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The Estate of John R.H. Thouron, Charles H. Norris, Executor v. Cecil Smith & Associates

January 3, 2013


The opinion of the court was delivered by: Slomsky, J.



Before the Court is a Motion to Dismiss the Complaint or, in the alternative, to Transfer Venue. (Doc. No. 12.) The Motion was filed by Defendants Cecil Smith and his law firm, Cecil Smith & Associates ("Defendants"). Plaintiff in this case is the Estate of John R.H. Thouron by and through an Executor named Charles H. Norris ("Plaintiff"). Plaintiff has sued Defendants for giving incorrect advice to the Estate on an estate tax filing required by the Internal Revenue Service ("IRS"). The alleged malpractice is pursued here as a claim for breach of contract by Defendants.

Defendants have moved to dismiss the Complaint on the ground that Plaintiff has failed to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6).

In the alternative, Defendants seek to have this case transferred to the federal court located in the Western District of Tennessee. For reasons that follow, the Court will deny Defendants' Motion.*fn1


A.The Motion to Dismiss

For present purposes, the Court accepts as true all well-pleaded facts of the Complaint. A plaintiff must state sufficient "facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662 (2009). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. Thus, the allegations must do more than raise a "'mere possibility of misconduct.'" Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (quoting Iqbal, 556 U.S. at 679).

In this case, Defendants contend that the breach of contract action filed by Plaintiff is barred by the statute of limitations and for this reason there is no plausible claim. They argue that the cause of action for breach of contract arose in Tennessee and the applicable statute of limitations for such an action is the one year limitations period under Tennessee law. Tenn. Code Ann. § 28-3-104(a)(e)(2). Plaintiff submits, on the other hand, that the four year statute of limitations under Pennsylvania law for breach of contract applies here. 42 Pa. Cons. Stat. § 5525(a).*fn2 To support their claim, Defendants rely on the Pennsylvania Uniform Statute of Limitations on Foreign Claims Act, commonly referred to as the "borrowing statute," which provides as follows:

The period of limitation applicable to a claim accruing outside this Commonwealth shall be either that provided or prescribed by the law of the place where the claim accrued or by the law of this Commonwealth, whichever first bars the claim.

42 Pa. Cons. Stat. § 5521(b).

The Pennsylvania Supreme Court has explained, "a right of action accrues only when injury is sustained by the plaintiff - not when the causes are set in motion which ultimately produce injury as a consequence." Foley v. Pittsburgh-Des Moines Co., 68 A.2d 517, 533 (Pa. 1949). In addition, a cause of action arises and the statute of limitations begins to run "as determined by the final significant event necessary to make the claim suable." Mack Trucks, Inc. v. Bendix-Westinghouse Automotive Air Brake Co., 372 F.2d 18, 20 (3d Cir. 1967).

With respect to the elements of a breach of contract, under Tennessee law, a plaintiff must plead the existence of a contract whether express or implied, the breach of an obligation imposed by the contract, and resultant damages. Life Care Ctrs. of Am. v. Charles Town Assocs. Ltd. Ptnr., 79 F.3d 496, 514 (6th Cir. 1996) (interpreting Tennessee law). The elements of a breach of contract under Pennsylvania law are the same. Pennsy Supply, Inc. v. Am. Ash Recycling Corp. of Pa., 895 A.2d 595, 600 (Pa. Super. 2006).

The essence of the breach of contract claim here is that Defendants, as counsel, advised the Executor that due to the complexity and size of the Estate, it was necessary to request an extension of time from the IRS in which to file an estate tax return. In addition, Defendants advised that this filing would also extend the time to pay the estate tax. It turns out that a separate filing was required to extend the date of the payment of the estate tax. The form to make this request was never filed with the IRS and the failure to do so resulted in the IRS assessing a penalty of $999,072.00 plus interest against Plaintiff. The notification that these funds were due to the IRS ...

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