ANTIOCH LITIGATION TRUST. v. McDERMOTT WILL EMERY

287, 312 (S.D. Ohio 2007) (citing Gries Sports Enter., Inc. v. Cleveland Browns Football Co., Inc., 26 Ohio St.3d 15, 20 (Ohio 1986)). Since the business judgment rule was intended for directors who act reasonably, and not for the purpose of protection against self-dealing, the rule does not apply to the conflicted directors with respect to the transaction. See Granada Inv., Inc. v. DWG Corp., 823 F.Supp. 448, 454 (N.D. Ohio 1993). Consequently, the business judgment rule provides no defense to the Antioch directors or to MWE.

Additionally, Defendant claims that based on the opinions of three separate financial advisors that the $850 per-share price was fair, MWE had no basis for advising Antioch to assert causes of action against its Board for self-dealing. However, as discussed in Section III.A.1, supra, these valuations did not state that the $850 per-share was fair to the corporation (MWE's client).

Moreover, although securing an independent assessment from a financial advisor or legal counsel is evidence of a thorough investigation, Martin v. Feilen, 965 F.2d 660, 670-71 (8th Cir. 1992), it is not a complete defense to a charge of imprudence. See Donnovan v. Mazzola, 716 F.2d 1226, 1234 (9th Cir. 1983). Independent expert advice is not a "whitewash." Donovan v. Bierwirth, 680 F.2d 263, 272 (2d Cir. 1982); Donovan v. Walton, 609 F. Supp. 12, 16 (D.C. Cal. 1984). The fiduciary must: (1) investigate the expert's qualifications, Mazzola, 716 F.2d at 1234, (2) provide the expert with complete and accurate information, Cunningham, 716 F.2d at 1467, and (3) make certain that reliance on the expert's advice is reasonably justified under the circumstances. Id. at 1474; see also Jordan, Pflepsen, Jr., Goldberg, ERISA Litigation Handbook, § 3.03[A] (1994).

Conflicted fiduciaries do not fulfill ERISA's investigative requirements by merely hiring an expert. There is no indication that the directors meaningfully reviewed, discussed, or questioned the valuation.

7. Malpractice arising out of MWE's advice relating to Antioch's attempted sale and refinancing

MWE continued to represent Antioch in connection with the company's efforts to sell, refinance, or recapitalize itself, which spanned the period from early 2007 through June 5, 2008. the day that Antioch terminated MWE. (Doc. 14 at ¶¶ 54-68). While Antioch had engaged Houlihan again to find a purchaser for the company, MWE helped the Morgan family hire a separate financial advisor, Candlewood Partners, to assist in efforts by the Morgans to secure refinancing or recapitalization that would leave the Morgan family in control of the company. ( Id. at ¶¶ 56-57). Plaintiff claims that despite conflicts between these two efforts, MWE failed to counsel the Board to stop this incompatible dual track approach, which was caused by the Morgans, acting in their own self-interest, rather than in the interest of the company. ( Id. at ¶ 61).

As alleged in the complaint, "the preference given by Antioch to a consensual deal with the Morgans had the effect of discouraging potential purchasers who were interested in acquiring control of Antioch. Potential purchasers knew that two directors, including the CEO and COO, who also controlled a large block of stock and were the largest unsecured creditors of Antioch, disfavored a sale to such an extent that they were pursuing with the Board's blessing, alternative transactions to maintain their own control of the business." (Doc. 14 at ¶ 60). Plaintiff claims that these factual allegations support more than a plausible conclusion that Antioch foreclosed opportunities to sell the company to independent purchasers by pandering to the Morgans' interests. Plaintiff claims that it is plausible that a purchaser would pay more to purchase a company outright, including the right to control the company through its own directors and officers, than one would pay to provide financing or capital to others who would control the decision-making.

Defendant maintains that Plaintiff does not allege any causal link between the alleged "incompatible" efforts of the Morgans' financial advisor and Antioch's financial advisor and the failure to sell or refinance the company. Defendant claims that having two advisors search for purchasers of the company actually increased the likelihood of both consummating a sale and a higher transaction price for the sale. Defendant also claims that Plaintiff does not have any factual support for the allegation that the company's "preference" for a "consensual deal with the Morgans had the effect of discouraging potential purchasers."

As this Court explained initially, the Federal Rules require only that the complaint state a claim, and the conclusory nature of particular allegations alone cannot justify dismissing a complaint. Back v. Hall, No. 07-5934, 2008 U.S. App. LEXIS 17057, at *14 (6th Cir. Aug. 11, 2008). See Erickson v. Pardus, 551 U.S. 89 (2007). Here, Defendant has offered potentially plausible defenses to Plaintiff's claim, but these arguments are insufficient to dismiss the claim.

Additionally, Defendant claims that the number of financial advisors that Antioch should have retained is a business question, and Plaintiff concedes that MWE had no duty to provide "business advice" to Antioch. The Trust, however, does not allege that MWE should have provided business advice. Rather, the Trust alleges that, as company counsel, MWE should have advised the directors against self-dealing.

B. Whether Plaintiff's Legal Malpractice Claims Are Time-Barred

The first amended complaint alleges that MWE committed malpractice in the course of representing Antioch in what Defendant claims are two separate events: (1) the November 14, 2004 Tender Offer and (2) the 2007 through early-2008 attempts to refinance or sell Antioch. (Doc. 14 at ¶¶ 20, 29, 54, 59). Accordingly, Defendant claims that all allegations relating to the 2003 Tender Offer are barred by the one-year statute of limitations. Ohio Rev. Code § 2305.11(A).

"An action . . . for malpractice . . . shall be commenced within one year after the cause of action accrued." Id.

A cause of action for legal malpractice accrues, and the one-year statute of limitations begins to run, on the later of two dates: (1) "when there is a cognizable event whereby the client discovers or should have discovered that his injury was related to his attorney's act or non-act and the client is put on notice of a need to pursue his possible remedies against the attorney"; or (2) when the attorney-client relationship for that particular transaction or undertaking terminates." Zimmie v. Calfee, Halter Griswold, 42 Ohio St. 3d 54, 57-58 (1989).

Defendant claims that the 2003 Tender Offer transaction closed in December 2003, and, therefore, all allegations relating in any way to the 2003 Tender Offer are barred by the one-year statute of limitations. (Doc. 14 at ¶ 41; Doc. 16, Ex. A at 11). Conversely, Plaintiff argues that the termination of the "particular transaction" prong of Zimmie was triggered in June 2008, when Antioch terminated the attorney-client relationship with MWE. (Doc. 18 at 25-30).

1. Cognizable event

A "cognizable event" is one "alert[ing] a reasonable person that his attorney has committed an improper act in the course of legal representation." Warman v. L. Patrick Mulligan Assocs., Co., No. 22503, 2009 Ohio App. LEXIS 1670, at *5-6 (Montgomery Cty. Apr. 17, 2009). "Knowledge of the potential problem" triggers the limitations period. Halliwell v. Bruner, Nos. 76933 and 77487, 2000 Ohio App. LEXIS 5896, at * 19 (Cuyahoga Cty. Dec. 14, 2000).

Defendant claims that if it caused any of Antioch's injuries, then Antioch knew that there was a problem with the Tender Offer no later than December 2006. Zimmie, 43 Ohio St. 3d at 58 (an injured client need not "be aware of the full extent of the injury before there is a cognizable event"); Mohler v. Unger, No. C3-90-284, 1994 U.S. Dist. LEXIS 21698, at *2, 23 (S.D. Ohio Aug. 26, 1994) ("While the Plaintiffs may have been in doubt about whether Defendant's professional services, or lack thereof, had played a part in the loss of stock value, they were then aware that all was not well"). Defendant further claims that it is irrelevant whether Antioch knew about the "legal significance" of those facts. Collett v. Steigerwald, No. 22028, 2007 Ohio App. LEXIS 5523. at *6, 8, 14, 16 (Montgomery Cty. Nov. 21, 2007) (affirming dismissal of malpractice action; explaining that knowledge of a "breach of the attorney's duty of care" is not required). Accordingly, Defendant argues that Plaintiff's malpractice claims accrued at least by December 2006 under the "cognizable event" prong of the Zimmie test. Mohler. 1994 U.S. Dist. LEXIS 21698, at 2, 21, 23 (the "cognizable event" occurred when the ESOP and plaintiffs learned that stock prices had significantly dropped after the leverage buyout of the company).

According to Plaintiff, Antioch's requirement to pay cash to repurchase the shares of its departing employees increased from $14 million in 2003 (before the Tender Offer) to "almost $75 million" in 2004 (after the Tender Offer). (Doc. 14 at ¶¶ 11, 46-47). Antioch suffered additional financial harm in 2005 and 2006. ( Id. at ¶¶ 11, 46-48, 52). Plaintiff alleges that by December 2006, "Antioch's cash reserves and borrowing capacity were destroyed and the company ceased making any further repurchase payments to any former employees." ( Id. at ¶¶ 48, 52) (in 2005 and 2006, Antioch's "debt continued to remain at extraordinarily high and unmanageable levels.").

Plaintiff claims, and the Court agrees, that it is not necessary to determine when a "cognizable event" occurred, because termination of the attorney-client relationship (June 5, 2008, as discussed in Section III.A.2, is the later date of the two tests.

2. Termination of the attorney-client relationship

The Sixth Circuit and this Court have held that the "key date" in determining the date of termination of a "particular transaction" ( Zimmie, 43 Ohio St. 3d at 57-58) is "when the [legal] representation on the matter in question ceases, rather than all representation." Mohler, 1994 U.S. Dist. LEXIS 21698, at 22. See also FDIC v. Alexander, 78 F.3d 1103, 1106, 1110 (6th Cir. 1996) (in legal malpractice action under Ohio law, holding that law firm's "general representation" of the corporation for other matters did not "toll the statute of limitations" for the earlier transaction at issue). "The question of when an attorney-client relationship for a particular undertaking or transaction had terminated is necessarily one of fact." Alexander, 78 F.3d 1103 at 1110.

The Trust alleges that MWE opened two matters for its representation of Antioch, one called "General." and another called "ESOP Transaction." (Doc. 14 at ¶ 18). In February 2008, MWE billed Antioch an additional $100,000 for a retainer under the ESOP Transaction matter and billed Antioch for services provided up through June 5, 2008 (the instant lawsuit was filed on June 4, 2009). ( Id.; see also Id. at ¶ 55) ("McDermott's attorneys continued to advise Antioch on matters related to the 2003 Transaction right up until Antioch terminated MWE on June 5, 2008."). Additionally, Plaintiff alleges that neither party communicated that the representation related to the ESOP Transaction had ended, and there was no suggestion that MWE closed the ESOP Transaction matter number, that the attorneys working on that transaction stopped working for Antioch, or that ESOP files were returned to Antioch or given to another lawyer before June 5, 2008. (Doc. 18 at 30).

Conversely, Defendant claims that its continued representation of Antioch after the 2003 Tender Offer transaction closed does not extend the limitations period for its malpractice claims relating to that "particular transaction," because Plaintiff's malpractice claims relating to the 2003 Tender Offer are based solely on advice provided before the transaction closed. ( E.g., Doc. 14 at ¶¶ 33-35) (alleging that MWE failed to advise Antioch to obtain a fairness opinion before the transaction was approved).

Additionally, Defendant claims that the cases cited by Plaintiff (Doc. 18 at 26-28 Murphy and Johnson) do not support its contention that MWE's general representation of Antioch tolled the limitations period as to MWE's specific work on the Tender Offer. The courts in Murphy and Johnson concluded that factual issues existed regarding when the termination prong was triggered because the evidence showed that the challenged legal advice that was given after the original transaction had ended related directly to that transaction. Defendant maintains that, unlike the claims in Murphy and Johnson, Plaintiff's allegations of continued representation (Doc. 14 at ¶¶ 18, 48, 55, 62) do not relate to MWE's pre-closing work on the 2003 transaction.

Murphy v. Hyatt Legal Servs., No. 16194, 1993 Ohio App. LEXIS 5829, at *7-8 (Summit Cty. Dec. 1, 1993) (deposition testimony indicated that attorney-defendant told the client after the original deed was filed that he would correct his mistakes on that deed); Johnson v. Lapin, No. 3:93-CV-7521, 1995 WL 681102. at *1-3 (N.D. Ohio Oct. 24, 1995) (malpractice claim was based on alleged incorrect legal advice provided after the original land transaction had closed and the post-closing advice related to what was wrong with the original transaction).

To toll the termination prong of Zimmie as to the 2003 transaction, MWE's continued legal advice must be alleged to have been incorrect, and the alleged malpractice must relate to that transaction.

Defendant claims that under the second prong of the Zimmie test, the limitations period was triggered in December 2003 — when the Tender Offer closed. (Doc. 14 at ¶¶ 27, 41). This Court has held that an attorney's representation terminates as to a particular transaction when the business transaction closes. Mohler, 1994 U.S. Dist. LEXIS 21698, at 2, 22. Defendant alleges that because the Tender Offer closed in December 2003, claims related to MWE's work on that transaction are untimely under the "particular transaction" prong of Zimmie. Plaintiff pleads around the "particular transaction" prong by alleging that MWE continued to advise Antioch on matters concerning the 2003 Tender Offer through June 2008. (Doc. 14 at ¶¶ 18, 48, 55, 62). In response, Defendant alleges that this Court has expressly rejected an attempt to extend Ohio's statute of limitations in a legal malpractice action based on continued representation. That is, in Mohler, 1994 U.S. Dist. LEXIS 21698, at 2-3, 22-23, this Court ruled that the law firm's representation of the ESOP ended on the date of the leveraged buyout (in September 1987), even though plaintiffs alleged that the firm "continued to represent the ESOP until the financial demise of [the company] in October 1990." See also Alexander, 78 F.3d at 1106, 1110 (affirming dismissal of legal malpractice claim under Ohio law; holding that representation for the "particular transaction" at issue ended in December 1986. despite the fact that the law firm continued to represent the company on other issues).

However, the Court finds that Mohler and Alexander are distinguishable from the facts of the instant case. The legal malpractice claim was before the Mohler Court on a motion for judgment as a matter of law ( Mohler, 1994 U.S. Dist. LEXIS 21698 at 2) and before the Alexander Court on an appeal from a grant of summary judgment ( Alexander. 78 F.3d 1103 at 1106). Accordingly, the courts had complete factual records for their consideration. This is a significant distinction from the instant case, where there are still disputed issues of material fact regarding whether Defendant continued to provide legal services related to the ESOP Transaction. Additionally, in both Mohler and Alexander, Plaintiff sought to use "general representation" by the law firm to keep alive a malpractice claim related to a particular transaction or undertaking. Neither court analyzed the question of how the particular transaction or undertaking was concluded; they merely reaffirmed the basic principle that a general representation on its own does not necessarily toll the statute as a matter of law.

In Slavens v. Spetnagel, No. 95CA769, 1996 WL 422499 (Ohio Ct. App. July 26, 1996), the court reviewed the policy behind the particular transaction or undertaking rule and explained that "the `particular transaction' language was added to the termination rule to avoid the possibility of continuous `general' representations tolling the statute of limitations." Id. at 5. However, the court cautioned as follows:

We think it unwise to attempt to dissect every legal transaction down to its elemental building blocks and then call each of these building blocks a separate transaction. If we were to narrowly define the "particular transaction," we believe that the attorney-client relationship would be significantly weakened. Any possible malpractice would force the client to consider bringing suit and likely end the attorney-client relationship or risk the waiver of a malpractice action. The client, as well as the attorney, might never know when one particular transaction has concluded and another has begun, thus ending the tolling provided by the termination rule, until a malpractice action was tried. The termination rule was adopted to avoid the necessity of the client making this unpleasant choice.

Id. (citation omitted) (emphasis added).

The court held that "`particular transaction' . . . encompasses all dealings related to the proceeding in which the alleged malpractice occurred that are not of a general nature." Id. The court determined that a question of fact remained as to whether the estate matter work was a general representation or whether it was "related to the proceeding in which the alleged malpractice occurred." Id. at 6.

MWE, like the lawyer in Murphy, suggests that its representation of Antioch regarding the ESOP necessarily ended — as a matter of law — when the ESOP Tender Offer was concluded in December 2003, because that signaled the end of a "particular transaction." (Doc. 16 at 11). But MWE, like the lawyers in Slavens and Murphy. continued to represent Antioch in matters related to the ESOP and the Tender Offer, including providing advice related to the 800 Antioch employees who resigned or were terminated between 2004 and 2007 because of the Tender Offer, as well as issues related to the ESOP S-Corporation structure and ESOP Notes that were established by the 2003 transaction. (Doc. 14 at ¶¶ 48, 55).

The Court must analyze the facts to determine when MWE's representation ended, and, at this stage in the litigation, construe the conflicting facts in the light most favorable to the Trust and take all well-pleaded factual allegations as true. Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009). Accepting Plaintiff's facts as true, there are genuine issues of fact as to when the relationship between Plaintiff and Defendant terminated, and reasonable minds could differ as to whether Defendant continued to represent Plaintiff with respect to the ESOP.

Accordingly, at this stage in the litigation, the Court finds that Plaintiff has properly alleged that it initiated this action within the one year statute of limitations.

C. Whether The Attempted Assignment Of Antioch's Malpractice Claim To The Litigation Trust Was Invalid

As part of Antioch's plan of reorganization, in accordance with 11 U.S.C. § 1123(b)(3), Antioch's bankruptcy estate succeeded to and retained certain identified Litigation Claims and Business Litigation Claims. (Doc. 10. Ex. D). The Bankruptcy Order provided that "the Debtors, their Estates, or the Reorganized Debtors [ i.e. Antioch] shall cause the Litigation Claims to be contributed, transferred, and assigned to the Litigation Trust" (Plaintiff here). ( Id., ¶ M at 11). Accord: (Id., ¶ 30 at 37; Plan of Reorganization, ¶ 5.13(a) at 29-30; ¶ 10.5 at 37-38). The Litigation Trust Agreement recognized that Antioch as debtor owned the Litigation Claims but purported to assign them to the Litigation Trustee: "Debtors hereby absolutely assign to the Trustee, and to his successors in trust and successors and assigns, all right, title and interest of the Debtors in and to the Trust Assets." including the Litigation Claims. ( Id., Ex. 2 at 2; ¶ 1.3, at 3) ("the Debtors and their Chapter 11 estates shall transfer, assign and convey to the Trustee the Trust Assets"). Ohio law governs the Litigation Trust Agreement. ( Id. ¶ 8.1 at 16).

"Litigation Claims" are defined as "all claims, rights of action, suits or proceedings by any Debtor or Estate, whether in law or in equity, whether known or unknown, that any Debtor or Estate may hold against any person." ( Id. § 1.75 at 14).

Plaintiff argues that pursuant to The Second Amended Joint Prepackaged Plan of Reorganization of The Antioch Company and its Affiliate Debtors, confirmed on January 27, 2009 by the United States Bankruptcy Court for the Southern District of Ohio, the Litigation Trust Agreement grants the Trustee the powers "to act as a representative of the Estates in accordance with Section 1123(b)(3) of the Bankruptcy Code with authority to investigate, institute, prosecute, litigate, maintain, settle, compromise or otherwise resolve Litigation Claims or any other actions or proceedings that the Trustee determines to be

prudent." (Doc. 10, Ex. D, Ex. 2, § 2.1(a) at 20). As a result, Plaintiff claims that the Trustee stands in the shoes of Antioch, and he can bring any claim that Antioch could have brought, including legal malpractice claims. Metro. Creditors' Trust v. Pricewaterhousecoopers, 463 F. Supp. 2d 1193, 1199-1200 (E.D. Wash 2006) (holding that the "reference to Section 1123 in the trust agreement at issue manifests a clear intent to appoint the [t]rusts as representatives, rather assignees, of the debtors' claims"). Moreover, the transfer of Antioch's claims to the Trust is consistent with the goal of a Chapter 11 plan, to maximize distributions to creditors. Id. at 1200; Fields Station v. Capitol Food Corp. of Fields Corner, 490 F.3d 21, 25 (1st Cir. 2007) (holding that a primary purpose of a chapter 11 petition is to maximize distributions to creditors). The Trustee has a duty to investigate and prosecute claims in order to increase potential distributions to certain creditors. (Doc. 10, Ex. D. Ex. 2 § 2.1(a) at 20). Accordingly. Plaintiff argues that the Trust's possession of Antioch's malpractice claims is governed by and consistent with bankruptcy law.

"The controlling principle of the Bankruptcy Code is the quick and efficient resolution of the bankrupt estate." In re Enron Corp., No. 01-16034, 2006 WL 538552, at *4 (Bankr. S.D.N.Y. Jan. 6, 2006). Section 105(a) of Chapter 11 grants bankruptcy courts broad equitable powers to effectuate the purposes of the Bankruptcy Code, so long as the court's actions are not inconsistent with the Code. See ATD Corp. v. Advantage Packaging, Inc. (In re ATD Corp.), 352 F.3d 1062, 1066 (6th Cir. 2003); In re Richard Potasky Jeweler, Inc., 222 B.R. 816, 829 (S.D. Ohio 1998). The Code specifically contemplates the need for post-confirmation entities to implement a plan. 11 U.S.C. § 1123(a)(5)(B) (authorizing the "transfer of all or any part of the property of the estate to one or more entities, whether organized before or after the confirmation of such plan").

Defendant claims that the Court should reject Plaintiff's arguments because: (1) the clear language of the Plan documents state that there was an assignment, and (2) Ohio law prohibits such an assignment. Defendant maintains that Ohio law bars the transfer of Antioch's legal malpractice claims to the Trust because, upon the filing of Antioch's petition for bankruptcy under 11 U.S.C. § 541, any of Antioch's purported professional negligence claims became property of the bankruptcy estate. Cottrell v. Schilling, 876 F.2d 540, 542-43 (6th Cir. 1989). "Under 11 U.S.C. § 541, the trustee . . . takes the property subject to the same restrictions that existed at the time the debtor filed the petition." Demczyk v. Mut. Life Ins. Co., 126 F.3d 823, 831 (6th Cir. 1997). "To the extent an interest is limited in the hands of the debtor, it is equally limited as property of the estate." Guar. Residential Lending, Inc. v. Homestead Mortgage Co., 291 Fed. Appx. 734, 741 (6th Cir. 2008).

Specifically, Defendant claims that the formation of the Litigation Trust pursuant to the debtor's right to retain claims under 11 U.S.C. § 1123(b)(3) does not negate the plain language of the Plan documents that an assignment of a legal malpractice claim was made. nor does Section 1123(b)(3) transform the Litigation Trustee into a "bankruptcy trustee" with all authority under bankruptcy laws. Rather, the Litigation Trustee, a creature created by contract, has only those rights and duties purportedly given to it by the Litigation Trust Agreement, and it received only some of Antioch's claims.

The Litigation Claims and Business Litigation Claims that Antioch retained are listed on Plan Schedule 10.5 of the Plan of Reorganization.

Defendant claims that state law governs as to the restrictions that existed at the time the debtor filed the petition. Guar. Residential Lending, 291 Fed. Appx. at 738. The Court does not dispute that the assignment of legal malpractice claims is generally prohibited. Sparagowski v. Williams, No. L-80-064, 1980 Ohio App. LEXIS 12363, at *7 (Lucas Cty. July 25, 1980) ("A cause of action running in favor of a person or corporation for legal malpractice is not transferable or assignable. This harmonizes with the general rules in Ohio that contracts to render professional or personal services, or those that involve a relationship of personal confidence and which involve rendition of skill or competence, are not transferable or assignable."). The rule against assignability of legal malpractice claims stems from "the unique quality of legal services, the personal nature of the attorney's duty to the client, and the confidentiality of the attorney-client relationship." Goodley v. Wank Wank, Inc., 62 Cal. App. 3d 389, 397 (Cal. Ct. App. 1976).

Defendant claims that this same principle has been applied to prohibit the assignment of legal malpractice claims under other states' laws by a bankruptcy estate. See, e.g., Baum v. Duckor, Spradling Metzger, 84 Cal. Rptr. 2d 703, 712 (Cal. Ct. App. 1999) ("We thus hold [under California law] that a legal malpractice claim belonging to the bankruptcy estate of a corporation may not be assigned by the trustee of that estate to a creditor of the corporation or any other person."). However, Baum did not involve a Chapter 11 petition. See Office of Statewide Health Planning Dev. v. Musik, Peeler Garrett, 76 Cal. App. 4^th 830, 835 (Cal. Ct. App. 1999) (holding that the no-assignment rule set forth in Baum did not apply because "a Chapter 11 bankruptcy plan may allow for the retention of a claim in the bankruptcy estate to be enforced by a representative other than the estate").

Defendant argues that because the Supreme Court of Ohio has not addressed this issue, the Court is bound by Sparagowski. Johnson v. Karnes, 198 F.3d 589, 593 n. 3 (6th Cir. 1999) (concluding that it was "bound" by "an unpublished decision" of an Ohio appellate court because the criminal defendant did not show that the Ohio Supreme Court "would decide the issue differently"). Accord: Stanek v. Greco, 323 F.3d 476, 478 (6th Cir. 2003) ("Where a state's highest court has not spoken on a precise issue, a federal court may not disregard a decision of the state appellate court on point unless it is convinced by other persuasive data that the highest court of the state would decide otherwise."). However, the case law does not require that the Court be bound by an unpublished decision, but rather that the Court may not "disregard" the decision. Id. at 478 (citing Ziegler v. IBP Hog Mkt., 249 F.3d 509, 517 (6th Cir. 2001)). Accordingly, the undersigned has carefully read and considered these cases, but finds that they are factually distinct from the instant case and therefore are not binding authority.

Plaintiff relies on the reasoning in Parrett v. Nat'l Century Fin. Enters., No. 2:04-cv-489, 2006 U.S. Dist. LEXIS 16982, at *12-16 (S.D. Ohio Mar. 23, 2006). arguing that Sparagowski is inapplicable because the assignment in the instant case occurred by operation of law, whereas Sparagowski involved an actual sale of a legal malpractice claim. (Doc. 18 at 32-33). Parrett recognized that the "Bankruptcy Code authorizes the creation of post-confirmation entities whose purpose is to liquidate the property of the estate for the benefit of the creditors." Id. at 5 (stating that the rule against the transfer of malpractice claims should not be applied where assignment is authorized by law, where the policy concerns of the rule are not implicated, and where the rule would frustrate the Bankruptcy Code). See also Cottrell, 876 F.2d 542-543 (holding that claims become a part of the bankruptcy estate regardless of whether such claims are assignable under state law).

MWE claims that the Parrett court reached the wrong conclusion. Other federal courts have disagreed with MWE. See In re Jennings, 378 B.R. 678, 683-684 (Bankr. M.D. Fla. 2006) (citing Parrett and holding that entities appointed under a Chapter 11 plan can assert causes of action that belong to the estate irrespective of the general rule prohibiting assignment); Network Staffing Serv., Inc., v. Jenkins Gilchrist, No. 02-35608-SAF-11, 04-3388, 2004 WL 3007082, * 4 (Bankr. N.D. Tex. 2004) (holding that Texas state law against assigning malpractice claims was inapplicable to liquidating trust created pursuant to Chapter 11 plan).

"The plaintiff purchased the claim against defendants-appellees from the trustee in bankruptcy on March 14, 1977." Sparagowski, 1980 Ohio App. LEXIS 12363 at 2-3 (emphasis added). The Court in Sparagowski did not discuss claims transferred to a post-confirmation entity created to prosecute the claims of the estate under 11 U.S.C. § 1123(b)(3)(B).

Defendant claims that the assignment of the legal malpractice claim from Antioch to the Litigation Trust did not occur by operation of law but by Antioch's affirmative conduct. Antioch specifically retained the malpractice claim (while keeping others), as it may do, under 11 U.S.C. § 1123(b), and then Antioch "assigned" the claim to the Litigation Trust. The Trust was created to litigate claims in place of the dissolved estate. As a result, and consistent with fundamental bankruptcy law, the Trustee stands in the shoes of Antioch, and therefore can bring any claim that Antioch could have brought.

IV. CONCLUSION

Accordingly, based on the foregoing, Defendant's motion to dismiss (Doc. 16) is DENIED.

IT IS SO ORDERED.