Horne v. Humphreys (In re James F. Humphreys & Associates, L.C.)

554 B.R. 355
CourtUnited States Bankruptcy Court, S.D. West Virginia
DecidedJuly 15, 2016
DocketCASE NO. 2:16-bk-20006; ADVERSARY PROCEEDING NO. 2:16-ap-2004
StatusPublished
Cited by2 cases

This text of 554 B.R. 355 (Horne v. Humphreys (In re James F. Humphreys & Associates, L.C.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Horne v. Humphreys (In re James F. Humphreys & Associates, L.C.), 554 B.R. 355 (W. Va. 2016).

Opinion

MEMORANDUM OPINION AND ORDER RESPECTING IRA AND MAVIS HORNE’S MOTIONS TO REMAND AND TO LIFT AUTOMATIC STAY

Frank W. Volk, Chief Judge, United States Bankruptcy Court Southern District of West Virginia

Pending are the motion to remand filed in the adversary proceeding by Plaintiffs Ira and Mavis Horne [Dckt. 4] and their motion to lift the automatic stay filed in the main case [Dckt. 36].

On February 9, 2016, the Court heard argument on the motions. The following day, a minute order was entered directing the parties to file a Joint Stipulation of Fact on or before February 20, 2016. The Court noted that it was “especially inter-, ested in potential insurance policies that may cover the time period in question, as more fully stated from the bench.” (Ord. at 1). The February 10, 2016, order additionally directed supplemental briefing, with the Hornes’ opening supplemental brief due on or before February 27, 2016, the response thereto of the Defendants James Humphreys and James F. Hum-phreys & Associates, L.C. (the “Firm” and, collectively the “AP Defendants”) due on or before March 8, 2016, and any reply due on or before March 15, 2016. Interested Party Liberty Insurance Underwriters, Inc. (“Liberty”), was later given leave to file a separate brief concerning the issues under consideration.1

I.

Mr. and Mrs. Horne are, respectively, 80 and 84 years old. They reside in Tazewell County, Virginia. The Firm is a West Virginia legal corporation formed in 1996. Mr. Humphreys is the President and sole owner of the Firm.

On July 8, 2001, the area where the Hornes reside was deluged. In January 2002, in an effort to recover for the losses they suffered, the Hornes claim they retained the Firm. They summarize the matter as follows:

The Hornes initially received correspondence from the Defendant law firm confirming that the Humphreys firm had decided to take the Hornes’ case and later that a Complaint had been filed on their behalf. The Hornes also received newsletters from the firm about the status of their case before the West Virginia Supreme Court of Appeals, and other correspondence from the firm about their case. It turned out, however, that all correspondence and “updates” regarding the flood cases were false as to the Hornes, although the Hornes were unaware of that. A Complaint was never filed on their behalf, anywhere, and the Virginia statute of limitations appli-' cable to the underlying 2001 flood claims expired at least by July 8, 2006, without being preserved in any manner by the Defendants.

(Memo, in Supp. at 6).

At no time did the Hornes ever communicate personally with Mr. Humphreys. [359]*359In June 2009, the same area was again afflicted by severe flooding. On November 5, 2009, the stipulation reflects that an unnamed lawyer employed by the Firm, along with lawyer Timothy Barber, visited the Hornes. The Hornes contend that they had several potential claims under Virginia law which should have been pursued by the AP Defendants for which they may have recovered economic, non-economic, and punitive damages.2 No lawsuit was ever filed on the Hornes’ behalf for either the 2001 or 2009 flood claims.

In August 2014, present, counsel for the Hornes in this action contacted the AP Defendants concerning their putative representation of the Hornes. They informed the AP Defendants that present counsel ■now also represented another twenty residents of Tazewell County, Virginia, apparently respecting other allegedly flood-related malpractice claims.

On September 11, 2014, the Hornes instituted an action against Mr. Humphrey's and the Firm in the Circuit Court of Kana-wha County (“State Court Action”). On November 24, 2014, the Supreme Court of Appeals of West Virginia specially assigned the haatter to the Honorable Jack Alsop of the Fourteenth Judicial Circuit, after the judicial officers in the Circuit Court of Kanawha County recused themselves. Judge Alsop is a twenty-year veteran of the state circuit bench.. On December 9, 2014, the Hornes filed an amended complaint alleging claims for negligence, breach of. .contract, breach of fiduciary duty, fraud and misrepresentation, and spoliation of evidence. For example, the Hornes assert as follows respecting the alleged fraud they believe was undertaken by the Firm:

The lawyers in the Humphreys firm fretted internally about the failure of the Motion to Sever and the missed statute of limitations, and discussed additional ways to avoid liability for allowing the statute of limitations to expire. To illustrate, Lisa’ Knight, one of the Hum-phreys firm’s paralegals who was aware of the missed statute of limitations for the Virginia flood victims, even joked (purportedly) that the firm should “burn the files” and “delete” any record of the Hornes as clients in their case management system, pretending that they never represented the Hornes. Meanwhile, the then managing attorney for the firm, David Cecil, was trying, to establish through outside legal research efforts that thé flood claims could not have been pursued successfully in the first place, due to an argument, that the Tazewell County Airport Authority was immune from suit, which the Plaintiffs have refuted. .

(Memo, in Supp. at 7). The Hornes seek both compensatory and punitive damages.

Judge Alsop originally set the case for trial on December I, 2015) The schedule wás modifíéd in September 2015 as follows:

[360]*360[[Image here]]

On December 16, 2014, Mr. Humphreys and the Firm, while denying any liability, filed an offer of judgment in the amount of $200,000. Mr. Humphreys and the Firm asserted the amount resided at “the high-end of the economic damages Plaintiffs’ [present] counsel alleged they suffered in his pre-suit demand letter.” (Defs.’ Resp. Br. and Objec. at 9). The offer of judgment has since expired. On November 25, 2015, Judge Alsop extended the parties’ discovery deadline to December 23, 2015, respecting certain expert witness depositions and defense financial information. According to the Hornes, the matter has undergone “an extensive discovery process, with dozens of depositions, including numerous fact witnesses with knowledge of the circumstances, as well as nine experts designated by the parties (five for the Plaintiffs and four for the Defendants).”3 (Memo, in Supp. at 2).

On December 29, 2015, Liberty moved to intervene in the State Court Action and for declaratory relief. It interposed a host of defenses as to the existence and extent of insurance coverage for the Hornes’ claims. Liberty's involvement stems from a Lawyers Professional Liability Policy the Firm purchased with an initial coverage period spanning August 2, 2002, to August 2, 2003. The Policy was renewed for two additional periods running from August 2, 2003, to August 2, 2005. The liability limits of the Policy running from August 2, 2004, through August 2, 2005 are $5,000,000.00 for each claim, and $5,000,000.00 in the aggregate. Each claim is subject to a $25,000.00 deductible. Claim expenses, such as attorney fees, reduce the limits of liability and impact the deductible. The Policy additionally excludes coverage for punitive damages, fraudulent conduct, and deliberate wrongful acts or omissions.

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Bluebook (online)
554 B.R. 355, Counsel Stack Legal Research, https://law.counselstack.com/opinion/horne-v-humphreys-in-re-james-f-humphreys-associates-lc-wvsb-2016.