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Robertson v. Cartinhour

March 5, 2010


The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge


Before the Court are Plaintiff's Motion to Reconsider or in the Alternative Vacate This Court's Order of February 22, 2010; Plaintiff's Motion to Recuse Pursuant [to] 28 U.S.C. § 144; and Plaintiff's Emergency Motion to Strike or Vacate & to Stay All Further Proceedings. For the reasons set forth herein and at the hearing held on March 1, 2010, the Court denies plaintiff's motions.


Plaintiff Wade Robertson filed a pro se complaint*fn1 on August 28, 2009, seeking declaratory judgment against William Cartinhour, Jr. (Compl. ¶ 24.) Robertson alleged that he and Cartinhour were "engaged together . . . in a continuing and active [business] partnership" located in the District of Columbia. (Id. ¶ 7.) Robertson further alleged that Cartinhour had signed a written indemnification agreement ("Indemnification Agreement") stating that Cartinhour "w[ould] not make any claims or demands, or file any legal proceedings against Wade A. Robertson," including claims concerning "any future injuries, losses, and damages not now known or anticipated, but which may later develop or be discovered." (Id. ¶ 9.) According to Robertson, Cartinhour's attorneys had sent Robertson written demands for money and had threatened a lawsuit against him. (Id. ¶¶ 12-15.) Robertson alleged that these demands breached the Indemnification Agreement and therefore he was entitled to a judgment declaring Cartinhour's obligations to release, hold harmless, and indemnify Robertson. (Id. ¶¶ 16, 24.)

In October 2009, Cartinhour filed his answer and a countersuit against Robertson. Cartinhour, an 82-year-old retiree, alleged that he had been introduced to Robertson, an attorney licensed to practice in the District of Columbia and California, in 2004. (Counter-Compl. ¶ 3.) According to Cartinhour, Robertson represented that he was seeking an investor on behalf of some plaintiffs and their counsel in a "multi-billion dollar [securities] claim with a high likelihood of success, including the anticipated recovery of attorney's fees in the hundreds of millions of dollars."*fn2 (Id. ¶ 6.) In reliance on Robertson's representations regarding the Liu securities case, Cartinhour entered into a partnership with Robertson and contributed $3,500,000.00 to that partnership between 2004 and 2006. (Id. ¶¶ 10, 15, 21.) Of these monies, $1,500,000.00 was contributed after Liu had been thrown out by Judge Scheindlin, because, according to Cartinhour, he did not know that the case had been dismissed and Robertson continued to represent that he was "confident that [their] position continue[d] to grow stronger and that [they] w[ould] ultimately be wildly successful in this endeavor." (Id. ¶¶ 17, 19, 21, Ex. D [Mar. 15, 2006 Letter from Robertson to Cartinhour].) Cartinhour also alleged that Robertson had acted as his attorney and had advised him not only about investing in the partnership, but also with respect to his will, estate planning, and taxes. (Id. ¶ 33.) Cartinhour claimed that he had paid Robertson at least $50,000.00 for those services. (Id.)

After the Supreme Court denied certiorari in Liu in December 2006, Robertson refused to respond to Cartinhour's inquiries about the whereabouts of the partnership funds or the status of the now-defunct litigation. (Id. ¶ 25.) He also refused to produce an accounting of the partnership funds or to return the monies Cartinhour had contributed, despite multiple demands from Cartinhour and his attorneys. (Id. ¶¶ 30-32.) Based on these allegations, Cartinhour countersued for accounting, fraud, breach of fiduciary duty, breach of partnership agreement, legal malpractice, negligent misrepresentation, conversion, and derivative action. (Id. ¶¶ 34-81.)

Shortly after Cartinhour filed his answer and counter-complaint, the Court scheduled an Initial Scheduling Conference. Prior to the conference Robertson filed a motion to dismiss and a motion for summary judgment.*fn3 In his motions, Robertson argued that all of Cartinhour's claims were barred by the April 7, 2006 Indemnification Agreement.*fn4 (Pl.'s Mem. of P. & A. in Supp. of his Mot. to Dismiss ["Dismissal Mem."] at 18-19.) Robertson also argued that Cartinhour's claims of fraud were barred by the statute of limitations and could therefore not serve as a basis to nullify the Indemnification Agreement. (Pl.'s Mem. of P. & A. in Supp. of his Mot. for Summ. J. at 17.) He contended that Cartinhour, despite his age and not being a lawyer, should have "exercised reasonable diligence in staying abreast of the class-action litigation" and if he had done so, he would have become aware of his fraud claim at an earlier date. (Id. at 18.)

In addition to the Indemnification Agreement, Robertson attached to his motions a business agreement, an April 2006 partnership agreement,*fn5 and an attestation of no attorney-client relationship, signed by Cartinhour on April 7, 2006, and stating that Cartinhour "ha[s] no claims against Wade A. Robertson of any kind with respect to him in his profession as an attorney or that could arise from any attorney-client relationship, whether actual or mistakenly assumed, or otherwise." (Dec. 6, 2009 Robertson Aff., Ex. 4.) The attestation further states that "no exchange of any information, documents, or anything whatsoever between [Robertson and Cartinhour] establishes in any way any attorney-client relationship between [Robertson and Cartinhour.]" (Id.)

On December 15, 2009, the Court held an initial scheduling conference. Neither of the parties attended the hearing, though both were represented by counsel. (Dec. 15, 2009 Tr. at 3:6-16.) In response to the Court's inquiry, Cartinhour's counsel explained that his client had inherited his money, spent "most of his time in his house," and "has certain social phobias." (Id. at 8:3-6.) The Court was also informed that a complaint against Robertson had been filed by Cartinhour with D.C. Bar Counsel. (Id. at 5:18-6:1.) When asked about the whereabouts of the $3,500,000.00, Robertson's counsel stated that there was "no evidence that the money ha[d] been spent," but he provided no further information about the status of the funds. (Id. at 10:4-5.)*fn6

Based on these facts, the Court expressed concern regarding the unconscionability of the agreements entered into by Cartinhour and the substantial risk that Cartinhour, who is now 82 years old, would never recover any of his $3,500,000.00. The Court sua sponte imposed an order freezing the money Cartinhour had contributed to the partnership and any assets obtained with those funds (id. at 10:6-10, 10:24-11:11; Dec. 16, 2010 Order) and ordered Robertson to file an accounting as to how the partnership funds had been spent and a description of the work, if any, he had done on the Liu case. (Id. at 11:9-11, 13:21-25; Dec. 15, 2009 Order.)

Following this hearing, Cartinhour filed his oppositions to the motions to dismiss and for summary judgment, attaching his affidavit and correspondence from Robertson regarding legal services that he had rendered to Cartinhour and a $40,000 check from Cartinhour to Robertson for that work. Cartinhour raised a host of disputed issues of fact regarding the circumstances surrounding his various agreements with Robertson. Thereafter, Robertson filed a motion for reconsideration of the Court's order enjoining him from spending or transferring the money that Cartinhour had contributed to the partnership. In addition, on January 4, 2010, Robertson filed an affidavit with accompanying documentation regarding the hours he had worked on behalf of the partnership. The sparse "breakdown" of Robertson's time stated that between September 2004 and February 2008, he had billed 7,714 hours to the Liu case. (Jan. 4, 2010 Aff. of Wade Robertson, Ex. A at 1.) That total included 3,297 hours billed in 2005, over 5,600 hours billed after the case was dismissed by the district court, and over 2,600 hours billed after the case was dismissed by the Second Circuit Court of Appeals. (Id., Ex. A at 2-60.) The financial information provided by Robertson did not give any accounting as to how the $3,500,000.00 had been spent except to show that the partnership had only $4,541.00 left in cash and that loans had been made from the partnership to Robertson in the amount of $3,405,000.00. (Id., Ex. B at 4.) As was learned at a subsequent hearing, these loans were taken by Robertson from the partnership in 2005 and 2007. (Feb. 22, 2010 Aff. of William C. Cartinhour ¶ 11.) A promissory note recording the 2005 loan indicates that Robertson borrowed $1,970.000.00 on April 18, 2005, coming due on or before January 1, 2030. (Id.) The second loan, taken by Robertson in 2007, was for $1,435,000.00 and not due until January 1, 2040. (Id.)

On January 11, 2010, the Court held a second hearing at which Robertson, his attorneys, and attorneys for Cartinhour were present. (Jan. 11, 2010 Tr. at 3:4-9.) After hearing argument on Robertson's motions to dismiss and for summary judgment (id. at 3:10-6:6), the Court denied the motions on the grounds that there were "issues of fact" in dispute and that the facts as set forth by Cartinhour would support a finding that the agreements that Cartinhour had signed were unconscionable and/or the product of fraud and that Robertson, as either a partner or an attorney, had breached his fiduciary duty to Cartinhour, who had good reason to view Robertson as his lawyer, irrespective of the attestation he had signed on April 7, 2006. (Id. at 6:7-7:16.)

Turning to the pending motion to reconsider the freezing order, the Court indicated that it planned to hold a preliminary injunction hearing pursuant to Fed. R. Civ. P. 65, but that Cartinhour was entitled to discovery regarding the status of the partnership funds and Robertson's assets and to an evidentiary hearing if the parties did not agree to a freezing order.*fn7

(Id. at 45:23-47:1.) After consulting with his client (id. at 49:11-14), Robertson's counsel indicated that an agreement had been reached that they "would work together to verify the remaining assets that Mr. Robertson has and get them into some form from Citibank or some format that is going to be acceptable to counsel for Mr. Cartinhour." (Id. at 50:4-7.) Cartinhour's counsel agreed, stating that the parties would talk about how to "get the bank discovery done" and requested a further status conference with the Court to decide what future proceedings would be needed. (Id. at 50:10-15.) In view of this agreement, the Court indicated that it would hold Robertson's motion for reconsideration in abeyance and ordered the parties to propose a discovery schedule and to inform the Court if an evidentiary hearing would be necessary by noon the next day. (Id. at 51:5-11, 52:6-10.)

The next day, Cartinhour filed an emergency motion for a temporary restraining order ("TRO") and a PI to prevent Robertson from contacting him outside the presence of his counsel. (Mem. of P. & A. in Supp. of Def.'s Emergency Mot. for TRO and Prelim. Inj. To Bar Wade Robertson From Contacting William C. Cartinhour Without the Presence of Counsel at 5-6.) Cartinhour alleged that Robertson went to his place of residence after the January 11 hearing in an attempt to settle the case and spoke to Cartinhour extensively outside the presence of his counsel. (Id. at 2-3.) Cartinhour further alleged that he had not spoken to his attorneys about the proceedings on January 11 when Robertson arrived at his apartment and that Robertson had told him that if he did not settle his claims, the litigation "would be prolonged and costly." (Id. at 3; see also id., Ex. 3 ["Jan. 12, 2010 Cartinhour Aff."] ΒΆΒΆ 2-7.) The Court scheduled an immediate conference call with counsel for the parties, during which the Court asked if a hearing would be required to decide Cartinhour's motion or if Robertson would agree to a stay-away order. Counsel for ...

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