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Venable LLP v. Overseas Lease Group, Inc.

United States District Court, District of Columbia

July 28, 2015

VENABLE LLP, Plaintiff,
v.
OVERSEAS LEASE GROUP, INC., et al., Defendants.

MEMORANDUM OPINION July 27th, 2015 [Dkt. #15]

RICHARD J. LEON, District Judge.

Plaintiff Venable LLP ("Venable" or "plaintiff"), a Maryland limited liability partnership engaged in the practice of law, brought this suit against defendants Overseas Lease Group, Inc. ("OLG" or "defendant"), [1] a corporation engaged in the business of leasing vehicles to organizations around the world, and Ernest George Badcock III ("Badcock"), president and chief executive officer of OLG, to recover legal fees and costs owed to Venable arising out of representation in a separate litigation. See generally Complaint [Dkt. # 1] ("Complaint" or "Compl."). In OLG's answer to the complaint, OLG asserted counterclaims, [2] including (1) breach of contract, (2) fraudulent inducement, (3) negligence, (4) breach of fiduciary duty, and (5) negligent misrepresentation. See Def. OLG's First Am. Ans., Aff. Defenses, & Counterclaims [Dkt. # 20] ("Am. Ans.").[3] Currently before the Court is plaintiff's counter motion to dismiss OLG's counterclaims, for failure to state a claim under Federal Rules of Civil Procedure (the "Rules") 12(b)(6), 8(a), and 9(b).[4] See Mot. to Dismiss Counterclaim of OLG [Dkt. # 15] ("Motion" or "Mot.").[5] Upon due consideration of the pleadings, the relevant law, and the entire record herein, the motion is GRANTED and defendant OLG's counterclaims against plaintiff are DISMISSED.

BACKGROUND

OLG is in the business of leasing vehicles to governmental and nongovernmental organizations around the world. Am. Ans. ¶ 79. In 2006, OLG was awarded an exclusive contract by the United States Department of Defense (the "DOD") to provide armor-plated vehicles, such as Land Rovers, SUVs and a variety of other vehicles, in connection with the American military operations in Afghanistan. Am. Ans. ¶ 80. In or about 2010, Wiley Rein LLP ("Wiley Rein") filed a lawsuit on behalf of OLG against the United States in the United States Court for Claims, alleging non-payment in the amount of approximately $10 million for services and vehicles OLG had already provided to DOD. Am. Ans. ¶¶ 81-82. In 2012, Wiley Rein helped OLG obtain summary judgment on claims asserted by OLG, but that judgment did not determine the amount of damages. Am. Ans. ¶ 83. After obtaining summary judgment, plaintiff Venable was brought in to replace Wiley Rein and to assist with recovering the damages that were determined to be owed by summary judgment in a "cost efficient" and "timely manner." Am. Ans. ¶¶ 84, 87.

OLG alleges that during the process of resolving the damages issue, Venable "performed virtually no work" and made "virtually no contributions" to the negotiations. Am. Ans. ¶¶ 93-94. OLG alleges that Venable's presence at the negotiations was "solely for the purpose of accumulating and escalating fees" and that as a result of Venable's failure to prepare for and effectively participate in settlement discussions, OLG accepted a settlement of approximately $4 million instead of the approximately $10 million to which OLG believes it is entitled. Am. Ans. ¶¶ 94-95. OLG further alleges that Venable made misrepresentations about the legal services it would provide and spent hours of legal research that were unnecessary. Am. Ans. ¶¶ 97-99.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) provides that a district court shall dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed.R. Civ. P. 12(b)(6). Although all factual allegations in a complaint are assumed to be true when deciding a Rule 12(b)(6) motion, and all reasonable inferences are drawn in a plaintiffs favor, the Court need not accept either inferences "unsupported by the facts set out in the complaint" or "legal conclusions cast in the form of factual allegations." Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (citations and internal quotation marks omitted). To survive a motion to dismiss, a complaint must contain sufficient factual matter that, if accepted as true, "state[s] a claim to relief that is plausible on its face." Id. at 570. "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, 556 U.S. 662 (2009). This plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Id. In addition, "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should... be exposed at the point of minimum expenditure of time and money by the parties and the court.'" Twombly, 550 U.S. at 558 (quoting 5 WRIGHT & MILLER § 1216 at 233-234) (alteration in original).

A plaintiff alleging fraud must also "state with particularity the circumstances constituting fraud[.]" Fed.R.Civ.P. 9(b); United States ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004) (citing United States ex rel. Totten v. Bombardier Corp., 286 F.3d 542, 551-52 (D.C. Cir. 2002)). The particularity requirement allows the defendant to "defend against the charge and not just deny that they have done anything wrong." Williams, 389 F.3d at 1259 (quotations omitted). Accordingly, to survive a motion to dismiss, a complaint pleading fraud must "state the time, place and content of the false misrepresentations, the fact misrepresented and what was retained or given up as a consequence of the fraud... [and must] identify individuals allegedly involved in the fraud." Id. at 1256 (internal quotations and citations omitted).

ANALYSIS

In order to state a claim of professional negligence under D.C. law, [6] a plaintiff must allege: (1) the attorney's employment; (2) his neglect of a reasonable duty; and (3) that such negligence resulted in and was the proximate cause of loss to the client. Macktal v. Garde, 111 F.Supp.2d 18, 21 (D.D.C. 2000) (quoting Niosi v. Aiello, 69 A.2d 57, 60 (D.C. 1949)), aff'd, No. 00-7207, 2001 WL 238170 (D.C. Cir. Feb. 23, 2001). An "attorney is not liable for negligence if, notwithstanding the negligence, the client had no cause of action or meritorious defense as the case may be; or that if conduct of an attorney with respect to litigation results in no damage to his client the attorney is not liable." Niosi, 69 A.2d at 60. Additionally, "actual, not speculative, damage is required to succeed on a legal negligence claim." In re Estate of Curseen, 890 A.2d 191, 194 (D.C.2006) see also Poole v. Lowe, 615 A.2d 589, 593 (D.C. 1992) ("[T]here must at least have been injury not dependent upon a contingent or uncertain event; for then the fact of damage would be speculative and a cause of action would not have accrued" (internal quotation, citation, and editing omitted)); Knight v. Furlow, 553 A.2d 1232, 1235 (D.C. 1989) (explaining "a claim for legal malpractice does not accrue until the plaintiff-client has sustained some injury from the malpractice" and the "mere breach of a professional duty, causing only nominal damages, speculative harm, or the threat of future harm - not yet realized - does not suffice to create a cause of action for negligence'") (internal quotation marks omitted).

OLG claims that as a result of Venable's negligence, OLG was forced to accept a $4 million settlement rather than the $10 million it believes it was owed. Am. Ans. ¶ 95. However, "hindsight challenges to recommended settlements as being inadequate must fail if they are based only on speculation about what alternative results could have been achieved." Macktal, 111 F.Supp.2d at 22. Here, none of the alleged damages logically flow from any acts of Venable, but instead from OLG's voluntary decision to settle its claims against DOD. In fact, OLG accepted the settlement offer that it now claims was the product of inadequate representation after it had already fired Venable and initiated a suit in New York against Venable pressing the same claims as the counterclaims here. Compare Compl., Overseas Lease Group, Inc. v. Venable LLP, No. 157792/2014 (N.Y. Sup.Ct. filed on Aug. 7, 2014), with Mot., Ex. 2 (Settlement Agreement), dated Sept. 12, 2014, at p.9 [Dkt. # 15-3].[7]

In Vogel v. Touhey, the Court of Special Appeals of Maryland rejected a malpractice claim where plaintiff fired her attorney four days prior to the divorce hearing where the terms of a settlement were finalized. The Vogel court explained:

Because the divorce trial had not yet occurred, [plaintiff] could have undertaken a review of Dr. Alfert's financial records and attempted to secure a more favorable settlement, if appropriate. If that course of conduct had occurred, obviously there would have been no basis for a malpractice suit.... [Plaintiff's] decision to settle made it impossible for her to obtain the result she desired from Dr. Alfert, and it set up the scenario for a malpractice claim against [defendant] that might otherwise have been avoided.

828 A.2d 268, 290 (Md. Ct. Spec. App. 2003).[8] Here, a corporate entity with in-house counsel fired its attorney for purported negligence, brought suit for that negligence, and nonetheless agreed to a settlement two months later, fully aware of its possible defects. Just as in Vogel, the voluntary, non-coerced decisions of OLG are what set up the scenario for a malpractice claim against Venable that might otherwise had been avoided. See Vogel, 828 A.2d at 289 ("Under these facts, appellant's decision to settle was a matter ...


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