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Klayman v. Barmak

March 13, 2009

LARRY KLAYMAN, PLAINTIFF,
v.
DAVID BARMAK, INDIVIDUALLY, AND MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C., A PROFESSIONAL CORPORATION DEFENDANTS.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

This is a breach of contract and breach of fiduciary duty case filed by Larry Klayman ("plaintiff") against David Barmak, an individual, and Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo, P.C., a law firm (collectively, "defendants"). Plaintiff alleges that defendants breached their contractual and fiduciary duties to plaintiff by publishing false and damaging information, disclosing statements protected by attorney-client privilege, and representing the interests of another client, Judicial Watch, against plaintiff's own interests. Now before the Court is defendants' Rule 12(b)(6) motion to dismiss for failure to state a claim.*fn1 For the reasons discussed below, defendants' motion is denied.

BACKGROUND

Klayman is the former Chairman, General Counsel, and Treasurer of Judicial Watch. Am. Compl. ¶ 5. He currently resides in Florida. Id. ¶ 2. Barmak resides in Maryland, practices law in Washington, D.C., and is a partner at the law firm Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo. Id. ¶ 3. Barmak serves as outside general counsel for Judicial Watch, and Klayman alleges that Barmak also represented him individually. Id. ¶ 6.

In a previous action in this Court, Klayman brought claims against several Judicial Watch employees for fraudulent misrepresentation, breach of contract, unjust enrichment, violation of the Lanham Act, violation of Florida statute § 540.08, rescission for breach of contract, and defamation. See Klayman v. Judicial Watch, Inc., Civ.A.No. 06-670, 2007 WL 140978 (D.D.C. Jan. 17, 2007) ("Klayman I"). Some of those claims are still pending, but Judge Kollar-Kotelly dismissed others, including the charge of defamation relating to the publication of allegedly false materials contained in Judicial Watch's Form 990 tax returns. The defamation claim was dismissed because Judicial Watch was required to prepare the Form 990 tax returns, so they were absolutely privileged against a defamation claim. Id. at *18.

In that action, Judicial Watch subsequently filed a counterclaim for trademark infringement, unfair competition, and cybersquatting, and then filed an amended counterclaim. Klayman v. Judicial Watch, Inc., 247 F.R.D. 10, 12 (D.D.C. 2007) ("Klayman II"). The amended counterclaim included Klayman's then-wife's allegations about Klayman -- allegations that were originally set forth in a sealed divorce hearing and then were relayed by Klayman himself to several Judicial Watch employees and Barmak. Id. at 17. Klayman filed a cross-motion for sanctions arguing that Judicial Watch's disclosure of his ex-wife's allegations violated his attorney-client privilege because he made the comments in the presence of Barmak, who, he asserts, was both his personal lawyer and Judicial Watch's general counsel. Id. Judge KollarKotelly ruled that the allegations were not covered by attorney-client privilege because even if Barmak represented both Judicial Watch and Klayman individually, the presence of another Judicial Watch employee destroyed any potential attorney-client privilege. Id.

Klayman brought this suit in Florida state court on November 1, 2007. The causes of action in the present suit arise from events occurring in September 2003 -- the same events that formed the basis of Klayman I and Klayman II. Am. Compl. ¶¶ 14-22. Defendants, asserting diversity jurisdiction, removed this case to the District Court of the Southern District of Florida and then moved to dismiss or for transfer based on lack of personal jurisdiction, improper venue, and forum non conveniens. Mot. at 2. The Southern District of Florida transferred the case to this Court under 28 U.S.C. § 1404(a) and did not reach defendants' personal jurisdiction arguments.

Defendants have now moved to dismiss, asserting that this action is barred by the D.C. statute of limitations. Defendants also argue that Judge Kollar-Kotelly's prior decisions collaterally estop two of plaintiff's claims here: that defendants' assistance in producing Judicial Watch's Form 990 tax returns (that allegedly include false statements) constitutes a breach of contract and a breach of fiduciary duty, and that defendants breached their contractual and fiduciary duties by publishing Klayman's ex-wife's allegations in the amended counterclaim they filed on behalf of Judicial Watch.

STANDARD

All that the Federal Rules of Civil Procedure require of a complaint is that it contain "'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200 (2007) (per curiam). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the "grounds" of "entitle[ment] to relief," a plaintiff must furnish "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atl. Corp., 127 S.Ct. at 1964-65; see also Papasan v. Allain, 478 U.S. 265, 286 (1986). Instead, the complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. Corp., 127 S.Ct. at 1965 (citations omitted). However, a court "must not make any judgment about the probability of the plaintiff's success, for a complaint 'may proceed even if it appears that a recovery is very remote and unlikely'" or that the plaintiff "will fail to find evidentiary support for his allegations." Aktieselskabet AF 21. November 21 v. Fame Jeans, Inc., 525 F.3d 8, 17 (D.C. Cir. 2008).

The notice pleading rules are not meant to impose a great burden on a plaintiff. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005); see also Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512-13 (2002). When the sufficiency of a complaint is challenged by a motion to dismiss under Rule 12(b)(6), the plaintiff's factual allegations must be presumed true and should be liberally construed in his or her favor. Leatherman v. Tarrant County Narcotics & Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979); see also Erickson, 127 S.Ct. at 2200 (citing Bell Atl. Corp., 127 S.Ct. at 1965)). The plaintiff must be given every favorable inference that may be drawn from the allegations of fact. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). However, "the court need not accept inferences drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint." Kowal v. MCI Commc'n Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Nor does the court accept "legal conclusions cast in the form of factual allegations." Aktieselskabet AF 21. November 21, 525 F.3d at 17 n.4; see also Domen v. Nat'l Rehab. Hosp., 925 F. Supp. 830, 837 (D.D.C. 1996) (citing Papasan, 478 U.S. at 286).

ANALYSIS

I. Statute of Limitations

Defendants argue that this case should be dismissed because D.C. law -- which imposes a three-year statute of limitations for breach of contract and breach of fiduciary duty actions --should apply because a federal court must apply the law of the state in which it sits. Mot. at 7-9; see D.C. Code Ann. ยงยง 12-301(3), (7). Plaintiff responds that Florida state law -- which has a five-year statute of limitations for tort and contract actions -- should ...


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