MEMORANDUM OPINION RE DOCUMENT NO. 23
RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE
Denying
Motion to Compel Arbitration and Dismiss
Counterclaim
I.
INTRODUCTION
Currently
before the Court is Plaintiff's motion to dismiss
Defendants' counterclaim and compel arbitration.
See ECF No. 23. This motion arises from a dispute
among attorneys moving among firms. Plaintiff alleges
interference with contract by all Defendants and breach of
fiduciary duty by Defendant Peter Miller. Despite several
attempts to resolve their differences via private mediation,
the parties have been unable to reach a settlement agreement
on all of the underlying issues. On November 5, 2018,
Defendants filled an answer and asserted a counterclaim for
breach of contract. See Defs.' Answer and
Countercl. (“Defs.' Answer”), ECF No. 20.
Plaintiff now moves to dismiss Defendants' counterclaim
and compel arbitration, contending that the instant dispute
is controlled by an arbitration clause contained in the
Banner Legal Partnership Agreement. See Pl.'s
Mot. Dismiss and Compel Arbitration (“Pl.'s Mot.
Compel”) ¶¶ 21-23, 29-31, ECF No. 23. Because
this Court concludes that Plaintiff's litigation conduct
has waived the right to invoke arbitration, it will deny
Plaintiff's motion.
II.
BACKGROUND
Plaintiff
Miller Legal, LLP, d/b/a Banner Legal (“Banner
Legal”) is a law firm based in Washington, D.C. Banner
Legal is led by managing partner Cary McDonald, Compl.
¶¶ 2, 15, ECF No. 1, a non-lawyer who operates
alongside the firm's other partner, D.C.-licensed
attorney Jeremy Shafer, id. ¶ 21. As of
September 2017, in addition to these two partners, the firm
included six other “Profit Share Members.”
See Pl.'s Mot. Compel, Ex. A, ECF No. 23-2.
Defendants are, respectively, an individual attorney, Mr.
Miller, and another law firm with which Mr. Miller is
associated, Miller DellaFera, PLC (“Miller
DellaFera”). Mr. Miller's relationship with Banner
Legal soured in early 2018, leading Mr. Miller to declare his
intention to leave the firm via an email sent on March 28,
2018. See Compl. ¶ 26; Defs.' Answer ¶
26.
The
parties dispute the reason for Mr. Miller's departure
from Banner Legal. According to Plaintiff's Complaint,
Mr. McDonald had funded Banner Legal and lent money to Mr.
Miller for use by Miller DellaFera, PLC (“Miller
DellaFera”) since 2015. Compl. ¶ 22. Plaintiff
contends that Mr. Miller departed the firm because he was
unable to “come to an agreement” with Mr. Shafer
regarding the settlement of debts that Mr. Miller owed to
Banner Legal and to Mr. McDonald. See Id.
¶¶ 21-25. Defendants describe the events
differently, asserting that Mr. Shafer and Mr. McDonald
forced Mr. Miller out of the partnership through a series of
actions taken in fall 2017 and early 2018. See
Defs.' Opp'n TRO 6-7, ECF No. 11. Defendants proffer
that Mr. Shafer and Mr. McDonald narrowed Mr. Miller's
involvement in the firm by redefining his role from
“Partner” to “Profit Share Member.”
Id. at 6. Defendants further aver that Mr. McDonald
“refused to honor the co-counsel agreement between
[Banner] Legal and Miller DellaFera, ” id.,
and under which “[Banner] Legal financed Miller
DellaFera's overhead, payroll, litigation and operating
expenses” from October 2014 to May 2017, Defs.'
Countercl. ¶ 15. After his departure from Banner Legal,
Mr. Miller sent letters to clients whom he had represented
during his tenure as a litigator at Banner Legal.
See Compl. ¶¶ 6-14 (alleging improper and
unethical communication with clients); Defs.' Answer
¶¶ 7-8 (discussing letters and arguing that Mr.
Miller was professionally obligated to update
clients).[1]
On
April 30, 2018, Banner Legal initiated this suit against Mr.
Miller and Miller DellaFera. See generally Compl.
Plaintiff's complaint alleged interference with contract
by both Defendants and breach of fiduciary duty by Defendant
Mr. Miller and sought a temporary restraining order and
preliminary injunction. Id. After this Court denied
Plaintiff's request for a temporary restraining order,
see May 3, 2018 Minute Order, and before the
scheduled hearing on Plaintiff's request for a
preliminary injunction, the parties agreed to private
mediation to attempt to resolve their dispute, see
June 8, 2018 Minute Order. On July 17, 2018, the parties
reported that they had reached a signed settlement agreement
on some of the claims and issues and agreed to meet with the
private mediator later in the summer to attempt to settle the
remaining disputes. See Joint Status Report
Regarding Mediation at 1, ECF No. 16. But further mediation
did not resolve the case.
On
November 5, 2018, Defendants filed an answer to
Plaintiff's complaint along with a series of
counterclaims. See Defs.' Answer. Plaintiff
responded with a motion to dismiss Defendants'
counterclaim for breach of contract and compel arbitration
based on the terms of the Banner Legal “Limited
Liability Partnership Agreement” (“Partnership
Agreement”), which was operative during approximately
two years of Mr. Miller's tenure at Banner
Legal.[2] See Pl.'s Mot. Dismiss
Countercl., Ex. A. This Partnership Agreement contains an
arbitration provision stipulating that “any claim or
controversy arising out of or relating to this Agreement, or
a breach of it, shall, upon the request of any party
involved, be submitted to and settled by arbitration.”
Id. at 10. The original Partnership Agreement was
amended on September 13, 2017, with the “First
Amendment to the Limited Liability Partnership
Agreement” (“First Amendment to the Partnership
Agreement”). See Id. at Ex. B. This document
reaffirmed the original agreement, except as “expressly
modified.” Id. at ¶ 7. The First
Amendment to the Partnership Agreement did not expressly
modify the arbitration clause.[3]
Defendants
contest the arbitrability of their counterclaims, which they
argue arise out of a different document, the “Agreement
Between Miller Legal, LLP, Miller DellaFera PLC, and Peter A.
Miller Concerning the Funding of Miller DellaFera PLC,
” which Defendants refer to as the “Co-Counsel
Agreement.”[4] Defs.' Opp'n Mot. TRO, Ex. B, ECF
No. 11-3. The undated, unsigned Co-Counsel Agreement provides
that “[Banner Legal] agrees to fully finance [Miller
DellaFera's] overhead, payroll, litigation, and operating
expenses in conjunction with the litigation of Mass. Tort
Cases” and lays out terms of repayment. Id. at
2. Defendants allege that the parties began operating under
an oral version of this same agreement in July 2014 and
reduced it to writing in 2016. See Defs'
Countercl. ¶ 13; Defs.' Opp'n Mot. Compel
Arbitration and Mot. to Dismiss 2 (“Defs.'
Opp'n Mot. Compel”), ECF No. 25. Defendants further
argue that the counterclaims are not properly subject to
arbitration because Defendant Miller DellaFera was not a
signatory to the Partnership Agreement and hence is not bound
by its arbitration clause. See Defs.' Opp'n
Mot. Compel 3-4. Plaintiff contests this version of events,
contending that the unsigned Co-Counsel Agreement is not
binding and does not “repudiate the [Partnership
Agreement's] arbitration clause.” Pl.'s Mot.
Compel ¶ 35. This matter is ripe for the Court's
consideration.
III.
LEGAL STANDARD
The
D.C. Circuit has established that a district court is to
examine a motion to compel arbitration under “the
summary judgment standard of Federal Rule of Civil Procedure
56(c), as if it were a request for ‘summary disposition
of the issue of whether or not there had been a meeting of
the minds on the agreement to arbitrate.'”
Aliron Int'l, Inc. v. Cherokee Nation Indus.,
Inc., 531 F.3d 863, 865 (D.C. Cir. 2008) (quoting
Aliron Int'l, Inc., 2006 WL 1793295, at *1
(internal citations omitted) (D. D.C. June 28, 2006) (citing
Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir.
2003)). Applying this standard, “summary judgment is
appropriate only if ‘there is no genuine issue as to
any material fact and . . . the moving party is entitled to a
judgment as a matter of law.” Id. (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247
(1986) (quoting Fed.R.Civ.P. 56(c))).
IV.
ANALYSIS
A.
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