Hays v. Page Perry, LLC
26 F. Supp. 3d 1311
N.D. Ga.2014Background
- Lighthouse Financial Partners, LLC faced a legal malpractice suit indexed to its receivership after its former manager, DeHaan, pled guilty to wire fraud and misappropriated client funds.
- Page Perry, LLC and Parker, along with Terry, represented Lighthouse from 2008–2012; their engagement excluded compliance duties unless expressly stated.
- Parker conducted mock audits (2010 and 2011) noting custody issues and noncompliance with client statements from custodians Interactive Brokers and TD Ameritrade.
- Lighthouse used a Pass Through Account to move funds, which DeHaan diverted for personal use, contradicting Lighthouse’s custody statements.
- SEC subpoena and investigation followed DeHaan’s scheme; Lighthouse’s assets were frozen and a receiver (Hays) was appointed.
- Plaintiff Receiver alleges defendants knew or should have known of custody issues and failed to inform regulators, causing damages; defendants moved to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether attorneys owed a duty to report regulatory noncompliance | Plaintiff argues defendants had a duty to disclose noncompliance to regulators. | Defendants contend no legal duty to report; GRPC Rule 1.13 does not create such obligation. | No independent duty; dismissal granted. |
| Causation linking alleged breach to damages | Plaintiff claims breach caused DeHaan’s theft. | Damages stem from DeHaan’s conduct, not deficient legal advice. | No causal link; dismissal upheld. |
| Whether claims duplicative of legal malpractice survive | Fiduciary and contract claims supplement malpractice claim. | Those claims duplicate the same theory of breach. | Duplicative claims dismissed. |
| Liability of Page, Perry, and MacIntyre (supervisory or vicarious liability) | Plaintiff seeks supervisory liability for firm partners. | Georgia law bars liability absent direct supervision or evidence of tendencies; no basis alleged. | No supervisory/vicarious liability; dismissal as to these parties. |
Key Cases Cited
- Novare Grp., Inc. v. Sarif, 290 Ga. 186, 718 S.E.2d 304 (Ga. 2011) (negligent supervision requires knowledge of employee tendencies; claims fail here)
- Griffin Indus., Inc. v. Irvin, 496 F.3d 1189 (11th Cir. 2007) (duplicate considerations; pleading standards apply in malpractice context)
- Davis v. Findley, 262 Ga. 612, 613, 422 S.E.2d 859 (Ga. 1992) (Code provisions do not create civil liability for attorney misconduct beyond professional rules)