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Beach TV Properties, Inc. v. Solomon

United States District Court, District of Columbia

June 1, 2017

BEACH TV PROPERTIES, INC., Plaintiff,
v.
HENRY A. SOLOMON, Defendant. Re Document No. 59

          MEMORANDUM OPINION, GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO AMEND ITS COMPLAINT

          RUDOLPH CONTRERAS United States District Judge.

         I. INTRODUCTION

         Plaintiff the Atlanta Channel, Inc. ("ACI"), seeks leave to amend its complaint for a second time. The proposed second amended complaint includes two new defendants, three new grounds for recovery, and new factual allegations. The only active defendant prior to this motion was ACI's former attorney, Henry Solomon. The only active claim was that he failed to complete one page of routine paperwork at the FCC. Now, Plaintiff alleges that Mr. Solomon, his colleague Melodie Virtue, and their law firm, Garvey Schubert Barer ("Garvey"), were all negligent when they advised ACI to assign its television license to former-plaintiff Beach TV Properties, Inc. ("Beach TV"). Without explicitly pleading facts supporting it, Plaintiff alleges that the assignment somehow diminished ACFs malpractice claim against Mr. Solomon. Plaintiff also alleges that Ms. Virtue and Mr. Solomon "lulled" ACI into not filing this suit earlier.

         Garvey opposes Plaintiffs motion on the grounds that amendment of the complaint would be futile, because it would not withstand a motion to dismiss. In support of its opposition, Garvey argues that the added count against Mr. Solomon does not adequately allege the elements of legal malpractice. It makes this same argument with respect to the “duty” element for the new count against Ms. Virtue. In addition, Garvey argues that the new claim against Ms. Virtue is not yet ripe, that adding her as a defendant would be disruptive, and that the complaint does not support an argument that Ms. Virtue “lulled” ACI into inaction.

         The Court agrees with Garvey that adding the new count against Mr. Solomon would be futile. Plaintiff's proposed second amended complaint in no way describes how the assignment of ACI's television license could have caused its malpractice suit to lose value. Its negligence claim thus does not contain a plausible theory of causation. However, the Court finds that ACI adequately alleged the other elements of the new claims, including the duty element of the claim against Ms. Virtue. The Court also finds that the claim against Ms. Virtue, though contingent upon certain legal rulings that have not yet occurred, is ripe. Moreover, adding such a claim would not be so disruptive as to justify denying Plaintiff a forum to raise its claims. Finally, Defendant's arguments pertaining to “lulling” are not applicable here-Plaintiff's lulling claim is a preemptive response to the affirmative defense that the statute of limitations bars recovery, not a freestanding claim in the complaint. Because adding the new count against Ms. Virtue would not be futile and Garvey is allegedly liable under the doctrine of respondeat superior, the Court grants Plaintiff's motion in part and denies it in part.

         II. FACTUAL BACKGROUND

         The Court already provided a detailed factual background in its memorandum opinion addressing Defendants' motions to dismiss. See Beach TV Props., Inc. v. Solomon, No. 15-1823, 2016 WL 6068806, at *3 (D.D.C. Oct. 14, 2016). Assuming familiarity with the prior opinion, the Court outlines only the most relevant facts to the resolution of Plaintiff's motion to amend.

         This legal malpractice case arises out of attorney Henry Solomon's alleged failure to adequately complete an FCC Statement of Eligibility, which would have entitled ACI to an FCC Low-Power Television class A license. Id. at *1. Key omissions on routine FCC paperwork completed by Mr. Solomon allegedly caused ACI to forfeit its statutory right to a class A license, resulting in a claimed loss of hundreds of millions of dollars. Id. Mr. Solomon represented ACI from the time of filing the license application in 2000 until at least 2012. See id.; see also Pl.'s Proposed Second Am. Compl. ¶ 39, ECF No. 59-3. In 2009, Mr. Solomon allegedly advised ACI to assign its TV license to Beach TV, but “failed to advise ACI on the effect the assignment would have on ACI's malpractice claim against him.” Pl.'s Proposed Second Am. Compl. ¶ 45.

         During the administrative appeals of the FCC's rejection, Mr. Solomon moved from the law firm Haley Bader to Garvey. Beach TV Props., 2016 WL 6068806, at *3. The Court dismissed Plaintiff's claims against Haley Bader for lack of personal jurisdiction and against Garvey for failure to state cognizable claims. Id. at *1. It also dismissed claims made by Beach TV for lack of standing, because ACI's attempted assignment of the malpractice claims was invalid under Virginia law. Id. at *1, *17.

         Plaintiff's proposed amended complaint makes four distinct claims and seeks to add two defendants. See Pl.'s Proposed Second Am. Compl. ¶¶ 51-62; 73-87. The first count is largely the same as it was in Plaintiff's original complaint, and alleges that Mr. Solomon committed malpractice by failing to complete the FCC Statement of Eligibility. Compare Pl.'s Proposed Second Am. Compl. ¶¶ 73-75 with Am. Compl. ¶¶ 122-23, ECF No. 21.

         Plaintiff seeks to add a second count-“Count Two”-alleging that Mr. Solomon's failure to adequately counsel ACI with respect to the license that ACI assigned to Beach TV was negligent and “compromise[d] ACI's ability to recover damages based on its ownership of WTHC-LD.” Pl.'s Mot. Am. Compl. ¶ 15; Pl.'s Proposed Second Am. Compl. ¶¶ 76-79. Plaintiff alleges that Mr. Solomon negligently advised ACI that the assignment of the television license WTHC-LD would shield that license from potential ACI creditors, and prepared and filed documents for the assignment. Pl.'s Proposed Second Am. Compl. ¶¶ 42-43. Mr. Solomon was negligent, ACI argues, because “Mr. Solomon failed to advise ACI that the License Assignment could adversely affect ACI's legal malpractice claim against him.” Pl.'s Proposed Second Am. Compl. ¶ 45. ACI's proposed amended complaint does not detail why or how the assignment of the license could adversely affect the malpractice claim, but its motion suggests that ownership of the WTHC-LD license is a prerequisite to recovering for malpractice, and that assigning the license without the malpractice claim undermined the holder of the malpractice claim's ability to recover damages. Pl.'s Mot. Am. Compl. ¶ 15; see generally Pl.'s Proposed Second Am. Compl. After the Court ruled that the assignment of the malpractice claim against Mr. Solomon was invalid because D.C. law did not apply, Beach TV assigned the WTHC-LD license back to ACI, so ACI now holds both the malpractice claim and the license. Pl.'s Proposed Second Am. Compl. ¶¶ 47-50. Thus, to the extent that Beach TV's ownership of the license for seven years does not affect ACI's ability to recover damages on the malpractice claim in Count One or the amount of such damages, Plaintiff concedes Count Two is moot. Pl.'s Reply Def.'s Opp'n to Pl.'s Mot. Amend Compl. at 5, ECF No. 64.

         Notably, moving to add Count Two is somewhat inconsistent with ACI's prior argument at the motion-to-dismiss stage. In its opposition to Haley Bader's motion to dismiss, ACI previously argued that the assignment from ACI to Beach TV was “governed by District of Columbia law, which permits” the assignment of both TV licenses and malpractice claims. Pl.'s Opp'n Haley Bader Mot. Dismiss at 16, ECF No. 36. Thus, Plaintiff argued, the malpractice claim did not lose any value when it was assigned from ACI to Beach TV along with the WTHC-LD license. Pl.'s Opp'n Haley Bader Mot. Dismiss at 18. But now, after the Court held that D.C. law does not apply, meaning that the assignment of the malpractice claim was invalid, see Beach TV Properties, Inc., 2016 WL 6068806, at *16, ACI accuses Mr. Solomon of malpractice for failing to recognize that assignment of the malpractice claim was invalid.

         The third count-and first new proposed defendant-arises out of the alleged negligence of attorney Melodie Virtue. According to the complaint, Ms. Virtue worked with Mr. Solomon and then, after Mr. Solomon stopped working as a full-time attorney, took over as lead counsel to ACI. Pl.'s Proposed Second Am. Compl. ¶¶ 51-56. Plaintiff alleges that Ms. Virtue was negligent in failing to inform ACI that Mr. Solomon had committed malpractice, that his withdrawal from the case could affect the statute of limitations of malpractice claims, that she had a conflict of interest in light of her professional relationship with Mr. Solomon, and that ACI should retain separate counsel. Pl.'s Proposed Second Am. Compl. ¶¶ 59, 80-84. The proposed amended complaint also alleges that both Mr. Solomon and Ms. Virtue “lull[ed] ACI into inaction in filing its malpractice claims against” them by continuing to work on their case. Pl.'s Proposed Second Am. Compl. ¶¶ 57-58.

         The final count of the proposed amended complaint seeks to add Garvey as a defendant for the malpractice of Mr. Solomon and Ms. Virtue through the doctrine of respondeat superior. Pl.'s Proposed Second Am. Compl. ¶ 85-87. Thus, the facts alleged for ACI's second and third counts are also relevant to its fourth count.

         III. ANALYSIS

         Defendant Solomon and his former law firm, Garvey, oppose Plaintiff's motion on the grounds that amendment of the complaint would be futile. See Garvey's Mem. P. & A. Opp'n Pl.'s Mot. Leave Amend Compl. (“Garvey's Opp'n”) at 14, ECF No. 62; Def. Solomon's Opp'n Pl.'s Mot. Leave Amend Compl. (“Def.'s Opp'n”) at 4, ECF No. 63. They specifically argue that Counts Two and Three-and, effectually, Count Four-do not state cognizable claims, and therefore allowing Plaintiff to amend its complaint to include them would be futile. See Garvey's Opp'n at 16-27. They also assert that Plaintiff's claims against Ms. Virtue are not ripe, and that adding them would be unduly disruptive to the case. Garvey's Opp'n at 25-27.

         Garvey is partially correct. Although Plaintiff is not precluded from making its argument in light of its position at the motion-to-dismiss stage and adequately pleads the elements of duty and breach, Plaintiff does not adequately plead causation, because it never explains how the assignment of a television license could adversely affect the value of its malpractice claim against Mr. Solomon. With that said, adding the claim against Ms. Virtue would not be futile. Plaintiff adequately states the legal duty that she owed ACI and does not seek recovery on the independent ground of “lulling, ” as Garvey seems to suggest. And, despite ACI's failure to respond to Garvey's arguments with respect to disruption and ripeness, the Court recognizes that amendment would not be unduly disruptive, and that the claim against Ms. Virtue is ripe.

         A. Legal Standard

         In general, “[t]he court should freely give leave [to amend] when justice so requires.” Fed.R.Civ.P. 15(a)(2). Although the standard is generous, leave should be denied in cases involving “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962). “Courts may deny a motion to amend a complaint as futile . . . if the proposed claim would not survive a motion to dismiss.” James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996) (citing Foman, 371 U.S. at 181-82). Accordingly, in determining the futility of amendment, the Court applies the same standard it applies in resolving a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Id.

         As noted in the Court's previous opinion, to survive a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain sufficient factual allegations that, if accepted as true, would state a plausible claim to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Instead, plaintiffs must “nudge[] their claims across the line from conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

         B. ...


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