issue in the present controversy: the plaintiffs’ acquisition of replacement, income-producing properties occurred several months after the dates on which they had closed on the sales of their relinquished properties. Significantly, however, Treasury Regulations stipulate that, “[i]n order to constitute a deferred exchange, the transaction must be an exchange (i.e., a transfer of property for property, as distinguished from a transfer of property for money).” Id. (emphasis supplied). Placing that regulatory requirement next to the observation that taxpayers almost never engage in transactions in which they and another party exchange properties with each other on the same day begs a question: How can a taxpayer structure a deferred exchange that still qualifies for favorable tax treatment under Section 1031? The answer lies in a legal fiction: the use of one of the four, so-called “safe harbors” sanctioned by Treasury Regulations. 22 By do *1134 ing so, the taxpayer-exchanger will not be deemed to be in actual or constructive receipt of money or other property derived from his or her disposition of a relinquished property. 23 One such “safe harbor,” the kind at issue in this case, is discussed below. Qualified intermediary: A qualified intermediary is a person or entity who (or which) “[e]nters into a written agreement with the taxpayer (the ‘exchange agreement’) and, as required by the exchange agreement, [i] acquires the relinquished property from the taxpayer, [ii] transfers the relinquished property, [Hi] acquires the replacement property, and [m] transfers the replacement property to the taxpayer.” 26 C.F.R. § 1.1031 (k)-1(g)(4)(iii)(B) (emphasis and alterations supplied). In other words, both the relinquished and replacement properties must pass through the qualified intermediary. This safe harbor provides that a qualified intermediary is not treated as the agent of the taxpayer-exchanger for the purposes of determining whether the taxpayer has actually or constructively received money from disposition of the “relinquished property” when that compensation is paid to and held by the qualified intermediary. In the case of a taxpayer’s transfer of relinquished property involving a qualified intermediary, the qualified intermediary is not considered the agent of the taxpayer for purposes of section 1031(a). In such a case, the taxpayer’s transfer of relinquished property and subsequent receipt of like-kind replacement property is treated as an exchange, and the determination of whether the taxpayer is in actual or constructive receipt of money or other property before the taxpayer actually receives like-kind replacement property is made as if the qualified intermediary is not the agent of the taxpayer. 26 C.F.R. § 1.1031 (k)-l(g)(4)(i). Stated differently, in order to preserve the legal fiction of an “exchange,” the exchanger cannot directly receive money when transferring the relinquished property to the qualified intermediary for sale. 24 Instead, the qualified intermediary holds the funds derived from the sale of the relinquished property until the closing on the acquisition of the replacement property. At that time, the qualified intermediary delivers to the seller of the replacement property the funds used to purchase that property, and then transfers to the taxpayer-exchanger title to the replacement property. Such transactions have been approved as a valid means of effecting an “exchange” of property for the purposes of favorable tax treatment under Section 1031. See, e.g., Alderson v. Comm’r of Internal Revenue, 317 F.2d 790 (9th Cir.1963). *1135 Requirements for “qualified intermediaries”: The following requirements must be satisfied in order for the “qualified intermediary safe harbor” to apply. The inclusion of the “(g)(6) restric tions”— The agreement between the taxpayer-exchanger and qualified intermediary must contain the restrictions specified in Treasury Regulation § 1.1031(k)-l(g)(6). 25 (6) Additional restrictions on safe harbors under paragraphs (g)(3) through (g)(5). (i) An agreement limits a taxpayer’s rights as provided in this paragraph (g)(6) only if the agreement provides that the taxpayer has no rights, except as provided in paragraph (g)(6)(n) and (g)(6)(m) of this section, to receive, pledge, borrow, or otherwise obtain the benefits of money or other property before the end of the exchange period. (ii) The agreement may provide that if the taxpayer has not identified replacement property by the end of the identification period, the taxpayer may have rights to receive, pledge, borrow, or otherwise obtain the benefits of money or other property at any time after the end of the identification period. (iii) The agreement may provide that if the taxpayer has identified replacement property, the taxpayer may have rights to receive, pledge, borrow, or otherwise obtain the benefits of money or other property upon or after— (A) The receipt by the taxpayer of all of the replacement property to which the taxpayer is entitled under the exchange agreement, or (B) The occurrence after the end of the identification period of a material and substantial contingency that— (1) Relates to the deferred exchange, (2) Is provided for in writing, and (3) Is beyond the control of the taxpayer and of any disqualified person (as defined in paragraph (k) of this section), other than the person obligated to transfer the replacement property to the taxpayer. 26 C.F.R. § 1.1031 (k)-l(g)(6) (emphasis in original). The qualification requirement— Second, the qualified intermediary must be a person or entity who (or which) is not either the taxpayer-exchanger or a “disqualified person” as defined in Treasury Regulation § 1.1031(k)-1(k). 26 See 26 *1136 C.F.R. § 1.1031 (k)-1(g)(4)(iii)(A). Requirement that both transfers pass through the qualified intermediary— The exchange agreement must require the qualified intermediary to: (1) acquire the relinquished property from the taxpayer-exchanger; (2) transfer the title to the relinquished property to the purchaser; (3) acquire the replacement property from the seller; and (4) transfer title to the replacement property to the taxpayer-exchanger. 27 In other words, both the relinquished property and replacement property must pass through the qualified intermediary. The definition of “transfer”— When determining whether property has been “transferred through” the qualified intermediary, a modified version of the usual Internal Revenue Service definition of the term “transfer” is employed: that is, property is deemed to have been “transferred through” a qualified intermediary if the qualified intermediary acquires or transfers title to the property. See 26 C.F.R. § 1.1031 (k)-1(g)(4)(iv). 28 *1137 The terms of the exchange agreement— The qualified intermediary is treated as having entered into an exchange agreement if the rights of a party to the agreement are assigned to the intermediary, and, all parties to the agreement are notified in writing of the assignment on or before the relevant transfer of property. See 26 C.F.R. § 1.1031 (k)-1 (g)(4) (v). 29 Thus, the taxpayer-exchanger may enter into an agreement with the purchaser of the relinquished property and satisfy this requirement by assigning his rights in the contract to the qualified intermediary. In like manner, the taxpayer-exchanger may enter into an agreement to purchase a replacement property (or properties) and satisfy this requirement by assigning his rights under that contract to the qualified intermediary. Timing requirements for deferred exchanges: Internal Revenue Code Section 1031(a)(3) imposes three strict time requirements for completion of a deferred exchange. The time period for each requirement begins on the day after the exchanger transfers the relinquished property 30 and ends at midnight on the last day of the applicable time period. 31 Moreover, if — as part of the same deferred exchange — the exchanger sells more than one relinquished property, and the relinquished properties are transferred on different dates, the times periods discussed below begin running on the earliest date on which any of the properties is sold. 32 The b5-day identification period— The first time restriction for a deferred exchange is the requirement that a taxpayer either close on the acquisition of a replacement property, or identify the potential replacement property, within 45 days from the date of the sale, transfer, or other disposition of the relinquished property. 33 The day rule is hard and fast, with no forgiveness for weekends or holidays. This requirement is satisfied if the replacement property is acquired before 45 days have expired; otherwise, the identification of the replacement property must be incorporated into a written document (“the identification notice”), signed by the taxpayer-exchanger, and delivered to the qualified intermediary. 34 The “identification notice” must contain an unambiguous description of the replacement property, *1138 including, in the ease of real property, the legal description and street address (or a distinguishable name). 35 More than one potential replacement property can be identified. These requirements are encapsulated in the following Treasury Regulations: Replacement property is identified only if it is designated as replacement property in a written document signed by the taxpayer and hand delivered, mailed, telecopied, or otherwise sent before the end of the identification period to either— (i) The person obligated to transfer the replacement property to the taxpayer ...; or (ii) Any other person involved in the exchange other than the taxpayer or a disqualified person (as defined in paragraph (k) of this section). Examples of persons involved in the exchange include any of the parties to the exchange, an intermediary, an escrow agent, and a title company. An identification of replacement property made in a written agreement for the exchange of properties signed by all parties thereto before the end of the identification period will be treated as satisfying the requirements of this paragraph (c)(2). (3) Description of replacement property. Replacement property is identified only if it is unambiguously described in the written document or agreement. Real property generally is unambiguously described if it is described by a legal description, street address, or distinguishable name (e.g., the Mayfair Apartment Building). Personal property generally is unambiguously described if it is described by a specific description of the particular type of property. For example, a truck generally is unambiguously described if it is described by a specific make, model, and year. (4) Alternative and multiple properties. (i) The taxpayer may identify more than one replacement property. Regardless of the number of relinquished properties transferred by the taxpayer as part of the same deferred exchange, the maximum number of replacement properties that the taxpayer may identify is— (A) Three properties without regard to the fair market values of the properties (the “3-property rule”), or (B) Any number of properties as long as their aggregate fair market value as of the end of the identification period does not exceed 200 percent of the aggregate fair market value of all the relinquished properties as of the date the relinquished properties were transferred by the taxpayer (the “200-percent rule”). 26 C.F.R. § 1.1031 (k)-1(c)(2)-(4)(i) (emphasis in original). The 180-day, or due-date of income-tax return, exchange period— Once a replacement property has been identified, it must be acquired and the exchange completed no later than the date of the occurrence of the first of the following events: (a) 180 days after the sale or transfer of the relinquished property; or (b) the due date of the taxpayer’s income tax return, including extensions, for the tax year in which the relinquished property was sold or transferred — whichever event first occurs. 36 The 180 day require *1139 ment is also strict: 37 it does not mean six months, but 180 consecutive days, with no forgiveness for weekends or holidays. 1031 Tax Savings Example: The following hypothetical demonstrates how a Facts related to the Relinquished Property $500,000 • Original Purchase Price 25.000 • Capital Improvements Made 100,000 • Depreciation Deducted 1,000,000 • Anticipated Sale Price 80.000 • Sale Related Expenses Determining the Basis Original Purchase Price $500,000 Plus Capital Improvements + 25,000 • Subtotal 525,000 Less Depreciation - 100,000 • Adjusted Basis $425,000 Determining the Gain Sale Price $1,000,000 Less Sale Related Expenses (closing costs) - 80,000 Net Sale Price $920,000 Less Adjusted Basis - 425,000 Realized Gain $495,000 Determining the Estimated Tax Depreciation Recapture ($100,000 x 25%) 25,000 Capital Gain (15% x $395,000) 38 59,250 Estimated Federal Taxes Due $84,250 In this example, if the taxpayer should decide not to pursue a Section 1031 exchange, the taxable gain would be $495,000, and the Federal capital gain tax liability would be $84,250, plus any state tax liability. By acquiring “like-kind” replacement property equal to or greater than the net sales price of $920,000, however, and reinvesting all of the proceeds of sale, the entire gain can be deferred and no taxes will be due for the tax year in which the relinquished property was sold. taxpayer might evaluate whether to exchange a rental property for a replacement investment property by estimating the potential Federal capital gain tax liability (15-25%). III. THE PLAINTIFFS, DEFENDANTS, AND OTHER, NON-PARTY PLAYERS A. Plaintiffs Thomas O’Shea is a California citizen, over the age of 65 years, and the husband of Anne Donahue O’Shea. He has extensive experience in real estate investments, including the management of a real estate portfolio that stretches across nine states and is valued at more than $14,000,000. *1140 He has participated in more than thirty like-kind exchanges, 39 and he identified his occupation as “real estate” on his 2007 joint income tax return. 40 Anne Donahue O’Shea is the wife of Thomas O’Shea and an attorney licensed to practice law in the State of California, where she was a state prosecutor for some thirteen years. 41 She has been involved in more than twenty like-kind exchanges. 42 She is the sister of Kate and Kevin Donahue. Like her husband, Anne O’Shea’s occupation was identified on the couple’s 2007 joint income tax return as “real estate.” 43 The Trust of Thomas and Anne O’Shea, sometimes referred to as “the O’Shea Trust,” is a California revocable living trust. The sole trustees are Thomas and Anne Donahue O’Shea. 44 Kate Donahue is a California citizen, and the sister of Anne Donahue O’Shea and Kevin Donahue. 45 She relies on real estate investments as her primary source of income, 46 and has been involved in at least ten like-kind exchanges. 47 San Francisco Residence Club, Inc. is a closely-held California corporation. There are four shareholders and Directors: Anne Donahue O’Shea; Kate Donahue; Kevin Donahue; and Gwen Donahue. 48 Gwen Donahue is the mother of Anne, Kate, Kevin, and Kim Donahue. 49 Kim Donahue Welch formerly was a shareholder, but relinquished her stock at the time of her divorce (presumably, to keep the shares out of the hands of her former husband). 50 She is no longer involved in the corporation or this case. Kevin Donahue is the President of the corporation, and Kate Donahue is the Secretary. 51 KKA CAS, L.L.C. is an Alabama limited liability company, the members of which are Kate Donahue, Kevin Donahue, and Anne O’Shea. 52 The acronym “KKA” is formed from the first letter of each member’s given name. “CAS” refers to the main tenant in one of the Huntsville commercial properties involved in this action. 53 *1141 TAK Tech Point, L.L.C. is another Alabama limited liability company, the members of which are Thomas O’Shea, Anne O’Shea, and Kate Donahue. 54 Again, the acronym “TAK” is formed from the first letter of each member’s given name. “Tech Point” references the seller of the property located at 7027 Old Madison Pike in Huntsville’s Cummings Research Park West. 55 B. Wilmer & Lee Defendants Samuel Givhan is an attorney licensed to practice law in the State of Alabama. 56 He is a shareholder in the Huntsville law firm known as “Wilmer & Lee, P.A.” 57 Givhan and his firm are sometimes referred to by the parties, and also this court, as “the Wilmer & Lee Defendants.” C. Baswell-Guthrie Defendants Cheryl Baswell-Guthrie is an attorney who, at the time of the events on which this action is based, was licensed to practice law in Alabama. She also then was the sole member of both Baswell-Guthrie, P.C., 58 and One Source Title & Escrow, L.L.C., an Alabama limited liability company. 59 Over the course of her legal career, Ms. Baswell-Guthrie was involved in over fifty like-kind exchanges. 60 Her license to practice law was suspended by the Alabama State Bar on September 16, 2011, following her arrest on a warrant obtained by the Securities and Exchange Commission and charging her with the offense of Theft of Property in the First Degree. She subsequently was placed on “disability inactive” status and, at least as late as July 23, 2012, remained in that status. 61 Her present whereabouts are unknown to this court. Her only contact with the attorneys defending the claims asserted against her apparently is by means of infrequent email transmissions. D.McDermott Defendants Scott McDermott, Roy Claytor, and William Chapman are Alabama citizens, real estate professionals, and, on the dates leading up to the commencement of this action, were associates of one another. Highlands Management, L.L.C. is an Alabama limited liability company, the members of which were the three individuals just named. Claytor-Phillips, L.L.C. was an Alabama limited liability company, the members of which were Scott McDermott, Roy Claytor, and Estell Phillips. Huntsville Commercial Brokerage, L.L.C. is an Alabama limited liability company, of which William Chapman is the sole member. The individual defendants named above, together with the limited liability companies controlled by them, will be collectively referred to in this opinion as “the McDermott Defendants.” *1142 1. The resolution and dismissal of plaintiffs’ claims against the McDermott Defendants In their initial investigation into Huntsville real estate, plaintiffs contacted Scott McDermott, Roy Claytor, and William Chapman — all of whom represented to plaintiffs that they were qualified real estate professionals with experience in arranging Section 1081 like-kind exchanges. Plaintiffs alleged that those representations were false, and that McDermott, Claytor, and Chapman conspired to defraud them. The McDermott Defendants were named in eight of the twelve counts of the plaintiffs’ Second Amended Complaint. 62 Those defendants are not the focus of the motions addressed in this opinion, however. Rather, this court previously granted a motion to compel arbitration that had been filed by some of the McDermott Defendants, and ordered plaintiffs and those defendants to proceed to arbitration. 63 William Chapman was dismissed from the case on October 22, 2010. 64 The parties filed a notice with the court on May 17, 2011, stating that the claims against the remaining McDermott Defendants had settled. 65 Accordingly, plaintiffs’ claims against those defendants were dismissed. 66 Thus — and even though the McDermott Defendants, especially Scott McDermott himself, are at the center of the web of events forming the basis of the plaintiffs’ remaining claims against all other defendants — the McDermott Defendants are no longer parties to the action. Plaintiffs’ remaining claims, asserted against the Wilmer & Lee and Baswell-Guthrie Defendants, grew out of the property acquisitions closed by those defendants. E. Non-Parties Involved in Some Transactions Kevin Donahue is a California citizen who, as previously noted, is the brother of Anne Donahue O’Shea, Kate Donahue, and Kim Donahue Welch. Michael Shiffman is a California attorney who has represented plaintiffs and other members of their family in the past, and who has been involved in fifteen to thirty like-kind exchanges under Section 1031. 67 Jeffrey Weiss is another California attorney. His practice is concentrated on estate planning and tax law, including like-kind exchanges. Weiss represented plaintiffs in some of the real estate transactions forming the basis of this action. 68 Erica O’Leary was employed by the qualified intermediaries discussed below in the capacity of either an “Exchange Specialist,” or “Senior Exchange Specialist.” The Qualified Intermediaries — As noted in Part II, supra, both the relinquished and replacement properties must pass through the same qualified intermediary; 69 *1143 otherwise, the taxpayer will be denied deferred taxation under Section 1031. However, upon initial review of the documents prepared by Senior Exchange Specialist Erica O’Leary in connection with Thomas O’Shea’s 2007 relinquishment of his interest in a 392-unit multi-family apartment complex known as “The Plaza at Sherman Oaks” in Los Angeles, California (i.e., the first investment property relinquished by any of the plaintiffs in anticipation of a Section 1031 exchange for Huntsville real estate), and his subsequent acquisition of an interest in a replacement property located at 6820 Moquin Drive in Huntsville’s Cummings Research Park West, it appeared that requirement had been ignored by both Erica O’Leary and Thomas O’Shea. (Both halves of that transaction are discussed in Part TV(A), infra). 70 That initial impression, which proved to be mistaken, was based upon the following facts. The letterhead of Erica O’Leary’s January 26, 2007 cover letter, enclosing copies of documents related to the sale of O’Shea’s interest in “The Plaza at Sherman Oaks,” bears the name of “North American Exchange Company.” 71 One of the documents included within that mailing — the “Exchange Agreement and Supplemental Closing Instructions” 72 — was executed by O’Leary on behalf of “Timcor Exchange Corporation dba North American Exchange Company, a California corporation.” 73 Finally, the May 4, 2007 letter from O’Leary to the Wilmer & Lee Defendants, enclosing documents necessary to close the purchase of property located at 6820 Moquin Drive in Huntsville, was written on stationary bearing the letterhead of “WaMu 10S1 Exchange.” 74 *1144 Even so, as it turns out, all three enti ties — North American Exchange Company, Timcor Exchange Corporation, and WaMu 10S1 Exchange — had been commonly owned by Washington Mutual, Inc. of Seattle, Washington (abbreviated to ‘WaMu”) since 2006. 75 Consequently, to minimize confusion, this court will follow the parties’ practice of referring to the entity employed by plaintiffs as the intermediary in all of the transactions at issue as either “WaMu 1031 Exchange” or, sometimes, just “WaMu.” IV. THE REPLACEMENT PROPERTY ACQUISITIONS A. The Moquin and Fountain Acquisitions The first investment property relinquished by any of the plaintiffs in anticipation of a Section 1031 exchange for Huntsville real estate was Thomas O’Shea’s interest in a 392-unit multi-family apartment complex known as “The Plaza at Sherman Oaks,” located at 4474-4500 Woodman Avenue in Los Angeles, California. 76 He owned an undivided 2.300224% interest in the property as a tenant in common with other persons and entities who (or which) are not parties in this case. 77 O’Shea entered into two agreements to sell his interest in the property for the aggregate amount of $1,895,384.58 on or about January 2, 2007; 78 that is, his interest was to be divided between two purchasers in the following manner: 1.873193% was to be sold to an entity known as “General Western Carmel Company” for “cash in the amount of $643,684.89 plus a pro rata portion of the existing debt on the Real Property attributable to the Interest (which Buyer shall receive a credit for at Closing) plus a pro rata portion of all existing unsecured debt of Seller (which Buyer shall assume and receive a credit for at Closing)”; 79 and, 0.427031% was to be conveyed to “FB Realty Corporation” on similar terms. 80 Thereafter, on or about January 26, 2007, Thomas O’Shea entered into an “Exchange Agreement” with the “WaMu 1031 Exchange” to act as “qualified intermediary” at the closing of the sale of his inter *1145 ests to the foregoing entities. 81 The agreement assigned O’Shea’s interests and sales contracts to WaMu, and directed that intermediary to transfer all of O’Shea’s right, title, and interest in the “relinquished property” to the purchasers, and to hold the net proceeds [of sale] from the Closing ... until such time as Exchangor has located suitable like-kind Replacement Property in which to exchange. Thereafter Exchangor shall instruct Intermediary to acquire said Replacement Property on terms and conditions negotiated by Exchangor, as evidenced by a written agreement for the purchase thereof. 82 The sales were closed on February 1 and March 1, 2007, respectively, 83 which meant that Thomas O’Shea, acting through his qualified intermediary, had to close on the acquisition of a replacement property no later than Tuesday, July 31, 2007: ie., 180 consecutive days from February 1, 2007, the earliest of the two sales of O’Shea’s fractional interest in the relinquished property. 84 Two “replacement properties” were identified by Thomas O’Shea as potential like-kind exchanges on the identification notice he signed following divestment of his interest in The Plaza at Sherman Oaks: ie., 5320 1-55 North in Jackson, Mississippi (a property that is not at issue in this action); 85 and, 6820 Moquin Drive in Huntsville, Alabama (the subject of discussion in the following subsection). 86 It is important to recognize that the Fountain property discussed in Part IV(A)(2), infra, was not listed in any identification notice signed by Thomas O’Shea. Therefore, and for that reason alone, the acquisition of the Fountain property could not have become a “replacement property” for a valid Section 1031 exchange. 1. The Moquin transaction The Moquin transaction closed on or about May 8,2007, 87 well within Section 1031’s 180-day requirement, and involved *1146 the purchase of a 46,215 square foot office building constructed in 1989 on a 7.0 acre lot in Huntsville’s Cummings Research Park West, 88 and located at 6820 Moquin Drive. 89 The seller was “Susanne Bard, Trustee of the Ervin and Susanne Bard Family Trust,” and the gross purchase price was $6,800,000. 90 The qualified intermediary standing between Thomas O’Shea and the Bard Family Trust was the “WaMu 1031 Exchange.” 91 The agreement executed by O’Shea and Erica O’Leary, Senior Exchange Specialist for WaMu, was entitled “Assignment Agreement and Supplemental Closing Instructions (Tenant-in-Common Interest).” 92 Pertinent portions of that agreement read as follows: A. Exchangor and intermediary previously entered into an Exchange Agreement and Supplemental Closing Instructions, the terms of which are referred to and incorporated herein by this reference, pursuant to which Exchangor has transferred certain real property (the “Relinquished Property”) through Intermediary to effect a delayed tax-deferred exchange pursuant to the provisions of Section 1031(a) of the Internal Revenue Code. B. Exchangor has selected suitable like-kind property in which to exchange located in the County of Madison, State of Alabama, as to a 25% beneficial interest in property commonly known as 6820 Moquin Drive, Huntsville, Alabama (the “Replacement Property”), legally described as follows: [property description omitted in original] C.Exchangor has entered into an agreement (the “Purchase Agreement”) to purchase the Replacement Property from Susanne Bard, Trustee of the Ervin and Susanne Bard Family Trust (“Seller”) for a purchase price of $6,800,-000.00. 1. Assignment. Exchangor hereby conditionally assigns all of Exchangor’s rights, title, and interest in and to the Purchase Agreement, and certain obligations thereunder[,] to Intermediary. More particularly, Exchangor assigns to Intermediary Exchangor’s obligation to purchase the Replacement Property from Seller, specifically conditioned upon Exchangor performing all other obligations required of Exchangor to Seller and any obligations surviving the closing and transfer of title. Intermediary agrees to assume this obligation and perform said obligation in the manner provided for herein. 3. Funding and Closing. In order to avoid the duplication of transfer fees, closing costs, title insurance expenses and the like, the parties agree as follows: (a) Exchangor’s right to receive [title to] the Replacement Property may be accomplished by direct deeding from Seller to Exchangor. Title to the Replacement Property will not be transferred to Intermediary at any time. (b) Closing Agent shall have Seller execute the appropriate deed in favor of *1147 Exchangor and shall deliver said deed when Closing Agent obtains for Seller the agreed sales price, less payment for costs of sal applicable thereto, and subject to encumbrances of record, as evidenced by Closing Agent’s HUD-1 or settlement statement approved by Ex-changor, Seller[,] and Intermediary. (c) All costs of acquiring the Replacement Property, including cash payments toward the purchase price and all other acquisition fees incident thereto, shall be borne first from the proceeds held by Intermediary [from the sale of Thomas O’Shea’s interest in “The Plaza at Sherman Oaks” in Los Angeles] and then, to the extent necessary, from the funds of Exchangor. 7.Authorization to Release Funds to Close. Execution of this Agreement by Exchangor constitutes an agreement and authorization by Exchangor that Intermediary may transmit exchange proceeds at the request of and upon the signature of Closing Agent in order to close the purchase of the Replacement Property. 93 1. Thomas O’Shea 22.483% 2. Jeri Holden 22.483% 3. San Francisco Residence Club, Inc. 11.241% 4. Staples Holding L.L.C. 11.241% 5. Beth Mason Living Trust 8.993% 6. Ronald and Loweeda Mitchell 8.993% 7. Dean and Katy Russell 4.496% 8. Fred and Martha Dolan 4.496% 4.496% 9. Scott McDermott 4.856% 10. William Chapman 4.856% 11. Roy Claytor 4.856% 94 2. The Fountain transaction The Fountain transaction involved the simultaneous acquisition of a 10,000 square A fair reading of the parenthetical phrase in the title of the O’Shea/WaMu Assignment Agreement — i.e., “(Tenant irir-Common Interest)” — together with the specification of the interest to be acquired stated in paragraph “B” (“a 25% beneficial interest”), and the language in paragraph 3(b) stating that “Closing Agent shall have Seller execute the appropriate deed in favor of Exchangor,” clearly implies that the Closing Agent was directed to prepare a deed in which the seller of the Moquin Drive property conveyed a 25% interest in the replacement property to Thomas O’Shea as a tenant in common with the other purchasers. However, as will be discussed in greater detail in Part V of this opinion, infra, the deed to the Moquin Drive property did not vest any portion of the title in Thomas O’Shea, but in “Moquin, L.L.C.,” an Alabama limited liability company. Further, the extent of O’Shea’s fractional membership interest in that L.L.C. was less than 25%. Instead, the eleven members of Mo-quin, L.L.C., held the following fractional interests: foot office building constructed in 1999 on a 2.30 acre lot in Huntsville’s Nichols Commercial Park, at 4092 South Memorial *1148 Parkway. 95 The seller was “Johnson Alabama L.L.C.,” and the purchase price was $4,000,000. 96 The original purchaser was defendant Scott McDermott, but he subsequently assigned his interest in and title to the property to “Fountain Partners, L.L.C.,” an Alabama limited liability company. The members of that limited liability company, and their respective fractional interests, were identical to those of Mo-quin, L.L.C., as listed in the preceding subsection. 97 Again, however, the Fountain property was not described in the identification notice signed by Thomas O’Shea in connection with the sale of his interest in “The Plaza at Sherman Oaks” in Los Angeles. Therefore, the acquisition of the Fountain property could not have become a “replacement property” for a valid Section 1031 exchange. To the extent that plaintiffs claim otherwise, they are wrong. B. The Corporate Drive Acquisition The “relinquished property” sold in anticipation of purchasing a 50,400 square foot office building constructed on a 3.39 acre lot at 4955 Corporate Drive in Huntsville’s Cummings Research Park Ease 98 was an apartment building located at 10471 Three Rivers Road, in Gulfport, Mississippi, 99 known as “Cedar Pointe.” 100 The property was owned by the Trust of Thomas and Anne O’Shea (“the O’Shea Trust”) and Kate Donahue, and each investor held an undivided 50% interest in the fee as tenants-in-common. 101 It was sold on June 8, 2007 to “MS Palms Partners, L.L.C.” 102 for approximately $4,740,000. 103 Three “replacement properties” were identified by the O’Shea Trust and Kate Donahue as potential, like-kind exchanges in the identification notice signed following the sale of their interests in the Mississippi property: i.e., 200 West Side Square in Huntsville, Alabama (a property implicated in the action assigned to Judge Kallon on this court); 104 4955 Corporate Drive in Huntsville, Alabama (the subject of the present discussion); and, 100 Quality Circle in Huntsville, Alabama (the subject of the discussion in Part IV(D), infra ). 105 *1149 The seller of the Corporate Drive property was “DA Technology, L.L.C.,” a Delaware limited liability company, and the purchase price was $5,400,000. 106 The qualified intermediary standing between the O’Shea Trust and Kate Donahue was, again, the WaMu 1031 Exchange. 107 In an interesting twist discussed in Part V(B), infra, however, the Corporate Drive property was not directly sold by DA Technology, L.L.C., to any of the plaintiffs, Instead, the original purchaser was former-defendant Scott McDermott, who subsequently assigned his interest in and title the ProPerty to an Alabama limited liability company known as “Corporate Drive L.L.C.” The six members of that entity, and the fractional membership interests of each, were as follows: 1 1. The Trust of Thomas and Anne O’Shea 25.00% 2. Kate Donahue 25.00% 3. Jeri Holden 10.00% 4. Scott McDermott 13.34% 5. William Chapman 13.33% 6. Roy Claytor 13.33% 108 C. The Old Madison Pike Acquisition The “relinquished property” sold in anticipation of purchasing a 70,000 square foot office building constructed in 2007 at 7027 Old Madison Pike in Huntsville’s Cummings Research Park West 109 was located at 851 California Street in the Nob Hill section of San Francisco, California. 110 It was solely owned by the “San Francisco Residence Club, Inc.,” a closely-held California corporation controlled by Anne Donahue O’Shea, Kate Donahue, Kevin Donahue, and Gwen Donahue, the sole shareholders and directors. 111 The property was a five-story, 83-room hotel known as the “San Francisco Residence Club.” 112 The identity of the purchaser of that property is not disclosed in the evidentiary materials, but it was sold for approximately $10,400,000. 113 The sale was closed on July 10, 2007, which meant that San Francisco Residence Club, Inc., acting through the WaMu 1031 Exchange, had to close on the acquisition of a replacement property no later than January 6, 2008: that is, 180 consecutive days from July 10, 2007. Three “replacement properties” were identified by the San Francisco Residence *1150 Club, Inc., as potential like-kind exchanges for the gain realized from divestment of the corporation’s interest in this property: ie., 200 West Side Square in Huntsville, Alabama (the property implicated in the action pending before Judge Kailon on this same court); 114 a property in Hawaii that has not been described in any detail in the record, but one that is not at issue in this action; and 7027 Old Madison Pike in Huntsville, Alabama, the subject of the present discussion. 115 The seller of the Old Madison Pike property was “Triad Tech Point, L.L.C.,” and the purchase price was $3,800,000. 116 The following entities and persons acquired the property as tenants in common, and the ownership interests of each were as follows: 91.8346% 1. San Francisco Residence Club, Inc. 0.2624% 2. TAK Tech Point, L.L.C. 0.0105% 3. KKA CAS, L.L.C. 7.5715% 4. 7027 Old Madison Pike, L.L.C. (McDermott) 0.0105% 5. Jeri Holden 0.0105% 117 6. Delta Trust (Elizabeth Mason IRA) D. The Quality Circle Acquisition As noted in Part IV(B), supra, the O’Shea Trust and Kate Donahue had identified an office building located at 100 Quality Circle in Huntsville’s Cummings Research Park as a potential like-kind replacement property in the identification notice they signed following the sale of their interests in the “Cedar Pointe Apartments” in Gulfport, Mississippi. The square footage and construction data is not disclosed in the record presented to this court, but the building appears to be occupied largely (if not altogether) by Wyle Laboratory’s “CAS Group.” 118 The seller was “Tera Properties, L.L.C.,” and the purchase price was $11,250,000. 119 The original purchaser was defendant Scott McDermott, but he subsequently assigned his interest in (and title to) the property to “Quality Circle, L.L.C.,” an Alabama limited liability company. The eight members of that company (and their respective fractional ownership interests) were as follows: 1. San Francisco Residence Club, Inc. 66.9% 2. Thomas O’Shea 7.3% 3. Kate Donahue 7.3% 4. Jeri Holden 4.8% 5. Scott McDermott 3.9% 6. Roy Claytor 3.9% 7. Delta Trust (Elizabeth Mason IRA) 3.8% 8. William Chapman 2.1% 120 The O’Shea Trust and Kate Donahue contributed funds to the acquisition of this *1151 replacement property, but interestingly the Trust is not listed among the members of “Quality Circle, L.L.C.” It is also interesting to note that the parties who actually contributed funds to the acquisition of the Quality Circle property (ie., the O’Shea Trust, Kate Donahue, KKA CAS, L.L.C., and TAX Tech Point, L.L.C.) 121 do not match those listed in the operating agreement of Quality Circle, L.L.C. (i.e., the San Francisco Residence Club, Inc., Thomas O’Shea, Kate Donahue, Jeri Holden, Scott McDermott, Roy Claytor, Delta Trust, and William Chapman). 122 V. ACQUISITIONS CLOSED BY THE WILMER & LEE DEFENDANTS The Wilmer & Lee Defendants served as the closing attorneys for the transactions described in Part IV, supra, as the “Moquin,” “Fountain,” and “Corporate Drive” acquisitions. A. Acquisition of the “Moquin Drive” and “Fountain” Properties The Moquin Drive and Fountain acquisitions grew from the fact that, in November of 2006, while Thomas O’Shea was traveling with his Mend Fred Haywood, a Hawaii-based real estate broker, 123 Haywood suggested that O’Shea consider investing in Huntsville real estate. 124 They traveled to the city, where Haywood introduced Thomas O’Shea to Scott McDermott. 125 During O’Shea’s brief, initial visit to the area, McDermott accompanied him on a tour of several properties, including the one located on Moquin Drive. 126 O’Shea told McDermott that, if he purchased investment property in Huntsville, he wanted to do so as part of a Section 1031 like-kind exchange. McDermott replied that he had experience with such acquisitions, but advised O’Shea that, in order to comply with the requirements of Alabama law on real estate acquisitions, he should employ a local attorney to close the transaction. 127 Following his return to California, Thomas O’Shea told his wife, Anne, and her sister and brother, Kate and Kevin Donahue, that he was impressed by the investment potential of Huntsville real estate, and Scott McDermott’s credentials. 128 Thomas O’Shea returned to Huntsville in January of 2007, accompanied by his brother-in-law, Kevin Donahue. 129 O’Shea again told McDermott that any Huntsville investment properties acquired by them needed to be structured as a “like-kind exchange” under Section 1031 of the Internal Revenue Code, and McDermott assured both men that he was “quite capable of doing that.” 130 O’Shea testified that, during one of his visits to Huntsville, McDermott disclosed that he had been “arrested” in connection with “some real estate transaction.” 131 O’Shea did not elaborate, other than to say that McDermott “volunteered” the information. 132 The nature of the conduct that *1152 precipitated the arrest is not clear, nor does the record establish whether McDermott was subsequently convicted of a crime, although the innuendo of O’Shea’s non sequitur remembrance is that McDermott was convicted. In February of 2007, Scott McDermott and Roy Claytor traveled to California, where they met Anne Donahue O’Shea and Kate Donahue. 133 McDermott and his colleagues, Claytor and William Chapman, invited plaintiffs to join them in their plans to purchase the Moquin Drive property. 134 McDermott initially expected plaintiffs to be the sole investors in the property, but eventually assembled a group of other investors to purchase fractional interests of the whole fee. 135 At least two of those other investors, Fred Haywood and Beth Mason, also intended for their investments to be part of a like-kind exchange. 136 McDermott and his colleagues ultimately decided to forego the commission normally paid real-estate brokers for finding and bringing purchasers to the closing table, and instead took ownership stakes in what all of the purchasers hoped (and expected) would be an income-producing investment. 137 As discussed in Part TV(A), supra, Thomas O’Shea relinquished his interest in “The Plaza at Sherman Oaks” in Los Angeles prior to acquisition of the Moquin Drive property. That sale occurred on or about February 9, 2007. 138 He filled out a form identifying two possible replacement properties in anticipation of a like-kind exchange: the Moquin property; and an investment property located in Jackson, Mississippi. 139 Thomas O’Shea sent that form to the WaMu 1031 Exchange. 140 The plaintiff “San Francisco Residence Club, Inc.,” had planned to sell the hotel from which its name is derived as part of a like-kind exchange for replacement-investment property, but the sale did not close. 141 The potential purchaser of the Residence Club Hotel forfeited earnest money, and San Francisco Residence Club, Inc., invested that money in the Moquin property instead. 142 Thus, the ownership interest of the San Francisco Residence Club, Inc., in the Moquin Drive property was a cash investment, and not intended to be part of a like-kind exchange. 143 The Moquin Drive property had only one or two tenants at the time of the acquisition at issue in this suit, and that fact made it difficult to obtain a purchase-money loan on attractive terms. 144 As best *1153 this court can ascertain, it was for that reason that the McDermott Defendants suggested that the parties combine the purchase of Moquin with the acquisition of an additional parcel, the so-called “Fountain property.” 145 Plaintiffs agreed to that arrangement. 146 1. Samuel Givhan’s involvement During January of 2007, McDermott instructed Samuel Givhan to organize two Alabama limited liability companies: “Mo-quin, L.L.C.”; and “Fountain Partners, L.L.C.” 147 McDermott was named the “manager” of both entities. 148 McDermott signed a purchase agreement for the Mo-quin property on behalf of Moquin, L.L.C. on January 30, 2007. 149 He signed a purchase agreement for the Fountain property on behalf of himself as an individual on March 2, 2007. 150 On or about April 25, 2007, McDermott prepared a “private placement memorandum” (“PPM”) on each of the limited liability companies for presentation to potential investors. 151 Plaintiffs allege in their Second Amended Complaint that McDermott’s PPMs were misleading. 152 Even so, it is important to note that neither Sam Givhan nor any other member of the Wilmer & Lee law firm was involved in the preparation of the PPMs, and the content of the PPMs is not at issue here. 153 2. The “Ireland conference call” Anne and Thomas O’Shea were in Ireland from April through the end of August 2007. 154 Scott McDermott placed a telephone call to them in early July, 155 during which they discussed the requirements necessary to comply with Section 1031, including the 45-day and 180-day requirements for identifying and closing on the acquisition of replacement properties. 156 In response to questions asked by the O’Sheas, McDermott utilized a feature on his telephone equipment that allowed him to call Givhan, and patch him into a three-way conference call. 157 Givhan explained to the O’Sheas that they needed to be “on title ... [and hold] an undivided interest in the property” in order to comply with the requirements of Section 1031 and qualify for favorable, deferred tax treatment as a “like-kind exchange.” 158 Givhan told the O’Sheas that they would not qualify for deferred tax treatment under Section 1031 if the title to *1154 the replacement properties was vested in a limited liability company that had not been “on the title” to the relinquished properties. 159 Thomas O’Shea confirmed during his deposition testimony that Givhan’s statements were consistent with his (O’Shea’s) understanding of the tax rules that applied to Section 1031 exchanges. 160 Even so, neither McDermott nor Givhan informed the O’Sheas that title to the Mo-quin and Fountain properties had been vested in limited liability companies, nor did either McDermott or Givhan indicate that the same would be true of Corporate Drive. 161 Rather, McDermott and Givhan told the O’Sheas that “they would do that”: ie., ensure that the Corporate Drive transaction would comply with Section 1031. 162 Based on the Ireland conference call, the O’Sheas concluded that McDermott and Givhan “were on the ball.” 163 Anne O’Shea took handwritten notes during the Ireland conference call. 164 She wrote: “For 1031 [treatment] should not buy through an LLC”; and, “everybody should have a direct interest [that is, an] undivided interest in the property.” 165 Her notes do not specify who among the four participants to the conference call made those statements but, presumptively, it was Givhan. In any event, the Ireland conference call that occurred in early July 2007 was the only conversation Thomas O’Shea had with Givhan during that year. 166 3. WaMu forwards funds and forms to Givhan The WaMu 1031 Exchange provided Givhan the funds that Thomas O’Shea intended to invest in the acquisition, and sent him a form with disbursement instructions on May 4, 2007. 167 That form indicated that Thomas O’Shea’s investment was part of a like-kind exchange pursuant to Section 1031. 168 The form referenced-the Moquin property only, which was consistent with the identification form that Thomas O’Shea had previously provided to WaMu. 169 The WaMu form transmitted to Givhan also stated that Thomas O’Shea had executed the purchase agreement with the seller of the Moquin Drive property. That statement was not correct. Moquin, L.L.C., not Thomas O’Shea, had executed the purchase agreement. 170 The WaMu form included an attachment entitled “notice of assignment” that was signed by Thomas O’Shea, but not by the seller of the Moquin property. 171 *1155 Thomas O’Shea executed a valid power-of-attorney on May 2, 2007, by the terms of which he vested McDermott with the authority to act on his behalf. 172 At some undisclosed point in time, O’Shea’s brother-in-law, Kevin Donahue, also executed a power-of-attorney naming McDermott as his attorney-in-fact. 173 On May 4, 2007, McDermott assigned the Fountain purchase agreement — a contract that he had signed in his own name on March 2, 2007 — to Fountain Partners, L.L.C. 174 Between May 2nd and 5th, 2007, Sam Givhan repeatedly requested Scott McDermott to provide him with tenancy-in-common agreements, so that he could close the transaction in compliance with Section 1031. 175 Even so, Givhan’s secretary emailed the Moquin Drive purchase agreement to WaMu’s exchange specialist Erica O’Leary on May 4, 2007, and that agreement indicated on its face that Moquin, L.L.C. was the purchaser. 176 (The record that has been provided to this court is not clear on the question of whether that email was sent before or after Givhan received the WaMu form listing Thomas O’Shea as the purchaser of the Moquin property. 177 ) Thomas O’Shea signed the Moquin, L.L.C. operating agreement, and purchased a membership in the limited liability company on May 8, 2007. 178 On the same day, Scott McDermott, acting as attorney-in-fact for Kevin Donahue, signed the same agreement on behalf of San Francisco Residence Club, Inc. 179 The amount of money invested by Thomas O’Shea in Moquin, L.L.C., purchased a membership share of 22.483%. 180 San Francisco Residence Club, Inc., used the earnest money forfeited by the prospective purchaser, who was either unable or unwilling to carry through with the purchase of the San Francisco Residence Club Hotel, to acquire a membership share of approximately half that amount, 11.241%. 181 The McDermott Defendants, who had opted to forego the commissions normally paid real estate brokers in lieu of obtaining ownership stakes in the investment, acquired roughly fifteen percent of the membership interests, and the other investors acquired the remaining membership interests, which aggregated roughly fifty-two percent. 182 Nevertheless, Thomas O’Shea owned the largest individual membership interest in Moquin, L.L.C. 183 Also on May 8, 2007, Scott McDermott, acting through the powers-of-attorney executed by Thomas O’Shea and Kevin Donahue, signed the Fountain Partners, L.L.C. operating agreement on behalf of Thomas O’Shea and San Francisco Residence Club, Inc. 184 Thomas O’Shea, San Francisco Res *1156 idence Club, Inc., the McDermott Defendants, and the other investors acquired fractional membership shares in Fountain Partners, L.L.C., that were equal to their respective ownership interests in Moquin, L.L.C. 185 On that same day, Thomas O’Shea signed “Unanimous Written Consent” documents ratifying the purchase agreements, and authorizing Scott McDermott to act on his behalf. 186 McDermott signed the same “Unanimous Written Consent” documents on behalf of Kevin Donahue for San Francisco Residence Club, Inc. 187 The purchase agreements listed the limited liability companies as the purchasers of the Moquin Drive and Fountain properties, whereas the forms forwarded to Samuel Givhan by the WaMu 1031 Exchange directed him to prepare a deed in which the seller conveyed a 25% interest in the Moquin Drive replacement property to (“in favor of’) Thomas O’Shea as a tenant-in-common with the other purchasers. 188 Even so, Givhan closed the transactions according to the terms of the purchase agreements, following the instructions of Scott McDermott, 189 who was the manager of Moquin, L.L.C., and Fountain Partners, L.L.C. 190 Thus, despite Givhan’s comments to Anne and Thomas O’Shea during the Ireland conference call, and his repeated requests to McDermott to provide tenancy in common agreements, Givhan followed the instructions of McDermott, and vested title to the Moquin Drive and Fountain properties in the limited liability companies of which McDermott was manager. Givhan never informed either Thomas O’Shea or Erica O’Leary at the WaMu 1031 Exchange that there was any conflict between WaMu’s instructions and the purchase agreements. 191 Even though the purchase agreements named the limited liability companies as the purchasers, the agreements could have been assigned to individuals, purchasing as tenants in common, at any time prior to closing; 192 a contingency that is discussed in Part V(D), infra. In fact, Givhan was asking McDermott for agreements assign *1157 ing the interest of the L.L.C.s to the various members of each liability company as tenants in common in the days immediately before closing. 193 McDermott did not provide such agreements to Givhan, however, and Givhan closed the transactions in accordance with McDermott’s instructions, thus vesting title in the limited liability companies. 194 Prior to closing the Moquin Drive and Fountain acquisitions, Givhan had a number of conversations with John Gragg, an attorney for the lender, Eurohypo Aktiengesellschaft (a German bank doing business in the United States as “Eurohypo AG”), 195 and Charles Callahan, one of the employees of that lending institution. 196 During one of those conversations, Mr. Callahan stated that the loan had not been underwritten for the acquisition of the two properties by a group of individuals and/or entities as tenants in common, and that the loan had not been priced on such a transaction. 197 Givhan understood that statement to mean that any attempt to restructure the transactions to assign the interests of Moquin, L.L.C., and Fountain Partners, L.L.C., to the members of each limited liability company and, thereby, to vest title in the various investors as tenants in common, would require the loan to go “back through underwriting, [and] there would be a higher return to the lender [presumably, e.g., greater closing costs and/or a different interest rate].” 198 The purchase of the Moquin Drive and Fountain properties closed as one transaction, funded by one loan. 199 None of the individual plaintiffs attended the dosing of the transaction, 200 In fact, both of the O’Sheas still were in Ireland, and they did not return to the United States until late August of that year. 201 B. Acquisition of the “Corporate Drive” Property McDermott also invited plaintiffs to participate in the purchase of the so-called “Corporate Drive” property. 202 McDermott instructed Givhan to organize an Alabama limited liability company known as “Corporate Drive, L.L.C.” in April of 2007. 203 McDermott once again was designated the manager of the company. 204 Kate Donahue signed the Corporate Drive, L.L.C. operating agreement on April 18, 2007. 205 Both Anne and Thomas O’Shea then were in Ireland, so Kate Donahue signed the operating agreement for both, in their capacity as trustees of the O’Shea Trust. 206 Kate Donahue and the O’Shea *1158 Trust each committed to a twenty-five percent share of Corporate Drive, L.L.C. (i.e., a total of 50%) 207 The McDermott Defendants acquired a forty percent interest, and the remaining ten percent was acquired by another investor, Jeri Holden. 208 On April 19, 2007, McDermott signed an agreement to purchase the Corporate Drive property on behalf of himself alone, and not Corporate Drive, L.L.C. 209 In preparation for their investment in the Corporate Drive property, McDermott distributed pro forma financial statements relating to anticipated income from the property. 210 Plaintiffs alleged that those financial statements were misleading. 211 It is important to note, however, that — as was the case with the Moquin Drive and Fountain private placement memoranda discussed earlier — neither Givhan nor the Wilmer & Lee law firm was involved in the preparation or distribution of McDermott’s proforma financial statements. 212 Kate Donahue and the O’Shea Trust sold their interests in the “Cedar Pointe” apartments located in Gulfport, Mississippi on June 7, 2007. 213 They identified Corporate Drive as one of the three, prospective “replacement properties” for the relinquished Mississippi property pursuant to 26 U.S.C. § 1031 . 214 Plaintiffs’ purchase money for the Corporate Drive transaction was deposited with Givhan, and WaMu sent forms to Wilmer & Lee for that transaction on June 27, 2007. 215 Again, as had been the case with the WaMu form relating to Thomas O’Shea’s Moquin Drive-Fountain transaction, the WaMu forms related to acquisition of the Corporate Drive property called for title to be placed “in favor of’ the named plaintiff-purchasers, and had been signed by the relevant plaintiff-purchasers, but not by the sellers of the Corporate Drive property. 216 Kate Donahue executed a “Unanimous Written Consent” form for Corporate Drive, L.L.C. on July 5, 2007. 217 She also signed the document on behalf of Anne and Thomas O’Shea in their capacity as trustees of the O’Shea Trust, because both still were in Ireland. 218 That document purported to ratify a purchase agreement for the Corporate Drive property, but the space in the document for insertion of the date of the purchase agreement was left blank. 219 Even so, the “Unanimous Written Consent” form listed the same purchase price and property description stated in the purchase agreement that had been executed by Scott McDermott on *1159 April 19, 2007, on behalf of himself and not Corporate Drive, L.L.C. 220 On the same day, July 5, 2007, Givhan sent an email to McDermott, stating that he still needed Section 1031 documents for the transaction. 221 The Corporate Drive transaction closed on July 13, 2007, with title vested in Corporate Drive, L.L.C. 222 Kate Donahue and Thomas O’Shea each signed a personal guaranty for any debt of that limited liability company. 223 As had been the case with the Moquin Drive and Fountain acquisitions, no plaintiff attended the closing. Worse, each of the plaintiffs signed closing documents without reading them. 224 Although Givhan had previously advised Anne and Thomas O’Shea during the Ireland conference call that the Corporate Drive acquisition would not qualify for Section 1031 status if title to the property was vested in a limited liability company, as opposed to each of the plaintiffs as tenants in common, and even though Givhan had repeatedly told McDermott the same thing, Givhan closed the transaction and vested title to the property in Corporate Drive, L.L.C. The Ireland conference call that occurred in early July 2007 was the only conversation Thomas O’Shea had with Samuel Givhan during that year, and he did not learn that the Moquin Drive, Fountain, and Corporate Drive acquisitions failed to meet the requirements of Section 1031 until plaintiffs’ California attorneys examined the deeds in November of that year. 225 C. The Role of California Attorney Jeffrey Weiss Jeffrey Weiss is a California attorney who, as early as six years before the events leading to the commencement of this action, had represented the O’Sheas on tax matters. 226 Documents produced during discovery establish that Kate Donahue emailed closing documents relating to the plaintiffs’ potential investment in Mo-quin, L.L.C., and Fountain Partners, L.L.C., to Weiss on May 1, 2007. 227 Despite that unequivocal fact, Jeffrey Weiss conveniently professed during his deposition that he did not “recall” receiving those documents, nor “recall” having any discussions with any of the plaintiffs regarding the transactions prior to the date upon which each closed. 228 Moreover, Kate Donahue did not invest in the Moquin and Fountain properties; instead, only Thomas O’Shea and San Francisco Residence Club, Inc. did so. *1160 Kate Donahue emailed Weiss “another urgent question” about Section 1031 compliance on July 11, 2007, three days prior to closing the Corporate Drive acquisition (July 13th). 229 Weiss responded the following day, copying both Anne and Thomas O’Shea, as well as Kevin Donahue, on his response. 230 He provided specific information regarding the criteria that a transaction must meet to satisfy the requirements for a Section 1031 exchange. 231 Despite those facts, clearly indicating that Weiss was solicited and provided advice to the plaintiffs, Kate Donahue testified that plaintiffs relied solely upon Givhan to protect their interests. 232 D. Reformation of Titles to the Properties Closed by Givhan After the closings of the Moquin Drive, Fountain, and Corporate Drive property acquisitions, plaintiffs retained California attorneys Jeffrey Weiss and Michael Shift-man to advise them in connection with the next two Huntsville properties they intended to purchase. 233 Shiftman reviewed the documents from the prior acquisitions in November 2007, and discovered that title to all three properties had been vested in limited liability companies. 234 Nevertheless, he advised plaintiffs that they could reform the deeds to vest title in the names of each of the investors as tenants in common and still comply with the requirements of Section 1081. 235 Scott McDermott traveled to California in November of 2007 to meet with Anne and Thomas O’Shea, Kate Donahue, Kevin Donahue, Michael Shiftman, and Jeffrey Weiss. He had two purposes for that trip: discuss the Section 1031 compliance problems with the transactions that already had closed; and, plan the next two acquisitions. 236 Anne and Thomas O’Shea, Kate Donahue, Kevin Donahue, Michael Shiftman, Jeffrey Weiss, and defendant Cheryl Baswell-Guthrie — the attorney who McDermott had chosen to replace Samuel Givhan as closing attorney for the next two acquisitions — prepared tenancy in common agreements for each of the three acquisitions that had been closed by Givhan. 237 Plaintiffs and McDermott agreed to execute the tenancy in common agreements. Before those agreements could he consummated, however, disputes arose between plaintiffs and McDermott, and title to the Moquin Drive, Fountain, and Corporate Drive properties was not transferred from the limited liability companies to the investors as tenants in common. 238 *1161 Even so, the O’Sheas’ and Kate Donahue’s 2007 federal income tax returns misrepresented the transactions — ie., those in which they had relinquished their interests in the California and Mississippi properties, and then closed upon the acquisitions of the Moquin Drive, Fountain, and Corporate Drive properties — as “like-kind exchanges” that complied with Section 1031 of the Internal Revenue Code. 239 It was only after commencement of this action that titles to those three properties were reformed to conform with Section 1031. Thus far, plaintiffs have suffered no adverse tax consequences. 240 In fact, as a result of plaintiffs’ settlement with the McDermott Defendants, plaintiffs no longer have any interest in the Moquin Drive, Fountain, or Corporate Drive proper ties. 241 E. The Issue of the $50,000 Check In the early stages of plaintiffs’ involvement with the McDermott Defendants, Thomas O’Shea wrote a check in the amount of $50,000 for use in the possible purchase of a commercial office building located on Sparkman Drive in Huntsville. 242 McDermott gave those funds to Givhan for deposit in his firm’s escrow account, to be used in the event that the “Sparkman Drive property” was acquired. 243 Plaintiffs did not consummate the purchase of that property, however, and Givhan admitted that he mistakenly used those funds as part of the consideration paid for purchase of the Moquin Drive and Fountain properties. 244 The Wilmer & Lee Defendants do not dispute that Thomas O’Shea “is entitled to recover” those funds. 245 VI. ACQUISITIONS CLOSED BY THE BASWELL-GUTHRIE DEFENDANTS Cheryl Baswell-Guthrie served as the closing attorney for the transactions described in Part IV, supra, as the “Old Madison Pike” and “Quality Circle” acquisitions. A. Lead-Up To Old Madison Pike and Quality Circle Acquisitions Scott McDermott traveled to California in November of 2007 for the purpose of meeting with Thomas O’Shea, Anne O’Shea, Kate Donahue, Kevin Donahue, Michael Shiftman, and Jeffrey Weiss. Among other issues, they discussed the possible acquisition of two other properties in Huntsville, generally referred to as “Quality Circle” and “Old Madison Pike.” 246 The Old Madison Pike property is sometimes referred to as “Tech Point.” 247 Plaintiffs reiterated the importance of vesting titles to those properties in the names of the individual investors as tenants in common, in order to qualify for favorable tax treatment as like-kind exchanges under Section 1031. 248 McDermott stated that he was aware of plaintiffs’ intention, and assured them that the trans *1162 actions would be closed properly. 249 He also informed plaintiffs that he had terminated- his professional relationship with Samuel Givhan, and that the closing attorney for the transactions would be defendant Cheryl Baswell-Guthrie. 250 At some point in time, Scott McDermott caused two additional limited liability companies to be organized under Alabama law: i.e., “7027 Old Madison Pike, L.L.C.,” and “Quality Circle, L.L.C.” McDermott was designated the manager of each 251 By the time McDermott retained Baswell-Guthrie, the terms of the purchase agreements for the Old Madison Pike and Quality Circle properties had already been negotiated, and the purchase agreements drafted by Samuel Givhan. 252 Further, McDermott never asked Baswell-Guthrie to represent plaintiffs; plaintiffs were not involved in the decision to retain her as the closing attorney; and, there was no retention agreement between Baswell-Guthrie and plaintiffs. 253 Nonetheless, McDermott told plaintiffs that Baswell-Guthrie represented the purchasing group (including plaintiffs) as a whole. 254 In preparation for their investment in the Old Madison Pike and Quality Circle properties, plaintiffs established two Alabama limited liability companies: “KKA CAS, L.L.C.,” the members of which were Kate Donahue, Kevin Donahue, and Anne Donahue O’Shea; and “TAK Tech Point L.L.C.,” the members of which were Thomas O’Shea, Anne O’Shea, and Kate Donahue. Baswell-Guthrie drafted the operating agreements for both entities. 255 She also served as the registered Alabama agent for each. 256 B. Old Madison Pike (a/k/a “Tech Point”) Plaintiff San Francisco Residence Club, Inc., sold its eponymous hotel on July 10, 2007. 257 The corporation identified three potential replacement properties for Section 1031 treatment: one was located in Hawaii; a second was the “Park Tower” property in Huntsville that formed the basis of the companion case in this District assigned to Judge Kallon; 258 and the third was the Old Madison Pike property that is implicated in the present action. 259 The two Alabama limited liability companies— TAK Tech Point, L.L.C. and KKA CAS, L.L.C. — also intended to invest in the Old Madison Pike property. 260 Those companies were not participating as Section 1031 exchangors; indeed, because neither limited liability company had owned an interest in the relinquished property, neither com *1163 pany could participate in Section 1031 exchanges. In addition to San Francisco Residence Club, Inc. and the two limited liability companies controlled by plaintiffs, “7027 Old Madison Pike, L.L.C.” (controlled by McDermott) and two other investors were part of the investment group. 261 At the meeting between McDermott, plaintiffs, and plaintiffs’ California attorneys held in California during November of 2007, it had been agreed that Jeffrey Weiss would draft the tenancy in common agreements for the Old Madison Pike and Quality Circle transactions. 262 McDermott informed Weiss of the percentages of ownership each investor would acquire in the properties on November 29, 2007. 263 San Francisco Residence Club, Inc., was investing the largest amount in the Old Madison Pike property, over ninety-one percent of the total. 264 Later that day, Weiss emailed the tenancy in common agreements for both properties to Cheryl Baswell-Guthrie. 265 The initial draft of the tenancy in common agreement for the Old Madison Pike acquisition named “7027 Old Madison Pike, L.L.C.” as the manager of the property, and required the owners to provide sixty days’ notice of an intent to terminate the manager. 266 Early in the morning of November 30, 2007, Baswell-Guthrie emailed Weiss a revised draft of the agreement, in which she added the requirement that the manager be given written notice of the owners’ intent to terminate. 267 The word “written” was in boldface and underlined, as were the other changes made by Baswell-Guthrie to the language originally drafted by Weiss. 268 A revised version of the Quality Circle tenancy in common agreement, containing the same change, was also attached to the email. 269 Later that day, McDermott emailed Baswell-Guthrie, asking her to add a “with cause” condition to the termination section of the tenancy in common agreements. 270 Baswell-Guthrie then emailed McDermott, Shiftman, Weiss, and Kevin Donahue another set of revisions to the agreements. 271 In the Old Madison Pike tenancy in common agreement, she replaced “7027 Old Madison Pike, L.L.C.” with the name of Scott McDermott as manager of the property, and removed the boldface and underlining from the adjective “written.” 272 She did not add a “with cause” condition to that draft, however. 273 The same changes *1164 were made to the draft of the Quality Circle tenancy in common agreement attached to the same email. Also on November 30, 2007, both Shiftman and Weiss indicated that they approved of the revised agreements and would authorize their clients to sign them. 274 During the afternoon hours of the same day, Anne O’Shea, using Thomas O’Shea’s email account, sent an email to all of the attorneys — California as well as BaswellGuthrie — asking whether anyone objected to the plaintiffs’ preference for signing, notarizing, and faxing only the signature pages of the tenancy in common and operating agreements due to the length of each of those documents. 275 Apparently, no one objected, because plaintiffs subsequently signed and faxed only the signature pages. 276 Kevin and Kate Donahue signed the Old Madison Pike tenancy in common agreement on behalf of San Francisco Residence Club, Inc. 277 Kate Donahue also signed on behalf of KKA CAS, L.L.C. 278 Thomas O’Shea signed on behalf of TAK Tech Point, L.L.C. 279 Thus, the Old Madison Pike transaction closed on November 30, 2007, with title held by all of the investors as tenants in common. 280 Note well, however, that neither the individual plaintiffs nor their California attorneys read the documents as finally revised prior to the time the signature pages were signed, dated, notarized, and faxed, nor did any of them attend the closing in person. 281 Four days after the Old Madison Pike closing (¿a, on December 3, 2007), Baswell-Guthrie emailed to plaintiffs and their California attorneys five documents that pertained to the upcoming Quality Circle transaction. 282 Shiftman responded, pointing out problems with the text of some of those documents. 283 Shortly thereafter, Baswell-Guthrie emailed the O’Sheas and Kevin Donahue, but not Shiftman or Weiss, additional documents related to the Quality Circle acquisition. 284 In addition, she attached a full copy of the executed Old Madison Pike tenancy in common agreement. 285 That version of the Old Madison Pike agreement stated that McDermott could only be terminated as manager upon sixty days’ written notice and “with good cause.” 286 As previously noted, none of the prior versions of the agreement contained the “good cause” condition. Nevertheless, the document Baswell-Guthrie sent plaintiffs on December 3rd included the signature pages they had faxed to her on November 30th. 287 None of the witnesses deposed in this case admitted to inserting the “good cause” provision. 288 Plaintiffs believe Baswell-Guthrie *1165 added it, perhaps at the behest of McDermott, after plaintiffs had signed the signature pages that they assumed would be added to the prior version of the agreement. 289 The full, executed agreement containing the “good cause” condition was not sent to plaintiffs’ California attorneys at any time in 2007. 290 Even so, that version of the document was recorded in the Probate Records of Madison County, Alabama on December 10, 2007. 291 Baswell-Guthrie emailed Thomas O’Shea, Kate Donahue, and Kevin Donahue the closing affidavit for the Old Madison Pike transaction on December 4, 2007, asking them to return the signature pages within two hours. 292 That affidavit identified “One Source Title & Escrow L.L.C.” as the title agent, Cheryl Baswell-Guthrie as an agent of “One Source,” and BaswellGuthrie, P.C., as an affiliated entity. 293 The closing affidavit included a waiver provision stating, in relevant part, that: Purchasers and Sellers hereby acknowledge that the following disclosure was made concerning the closing of subject transaction: ... the law firm of Baswell-Guthrie, P.C., represents 7027 Old Madison Pike, LLC (the entity) and not the individual members of the entity.... There may exist a potential conflict of interest between the Purchaser(s), Borrower(s), the Lender, and/or the Title Agent in consummating this transaction .... The parties acknowledge they have not received nor relied on any legal advice from the Title Agent related to this transaction, but only from their respective legal counsel, and hereby fully release and waive any and all claims they may have against the Title Agent, its agent’s affiliates and/or assigns. 294 Thomas O’Shea executed the affidavit on behalf of TAK Tech Point, L.L.C. 295 Kate Donahue executed it on behalf of KKA CAS, L.L.C. 296 She and Kevin Donahue signed for San Francisco Residence Club, Inc. 297 The deed consummating the transaction was recorded in the Probate Records of Madison County, Alabama on December 31, 2007. 298 C. Quality Circle The final property acquisition involved in this case was the purchase of another office building in Huntsville’s Cummings Research Park located at 100 Quality Circle. As previously discussed in Part IV(B) of this opinion, supra, the O’Shea Trust and Kate Donahue identified the Quality Circle property as a potential replacement property for the Gulfport, Mississippi “Cedar Pointe” apartment complex they relinquished in June of 2007. 299 The 180-day *1166 period during which they had to close the acquisition of a replacement property in order to qualify for tax deferral under Section 1031 gave them a deadline of December 4, 2007. 300 TAK Tech Point, L.L.C. and KKA CAS, L.L.C. also took part in the investment, but the funds contributed by those companies to the purchase price of the Quality Circle property were not part of a like-kind exchange. 301 Scott McDermott and Samuel Givhan prepared the purchase agreement for the Quality Circle acquisition before the date on which McDermott replaced Givhan with Cheryl Baswell-Guthrie as the closing attorney. 302 The purchasers were listed as Scott McDermott, Thomas O’Shea, or their assigns. 303 McDermott executed the agreement on behalf of himself alone in May of 2007. 304 That purchase agreement made no mention of Section 1031. 305 Plaintiffs had given McDermott the authority to apply for a purchase-money loan for the transaction. 306 McDermott submitted a loan application to National Integrity Life Insurance Company in October 2007. That application named “Quality Circle, L.L.C.” as the borrower, despite the fact that the purchase agreement listed Thomas O’Shea and Scott McDermott as the purchasers. 307 Neither plaintiffs nor their California counsel reviewed the loan application before closing. 308 As noted above, Jeffrey Weiss and Cheryl Baswell-Guthrie were exchanging drafts of a tenancy in common agreement for the Quality Circle property concurrently with their exchange of drafts of the Old Madison Pike tenancy in common agreement. Thomas and Anne O’Shea (in their capacity as trustees of the O’Shea Trust) and Kate Donahue (in her individual capacity and as manager of KKA CAS, L.L.C.) executed the signature pages of the Quality Circle tenancy in common agreement on November 30,2007. 309 The Quality Circle tenancy in common agreement contained the same “good cause” condition for terminating the manager as the Old Madison Pike tenancy in common agreement. 310 Michael Shiftman transmitted an email to Baswell-Guthrie on November 26, 2007, informing her that there was a problem with the structure of the Quality Circle acquisition. It was the same old problem: the transaction was arranged with the purchasers as members of a limited liability company, rather than as tenants in common. 311 Baswell-Guthrie contacted the lending institution, National Integrity Life Insurance Company, about the prospect of *1167 revising the mortgage and other closing documents; she was told that the lender would not approve a loan to the individual purchasers as tenants in common until all of its fees were paid, and all of its due diligence requirements for the issuance of a loan to individual investors had been complied with. 312 Nevertheless, BaswellGuthrie repeatedly told Shiffman that the transaction was proceeding as planned. 313 Indeed, Baswell-Guthrie and McDermott did not inform Shiffman until December 3, 2007 — the day before the expiration of the 180-day rule — that the lender would not approve a loan to the individual plaintiffs as tenants in common, unless all of the lender’s due diligence requirements had been satisfied. 314 That could not happen immediately, however, because the employee of the lender who could approve a re-structuring of the loan was out of the office. 315 Baswell-Guthrie indicated that the lender likely would give its approval to a restructuring within two weeks. 316 Plaintiffs, however, could not wait two weeks to close the transaction; they had to close on the property by December 4, 2007, in order to qualify for their desired tax treatment under Section 1031. 317 Thus, plaintiffs were presented with a Hobson’s choice: they could close the Quality Circle transaction with title vested in a limited liability company and hope to 'reform the title afterward, or forgo the opportunity to close on the transaction within the 180-day window required to qualify the acquisition for favorable tax treatment under Section 1031. 318 Plain tiffs — acting on the advice of their California attorney, Michael Shiffman — decided to close on the transaction with title vested in a limited liability company. 319 Thus, in order to timely close on the acquisition of the Quality Circle property, plaintiffs executed an operating agreement for Quality Circle, L.L.C. 320 Despite the fact that the O’Shea Trust, Kate Donahue, KKA CAS, L.L.C., and TAK Tech Point, L.L.C. were the parties contributing funds to the acquisition, they were not the same group of plaintiffs who or which executed the operating agreement. Kate Donahue did sign the agreement. 321 She, along with Kevin Donahue, signed on behalf of San Francisco Residence Club, Inc. 322 Thomas O’Shea signed in his individual capacity only, but neither Thomas O’Shea nor San Francisco Residence Club, Inc. contributed funds toward the purchase price of Quality *1168 Circle. 323 The other plaintiffs that did contribute funds — ie., the O’Shea Trust, KKA CAS, L.L.C., and TAK Tech Point, L.L.C. — were not parties to the operating' agreement. The inconsistency between, on the one hand, those parties who or which provided the funds for acquisition of the property and, on the other hand, the parties that executed the operating agreement, apparently went without notice. Plaintiffs did not read the operating agreement before signing it. 324 Although the investors had intended to take title to the Quality Circle property as tenants in common, and even executed a tenancy in common agreement, Quality Circle, L.L.C. was the purchaser in which title to the property actually was vested. Thus, the Quality Circle, L.L.C. operating agreement — and not the Quality Circle tenancy in common agreement — governed the management of the property. The limited liability company operating agreement designated McDermott as the manager of the Quality Circle property. 325 Unlike the Old Madison Pike tenancy in common agreement, however, the L.L.C. operating agreement did not contain a “good cause” condition. 326 The transaction closed on December 4, 2007, with title vested in Quality Circle, L.L.C. 327 At the time of closing, BaswellGuthrie told Shiffman that, in addition to the deed vesting title to the property in Quality Circle, L.L.C., she was going to obtain a deed vesting title in the investors as tenants in common. 328 She said that she would file the deed transferring title from the limited liability company to the tenants in common when the lending institution approved that arrangement, within two weeks of closing. 329 Note well, however, that the mortgage contained a provision stating that lender approval was required to transfer title to a tenancy in common, and Shiffman later admitted that he then understood that there was no guarantee the lender would approve the conversion. 330 After the transaction closed, BaswellGuthrie contacted the lending institution in an attempt to obtain approval for conversion of the ownership interests to a tenancy in common. 331 Based on the lender’s response, she informed the California attorneys that the issue was in the hands of the lender. 332 Despite the fact that the acquisition did not comply with the requirements of Section 1031, the O’Sheas and Kate Donahue falsely listed the Quality Circle transaction as a Section 1031 like-kind exchange on their 2007 tax returns. 333 The O’Sheas did not file their return until late 2009, after commencing this action. 334 At the time, title to the property was still vested in Quality Circle, *1169 L.L.C. 335 To date, plaintiffs have suffered no adverse tax consequences. 336 D. Potential Conflict of Interest After the transactions closed, Shiftman emailed Baswell-Guthrie. 337 A dispute had arisen between the Old Madison Pike lender and the borrowers: ie., plaintiffs and the McDermott Defendants. 338 Shift-man stated that he assumed BaswellGuthrie was an agent of the title company, and asked whether she would have a conflict of interest if she represented the borrowers. 339 Baswell-Guthrie responded, stating that: “So long as the Borrowers do not become at odds with one another ... I can proceed and represent everyone. If at a later time, ... the Borrowers become at odds with each other or ... with One Source Title, then I would have to withdraw from representing any of the Borrowers and One Source Title.” 340 She told him that plaintiffs did not need to retain separate local counsel. 341 Although Baswell-Guthrie’s response had indicated a potential conflict of interest in her representation of a party adverse to plaintiffs, plaintiffs did not solicit any advice from her regarding Section 1031 or the structure of the transactions. 342 Indeed, McDermott and plaintiffs’ California attorneys were solely responsible for structuring the transactions. 343 BaswellGuthrie provided an opinion letter to National Integrity Life Insurance Company on December 4, 2007. 344 That letter represented that Baswell-Guthrie “acted as counsel for the above-referenced Borrower, Quality Circle, L.L.C.[,] and [that] Tom O’Shea, Anne O’Shea, and Kate Donahue (each, a ‘Guarantor,’ and collectively, the ‘Guarantors’) are represented by separate legal counsel, Michael Shiftman ....” 345 Thomas O’Shea testified that he never met Baswell-Guthrie at any time prior to the closings. 346 Moreover, plaintiffs did not pay Baswell-Guthrie directly. Instead, she was indirectly compensated out of the escrow monies, but those funds were largely provided by plaintiffs. 347 E. Dispute With McDermott In August of 2008, plaintiffs decided to remove McDermott as the manager of the Old Madison Pike property because they were not satisfied with his performance, and because they believed that they had “good cause” to do so. 348 Two years later, in August of 2010, McDermott filed a statement of claims against plaintiffs in a proceeding submitted to the American Ar *1170 bitration Association, based in part on his allegedly wrongful termination from his position as manager of the Old Madison Pike property. 349 McDermott denied that “good cause” existed to remove him. 350 At the conclusion of arbitration in May 2011, plaintiffs settled their disputes with McDermott and relinquished their interests in the Moquin, Fountain, and Corporate Drive properties. 351 Plaintiffs also terminated McDermott as manager of the Quality Circle property, pursuant to the Quality Circle, L.L.C. operating agreement. 352 That operating agreement did not contain a “good cause” condition. 353 Even so, McDermott sued plaintiffs over his termination. 354 He alleged that San Francisco Residence Club, Inc. did not have an ownership stake in the company and, thus, San Francisco Residence Club could not validly vote to terminate him. 355 In February 2011, plaintiffs settled their disputes with McDermott over Quality Circle. 356 As part of the settlement, they agreed to change title to the Quality Circle property to a tenancy in common. 357 A corrective deed was filed in the Probate Records of Madison County in April 2011. 358 VII. CHOICE OF GOVERNING LAW The parties dispute the substantive law that should govern plaintiffs’ claims. It is, of course, well-settled that, when a federal court exercises jurisdiction over a controversy based upon the parties’ diversity of citizenship and the requisite amount in controversy, the court normally will apply the eonflict-of-laws rules of the forum state. As a preliminary matter, the court must characterize the legal issue and determine whether it sounds in torts, contracts, property law, etc. Once it has characterized the legal issue, it determines the choice of law rule that the forum state applies to that particular type of issue. Grupo Televisa, S.A. v. Telemundo Communications Group, Inc., 485 F.3d 1233, 1240 (11th Cir.2007) (citations omitted). The parties agree that plaintiffs’ claims sound in tort. 359 Alabama generally follows the principle of lex loci delicti when determining the substantive law that should govern tort claims asserted between citizens of different states in an Alabama forum: that is, “an Alabama court will determine the substantive rights of an injured party ac *1171 cording to the law of the state where the injury occurred.” Fitts v. Minnesota Mining & Manufacturing Co., 581 So.2d 819, 820 (Ala.1991). Where, as here, the injuries allegedly suffered by the plaintiffs are financial, the location where the injury was felt normally is the determinative consideration. Id. “[T]he place of injury is the locale in which the last event necessary to make a defendant liable for the alleged tort occurs.” Chambers v. Cooney, No. 07-0373-WS-B, 2007 WL 2493682 , at *11 (S.D.Ala. Aug. 29, 2007) (“Chambers I”). Plaintiffs argue that, as California citizens, any financial injury they suffered must have occurred in California; and that, under Alabama’s choice of law rule, California provides the proper substantive rules of decision. In response, defendants argue that, because the harm arose from the purchase and sale of Alabama real estate, and the transactions were closed in Alabama, this State’s substantive law should govern. Defendants emphasize the fact that plaintiffs’ residency in California is the only connection to that state, and that in Chambers v. Cooney, 535 F.Supp.2d 1255 (S.D.Ala.2008) (“Chambers II”), the case upon which plaintiffs rely, the court merely assumed that the law of the plaintiffs’ home state would apply because it was not disputed by the parties. Specifically, the Chambers II opinion observed that it appears that the injury from the alleged tortious interference would have been felt by Dr. Cooney in New York, such that New York law would apply under the lex loci delicti doctrine. No party has argued otherwise, at least for purposes of the pending Motion to Dismiss, so the Court will not explore that question further at this time. Chambers II, 535 F.Supp.2d at 1260 n. 4 (emphasis supplied). Even so, defendants’ argument ignores the fact that the Chambers II opinion cited the Chambers I decision (in which the governing law was disputed) for the proposition that financial injury occurs where the injured party resides. See Chambers I, 2007 WL 2493682 , at *11 (citing, inter alia, The Bradbury Co. v. Teissier-duCros, 387 F.Supp.2d 1167, 1173 (D.Kan.2005) (holding that Georgia law applied to a claim of tortious interference where the injury was financial, the injured parties were citizens of Georgia, and the financial injury was felt in Georgia)). Defendants also cite The Mitchell Co., Inc. v. Campus, No. 07-0177-KD-C, 2008 WL 183344 (S.D.Ala. Jan. 16, 2008), for the proposition that, as the location of the real estate, Alabama law should govern. In that case, the plaintiff alleged that one of its former employees had made misrepresentations and engaged in self-dealing when arranging for the company to purchase seven parcels of real estate. Four of the properties were located in Florida, and three were in Alabama. See Second Amended Complaint ¶ 13, The Mitchell Co. (No. 07-0177-KD-C), 2008 U.S. Dist. Ct. Pleadings 576289. The defendants' — i.e., the employee and two of his alleged co-conspirators — were all Florida citizens. Id. ¶¶ 7-9 . Although the plaintiff was an Alabama corporation, and the injury was financial, the court applied Florida law in ruling on the defendants’ motions to dismiss. The Mitchell Co., 2008 WL 183344 , at *3 n. 5. Even so, The Mitchell Co. decision is not particularly persuasive, because the plaintiff did not address the choice of law issue in its brief. Id. The court simply stated that the plaintiff alleged that “the wrongs occurred in Florida.” Id. As noted at the beginning of this opinion, the parties to this action are embroiled in litigation before other judges on this court. 360 In one of those other actions, *1172 Judge Abdul K. Kallon addressed the parties’ nearly-identical arguments on the choice of law question, and held that “because Plaintiffs suffered their alleged financial injury arising from the common law tort claims in California, [the] law [of that state] governs these claims.” San Francisco Residence Club, Inc., et al. v. Park Tower, LLC, et al., Civil Action No. CV-08-1423-NE-AKK, slip op. at 11 (N.D.Ala. Jan. 12, 2012) (“Park Tower”) (alterations supplied). To the extent that Judge Kallon determined that the financial injury occurred “in” California, this court agrees. Even so, this court is not convinced that he was correct when concluding that “there is no overarching Alabama public policy that demands the application of Alabama law in the face of lex loci delicti.” Id. at 10. A. The Public Policy Exception to the Rule of Lex Loci Delicti Although Alabama generally follows the principle of lex loci delicti when determining the substantive law that should govern tort claims asserted between citizens of different states in an Alabama forum, the location of the injury is not the only consideration taken into account. Alabama courts reject foreign law when the application of that law would be contrary to the public policy of the State. See, e.g., Caine v. St. Louis & S.F.R. Co., 209 Ala. 181 , 95 So. 876, 877 (1923) (“While it is well recognized that the statutes of another state have no extraterritorial force, yet rights acquired thereunder will always, in comity, be enforced, if not against the public policy of the laws of the state where redress is sought.” (emphasis supplied)). See also Restatement (First) of Conflict of Laws § 612 (1934) (“No action can be maintained upon a cause of action created in another state the enforcement of which is contrary to the strong public policy of the forum.”). A state’s public policy “is to be found in its constitution, its statutes, the decision^] of or settled rules laid down by its courts, and the prevailing social and moral attitudes of the community.” 16 Am.Jur.2d Conflict of Laws § 18 (2012) (bracketed alteration supplied). The exception is more likely to apply if the state has memorialized its public policy in a statute. Id. The public policy exception is infrequently applied, because it is intended to be “narrow and should be applied only in rare circumstances.” Id. 1. The Alabama Legal Services Liability Act Prior to enactment of the Alabama Legal Services Liability Act of 1988 (“ALS-LA”), many forms of action could be asserted against persons providing legal services within this State, including claims like those asserted by plaintiffs in Count 4 of their Second Amended Complaint, which are based upon California law. When enacting the ALSLA, the Alabama Legislature included a preamble explaining the motivation for and purposes of the new law. Due to the importance of that statement of legislative intent to the resolution of the question of whether the statutory innovations forced upon common-law forms of action by the ALSLA represents a “strong public policy,” it is set out in full below: It is hereby declared by the Legislature of the State of Alabama that a crisis threatens the delivery of legal service to the people of Alabama and that the quality of legal services which should be made available to the citizens of this state is in jeopardy. It is the declared intent of this Legislature to insure that quality legal services continue to be available at reasonable costs to the citizens of the State of Alabama. This Legislature finds and declares that the increasing threat of legal actions against *1173 legal service providers contributes to an increase in the cost of legal services and places a heavy burden upon those who can least afford such cost and that the threat of such legal actions contributes to the expense of providing legal services to be performed by legal service providers which otherwise would not be considered necessary, and that the spiraling costs and decreasing availability of essential legal services caused by the threat of such litigation constitutes a danger to the welfare of the citizens of this state, and that this article should be given effect immediately to help control the spiraling cost of legal services and to insure the continued availability of vital legal services. In addition, this Legislature finds that legal service providers are experiencing great and increasing difficulties in obtaining professional liability insurance and that there is a great and rapid increase in the cost of professional liability insurance. This Legislature finds that both the availability and the cost of professional liability insurance is in direct consequence to the threat of legal actions against Alabama legal service providers. It is the intent of the Legislature to establish a comprehensive system governing all legal actions against legal service providers. The Legislature finds that in order to protect the rights and welfare of all Alabama citizens and in order to provide for the fair, orderly and efficient administration of legal actions against legal service providers in the courts of this state, this article provides a complete and unifíed approach to legal actions against legal service providers and creates a new and single form of action and cause of action exclusively governing the liability of legal service providers known as a legal service liability action and provides for the time in which a legal service liability action may be brought and maintained is required. Ala. Code § 6-5-570 (1975) (2005 Replacement Vol.) (all emphasis supplied). The foregoing statement of legislative intent makes it perfectly clear that any difference in the remedies available against legal service providers under the laws of Alabama and California is not the result of mere happenstance. Instead, it is the result of a conscious effort by the Alabama Legislature to affirmatively abolish common-law causes of action for so-called “legal malpractice claims.” The State’s Legislature has affirmatively stated a strongly-worded public policy against the maintenance of common-law tort actions against persons providing legal services within Alabama. That public policy precludes the application of foreign law, and limits plaintiffs’ remedies against both the Wilmer & Lee Defendants and BaswellGuthrie Defendants to claims asserted under the Alabama Legal Services Liability Act of 1988. Plaintiffs admit that Alabama’s public policy is sufficiently strong to require the application of the Alabama Legal Services Liability Act to the legal malpractice claims that are asserted in Count 3 of their Second Amended Complaint, but they make a twofold argument for the application of California law to other claims arising from the same factual circumstances. First, they argue that Alabama courts have interpreted the Alabama Legal Services Liability Act to allow common-law claims brought against attorneys by non-clients. In that regard, plaintiffs have pled alternative (and inherently contradictory) theories in their Second Amended Complaint. On the one hand, plaintiffs affirmatively allege in Count 3 that an attorney-client relationship existed between them and, at varying times, both Samuel Givhan and Cheryl Baswell-Guthrie. Plaintiffs admit that those claims are subject to the Alabama Legal Services Liability Act. *1174 On the other hand, plaintiffs inconsistently allege in Count 4 of their Second Amended Complaint — on the basis of exactly the same nucleus of operative facts undergirding their claims in Count S— that no attorney-client relationship existed between them and either Samuel Givhan or Cheryl Baswell-Guthrie; and that those defendants are accordingly liable to plaintiffs under common-law causes of action. Moreover, plaintiffs insist in the second part of those allegations that California law governs their common-law claims. This court is not persuaded by plaintiffs’ arguments. 2. Plaintiffs’ argument that non-clients can assert common-law claims against Alabama attorneys Plaintiffs rely on four cases for the proposition that non-clients can assert common-law claims against attorneys, despite the “single cause of action” rule of the ALS-LA. All of those cases are readily distinguishable from the present action, as demonstrated by the following discussion, a. Cunningham v. Langston, Frazer, Sweet & Freese, P.A., 727 So.2d 800 (Ala. 1999) The first case relied upon by plaintiffs is Cunningham v. Langston, Frazer, Sweet & Freese, P.A., 727 So.2d 800 (Ala.1999). That action arose out of a dispute between attorneys over the division of a legal fee. The plaintiff-attorney, William C. Cunningham, and the defendant law firm, Langston, Frazer, Sweet & Freese, P.A., had entered into a contractual arrangement to equally divide any fee earned in the prosecution of class action claims. Id. at 801-02 . An attorneys’ fee of $1,000,000 was awarded, but Langston Frazer delivered only one percent of that amount ($10,000) to Cunningham. Id. at 802 . Cunningham brought suit against the Langston Frazer firm, alleging claims for breach of contract and several torts. Id. Langston Frazer moved for dismissal. In doing so, the law firm did not contend that Cunningham’s complaint was factually deficient but, instead, argued that “Cunningham’s various claims relating to the alleged breach of contract must be brought under the Alabama Legal Services Liability Act.” Id. The trial court granted the motion, and Cunningham appealed. Id. The Alabama Supreme Court reversed, holding that the Alabama Legal Services Liability Act “does not apply to an action filed against a ‘legal service provider’ by someone whose claim does not arise out of the receipt of legal services.” Id. at 804 (emphasis supplied). 361 b. Fogarty v. Parker, Poe, Adams & Bernstein, L.L.P., 961 So.2d 784 (Ala. 2006) The second case relied upon by plaintiffs, Fogarty v. Parker, Poe, Adams & *1175 Bernstein, L.L.P., 961 So.2d 784 (Ala.2006), arose out of a dispute over a real estate investment. The plaintiffs, Mr. and Mrs. Forgarty, purchased minority shares in three limited liability companies, including one that was colorfully named “Confederate Money, L.L.C.” Id. at 786 . The majority shareholder in each of the three L.L.C.s was a closely-held corporation. Id. The Fogartys’ investment funded a real estate venture in Gulf Shores, Alabama that declined in value. Id, 362 The Fogartys traveled from their home in South Carolina to Gulf Shores in the hope of determining what went wrong. Id. They suspected that the majority shareholders in the venture had misrepresented the financial health of the project. Id. The accountant for Confederate Money, L.L.C., allowed Mrs. Fogarty limited access to the company’s books, further fueling the Fogartys’ suspicions. Id. The Fogartys returned to South Carolina, where they received a letter from a North Carolina law firm named Parker, Poe, Adams & Bernstein, L.L.P. (“Parker Poe”). Id. That letter stated that Parker Poe represented the majority owner of the limited liability companies, and that the Fogartys would not be permitted to again have access to the books of Confederate Money, L.L.C. Id. The Parker Poe letter also threatened legal action if the Fogartys continued to seek access to the records. Id. The firm asserted that Alabama law did not permit the Fogartys to review the books, which was a misrepresentation. Id. Parker Poe later mailed the Fogartys additional letters, stating that they would not be permitted additional contact with the accountant for Confederate Money, L.L.C. Id. Ultimately, “Parker Poe removed the books and records of Confederate Money from Alabama specifically to prevent the Fogartys from having access to those books and records.” Id. The Fogartys sued numerous defendants, including the Parker Poe law firm. The claims asserted against Parker Poe sounded i [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8702765. Public record. Not legal advice.