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Capitol Hill Group v. Pillsbury Winthrop Shaw Pittman

September 5, 2008

CAPITOL HILL GROUP PLAINTIFF,
v.
PILLSBURY WINTHROP SHAW PITTMAN, LLP, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Royce C. Lamberth, Chief Judge

MEMORANDUM OPINION

Now before the Court comes defendant Shaw Pittman's Motion for Summary Judgment. Upon consideration of the motion [4], plaintiff Capitol Hill Group's opposition [34], defendant Shaw Pittman's reply [37], the entire record herein, and applicable law, the Court will GRANT Shaw Pittman's Motion for Summary Judgment for the reasons set forth below.

I. BACKGROUND

Plaintiff Capitol Hill Group ("CHG") filed suit against defendants Pillsbury Winthrop Shaw Pittman, LLP (collectively "Shaw Pittman"), in addition to their employees Paul A. Tummonds, Jr. and Patrick J. Potter, alleging a number of claims stemming from Shaw Pittman's representation of CHG in a bankruptcy proceeding. Since the plaintiff is asserting claims of legal malpractice, breach of contract, and breach of fiduciary duty arising out of Shaw Pittman's representation of CHG, and Shaw Pittman is defending on the ground that these claims are barred by res judicata, two sets of facts are relevant to this Motion. First, the events that occurred during Shaw Pittman's representation of CHG and in the months after the termination of the representation. Second, the earlier litigation between Shaw Pittman and CHG that occurred in bankruptcy court.

A. Shaw Pittman's Representation of CHG

The material facts underlying this suit are not in dispute. CHG retained Shaw Pittman to represent it before the United States Bankruptcy Court for the District of Columbia in a case under Chapter 11 of the federal Bankruptcy Code in 2002. During the bankruptcy proceedings, the D.C. Department of Consumer and Regulatory Affairs issued a citation requiring CHG to provide off-street parking for a hospital and nursing center owned by CHG. (Pl.'s Opp'n 2.) As a result, Shaw Pittman began representing CHG in its dealings with the Board of Zoning Adjustment ("BZA") and Zoning Administrator regarding the amount of parking spaces that would be required with respect to its property holdings in June 2002. (Id.)

Although the Department of Consumer and Regulatory Affairs initially issued a citation requiring CHG to provide 225 parking spaces, the Zoning Administrator dismissed the citation and issued CHG certificates of occupancy stating that CHG was in compliance with applicable zoning regulations in March of 2003. Id. Subsequently, neighbors of the CHG appealed to the BZA the Zoning Administrator's decision to issue the certificates of occupancy. Id. On January 6, 2004, the BZA orally affirmed the Zoning Administrator's issuance of the certificates of occupancy to CHG, while Shaw Pittman was still representing CHG. (Def.'s Mem. 6.) Six days earlier, Shaw Pittman had filed a motion seeking to terminate its engagement with CHG based upon financial and other reasons. (Def.'s Mem. 9.)

On January 7, 2004, the day after the BZA orally affirmed the Zoning Administrator's issuance of certificates of occupancy, the bankruptcy court approved Shaw Pittman's request to terminate its representation of CHG on all matters. (Potter Aff. ¶ 15.) Shaw Pittman provided no further legal services to CHG after January 7, 2004. (Id. ¶ 15.) Following the termination of the representation, Donald Hartman, in-house counsel for CHG, requested that Shaw Pittman turn over all BZA files in order for CHG to retain substitute zoning counsel. On January 15, 2004, Shaw Pittman transferred the BZA files to CHG. (Tummonds Aff. Ex. 10.)

While at the BZA on an unrelated matter on February 10, 2004, an associate with Shaw Pittman learned that the BZA would reconsider its January 6, 2004 decision affirming the Zoning Administrator's decision to grant certificates of occupancy to CHG, and the associate relayed this information to defendant Tummonds. (Tummonds Aff. ¶ 19.) On February 11, 2004, defendant Tummonds sent a letter to CHG's in-house counsel, Mr. Hartman, advising him that the BZA would take the matter up at a special public meeting on February 24, 2004, at 9:00 A.M., and CHG received this letter. Id. In the letter, Mr. Tummonds provided Mr. Hartman with the name and number of specific personnel at the BZA whom he could contact. However, Shaw Pittman did not notify the BZA that it had withdrawn from the representation of CHG. (Def.'s Mem. 10.)

Although Mr. Hartman and CHG were aware of the reconsideration hearing, apparently neither Mr. Hartman nor any other representative of CHG attended the hearing. (Def.'s Mem. 10.). At the hearing, the BZA decided by a vote of 5-0 to reverse its earlier decision and require CHG to provide one parking space for each bed in the hospital and nursing center-CHG would now be required to provide 177 parking spaces. (Pl.'s Opp'n 3.) On September 9, 2004, the BZA issued a written decision reflecting its oral ruling on February 24, 2004, and sent the order to Mr. Tummonds at Shaw Pittman. (Hartman Aff. Ex. 1.) However, Shaw Pittman had not represented CHG as of January 7, 2004, and never forwarded the order to CHG. (Pl.'s Opp'n 4) CHG did not learn of the written order until March of 2005, after the time to appeal the order had lapsed. (Id.)

B. CHG and Shaw Pittman's Fee Disputes in Bankruptcy Court

After CHG and Shaw Pittman's relationship ended, they were involved in a number of fee disputes before the bankruptcy court. The first fee dispute was a result of CHG refusing to pay Shaw Pittman for services rendered during the zoning proceedings because of its belief that the fees were unreasonable. (Potter Aff. Ex. 14; Id. Ex. 15; Id. Ex. 16.) In preparation for the fee dispute hearing at bankruptcy court in April, CHG conducted discovery on Shaw Pittman and deposed one of Shaw Pittman's employees (Potter Aff. ¶ 19.) The bankruptcy court held two contested hearings on the first fee application in April 2004. (Potter Aff. Ex. 17--18.) The bankruptcy judge granted Shaw Pittman's Motion for Summary Judgment and awarded the firm fees based primarily on its conclusion that CHG had agreed not to contest the amount of the fees. The bankruptcy judge also made oral findings that Shaw Pittman's services were professional and that Shaw Pittman deserved to be compensated for those services. (Potter Aff. Ex. 18 at 23--25.) This Court affirmed the decision of the bankruptcy court, In re Capitol Hill Group, 313 B.R. 344 (D.D.C. 2004).

Shaw Pittman then filed a fee application for costs incurred in representing itself during the first fee dispute. The bankruptcy court conducted a trial on October 21, 2004, and on October 22, 2004, the bankruptcy judge made extensive oral findings stating that CHG was responsible for paying all fees and expenses that were reasonably foreseeable as a result of engaging in litigation with Shaw Pittman. (Potter Aff. 6.) Nevertheless, the cycle of CHG refusing to pay Shaw Pittman fees, the bankruptcy court holding a hearing, and the bankruptcy court awarding fees to Shaw Pittman continued. The bankruptcy court held a one-day trial on the third fee application on August 1, 2005, and subsequently approved Shaw Pittman's third fee application. The bankruptcy court later entered the fourth and fifth fee judgments with the consent of CHG. Finally, the parties found themselves before the bankruptcy court one final time on April 12, 2006, on Shaw Pittman's motion to compel because it feared that CHG was withholding further claims. (Potter Aff. Ex. 32 at 2--3.) At that hearing, the bankruptcy judge asked CHG if it had any further claims against Shaw Pittman. (Id. at 3.) CHG generally responded that it had concerns about Shaw Pittman's representation but had not filed anything (Potter Aff. Ex. 32 at 5), and that it had no outstanding claims against Shaw Pittman arising out of the bankruptcy proceedings (Potter Aff. Ex. 32 at 3). The bankruptcy court noted that CHG could have ...


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