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WAGSHAL v. RIGLER

November 25, 1996

JEROME S. WAGSHAL, Plaintiff,
v.
DOUGLAS V. RIGLER, et al., Defendants.



The opinion of the court was delivered by: SPORKIN

MEMORANDUM OPINION

 This matter comes before the Court on: (1) Plaintiff's unopposed motion to lift the stay imposed by the Court on May 10, 1995; (2) Defendants' motion to dismiss or, in the alternative, for summary judgment; and (3) Defendants' motion for sanctions. The Court heard arguments on the motions on November 4, 1996 and November 8, 1996.

 BACKGROUND

 Plaintiff is an attorney appearing pro se in this matter. The Defendants are former partners of the law firm of Russin & Vecchi L.L.P., formerly Kaplan, Russin & Vecchi ("KRV"). The dispute stems from the parties' legal representation of Norcom Electronics Corporation ("Norcom").

 There appears to be no significant disagreement about the factual setting in which this case arose. Plaintiff introduced Norcom to KRV as a potential client in August 1987. On August 24, 1987, KRV agreed to represent Norcom in litigation against Datacard Corp., Inc. ("Datacard") with Plaintiff playing an advisory role. Plaintiff drafted the resulting Norcom-KRV retainer agreement (the "Retainer Agreement") to incorporate lowered KRV hourly rates to be balanced against a success contingency fee for the Datacard litigation.

 Simultaneously with the execution of the Retainer Agreement, Plaintiff signed a letter agreement to serve as a "common law employee" of KRV for the Datacard litigation (the "Employment Agreement"). The Employment Agreement provided that Plaintiff would receive 25% of KRV's reduced hourly fees and 50% of the success contingency fee for his work pursuant to the Retainer Agreement. The Employment Agreement did not specify whether the 50% portion of the success contingency fee to be paid to Plaintiff would be net or gross of receipts from Norcom.

 In September 1990, Norcom settled the Datacard litigation without the participation of KRV. Norcom refused to pay the success contingency fee to KRV. KRV took the position that it was entitled to the success contingency fee and arbitrated the fee dispute with Norcom. Plaintiff participated in the arbitration on the side of KRV and testified before the arbitrator with respect to the calculation of the claim against Norcom. The arbitrator awarded KRV $ 139,777 plus interest and costs. Norcom unsuccessfully contested the award in a law suit in the state of Connecticut, an action which required KRV to hire outside counsel.

 KRV filed a motion in this Court to reduce to judgment its arbitration award from the Datacard litigation. The Court entered judgment on January 30, 1992 in the amount of $ 139,717, plus fees and interest (the "Award"). Norcom claimed it was unable to satisfy the Award immediately and gave KRV a promissory note calling for an initial payment of $ 44,512.14 and monthly payments with interest on the balance. KRV gave Plaintiff a copy of the promissory note and the payment schedule.

 On April 29, 1992, KRV informed Plaintiff in writing of its intention to deduct $ 6,702.19 in out-of-pocket expenses and $ 23,585 in attorney fees (a total of $ 30,287) from the Award prior to calculating Plaintiff's 50% share. KRV claimed that it had incurred those costs in connection with arbitrating, defending and enforcing the Award, and that Plaintiff's 50% share of the Award would be calculated as net, rather than gross, of receipts. KRV simultaneously offered to arbitrate any dispute concerning Plaintiff's share of the Award before a mutually acceptable arbitrator. The gross payments to Plaintiff by KRV and its successor firm since August 1992 pursuant to the success contingency fee have exceeded $ 60,000; total payments to Plaintiff by KRV pursuant to the Employment Agreement have exceeded $ 119,000.

 Plaintiff filed this complaint in the United States District Court for the District of Columbia in April 1993 and subsequently filed an identical suit in the Superior Court for the District of Columbia ("Superior Court"). He claims to have filed the two identical actions because of admitted uncertainties regarding the statute of limitations on his claims and the jurisdiction of federal courts in this matter.

 On November 19, 1996, after this Court had heard argument from the parties on the motions and was finalizing this Memorandum Opinion, the D.C. Court of Appeals issued its decision on Plaintiff's appeal. It affirmed the decision of the Superior Court, rejecting Plaintiff's appeal.

 Plaintiff's complaint in this Court alleges that the Defendants, his principal interlocutors from KRV, had engaged in fraud, breach of fiduciary duty and breach of contract. *fn1" The complaint alleges that Defendants failed to make a full accounting to him of all payments by Norcom to KRV, as they were obligated to do by the D.C. Rules of Professional Conduct, and he also makes a quantum meritum claim. He seeks compensatory damages for the amount that he claims remains owed to him pursuant to the Award, costs, and punitive damages of $ 750,000. Plaintiff brought his motion to lift the stay before this Court because his appeal of the decision of the Superior Court had been pending before the D.C. Court of Appeals for many months. Not hearing from the D.C. Court of Appeals for this period of time, he asked this Court to proceed with the lawsuit.

 While Defendants did not oppose Plaintiff's motion to lift the stay in this Court, they do move to dismiss Plaintiff's complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (the "FRCP") for lack of jurisdiction or, in the alternative, for summary judgment. Defendants argued that the Court lacks diversity jurisdiction in this matter since: (1) there is not complete diversity among the parties to the dispute and (2) the amount in controversy ...


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