PHILADELPHIA – A local law firm seeks to dismiss a legal malpractice suit brought against it by a Virginia business, which claimed the firm’s negligent representation resulted in it losing $30 million.
Crawl Space Door System, Inc. (doing business as “Crawl Space Door Systems, Inc.”) of Virginia Beach, Va. first filed suit in the U.S. District Court for the Eastern District of Virginia on May 11 versus White & Williams, LLP, of Philadelphia.
“This case arises out of White & Williams’ legal representation of Crawl Space in a suit brought by Smart Vent Products, Inc. in the U.S. District Court for the District of New Jersey. While the lawsuit was filed in September 2013, White & Williams was not was retained until October 2015, when Crawl Space contacted [the firm] seeking representation,” the defendant’s dismissal motion recalled.
“The Smart Vent suit against Crawl Space alleged the following claims: 1) Unfair competition under the Lanham Act, unfair competition under New Jersey state law, common law unfair competition, negligent misrepresentation and trademark infringement under federal law. Crawl Space filed a counterclaim for false advertising, unfair competition and trademark cancellation.”
However, Crawl Space did not allege any antitrust claims in the counterclaims it asserted in the new responding to Smart Vent’s amended complaint. A few months before the trial, on June 18, 2019, Crawl Space filed a separate suit against Smart Vent in the U.S. District Court for the Eastern District of Virginia, seeking damages for alleged violations of the Sherman Act.
Trial in the New Jersey litigation was held in October 2019 and resulted in a verdict in favor of Crawl Space on all the Smart Vent claims, together with an award of $300,000 to Crawl Space on its counterclaim against Smart Vent, according to the motion.
“On Nov. 23, 2021, after the New Jersey litigation was concluded, White & Williams’ collection arm, Philadelphia Professional Collections, LLC, brought an action for unpaid legal fees against Crawl Space in the Philadelphia County Court of Common Pleas. Crawl Space removed the case to the U.S. District Court for the Eastern District of Pennsylvania and answered, but did not file a counterclaim. On Nov. 22, 2022, this Court granted summary judgment in favor of PPC and against Crawl Space in the amount of $797,613.45,” the motion continued.
“In this case, Crawl Space alleges that White & Williams’ representation in the New Jersey litigation was deficient in that the case it presented at trial ‘legally and factually’ preempted antitrust claims against Smart Vent in Virginia. Crawl Space is seeking damages in excess of $30,000,000 as a result of White & Williams’ allegedly deficient legal representation.”
White & Williams countered in a Dec. 30 motion to dismiss that Crawl Space’s amended complaint against it fails to state a claim upon which relief can be granted, and it should be dismissed.
“The essence of the amended complaint is that White & Williams damaged the value of Crawl Space’s antitrust claims against Smart Vent. But Crawl Space did not include antitrust causes of action in its counterclaims in the New Jersey litigation and therefore waived them, and they are barred by res judicata. Crawl Space therefore lost nothing due to any conduct of White & Williams. Crawl Space also waived its claim for malpractice by not raising a malpractice counterclaim when it answered the Pennsylvania litigation complaint for legal fees,” the motion stated.
White & Williams maintained that if Crawl Space had good faith antitrust claims, it was required to bring them as counterclaims in the New Jersey litigation, and not “wait until several months before trial of the New Jersey litigation to retain another lawyer and file a complaint against Smart Vent under Sections 1 and 2 of the Sherman Act in the Eastern District of Virginia.”
Subsequently, Smart Vent moved to dismiss Crawl Space’s amended complaint and the Court dismissed the Section 1 claim, prior to the case being settled.
“Because Crawl Space failed to assert its antitrust claims in response to Smart Vent’s amended complaint, it waived them and they are barred by res judicata. Nothing done or not done by White & Williams caused the loss of those claims, and Crawl Space has no claim for malpractice damages because the claims became worthless when waived,” the motion stated.
“Plaintiff Crawl Space’s amended complaint against White & Williams fails to state a claim upon which relief can be granted. Crawl Space’s claim for legal malpractice is barred as it was required to bring its antitrust claims as compulsory counterclaims in the New Jersey litigation, and should have alleged its malpractice claim against White & Williams as a compulsory counterclaim in the Pennsylvania litigation. Therefore, White & Williams’s motion to dismiss should be granted.”
For a lone count of legal malpractice, the plaintiff is seeking damages of no less than $30,000,000, plus punitive damages, attorney’s fees and costs and other such relief as the Court deems proper.
The plaintiff is represented by Duncan G. Byers of Patten Wornom Hatten & Diamondstein, in Newport News, Va.
The defendant is represented by David D. Hudgins and William Francis Gogoel of Hudgins Law Firm in Alexandria, Va., plus Peter J. Mooney of in-house counsel.
U.S. District Court for the Eastern District of Pennsylvania case 2:22-cv-04698
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com