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Beach TV Properties Inc. v. Soloman

United States District Court, District of Columbia

March 29, 2018

BEACH TV PROPERTIES, INC., et al., Plaintiffs,
v.
HENRY R. SOLOMON, et al., Defendants.

         Re Document, 71, 74

          MEMORANDUM OPINION DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT; DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          RUDOLPH CONTRERAS, United States District Judge.

         I. INTRODUCTION

         With the inclusion of a few check marks on a form submitted in 1999, this litigation might have been avoided. In December of 1999, Defendant Henry Solomon, an attorney for Plaintiff Atlanta Channel, Inc. (“ACI”), submitted a form on ACI's behalf to the Federal Communications Commission (“FCC”) without realizing that several key questions on the form remained unanswered. Because the form was incomplete, the FCC dismissed it, thereby blocking ACI's ability to obtain a special license that would have given it preference on the airwaves. Mr. Solomon filed a motion with the FCC asking it to reverse its dismissal of the form, but for twelve years the FCC sat on that motion. In the intervening years, Mr. Solomon retired from the practice of law. After several failed appeals of the FCC's dismissal, ACI filed suit in this Court alleging that Mr. Solomon was negligent when he filed the incomplete form, and now moves for summary judgment as to Mr. Solomon's liability. In his cross-motion for summary judgment, Mr. Solomon argues that ACI cannot recover because its malpractice claim is barred by the statute of limitations, because ACI was contributorily negligent by failing to complete the form itself, and because the far-reaching damage ACI now alleges it suffered was not proximately caused by the submission of the incomplete form. For the reasons set forth below, the Court finds that neither party has met its burden for a finding of summary judgment in its favor, and therefore denies both motions.

         II. FACTUAL AND PROCEDURAL BACKGROUND

         ACI is a broadcast television business that owns and operates a low power television (“LPTV”) station with the call sign WTHC-LD in Atlanta, Georgia. Pl.'s Statement of Material Facts Not in Dispute (“Pl.'s SMF”) ¶ 18, Pl.'s Mot. Partial Summ. J. (“Pl.'s Mot.”), ECF No. 71-1; Def.'s Statement of Material Facts Not in Genuine Dispute (“Def.'s SMF”) ¶ 1, Def.'s Mot. Summ. J. (“Def.'s Mot.”), ECF No. 76-1. Through this license granted by the FCC, ACI broadcasts “visitor information to hotels in the Atlanta area.” Pl.'s SMF ¶¶ 19-20; Def.'s Brief Supp. Mot. Summ. J. (“Def.'s Brief”) at 4, ECF No. 76. From 1993 to 2009 and from 2016 to present, ACI has held the FCC license for this channel; from 2009 to 2016, the license was assigned to Beach TV Properties, Inc. (“Beach TV”). Pl.'s SMF ¶¶ 20-21. Both ACI and Beach TV are owned and operated by Jud Colley and Toni Davis. Id. ¶¶ 2-3.

         In 1999, Congress enacted the Community Broadcasters Protection Act (“CBPA”), 47 U.S.C. § 336(f), which directed the FCC to award qualified LPTV licensees Class A licenses granting them the same protection and status as full power broadcast television stations in the event of displacement from their assigned broadcast frequency. Pl.'s SMF ¶¶ 23-24; Def.'s SMF ¶ 4. ACI claims that its LPTV station met the qualification criteria for a Class A license, as provided by 47 U.S.C. § 336(f)(2)(A). Pl.'s SMF ¶¶ 25-26. Therefore, in December 1999, Mr. Colley worked with his attorney Henry Solomon, who at the time was employed by the Virginia law firm Haley Bader & Potts, to obtain a Class A license for WTHC-LD, along with several LPTV stations owned by Beach TV. Id. ¶¶ 7-8, 29-44.

         In order to obtain a Class A license for an LPTV station, applicants must have completed and filed Statements of Eligibility with the FCC by January 28, 2000. See 47 U.S.C. §336(f)(1)(B). The CBPA provided that “[a]bsent a material deficiency, the [FCC would] grant certification of eligibility to apply for class A status.” Id. Therefore, in December 1999, Mr. Colley “partially filled out and signed Statements of Eligibility for five (5) LPTV licenses owned by Beach TV and sent them to Mr. Solomon for review and filing with the FCC.” Pl.'s SMF ¶ 31. Questions 3(a), 3(b), 3(c), and 4 remained incomplete on each form. Id. ¶ 32; Solomon Dep. 20:12-21:7, 21:16-21:20, Pl.'s Mot., ECF No. 72-4. Mr. Colley claims that he sent the forms to Mr. Solomon partially filled out because he “did not know how to provide the appropriate answers to the Qualification Questions on any of the Beach TV Statements.” Pl.'s SMF ¶ 32; see also Colley Dep. 99:13-103:3, 106:21-107:5, Pl.'s Mot., ECF No. 72-2. Therefore, he “relied on Mr. Solomon to provide the appropriate answers” to the questions he left blank. Pl.'s SMF ¶ 32. A paralegal at the Haley firm filled in the relevant parts of the forms, at which point Mr. Solomon reviewed the forms and submitted them to the FCC on December 28, 1999. Pl.'s SMF ¶¶ 33-34. Around that time, Mr. Colley sent Mr. Solomon a similarly partially filled out and signed form for ACI's LPTV channel, and similarly relied on Mr. Solomon to complete the form. Id. ¶¶ 35-36. However, Mr. Solomon submitted this form to the FCC with the boxes for Questions 3(a), 3(b), 3(c), and 4 left blank. Id. ¶¶ 37-39; see also Ex. A, Pl.'s SMF, ECF No. 71-3. The form also contained the incorrect call sign for the LPTV station. Solomon Dep. 24:18- 25:17, ECF No. 72-4. On March 6, 2000, Mr. Solomon switched employers from the Haley firm to the D.C. firm Garvey, Schubert & Barer. See Def.'s SMF ¶ 8.

         On June 2, 2000, the FCC's Mass. Media Bureau (“MMB”) accepted Beach TV's Statements of Eligibility, and soon after granted Beach TV's stations Class A licenses. Pl.'s SMF ¶ 42. However, on June 9, 2000, the MMB dismissed ACI's Statement because it was incomplete. Id. ¶ 43. Mr. Solomon informed Mr. Colley of the dismissal soon thereafter. See Colley Dep. 93:14-97:14, Def.'s Mot., ECF No. 76-3. Mr. Colley told Mr. Solomon that they would “need to do everything possible to get [the] Class A status” for the ACI station. Pl.'s SMF ¶ 45. Therefore, on June 22, 2000, Mr. Solomon filed a Petition for Reconsideration of the Dismissal with the Bureau, which included a correctly filled out, amended Statement of Eligibility. Id. ¶ 47. However, on November 20, 2000, the MMB denied the Petition for Reconsideration because ACI's original Statement of Eligibility had been “patently defective.” Id. ¶ 49.

         A few weeks later, on December 13, 2000, Mr. Solomon emailed Mr. Colley about seeking further review of the dismissal with the FCC, and explained that in the meantime, “it d[id] not appear that the station [wa]s likely to suffer any harm as a result of” the dismissal. Id. ¶¶ 50-51. Mr. Colley agreed that for the time being, the station was not at risk of displacement, but worried that at some point in the future it could be. Id. ¶ 53. Therefore, on December 20, 2000, Mr. Solomon filed an Application for Review by the full FCC of the MMB's denial of ACI's Petition for Reconsideration. Id. ¶ 56. The Application languished for twelve long years. It was ultimately denied on November 8, 2012. Id. ¶ 57.

         During the first few years following the submission of the Application, Mr. Solomon communicated with ACI regarding its status, and in 2004 drafted a letter in support of the Application from U.S. Representative John Lewis of Georgia to be submitted to the FCC. Id. ¶¶ 58-60. The last time Mr. Solomon communicated directly with Mr. Colley regarding the Application was in 2008. Id. ¶ 60.

         Also in 2008, Mr. Solomon began the process of winding down his practice at the Garvey firm due to his advanced age. See Ex. 25, Solomon Dep., Pl.'s Mot., ECF No. 72-5. The details regarding how he characterized this change to Mr. Colley remain murky. Mr. Colley summarizes Mr. Solomon's 2009 communications with him regarding this “transition” as follows: that Mr. Solomon told Mr. Colley that he would turn over responsibility for ACI and Beach TV matters to Melodie Virtue, another partner at the firm; that she would become the “front person” for ACI and Beach TV's dealings with the FCC; that Mr. Solomon would act “in the background” as a “consultant”; that Mr. Solomon would remain in Washington, D.C. and would maintain an office at the Garvey firm; that he would continue to perform a limited amount of work for the firm; and that he would continue to work on pro bono matters. Pl.'s SMF ¶ 64. In his deposition, Mr. Solomon said that he could not recall speaking with Mr. Colley or Ms. Davis about his retirement, see Solomon Dep. 108:2-17, 140:8-22, ECF No. 72-4, but now claims that he never told Mr. Colley that he “would be the back person regarding legal representation of ACI or any of the other businesses owned by Colley.” 2d Solomon Decl. ¶ 8, Def.'s Opp'n, ECF No. 78-6.

         On December 11, 2009, Mr. Solomon forwarded an email to Mr. Colley that contained an image of a “biker bar in Florida.” See Ex. C, Pl.'s Mot., ECF No. 71-5. The image depicted three motorized scooters parked outside of a convenience store. In the email, Mr. Solomon told Mr. Colley, while referring to the photo: “Not me. Staying in DC forever. Transition will be smooth and I will be around to consult, etc.” Id. In response, Mr. Colley joked, “Don't look close, they may have our names on them.” Id. The parties have provided no other documentation regarding how Mr. Solomon informed Mr. Colley of his impending retirement. Mr. Colley claims that the email “was the only written communication by Mr. Solomon to Mr. Colley regarding his ‘transition' at the Garvey Firm.” Pl.'s SMF ¶ 69.

         Between 2008 and 2011, Mr. Solomon took several steps to wind down his practice. On July 1, 2010, his employment at the Garvey firm was officially terminated. See Ex. 25, Solomon Dep. Mr. Solomon relinquished his Virginia bar license in 2009 and his D.C. license in 2011. Def.'s SMF ¶ 19. However, Mr. Solomon did not completely sever his relationship with the Garvey firm upon his termination and the relinquishment of his bar licenses. He continued to work from his office at the firm several days a week, and maintained a pro bono practice. Pl.'s SMF ¶¶ 70, 73. Additionally, at least in ACI's case, he continued to advise his former partners on their work before the FCC. See, e.g., Ex. 41, Virtue Dep., Pl.'s Mot., ECF No. 72-7.

         In February 2012, Congress passed the Spectrum Act, which Mr. Colley worried might affect ACI's LPTV spectrum usage rights. As such, he contacted Ms. Virtue, whom he believed he had been told would be the “front person” for all of ACI's dealings with the FCC, inquiring as to the status of ACI's December 2000 Application for Review. Pl.'s SMF ¶¶ 85-87. Up until Mr. Colley's email, Ms. Virtue had been unaware that ACI had an Application for Review pending before the FCC. Id. ¶¶ 88-89. The next morning Ms. Virtue emailed Mr. Solomon asking if he knew whether the FCC had ever issued a decision regarding the Application for Review (which she referred to as a petition for reconsideration), and after he answered that it had not issued a decision, she confirmed that it was still a “live” Application. See Ex. E, Pl.'s SMF., ECF No. 71-7.

         Upon further inquiry, Ms. Virtue learned that the Garvey firm did not have a complete record of the Application, and the FCC had “no records in its Public File regarding the Application for Review.” Pl.'s SMF ¶¶ 90-91. Therefore, Ms. Virtue reconstructed the record for the Application for Review using documents provided by Mr. Colley and forwarded the reconstructed record to the FCC. She informed Mr. Colley that she was “in communication with Mr. Solomon about the Application for Review.” Id. ¶ 94.

         While Ms. Virtue had “notified the FCC in writing [that] she would be the contact person for other matters handled by Mr. Solomon for Beach TV, ” which at that point was the licensee for the relevant LPTV station, she did not notify the FCC in writing that she would be the contact person for the Application for Review, nor did she substitute as counsel of record. Id. ¶¶ 95-100. However, she immediately began strategizing, with the help of Mr. Solomon, on how to obtain a favorable decision on the Application for Review for Beach TV. On March 23, 2012, Mr. Solomon emailed Ms. Virtue from his personal email account to brainstorm, writing “Do you think that a Supplement to the Application for Review might be worthwhile-including Cong. Letter and more facts? One reason is that now that the staff has the file, it might act quickly. Also, arrange meeting with Barbara and bring Jud?” Ex. F, Pl.'s Mot., ECF No. 71-8. Ms. Virtue responded that “Jud's already trying to get another congressional letter and I've recommended Jud come back up for FCC meetings with the Commissioners. A supplement might be a good idea.” Id. In response, Mr. Solomon explained, “I'm just trying to head off a quick decision before we exhaust all other options. Based on my experience with Honig, I think meetings with commissioner[]s as a first resort isn't advisable. I'd set something up with Barbara and Joyce first-with Jud.” Id. Ms. Virtue believes that after that exchange she likely communicated to Mr. Colley that “Henry [Solomon] was giving [her] some ideas on how to get the FCC to act on that pending application for review, and to bring it full circle with the staff, based on the fact that it had been pending for 12 years.” Virtue Dep. 94:14-95:12, Pl.'s Mot., ECF No. 72-6.

         Mr. Colley went on to lobby the FCC for an adjudication in his favor, using lobbyists not employed by the Garvey firm. Pl.'s SMF ¶ 108-09. One of those lobbyists was Benjamin Perez, an engineer who is also a licensed attorney. Colley Dep. 147:8-15, ECF No. 76-3; see also Ex. 10, Def.'s Mot., ECF No. 76-12. During that time, the FCC contacted Mr. Solomon requesting a copy of ACI's Statement of Eligibility. Pl.'s SMF ¶ 112. Mr. Solomon forwarded the request to Ms. Virtue, who supplied the FCC with a copy of the statement. Id.

         On November 8, 2012, the FCC denied the Application for Review, explaining that ACI's Statement of Eligibility had a “material deficiency” because it did not include answers to key questions. See Ex. G, Pl.'s SMF, ECF No. 71-9. The next day, Ms. Virtue sent a copy of the denial to Mr. Solomon for his review, and told him that she planned to file a Petition for Reconsideration with the FCC. Pl.'s SMF ¶¶ 118-19. Mr. Solomon offered to provide her with “input” and “wisdom” as she drafted the petition. Id. ¶ 120. On November 16, 2012, Mr. Solomon emailed Ms. Virtue with his “preliminary thoughts” on the denial and the types of arguments that could be made in the Petition for Reconsideration. In his email, he included a phrase (“the law favors repose”) that Ms. Virtue liked so much that she included it in the final petition. Id. ¶¶ 121-123, 126. In his email, he also used the phrase “we” when describing strategy for the case. See Ex. H, Pl.'s SMF, ECF No. 71-10.

         On November 21, 2012, Ms. Virtue emailed Mr. Colley and Ms. Davis discussing her recommendations for the Petition for Reconsideration. See Ex. 43, Virtue Dep., Pl.'s Mot., ECF No. 72-7. In the email, she also responded to a previous email from Ms. Davis in which Ms. Davis expressed her belief that this whole situation had arisen because of a clerical error by the Haley firm. Id. Ms. Virtue explained that it would behoove Beach TV to consider engaging independent counsel to consider whether Beach TV and the Garvey firm had a conflict of interest regarding the Petition for Reconsideration. Id. She explained that Beach TV had several options as it assessed whether a conflict existed. Id. It “could decide to have Garvey Schubert Barer file the Petition for Reconsideration, [it] could transfer this matter to independent counsel, or [it] could engage another firm with expertise in administrative litigation to serve as co-counsel with Garvey Schubert Barer and complement [Ms. Virtue's] background in communications regulation.” Id. Beach TV and ACI retained the law firm Balch & Bingham to determine whether there was a conflict, but ultimately chose to proceed with the Garvey firm as counsel for the Petition. See Ex. 54, Virtue Dep., Pl.'s Mot., ECF No. 72-7.

         Upon finishing a draft of the Petition, Ms. Virtue sent a copy to Mr. Colley and Ms. Davis, and also left a copy on Mr. Solomon's chair in his Garvey firm office for him to review. See Ex. J, Pl.'s SMF, ECF No. 71-12; Ex. K, Pl.'s SMF, ECF No. 71-13. It appears that Mr. Solomon was in the office that day, because an hour and a half later, he responded to Ms. Virtue with comments. In those comments, he suggested

Maybe a short para. saying that what the FCC did to us vs. its flexibility vis-a-vis other filers, borders on disparate treatment. See Melody Music, Inc. v. FCC (a couple of cases followed and relied on MM doctrine. Similarly-situated parties can't be treated differently. Granted network stations though anti-trust violations/deception, but denied AM renewal where also deceptive practices.) Melody Music v. FCC, 345 F.2d 730 (DC Cir. 1965). I haven't re-read the McElroy Electronics case, but I think MM was cited. 990 F.2d 1351 (DC Cir. 1993). In any event, MM has been cited in a number of subsequent cases that you can easily find. Jud's Declaration excellent.

Ex. K, Pl.'s SMF. Seven minutes later, he sent another email, which read: “Also see fn. 13 White Mtn. Beg. Co, Inc. v. FCC 598 F.2d 274 (1998). Did not follow MM, but distinguished. I think maybe we're closer to MM than was appellant in WMtn. I will be re-reading Pet. For Recon.” Id. Ms. Virtue incorporated an analysis of the Melody Music case into the final Petition for Review. Pl.'s SMF ¶ 130. Mr. Colley recalls Ms. Virtue informing him at the time that she was consulting with Mr. Solomon as she prepared the Petition for Review. Colley Dep. 177:21-178:8, ECF No. 72-2. Ms. Virtue does not recall telling Mr. Colley that Mr. Solomon was involved, but she “assumes” that she did. Virtue Dep. 166:18-167:2, ECF No. 72-6. Ms. Virtue submitted the Petition on December 7, 2012. Pl.'s SMF ¶ 133.

         On October 7, 2014, the MMB denied the Petition for Reconsideration because “[t]he Atlanta Channel's initial Statement of Eligibility lacked any information supporting eligibility, and its corrected statement was untimely.” Ex. 53, Virtue Dep., ECF No. 72-7. In response to this denial, Ms. Virtue emailed Mr. Colley and Ms. Davis explaining the process for filing an appeal of the decision to the D.C. Circuit. See Ex. 54, Virtue Dep., ECF No. 72-7. She also explained that it would be wise at that juncture to again consult with outside counsel regarding whether Beach TV and the Garvey firm had a conflict of interest that could affect the appeal. Id.

         Beach TV ultimately decided to file an appeal with the D.C. Circuit using a different law firm, but continued to retain the Garvey firm for other matters. The D.C. Circuit affirmed the FCC denial of the Petition for Review on September 23, 2015. See Beach TV Props., Inc. v. FCC, 617 Fed. App'x 10 (D.C. Cir. 2015). One month later, on October 26, 2015, Beach TV and ACI filed this suit against Mr. Solomon, the Haley firm, and the Garvey firm. See generally Compl., ECF No. 1. At that point, Ms. Virtue advised Mr. Colley that the Garvey firm could no longer represent ACI and Beach TV due to the conflict of interest posed by the lawsuit. Pl.'s SMF ¶ 151.

         All three defendants moved to dismiss ACI and Beach TV's First Amended Complaint. See ECF Nos. 24, 25, 27. The Court granted the Garvey and Haley firms' motions, and granted in part and denied in part Mr. Solomon's. See Beach TV Props., Inc. v. Solomon, No. 15-cv- 1823, 2016 WL 6068806 (D.D.C. Oct. 14, 2016). It also dismissed claims by Beach TV for lack of standing. Id. With only one active claim remaining (ACI's claim against Mr. Solomon for his submission of the defective form) ACI filed a motion to amend its complaint a second time, which the Court granted in part and denied in part. See Beach TV Props., Inc. v. Solomon, 254 F.Supp.3d 118 (D.D.C. 2017). Following the Court's order, the case now contains two surviving claims of legal malpractice: one against Mr. Solomon for preparing and filing the incomplete Statement of Eligibility, and one against Ms. Virtue for failing to advise ACI about, among other things, potential conflicts and ...


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