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Glenn v. Fay

United States District Court, District of Columbia

December 6, 2016

JAY GLENN, Plaintiff


          Royce C. Lamberth, United States District Judge


         This is an ancillary dispute between attorneys over who will reap the rewards of a sprawling litigation against the Islamic Republic of Iran (Iran) under the state sponsor of terrorism exception to the Foreign Sovereign Immunities Act (FSIA). Plaintiff Jay Glenn filed a declaratory suit against defendants Thomas Fortune Fay, Steven Perles, and their respective law practices. Defendants were the lead attorneys for plaintiffs in the action captioned Peterson v. Islamic Republic of Iran[1]litigated before this Court. Glenn claims he was employed by defendants to assist in that litigation and seeks a declaratory judgment that he is entitled to payment. Before this Court are Fay's Motion to Dismiss [ECF No. 8] and Perles' Motion to Dismiss [ECF No. 13], pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons discussed below, this Court will dismiss this action sua sponte.


         On October 23, 1983, suicide bombers from Hezbollah murdered 241 American servicemen and injured several more by bombing a United States Marine Corps barracks in Beirut, Lebanon. This Court previously presided over a consolidated action by nearly one thousand plaintiffs consisting of the victims, their families, and the representatives of their estates. On September 7, 2007, this Court found Iran liable for damages because it provided material support and assistance to Hezbollah. Iran did not appear here, and default judgment was entered in favor of the plaintiffs in the amount of more than $2 billion.

         The Peterson plaintiffs were represented before this Court by the Fay Law Group, PA, Thomas Fortune Fay, the Perles Law Firm, PC, and Steven R. Pedes (collectively, "Fay and Perles"). Fay and Perles engaged Jay Glenn to prove the amount of some of the Peterson plaintiffs' damages to a Special Master. Glenn asserts that, pursuant to a written agreement signed in 2003, Fay and Perles agreed to pay Glenn 3% of the gross amounts collected on judgments for plaintiffs represented before the Special Master, plus an amount equal to the necessary expenses incurred by Glenn. Compl. Ex. 1 [ECF 1-1]. Glenn alleges that Fay and Perles referred 63 plaintiffs to Glenn for representation before a Special Master. Compl. 3, ¶ 14. Importantly, Glenn's fee was "contingent upon collection and to the extent of collection only." Compl. Ex. 1 [ECF No. 1-1].

         Glenn further asserts that Fay and Perles orally agreed to pay Glenn one-third of the one-third contingent fee received by Fay and Perles (11.11% of the total recovery), on top of the amount owed under the 2003 Written Agreement (3% of the gross recovery), if Glenn were to engage and refer other potential plaintiffs to Fay and Perles. Glenn claims to have engaged 40 additional plaintiffs pursuant to this Oral Agreement. Compl. 4, ¶ 17. He also claims the substance of the Oral Agreement was confirmed in the following writings to Fay and Perles:

• "First, following Glenn's entry into a Contingent Retainer Agreement with each additional plaintiff, Glenn transmitted an executed copy of the same to Fay, together with a cover letter confirming that the client was referred by Glenn." Compl. 4, ¶ 19.
• "Second, following Glenn's entry into each Contingent Retainer Agreement with the relatives of a Marine Barracks bombing victim, Glenn completed a Family Information Sheet. .. together with a letter which provided:
I located and executed Attorney Client Contracts for [names indicated on Family Information Sheet]. In accordance with prior discussions, I am entitled to an additional contingent fee of 11.11 % of any recovery/interest for these [__] claims." Compl. 4-5, ¶ 20.
• "Third, following the Special Master's entry of a report and recommendation for each [plaintiff] Glenn represented, Glenn transmitted a copy of the same to Fay, together with a cover letter indicating the calculation of his fee under both the [Written Agreement] and [Oral Agreement], and Fay and Perles never objected." Compl. 5, ¶ 21.

         This Court entered default judgment in favor of the Peterson plaintiffs. Glenn asserts that the 103 plaintiffs he represented pursuant to the Written and Oral Agreements were awarded over $309 million. Compl. 5, ¶ 22. However, Glenn claims that Fay and Perles repudiated the agreement in 2010, advising Glenn that he "would not be paid any amount under the [Written Agreement] or [Oral Agreement]." Id. Glenn filed for declaratory relief in the United Stated District Court for the Southern District of New York, Glenn v. Fay, Case No. 1:10-cv-08287. There, Glenn sought a declaratory judgment that (1) Glenn had a charging lien against Iranian assets in New York in an amount equal to that owed under the Written and Oral Agreements, (2) Glenn referred the 40 plaintiffs to Fay and Perles, (3) Glenn should be permitted access to sealed files in the Peterson case. Fay's Am. Mot. to Dismiss Ex. 2 [ECF No. 8-3]. That case was subsequently dismissed on jurisdictional grounds. Id. at Ex. 4 [ECF No. 8-5].

         In 2013, the Peterson plaintiffs successfully brought an action to seize Iranian assets in the United States District Court for the Southern District of New York. That court ordered the turnover of $1.75 billion in assets held by Citibank N.A., cash bonds that Bank Markazi-the Central Bank of Iran-held in an account through an intermediary. The court's order created a qualified settlement fund (QSF trust) and transferred the seized funds to a trustee-the Honorable Stanley Sporkin-for the benefit of the plaintiffs. The court's order was affirmed by both the Second Circuit[2] and the United States Supreme Court.[3]

         In 2016, Glenn filed this action seeking a sole declaratory judgment that "upon Defendants' receipt of a distribution from the QSF Trust, Defendants must immediately remit to Glenn an amount to be determined at trial, plus interest and costs, as required by the Associate Counsel Agreement and the Additional Fee Agreement." Compl. 7, ¶ 30. Fay and Perles have moved that this action should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. Specifically, Fay and Perles argue that the case is barred by the District of Columbia's three-year statute of limitations on breach of contract actions, which was triggered by the 2010 S.D.N.Y. suit. In the alternative, Fay and Perles argue Glenn has failed to plead to necessary elements of a breach of contract claim. Fay's Am. Mot. to Dismiss [ECF No. 8]; Perles' Mot. to Dismiss [ECF No. 13]. Glenn counters that the statute of limitations would not begin to run until Fay and Perles actually receive payment and decline to pay Glenn. Mem. in Opp'n. to Fay's Mot. to Dismiss 4-5. Further, Glenn argues that he is not required to plead the elements of a breach of contract claim because the entire purpose of a declaratory action is to ...

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