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Perry v. Scholar

March 19, 2010

HARRY C. PERRY, JR., PLAINTIFF,
v.
SAM SCHOLAR, DEFENDANT.



The opinion of the court was delivered by: Richard W. Roberts United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Harry Perry, Jr. filed a one-count complaint against Sam Scholar seeking damages for wrongful involvement in litigation. Scholar moves under Federal Rule of Civil Procedure 12(b)(6) to dismiss Perry's complaint, arguing that Perry failed to state a claim and filed this action untimely. Because Perry has sufficiently alleged a claim of tortious involvement in litigation, and because there is a factual dispute about when Perry was aware of his claim against Scholar, Scholar's motion to dismiss will be denied.

BACKGROUND

Between 1986 and 2005, Perry, an accountant, served as a paid plan administrator of the Plasterers' Local Union No. 96 Pension Plan ("the Plan"). During the same time period, Scholar was an attorney who served as counsel to the Plan. (Compl. ¶¶ 1-2.) As the plan administrator, Perry provided organizational and administrative support to the Trustees of the Plan and implemented their decisions regarding administering the Plan and investing Plan assets. (Id. ¶ 6.) According to Perry, "[f]rom time to time, various legal questions required the advice of . . . Scholar, who issued opinions, prepared resolutions of the Board of Trustees of the Plan and provided advice to the Trustees and to [Perry] both orally and in writing." (Id.) Perry alleges that Scholar provided incorrect legal advice to "Plan trustees and to [Perry] in several respects," including advising the Trustees of the Plan that they were allowed to "return to certain contractors who had employed Plan participants a portion of the funds initially credited to those participants when it was determined that the Plan participants were not vested pursuant to the Plan's provisions." (Id. ¶ 7.) Perry questioned Scholar about that advice, but Scholar did not change his opinion, and the Trustees returned to certain employers approximately $130,000 of contributions from the Plan. (Id.) Perry further alleges that Scholar failed to advise him or the Plan trustees that they had a duty to diversify the investment of Plan assets, causing them to limit their investment of Plan assets to only certificates of deposit and treasury bills. In addition, Perry alleges that Scholar failed to advise the Plan's Trustees about their duties to hold regular meetings and to maintain minutes of those meetings. (Id.)

On February 9, 2006, the Plan filed suit against Perry, Scholar, and other defendants in a case titled Plasterers Local Union No. 96 Pension Plan v. Harold Perry et al., Civil Action No. 06-338 (D. Md. 2006) ("Maryland litigation"), seeking damages for breach of fiduciary duty and legal malpractice. (Id. ¶¶ 7, 11.) Perry responded in that case on March 3, 2006. (Def.'s Mem. in Supp. of Mot. to Dismiss ("Def.'s Mem.") Ex. 3.) Perry filed this action against Scholar on July 23, 2009, arguing that Scholar was negligent by giving the legal advice described above, and that as a result of Scholar's negligence Perry was forced to spend $168,989 defending himself in the Maryland litigation. (Id. ¶¶ 9-14.)

Scholar has moved to dismiss Perry's complaint, arguing that Perry failed to plead a cause of action because Perry "does not suggest that he had an attorney-client relationship with Mr. Scholar," and thus cannot show that Scholar owed him a duty. (Def.'s Mem. at 1, 4-7.) Scholar also argues that Perry's claim is barred by the applicable statute of limitations. (Id. at 8.)

DISCUSSION

A complaint can be dismissed under Federal Rule of Civil Procedure 12(b)(6) when a plaintiff fails to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6).

To survive a motion to dismiss, a complaint must contain sufficient factual matter, acceptable as true, to "state a claim to relief that is plausible on its face." A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The complaint must be construed in the light most favorable to the plaintiff and "the court must assume the truth of all well-pleaded allegations." Warren v. District of Columbia, 353 F.3d 36, 39 (D.C. Cir. 2004). If a plaintiff fails to allege sufficient facts to support a claim, that claim must be dismissed. See Twombly, 550 U.S. at 555-556. It is not necessary for a plaintiff to plead all elements of his prima facie case in the complaint, Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002), or to "plead law or match facts to every element of a legal theory." Krieger v. Fadely, 211 F.3d 134, 136 (D.C. Cir. 2000). A complaint should contain enough factual heft to show an entitlement to relief. Twombly, 550 U.S. at 557. That is, a complaint is required to plead "only enough facts to [nudge] a claim to relief . . . across the line from conceivable to plausible[.]" Id. at 570. "Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950.

I. DUTY

Scholar argues that Perry's claim for wrongful involvement in litigation is insufficient because his allegations of duty lack sufficient factual support, and are instead hollow legal assertions. Under the common law of the District of Columbia,*fn1 where the plaintiff seeks in a separate action to recover attorney [sic] fees incurred by him in earlier litigation with a third person arising out of the tortious act of the defendant, it has been held that if the natural and proximate consequences of the defendant's tortious act were to involve the plaintiff in litigation with a third person, reasonable compensation for attorney's fees incurred by the plaintiff may be recovered as damages against the author of the tortious act.

Brem v. United States Fidelity & Guaranty Co., 206 A.2d 404, 407 (D.C. 1965); see also Answering Service, Inc. v. Egan, 785 F.2d 1084, 1086 (D.C. Cir. 1986) (quoting Biddle v. Chatel, 421 A.2d 3, 7 (D.C. 1980)). The essential elements that must be established for this claim are: "'(1) the plaintiff must have incurred the fees in the course of prior litigation, (2) ordinarily that litigation must have occurred between the plaintiff and the third party who is not the defendant in the present action, and (3) the plaintiff must have become involved in the underlying litigation as a consequence of the defendant's tortious act.'" Nepera Chem. v. Sea-Land Serv., 794 F.2d 688, 697 n.65 (D.C. Cir. 1986) (quoting Auxier v. Kraisel, 466 A.2d 416, 420 (D.C. 1983)). A plaintiff can have no claim against a defendant for wrongful involvement in litigation if the plaintiff is found liable for any portion of the underlying litigation. See Answering Service, 785 F.2d at 1087 (stating that "any independent liability of Answering Service for the tortious actions [in the underlying litigation] would defeat its claim for wrongful involvement in litigation") (citing Safeway Stores, Inc. v. Chamberlain Protective Services, Inc., 451 A.2d 66, 73 (D.C. 1982)). In addition, "the tort of wrongful involvement in litigation is a tort like any other tort - - all traditional tort concepts apply," including that the plaintiff cannot recover damages unless he establishes that the defendant owed him a duty. Answering Service, 785 F.2d at 1088.

Here, Perry sufficiently alleges the elements required for tortious involvement with litigation. Perry alleges that in the course of his defense of the Maryland litigation, he incurred $168,989 in legal fees and expenses as a result of Scholar's negligent legal advice. (Compl. ¶ 13.) Perry asserts that as the Plan administrator, he relied and was entitled to rely on Scholar's legal advice. (Id. ¶¶ 6, 9.) That combined with the specific advice Perry alleges as having been wrongful presents enough factual heft to fully state a claim construed to allege that Scholar owed Perry a duty not to provide legal advice regarding the administration of the Plan in a negligent manner. See Wilson v. Prudential Financial, Civil Action No. 03-2313 (RMU), 2004 WL 2451412, at *3-4 (D.D.C. October 18, 2004) (listing the elements of a claim for negligence under D.C. law, then stating that "[a]lthough the plaintiff need not plead each of these elements in his complaint to survive a motion to dismiss, he must at least present facts to demonstrate that negligence provides the appropriate remedy for his grievance"); United States v. Espy, 145 F.3d 1369, 1371 (D.C. Cir. 1998) (finding that a statute imposed "a host of tasks that fit comfortably within the definition of 'duty'" despite the fact that the statute did not use that specific term, and defining duty as "something that one is ...


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