Court Opinion

ID: 2666250
Source: CourtListenerOpinion
Date Created: 2014-04-04 08:43:56.143238+00
Date Added: 2024-06-11T13:01:58.233914
License: Public Domain

UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLUMBIA
_____________________________
                               )
HARRY C. PERRY, JR.,           )
                               )
          Plaintiff,           )
                               )
          v.                   )    Civil Action No. 09-1368 (RWR)
                               )
SAM SCHOLAR,                   )
                               )
          Defendant.           )
_____________________________ )

                   MEMORANDUM OPINION AND ORDER

      Plaintiff Harry Perry, Jr. filed a one-count complaint

against Sam Scholar seeking damages for wrongful involvement in

litigation.   Scholar moves under Federal Rule of Civil Procedure

12(b)(6) to dismiss Perry’s complaint, arguing that Perry failed

to state a claim and filed this action untimely.   Because Perry

has sufficiently alleged a claim of tortious involvement in

litigation, and because there is a factual dispute about when

Perry was aware of his claim against Scholar, Scholar’s motion to

dismiss will be denied.

                             BACKGROUND

      Between 1986 and 2005, Perry, an accountant, served as a

paid plan administrator of the Plasterers’ Local Union No. 96

Pension Plan (“the Plan”).   During the same time period, Scholar

was an attorney who served as counsel to the Plan.   (Compl. ¶¶ 1-

2.)   As the plan administrator, Perry provided organizational and

administrative support to the Trustees of the Plan and
                                  -2-

implemented their decisions regarding administering the Plan and

investing Plan assets.    (Id. ¶ 6.)    According to Perry, “[f]rom

time to time, various legal questions required the advice of

. . .   Scholar, who issued opinions, prepared resolutions of the

Board of Trustees of the Plan and provided advice to the Trustees

and to [Perry] both orally and in writing.”     (Id.)   Perry alleges

that Scholar provided incorrect legal advice to “Plan trustees

and to [Perry] in several respects,” including advising the

Trustees of the Plan that they were allowed to “return to certain

contractors who had employed Plan participants a portion of the

funds initially credited to those participants when it was

determined that the Plan participants were not vested pursuant to

the Plan’s provisions.”    (Id. ¶ 7.)   Perry questioned Scholar

about that advice, but Scholar did not change his opinion, and

the Trustees returned to certain employers approximately $130,000

of contributions from the Plan.    (Id.)   Perry further alleges

that Scholar failed to advise him or the Plan trustees that they

had a duty to diversify the investment of Plan assets, causing

them to limit their investment of Plan assets to only

certificates of deposit and treasury bills.     In addition, Perry

alleges that Scholar failed to advise the Plan’s Trustees about

their duties to hold regular meetings and to maintain minutes of

those meetings.   (Id.)
                                 -3-

       On February 9, 2006, the Plan filed suit against Perry,

Scholar, and other defendants in a case titled Plasterers Local

Union No. 96 Pension Plan v. Harold Perry et al., Civil Action

No. 06-338 (D. Md. 2006) (“Maryland litigation”), seeking damages

for breach of fiduciary duty and legal malpractice.      (Id. ¶¶ 7,

11.)    Perry responded in that case on March 3, 2006.   (Def.’s

Mem. in Supp. of Mot. to Dismiss (“Def.’s Mem.”) Ex. 3.)     Perry

filed this action against Scholar on July 23, 2009, arguing that

Scholar was negligent by giving the legal advice described above,

and that as a result of Scholar’s negligence Perry was forced to

spend $168,989 defending himself in the Maryland litigation.

(Id. ¶¶ 9-14.)

       Scholar has moved to dismiss Perry’s complaint, arguing that

Perry failed to plead a cause of action because Perry “does not

suggest that he had an attorney-client relationship with

Mr. Scholar,” and thus cannot show that Scholar owed him a duty.

(Def.’s Mem. at 1, 4-7.)    Scholar also argues that Perry’s claim

is barred by the applicable statute of limitations.      (Id. at 8.)

                             DISCUSSION

       A complaint can be dismissed under Federal Rule of Civil

Procedure 12(b)(6) when a plaintiff fails to state a claim upon

which relief can be granted.    See Fed. R. Civ. P. 12(b)(6).

       To survive a motion to dismiss, a complaint must
       contain sufficient factual matter, acceptable as true,
       to “state a claim to relief that is plausible on its
       face.” A claim has facial plausibility when the
                                  -4-

     plaintiff pleads factual content that allows the court
     to draw the reasonable inference that the defendant is
     liable for the misconduct alleged.

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).       The

complaint must be construed in the light most favorable to the

plaintiff and “the court must assume the truth of all

well-pleaded allegations.”    Warren v. District of Columbia, 353
F.3d 36, 39 (D.C. Cir. 2004).     If a plaintiff fails to allege

sufficient facts to support a claim, that claim must be

dismissed.   See Twombly, 550 U.S. at 555-556.      It is not

necessary for a plaintiff to plead all elements of his prima

facie case in the complaint, Swierkiewicz v. Sorema N.A., 534
U.S. 506, 511 (2002), or to “plead law or match facts to every

element of a legal theory.”    Krieger v. Fadely, 211 F.3d 134, 136

(D.C. Cir. 2000).    A complaint should contain enough factual heft

to show an entitlement to relief.       Twombly, 550 U.S. at 557.

That is, a complaint is required to plead “only enough facts to

[nudge] a claim to relief . . . across the line from conceivable

to plausible[.]”    Id. at 570.   “Determining whether a complaint

states a plausible claim for relief will . . . be a

context-specific task that requires the reviewing court to draw

on its judicial experience and common sense.”       Iqbal, 129 S. Ct.

at 1950.
                                -5-

I.   DUTY

     Scholar argues that Perry’s claim for wrongful involvement

in litigation is insufficient because his allegations of duty

lack sufficient factual support, and are instead hollow legal

assertions.   Under the common law of the District of Columbia,1

     where the plaintiff seeks in a separate action to
     recover attorney [sic] fees incurred by him in earlier
     litigation with a third person arising out of the
     tortious act of the defendant, it has been held that if
     the natural and proximate consequences of the
     defendant’s tortious act were to involve the plaintiff
     in litigation with a third person, reasonable
     compensation for attorney’s fees incurred by the
     plaintiff may be recovered as damages against the
     author of the tortious act.

Brem v. United States Fidelity & Guaranty Co., 206 A.2d 404, 407

(D.C. 1965); see also Answering Service, Inc. v. Egan, 785 F.2d
1084, 1086 (D.C. Cir. 1986) (quoting Biddle v. Chatel, 421 A.2d
3, 7 (D.C. 1980)).   The essential elements that must be

established for this claim are: “‘(1) the plaintiff must have

incurred the fees in the course of prior litigation, (2)

ordinarily that litigation must have occurred between the

plaintiff and the third party who is not the defendant in the

present action, and (3) the plaintiff must have become involved

in the underlying litigation as a consequence of the defendant’s

     1
       Perry asserts and Scholar does not contest that District
of Columbia law governs his claim. A court may base its analysis
upon such concessions by parties. Jacobsen v. Oliver, 555 F.
Supp. 2d 72, 77 (D.D.C. 2007) (citing CSX Transp., Inc. v.
Commercial Union Ins. Co., 82 F.3d 478, 482-83 (D.C. Cir. 1996)).
                                 -6-

tortious act.’”   Nepera Chem. v. Sea-Land Serv., 794 F.2d 688,

697 n.65 (D.C. Cir. 1986) (quoting Auxier v. Kraisel, 466 A.2d
416, 420 (D.C. 1983)).    A plaintiff can have no claim against a

defendant for wrongful involvement in litigation if the plaintiff

is found liable for any portion of the underlying litigation.

See Answering Service, 785 F.2d at 1087 (stating that “any

independent liability of Answering Service for the tortious

actions [in the underlying litigation] would defeat its claim for

wrongful involvement in litigation”) (citing Safeway Stores, Inc.

v. Chamberlain Protective Services, Inc., 451 A.2d 66, 73 (D.C.

1982)).   In addition, “the tort of wrongful involvement in

litigation is a tort like any other tort - - all traditional tort

concepts apply,” including that the plaintiff cannot recover

damages unless he establishes that the defendant owed him a duty.

Answering Service, 785 F.2d at 1088.

     Here, Perry sufficiently alleges the elements required for

tortious involvement with litigation.   Perry alleges that in the

course of his defense of the Maryland litigation, he incurred

$168,989 in legal fees and expenses as a result of Scholar’s

negligent legal advice.   (Compl. ¶ 13.)   Perry asserts that as

the Plan administrator, he relied and was entitled to rely on

Scholar’s legal advice.   (Id. ¶¶ 6, 9.)   That combined with the

specific advice Perry alleges as having been wrongful presents

enough factual heft to fully state a claim construed to allege
                               -7-

that Scholar owed Perry a duty not to provide legal advice

regarding the administration of the Plan in a negligent manner.

See Wilson v. Prudential Financial, Civil Action No. 03-2313

(RMU), 2004 WL 2451412, at *3-4 (D.D.C. October 18, 2004)

(listing the elements of a claim for negligence under D.C. law,

then stating that “[a]lthough the plaintiff need not plead each

of these elements in his complaint to survive a motion to

dismiss, he must at least present facts to demonstrate that

negligence provides the appropriate remedy for his grievance”);

United States v. Espy, 145 F.3d 1369, 1371 (D.C. Cir. 1998)

(finding that a statute imposed “a host of tasks that fit

comfortably within the definition of ‘duty’” despite the fact

that the statute did not use that specific term, and defining

duty as “something that one is expected or required to do by

moral or legal obligation”); see also Morgan Stanley & Co. v. JP

Morgan Chase Bank, N.A., 645 F. Supp. 2d 248, 255 (S.D.N.Y. 2009)

(stating that “[d]uty, in negligence cases, may be defined as an

obligation, to which the law will give recognition and effect, to

conform to a particular standard of conduct toward another”).

     Scholar argues that Perry’s claim is controverted by the

fact that Perry was dismissed from the Maryland litigation

because the court in that case held that his relationship to the

Plan was “ministerial in nature.”    (Def.’s Mem. at 2-3.)

According to Scholar, that ruling means that Scholar did not have
                                 -8-

a lawyer-client relationship with Perry because both Scholar and

Perry were independent, third-party service providers to the

Plan.   (Id.)   Scholar, citing Clark v. Feder Semo & Bard, P.C.,

634 F. Supp. 2d 99 (D.D.C. 2009), argues that under District of

Columbia law, a legal malpractice claim against an attorney

requires the existence of an attorney-client relationship.

(Def.’s Mem. at 5-7.)    However, the elements necessary to bring a

claim of legal malpractice do not govern an analysis of Perry’s

complaint, which alleges a claim against Scholar for tortious

involvement with litigation, a tort with elements different from

those of a legal malpractice claim.    Scholar does not provide

authority for the proposition that a claim alleging tortious

involvement with litigation against an attorney requires the

plaintiff to allege that he had an attorney-client relationship

with the defendant.   Nor does Scholar demonstrate how the

allegation that Perry relied upon Scholar’s specified legal

opinions rendered to Plan trustees and Perry does not adequately

allege factually Scholar’s duty to not provide negligent advice.

Therefore, Perry has alleged sufficient facts, accepted as true,

to state a claim for relief that is plausible on its face.

II.   LIMITATIONS

      Scholar argues that Perry’s claim should be dismissed

because it was filed after the end of the applicable three-year
                                  -9-

limitations period.2    He claims the period began in February or

March of 2006 at the inception of the Maryland litigation, while

Perry argues the period began in July of 2009 when he was

exonerated in the Maryland litigation.

     “A defendant may raise the affirmative defense of statute of

limitations via a Rule 12(b)(6) motion when the facts that give

rise to the defense are clear from the face of the complaint.”

Turner v. Afro-American Newspaper Co., 572 F. Supp. 2d 71, 72

(D.D.C. 2008) (quoting DePippo v. Chertoff, 453 F. Supp. 2d 30,

33 (D.D.C. 2006)).     “A court should grant a pre-discovery motion

to dismiss on limitations grounds ‘only if the complaint on its

face is conclusively time-barred,’ and the parties do not dispute

when the limitations period began.”     Turner, 572 F. Supp. 2d at

72 (quoting Depippo, 453 F. Supp. 2d at 33).

     “Generally, under D.C. Code § 12-301, a cause of action can

be brought within the given time period from when ‘the time the

right to maintain the action accrues.’”    Hunt v. DePuy

Orthopaedics, Inc., 636 F. Supp. 2d 23, 28 (D.D.C. 2009) (quoting

Capitol Place I Assocs. L.P. v. George Hyman Constr. Co., 672
A.2d 194, 198 (D.C. 1996)).    “In ordinary negligence actions, a

cause of action accrues for statute of limitations purposes at

the time the injury actually occurs.”    Knight v. Furlow, 553 A.2d
2
       Both parties accept that under D.C. Code § 12-301, the
applicable limitations period is three years. (See Def.’s Mem.
at 8; Pl’s Opp’n at 7-8.)
                                -10-

1232, 1234 (D.C. 1989).   “However, in cases where the

relationship between the fact of injury and some tortious conduct

is obscure at the time of injury, this court has applied the

‘discovery rule’ to determine when the statute of limitations

begins to run.”   Id., citing Bussineau v. President & Directors

of Georgetown College, 518 A.2d 423, 425-26 (D.C. 1986)).    “Under

this rule, a cause of action accrues when the plaintiff has

knowledge of (or by the exercise of reasonable diligence should

have knowledge of) (1) the existence of the injury, (2) its cause

in fact, and (3) some evidence of wrongdoing.”   Knight, 553 A.2d

at 1234; see also Wagner v. Sellinger, 847 A.2d 1151, 1154 (D.C.

2004) (stating that a “plaintiff need not be fully informed about

the injury for the statute to begin running; [he] need only have

some knowledge of some injury”).

     Here, Perry plausibly argues that the relationship between

the fact of injury and some tortious conduct was obscure when he

first hired a lawyer to defend him in the Maryland litigation

because the nature of Scholar’s role in causing Perry to be

involved in the Maryland litigation did not emerge solely or even

chiefly from the complaint in the Maryland litigation, but

instead emerged “from the facts as developed in discovery in that

case.”   (Pl.’s Opp’n at 9.)   Further, Perry points out that “[i]t

was not until April 23, 2007 that discovery proceedings initiated

following the filing of initial disclosures,” and claims that
                               -11-

only after the beginning of discovery did he understand Scholar’s

role in the events causing the Maryland litigation, the nature of

his advice and the problems associated with it.   (Id. at 9-10.)

Scholar disagrees, and argues that under the discovery rule as

interpreted in Knight3, Perry was aware of his claim on either

February 9, 2006, the date that the Plan filed its complaint in

the Maryland litigation, or on March 3, 3006, the date that Perry

filed his initial pleading in the Maryland litigation (Def.’s

Mem. at 3, 8-10), and that his complaint filed in this action on

July 23, 2009 was untimely.

     The parties have a factual dispute about when Perry first

knew, or by the exercise of reasonable diligence should have

known, about the causal link between his injury - - the attorney

fees he paid to defend himself in the Maryland litigation - - and

Scholar’s negligence.   Perry correctly notes that this factual

dispute precludes resolving this pre-discovery motion to dismiss

     3
       However, in Knight the issue was “whether a cause of
action for malpractice accrues only after an appeal is
exhausted,” an issue not relevant in the instant case. See De
May v. Moore & Bruce, LLP, 584 F. Supp. 2d 170, 183 (D.D.C. 2008)
(stating that Knight “merely rejected the exhaustion of appeals
rule,” which was not at issue in that case). Furthermore, the
opinion in Knight pertained to a cause of action for malpractice
regarding the formation of a will that was invalidated by a court
judgment more than three years before the plaintiff brought his
malpractice action. Knight, 553 A.2d at 1233. Here, Perry has
brought this action well within three years of the order issued
by the lower court exonerating him.
                              -12-

where the complaint on its face does not conclusively establish

whether the complaint is time-barred.

                      CONCLUSION AND ORDER

     Perry has sufficiently alleged a claim of tortious

involvement in litigation, and there is a factual dispute about

when Perry knew, or by the exercise of reasonable diligence

should have known, that Scholar’s negligence caused his

involvement in the Maryland litigation.   Therefore, it is hereby

     ORDERED that the defendant’s motion [5] to dismiss be, and

hereby is, DENIED.

     SIGNED this 19th day of March, 2010.

                                        /s/
                               RICHARD W. ROBERTS
                               United States District Judge