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COA affirms dismissal of malpractice suit against Barnes

January 23, 2018

A South Bend-based staffing company has failed to state a claim for relief in its legal malpractice complaint against Barnes & Thornburg LLP, the Indiana Court of Appeals ruled in a Tuesday opinion upholding the dismissal of the complaint against the law firm.

Peoplelink, LLC is a nationwide staffing business and owned by CRIT Corp., which gained a controlling interest in the business when the Wilkinson family sold the interest in 2011.  William Wilkinson continued to serve as president and CEO of Peoplelink until Dec. 31, 2015, when he hired Peter G. Trybula with Barnes & Thornburg LLP to represent him in connection with written agreements such as a non-compete agreement between Wilkinson and Peoplelink.

Trybula and Barnes continued to serve as one of the company’s key counsel after Wilkinson left, while the firm continued to represent Wilkinson in separate matters. As a result of that double representation, Peoplelink president and COO Jay Matter received an email from Trybula that was intended for Wilkinson. The email concerned Wilkinson’s acquisition of an Ohio-based staffing solutions company about 250 miles away from Peoplelink’s headquarters.

The mistaken email came less than seven months after Wilkinson left Peoplelink and agreed not to engage in the staffing services industry. Thus, Peoplelink filed a breach of fiduciary duty complaint against Barnes.

After the St. Joseph Superior Court dismissed the complaint against the firm for failure to state a claim for relief, Peoplelink filed a second complaint against Barnes and Trybula alleging legal malpractice, fraud and constructive fraud. Specifically, the company alleged a violation of Indiana Rules of Professional Conduct 1.7 and 1.8, but the trial court also dismissed the second complaint.

The Indiana Court of Appeals upheld that decision Tuesday, with Judge James Kirsch writing Peoplelink was precluded from basing the alleged violations of fiduciary duty in its initial complaint on the Rules of Professional Conduct under Sanders v. Townsend, 582 N.E.2d 355 (Ind. 1991) and Ligget v. Young, 877 N.E.2d 178 (Ind. 2007). Further, Peoplelink’s allegations did not have a common law basis apart from violations of Rule 1.7 and 1.8, Kirsch said, so there was no common law basis for its initial claims, he said.

Peoplelink also challenged the dismissal of its second amended complaint, arguing it stated a viable claim for legal malpractice because Barnes and Trybula operated with a conflict of interest and, thus, fell below the applicable standard of care. But Peoplelink did not allege the firm’s malpractice caused the company to suffer actual damages, Kirsch said, but merely sought disgorgement of paid attorney fees.

“The information that Peoplelink asserts should have been disclosed by B&T was obtained by B&T as part of its representation of Wilkinson, and therefore, B&T had no duty to disclose,” Kirsch wrote, “and in fact, was prohibited by the Rules of Professional Conduct, this information related to its representation of Wilkinson.”

The case is CRIT Corp. and Peoplelink, LLC v. William J. Wilkinson, Hoosier Investments, LLC, Peter G. Trybula, and Barnes & Thornburg LLP, 71A03-1705-PL-982.

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