Jodie Kelly v. Paul Rembach
2017 U.S. App. LEXIS 15846
5th Cir.2017Background
- Plaintiff Jodie Kelly alleges a conspiracy with defendant Paul Rembach and attorney Seth Nichamoff to defraud her into buying undervalued shares of Legacy Automation, with false assurances about 50% ownership and concealment of material information.
- Kelly's complaint claims Nichamoff helped manipulate the share transfer, received payments beyond legal fees, and had a pecuniary interest in Kelly’s acquisition.
- Nichamoff moved to dismiss under Texas attorney-immunity doctrine, asserting the alleged acts fell within his representation of Rembach.
- The district court denied dismissal, concluding the alleged conduct occurred in a business/transactional context unrelated to litigation or an adversarial proceeding.
- Nichamoff appealed; the Fifth Circuit has collateral-order jurisdiction to review denial of attorney-immunity dismissals.
- The Fifth Circuit affirms the denial on alternative grounds: Nichamoff failed to conclusively show on the face of the complaint that the alleged conduct was within the scope of his legal representation (the burden required under Texas law).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Texas attorney immunity bars Kelly's claims against Nichamoff | Kelly argues immunity should not extend where conduct is unrelated to litigation or where the attorney participated in a fraud scheme | Nichamoff contends immunity protects attorneys for conduct within scope of client representation, including transactional work here | Denied on alternative ground: Nichamoff failed to conclusively establish on the complaint’s face that alleged acts were within the scope of representation; dismissal inappropriate |
| Whether mere attorney-client relationship at time of wrongdoing establishes immunity | Kelly: mere representation at the time is insufficient; lawful duties do not cover independent fraud | Nichamoff: representation at the time supports immunity for acts tied to that representation | Held: Mere contemporaneous representation is insufficient; attorney bears burden to conclusively show scope covers the conduct |
| Whether independently fraudulent or pecuniary-interest allegations defeat immunity | Kelly: allegations that Nichamoff received extra payments and had pecuniary interest indicate independent fraud outside attorney duties | Nichamoff: denies or argues actions were part of transactional representation | Held: Such allegations, credited at pleading stage, suggest independently fraudulent activity foreign to attorney duties and defeat immunity at this stage |
| Whether this Court should decide whether immunity applies only in litigation-like contexts | Kelly: court should adopt bright-line rule limiting immunity to litigation contexts | Nichamoff: urges broader application including transactional contexts | Held: Court declines to decide that broader question; resolves case on Nichamoff’s failure to meet his burden to show scope of representation |
Key Cases Cited
- Troice v. Proskauer Rose, L.L.P., 816 F.3d 341 (5th Cir. 2016) (establishes collateral-order appealability and de novo review for attorney-immunity denial)
- Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477 (Tex. 2015) (defines Texas attorney-immunity scope and burden on attorney to prove immunity)
- EPCO Carbon Dioxide Prods., Inc. v. JP Morgan Chase Bank, N.A., 467 F.3d 466 (5th Cir. 2006) (Rule 12(b)(6) dismissal and affirmative defense must appear on complaint’s face)
- Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398 (Tex. App.—Houston [1st Dist.] 2005) (attorney cannot shield willful, premeditated fraud by invoking agency/representation)
- Kruegel v. Murphy, 126 S.W. 343 (Tex. Civ. App. 1910) (historical articulation that attorneys may advise and defend without incurring liability)