Beach Tv Properties Inc. v. Soloman

Citation: Not availableDocket: Civil Action No. 2015-1823

Court: District Court, District of Columbia; August 29, 2018; Federal District Court

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The United States District Court for the District of Columbia addressed a legal malpractice case involving Plaintiff Atlanta Channel, Inc. (ACI) against Defendant Henry Solomon, who submitted an incomplete FCC form in 1999. ACI claimed Solomon's actions led to the dismissal of their application for a Class A license, resulting in significant financial loss. Solomon contended that ACI's lawsuit was time-barred, but the Court found unresolved factual issues regarding the applicability of the 'continuous representation doctrine' to ACI’s claim. ACI later added Melodie Virtue and her law firm, Garvey, Schubert, Barer, as defendants, alleging malpractice stemming from their failure to rectify the incomplete submission. The Garvey Defendants sought to dismiss the claims against them, asserting that the Court previously recognized undisputed facts contradicting ACI's allegations and that ACI failed to establish legal malpractice or proximate causation. The Court granted the Garvey Defendants' motion to dismiss certain claims while denying it for others, specifically allowing Count Three and related portions of Count Four to proceed, but dismissing aspects of Count Two and other parts of Count Four.

ACI asserts that Ms. Virtue failed to disclose critical information prior to her involvement in the case, which they categorize as the "Virtue Obligations." These obligations include informing ACI about Mr. Solomon's alleged malpractice in filing a defective ACI Statement, the potential impact of his withdrawal from full-time legal practice on the statute of limitations, the adversarial nature of the relationship between ACI and Mr. Solomon, her conflict of interest due to her relationship with him, the Garvey Firm's conflict of interest, and the necessity for ACI to obtain independent counsel regarding these issues. ACI claims that Ms. Virtue’s failure to fulfill these obligations resulted in a lack of informed consent for her to take on responsibility in the FCC Proceeding and Appeal. 

Following the D.C. Circuit's denial of ACI's appeal in September 2015, ACI and Beach TV filed a malpractice lawsuit against Mr. Solomon, the Garvey Firm, and Haley Bader Potts in October 2015. A year later, the court dismissed several claims, leaving only ACI's malpractice claim against Mr. Solomon related to the incomplete Statement of Eligibility. ACI also contends that Ms. Virtue should have informed them of Solomon’s malpractice in recommending the License Assignment, though this allegation was deemed included in error in ACI's Second Amended Complaint, as the court had not granted permission for its inclusion. ACI later sought to amend its complaint to add claims for malpractice and name Ms. Virtue and the Garvey Firm as additional defendants.

The proposed complaint includes four claims against Mr. Solomon and Ms. Virtue. The first claim pertains to Mr. Solomon's alleged filing of an incomplete Statement of Eligibility. The second claims he failed to adequately advise ACI regarding the assignment of its license to Beach TV, resulting in negligence that compromised ACI’s ability to recover damages. The third claim accuses Ms. Virtue of legal malpractice for not fulfilling her obligations, contingent on the outcomes of the first two claims, especially if they are time-barred. The fourth claim holds the Garvey Firm liable for the malpractice of both Mr. Solomon and Ms. Virtue under the doctrine of respondeat superior, also contingent on the time-bar status of Count One.

Mr. Solomon and the Garvey Firm opposed the amendment, arguing that Counts Two and Three did not state viable claims. The Court agreed with the defendants regarding Count Two, finding insufficient causation, but determined that Count Three was adequately pleaded, particularly noting that Ms. Virtue's alleged actions constituted a defense against the statute of limitations rather than a separate claim.

Subsequently, ACI and Mr. Solomon filed cross-motions for partial summary judgment concerning Mr. Solomon's liability for Count One, with Solomon asserting that Count One was time-barred and that ACI was contributorily negligent. The Court found unresolved factual questions regarding ACI's belief in Mr. Solomon's continued representation and the timing of the alleged malpractice, which occurred on June 9, 2000. Disputes regarding the continuous representation doctrine's applicability and the duty of care owed by Mr. Solomon also persisted. Consequently, the Court denied both parties' motions for partial summary judgment.

The Court is addressing motions to dismiss filed by the Garvey Defendants, Ms. Virtue and the Garvey Firm, against claims in ACI’s Second Amended Complaint. Discovery related to Mr. Solomon’s liability for Count One is complete, while discovery for other counts is on hold pending the resolution of the dismissal motion. The Court is also considering ACI's motion for a sur-reply and the Garvey Defendants’ motion for a rebuttal, both of which have been agreed upon to be briefed after the dismissal motion.

The Garvey Defendants seek to dismiss Count Three and part of Count Four, arguing that the facts established in prior rulings should be considered "law of the case," suggesting that Ms. Virtue met some alleged obligations. They also request a reconsideration of the Court's previous finding that Count Three does not constitute a claim for the tort of lulling and assert that the allegations lack proximate cause and compensable damages.

In response, ACI argues that the previous determination of Count Three’s validity is binding and that the dismissal motion should be viewed as a premature summary judgment request due to an incomplete factual record. ACI further asserts that their complaint adequately specifies Ms. Virtue’s expected standard of care, that she failed to meet obligations before the limitations period began, and that the Garvey Defendants forfeited their right to challenge the sufficiency of ACI’s pleadings regarding proximate causation.

The Court concludes that the Garvey Defendants' motion is indeed a motion to dismiss, not a summary judgment request. It clarifies that not all facts from previous rulings are applicable as law of the case and upholds ACI's allegations regarding proximate causation. The Court grants ACI's motion for a sur-reply and the Garvey Defendants' motion for a rebuttal.

The Garvey Defendants assert their motion is a motion to dismiss, contending that the Court can consider undisputed facts from previous rulings as part of the "law-of-the-case." In contrast, ACI argues that this motion is essentially a summary judgment motion based on an incomplete record. The Court decides to treat the motion as a motion to dismiss, ensuring it will not be converted to a summary judgment motion. Consequently, the Court will focus solely on the facial sufficiency of the Second Amended Complaint and will not consider any facts mentioned in dicta from prior opinions. 

Under Rule 12(b)(6), only the facts alleged in the complaint, attached documents, and matters subject to judicial notice can be considered, and vague complaints may survive dismissal if further detail could reveal weaknesses. If extrinsic matters are introduced without exclusion, the motion must be treated as a summary judgment under Rule 56. The decision to convert a motion lies within the trial court's discretion, but a motion can still be treated as a summary judgment without prior notice if the parties had a reasonable chance to contest the outside matters.

Although extensive discovery has been conducted regarding Mr. Solomon's liability, the Defendants have not requested summary judgment nor asked the Court to recognize additional facts outside the pleadings. They seek to apply the law-of-the-case doctrine, which prevents reopening previously determined issues, with the important distinction that only established issues, not mere possibilities or dicta, are considered part of this doctrine.

The doctrine in question includes both explicit court decisions and those determined by necessary implication, as established in Williamsburg Wax Museum, Inc. v. Historic Figures, Inc. Adherence to this doctrine is discretionary, not mandatory. The defendants assert three facts should be recognized as the law of the case regarding a potential malpractice claim: 1) the plaintiff was aware of this claim by June 2000; 2) Ms. Virtue informed ACI and Beach TV about a conflict of interest in November 2012 and advised them to seek independent legal counsel; and 3) the plaintiff obtained independent legal advice before deciding to retain Garvey as counsel for its FCC appeal. These facts are presented to counter ACI's claim that Ms. Virtue breached her standard of care by failing to disclose Mr. Solomon's malpractice and the conflict of interest with the Garvey Firm, and by not advising ACI to seek separate counsel.

The defendants did not cite any case law supporting the dismissal of a claim in an amended complaint based on previously presented evidence in a summary judgment opinion involving different parties. Even if the law of the case doctrine were applicable, the facts highlighted by the defendants were not essential to the court's prior reasoning and were merely stated as dicta. The court acknowledged that while Mr. Solomon informed ACI of the dismissal of the Statement of Eligibility and Ms. Virtue raised concerns about potential conflicts, these observations did not influence the court's conclusions regarding ongoing factual disputes related to the statute of limitations and proximate causation. Consequently, because the defendants did not move for summary judgment or seek judicial notice of their factual allegations, and because the mentioned facts do not constitute the law of the case, the court cannot dismiss parts of ACI’s Second Amended Complaint based on the prior memorandum opinion.

The Garvey Defendants request the Court to reconsider its previous ruling that ACI’s claim regarding Ms. Virtue’s work in the FCC Proceeding and Appeal served as a rebuttal to a potential statute of limitations defense rather than constituting a claim for the tort of lulling. ACI contends that it is premature to assess whether the lulling doctrine tolls the statute of limitations for Count Three since Ms. Virtue has not yet responded to the Second Amended Complaint. ACI also argues that the law of the case principle should apply because the Court previously allowed the amendment when it deemed Count Three non-futile. The Garvey Defendants counter that the prior ruling did not allow them to present their arguments and assert that ACI has been vague about its intentions regarding lulling.

The Court maintains that ACI's reference to lulling does not transform its malpractice claim into a separate lulling claim and reaffirms that this interpretation is the law of the case, which the Court will not overturn at this stage. The doctrine of law of the case applies to previously determined issues, and its adherence is discretionary for the district court. The Garvey Firm had previously argued for interpreting Count Three as a lulling claim, but the Court concluded that ACI's mention of lulling was a response to the statute of limitations defense and not a standalone claim. The Court found that ACI sufficiently stated a negligence claim against Ms. Virtue, distinguishing it from a mere lulling claim. The current motion parallels the earlier situation where the Court granted ACI leave to amend its complaint, and despite the Defendants' continued characterization of ACI's claim as lulling, ACI has not directly addressed this assertion, reiterating that it is too early to determine the implications of lulling on the statute of limitations defense. ACI suggests that Ms. Virtue’s actions contributed to the delay in filing its malpractice claim against Mr. Solomon.

ACI's Second Amended Complaint primarily asserts a claim for negligence, with references to "lulling" seen as an attempt to address a potential affirmative defense rather than a separate claim. The Court declines to reconsider this stance and denies the Defendants' motion based on this argument. Regarding proximate causation, Defendants contend that ACI's allegations do not adequately establish a causal link between Ms. Virtue's actions and ACI's alleged injury. They argue that the consultation with Balch, Bingham severed the causal connection, that ACI's claims are speculative, and that the connection to the Solomon case renders Count Three a lulling claim. In response, ACI maintains that its allegations collectively demonstrate that it would have timely pursued a malpractice claim against Mr. Solomon but for Ms. Virtue's failures. The Court finds that Defendants have not waived their right to challenge proximate causation, as their motion to dismiss is a proper responsive pleading. Furthermore, the Court concludes that proximate causation is typically a factual issue for a jury and that Count Three sufficiently alleges negligence rather than lulling. Thus, the Court denies the motion to dismiss based on the proximate causation argument, affirming that Defendants have not forfeited their challenge to ACI’s allegations.

Count Three will not be dismissed despite Defendants' arguments about insufficient pleading of proximate causation. The Court did not consider evidence outside the pleadings, specifically ACI's consultation with outside counsel, as it was not included in the Second Amended Complaint. The Court has determined that Count Three asserts a negligence claim rather than one for lulling. Although Defendants argue that the allegations of proximate cause in Paragraph 83 are conditional and hypothetical, the Court finds them sufficiently clear to survive a motion to dismiss. ACI alleges that Ms. Virtue failed to fulfill specified obligations, which lulled ACI into inaction regarding malpractice claims against Mr. Solomon, and that any untimely filing of these claims would be a direct result of her failure. The Court notes that proximate causation is typically a factual question for the jury, suggesting this issue may be revisited at later stages of litigation. 

Count Two is dismissed at ACI's concession, as it was inadvertently filed without the Court's permission. The Court grants the Garvey Defendants’ motion to dismiss Count Two and related portions of Count Four, resulting in the dismissal of specific paragraphs from ACI’s Second Amended Complaint. The Court’s rulings include granting ACI’s motion for leave to file a sur-reply and the Garvey Defendants’ motion for leave to file a rebuttal. An order consistent with these findings is to be issued.