Natural Answers, Inc. v. Carlton Fields, P.A.

20 So. 3d 884, 2009 Fla. App. LEXIS 12820, 2009 WL 2762735
CourtDistrict Court of Appeal of Florida
DecidedSeptember 2, 2009
Docket3D08-945
StatusPublished
Cited by2 cases

This text of 20 So. 3d 884 (Natural Answers, Inc. v. Carlton Fields, P.A.) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Natural Answers, Inc. v. Carlton Fields, P.A., 20 So. 3d 884, 2009 Fla. App. LEXIS 12820, 2009 WL 2762735 (Fla. Ct. App. 2009).

Opinion

ROTHENBERG, J.

Natural Answers, Inc. and Brian A. Feinstein (“Feinstein”) (collectively, “NAI”) appeal from two orders granting summary judgment in favor of Carlton Fields, P.A. and Gary, Williams, Parenti, Finney, Lewis, McManus, Watson & Sper-ando (collectively, “the law firms”). Because the undisputed facts reveal that any *886 harm to NAI is attributable to failed negotiations, not legal malpractice, we affirm.

The instant legal malpractice action arose from a collapsed business negotiation commenced in 1999. At that time, Feinstein was the President and CEO of Natural Answers, Inc., a company involved in the production and distribution of herbal/natural remedies and vitamins. Fein-stein sought to expand Natural Answers, Inc. to the nationwide level. To that end, Feinstein’s friend, the Honorable Bruce Kauffman (from the Eastern District of Pennsylvania), introduced him to Melvyn Estrin (“Estrin”), a businessman with experience in national drugstore ventures.

In November 1999, Feinstein and Estrin began negotiating a deal whereby, in exchange for a stake in Natural Answers, Inc., Estrin would provide consulting and business advice, invest in the corporation himself, and procure the investment of additional funds from outside parties. During the initial period of meetings and discussions, NAI was represented by Luis Prats (“Prats”), an attorney with Carlton Fields. Notably, on December 10, 1999, Prats sent a letter to Estrin outlining the “major terms” of the “agreement reached.” However, a number of significant terms remained in dispute, and the letter acknowledged an understanding that a different attorney would finalize a formal agreement to be signed by the parties. The record reflects that by early 2000, in an effort to execute a final contract, NAI and Estrin hired transactional attorneys: NAI hired Jerald August, and Estrin hired Morris DeFeo. From January through March 2000, these transactional attorneys exchanged six different proposed drafts, however their clients were unable to agree on a final written contract. In January and February of 2000, Estrin made two payments ($100,000 each) to Natural Answers, Inc. as an “initial investment.”

Thereafter, negotiations broke down, and although the parties attempted to recommence discussions (even meeting in Judge Kauffman’s chambers at one point), on April 14, 2000, Estrin wrote to Fein-stein declaring that while he was willing to make an investment in Natural Answers, Inc., he no longer wished to become personally involved, and that if Feinstein did not want his investment, he should return his $200,000. In response, Feinstein accused Estrin of bad faith and nefarious motives. He did not return the $200,000.

In August 2001, the dispute between NAI and Estrin was brought before the District Court of Maryland with Estrin as the plaintiff seeking the return of his $200,000. Thereafter, the Gary Firm replaced Carlton Fields as counsel for NAI. NAI counterclaimed on the theories of breach of contract, promissory estoppel, and breach of the covenant of good faith/ fair dealing. The District Court granted summary judgment in favor of Estrin, ordering the return of the $200,000, finding that: (1) the parties contemplated, but did not reach, a final written agreement; (2) NAI’s action for damages, as opposed to specific enforcement of the promise, precluded relief based upon promissory estop-pel; and (3) the breach of the covenant of good faith/fair dealing is not actionable under Maryland law. NAI appealed, and the Fourth Circuit affirmed, holding that the parties’ failure to complete their negotiations did not give rise to an action for breach of contract.

After losing in federal court, NAI sued the law firms. NAI alleged transactional negligence as to Carlton Fields, arguing that Prats, who represented NAI during its initial negotiations with Estrin, was negligent when he failed to obtain a signature from Estrin after a binding agreement was reached, and for advising NAI that a binding agreement had been *887 reached. NAI also claimed that the Gary Firm and Carlton Fields committed litigation malpractice by not adequately defending NAI against Estrin’s motion for summary judgment in the federal litigation.

NAI moved for summary judgment, and the law firms filed cross-motions. Carlton Fields argued that: (1) Prats was not the lead transactional attorney — Jerald August was retained and served in that capacity; (2) the federal litigation established that the failure to conclude the parties’ negotiations, not malpractice, was the proximate cause of NAI’s losses; and (3) NAI’s lawsuit was barred by collateral estoppel. The Gary Firm argued that they performed as well as possible in the federal litigation, and that judgmental immunity and collateral estoppel barred NAI’s lawsuit. NAI’s litigation malpractice claims depended almost entirely upon an “expert” affidavit, which the trial court rejected as speculative, finding that it did not raise any issues of fact.

The trial court denied NAI’s motion and granted the law firms’ motions for summary judgment in two separate orders, which we review de novo. See Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126, 130 (Fla.2000); Sheikh v. Coregis Ins. Co., 943 So.2d 242, 243 (Fla. 3d DCA 2006).

THE TRANSACTIONAL NEGLIGENCE CLAIM

We begin our analysis with recognition of the decisions rendered by the District Court of Maryland and the Fourth Circuit Court of Appeals, and federal principles of collateral estoppel. The District Court found, and the Circuit Court affirmed, that the undisputed facts reflect that at all times, the parties contemplated the execution of a formal written contract, and that any agreement would not be binding until the transactional attorneys executed the requisite documents and obtained the parties’ signatures. In other words, all of the parties involved understood that the negotiations between NAI and Estrin were just that — negotiations, until the finalized documents were executed and signed. However, these negotiations broke down, and the parties failed to enter into a binding agreement. Thus, there was no meeting of the minds.

Federal principles of collateral es-toppel bar re-argument of whether the parties had reached a legally binding agreement. Two federal courts concluded that there was no meeting of the minds, and the failure to conclude negotiations was the sole proximate cause of any loss to NAI. The issue of whether a binding agreement existed at any stage was fully litigated and ruled upon in Maryland, and to the extent that NAI seeks to revisit those rulings, NAI is barred. See I.A. Durbin, Inc. v. Jefferson Nat’l Bank, 793 F.2d 1541, 1549 (11th Cir.1986) (detailing the following federal prerequisites to the application of collateral estoppel: “(1) the issue at stake must be identical to the one involved in the prior litigation; (2) the issue must have been actually litigated in the prior suit; (3) the determination of the issue in the prior litigation must have been a critical and necessary part of the judgment in that action; and (4) the party against whom the earlier decision is asserted must have had a full and fair opportunity to litigate the issue in the earlier proceeding”).

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Cite This Page — Counsel Stack

Bluebook (online)
20 So. 3d 884, 2009 Fla. App. LEXIS 12820, 2009 WL 2762735, Counsel Stack Legal Research, https://law.counselstack.com/opinion/natural-answers-inc-v-carlton-fields-pa-fladistctapp-2009.