Court Opinion

ID: 9388196
Source: CourtListenerOpinion
Date Created: 2023-04-19 21:01:21.540128+00
Date Added: 2024-06-11T17:18:18.742566
License: Public Domain

USCA4 Appeal: 22-1505      Doc: 31         Filed: 04/18/2023     Pg: 1 of 21

                                              PUBLISHED

                               UNITED STATES COURT OF APPEALS
                                   FOR THE FOURTH CIRCUIT

                                               No. 22-1505

        HALSCOTT MEGARO, P.A.,

                              Plaintiff - Appellant,

                      v.

        HENRY MCCOLLUM; LEON BROWN; RAYMOND TARLTON, as guardian for
        Henry McCollum and individually; DUANE GILLIAM, as guardian for Leon
        Brown; KIMBERLY PINCHBECK, as guardian for the estate of Henry McCollum
        and individually,

                             Defendants - Appellees.

        Appeal from the United States District Court for the Eastern District of North Carolina, at
        Raleigh. Terrence W. Boyle, District Judge. (5:21−cv−00478−BO)

        Argued: January 25, 2023                                         Decided: April 18, 2023

        Before RICHARDSON, QUATTLEBAUM, and HEYTENS, Circuit Judges.

        Affirmed in part, dismissed in part by published opinion. Judge Quattlebaum wrote the
        opinion, in which Judge Richardson and Judge Heytens concur.

        ARGUED: Jaime Torre Halscott, HALSCOTT MEGARO, PA, Winter Park, Florida, for
        Appellant. Matthew J. Higgins, HOGAN LOVELLS US LLP, Washington, D.C., for
        Appellees. ON BRIEF: Elliot S. Abrams, CHESHIRE PARKER SCHNEIDER, PLLC,
        Raleigh, North Carolina; Liz Lockwood, ALI & LOCKWOOD LLP, Washington, D.C.;
        Catherine E. Stetson, E. Desmond Hogan, W. David Maxwell, Eric S. Roytman, HOGAN
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        LOVELLS US LLP, Washington, D.C., for Appellees.

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        QUATTLEBAUM, Circuit Judge:

               Law firm Halscott Megaro, P.A., (“Halscott Megaro” or “the firm”) sued former

        clients Henry McCollum, Leon Brown and their guardians (collectively “former clients”),

        seeking to recover unpaid legal fees and expenses. A district court dismissed the action

        under Federal Rule of Civil Procedure 12(b)(6). In reaching that decision, the district court

        took judicial notice of a North Carolina State Bar Disciplinary Hearing Commission

        (“Commission”) decision that found the firm’s lead partner misled McCollum and Brown

        into retaining the firm and engaged in other unethical conduct. The court then held the firm

        was precluded from relitigating issues decided by the Commission. And based on the

        Commission’s decision, it held that Halscott Megaro failed to plausibly plead claims for

        which relief could be granted.

               Halscott Megaro appeals, arguing the district court improperly considered matters

        outside the pleadings—namely, the Commission’s decision—and failed to accept its

        allegations and all reasonable inferences from them as true in concluding that the

        Commission’s decision as to its lead partner bound the law firm. The firm also argues that

        the district court abused its discretion in denying its motion for recusal. We disagree. The

        district court committed no reversible error in granting the former clients’ motion to

        dismiss or in denying the law firm’s motion for recusal. So we affirm.

                                                     I.

               After intellectually disabled brothers Henry McCollum and Leon Brown served 31

        years in prison for the rape and murder of an 11-year-old girl, the North Carolina Innocence

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        Inquiry Commission tested DNA on a cigarette found at the crime scene. The DNA

        matched a serial rapist and murderer who lived close to where the girl’s body was found.

        Based on these test results, and following a motion for appropriate relief, the Robeson

        County Superior Court vacated McCollum and Brown’s sentences.

               McCollum and Brown then pursued several legal proceedings based on their

        wrongful convictions. They sought and received pardons for their convictions. They also

        petitioned for monetary awards permitted by North Carolina statute and received the

        maximum statutory amount. And they sued the Town of Red Springs, Robeson County,

        and the state of North Carolina for violating their civil rights, ultimately leading to a

        $75,000,000 jury verdict. 1

               This appeal involves a dispute between McCollum and Brown and the law firm

        Halscott Megaro, which represented McCollum and Brown. Halscott Megaro claims it

        helped McCollum and Brown obtain their pardons and statutory monetary awards. And it

        contends it negotiated a $1,000,000 settlement with the Town of Red Springs in the civil

        rights case. 2 Finally, it claims it expended substantial hours and incurred significant costs

        in working that case until the firm was replaced by new counsel by the time of trial.

               Halscott Megaro sued McCollum and Brown as well as Raymond Tarlton,

        McCollum’s guardian; Duane Gilliam, Leon Brown’s guardian; and Kimberly Pinchbeck,

               1
                 We discussed the brothers’ convictions and post-relief efforts in considering an
        appeal related to this verdict. Gilliam v. Allen, No. 21-2313, 2023 WL 2395416 (4th Cir.
        Mar. 8, 2023).
               2
                The Town of Red Springs settled with McCollum and Brown, and the referenced
        $75,000,000 jury verdict was with respect to other defendants that remained in the case.
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        the guardian for McCollum’s estate in the circuit court in Orange County, Florida. Halscott

        Megaro alleged the guardians replaced the firm with new lawyers but failed to pay for any

        of the work the firm did or the expenses it incurred in the civil rights case.

               In its state court complaint, Halscott Megaro alleged that McCollum, Brown and

        their sister Geraldine Brown Ransom—who the firm alleged to be the brothers’ “attorney-

        in-fact”—asked Halscott Megaro to represent them. Halscott Megaro alleged that Michael

        Megaro, “as partner for Plaintiff law firm,” met with McCollum, Brown and Ransom

        regarding representation. J.A. 51. During the meeting, they signed a “retainer agreement,”

        which outlined a contingency fee arrangement and the duties to be performed by the firm.

        J.A. 52. Halscott Megaro then represented McCollum and Brown in seeking: (1) pardons

        of actual innocence with the Office of the Governor of North Carolina; (2) statutory

        compensation for wrongful convictions through North Carolina’s Industrial Commission;

        and (3) damages for being wrongfully imprisoned in a 42 U.S.C. § 1983 civil rights action.

        Halscott Megaro alleged that it succeeded in obtaining pardons and the maximum statutory

        amounts of $750,000 each to McCollum and Brown for their wrongful convictions.

               According to Halscott Megaro, shortly after securing the pardons and the statutory

        amounts for wrongful convictions, Megaro decided that Brown needed a guardian. So, he

        petitioned a North Carolina state court for one to be appointed. That court appointed

        Ransom as guardian. But later, the state court replaced her with Duane Gilliam because

        Ransom was mismanaging funds. Also, Halscott Megaro alleged that during the civil rights

        action, the district court appointed Raymond Tarlton as guardian ad litem for McCollum.

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        Tarlton then brought in Kimberly Pinchbeck as guardian of McCollum’s estate. The firm

        alleges that later, McCollum and Brown replaced Halscott Megaro with different lawyers.

               Halscott Megaro’s complaint asserted a breach of contract claim against Brown and

        his guardian, Gilliam, 3 and quantum meruit and unjust enrichment claims against

        McCollum and Brown along with their guardians, Gilliam, Tarlton and Pinchbeck.

        Alleging diversity jurisdiction, the former clients removed the case to the United States

        District Court for the Middle District of Florida. The Middle District of Florida then

        granted their motion to transfer the case to the Eastern District of North Carolina where

        McCollum and Brown reside, where the parties executed the retainer agreement and where

        McCollum and Brown filed their underlying federal civil rights action. The Clerk of Court

        reassigned the transferred case to Judge Terrence Boyle, the district court judge who

        presided over the civil rights action.

               Once the case was before Judge Boyle, the former clients moved to dismiss Halscott

        Megaro’s suit. In their motion to dismiss, the former clients argued that the district court

        should take judicial notice of the Commission’s decision, that Halscott Megaro was bound

        by the decision since it was in privity with Megaro, and that Halscott Megaro was

        collaterally estopped from claiming breach of the retainer agreement. They also argued that

        the Commission’s findings as to Megaro’s ethical violations barred the firm’s equitable

        claims based upon the doctrines of unclean hands and laches.

               The firm did not assert a breach of contract claim as to McCollum or his guardians.
               3

        This may be because the district court found the retainer agreement unenforceable as to
        McCollum in the civil rights action.
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               The Commission’s decision, issued after a five-day evidentiary hearing where

        Megaro was represented by counsel, contained an order of discipline and factual findings.

        The Commission noted that “[m]inimal research on the cases of McCollum and Brown

        would have disclosed their significant intellectual disabilities.” J.A. 28. It added that

        Megaro entered into the representation agreement with them and their sister Ransom,

        despite knowledge of the brothers’ diagnoses and low IQ scores. That agreement reflected

        that Megaro would collect a contingency fee of between 27-33% of any monetary recovery

        or award, and the Commission determined that it ultimately “created an impermissible

        nonrefundable fee.” J.A. 29.

               Additionally, the Commission found that Megaro “performed minimal work on

        behalf of McCollum and Brown” to obtain their statutory monetary awards. J.A. 31. Yet,

        Megaro took a one-third fee from the awards of both McCollum and Brown, repaid high-

        interest loans he facilitated for them and charged other costs, expenses and repayments.

        And with respect to the settlement with the Town of Red Springs, the Commission noted

        that Megaro sought even more fees. The Commission explained that, in the district court’s

        consideration of a motion to approve that settlement, the presiding district court judge in

        the civil rights action found that McCollum was not competent to manage his own affairs

        and that Megaro’s “representation agreement with McCollum was invalid due to

        McCollum’s incompetency.” J.A. 38. The Commission found that “McCollum and Brown

        did not have the capacity to enter into representation agreements with” Megaro. J.A. 39.

               The Commission determined that by “entering into a representation agreement with

        his clients when he knew they did not have the capacity to understand,” Megaro’s conduct

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        was deceitful, fraudulent and dishonest and violated the North Carolina Rules of

        Professional Conduct. J.A. 40. The Commission issued a judgment and a disciplinary order,

        which suspended Megaro’s license to practice in the state of North Carolina for five years

        and required him to pay restitution if he wanted to be reinstated at the end of that time

        period.

               Halscott Megaro opposed the motion to dismiss and also moved for the district court

        judge’s recusal, arguing that he was biased. J.A. 311. The district court denied that motion,

        noting Halscott Megaro identified no basis suggesting that a fair judgment would be

        impossible. The district court then dismissed the firm’s complaint, ruling it was precluded

        from arguing that the retainer agreement was valid after the Commission had determined

        that it was not. And it dismissed the firm’s unjust enrichment and quantum meruit claims,

        reasoning they were barred under the doctrines of unclean hands and laches based on the

        Commission’s findings on Megaro’s unethical conduct.

               Halscott Megaro timely appealed, and we have jurisdiction pursuant to 28 U.S.C.

        § 1291.

                                                       II.

               We begin with our standard of review. We review the district court’s ruling on a

        motion to dismiss under Rule 12(b)(6) de novo. Harvey v. Cable News Network, Inc., 48

        F.4th 257, 268 (4th Cir. 2022). In doing so, we must determine whether the complaint

        alleges sufficient facts “to raise a right to relief above the speculative level” and “to state a

        claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555,

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        570 (2007). Generally, our review is limited to the well-pled facts in the complaint viewed

        in the light most favorable to the plaintiff. “A motion to dismiss under Rule 12(b)(6) tests

        the sufficiency of a complaint; importantly, it does not resolve contests surrounding the

        facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.

        Carolina v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citation omitted); Goldfarb v.

        Mayor & City Council of Baltimore, 791 F.3d 500, 508–12 (4th Cir. 2015) (a motion to

        dismiss under Rule 12(b)(6) does not typically resolve the applicability of defenses to a

        well-pled claim). But affirmative defenses can be considered in resolving Rule 12(b)(6)

        motions when the facts surrounding the defense are clear from the complaint. Richmond,

        Fredericksburg & Potomac R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993).

               Courts are limited to considering the sufficiency of the allegations set forth in the

        complaint and the “documents attached or incorporated into the complaint.” E.I. du Pont

        de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011) (citation

        omitted). Under Rule 12(d), if matters “outside the pleadings are presented to and not

        excluded by the court [for a Rule 12(b)(6) motion], the motion must be treated as one for

        summary judgment under Rule 56.” Fed. R. Civ. P. 12(d). And it is not appropriate for the

        court to convert a motion to dismiss into a motion for summary judgment “when the parties

        have not had an opportunity to conduct reasonable discovery.” Zak v. Chelsea Therapeutics

        Int’l, Ltd., 780 F.3d 597, 606 (4th Cir. 2015). Although the evaluation is generally limited

        to a review of the allegations of the complaint itself, and documents attached to the

        complaint as exhibits, a court may properly take judicial notice of matters of public record

        without converting a motion to dismiss into a motion for summary judgment. Philips v.

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        Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009); see also Goldfarb, 791 F.3d at

        506.

                                                     III.

                Halscott Megaro argues that the district court erred in granting the motion to dismiss

        by improperly considering matters outside the four corners of the complaint—namely, the

        Commission’s decision. The firm insists this effectively converted a Rule 12(b)(6) motion

        to dismiss into a Rule 56 motion for summary judgment. It also argues that the court

        resolved disputed issues of material fact in favor of its former clients.

                Halscott Megaro’s arguments raise three primary issues. First, is the Commission’s

        decision an appropriate matter of public record for which the district court could take

        judicial notice, and does it have preclusive effect against Megaro? If so, under North

        Carolina preclusion law, is the firm in privity with Megaro such that it was precluded from

        re-arguing issues resolved against Megaro by the Commission? And finally, do the

        complaint and the Commission’s decision clearly establish that the firm’s equitable claims

        are barred by the doctrines of unclean hands and laches? We consider these questions in

        turn.

                                                      A.

                First, we consider whether the Commission’s decision was an appropriate matter of

        public record for the district court to have considered by judicial notice. As noted above, a

        court may take judicial notice of “matters of public record” and other information that

        would constitute adjudicative facts under Federal Rule of Evidence 201. Goldfarb, 791

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        F.3d at 508. And an appellate court can take judicial notice of the same facts as could the

        district court. Id. at 509.

               The Commission’s decision on Megaro is a publicly available record. See Hall v.

        Virginia, 385 F.3d 421, 424 n.3 (4th Cir. 2004) (recognizing that voting statistics were

        available on the state’s official website). It is also an administrative decision from a body

        acting in a judicial capacity. In North Carolina, the Bar is an agency of the state of North

        Carolina. N.C. Gen. Stat. § 84-15. The Commission is an independent subsection of the

        Bar which may “hold hearings in discipline, incapacity and disability matters, make

        findings of fact and conclusions of law after these hearings, enter orders necessary to carry

        out the duties delegated to it by the Council, and tax the costs to an attorney who is

        disciplined or is found to be incapacitated or disabled.” N.C. Gen. Stat. Ann. § 84-28.1(b).

        Further, either party may appeal a final order of the Commission to the North Carolina

        Court of Appeals. N.C. Gen. Stat. Ann. § 84-28(h); see also Middlesex Cnty. Ethics Comm.

        v. Garden State Bar Ass’n, 457 U.S. 423, 432 (1982) (recognizing that state bar disciplinary

        proceedings can constitute ongoing state judicial proceedings).

               The Commission here acted in a judicial capacity. It held a five-day hearing. Megaro

        was represented by counsel. Evidence was introduced. And after an adverse decision,

        Megaro appealed to the North Carolina Court of Appeals. The North Carolina Court of

        Appeals affirmed the Commission’s order, concluding that the order’s “findings of fact

        support the conclusion that [Megaro] knew McCollum and Brown did not have the capacity

        to understand the representation agreement or settlement agreement.” N. Carolina State

        Bar v. Megaro, 880 S.E.2d 401, 409 (N.C. Ct. App. 2022).

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               The district court did not have the benefit of the North Carolina Court of Appeals

        order which was issued after the district court’s opinion; therefore, it could not

        unequivocally state the Commission’s decision had been judicially reviewed. However, it

        correctly applied the governing test from University of Tennessee v. Elliott, 478 U.S. 788

        (1986), to determine whether the administrative body was acting in a judicial capacity and

        whether the state court would give preclusive effect to the administrative decision. See

        Davenport v. N. Carolina Dep’t of Transp., 3 F.3d 89, 93 n.4 (4th Cir. 1993). Under that

        test, federal courts are directed to give preclusive effect to unreviewed administrative

        decisions “when a state agency acting in a judicial capacity… resolves disputed issues of

        fact properly before it which the parties have had an adequate opportunity to litigate.” Hall

        v. Marion Sch. Dist. No. 2, 31 F.3d 183, 191 (4th Cir. 1994) (cleaned up) (noting that

        federal courts must give the agency’s factfinding the same preclusive effect to which it

        would be entitled in the state’s courts).We agree with the district court’s conclusion that

        the Commission was acting in a judicial capacity when it entered its discipline order against

        Megaro such that a state court would give preclusive effect to the administrative decision.

        We also agree that he received a full and fair opportunity to litigate the issues and due

        process protections.

               But the existence of the North Carolina Court of Appeals order changes the analysis

        slightly for us. We do not have to assume what credit a state court would give the

        administrative decision because a state court has now issued a judgment. “Federal courts

        must give the same preclusive effect to a state court judgment as the forum that rendered

        the judgment would have given it” under the Full Faith and Credit Act, 28 U.S.C.

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        § 1738. Sartin v. Macik, 535 F.3d 284, 287 (4th Cir. 2008); Davenport, 3 F.3d at 93 n.4

        (4th Cir. 1993) (“28 U.S.C. § 1738 requires application of state preclusion law only where,

        as here, the state administrative decision has been judicially reviewed; the statute reaches

        only state judicial judgments.”). And since we review the district court’s order de novo,

        there no longer seems to be any question about whether the Commission’s decision is

        proper to consider. We must consider the potential preclusive effect of the North Carolina

        state court’s judgment, which affirmed the Commission’s decision, as it relates to Megaro.

        And doing so, we must recognize that North Carolina has found that Megaro knew that

        McCollum and Brown lacked the capacity to understand the representation agreement and

        that the contract they signed was unenforceable as to them.

                                                      B.

               Second, we consider whether the state court judgment against Megaro and the

        allegations in the complaint clearly establish that the firm was in privity with Megaro such

        that the firm is precluded from seeking to enforce the retainer agreement just as Megaro

        would. To do that, we apply North Carolina law. 4 Sartin, 535 F.3d at 287 (applying North

        Carolina law to determine the preclusive effect of a default judgment). And this issue

        involves two questions. One, what are the parameters of North Carolina preclusion law?

               4
                  A federal court sitting in diversity applies the substantive law of the state in which
        it sits. Volvo Const. Equip. N Am., Inc. v. CLM Equip. Co., Inc., 386 F.3d 581, 599-600
        (4th Cir. 2004). The transferee court also applies the law of the state in which it sits. LaVay
        Corp. v. Dominion Fed. Sav. & Loan Ass’n, 830 F.2d 522, 526 (4th Cir. 1987).
        Accordingly, we continue the application of North Carolina substantive law.

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        And two, would North Carolina’s privity doctrine extend the preclusive effect to Halscott

        Megaro?

                                                        1.

               The preclusion doctrine—including that of North Carolina—consists of both res

        judicata and collateral estoppel. Sartin, 535 F.3d at 287. This appeal involves collateral

        estoppel. That doctrine bars the re-litigation of specific issues that were actually determined

        in a prior action. Id. Under North Carolina law, “the determination of an issue in a prior

        judicial or administrative proceeding precludes the relitigation of that issue in a later action,

        provided the party against whom the estoppel is asserted enjoyed a full and fair opportunity

        to litigate that issue in the earlier proceeding.” Whitacre P’ship v. Biosignia, Inc., 591

        S.E.2d 870, 880 (N.C. 2004). Thus, collateral estoppel bars litigation of claims where (1)

        the issues are the same as those involved in the prior action; (2) the issues have been raised

        and actually litigated in the prior action; (3) the issues were material and relevant to the

        disposition of the prior action and (4) the determination of the issues in the prior action was

        necessary and essential to the resulting judgment. Sykes v. Blue Cross & Blue Shield of N.

        Carolina, 828 S.E.2d 489, 494 (N.C. 2019).

                Like the district court, we have no trouble concluding that the Commission’s

        decision meets these requirements. Megaro and the North Carolina State Bar actually

        litigated the question of whether the retainer agreement that Megaro signed on behalf of

        the firm constituted an unenforceable contract. Further, the facts that led to the

        Commission’s decision that the retainer agreement was invalid—McCollum and Brown’s

        limited intellectual capacity, Megaro’s knowledge of those limitations and his decision to

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        manipulate them into signing the agreement—were material, relevant and essential to the

        Commission’s findings of unethical conduct by Megaro.

                                                       2.

               But there is a wrinkle here. Megaro, individually, was the party in the North

        Carolina disciplinary proceeding, not Halscott Megaro, the firm. So, is the firm bound by

        the order? Answering that question involves the doctrine of privity.

               North Carolina courts have consistently held that where a party would be

        collaterally estopped, a person in privity with that party is also estopped. Whitacre P’ship,

        591 S.E.2d at 893; see also Sykes, 828 S.E.2d at 494 (“Collateral estoppel precludes parties

        and parties in privity with them from retrying fully litigated issues that were decided in any

        prior determination and were necessary to the prior determination.”) (cleaned up). In other

        words, when parties are in privity, “courts will look beyond the nominal party whose name

        appears on the record as plaintiff and consider the legal questions raised as they may affect

        the real party or parties in interest.” Whitacre P’ship, 591 S.E.2d at 893 (internal citation

        and quotation marks omitted). In the context of collateral estoppel, privity “denotes a

        mutual or successive relationship to the same rights of property.” Id. (internal citation and

        quotation marks omitted).

               The district court held that Megaro was in privity with his law firm for the issues

        discussed in the Commission’s decision. In reaching this decision, the court first identified

        the “mutual or successive relationship to the same rights of property” test for privity. J.A.

        319 (quoting State ex rel. Tucker v. Frinzi, 474 S.E.2d 127, 128 (N.C. 1996)). The court

        then relied on the allegations in the complaint that Megaro is a partner of the law firm and,

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        on behalf of the firm, met with McCollum and Brown and executed the agreement outlining

        duties to be performed by the firm. And it concluded stating “[t]here is no credible

        argument that the plaintiff law firm and Megaro are not in privity.” J.A. 319.

               In challenging this conclusion, Halscott Megaro argues “the Court expends great

        efforts to not just establish a privity of Megaro and [the firm], who are undoubtedly separate

        entities, but goes further to speak of them interchangeably as if there is no distinction.” Op.

        Br. at 15. The firm adds that

               [t]he District Court makes a legal finding of privity with Megaro and [the
               firm], which would require a factual determination that it did not perform
               and that it cannot rely on the [Commission] having performed. There is no
               analysis of which acts in the North Carolina State Bar order of discipline
               apply to Megaro and which apply to Halscott Megaro.

        Id. at 15.

               We disagree. First, the district court did not treat Megaro and the firm as if they

        were a single entity. In fact, if it had, there would have been no need to evaluate privity.

        And the court identified the correct legal test to analyze that issue. It then noted that Megaro

        was a partner in the firm and was acting on behalf of the firm in meeting with McCollum

        and Brown about the retainer agreement. So, contrary to Halscott Megaro’s argument, the

        district court applied the proper legal test to undisputed facts, which it gleaned from the

        complaint and the Commission’s decision. Halscott Megaro’s argument to the contrary

        simply misconstrues the district court’s decision. Because the Commission and the Court

        of Appeals found that the retainer agreement was invalid, there is no valid contract upon

        which to support a breach of contract cause of action. Accordingly, we affirm the district

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        court’s granting of the motion to dismiss the breach of contract claims brought against

        Brown and his guardian.

                                                    C.

               Third, we consider the district court’s dismissal of Halscott Megaro’s claims for

        unjust enrichment and quantum meruit based on the doctrines of unclean hands and laches.

        Under North Carolina law, “unjust enrichment is a claim in quasi contract or a contract

        implied in law.” Butler v. Butler, 768 S.E.2d 332, 336 (N.C. Ct. App. 2015) (internal

        citation and quotation marks omitted). To establish unjust enrichment, a party must show

        “(1) a measurable benefit was conferred on the defendant, (2) the defendant consciously

        accepted that benefit, and (3) the benefit was not conferred officiously or gratuitously.”

        Primerica Life Ins. Co. v. James Massengill & Sons Const. Co., 712 S.E.2d 670, 677 (N.C.

        Ct. App. 2011) (citing Progressive Am. Ins. Co. v. State Farm Mut. Auto Ins. Co., 647

        S.E.2d 111, 116 (N.C. Ct. App. 2007)). And quantum meruit “is a measure of recovery for

        the reasonable value of services rendered in order to prevent unjust enrichment.” Whitfield

        v. Gilchrist, 497 S.E.2d 412, 414 (N.C. 1998). Relevant here, “an attorney who has

        provided legal service pursuant to a contingency fee agreement and [was] fired has a viable

        claim in North Carolina in quantum meruit against the former client or its subsequent

        representative.” Guess v. Parrott, 585 S.E.2d 464, 468 (N.C. Ct. App. 2003).

               Halscott Megaro bases its claim for unjust enrichment and quantum meruit on the

        services the firm provided to McCollum and Brown. The firm alleges that the “parties were

        operating on a quantum meruit basis following a ruling by Judge Terrence Boyle [] that

        McCollum’s fee arrangement contained some language issues and that it needed revision.”

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        J.A. 58. And it maintains that “[n]o challenge or invalidation of the signed retainer

        agreement occurred during the pendency of the underlying civil rights action as it pertained

        to Brown and Gilliam.” J.A. 58. The firm alleges it conferred the benefits of representation

        and expended significant sums of money in representing McCollum and Brown. And it

        asserts that its former clients “have made no efforts to pay any fees or costs as contemplated

        under the signed and ratified retainer agreement, nor under any other legal theory.” J.A.

        59.

               Despite these allegations, the district court, relying largely on the findings and

        conclusions of law from the Commission’s decision, held that the doctrine of unclean hands

        and laches barred Halscott Megaro’s equitable claims. In challenging that decision,

        Halscott Megaro argues that the district court failed to recognize that the Commission’s

        order actually explained the amount of work Megaro performed for McCollum and Brown.

               But we find no error in the district court’s analysis. Regardless of any discussion

        about the amount of work Megaro performed, the Commission concluded that “[b]y

        entering into a representation agreement with his clients when he knew they did not have

        the capacity to understand the agreement, [Megaro] engaged in conduct involving

        dishonesty, fraud, deceit or misrepresentation in violation of Rule 8.4(c) and engaged in

        conduct prejudicial to the administration of justice in violation of Rule 8.4(d).” J.A. 40.

        The Commission also found that Megaro charged an improper fee by claiming an

        irrevocable interest in McCollum and Brown’s potential financial payments from the civil

        rights action. And the Commission determined that collecting one-third of the North

        Carolina statutory award for McCollum and Brown’s wrongful convictions was an

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        excessive fee in violation of the North Carolina Rules of Professional Conduct since most

        of the work had been done before the firm was even involved. See N.C. Rule of

        Professional Conduct 1.5(a).

               In North Carolina, the “clean hands doctrine denies equitable relief only to litigants

        who have acted in bad faith, or whose conduct has been dishonest, deceitful, fraudulent,

        unfair, or overreaching in regard to the transaction in controversy.” Collins v. Davis, 315

        S.E.2d 759, 762 (N.C. Ct. App. 1984) (citation omitted). We find no reversible error in the

        district court’s determination that the findings and conclusions of law from the

        Commission’s decision establish that Megaro and by extension his law firm, sought relief

        from the district court with unclean hands.

               What’s more, in its decision, the district court cited Law Offices of Peter H. Priest,

        PLLC v. Coch, 780 S.E.2d 163, 164–65 (N.C. Ct. App. 2015). There, a law firm and its

        principal attorney sued their clients for breach of contract and other equitable claims. The

        North Carolina Court of Appeals held that former clients could use the law firm’s violation

        of the North Carolina Rules of Professional Conduct to avoid liability to the firm. Id. at

        172. It reasoned “that an attorney’s failure to comply with the Rules of Professional

        Conduct can indeed function as a bar to recovery in a subsequent action for attorney fees.”

        Id. at 172. And “although an attorney’s violation of the Rules does not give rise to an

        independent cause of action,” neither the case law nor commentary to the Rules of

        Professional Conduct prohibit “defensive use of such violations against a lawsuit

        subsequently initiated by the same attorney.” Id. Law Offices of Peter H. Priest, therefore,

        supports the district court’s decision.

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               Thus, we affirm the dismissal of the firm’s equitable claims based on the doctrine

        of unclean hands. And because we reach this conclusion, we need not discuss the former

        clients’ laches defense.

                                                   IV.

               Last, Halscott Megaro also argues that the district court erred in failing to recuse

        itself from consideration of the case under either 28 U.S.C. § 455, 28 U.S.C. § 144, or

        Canon 3C (1) of the Code of Conduct for United States Judges. 5 The firm challenged the

        district court’s ability to rule fairly on its case based on what it viewed as the court’s

        negative opinion of Megaro. But the district court considered the applicable law and the

        firm’s affidavit. It then concluded the firm failed to identify an opinion derived from an

        extrajudicial source or any comment that revealed a high degree of favoritism or

        antagonism that would make it impossible for the court to render a fair judgment. See Sine

        v. Loc. No. 992 Int’l Bhd. of Teamsters, 882 F.2d 913, 914–15 (4th Cir. 1989). Accordingly,

               5
                 28 U.S.C. § 455 explains that a judge of the United States shall disqualify himself
        in any proceeding in which his impartiality may be questioned, and under several other
        enumerated circumstances, such as “[w]here he has a personal bias or prejudice concerning
        a party, or personal knowledge of disputed evidentiary facts concerning the proceeding.”
        28 U.S.C. § 455. Under 28 U.S.C. § 144, “whenever a party to any proceeding in a district
        court makes and files a timely and sufficient affidavit that the judge before whom the matter
        is pending has a personal bias or prejudice either against him or in favor of any adverse
        party, such judge shall proceed no further therein, but another judge shall be assigned to
        hear such proceeding.” 28 U.S.C. § 144. The affidavit “shall state the facts and the reasons
        for the belief that bias or prejudice exists, and shall be filed not less than ten days before
        the beginning of the term at which the proceeding is to be heard, or good cause shall be
        shown for failure to file it within such time.” Id. Similarly, Canon 3(C)(1) calls for a judge
        to disqualify him or herself in a proceeding in which the judge’s impartiality might
        reasonably be questioned.
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        the court held that Halscott Megaro failed to identify any facts which would cause one to

        reasonably question the court’s impartiality.

               We review a district court’s denial of a motion for recusal for abuse of discretion.

        Kolon Indus. Inc. v. E.I. DuPont de Nemours & Co., 748 F.3d 160, 167 (4th Cir. 2014).

        We find none here. The firm’s allegations of impartiality were not related to any particular

        facts, sources or statements. A presiding judge is not required to recuse himself simply

        because of unsupported or highly tenuous speculation. See United States v. Cherry, 330

        F.3d 658, 665 (4th Cir. 2003). So, we affirm the district court’s denial of Halscott Megaro’s

        motion to recuse.

                                                     V.

               For the reasons set forth above, we affirm the district court’s dismissal of Halscott

        Megaro’s action and dismiss the appeal in part for lack of jurisdiction. 6

                                                        AFFIRMED IN PART, DISMISSED IN PART

               6
                  Halscott Megaro also challenges the order from a district court for the Middle
        District of Florida transferring venue to the Eastern District of North Carolina. At oral
        argument, Halscott Megaro admitted that the argument was improper. And because we lack
        jurisdiction to review the order of the district court for the Middle District of Florida, we
        dismiss that portion of the appeal. Brock v. Entre Computer Centers, Inc., 933 F.2d 1253,
        1257 (4th Cir. 1991) (“This court has held that we have no jurisdiction to review a decision
        to transfer venue rendered by a district court in another circuit.”).

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