An Ohio egg farm’s lawsuit alleging a law firm failed to include the proper terms regarding emissions requirements in a lease agreement is timely and can proceed, a federal court in the state ruled.
Ohio Fresh Eggs LLC and Ohio Investments Co. LLC decided to “exit the egg business” in 2011, and it retained Iowa-based Smith & Kramer PC to negotiate a lease of its facilities to Trillium Holdings LLC. The law firm drafted the agreements, but it failed to notify Trillium of a consent decree with the Environmental Protection Agency, according to the complaint in the U.S. District Court for the Southern District of Ohio.
The agreements also didn’t require Trillium to comply with the consent decree, which mandated upgrades to the facilities to bring them into compliance with emissions standards, the lawsuit says. The EPA later told Trillium it was considering taking action for failing to comply with the consent decree.
Smith & Kramer argued the lawsuit was time-barred under the one-year statute of limitations for malpractice claims in Ohio. This argument hinged on when Ohio Fresh realized a “questionable legal practice may have occurred,” according to the ruling.
The law firm argued the cognizable event was in 2011, when Ohio Fresh executed the lease agreements. But the complaint supports a finding that a reasonable client wouldn’t have discovered the alleged mistakes until Trillium notified Ohio Fresh that the EPA was considering taking action in 2018, the court said.
The complaint also supports an inference that Ohio Fresh reasonably relied on the advice of Smith & Kramer in understanding what the lease agreements meant and in deciding to sign the agreements, according to the ruling.
The law firm may be able to show that Ohio Fresh should have known when it read the agreements that they lacked information about the consent decree, the court said. However, this analysis is a factual one and better suited for a motion for summary judgment, wrote Judge James L. Graham.
Crabbe, Brown & James LLP represents Ohio Fresh. Gallagher Sharp LLP represents Smith & Kramer.
The case is Ohio Fresh Eggs LLC v. Smith & Kramer PC, S.D. Ohio, No. 2:20-cv-5267, 7/21/21.