United States District Court, M.D. Georgia, Macon Division
JOSPEH T. SUMRALL, JR., et al., Plaintiffs,
HY SMITH, et al., Defendants.
ORDER ON CERTAIN DEFENDANTS' MOTION TO DISMISS
COUNTS II, V, and VI
E. SELF, III, JUDGE
the Court is Defendants Hy Smith; Hy Smith Consulting, Inc.;
GPS Practices Sales, Inc.; and GPS Transitions, LLC f/k/a ADS
Florida, LLC's Motion to Dismiss [Doc. 12] Counts II, V,
and VI of Plaintiffs' Complaint [Doc. 3-1]. Plaintiffs
initially filed this action in the Superior Court of Houston
County on July 11, 2017 [Doc. 3-1, at 1], and on August 31,
2017, all Defendants filed a notice of removal pursuant to 28
U.S.C. § 1446. [Doc. 1].
following facts are taken from Plaintiffs' Complaint
[Doc. 3-1] and assumed to be true for the purposes of ruling
on Defendants' Motion to Dismiss [Doc. 12]. See
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
(2007). Plaintiffs Joseph T. Sumrall, Jr., DMD, (“Joe
Sumrall”), Joseph G. Sumrall, DDS (“Gran
Sumrall”), and Houston Dental Professionals, P.C.
(“Houston Dental”) (collectively,
“Plaintiffs”) filed suit against Hy Smith
(“Smith”), a dental practice broker and practice
management consultant, and four corporate entities with which
Smith is affiliated: Hy Smith Consulting, Inc. (“Hy
Smith Consulting”); GPS Practice Sales, Inc. f/k/a
Professional Transitions, Inc. (“Professional
Transitions”); GPS Transitions, LLC f/k/a ADS Florida,
LLC (“ADS Florida”); and Pride Institute
Companies, Inc. d/b/a The Pride Institute (“Pride
Institute”). [Doc. 3-1, at ¶¶ 4-10, 17]. In
their lawsuit, Plaintiffs allege claims against the
above-listed Defendants for professional negligence,
negligence per se, breach of fiduciary duty, negligent
misrepresentation, fraud, and fraudulent inducement,
punitive damages, and attorneys' fees [Id. at
19, 23, 25-27, 29, 35-36]. Four of those Defendants: Smith,
Hy Smith Consulting, Professional Transitions, and ADS
Florida now move the Court to dismiss Counts II, V, and VI of
Plaintiffs' Complaint [Doc. 3-1].
1995, Jerry T. Vasko, DMD (“Vasko”) began
practicing dentistry with Plaintiff Joe Sumrall as an
associate of Houston Dental. [Id. at ¶ 15].
After Vasko expressed interest in buying into Houston Dental
and becoming a partner with Joe Sumrall, Plaintiff Joe
Sumrall and Vasko met with Defendant Smith in February 2003
in connection with potential engagement for appraisal
services related to the dental practice. [Id. at
¶¶ 21-22]. Then, on or about March 13, 2003,
Houston Dental engaged Defendants for the purpose of providing
professional management consulting services, practice
valuation, and appraisal services. [Id. at ¶
23-24]. After Vasko's purchase of a 50% interest in
Houston Dental, Defendants continued to provide professional
management consulting services, practice valuation, and
appraisal services for Houston Dental and, in connection with
such services, Houston Dental continued to provide Defendants
with access to confidential and proprietary information.
[Id. at ¶ 39].
around August 2011, Plaintiff Gran Sumrall began practicing
dentistry as an associate with his father, Plaintiff Joe
Sumrall, and Vasko. [Doc. 3-1, at ¶ 42]. By April 23,
2015,  at the latest, Plaintiffs allege that
Defendants were aware that Vasko, due to his plans to leave
the state of Georgia, wanted to sell the 50% interest he
acquired in Houston Dental during the 2003 transactions.
[Id. at ¶¶ 43, 46]. Defendants advised,
brokered, provided legal documentation for the 2015
transaction, and closed the sale of Vasko's 50% interest
in Houston Dental to Gran Sumrall and completed the related
practice transition in approximately two
months. [Id. at ¶¶ 46, 99].
Defendants purportedly held themselves out as “an
expert and qualified neutral party representing the interests
of all parties in connection with [the 2015
transactions].” [Id. at ¶ 49]. Further,
Defendants failed to advise Plaintiffs, or express any
concerns, of any issues that could arise from dual
representation. [Id. at ¶ 62]. Therein lies the
bulk of the dispute.
claim that Defendants, in the course of providing services
for the 2015 transactions in connection with Gran
Sumrall's purchase of Vasko's 50% partnership
interest, made “representations” and
“unilateral adjustments” regarding the historical
financial and accounting data of Houston Dental.
[Id. at 50-51]. Specifically, Plaintiffs assert that
the adjustments within the sale of the 50% interest in
Houston Dental resulted in an inaccurately high purchase
amount-in Vasko's favor. [Doc. 3-1, at ¶¶ 51,
59]. This alleged detriment to Plaintiffs, as well as
disputes regarding the contractual rights and obligations set
forth in the legal documentation drafted by defendants, led
to extensive litigation between Plaintiffs and Vasko.
[Id. at ¶¶ 59, 64]. Additionally,
Plaintiffs allege that Defendants knew of facts and
circumstances that rendered their valuation of Houston
Dental, Vasko's 50% interest, and the purchase price for
Vasko's sale of his 50% interest, inaccurate and unfairly
favorable to the detriment of Plaintiffs. [Id. at
¶¶ 51, 58-60, and 102]. In summation, Plaintiffs
state that they relied on the misrepresentations, warranties,
and material nondisclosures made by Defendants and suffered
substantial loss as a result. [Id. at ¶ 102].
Defendants' Motion to Dismiss
Smith, Hy Smith Consulting, Professional Transitions, and ADS
Florida filed the instant Motion to Dismiss [Doc. 12] on
August 21, 2017, in the Superior Court of Houston
County. There, Defendants moved to dismiss Count
II based on O.C.G.A. § 9-11-12(b)(6) and Counts V and
VI based on O.C.G.A. § 9-11-9(b). [Doc. 12]. As
an alternative to Defendants' Motion to Dismiss Counts V
and VI, Defendants moved for a more definite statement.
Motion [Doc. 12] as it relates to Count II, rests on the
general premise that “Georgia law does not recognize a
private right of action for the unauthorized practice of
law.” [Doc. 12, at 4 (citing Oswell v. Nixon,
620 S.E.2d 419, 422 (Ga.Ct.App. 2005)]. Additionally,
Defendants move the Court to either dismiss, or in the
alternative require a more definite statement, Counts V and
VI on the assertion that Plaintiffs' Complaint [Doc. 3-1]
does not supply the minimum, necessary detail required by
O.C.G.A. § 9-11-9(b) and therefore fails to plead fraud
light of this case's § 1446 removal, the Court notes
(for the purposes of Counts V and VI) that “the
procedure for pleading fraud in federal courts is governed by
federal law and not state law . . .” McAllister
Towing & Transp. Co., Inc. v. Thorn's Diesel Service,
Inc., 131 F.Supp.2d 1296, 1302 (2001) (citing Hayduk
v. Lanna, 775 F.2d 441, 443 (1st Cir. 1985)
(“[T]he procedure for pleading fraud in federal courts
in all diversity suits is governed by the special pleading
requirements of Federal Rule of Civil Procedure
9(b).”)). Therefore, the Court follows the law relating
to Fed.R.Civ.P. 9(b) in its determination of whether
Plaintiffs' Complaint, as stated, satisfies the 9(b)
requirements to survive a motion to dismiss. Similarly, in
considering Count II (Negligence Per Se), the Court reviews
the Defendants' motion against standards under the
federal rules, specifically Fed.R.Civ.P.
Standard of Review
to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6)
seek dismissal of Count II for failure to state a claim
pursuant to Fed.R.Civ.P. 12(b)(6). When ruling on a motion to
dismiss pursuant to Rule 12(b)(6), a district court must
accept as true the facts set forth in the complaint and draw
all reasonable inferences in the plaintiff's favor.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). A complaint fails to state a claim if it does not
include “sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Twombly, 550 U.S. at 570). The
factual allegations in a complaint “must be enough to
raise a right to relief above the speculative level”
and cannot “merely create a suspicion [of] a legally
cognizable right of action.” Twombly, 550 U.S.
at 555 (first alteration in original).
other words, the complaint must allege enough facts “to
raise a reasonable expectation that discovery will reveal
evidence” supporting a claim. Id. at 556. A
complaint may survive a motion to dismiss for failure to
state a claim even if the possibility of recovery is
extremely “remote and unlikely.” Id.
Motion to Dismiss Pursuant ...