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Beach TV Properties Inc. v. Soloman

United States District Court, District of Columbia

August 29, 2018

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

         Re Document, 86, 92, 94

          MEMORANDUM OPINION GRANTING IN PART AND DENYING IN PART THE GARVEY DEFENDANTS' MOTION TO DISMISS; GRANTING THE PARTIES' MOTIONS FOR LEAVE TO FILE SUR-REPLY AND REBUTTAL TO SUR-REPLY

          RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This case stems from the submission of an incomplete form in 1999. Plaintiff the Atlanta Channel, Inc. (“ACI”) sued the attorney who submitted the incomplete form, Defendant Henry Solomon, in 2015 for legal malpractice. Mr. Solomon has argued that ACI's suit is time-barred, but the Court determined, following summary judgment briefing as to his liability, that questions of fact persist as to whether the “continuous representation doctrine” keeps ACI's claim against him timely. Two years after filing this suit, ACI added to its complaint a legal malpractice claim against Defendant Melodie Virtue, who in 2012 took over ACI's attempt to remedy the effects of the incomplete submission, as well as her law firm Garvey, Schubert & Barer (“Garvey Firm”) under the doctrine of respondeat superior. ACI's claim against Ms. Virtue, that she failed to fulfill several “obligations” she had to ACI, is conditional on a finding that ACI's claim against Mr. Solomon is time-barred.

         Ms. Virtue and the Garvey Firm have now moved to dismiss the claims against them, arguing that the Court acknowledged as undisputed in its memorandum opinion denying ACI's and Mr. Solomon's prior motions for partial summary judgment several pertinent facts that directly contradict the facts alleged in ACI's Second Amended Complaint. They further argue that ACI has failed to state a claim for legal malpractice and has failed to plead proximate causation. Finally, they ask the Court to dismiss claims that ACI erroneously included in its Second Amended Complaint after the Court denied ACI's motion for leave to file those particular claims. For the reasons explained below, the Court denies the Garvey Defendants' motion to dismiss as to Count Three and the portions of Count Four that pertain to Count Three, but grants their motion as to Count Two and the portions of Count Four that pertain to Count Two.

         II. FACTUAL AND PROCEDURAL BACKGROUND

         Plaintiff ACI filed this suit to recover damages resulting from the erroneous filing of an incomplete form with the Federal Communications Commission (“FCC”) on December 29, 1999. See 2d Am. Compl. ¶¶ 26-27, ECF No. 69. ACI alleges that because the form, a Statement of Eligibility for a Class A license for an LPTV station, was submitted with several questions left blank, the form was dismissed by the FCC's Mass. Media Bureau on June 9, 2000. Id. ¶¶ 28, 32. Without a Statement of Eligibility, ACI was unable to obtain a Class A license for its station, id. ¶ 33, which ACI argues eventually led to the station being valued for at least $25, 000, 000 less than it would have been if it had obtained the license, id. ¶ 70.

         ACI alleges that Defendant Henry Solomon was responsible for the filing of the incomplete Statement of Eligibility. Id. ¶ 29. Once he learned of the error, Mr. Solomon immediately sought a reversal of the Mass. Media Bureau's dismissal of the Statement. See Id. ¶¶ 36-39. While ACI's Statement of Eligibility was pending before the Mass. Media Bureau, Mr. Solomon joined Defendant law firm Garvey, Schubert & Barer, where he remained until he “ceased working full time in 2010.” Id. ¶ 11. In order to obtain a reversal of the dismissal, Mr. Solomon filed an Application for Review with the FCC on December 29, 2000, but the Application remained pending until the Mass. Media Bureau's dismissal was affirmed by the FCC on November 9, 2012. Id. ¶ 37. At that point, Mr. Solomon had ceased working full-time at the Garvey Firm for several years. See Id. ¶ 11.

         Defendant Melodie Virtue worked with Mr. Solomon at the Garvey Firm, “advising ACI and its affiliates on FCC law matters.” Id. ¶ 8. When Mr. Solomon ceased working full-time as an attorney in 2010, Ms. Virtue continued to represent ACI and its affiliates. Id. ¶ 53. Beginning in 2012, this included representing ACI on the pending Application for Review and subsequent attempts to reverse the FCC's decision and obtain a Class A license for ACI. Id. ¶¶ 53-56.

         ACI takes issue with certain aspects of Ms. Virtue's representation. ACI contends that “[p]rior to assuming responsibility for or participating in [the matter], Ms. Virtue had an obligation to tell ACI that:” (1) “Mr. Solomon committed malpractice by preparing and filing the defective ACI Statement”; (2) “Mr. Solomon's withdrawal from the full-time practice of law could affect the running of the statute of limitations on ACI's malpractice claims against Mr. Solomon”; (3) “ACI and Mr. Solomon were potential adversaries in a legal malpractice action”; (4) “Ms. Virtue had a conflict of interest between her representation of ACI and her professional and personal relationship with Mr. Solomon”; (5) “[t]he Garvey Firm had a conflict of interest between its representation of ACI and its relationship with Mr. Solomon”; and (6) “ACI should immediately retain separate and independent counsel to advise ACI about:” (a) “Mr. Solomon's preparation and filing the defective ACI Statement”; (b) “Mr. Solomon's withdrawal from the full time practice of law”; (c) “[t]he FCC Proceeding.” Id. ¶ 59.[1] ACI refers to the above-listed assertions as the “Virtue Obligations, ” and alleges that “Ms. Virtue failed to perform the Virtue Obligations.” Id. ¶¶ 60-61. Therefore, it argues, she “failed to obtain ACI's fully informed consent to her assumption of responsibility for and working on the FCC Proceeding and Appeal.” Id. ¶ 62.

         ACI's attempts to obtain a Class A license for its station ceased in September 2015 when the D.C. Circuit denied its appeal of the FCC's decisions. See Beach TV Props., Inc. v. FCC, 617 Fed.Appx. 10 (D.C. Cir. 2015). On October 26, 2015, Beach TV and ACI sued Mr. Solomon, the Garvey Firm, and Haley Bader & Potts, the firm where Mr. Solomon had worked when he filed the incomplete Statement of Eligibility, for legal malpractice. See generally Compl., ECF No. 1; see also Am. Compl., ECF No. 21. A year later, the Court granted the Garvey and Haley Firms' motions to dismiss ACI and Beach TV's first amended complaint, granted in part and denied in part Mr. Solomon's motion to dismiss the first amended complaint, and dismissed all claims brought by Beach TV in the first amended complaint for lack of standing. See Beach TV, Props., Inc. v. Solomon (“Beach TV I”), No. 15-1823, 2016 WL 6068806 (D.D.C. Oct. 14, 2016). After the issuance of this memorandum opinion, the only claim remaining in the case was ACI's malpractice claim against Mr. Solomon for filing the incomplete Statement of Eligibility. Id.

         ACI subsequently moved to amend its complaint. See Pls.' Mot. Leave Amend, ECF No. 59. ACI's proposed amended complaint contained four distinct claims for malpractice and sought to add two defendants: Melodie Virtue, who up until that point had not been named as a defendant in the case, and the Garvey Firm. See Pls.' Proposed 2d Am. Compl. ¶¶ 51-62; 73-87, ECF No. 59-3. The first claim in the proposed complaint remained the claim against Mr. Solomon for filing the incomplete Statement of Eligibility. See Pls.' Proposed 2d Am. Compl. ¶¶ 73-75. The second proposed claim alleged that Mr. Solomon did not adequately counsel ACI when it assigned its license to Beach TV and that this negligence “compromise[d] ACI's ability to recover damages based on its ownership of” the license. Pls.' Mot. Am. Compl. ¶ 15; Pls.' Proposed 2d Am. Compl. ¶¶ 76-79.

         The third proposed count alleged legal malpractice by Ms. Virtue for not fulfilling the “Virtue Obligations.” Pls.' Proposed 2d Am. Compl. ¶¶ 59-61, 81. ACI and Beach TV clarified that this claim was contingent upon a finding that Counts One and Two are time-barred. See Proposed 2d Am. Compl. ¶ 83 (“ACI was damaged as a direct and proximate result of Ms. Virtue's malpractice if and to the extent ACI's malpractice claims against Mr. Solomon stated in Counts One or Two are barred by the statute of limitations.”) Finally, the proposed fourth count alleged that the Garvey Firm is liable for “the malpractice and negligence of Mr. Solomon pursuant to Count Two by operation of the doctrine of respondeat superior” and for “the malpractice and negligence of Ms. Virtue pursuant to Count Three by operation of the doctrine of respondeat superior.” Id. ¶¶ 86-87. As such, part of Count Four is also contingent upon a finding that Count One is time-barred.

         Mr. Solomon and the Garvey firm opposed ACI's motion on the ground that amending the complaint would be futile because Counts Two and Three failed to state cognizable claims.

         See Garvey's Mem. P. & A. Opp'n Pl.'s Mot. Leave Amend Compl. at 14, ECF No. 62; Def. Solomon's Opp'n Pl.'s Mot. Leave Amend Compl. at 4, ECF No. 63. The Court agreed with Defendants as to Count Two, finding that ACI and Beach TV had not adequately pleaded causation, Beach TV II, 254 F.Supp.3d at 128-30, but found that ACI had adequately pleaded Count Three, id. at 130-34. In particular, the Court found that ACI's inclusion of the factual allegation that Ms. Virtue “lulled ACI into inaction in filing its malpractice claims, ” 2d Am. Compl. ¶ 57, was a “preemptive response to the affirmative defense of statute of limitations, ” rather than an attempt to assert a cause of action for “lulling, ” which is not an actionable tort under D.C. law. Beach TV II, 254 F.Supp.3d at 133-34.

         Following the filing of ACI's Second Amended Complaint, which inadvertently included Count Two, see Pl.'s Opp'n at 15, ACI and Mr. Solomon filed cross-motions for partial summary judgment as to Mr. Solomon's liability for Count One of the Second Amended Complaint. See Pl.'s Mot. Partial Summ. J., ECF No. 71; Def.'s Mot. Partial Summ. J., ECF No. 74. In his motion, Mr. Solomon claimed that Count One was time-barred, that ACI was contributorily negligent when it forwarded the incomplete Statement of Eligibility to him for his review, and that ACI could not demonstrate, as a matter of law, that Mr. Solomon's actions caused the full extent of the damages ACI alleged it suffered. See Beach TV Props., Inc. v. Solomon (“Beach TV III”), 306 F.Supp.3d 70, 82 (D.D.C. 2018). Reviewing the evidence that the parties had provided with their motions, the Court found that questions of fact remained as to whether ACI reasonably believed that Mr. Solomon continued to represent it until at least October 26, 2012, three years before the filing of this case.[2]See Beach TV III, 306 F.Supp.3d at 89. While the Court was able to determine from the record that the date of the injury resulting from Mr. Solomon's alleged malpractice was June 9, 2000, see Id. at 84, and that the evidence presented did not support the tolling of the statute of limitations on the basis of lulling or fraudulent concealment, see Id. at 89-91, the Court did find that significant disputes of fact precluded the Court from determining whether the ...


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