United States District Court, District of Columbia
Dirk D. HAIRE and Reginald M. Jones, Plaintiffs,
SMITH, CURRIE & HANCOCK LLP, Defendant.
Eric N. Heyer, Schwartz & Associates PLLC, Washington, DC, for Plaintiffs.
Everette L. Doffermyre, Doffermyre, Shields, Canfield, Knowles & Devine, Atlanta, GA, Gary Edward Mason, Whitfield Bryson & Mason LLP, Washington, DC, for Defendant.
JOHN D. BATES, District Judge.
Dirk Haire and Reginald Jones (collectively " plaintiffs" ) initiated this action in the Superior Court of the District of Columbia against their former law firm, Smith Currie & Hancock, LLP (" Smith Currie" or " defendant" ), alleging conversion and breach of contract claims. They also seek declaratory relief that neither of them violated the Smith Currie Partnership Agreement; that the liquidated damages clause of the agreement is unenforceable as violative of public policy; and that the arbitration provision of the Partnership Agreement does not apply to their claims. Haire also seeks a declaration that he is entitled to retain all the funds paid to him by Smith Currie prior to his withdrawal from the partnership. Compl. ¶ 1. Before the Court is Smith Currie's motion to dismiss or to stay and compel arbitration. For the reasons discussed below, Smith Currie's motion to compel arbitration will be granted and the case will be dismissed.
Smith Currie is an Atlanta-based law firm with several offices around the country, including one in Washington, D.C. Id. ¶ 4, 8. Haire, an attorney who specializes in construction law, was an equity partner at Smith Currie from January 1, 2011 through August 31, 2011. He has been a partner with the law firm Fox Rothschild since September 1, 2011. Id. ¶ 2. Jones specializes in government contracts, and was an equity partner with Smith Currie from 2006 through August 31, 2011. He is also now a partner with Fox Rotshchild since September 1, 2011. Id. ¶ 3.
Smith Currie's Washington, D.C. office consisted of plaintiffs, one additional partner, five associates, and five staff members. Id. ¶ 8. In 2011, Haire and Jones grew concerned about the firm's financial condition and their levels of compensation compared to their contributions. They claimed that they were among the firm's top performers for hours billed and revenues collected, and that few of the firm's equity partners were on pace to bill the required hours. Plaintiffs repeatedly requested that the firm adjust its compensation plan to reflect their contributions to the firm's revenues and productivity, but these requests were rejected. Id. ¶¶ 13, 15-16. Hence, in August 2011, plaintiffs announced they would leave Smith Currie to join Fox Rothschild. Id. ¶ 16. Ultimately, Fox Rothschild hired the associates and staff members in Smith Currie's Washington, DC office and took over the lease from Smith Currie for the office space. Id. ¶ 19.
Smith Currie and plaintiffs had signed a Partnership Agreement, which governed their relationship. Id. ¶ 10. The Partnership Agreement sets forth the duties of partners, how distributions were made, and terms relating to changes in the partnership. It also contains an arbitration provision, which states the following in relevant part:
(b) Arbitration. Any dispute (not resolved by mediation) arising out of or relating to this Agreement, or any alleged breach hereof, or arising out of or relating to the Partners and the Partnership, shall be settled by voluntary arbitration conducted in Georgia. Partnership Agreement Art. X § 10.2(b).
The arbitration provision also states that the arbitration " shall follow the Commercial Arbitration Rules of the AAA, as amended and in effect on the date a Demand for Arbitration is filed." Id. It further provides that " [t]he arbitrator(s) shall be governed by and shall apply the substantive law of the State of Georgia in making its or their award." Id.
Plaintiffs claim that when they terminated their partnership, they were told that their capital contributions would be returned. Compl. ¶ 17. However, Smith Currie informed plaintiffs by letter that it would seek damages for their alleged breaches of the Partnership Agreement and for breach of fiduciary duty. Id. ¶ 21. Smith Currie also claimed that plaintiffs owed certain allocated amounts for fees associated with the Washington, DC office and that it could use plaintiffs' capital contributions to offset those obligations. Id. It also sought return of $166,105 in " overpayments" that Haire had received as compensation. Id. ¶ 22.
On April 18, 2012, plaintiffs filed this action in the Superior Court of the District of Columbia. It was subsequently removed to this Court. The complaint contains three counts. The first two counts allege conversion and breach of contract claims against Smith Currie, based on its alleged refusal to return plaintiffs' ...