Alston & Bird LLP v. Mellon Ventures II, L.P.
307 Ga. App. 640
| Ga. Ct. App. | 2010Background
- Investors sued Alston & Bird LLP and two of its attorneys for legal malpractice arising from drafting errors in the Series C Preferred Stock refinancing and Shareholders' Agreement.
- Lead investor Mellon engaged the attorneys to draft final documents; it was customary for leading investor's counsel to represent other investors as well.
- A tag-along clause was drafted but conflicted with the charter's waterfall provision due to a copying error; the mistake surfaced after closing.
- Investors later settled with the managers to reform the agreement; investors then sued the law firm alleging malpractice related to the closing documents.
- The trial court granted partial summary judgment to investors on several issues and appointed a special master to oversee discovery and related rulings.
- The Court of Appeals conducted de novo review of the summary-judgment rulings and related procedural issues, affirming in part and reversing in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proximate cause in legal malpractice | Lyman's testimony supports causation countering defendant's lack of proof. | No evidence would show but-for causation; expert testimony credibility is disputed. | Appellants failed to prove proximate cause as a matter of law; summary judgment affirmed on this issue. |
| Comparative negligence for Noro-Moseley and SBK investors | Investors read and understood the tag-along clause, or were advised; responsibility lies partly with investors. | No evidence investors saw the tag-along clause before closing; no comparative negligence applies to some investors. | Reversed as to Noro-Moseley investors; affirmed as to SBK investors; remanded for further proceedings as needed. |
| Mitigation of damages | Investors mitigated damages; appellants failed to present evidence of failure to mitigate or feasible mitigatory options. | Investors did not prove viable mitigatory options or avoidance of damages. | Summary judgment affirmed; mitigation of damages found in appellants' favor deficient. |
| Discretionary discovery sanctions and return of inadvertently produced emails | Emails contain privileged communications; their disclosure was improper and should be used at trial. | Privilege protected; inadvertent disclosure merely required redaction and return. | Trial court did not abuse its discretion; ordered return and redaction upheld. |
| Appointment of a private special master to decide substantive/evidentiary issues | Appointment was proper under enduring doctrine and USCR 46 for complex issues. | Use of a special master for these issues exceeded permissible bounds; improper without statutory basis. | Affirmed in part; appellate review deferred on some issues; trial court's use of a special master sustained within limits. |
Key Cases Cited
- Millsaps v. Kaufold, 288 Ga.App. 44 (2007) (proximate cause in malpractice cases; standard of proof)
- Carroll v. The Krystal Co., 303 Ga.App. 292 (2010) (opinion credibility and admissibility of opposing-affidavits)
- E.I. DuPont de Nemours & Co. v. Waters, 287 Ga. 235 (2010) (inherent power to appoint special masters; framework for referrals)
- NationsBank v. SouthTrust Bank of Ga., 226 Ga.App. 888 (1997) (privilege and discovery; treatment of confidential communications)
- Lovett v. Sandersville R. Co., 199 Ga. 238 (1945) (inherent judicial authority and power of courts)