A Texas appellate court has thrown out a legal malpractice case against Fried Frank and one of its New York-based tax partners after finding a former client could not establish jurisdiction in the Lone Star State even though the plaintiff moved to Texas and the defendant lawyer held a meeting in Dallas.

The recent decision in Fried Frank Shriver & Jacobson v. Millennium Chemicals by Dallas' Fifth Court of Appeals reverses a trial court decision rejecting an argument by the law firm and tax partner Richard A. Wolfe that they could not be sued in Texas because the conflict had no connection to the state.

Millennium, at the time based in New Jersey, was represented by Fried Frank and Wolfe in its “demerger” from its parent company Hanson. A dispute arose between Millennium and Hanson over a $65 million tax deduction that had been disallowed by the IRS prior to the demerger. Hanson, which was also represented by Fried Frank and Wolfe, was later audited and settled with the IRS. But Millennium alleged Fried Frank and Wolfe failed to inform them of the $65 million in expenditures by Hanson. Millennium sued Fried Frank and Wolfe in a Dallas state district court alleging fraud, breach of fiduciary duty, and legal malpractice, specifically claiming they omitted facts that led Millennium to sign a tax benefits agreement with Hanson that deprived them of tax benefit recovery rights and that the defendants took positions adverse to Millennium.