JOHN V. PARKER, United States District Judge
This matter is before the court on remand on a motion by defendants, Norman F. Slenker and Slenker, Brandt, Jennings Johnston, to transfer to the Eastern District of Virginia (doc. 237), and a motion by defendants to dismiss the complaint as untimely (doc. 239). Plaintiff, James H. "Jim" Brown, Commissioner of Insurance for the State of Louisiana as Liquidator of Physician's National Risk Retention Group, Inc., opposes both motions. Removal jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332. Oral argument on the motions was held on September 7, 2001.
Background
The Commissioner of Insurance filed this action in state court in his capacity as liquidator of Physicians National Risk Retention Group (PNRRG). The Commissioner claims that defendants entered into Commissioner (as liquidator of PNRRG) in the lawsuit, Karlissa Krombein v. David Davoudlarian, M.D., filed in Circuit Court in the State of Virginia. The Commissioner claims that on November 5, 1992, defendants allegedly caused a $1,175,000 cash appeal bond that had been filed in the Krombein lawsuit by PNRRG to be withdrawn from the registry of the court and used to settle the case without his knowledge or consent and in violation of specific instructions by the Commissioner to have the bond returned to him. The Commissioner claims that this action was a breach of the defendants' contractual and fiduciary duties to plaintiff. The petition was later amended to add a claim for fraud. Defendants filed a counterclaim for fraud and constructive fraud. The matter was subsequently removed to this court.
Defendants filed a motion to dismiss for lack of personal jurisdiction or in the alternative to transfer the matter to the U.S. District Court for the Eastern District of Virginia. The court denied the motion (doc. 27).
At the jury trial of this matter in January of 1999, at the close of plaintiff's case, defendants moved for a judgment as a matter of law, pursuant to Rule 50 of the Federal Rules of Civil Procedure, on the grounds that plaintiff had not introduced sufficient evidence to show: 1) personal jurisdiction over defendants; 2) the existence of a duty owed by the defendants to plaintiff pertaining to the allegations in the complaint; 3) proximate cause; and 4) that defendants should not prevail on their affirmative defense of contributory negligence. The motion was denied. Defendants renewed the motion at the close of all of the evidence and it was again denied. However, the court granted a Rule 50 motion by plaintiff for judgment as a matter of law, finding that there was no legally sufficient evidentiary basis for a reasonable jury to have found for defendants on plaintiff's malpractice claims and on the counterclaims. Judgment was entered granting plaintiff the claimed $700,000.00 in damages.
Defendants filed an appeal of the judgment to the U.S. Fifth Circuit Court of Appeals. The Fifth Circuit reversed and remanded on the issue of prescription (doc. 231), among other issues. The Fifth Circuit ordered that this court determine whether plaintiff's suit is barred under the applicable prescriptive and preemptive law of Louisiana.
On remand from the Fifth Circuit, defendants have filed a motion to dismiss the complaint as untimely and a motion to transfer this mailer to the U.S. District Court for the Eastern District of Virginia.
Arguments
Motion to Dismiss
In support of the motion to dismiss, defendants argue that the one-year prescription period provided by La. R.S. 9:5605 bars the claims asserted by plaintiff. Defendants are not admitted to practice in Louisiana and they argue that the only fair and constitutionally permissible interpretation of the statute requires its application to attorneys who are not admitted to the Louisiana State Bar. Otherwise, defendants argue that the statute violates the Commerce Clause and the Privileges and Immunities Clause of the Constitution of the United States. Defendants argue that Section 5605 applies to bar all of plaintiff's claims, in that all of the claims arise out of the engagement to provide legal services. In the alternative, defendants argue that the one-year prescriptive period contained in La. C.C. Art. 3492 for delictual actions operates to bar any claims not covered by the legal malpractice statute. Further, defendants argue that the legal malpractice statute was specifically intended to avoid application of the ten-year statute of limitations contained in La. C.C. Art. 3499 to actions against attorneys arising from engagements to provide legal services. Nonetheless, defendants argue that Article 3499 does not apply in this case because plaintiff has not alleged that defendants warranted a specific result nor has plaintiff alleged that defendants agreed to perform certain work and did nothing.
In response, plaintiff concedes that the claims for legal malpractice, breach of contract, and conversion are time-barred under Louisiana law. However, plaintiff rgues that the claims for breach of fiduciary duty and fraud are timely. Plaintiff argues that the Louisiana legal malpractice statute has no application in this matter, in that there is no evidence in the record to suggest that defendants are authorized by the laws of Louisiana to engage in the practice of law.
Further, plaintiff argues that the constitutional arguments advanced by defendants are unfounded. Plaintiff argues that Section 5605 does not differentiate based upon a party's citizenship and thus does not burden interstate commerce. Plaintiff argues that if such burden is found, it is incidental in light of the substantial benefit afforded to attorneys admitted to practice in Louisiana. Plaintiff argues that the statute does not prevent out-of-state attorneys from applying for admission to the state bar nor does it prevent out-of-state attorneys from forming law firms authorized to engage in the practice of law in this state.
In addition, plaintiff argues that the statute does not violate the privileges and immunities clause because the right to avail oneself of the defense of a statute of limitations is not a fundamental right. Plaintiff cites the matter of Searle Co. v. Cohn, 455 U.S. 404, 102 S.Ct. 1137, 71 L.Ed.2d 250 (1982) for the proposition that statutes of limitations represent public policy concerning the right to litigate, and are not regarded as fundamental or natural rights. In the alternative, plaintiff argues that Section 5605 is narrowly tailored to protect attorneys admitted to the Louisiana statebar and firms authorized to engage in the practice of law in this state and therefore does not discriminate on the basis of citizenship or residency of any attorney. Further, plaintiff argues that, if the statute is unconstitutional, the applicable statute of limitations for plaintiff's breach of fiduciary duty claim is ten years under La. C.C. Art. 3499 and plaintiff's fraud claim is timely as filed within one year of discovery of the facts supporting the cause of action.
In the alternative, plaintiff argues that, if La. R.S. 9:5605 does apply in this case, the fiduciary duty and fraud claims are nonetheless timely. Plaintiff argues that the fiduciary claim is separate and distinct from the legal malpractice claim because it arises from duties defendants assumed with regard to the funds in particular, and not the general fiduciary duty as legal counsel. Plaintiff argues that the allegations against defendants specifically address intentional breaches of trust and acts outside the scope of fiduciary authority. Further, plaintiff argues that the fiduciary relationship predates the attorney-client relationship.
Defendants reply that plaintiff has never "affirmatively" asserted any cause of action for fraud. Defendants further argue that there is no evidentiary support for the argument that a fiduciary relationship existed at all or separate from the attorney-client relationship.
Motion to Transfer
In the event that the court denies the motion to dismiss the complaint as untimely, defendants urge the court to transfer the matter to the Eastern District of Virginia. Defendants argue that the underlying Krombein lawsuit must be retried within the second trial of this matter. Defendants argue that the majority of the witnesses are located in Virginia, Washington, DC, or Maryland. Moreover, defendants argue that the case is governed by Virginia law, and that personal jurisdiction clearly exists in the Eastern District of Virginia.
In opposition, plaintiff argues that this court has expended considerable judicial resources on this matter and is intimately familiar with the facts and law applicable to this case. Plaintiff concedes that its legal malpractice claim is time-barred under Louisiana law and therefore argues that a "trial within a trial" will not be necessary if this matter proceeds in this court. Plaintiff further argues that its fiduciary duty claim will not require a "trial within a trial".
Defendants reply that plaintiff will nonetheless be required to show proximate causation as part of the prima facie case of breach of fiduciary duty under Virginia law, thereby requiring a "trial within a trial".
Law and Discussion
Motion to Dismiss
The Fifth Circuit remanded the matter for the court to determine, inter alia, whether the plaintiff's action is otherwise barred under Louisiana law. Plaintiff concedes that the claims for legal malpractice, breach of contract, and conversion are time-barred under Louisiana law. The only claims that remain for purposes of the motion to dismiss are the claims for breach of fiduciary duty and fraud.
The Fifth Circuit has determined that the fiduciary duty claim is separate and distinct from any legal malpractice claim because the claim arises from duties Mr. Slenker assumed with regard to the $1.175 million in particular, and not from his general fiduciary duties as an attorney. Therefore, the applicable prescriptive period is ten (10) years under La. C.C. Art. 3499. The earliest actions alleged to be wrongful in this matter occurred in 1992. The lawsuit was filed in 1994 and is therefore timely under this statute. The applicability and constitutionality of La. R.S. 9:5605 is not an issue in this case.
231, p. 20, n. 15.
Art. 3499. Personal action Unless as otherwise provided by legislation, a personal action is subject to a liberative prescription of ten years.
With respect to the fraud claim, the Fifth Circuit noted that this claim was added for the purpose of defeating defendants' prescription claim under Louisiana law. This court must confess lack of understanding the argument by defendants that plaintiff pleads fraud and breach of fiduciary duty only in a "defensive" sense, not an "affirmative" sense. Rule 15 F.R.Civ.P. clearly provides for amended pleadings, that "leave shall be freely given when justice so requires," and that an amended pleading relates back to the date of the original. In this court's view, when a pleading has been amended, it is amended for all purposes.
Doc. 231, p. 6.
Tort claims for fraud, misrepresentation, and tortious interference with contract, are governed by the one-year prescriptive period under Civil Code article 3492. Under the doctrine of contra non valentem, however, prescription does not begin to run before a plaintiff knew or should have known of a cause of action, even if that does not occur until long after the wrongful conduct at issue has occurred.
Art. 3492. Delictual actions. Delictual actions are subject to a liberative prescription of one year . . .
Plaquemines Parish Comm'n Council v. Delta Development Co., 502 So.2d 1034, 1056-60 (La. 1987).
Plaintiff obtained leave of court in 1997 to amend the complaint to assert a cause of action for fraud within one year of learning of the specific acts which supported such cause of action. In the first amended complaint, plaintiff alleges that defendants intentionally misrepresented and suppressed the truth as to an error contained in the April 3, 1992 contract until it was considered by them to their advantage to reveal it in an effort to deny responsibility to plaintiff. Plaintiff further alleges in the amended complaint that defendants intentionally suppressed and misrepresented the existence and execution of the settlement with the attorney for the plaintiff in the underlying malpractice action. Although no specific date for discovery is mentioned in the pleadings, this is an issue of fact for a jury to decide. The allegations of the complaints are such that the court concludes that the motion to dismiss the complaint as untimely is without merit as to the fiduciary duty claims and the fraud claims asserted by plaintiff, and the motion is therefore denied.
Motion to Transfer
28 U.S.C. § 1404(a) provides as follows:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.
In determining whether to grant a motion to transfer under Section 1404(a), federal courts have considered such factors as:
(1) Plaintiff's choice of forum. (2) The availability of compulsory process for the attendance of unwilling witnesses. (3) The cost of obtaining the attendance of willing witnesses. (4) The accessibility and location of sources of proof. (5) The location of counsel. (6) The relative congestion of the courts' dockets. (7) Accessibility of the premises to jury view. (8) Relation of the community in which courts and the jurors are required to serve to the occurrence giving rise to the suit. (9) The time, cost, and ease with which the trial can be conducted, and all other practical considerations relative to the trial.
The decision whether to transfer venue under Section 1404(a) rests within the sound discretion of the district court.
Peteet v. Dow Chemical Co., 868 F.2d 1428, 1436 (5th Cir. 1989).
The Fifth Circuit has vacated the court's ruling on personal jurisdiction in this matter on the grounds that the issue of personal jurisdiction is a jury question as it is intertwined with the merits. Therefore, the court's jurisdiction over defendants remains an issue for determination. However, the issue of personal jurisdiction may not exist if this matter is transferred to Virginia.
Further, the court has previously ruled that Virginia substantive law applies to this case (docs. 117 and 170). The Fifth Circuit has noted that Virginia law requires a "trial within a trial" to show proximate cause as to a legal malpractice claim, and plaintiff has reserved its right (if any) to pursue a legal malpractice claim under Virginia law.
To the extent that a "trial within a trial" must be conducted, and to possibly moot any potential personal jurisdiction issues, the court now finds that transfer of this matter to Virginia is appropriate. In federal court in Virginia, compulsory process for the attendance of unwilling witnesses is readily available. The cost of obtaining the attendance of willing witnesses would be less in federal court in Virginia than here in Louisiana. Virtually all Louisiana witnesses whose testimony will be required have already testified. Their testimony therefore is available under FRE 804(b)(1) and plaintiff can prevail upon them to travel to Virginia, if necessary. Since the majority of the alleged wrongful acts occurred in Virginia, that state provides for the location of, and greater accessibility to, sources of proof. Finally, as defendants are attorneys licensed to practice in the state of Virginia, there is a greater relation between the community in which the court and the jurors are required to serve and the occurrence giving rise to the suit. The court now finds, despite its previous finding to the contrary, that, in the interest of justice, this matter should be transferred to the United States District Court for the Eastern District of Virginia.
To plaintiff's plea that this court has already expended six-plus years of effort in the case, the court responds, that effort has largely been in vain, for this action must be tried over in toto.
Conclusion
Accordingly, for the foregoing reasons, the motion by defendants to dismiss the complaint as untimely (doc. 239) is hereby DENIED, and the motion by defendants, Norman F. Slenker and Slenker, Brandt, Jennings Johnston, to transfer to the Eastern District of Virginia (doc. 237) is hereby GRANTED, and this matter is hereby TRANSFERRED to the United States District Court for the Eastern District of Virginia.