United States District Court, D. Columbia
EQUITAS DISABILITY ADVOCATES, LLC, Plaintiff: Charles Allen
Foster, LEAD ATTORNEY, WHITEFORD TAYLOR & PRESTON LLP,
Washington, DC; Eric C. Rowe, LEAD ATTORNEY, WHITEFORD TAYLOR
& PRESTON, Washington, DC.
DAVID A. BRYANT, FREDERICK DALEY, Defendants: Autumn Rose
Agans, Kenneth Gordon Stallard, Randell Hunt Norton, LEAD
ATTORNEYS, THOMPSON O'DONNELL, LLP, Arlington, VA.
Royce C. Lamberth.
the Court are defendants' Motion  to Dismiss the
plaintiff's Second Amended Complaint and plaintiff's
Motion  for Leave to Take Jurisdictional Discovery. Upon
consideration of the motions, oppositions, replies, the
entire record in this case, and the applicable law, the Court
will GRANT defendants' Motion  to Dismiss the Amended
Complaint and DENY plaintiff's Motion  for Leave to
Take Jurisdictional Discovery.
center of this dispute is a valuable compilation of insurance
documents plaintiff refers to as the " Archive."
Second Am. Compl.  ¶ 13, Nov. 3, 2014. The Archive
was developed by Brian Abeles after he worked for decades in
the insurance industry as an insurance broker, benefits
consultant and claims consultant. Id. at ¶ 11.
Abeles planned to the license the Archive's contents to
disability insurance lawyers who were in the business of
bringing claims against insurance companies to secure the
appropriate recovery for their clients. Id. at
¶ 11, 13. Fulcrum Law Group, PLLC (" FLG" ), a
corporation Abeles formed and managed, ultimately entered
into two agreements to license the Archive's contents to
Daley, DeBofsky & Bryant P.C., (" DDB" ), an
Illinois-based professional corporation that dissolved in
2013. Id. at ¶ 31, 108. The plaintiff now
alleges that defendants breached those contracts and carried
out an elaborate fraud to gain access to the Archive.
Id. at ¶ ¶ 22, 84-98.
plaintiff in this case is Equitas Disability Advocates, LLC,
(" Equitas" ) a limited liability company based in
Washington, D.C. and co-founded by Brian Abeles and Joshua N.
Rose. Id. at ¶ ¶ 2, 10. Equitas is the
successor-in-interest to FLG and
the holder of the " Archive." Id. at
¶ 2. Abeles, then through FLG, and David Bryant of DDB
began negotiations to license the Archive in the summer of
2007. Id. at ¶ 14. Defendants Daley, DeBofsky,
and Bryant were all members of DDB, which " never
practiced and was never organized as a partnership."
Defs.' Mem., [19-2] Ex. A, Bryant Deck, ¶ 4. Now
dissolved, David Bryant incorporated DDB as a professional
corporation under Illinois law in July 2002. Id. at
Ex. E (providing proof of DDB's incorporation).
2007, Abeles met defendant Bryant and Jonathan Feigenbaum, a
non-party in this litigation, at a disability litigation
conference in Boston, Massachusetts, where Bryant first
learned of and expressed interest in the Archive. Second Am.
Compl.  ¶ 14. Later that month, Abeles took the
first of his many trips to Chicago, where he, Bryant, the
other members of DDB, and Feigenbaum discussed the
possibility and potential terms of licensing portions of the
Archive. Id. at ¶ ¶ 15-19. Abeles stressed
that he could not discuss the details of the Archive until
DDB signed a non-disclosure agreement relating primarily to
the use of the Archive's confidential information, which
Bryant signed on behalf of DDB in June 2007. Id. at
¶ ¶ 14-15.
next phase of negotiations centered on how best to compensate
Abeles for access to his archive in light of his status as a
non-lawyer. Id. at ¶ ¶ 23-27. The parties
determined that although most jurisdictions prohibited
lawyers from sharing fees with non-lawyers, Washington D.C.
was an exception; the District of Columbia Rules of
Professional Conduct permit non-lawyers to have a financial
stake in law firms so long as a number of specific conditions
are satisfied. Id. at ¶ 24 (citing D.C. Rules
of Prof'l Conduct 5.4(b)). As such, the parties decided
the " solution" was to create a Washington
D.C.-based law firm, " in which Mr. Abeles would have a
minority interest." Id. at ¶ 25.
Abeles's newly created law firm would then serve as
co-counsel with DDB or Feigenbaum in various disability
insurance cases, effectively permitting a fee sharing scheme
to govern the underlying licensing agreements. Id.
DDB supported this idea, so long as Abeles obtained an ethics
opinion stating that such fee sharing was proper under
applicable D.C. law. Id. at ¶ 31; Defs.'
Mem., [19-2] Ex. A, Bryant Aff., ¶ ¶ 20-23.
connection with obtaining an ethics opinion, Bryant, Abeles,
and an array of lawyers met in Washington, D.C. in October
2007. Second Am. Compl.  ¶ 28. The specific purpose
of the meaning was to " creat[e] the mechanisms by which
Mr. Bryant, and through him, DDB, and Mr. Feigenbaum would do
business with Plaintiff in Washington, D.C., and obtain
access to the Archive from Plaintiff in Washington."
Id. at ¶ 29. After the parties agreed that a
" formal opinion would be obtained from a leading expert
on legal ethics," Mr. Abeles formed FLG in November 2007
for the purpose of doing business with DDB and Mr.
Feigenbaum. Id. at ¶ 31. Accordingly, after Mr.
Abeles obtained two expert opinions concluding that the
prospective fee-sharing agreement was legally permissible,
DDB expressed that they were prepared to enter into the
licensing agreements with plaintiff. Id. at ¶
FLG, DDB, and Jonathan Feigenbaum entered into two separate
agreements for the licensing of the Archive. Id. at
¶ ¶ 44-66. The first was the Strategic Alliance
Co-Counsel Agreement (" SACCA" ), providing "
for the joint representation and prosecution of disability
claims." Id. at ¶ ¶ 44-45. Under the
terms of the agreement, DDB and Feigenbaum would separately
gain access to the Archive when
prosecuting insurance claims, and in return, FLG would serve
as co-counsel. Id. The SACCA contained a somewhat
complex fee splitting formula to divide the fees between
either DDN or Feigenbaum and FLG. Id. at ¶
¶ 48-49. It also provided for special fee calculations
for class actions and marking to potential class action
clients. Id. at ¶ ¶ 50-51. Lastly, the
parties agreed that each would be " subject to an
audit" upon ten days prior written notice provided by
" the Firm or Firm [sic] who are not first chair on the
subject claims or litigation." Id. at ¶ 52
(citing SACCA ¶ 4(c)). Importantly, the contract was
signed by defendant Bryant on behalf of " Daley,
DeBofsky & Bryant," not " Daley, DeBofsky & Bryant,
P.C." Id. at 56; see also Pl.'s
Mem.  at 27.
addition to SACCA, at the same time, the parties entered into
the Fulcrum-Alliance Archive Sublicense Agreement ("
FAASA" ), which granted a sublicense to DDB to the
Archive in connection with claims or litigation subject to
the SACCA. Second Am. Compl.  ¶ ¶ 59-62. The
agreement made clear that DDB did not have " any right
to use any [documents] from the Archive except for claims or
litigation subject to the [SACCA] and the fee sharing terms
and conditions thereof." Id. at ¶ 63
(citing FAASA ¶ 2). Lastly, in signing FAASA, DDB also
expressly agreed not to take any action that would tend to
destroy or diminish the goodwill or value associated with the
Archive. Similar to the SACCA, the FASSA was signed by
defendant Bryant on behalf of " Daley, DeBofsky &
Bryant," not " Daley, DeBofsky & Bryant, P.C."
Pl.'s Mem.  at 27.
signing these agreements and receiving access to the Archive,
plaintiff alleges DDB used the Archive without compensating
FLG according to the terms of its agreement. Second Am.
Compl.  ¶ 70. Specifically, a lawsuit that DDB filed
in Ohio settled in August 2011 for more than $1,000,000--none
of which was remitted to FLG under the terms of SACCA and
FAASA. Id. Defendant additionally points to several
other cases in which " DDB also failed and refused to
remit the amounts owed to Plaintiff under the fee allocation
provisions of the SACCA." Id. at ¶ ¶
connection with these alleged acts of deception, plaintiff
brings nine separate causes of action--mostly relating to
fraud and breach of contract--and seeks to hold the members
of Daley, DeBofsky & Bryant, P.C. personally liable.
Id. at ¶ ¶ 73-83. Primarily, plaintiff
argues that the defendants should bear personal liability
because they " held themselves out as a
partnership." Id. at ¶ 73. In addition to
claims of fraud and breach of contract, plaintiffs also have
brought claims for breach of implied covenant of good faith
and fair dealing; a claim under the Business Corporation Act;
a claim for fraudulent transfer; a claim for unjust
enrichment; a claim for an audit under FAASA and SACCA; and a
claim for injunctive relief to prohibit defendants'
future use of the Archive. Id. at ¶ ¶
procedural history of the case is somewhat complex. This
lawsuit was originally filed on February 10, 2014 in District
of Columbia Superior Court. On April 7, 2014, plaintiff filed
an Amended Complaint, and defendants filed a notice of
removal to the federal district court on October 1, 2014.
Seven days later, on October 7, the defendants filed a motion
to dismiss the Amended Complaint. In response, on November 3,
plaintiff filed a Second Amended Complaint, and later that
month, defendants filed a motion to dismiss that complaint
pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(6), one of the
two motions currently before the Court. Additionally,
plaintiff filed a Motion for
Leave to Take Jurisdictional Discovery on November 3, 2014.
LEGAL STANDARD FOR FAILURE TO STATE A CLAIM
motion to dismiss is appropriate when a complaint fails
" to state a claim upon which relief can be
granted." Fed.R.Civ.P. 12(b)(6). To overcome this
hurdle, a complaint must 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 A. Corp. v. Twombly, 550 U.S. 544, 555, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations
omitted). The Court must " accept as true all of the
factual allegations contained in the complaint,"
Atherton v. D.C. Office of the Mayor, 567 F.3d 672,
681, 386 U.S.App.D.C. 144 (D.C. Cir. 2009), and grant a
plaintiff " the benefit of all inferences that can be
derived from the facts alleged." Kowal v. MCI
Communications Corp., 16 F.3d 1271, 1276, 305
U.S.App.D.C. 60 (D.C. Cir. 1994). However, the Court may not
" accept inferences drawn by plaintiffs if such
inferences are unsupported by the facts set out in the
complaint." Id. In other words, " only a
complaint that states a plausible claim for relief survives a
motion to dismiss." Ashcroft v. Iqbal, 556 U.S.
662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009); see
also Atherton, 567 F.3d at 681.
viability of several of plaintiff's claims depends on
whether or not the defendants may be held personally liable
for debts incurred by DDB, a professional corporation in
which they were members. The legal standards governing this
inquiry are found in D.C. Code § 29-603.08(a)(b) and the
common law's approach to piercing the corporate veil.
D.C Code Section 29-603.08 (a)(b): Liability of a ...