Seed Company Limited v. Westerman, Hattori, Daniels & Adrian, LLP ( 2020 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Submitted March 27, 2020 Decided June 12, 2020
No. 19-7086
SEED COMPANY LIMITED AND SHIGERU TAMAI,
APPELLANTS
v.
WESTERMAN, HATTORI, DANIELS & ADRIAN, LLP, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cv-00355)
Creighton Magid and Paul T. Meiklejohn were on the
briefs for appellants.
J. Peter Glaws IV and Paul J. Maloney were on the brief
for appellees Kratz, Quintos & Hanson, LLP, et al.
Mark London and Lance A. Robinson were on the brief for
the Westerman appellees.
Before: HENDERSON, ROGERS and GARLAND, Circuit
Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
2
KAREN LECRAFT HENDERSON, Circuit Judge: This legal
malpractice case arises out of the failure of two sets of lawyers
associated with two different law firms, Westerman, Hattori,
Daniels & Adrian, LLP (Westerman) and Kratz, Quintos &
Hanson, LLP (Kratz), to file necessary documents in the
plaintiffs’ patent case, allegedly resulting in the plaintiffs’ loss
of that case. The plaintiffs’ complaint alleged four counts
against the defendants: Count I against both defendants for the
original malpractice, Count II alleging that Westerman
negligently gave legal advice after the original decision in the
patent case issued and Counts III and IV alleging that advice
Kratz gave regarding the malpractice case against Westerman
led to the loss of the Count I claim against both defendants
through the operation of the statute of limitations. In a previous
appeal, we ordered Count I against Westerman to proceed to
trial, dismissed Count I against Kratz based on the statute of
limitations and remanded Counts II, III and IV to the district
court for further consideration. On remand, the district court
dismissed Count II based on the plaintiffs’ concessions and
granted summary judgment to Kratz on Counts III and IV. The
plaintiffs now appeal those rulings. We affirm.
I. Background
The plaintiff-appellants, Seed Company Limited and
Shigeru Tamai (Seed), filed three patent applications for a
device that dispenses correctional tape. See Seed Co. v.
Westerman (Seed II), 832 F.3d 325, 328–29 (D.C. Cir. 2016).
Seed filed one application in Japan, one through the
international Patent Cooperation Treaty (PCT) and one in the
United States. Id. at 329. The law firm Armstrong, Westerman,
Hattori, McLeland & Naughton LLP (Armstrong Westerman)
handled Seed’s U.S. patent application. Because the U.S.
Patent Office determined that another inventor, Christopher
Stevens, had already filed a patent for the same device, Seed’s
3
U.S. application led to proceedings before the U.S. Board of
Patent Appeals (Patent Board). Both Seed and Stevens sought
to establish that they had filed an application to patent the
device in another jurisdiction at an earlier date. Seed relied on
its earlier applications in Japan and through the PCT. At the
time, U.S. Patent Office regulations required applicants, if
relying on an application in another jurisdiction written in a
language other than English (as were Seed’s PCT and Japanese
applications), to include a translation and an affidavit certifying
the translation’s accuracy. See 37 C.F.R. § 1.647 (1997).
Seed’s then-counsel, Armstrong Westerman, failed to file a
translation or affidavit of accuracy with respect to the PCT
application. Nevertheless, Seed initially prevailed before the
Patent Board. Stevens subsequently appealed to the United
States Court of Appeals for the Federal Circuit. See Stevens v.
Tamai, 366 F.3d 1325, 1327 (Fed. Cir. 2004).
In the meantime, Armstrong Westerman split into two
different firms. One group of lawyers formed Westerman,
Hattori, Daniels, and Adrian LLP (Westerman) and the other
group founded the firm now called Kratz, Quintos, & Hanson
LLP (Kratz). Westerman continued representing Seed in the
patent case at issue. Seed II, 832 F.3d at 330.
Armstrong Westerman’s failure to file the required
translation resulted in Seed’s loss on appeal, see Stevens, 366
F.3d at 1332, which subsequently led to the rejection of Seed’s
patent application, see Seed II, 832 F.3d at 330. According to
Seed’s complaint, several times after the Patent Board decision,
and even after the Federal Circuit’s decision, Westerman
advised Seed that it was likely to obtain its patent. Seed
allegedly relied on that advice when it declined to settle with
Stevens.
4
In May 2005, James Armstrong, at that point a lawyer with
Kratz, emailed Seed, advising it to initiate a malpractice suit
against Westerman for the predecessor firm’s failure to file the
required translation and affidavit of accuracy. Armstrong
subsequently advised Seed, again by email, regarding the
statute of limitations and accrual date applicable to a
malpractice suit against Westerman. In 2006, Seed retained its
current counsel to sue both Westerman and Kratz for
malpractice. Id. at 330.
The original complaint contained two counts. The first
count was directed against both defendants, alleging that they
committed malpractice by failing to file both the translation of
the PCT application and an affidavit of accuracy (Count I). The
second count was directed against Westerman only, alleging
that it committed malpractice by giving Seed faulty legal
advice after the Patent Board decision, and in doing so, caused
Seed to forego settlement opportunities with Stevens (Count
II).
Both defendants raised a statute of limitations defense to
Count I and Seed then amended its complaint to add two more
counts (Counts III and IV). Id. Seed alleged in Counts III and
IV that the advice Armstrong gave it regarding the statute of
limitations applicable to a malpractice claim against
Westerman caused it to file its Count I claim against both
Westerman and Kratz after the statute of limitations expired.
Counts III and IV were expressly made “contingent” on the
success of the statute of limitations defense to Count I. Seed
also amended the allegations contained in Count II to allege
that Westerman’s advice given after the Patent Board decision
caused it to delay filing its complaint. The parties dispute
whether the Count II amendments included allegations that
Westerman’s advice harmed Seed by causing it to lose its
malpractice claims against Kratz.
5
The defendants moved for summary judgment. In its briefs
opposing summary judgment, Seed waived at least some its
Count II damages. The scope of Seed’s waiver, however, is in
dispute. Seed contends that it waived only those damages
caused by the loss of settlement opportunities allegedly caused
by Westerman’s advice given after the Patent Board decision.
Westerman argues that Seed also waived all alleged damages
that Westerman’s post-Board-decision advice caused it,
including the loss of its Count I claim.
The district court held that the statute of limitations did not
bar any of Seed’s claims. See Seed Co. v. Westerman (Seed I),
62 F. Supp. 3d 56, 65 (D.D.C. 2014). Nevertheless, it granted
the defendants’ summary judgment motions, finding no
genuine disputes of material fact regarding the malpractice
allegations, concluding that Seed waived its Count II claim and
that the “contingent” Counts III and IV were moot. Id. at 62,
65–67.
Seed then appealed to our court. We reversed in part and
affirmed in part. First, we concluded that the statute of
limitations barred Seed’s Count I claim against Kratz but not
Westerman. Seed II, 832 F.3d at 331–35. Next, we concluded
that Seed plausibly alleged that Westerman committed
malpractice by failing to file the necessary translation and
affidavit of accuracy. Id. at 335–38. We remanded Counts III
and IV “for the district court to adjudicate them in the first
instance” because it had dismissed Counts III and IV based on
the erroneous finding that the statute of limitations did not bar
Seed’s Count I claim. Id. at 335. And we declined to resolve
whether Seed waived all damages arising from Count II, noting
that “if the allegations in the complaint cover such a claim and
Seed did not concede it, Seed could seek damages based on the
Westerman defendants’ faulty advice about the timing of its
(now dismissed) claims against the Kratz defendants.” Id. at
6
339. We remanded the case to the district court for further
consideration.
On remand, the defendants moved for judgment on the
pleadings with respect to Count II and for summary judgment
with respect to Counts III and IV. The district court found an
ambiguity regarding whether Count II included allegations that
Westerman’s advice harmed Seed by causing it to lose its
Count I claim against Kratz; construing the ambiguity in favor
of Seed, it concluded that Count II alleged such damages. Seed
Co. v. Westerman (Seed III), 266 F. Supp. 3d 143, 147 (D.D.C.
2017). Nonetheless, it also held that Seed had waived all
damages alleged in Count II by disclaiming its intention to
“pursu[e] that cause of action.” Id. at 147. The district court
also dismissed Counts III and IV on the merits, reasoning that
Armstrong’s advice was not the “cause” of any “injury”
because his advice had involved Seed’s claim against
Westerman and we had allowed Seed to proceed against
Westerman. Id. at 149–50. Seed now appeals the district court’s
dismissal of Counts II, III and IV.
II. Analysis
Our review of a Rule 12(c) judgment on the pleadings is
de novo. See Dist. No. 1 v. Liberty Mar. Corp., 933 F.3d 751,
760 (D.C. Cir. 2019). “A reviewing court ‘will affirm the
district court if the moving party demonstrates that no material
fact is in dispute and that it is entitled to judgment as a matter
of law.’” Id. at 760 (quoting Peters v. Nat’l R.R. Passenger
Corp., 966 F.2d 1483, 1485 (D.C. Cir. 1992)). A grant of
summary judgment is also reviewed de novo. See Giles v.
Transit Emps. Fed. Credit Union, 794 F.3d 1, 4 (D.C. Cir.
2015). “Summary judgment is warranted only if, viewing the
evidence in the light most favorable to [the plaintiff] and giving
[the plaintiff] the benefit of all permissible inferences, [the
7
court] conclude[s] that no reasonable jury could reach a verdict
in [the plaintiff’s] favor.” Id. at 5 (quoting Jones v. Bernanke,
557 F.3d 670, 674 (D.C. Cir. 2009) (internal quotation marks
omitted)).
A. Count II
We begin with Seed’s appeal of the Rule 12(c) dismissal
of its Count II claim. On appeal, Seed contends that the district
court erred by finding that it waived any claim for damages
arising from its Count II allegations—in its view, it waived
only its claim for damages arising from the loss of settlement
opportunities, not its claim for damages arising from the
purported separate claim that Westerman caused it to lose its
malpractice claim against Kratz by “lulling” it into believing
that it would succeed in its patent case. Westerman, for its part,
contends that the district court correctly found that Seed
waived all damages claims included in Count II.
Because “waiver is the intentional relinquishment or
abandonment of a known right,” we may not consider Seed’s
claim for damages under Count II if it was waived. See United
States v. Olano, 507 U.S. 725, 733 (1993) (quoting Johnson v.
Zerbst, 304 U.S. 458, 464 (1938) (internal quotation marks
omitted)). The parties point to no precedent expressly setting
forth the standard of review applicable to our review of the
district court’s determination that a party waived a substantive
claim. We conclude that the appropriate standard of review is
for abuse of discretion. Cf. Wannall v. Honeywell, Inc., 775
F.3d 425, 428 (D.C. Cir. 2014) (reviewing for abuse of
discretion district court’s determination that party conceded
issue by failing to brief it pursuant to district court local rules);
In re Sealed Case, 29 F.3d 715, 719 (D.C. Cir. 1994)
(reviewing for abuse of discretion district court determination
of scope of waiver of attorney-client privilege).
8
Seed referenced the waiver issue twice in its briefing in
district court in response to Westerman and Kratz’s respective
summary judgment motions. As to Westerman’s motion, Seed
explained that “[i]n Count II of [its] Amended Complaint,
[Seed] allege[d] that the Westerman defendants negligently
advised Seed that the examination of [its patent] application
would reopen after the Interference was concluded, and that
this erroneous advice caused Seed to forego a potential
settlement” and so “[i]n order to avoid wasted efforts by
plaintiffs or defendants, counsel for [Seed] informed counsel
for defendants early in discovery that [Seed was] not claiming
any damages related specifically to the settlement
negotiations.” Pl.’s Mem. in Opp’n to Defs.’ Mot. Summ. J. at
9, ECF No. 138. Seed assured the court that “[t]hus, the
Westerman defendants’ motion is moot, because it relates to a
withdrawn claim for damages relating to the . . . settlement
proposals. The factual allegations contained in Count II are still
relevant to the issue of defendants’ ‘lulling’ activity, but not to
any specific claim for damages.” Id. Similarly, in its response
to Kratz’s motion, Seed stated that “the Kratz defendants argue
that the Court should dismiss Count II, which alleges that
plaintiffs received poor advice regarding settlement in January
and July 2004,” adding that “[p]laintiffs have already informed
defendants that there were no additional measure of damages
arising from Count II, and therefore, they would not be
pursuing that cause of action.” Mem. in Opp. to Kratz Defs.’
Mot. Summ. J. at 6, ECF No. 137.
Seed contends that, if its statements are read in context, it
is clear that it intended to abandon damages resulting from the
failure of settlement negotiations in the patent dispute only. To
support its contention, it points to the fact that both it and the
defendants specifically mentioned only lost settlement
opportunities in discussing Count II. We are not persuaded.
9
We are unable to read Seed’s statements as anything other
than a broad and unqualified waiver of damages arising from
Count II. Seed may have specifically mentioned lost settlement
opportunities only but that was almost certainly because it did
not intend to assert any other claim for damages in Count II.
Although Seed stated that it was still making a “lulling”
argument, that reservation refers to the separate argument it
made in district court that Westerman’s “lulling” activities
served to toll the statute of limitations. See Pl.’s Mem. in Opp.
to Defs.’ Mot. for Summ. J. at 35, ECF No. 138. Accordingly,
the district court acted within its discretion in dismissing Count
II.
B. Counts III and IV
District of Columbia law governs Seed’s malpractice
claims set forth in Counts III and IV. See Seed II, 832 F.3d at
335. “To succeed on a legal malpractice claim, the plaintiff
must show that (1) the defendant was employed as the
plaintiff’s attorney, (2) the defendant breached a reasonable
duty, and (3) that breach resulted in, and was the proximate
cause of, the plaintiff’s loss or damages.” Martin v. Ross, 6
A.3d 860, 862 (D.C. 2010) (citing Niosi v. Aiello, 69 A.2d 57,
60 (D.C. 1949)); see also Biomet Inc. v. Finnegan Henderson
LLP, 967 A.2d 662, 664 (D.C. 2009) (D.C. “law requires a
plaintiff to establish three elements to state a claim of
malpractice: the applicable standard of care, a breach of that
standard, and a causal relationship between the violation and
the harm complained of.”). The parties raise several issues on
appeal related to Counts III and IV but we need discuss only
one in order to affirm the district court: causation.
Seed contends that it raised a genuine issue of fact as to
whether Armstrong’s advice “caused” it to lose its Count I
claim against Kratz because Armstrong’s advice “misled Seed
10
as to the date on which Seed’s damage occurred.” Appellant’s
Br. 24 (internal quotation marks omitted). The district court
concluded that the fact that Armstrong’s May 20, 2005 email
involved only Westerman meant that Seed could not establish
that the email was the cause-in-fact of the loss of Seed’s Count
I claim against Kratz. But Masatoshi Shintani, the Seed
employee overseeing the patent proceedings, declared that “[i]f
not for Mr. Armstrong’s advice, Seed would have filed suit or
entered into tolling agreements with all of the defendants
before May 5, 2007.” Shintani Decl., ECF No. 170-1. A
reasonable jury could credit Shintani’s statement that Seed
relied on Armstrong’s advice regarding its claims against
Westerman in deciding how to proceed on its claims against
Kratz. If it did so, it would follow that Armstrong’s allegedly
negligent advice was the “but-for” cause of the loss of Seed’s
claims.
To succeed on its Count III and IV claims, however, Seed
must also establish that Armstrong’s advice was the “proximate
cause” of its injuries. That it cannot do. To establish that
Armstrong’s negligent act was the proximate cause of its
injury, Seed must establish that the injury was a foreseeable
result of Armstrong’s alleged breach. See Convit v. Wilson, 980
A.2d 1104, 1125 (D.C. 2009) (“To establish proximate cause,
the plaintiff must present evidence from which a reasonable
juror could find that there was a direct and substantial causal
relationship between the defendant’s breach of the standard of
care and the plaintiff’s injuries and that the injuries were
foreseeable.”) (quoting District of Columbia v. Zukerberg, 880
A.2d 276, 281 (D.C. 2005)); see also Dalo v. Kivitz, 596 A.2d
35, 42 (D.C. 1991) (“Proximate cause exists when there is a
‘substantial and direct causal link’ between the attorney’s
breach and the injury sustained by the client.” (citation
omitted)). Moreover, “an intervening act not reasonably
foreseeable (sometimes referred to as a ‘superseding cause’)
11
breaks the chain of causation and relieves the wrongdoer of
liability.” Dalo, 596 A.2d at 42. Notwithstanding “‘[p]roximate
cause is generally a factual issue to be resolved by the jury,’
. . . it becomes a question of law ‘when the evidence . . . will
not support a rational finding of proximate cause.’” Majeska v.
District of Columbia, 812 A.2d 948, 950 (D.C. 2002) (quoting
Washington Metro. Area Transit Auth. v. Davis, 606 A.2d 165,
170 (D.C. 1992)). Assuming without concluding a jury could
conclude that Armstrong’s advice was a but-for cause of the
loss of Seed’s Count I claim against Kratz, no reasonable jury
could find that the loss of Seed’s Count I claim against Kratz
was a foreseeable result of that advice because Armstrong had
no reason to believe that, by advising Seed about pursuing a
malpractice claim against Westerman, Seed would rely on that
advice in deciding when to bring a malpractice claim against
Kratz. Moreover, Seed’s current counsel, Dorsey & Whitney,
took over the representation well before the statute of
limitations ran on the Count I claim, negotiated tolling
agreements regarding Seed’s malpractice suit and filed the
complaint against Kratz after the statute of limitations elapsed.
A reasonable jury could not find that Armstrong should have
foreseen that Seed would retain new counsel who would fail to
independently (and correctly) review the statute of limitations
applicable to Seed’s claims, negotiate tolling agreements that
did not adequately protect Seed’s claims and file the complaint
after the statute of limitations had run. Accordingly, we affirm
the district court’s dismissal of Counts III and IV.
For the foregoing reasons, the judgments of the district
court—dismissing Count II of the Second Amended Complaint
and granting summary judgment to defendant Kratz on Counts
III and IV of the Second Amended Complaint—are affirmed.
So ordered