Thomas v. Peabody

• Court: Superior Court of Maine
• Decided: October 15, 2009
• Docket: PENcv-09-22
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT PENOBSCOT, ss CIVIL ACTION ,- . ~ DOCKET NO. CV-09-2~

RICHARD 1. THOMAS, et al" CC:- 1 5 2009 Plaintiffs, F""-" I n II t',,, t"\ -r r' r'\ I' r '-'f j - ;~:'" '.- ~ ~'~,',J l u Uc) ~9RpER ON v. DEFANDANTS' 12(B)(6) MOTION TO DIMISS

EATON PEABODY, et aI.,

Defendants.

Before the Court is the Defendants' Motion to Dismiss Counts I, III, IV and IV, of

the Plaintiffs complaint pursuant to M.R. Civ. P. 12(b)(6). The court has reviewed the

parties' filings in the matter, and considered their oral presentations. The Defendants

Motion to Dismiss is granted, in part, and denied, in part.

I PROCEDURAL BACKGROUND

On March 16,2009, Plaintiffs Robert J. Thomas, individually and as Trustee for

the Ichabod Trust, and Richard A. Thomas, individually, filed suit against the defendants

Eaton Peabody, PA ("Firm"), and three attorneys employed by the Firm, Christine Burke-

Worthen, Calvin E. True, and Nathaniel S. Putnam, respectively. On March 16,2009, the

defendants served the plaintiffs with a timely responsive pleading and the M.R. Civ. P

12(b)(6) motion to dismiss Counts I, III, IV, and V of the Complaint. The Firm then

served the plaintiffs with an amended pleading setting forth three counterclaims: (1)

breach of contract; (2) unjust emichment; and (3) services rendered. The Firm's

counterclaims stem from the plaintiffs' failure to pay for the legal services it rendered in

connection with the representing Robert Thomas, Richard Thomas, and the Trust.

1 Subsequently, the plaintiffs moved to stay all proceedings pending the outcome of an

appeal Richard Thomas filed with United States Court of Appeals for the First Circuit on

June 1,2009. As part ofthe motion to stay the proceedings, the plaintiffs summarily

denied "the Defendants' arguments in their defense of Counts I, III, IV, and V."

(Plaintiffs Mot. to Stay Proceedings ~ 4.) This Court denied the plaintiffs motion to stay

proceedings on June 25, 2009. Consequently, the Firm's l2(b)(6) motion to dismiss

Counts I, III, VI and V of the Complaint is ripe for review.

II. FACTUAL BACKGROUND

The facts relevant to this motion to dismiss are set forth in the Complaint. At

some point in 1997, the plaintiffs formed the Ichabod Trust with plaintiff Richard J.

Thomas and Joan M. Thomas designated as beneficiaries. (CompI. ~ 8.) On February 5,

2005, the Internal Revenue Service ("IRS") made tax assessments against Richard

Thomas for allegedly failing to pay federal income taxes during the years 1995 and 1996.

(Id at ~ 9.) On June 19,2006, Plaintiff Robert A. Thomas, Trustee of the Ichabod Trust

("Trust"), engaged attorney Calvin True of Eaton Peabody, PA, to provide legal advice

concerning the validity of the Trust. (Id at ~. 11.) At the time of that meeting, Plaintiff

Richard Thomas was involved in a separate criminal proceeding in federal district court

on charges of tax evasion. (Id at ~ 13.) On March 12,2007, the IRS placed a jeopardy

levy in the amount of $52,000.00 on the Penobscot County Federal Credit Union account

holding the Trust assets. (Id at ~ 19.) Shortly thereafter, Robert Thomas hired Calvin

True to defend the Trust against the jeopardy levy imposed by the IRS. (Id at ~ 20.) On

April 5,2007, Richard Thomas signed a form giving True and Burke-Worthen Power of

2 Attorney to represent him.' (ld at ~ 21.) Burke-Worthen then requested an administrative

hearing to review the actions of the IRS regarding the jeopardy levy imposed on the Trust

account. (ld at ~ 22.)

On May 7, 2007, the IRS delivered to Burke-Worthen notice ofa second jeopardy

levy on the Trust account identical to the one previously received by the plaintiffs on • March 12, 2007. (ld at ~ 26.) Burke-Worthen then filed a request with the IRS for a

Collections Due Process ("CDP") hearing on May 21,2007. (Id at 27.) The IRS held a

CDP hearing on July 10,2007. (Id at 28.) The Firm did not initiate proceedings seeking

judicial review of the jeopardy levy in United State District Court pursuant to 26 U.S.C. §

7429. (ld at ~ 29.) On August 7, 2007, the IRS issued a Notice of Determination

upholding the jeopardy levy imposed on the Trust. (ld at ~ 30.) Burke-Worthen then

advised Richard Thomas that she would appeal the decision of the Tax Court to uphold

the jeopardy levy on the Trust provided the plaintiffs could pay the fees necessary to

continue representation. (ld at ~·31.) As the plaintiffs were unable to procure additional

funds to retain the Firm for the purposes of appealing the jeopardy levy on the Trust, the

Firm did not file an appeal for "wrongful levy" on behalf of the Trust or its Trustee

within the nine months required by 26 U.S.C. § 6532(c). (ld at ~ 33.)

III STANDARD OF REVIEW

On a motion to dismiss, facts are not adjudicated. Instead, the court evaluates the

allegations in the complaint in relation to any cause of action that may reasonably be

inferred from the complaint. The court considers the facts stated in the complaint as if

they were admitted. Libner v. Me. County Comm 'rs Ass 'n, 2004 ME 39, ~ 7,845 A.2d

, The Complaint is unclear concerning the exact capacity in which the Firm was to represent Richard Thomas. As is established later Complaint, Burke-Worthen appears to have represented the interests of Richard Thomas during the administrative hearings with the IRS.

3 570, 572; Napieralski v. Unity Church a/Greater Portland, 2002 ME 108, ~ 4,802 A.2d

391, 392. Evaluating the complaint in the light most favorable to the plaintiff, the court

determines whether the complaint "sets forth elements of a cause of action or alleges

facts that would entitle the plaintiff to relief pursuant to some legal theory." In re Wage

Payment Litig., 2000 ME 162, ~ 3, 759 A.2d 217, 220. "Dismissal is warranted when it

appears beyond a doubt that the plaintiff is not entitled to relief under any set of facts that

he might prove in support of his claim." Johanson v. Dunnington, 2001 ME 169, ~ 5,

785 A.2d 1244, 1246.

IV DISCUSSION

A. Count I: Negligence

The Firm essentially concedes that it owed Robert Thomas, both individually and

as Trustee of the Trust, a duty of care to provide competent legal advice concerning the

validity of the Trust. (Def.'s Mot. to Dismiss 3.) Even assuming a breach of the standard

of care, however, the Firm moves to dismiss Count I on the grounds that any such breach

could not have proximately caused the injuries the Robert Thomas alleges in the

Complaint. To prove a claim for professional negligence, or civil malpractice, "the

plaintiff must show (1) a breach by the defendant attorney of the duty owed to the

plaintiff to conform to a certain standard of conduct; and (2) that the breach of the duty

proximately caused an injury or loss to the plaintiff." Corey v. Norman, Hanson &

Detroy, 1999 ME 196, ~ 10, 742 A.2d 933, 938-39.

Robert Thomas alleges that an attorney-client relationship existed at the time True

rendered legal advice concerning the validity of the Trust, the advice True gave to

Robert Thomas was "negligent," and as a result of True's "negligent" advice, Robert

4 Thomas suffered damage to his reputation and suffered loss of customers and business.

(CompI. ,-r,-r 37-40.) Crediting the facts alleged in the Complaint as true, the Firm argues

that the plaintiffs have failed to plead facts sufficient to demonstrate a causal connection

between the negligent act, rendering "negligent" advice concerning the validity of the

Trust, and the injury alleged, harm to Robert Thomas' reputation and loss of customers

and business. This Court agrees.

The Law Court has noted "[p]roximate cause exists in professional malpractice

cases where evidence and inferences that may reasonably be drawn from the evidence

indicate that the negligence played a substantial part in bringing about or actually causing

the injury or damage and that the injury or damage was either a direct result or a

reasonably foreseeable consequence of the negligence." Niehoff v. Shankman & Assocs.

Legal Ctr., P.A., 2000 ME 2l4,,-r 8, 763 A.2d 121,124) (quoting Merriam v. Wanger,

2000 ME 159,,-r 8, 757 A.2d 778,780-81) (quotation marks omitted). Generally, the issue

of proximate cause is a question of fact for the jury. Klingerman v. SOL Corp ofMe. 505

A.2d 474. However, the Court may wrest the proximate cause inquiry from jury

determination "when the matter remains one of pure speculation or conjecture ... [and] a

defendant is entitled to judgment." Merriam, 2000 ME 159,,-r 8, 757 A.2d at 781.

In this case, Robert Thomas alleges that True's negligent advice concerning the

validity of the Trust is somehow connected to a loss of reputation and business clientele.

There are no facts in the Complaint suggesting the Trust was integrally related to Robert

Thomas' consulting business. Furthermore, the Complaint fails to either set forth

elements of a defamation claim, or allege facts that would entitle him to relief pursuant to

a defamation theory. See, e.g., Withers v. Hackett, 714 A.2d 798,801 (Me. 1998) (noting

5 that a common law defamation claim requires the plaintiff to prove a false and

defamatory statement concerning another, unprivileged publication to a third party, fault

amounting to at least negligence on the part of the publisher, and either actionability of

the statement irrespective of special harm or the existence of special harm caused by the

publication) (citation omitted).

The proximate cause analysis applicable to attorney malpractice actions

demonstrates that the loss of reputation and business injury claimed by Robert Thomas is

wholly unrelated to any advice True rendered concerning the validity ofthe Ichabod

Trust. Simply put, the Court fails to find any correlation between the advice given, even

if "negligent" as the plaintiff claims, and Robert Thomas' ability to maintain clients in his

professional capacity as an investment, tax, and accounting advisor. The injury the

Robert Thomas claims is not a foreseeable consequence of the allegedly negligent advice

rendered by True concerning the validity of the Trust, but rather, subject to "pure

speculation or conjecture." Merriam, 2000 ME 159,,-r 8,757 A.2d at 781.

The plaintiff has thus failed to plead facts sufficient to demonstrate the causal

connection between the advice concerning the trust and the defamation-like injury Robert

Thomas claims to have suffered. Moreover, the Court cannot conceive of any facts that

Robert Thomas could plead or otherwise show at trial that would demonstrate the injury

claimed in the absence of alleging a separate defamation count. In other words, "it

appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim

that would entitle him to relief." 1 Field McKusick & Wroth, Maine Civil Practice §

12.11 at 249 (2ded. 1970) (quoting Conley v,. Gibson, 355 US41,45-6, 79S.Ct.99, 102

(1957)). Since the Complaint does not provide facts that would support a defamation

6 claim, or otherwise states the elements of a defamation claim, Robert Thomas has failed

to state a claim upon which relief can be granted with respect to Count I of the

Complaint. M.R. Civ. P. 12(b)(6).

B. Count III: Negligence

In its motion to dismiss Count III, the Firm argues that the Complaint itself avers

facts that specifically undermine the basis for this claim. The Firm attacks the breach

element of the plaintiffs claim by noting that the plaintiffs (1) received notice of the

jeopardy levy imposed on the Trust; and (2) the plaintiffs were aware of, and the Firm

specifically relied on, the statutorily designated process of pursuing expedited judicial

review of the jeopardy levy imposed on the Trust.

A thorough review of the Complaint outline at least two possible professional

negligence claims. First, Robert Thomas alleges that the Firm's primary responsibility

was to protect the Trust and represent him as Trustee throughout the course of the

jeopardy levy proceedings. (CompI. ~~ 54-5.) The Complaint charges that Burke-

Worthen erroneously noted plaintiff "Richard Thomas" as the "Trustee,,2 of the Ichabod

Trust on the form document requesting the CDP hearing. (Id. at ~ 56.) The Complaint

further states that Burke-Worthen continued to refer to Richard Thomas as the Trustee of

the Ichabod throughout the CDP hearing process. (Id.) In addition, the Complaint states

that Burke-Worthen failed to raise four issues at the CDP hearing critical to defending the

Trust property against the IRS jeopardy levy. (Id. at ~ 62.) Specifically, the plaintiffs

allege that Burke-Worthen failed to notify the CDP hearing board of the following

material facts:

2 The background facts indicate that plaintiff Robert Thomas was, in fact, the designated Trustee of the Ichabod Trust. (CompI. ~~ 11-12.)

7 (1) Richard Thomas did not receive a Notice and Demand for Payment from the IRS;

(2) Richard Thomas did not receive pre-assessment Audit Trail documents supporting the IRS's February 2002 assessment of his income tax liabilities for the years 1995 and 1996;

(3) The IRS did not comply with Richard Thomas' discovery requests to disclose any pre-assessment documents connecting Richard Thomas to the February 2002 tax assessment; and

(4) The criminal freeze placed on the Trust account, as a result of the jeopardy levy imposed by the IRS, denied Richard Thomas access to Trust funds that would have permitted him to hire an attorney of his choice for the purposes of defending against the tax evasion charges.

(Id. at ~ 63.) Thus, the plaintiffs' basic claim appears to be that the Firm was negligent in

defending the IRS jeopardy levy imposed on the Trust. Richard Thomas alleges two

injuries based on the loss of Trust assets through the jeopardy levy proceedings: (1) the

negligent defense left Richard unable to pay for a private defense attorney to represent

him on tax evasion charges; and (2) severe emotional distress. (Id. at ~ 65.)

Alternatively, Count III of the Complaint sets forth an additional theory of

pursuing a professional negligence action against the Firm. The plaintiffs allege that the

Firm had an obligation to inform them that they could pursue an expedited challenge to

the IRS's jeopardy levy under 26 U.S.C. § 7429. (CompI. ~~ 59-60.) The Complaint

states that the Firm failed to properly inform the plaintiffs of the additional means of

expediting review of the jeopardy levy by initiating suit against the United States in

Federal District Court. (Id. at ~ 59.) The plaintiffs claim that the Firm thus failed to

properly challenge the jeopardy levy by pursuing an administrative review process "not

8 authorized by the IRS Code" and by failing to file an action in United States District

Court. 3 (Id. at ~~ 60-61.) Consequently, the plaintiffs' claim that Firm's failure to

initiate proceedings in Federal District Court rendered the trust assets unavailable,

deprived Richard Thomas of the ability to hire private legal counsel to defend against tax

evasion charges, inflicted severe mental distress, caused significant monetary loss, and

otherwise impeded Richard Thomas' ability to challenge the constitutionality of the

jeopardy levy during his tax evasion trial. (Id. ~~ 57-58.)

The Firm's attack on the sufficiency of the professional malpractice claim alleged

in Count III appears focused on the latter of the two claims noted above. The Firm

argues that (1) the plaintiffs were well aware of the procedural means available to pursue

expedited judicial review of the jeopardy levy; and (2) the Firm pursued the review of the

jeopardy levy within the parameters of26 U.S.c. § 7429 by lodging the plaintiffs' protest

through the administrative process. Regardless of the Firm's position on whether the

allegations of professional negligence in Count III rest on false grounds, the plaintiffs

allege that attorney Burke-Worthen negligently failed to raise issues critical to defending

the Trust assets against the jeopardy levy during the CDP hearing. (Compl. ~ 63.); see,

e.g., Neihoffv. Shankman & Assoc Legal Ctr., P.A., 2000 ME 214, ~ 9,762 A.2d 121,

124 (recognizing "legal malpractice in advice or tactics which preceded the final result on

the merits of an underlying action" as a species of attorney negligence). In addition, the

Firm has provided the court with no legal basis to explain why it did not initiate judicial

3 The relevant portion of the Internal Revenue Code, 26 USC § 7429, permits both administrative and judicial review of a jeopardy levy imposed by the IRS. As the noted by the Firm, a taxpayer must first initiate the administrative review process before filing an civil action in United States District Court. The Internal Revenue Code requires a taxpayer served with notice of a jeopardy levy to request an administrative hearing within 30 days of receiving the notice. 26 U.S.c. § 7429(a)(2). After first requesting administrative review, the taxpayer may bring a civil suit against the United States in District Court within 90 days after the earlier of (1) the day the IRS notifies the taxpayer of its decision concerning the taxpayers protest; or (2) the 16 th day after the taxpayer protests the jeopardy levy. 26 U .S.c. § 7429(b)(1 )(A)-(B).

9 review of the jeopardy levy in Federal District Court after properly lodging an

administrative appeal. See 26 U.S.c. § 2479. Thus, under either theory discernible under

Count III, the Complaint states sufficient facts to withstand a M.R. Civ. P. 12(b)(6)

motion to dismiss. 4

C. Count IV: Conspiracy

The Firm argues, as matter of law, that the plaintiffs cannot maintain a cause of

action for civil conspiracy on the facts of this case. Traditionally, the Law Court has not

viewed civil conspiracy as an independent tort. Potter, Prescot, Jamieson & Nelson, P.A.

v. Cambell, 1998 ME 70, ~ 8, 708 A.2d 283, 286. A claim of civil conspiracy will fail "as

the basis for the imposition of civil liability absent the actual commission ofsome

independently recognized tort; and when such separate tort has been committed, it is that

tort, and not the fact of combination, which is the foundation ofthe civil liability." Cohen

v. Bowdoin, 288 A.2d 106, 112 (Me. 1972) (citation omitted) (emphasis in original).

The plaintiffs allege that the Firm conspired "to assist the Federal Court in

expediting the federal prosecution and [to] assist the IRS in the prosecution of ...

Richard Thomas." (CompI. ~ 71.) The plaintiffs draw this conclusion, in part, based on

the fact that the Firm employs Timothy Woodcock, the brother of Federal District Court

Judge John A. Woodcock. (Id. at ~ 69.) As noted by the Firm, this claim explicitly refers

back to the allegations in Count III: "Defendants True, Burke-Worthen and Eaton-

Peabody, PA did knowingly, blatantly, and with reckless disregard for the rights of

Plaintiff Richard Thomas, fail to follow the procedures required by 26 U.S.C. § 7429 to

4 This ruling does not diminish the plaintiffs' burden at trial to prove that, but for the Firm's conduct, the plaintiffs more likely than not would have been successful in protesting the jeopardy levy. See Spickler v. York, 566 A.2d 1385, 1390 (Me. 1989) (noting that the issue for a jury in an attorney malpractice action is whether the attorney's conduct "was a substantial factor in bringing about the loss of the initial action"); Simmons, Zillman & Gregory, Main Tort Law § 9.28 at 9-77 n.4 (2004 ed.).

10 expedite judicial review in Federal District Court of the March 12,2007 jeopardy levy."

(Id. at ,-r 72.) The plaintiffs ultimately conclude that the intentional failure to follow the

mandate of26 U.S.c. § 7429 "set it up for Judge Woodcock, Jr. in his September 24,

2008 order to deny Plaintiff Richard Thomas' constitutional challenge to the jeopardy

levy because it interfered with his right to counsel of his choice in his criminal trial." (Id.

,-r 73.) As noted by the Firm, the basis of the civil conspiracy claim necessarily involves

the alleged failure of Firm to pursue judicial review of the jeopardy levy under 26 U.S.C.

§ 7429. Consequently, because the plaintiffs' negligence claim in Count III survives, it is

that claim that will serve as the basis for possible liability. Cohen, 288 A.2d atl12.

Therefore, Count IV, the plaintiffs' civil conspiracy claim, is dismissed for failure to state

a claim upon which relief can be granted. M.R. Civ. P. 12(b)(6).

D. Count V: Business Interference

The Firm argues that the Complaint is insufficient to sustain a claim of tortious

interference for two reasons. First, the Firm argues that the Complaint does not

sufficiently establish the element of "fraud or intimidation" necessary to make out a

prima facie claim for tortious interference with a prospective economic advantage. A

claim for tortious interference with a prospective economic advantage requires the

plaintiff to show: "(1) a valid contract or prospective economic advantage existed; (2) the

defendant interfered with that contract or advantage through fraud or intimidation; and

(3) such interference proximately caused damages." Rutland v. Mullen, 2002 ME 98, ,-r

13,798 A.2d 1104,1110 (citing James v. MacDonald, 1998 ME 148,,-r 7,712 A.2d 1054,

1057).

11 According to the Complaint, plaintiff Robert Thomas runs an accounting, tax

preparation, and investment counseling business in Bangor, Maine. (CompI. ~ 76.) Robert

Thomas avers that Putnam advised "one of [Robert] Thomas' major clients" to seek a

second opinion with regard to any investment services currently being rendered and "to

seek said services elsewhere." (Id. at ~ 77.) As a result of Putnam's conversation with this

unnamed person, ostensibly a client of both the Firm and Robert Thomas, Robert Thomas

claims to "have lost a major tax and investment client and the future income [his]

services [for this client] would generate." (Id. at ~ 79.)

The Firm argues the complaint is "bereft of any suggestion" that Putnam

fraudulently interfered with Robert Thomas' business clientele. To support its argument,

the Firm establishes that the gravamen of a tortious interference with a prospective

economic advantage claim is the "presence of fraud or intimidation ... [which]

distinguishes unlawful conduct from conduct inherent in a healthy competitive

environment." Rutland, 2002 ME 98, ~ 13, 798 A.2d at 1104. To demonstrate the

element of fraud necessary to sustain the tortious interference claim, Thomas must show

that Putnam:

(1) ma[de] a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act or refrain from acting in reliance on it, and (5) the other person justifiably relie[d] on the representation as true and act[ed] upon it to the damage of the plaintiff.

Rutland, 2002 ME 98, ~ 13 n.S, 798 A.2d at 1110 n.S (quoting Petit v. Key Bank ofMe.,

688 A.2d 427, 430 (Me. 1996)). Again, the Complaint states only that Putnam counseled

one of Robert Thomas' investment clients to "seek a second opinion regarding using

Robert Thomas for investment services and to seek said services elsewhere." (CompI. ~

12 77.) The Complaint makes no specific allegation of fraud Instead, the plaintiff merely

avers that Putnam "with negligence and reckless disregard to Thomas' rights ... knew or

should have known, that the client had been brought to Eaton Peabody, PA originally by

Plaintiff Thomas, and Defendant Putnam acted to interfere with Robert Thomas's account

and investment business." (CompI. ~ 77.) Whether Putnam's advice was negligent or

reckless is irrelevant to the M.R. Civ. P.12(b)(6) inquiry. See Rutland, 2002 ME 98, ~ 13

n.S, 798 A.2d at 1110 n.S (noting that the Law Court has never recognized a claim for

negligent interference with an economic advantage and the Restatement (Second) of

Torts § 766(C) similarly rejects the negligent interference theory as a basis of tort

liability). Where fraud is alleged, the circumstances constituting the allegation "shall be

stated with particularity." M.R. Civ. P. 9(b). The Complaint takes no affirmative step to

state with particularity or otherwise provide bare facts that demonstrate fraud. The

allegation of negligence or recklessness is thus insufficient to sustain the tortious

interference with a prospective economic advantage claim against the Firm's motion to

dismiss for failure to state a claim upon which relief can be granted. 5 M.R. Civ. P.

l2(b)(6).

Second, the Firm argues that the Count V lacks the necessary proximate cause

connection to maintain the tortious interference claim. The Court need not address the

merits of this argument given that the Plaintiffs have failed to allege or state sufficient

facts in the Complaint to demonstrate fraud or intimidation.

5 The claim for tortious interference with a prospective economic advantage may also proved by intimidation. The Law Court has defined interference by intimidation as unlawful coercion or extortion. Rutland, 2002 ME 98, ~ 16, 798 A.2d at I I I I (citing Black's Law Dictionary 827 (7th ed. 1999)). The Complaint is devoid of any facts or conclusions suggesting Putnam coerced, or otherwise extorted, the unnamed client for the purpose of interfering with the consulting services Robert Thomas allegedly performed for this client. Similar to the fraud analysis above, the Complaint has failed to plead sufficient facts to withstand the Firm's M.R. Civ. P. 12(b)(6) motion to dismiss even if the plaintiffs were to rely on an "intim idation" theory in order to prove the tortious interference claim.

13 The entry is:

1. Defendant Eaton Peabody's motion to dismiss Count I of the Plaintiffs complaint is GRANTED.

2. Defendant Eaton Peabody's motion to dismiss Count III of the Plaintiffs complaint is DENIED.

3. Defendant Eaton Peabody's motion to dismiss Count IV of the Plaintiff s complaint is GRANTED.

4. Defendant Eaton Peabody's motion to dismiss Count V of the Plaintiffs complaint is GRANTED.

Date: October l!:L, 2009 /

M. Michaela Murphy Justice, Superior Court

14 10/27/2009 MAINE JUDICIAL INFORMATION SYSTEM PENOBSCOT COUNTY SUPERIOR COURT PAGE P - PARTY VIEW RICHARD J THOMAS ET AL S EATON PEABODY PA ET AL CASE #:BANSC-CV-2009-00022

SEQ TITLE NAME DOB ATTY 001 PL RICHARD J THOMAS PRO SE / / PRO 003 PL ROBERT A THOMAS TRUSTEE' ICHABOD TRUST PRO SE / / PRO 004 PL ROBERT A THOMAS INDIVIDUALLY PRO SE / / PRO 002 DEF EATON PEABODY PA by Bernard Kubetz, Esq.& Mark Beaumont, Esq. 005 DEF CHRISTINE BURKE WORTHEN b y " " "/ /" T 006 DEF CALVIN E TRUE byII II II / T /"

007 DEF NATHAN S PUTNAM by " " II / T / II STATE OF MAINE SUPERIOR COURT PENOBSCOT, ss. CIVIL ACTION DOCKET NO. CV-09-27 . 7 J..AMM- PEfV- d 7/2t?/· I RICHARD 1. THOMAS, et ai.,

Plaintiffs,

v. DECISION AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT EATON PEABODY, PA, et. ai.,

On January 28, 2009 Plaintiffs filed a five count complaint alleging three counts

of professional negligence, one count of conspiracy and one count of business

interference. On March 16, 2009 Defendants filed a Rule 12(b)(6) motion to dismiss

Counts I, III, IV and V. Counts I, IV and V were dismissed on October 15, 2009,

pursuant to M. R. Civ. P. 12(b)(6) (Murphy, 1.). Currently before the Court is the

Defendants' Motion for Summary Judgment on Counts II and III, filed pursuant to M.R.

Civ. P. 56. While Plaintiffs filed a Response to the Motion for Summary Judgment, they

did not file an Opposing Statement of Material Facts as required by Rule 56(h)(2).

Having reviewed the parties' filings, the Court grants the Defendants' motion for

summary judgment on Counts II and III.

FACTUAL BACKGROUND

In 1997, the Internal Revenue Service (IRS) began pursuing Plaintiff

Richard Thomas for unpaid income taxes. The IRS prepared substitute tax returns on

·1 behalf of Richard Thomas for tax years 1995 and 1996 and mailed aNotice of Deficiency

to Richard Thomas on September 14,2000. The IRS notice informed Richard Thomas

that he had 90 days from the date of the Notice of Deficiency to contest the assessment.

Richard Thomas did not voluntarily the pay the assessment, nor contest it within 90 days,

and thus the amounts were assessed for the outstanding taxes owed for the tax years 1995

and 1996.

In October of 2000, several weeks after the Notice of Deficiency was sent to

Richard Thomas, Plaintiff Richard Thomas caused the creation of the Ichabod Trust

("Trust"), an irrevocable trust established under the laws of the State of Nevada, naming

himself and his wife, Joan M. Thomas, as beneficiaries.

On January 11,2006, Richard Thomas was indicted on six counts of tax evasion

for his alleged failure to file federal income tax returns from 1995 through 2001,

excluding the year 1997. In May 2006, the Trust sold certain property to provide for the

living and legal expenses of beneficiaries Richard and Joan Thomas.

On June 6, 2006, Plaintiff Robert Thomas, the brother of Plaintiff Richard

Thomas, became the acting trustee of the Trust. Around that time Robert Thomas met

with Attorney Calvin True, an employee of Defendant Eaton Peabody, to inquire about

the legal validity of the Trust. Attorney True advised Robert Thomas that the Trust, at

least on its face, appeared to be validly formed.

On March 12, 2007, many years after the initial assessment, the IRS placed a

jeopardy levy in the amount of approximately $52,000.00 on the Penobscot County

Federal Credit Union account holding the trust assets and delivered a "Notice of Jeopardy

Levy and Right of Appeal" (March 2007 Notice) to Richard Thomas and to the Trust, as

2 nominee of Richard Thomas. The IRS did not recognize the trust as a separate legal

entity and levied against the assets of the Trust as if they were the assets of Plaintiff

Richard Thomas individually. The March 2007 Notice indicated that Richard Thomas

appeared to be utilizing the Trust "to place property beyond the reach of the

Government" and otherwise that his "financial solvency appeared to be imperiled,"

jeopardizing the Government's ability to collect on taxes owed for the years 1995 and

1996. As part of the March 2007 Notice, IRS Territory Manager Peter Bousnakis

approved the issuance of a jeopardy levy on Trust property under 26 U.S.c. § 6331. The

March 2007 Notice contained instructions on the availability of and procedure for

pursuing administrative and judicial review of the jeopardy levy under 26 U.S.C. § 7429.

Following the issue and delivery of the March 2007 Notice, Defendants were retained to

defend the Trust assets against the IRS jeopardy levy.

The IRS delivered a second "Notice of Jeopardy Levy and Right to Appeal" on

May 7, 2007. The substantive content of this second notice was much the same as the

first, with the IRS indicating that Richard Thomas appeared to be using the Trust "to

place ... property beyond the reach of the Government" and that his "financial solvency

appear[ed] to be imperiled." Importantly, however, the May 2007 Notice differed from

the March 2007 Notice in that it notified the Plaintiff of his appeal rights under the

"Collections Due Process" framework provided under 26 U.S.C. § 6330.

In preparing a defense to the jeopardy levy, Defendants learned that the IRS

refused to recognize the legal existence of the Trust and indicated that it would only

interact with Plaintiff Richard Thomas. On Apri111, 2007, Attorney Burke-Worthen filed

3 a timely request for a Collections Due Process (CDP) hearing pursuant to 26 U.S.C. §

6330.

On June 14,2007, the IRS delivered a letter to Richard Thomas indicating that it

had received Attorney Burke-Worthen's request for a Collections Due Process hearing

and the hearing would convene, via telephone conference, on July 10, 2007. Prior to the

phone conference with the IRS, Attorney Burke-Worthen contacted Richard Thomas's

criminal defense attorney, Attorney Chuck McFarland, who indicated that he would not

be participating in the conference and was comfortable with Attorney Burke-Worthen

handling the CDP hearing without his participation.

By letter on June 29,2007, Attorney Burke-Worthen advised Richard Thomas

that the purpose of the CDP hearing was "to address the Notice of Jeopardy and Right to

Appeal issue only, and there would not be an opportunity ... to argue the validity of the

trust." Attorney Burke-Worthen participated in the July 10,2007 teleconference hearing

with IRS Agent Blais, but despite the issues and arguments raised on Richard Thomas's

behalf, the IRS refused to release the levy on the Trust based on a belief that the Trust

assets would continue to be depleted and that the IRS would not be able to recoup the

taxes owed by Richard Thomas. Attorney Burke-Worthen relayed the substance of the

hearing and the conclusion reached by the IRS to both Richard Thomas and Attorney

McFarland. In a letter dated July 10, 2007, Attorney Burke-Worthen fully explained the

outcome of the July 10, 2007 CDP hearing to Richard Thomas and stated that it would be

possible to pursue an appeal of the IRS decision to the U.S. Tax Court once IRS Agent

Blais had issued a Notice of Determination.

4 With the Trust assets frozen, Richard Thomas indicated that he no longer had the

funds to pay Attorney Burke-Worthen, or Eaton Peabody generally, for their legal

assistance concerning the jeopardy levy. Thereafter, Richard Thomas proceeded to file

the appeal of the Notice of Determination to the Tax Court pro se.

On September 18,2008, the U.S. Tax Court (MA. Cohen, J.) granted the IRS's

motion for summary judgment and upheld the imposition of the Jeopardy Levy on the

Trust. In February, 2009, Plaintiff Richard Thomas entered a guilty plea to one count of

tax evasion for the 2001 tax year in exchange for the Government's voluntary dismissal

of the remaining tax evasion counts contained in the January 2006 criminal indictment.

On November 16,2009, the United States District Court for the District of Maine

(Woodcock J.) sentenced Richard Thomas to 24-months in prison, three years of

supervised release and ordered him to pay $15,082 in restitution.

PROCEDURALBACKGRAOUND

On January 28, 2009 the Plaintiffs filed a five count Complaint against

Defendants Eaton Peabody, Attorney Christine Burke-Worthen, Attorney Calvin True,

and Attorney Nathaniel Putnam. Defendants filed a M.R. Civ. P. l2(b)(6) motion to

dismiss Counts I, III, IV, and V of the Plaintiffs' Complaint on March 16,2009. The

Court granted the Defendants' Rule 12(b)(6) Motion with respect to the Counts I, IV, and

V, and denied the Rule 12(b)(6) motion with respect to professional negligence alleged in

Count III of the Plaintiffs January 2009 Complaint'. See Thomas v. Eaton Peabody,

I The Court (Murphy, 1.) found sufficient facts had been alleged in Count III to withstand a Rule 12(b)(6) motion to dismiss, but cautioned that denying Defendants' motion to dismiss count III would not diminish the plaintiffs' burden to prove that but for the Defendants' conduct, the plaintiffs more likely than not

5 PENSC-CR-2009-22 (Me. Super. Ct., Pen Cty., October 14,2009) (Murphy, J). After

discovery disputes and various attempts to continue the litigation, the Defendants

submitted a M.R. Civ. P. 56 motion for summary judgment on November 8, 2010 seeking

judgment on Counts II and III of the Plaintiff s Complaint. Plaintiffs filed a

memorandum in opposition, without an Opposing Statement of Material Facts.

Defendants then filed a Reply. In the Rule 56 motion now before the Court, the

Defendants argue that no genuine issue of material fact exists and that as a matter of law

the Plaintiffs cannot prevail on the professional negligence claims alleged in Counts II

and III of the January 2009 Complaint.

STANDARD OF REVIEW

"Summary judgment is appropriate when review of the parties' statements of

material facts and the referenced record evidence indicates no genuine issue of material

fact that is in dispute, and, accordingly, the moving party is entitled to judgment as a

matter oflaw." Dyer v. Dep't ojTransp. , 2008 ME 106, ~ 14, 951 A.2d 821,825. A

genuine issue of material fact exists when there is sufficient evidence to require the fact-

finder to choose between competing versions of a fact that could affect the outcome of

the case. Id.; Inkel v. Livingston, 2005 ME 42, ~ 4,869 A.2d 745, 747. The court will

review the evidence in the light most favorable to the non-moving party. Cookson v.

Brewer School Dep't, 2009 ME 57, ~ 12, 974 A.2d 276,281.

Summary judgment is appropriate unless there is sufficient evidence in favor of

the non-moving party to support ajury verdict in favor of the non-moving party. Biette v.

would have been successful in protesting the jeopardy levy. See Thomas v. Eaton Peabody, PENSC-CR­ 2009-22 (Me. Super. Ct., Pen Cty., October 14,2009) (Murphy, J.).

6 Scott Dugas Trucking and Excavating Inc., 676 A. 2d 490, 494 (Me. 1996). Summary

judgment for a defendant is proper when the plaintiff bears the burden of proof on an

essential issue and it is clear that a defendant would be entitled to a directed verdict at

trial if plaintiff presented the evidence before the court at the summary judgment stage.

Bouchard v. American Orthodontics, 661 A. 2d 1143, 1145 (Me. 1995). The function of

summary judgment is to permit the Court to determine whether a triable issue of fact

exists, and there is no issue for trial unless there is sufficient evidence favoring the non­

moving party to support a verdict in favor of that party. Id See also Champagne v. Mid-

Maine Medical Center, 1998 ME 87 ~9 (to avoid judgment for defendant as a matter of

law, plaintiff must establish a prima facie case for each element of his cause of action)

Gudgment for defendant as a matter of law is proper when a verdict for the plaintiff

would be based on conjecture or speculation).

DISCUSSION

As a threshold matter, the Plaintiffs have failed to file a M.R. Civ. P. 56(h)(2)

opposing statement of material facts 2 • As a consequence, the Court deems as admitted

the Defendants' uncontroverted M.R. Civ. P. 56(h)(1) statement of material facts for the

purposes of this summary judgment analysis. M.R. Civ. P. 56(h)(4); see also Dyer v.

Dep't ofTrans. , 2008 ME 106, ~ 15, 951 A.2d 821,825-26 ("Failure to properly respond

to a statement of material facts permits a court to deem admitted any statements

not properly denied or controverted.") While the Court is mindful that the Plaintiffs have

2 Moreover, in this case, none of Plaintiffs' filings, whether or not in the form of an Opposing Statement of Material Facts, suggest the existence of any expert witness opinions on: 1) the applicable standard of care and any breach thereof, and/or 2) proximate cause between any alleged breach and plaintiffs' alleged damages (i.e. that plaintiffs would have been successful but for the Defendants' conduct).

7 proceeded in a pro se capacity, they continue to prosecute this lawsuit at their own peril.

See Michaud v. Blue Hill Memorial Hospital, 2008 ME 29, ~ 8, 942 A.2d 686, 688

(noting that "[t]here exists no general right to representation by counsel in civil litigation

between private parties"). The Law Court has affirmed the trial courts of Maine granting

motions for summary judgment based solely on the party's failure to comply with M.R.

Civ. P. 56, see Dyer, 2008 ME 106, ~ 15, 951 A.2d at 826 (citation omitted), so long as

no genuine issue of material fact exists.

Counts II and III of the January 2009 Complaint allege that Eaton Peabody,

through its attorneys, provided negligent representation to Richard Thomas, Robert

Thomas, and the Ichabod Trust during the time the IRS sought, and ultimately succeeded

in securing, a jeopardy levy. It is well-settled in this State that "[t]o prove attorney

malpractice, a plaintiff must show: (l) a breach by the defendant ofthe duty owed to the

plaintiff to conform to a certain standard of conduct; and (2) that the breach of that duty

proximately caused an injury or loss to the plaintiff" Corey v. Norman, Hanson &

DeTroy, 1999 ME 196,742 A.2d 93. As a general rule, "expert evidence is required in a

legal malpractice case to establish the attorney's breach of duty except in cases where the

breach or lack thereof is so obvious that it may be determined by the Court as a matter of

law, or is within the ordinary knowledge and experience of laymen." Jim Mitchell & Jed

Davis v. Jackson, 687 A.2d 1014, 1017 (Me. 1993); accord Kurtz & Perry, P.A., v.

Emerson, 2010 ME 107, ~~ 26, -- A.3d --. In addition to establishing, generally by

expert testimony, the requisite standard of care and breach thereof, the plaintiff must also

establish the "proximate cause" prong of the analysis and must demonstrate that "that he

or she would have achieved a more favorable result but for the alleged legal malpractice."

8 NeihojJv. Shankman & Assocs. Legal Ctr.) P.A., 2000 ME 214, ~ 9, 763 A.2d 121, 124.

Proximate cause exists in professional malpractice cases where "evidence and inferences

that may reasonably be drawn from the evidence indicates that the negligence played a

substantial part in bringing about or actually causing the injury or damage and that the

injury or damage was either the direct result or a reasonably foreseeable consequence of

the negligence. .Id (quoting Merriam v. Wanger, 2000ME J59~8). While proximate

cause is generally an issue for the fact-finder, Klingerman v. SOL Corp. ofMaine, 505 A.

2d 474 (1986), the court may enter judgment for a defendant if proximate cause rests on

"pure speculation or conjecture". Merriam.

A. Count II: Negligence

Count II alleges that Defendants committed malpractice by failing to file a

wrongful levy lawsuit on behalf of the Trust/Trustee (presumably pursuant to 26 U.S.c. §

7426(a)(1)) (permitting those with an interest in the levied property, "other than the

person against whom is assessed the tax out of which such levy arose," to initiate a civil

action in United States District Court for "wrongful levy") and otherwise failed to

properly represent the Trust/Trustee.

The Plaintiffs' arguments in opposing the Defendants' motion for summary

judgment appear to attempt to integrate facts regarding Attorney True's opinion on the

validity of the Trust initially noted in Count I of the Complaint with those contained in

Count II 3 .

3 Pursuant to M .R . Civ. P 12(b)(6), the Court (Murphy, J.) previously dismissed Count I of the complaint which alleged that Attorney True negligently advised Robert Thomas that the Ichabod Trust was a valid trust because the damages alleged by Plaintiff Robert Thomas were speculative and causally disconnected from Attorney True's initial advice. See Thomas v. Eaton Peabody, PENSC-CR-2009-22, *4-*7 (Me.

9 Defendants argue that they had no choice but to represent Richard Thomas in the

26 U.S.C. §6330 hearing (Collections Due Process) as the IRS refused to recognize the

legal existence of the Trust and would only deal with Richard Thomas with respect to the

levy. (Def.'s Supp. S.M.F. ~18-19, 24-27). Defendants further argue that they concluded

that a wrongful levy action (§7426) would not have been "advisable" because the IRS

had determined that the Trust was not being "respected" and the IRS refused to recognize

the legal existence of the Trust. (Def.'s Supp. S.M.F. ~18-19, 24-27).

Plaintiffs, who bear the burden of establishing a breach of the applicable standard

of care, have not set forth any expert facts in an Opposing Statement of Material Facts (or

otherwise) with respect to the standing of the Trust in the §6330 process and/or the

advisability of the Trust proceeding under §7426 (or any other available option). These

complex tax issues require expert opinion evidence to establish a breach of the applicable

standard of care.

Additionally and perhaps most compelling in granting the motion for summary

judgment on Count II is the lack of any assertion of facts suggesting that but for the

conduct of the defendants, plaintiffs would have been successful in defeating the

jeopardy levy. Even if the Court assumes that Defendants breached the standard of care

Super. Ct., Pen Cty., October 14,2009) (Murphy, J.). In Plaintiffs' memorandum opposing the motion for summary judgment, Plaintiff Robert Thomas asserted that as a result of Attorney True's negligent advice about the validity of the Trust he "suffered damages equal to the amount of fees paid ... and the remaining funds in the bank account seized by the IRS." (Robert Thomas Aff. ~ 19.) Regardless of the damages claimed by Plaintiff Robert Thomas, Robert Thomas would have to prove that Attorney True's advice that on its fact the Trust appeared to be validly formed was wrong (vs. the IRS refused to recognize the Trust for other reasons) and that he breached the applicable standard of care in rendering that opinion. Ascertaining the validity or invalidity of a trust instrument formed under the laws of Nevada requires the type of expertise, familiarity, and training that is neither obvious to the Court nor within the ordinary knowledge of a layman. Absent expert evidence setting forth the standard of care applicable to Attorney True, and that he in fact breached that standard of care when he stated that the Ichabod Trust was facially valid, Jackson, 687 A.2d at 1017, the Plaintiff failed to discharge his burden and Defendants remain entitled to judgment as a matter of law on this aspect of the claim.

10 in failing to pursue a wrongful levy action on behalf of the Ichabod Trust and/or Plaintiff

Robert Thomas and/or in failing to properly defend the Trust/Trustee in the Collection

Due Process proceeding (§6330) and/or in failing to keep the Trustee informed or

otherwise, the Plaintiffs have proffered no evidence, expert or otherwise, to suggest that

the jeopardy levy would have been lifted from the Trust assets but for the Defendants'

conduct. See Steeves v. Bernstein, Shur, Sawyer & Nelson, PC, 1998 ME 210,,-r 12,718

A.2d 186, 190 ("Because' a mere possibility' of success, ... is insufficient to establish

legal malpractice, a summary judgment in favor of the defendant is appropriate when the

link between the attorney's act or omission and the alleged damage is

overly speculative.") (citation omitted).

There are no factual disputes that a 26 U.S.C. § 7426 suit was not filed and that

the Trust/Trustee was not involved in the Collection Due Process proceeding. Plaintiffs

bear the burden to establish breach of the applicable standard and that but for the breach

Plaintiffs would have been successful in defeating the jeopardy levy. The breach, if any,

and the potential success in defeating the jeopardy levy are not matters that are obvious to

the Court or within the ordinary knowledge and experience of laymen. Plaintiffs have not

set forth any expert opinions regarding breach of the applicable standard by the

Defendants or that the jeopardy levy would have been defeated but for Defendants'

breach, and it would be a matter of improper conjecture or speculation for a fact-finder to

find for the plaintiffs under these circumstances. Thus, Defendants are entitled to

judgment as a matter of law on Count II.

11 B. Count III: Negligence

i. Collection Due Process, 26 U.S.C. §6330

Similar to the allegations contained in Count II, Plaintiff Richard Thomas alleges

that the firm's representation of him in challenging the jeopardy levy in the Collection

Due Process proceeding (§6330) was improper and that Defendants improperly failed to

raise four issues during that process4 •

As established by the Defendants' uncontroverted M.R. Civ. P. 56 statement of

material facts, the IRS placed a jeopardy levy on the Ichabod Trust, freezing its assets,

and treated the trust as the alter-ego of its beneficiaries, Plaintiff Richard Thomas and his

wife. (Def.'s Supp. S.M.F. ~ 18.) To the extent the IRS treated the trust as a sham and

refused to engage with either the Ichabod Trust itself, or Plaintiff Robert Thomas, as

Trustee, the Defendants' representation of Plaintiff Richard Thomas met the stated goal

of defending Trust assets from the jeopardy levy. (Def.'s Supp. S.M.F. ~~ 16,26.) From

facts deemed admitted by operation of M.R. Civ. P 56(h)(4), the Defendants' were left

with no reasonable alternative but to defend the trust assets in the Collections Due

Process hearing in the name of Plaintiff Richard Thomas. Plaintiffs have not proffered

any expert opinions to demonstrate that a conflict of interest existed between the

Trust/Trustee and Richard Thomas with respect to the goal of defending the Trust assets

from the jeopardy levy (sole beneficiaries of the Trust were Richard Thomas and his

wife).

4 The four issues Richard Thomas alleges should have been raised in the CDP are: 1) Richard Thomas did not receive a Notice and Demand for Payment from the IRS; 2) Richard Thomas did not receive pre-assessment Audit Trail evidence of an assessment of his income tax liability for taxable years 1995 and 1996, disputing the underlying deficiency and resulting assessment; 3) the IRS did not comply with Richard Thomas' discovery requests in his criminal case; and 4) the criminal freeze placed on the Trust account, as a result of the jeopardy levy imposed by the IRS, denied Richard Thomas access to Trust funds that would have permitted him to hire an attorney of his choice for the purposes of defending him against the tax evasion charges.

12 Whether the Defendants breached the applicable standard of care by representing

Richard Thomas in the Collection Due Process hearing and/or in failing to argue the four

issues raised by the Plaintiffs in the CDP hearing requires expert support, and Plaintiffs

have failed to set forth any expert opinions to support that Defendants breached the

applicable standard of care.

In addition to the Plaintiffs' failure to establish the appropriate standard of care or

the Defendants' breach, the Plaintiffs have also failed to set forth any facts suggesting

that they would have been successful in defending the assets of the Trust against the

jeopardy levy or otherwise if the Defendants had represented either the Trust itself or its

Trustee or raised any of the four issues Plaintiffs argue should have been raised in the

Collection Due Process proceeding. Consequently, Defendants are entitled to judgment

on this part of Count II as a matter of law.

ii. 26 U.S.C. §7429

Robert Thomas' final claim concerns the method by which the Defendants

attempted to defend the Trust's assets. It is undisputed that Attorney Burke-Worthen

notified the IRS of the Plaintiffs' intent to pursue a review of the jeopardy levy through

the "Collections Due Process" procedure outlined in 26 U.S.C. § 6330. There is also no

dispute that Defendants' followed the "Collections Due Process" framework to its logical

end-up until the point Plaintiff Richard Thomas lacked the funds to continue paying for

the firm's services. (See Def.'s Supp. S.M.F. ~~ 28-37.) However, Plaintiff Richard

Thomas claims that the Defendants should have sought to defend the Trust from the

jeopardy levy by employing the administrative and judicial review procedures provided

13 under 26 U.S.C. § 7429 instead of or in addition to the "Collections Due Process"

mechanism made available under 26 U.S.c. § 6330.

Defendants argue, with record support, that §7429 review of the jeopardy levy did

not apply in Richard Thomas' situation as the levy was made more than thirty (30) days

after the initial assessment 5 . (See Def.'s Supp. S.M.F. ,-r24). Plaintiffs argue, without any

record support, that §7429 did apply to Richard Thomas' situation. Whether or not

§7429 review was an available mechanism which Defendants should have pursued is a

matter which requires expert support, and the record is devoid of any expert evidence that

§7429 review should have been pursued. The Plaintiffs have failed to set forth facts

regarding expert testimony that would establish either the standard of care or Defendants'

breach thereof by not pursuing a §7429 process. The intricacies of the Internal Revenue

Code and the methods a taxpayer may and should use to challenge a levy are certainly not

within the ordinary knowledge of laymen or obvious to the Court. Accordingly, it was

incumbent on the Plaintiffs to provide competent expert testimony to support their view

about the availability and advisability of the 26 U.S.c. §7429 process, and that the firm's

5 The Defendants have addressed the outstanding concern voiced by the Court in its previous order on this matter. See Thomas v. Eaton Peabody, PENSC-CR-2009-22, *9 n.3 (Me. Super. Ct., Pen Cty., October 14,2009) (Murphy, 1.) (withholding M.R. Civ. P. 12(b)(6) dismissal of Count III of the Complaint because there was a question as to whether the Defendants should have pursued action under 26 U.S.C. § 7429). The plain language of 26 U.S.C. § 7429(a)(I)(A), the information provided in the Internal Revenue Manual, and cases interpreting this particular statutory provision, all support the Defendants' assertion that the framework for contesting ajeopardy levy like the one initiated in this case was solely through the "Collections Due Process" procedure contained in 26 U.S.C. § 6330. The uncontroverted fact is that §7429 would only be available in the event the IRS had issued its jeopardy levy within 30-days of the initial assessment, which was certainly not the case in this instance. See Internal Revenue Manual § 5.11.3.6 available at http://www. irs.gov/irm/part5/irm_05-011-003 .html ("If the jeopardy levy is issued more than 30 days after the notice and demand and the taxpayer has not already been issued their appeal rights under IRC 6330, the IRS must notify the taxpayer of their appeal rights under IRC 6330 ...."); Carter v. US, 2009 U.S. Dist. LEXIS 114013, *19-20 (D. N.M. 2009) ("Section 7429 is titled "Review ofjeopardy levy or assessment procedures," and accords "administrative review"... to levies' made under section 633 J (aj less than 30 days after notice and demand/or payment is made.") (emphasis added). The IRS's initial March 2007 Notice of Jeopardy Levy and Right to Appeal provided information concerning the § 7429 review process, but the later delivered May 2007 Notice of Jeopardy and Right to Appeal provided information only regarding the "Collection Due Process" framework outlined in § 6330.

14 failure to pursue administrative and judicial review under 26 U.S.C. §7429, if available,

constituted a breach of the applicable standard of care.

Moreover, for purposes of this Motion for Summary Judgment, even assuming the

§7429 process was available as a possible avenue to defend the Trust assets, Plaintiffs

have failed to proffer any facts suggesting that a 26 U.S.C.§7429 review would have

provided the Plaintiffs with a favorable result (the release of IRS jeopardy levy placed on

the Trust assets).

In accord with the guidance provided in Jackson and Steeves, since Plaintiffs have

not provided facts from an expert that the Defendants breached a duty of care and that

had the Defendants pursued a § 7429 review Plaintiffs would have received a favorable

result, summary judgment is appropriate on this aspect of Count III.

For the foregoing reasons, Defendants are entitled to judgment as a matter of law

on all aspects of Count III.

The entry is:

1. Defendants' M.R. Civ. P. 56 Motion for Summary Judgment, filed on November 8, 2010, is GRANTED. 2. This order is incorporated into the docket pursuant to M.R. Civ. P. 79(a).

Date: February 7, 2011

Deci'!=iion and Order entered upon the docket on 2/14/11.