Court Opinion

ID: 6327019
Source: CourtListenerOpinion
Date Created: 2022-03-25 19:01:07.722274+00
Date Added: 2024-06-11T09:22:19.413800
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

UGO COLELLA, et al.,                                :
                                                    :
        Plaintiffs and Counter-Defendants,          :       Civil Action No.:        20-813 (RC)
                                                    :
        v.                                          :       Re Document No.:         28
                                                    :
THOMAS T. ANDROUS, et al.,                          :
                                                    :
        Defendants and Counter-Plaintiffs.          :

                                   MEMORANDUM OPINION

             DENYING COUNTER-DEFENDANTS’ MOTION TO DISMISS COUNTERCLAIM

                                         I. BACKGROUND

        What began as a lawsuit two attorneys brought against former clients to recover allegedly

unpaid legal fees has morphed, via a counterclaim, into a legal malpractice suit. The Court’s

previous opinion in the matter describes in detail the fee-recovery allegations, and the Court does

not repeat that background in detail here. Colella v. Androus, 518 F. Supp. 3d 439, 442–44

(D.D.C. 2021). In short, Ugo Colella and John Zefutie represented Thomas Androus and two

limited liability companies of which Androus was the sole and controlling member—2208

Russell Road, LLC and 2208 RR AVA, LLC—in a lawsuit against a construction contractor in

Virginia state court. Id. at 442. Androus and his businesses allegedly failed to pay Colella and

Zefutie for their services, so they filed the instant suit in this Court to recover their fees. Id. at

443. Androus, 2208 Russell Road, and 2208 RR AVA (together, “Counter-Plaintiffs”) filed an

answer, as well as a counterclaim against Colella and Zefutie (together, “Counter-Defendants”)

alleging legal malpractice in relation to the underlying Virginia lawsuit and related matters.

Counterclaim at 19, ECF No. 26. Currently before the Court is Counter-Defendants’ Federal

Rule of Procedure 12(b)(6) motion to dismiss the Counterclaim for failure to state a claim. Mot.
Dismiss Counterclaim, ECF No. 28. For the purpose of resolving this motion, the Court accepts

the following allegations in the Counterclaim as true. See, e.g., Robb v. Vilsack, No. CV 20-

0929, 2021 WL 3036796, at *1 n.2 (D.D.C. July 19, 2021).

       In October 2015, 2208 Russell Road, LLC contracted to purchase an Alexandria, Virginia

property (the “Alexandria Property”) from Brian Thomas and Thomas Brothers Enterprises, LLC

(together, “Thomas”), who were in the process of renovating a home on the property.

Counterclaim ¶¶ 6–7, 10. “As part of the purchase price, Androus signed a promissory note to

Thomas in the amount of $1,600,000 (the ‘Note’), secured by a Deed of Trust on the Property.”

Id. ¶ 7. Androus grew concerned that Thomas’s construction of the home on the property had

been defective. In August 2017, he retained Colella, who at the time was associated with the law

firm of Duane Morris, to represent him in relation to a potential dispute between Androus and

Thomas. Id. ¶¶ 6, 8. Within a week, Colella advised Androus via email of several claims he

could potentially bring against Thomas: “violation of the Virginia Consumer Protection Act

(‘VCPA’); aiding and abetting violation of the VCPA; conspiracy to violate the VCPA;

fraudulent inducement; fraud in the execution; negligent misrepresentation; and breach of

contract.” Id. ¶ 9.

       In October 2017, with Colella’s assistance, 2208 Russell Road, LLC deeded the

Alexandria Property to Androus, who then immediately deeded it to 2208 RR AVA. Id. ¶ 10. In

April 2018, Thomas demanded from Androus $1,954,854.51 in payment on the Note. Colella

responded with a letter alleging construction defects worth over $1,000,000 and asserting that

Thomas had acted without a state contracting license, which according to Colella rendered him

liable under the VCPA for treble damages in the amount of $3,000,000. Id. ¶ 11. Colella offered

                                                2
that if Thomas would walk away from his claim on the Note, Androus would finish the

construction using different contractors. Id.

       Instead of settling, Thomas sued Androus and his LLCs in Virginia state court, alleging

that the transfers of the property between Androus and his LLCs were fraudulent conveyances

intended to defeat his claims. He sought a judgment declaring that he had a lien against the

Alexandria Property. Id. ¶ 12. Androus asked his attorney Colella if he should have 2208 RR

AVA return the property to 2208 Russell Road, LLC, “in order to render [Thomas’s complaint]

moot.” Id. ¶ 13. Colella advised that he should not, and that he instead should file a

counterclaim against Thomas seeking damages for violations of the VCPA, fraudulent

inducement, and breach of contract. Id. ¶¶ 13, 15. Androus took the advice and filed a

counterclaim and third-party complaint against Thomas seeking, among other things, $2,000,000

in compensatory damages, treble damages under the VCPA, and punitive damages. Id. ¶ 15.

Thomas responded with an amended complaint, which added causes of action and sought

$1,600,000 in damages on the Note. Id. at 16. The case proceeded toward trial.

       “Throughout his representation of Androus,” including “shortly before trial,” Colella had

advised Androus of two key legal theories. Id. ¶ 14. First, he “estimated that Counter-Plaintiffs

had incurred actual damages of $1,200,000, which could be trebled to $3,600,000 under the

VCPA.” Id. Second, he “advised Androus that [he and his LLCs] had a viable claim for

punitive damages, which could result in up to nine times the actual damages (i.e. $10,800,000),

as well as a claim for attorneys’ fees, estimated at $400,000.” Id. Colella never told Androus

about Va. Code Ann. § 8.01-38.1, which provides that “[i]n any action accruing on or after July

1, 1988 . . . [i]n no event shall the total amount awarded for punitive damages exceed $350,000.”

See Counterclaim ¶ 14.

                                                 3
       Before trial, Colella and Zefutie left Duane Morris for Culhane Meadows, PLLC, but

they signed an engagement letter stating that they would continue to represent Androus and his

LLCs in the pending lawsuit against Thomas. Id. ¶ 18–20. Zefutie “assisted Colella with the

preparation for and conduct of the trial.” Id. ¶ 20. Naturally, preparation for trial involved

readying witnesses. Although Colella discussed with Androus the need to present expert

witnesses, he relied on Androus to select the experts himself, “without advising Androus that he

should not retain an expert with whom he had a personal relationship.” Id. ¶ 21. Androus

selected his “neighbor and friend” Jeffrey Resetco “as a construction expert,” and selected Randy

Harding—“a friend of Androus’ since high school”—“to offer an estimate of the cost of repair.”

Id.

       In addition to leaving the selection of these witnesses up to Androus, neither Androus nor

Zefutie supervised Harding’s preparation. Id. ¶ 22. Harding duly authored a report which

estimated the costs of repairing the defects ($859,172), but Androus considered the estimate to

be too high based on his own experience in the business. Id. He therefore “edited the report and

revised the estimate down to $598,386.75.” Id. Androus delivered the revised report to Colella,

who did not ask any questions about it. Id. Thus, when preparing Harding for his deposition,

“Colella and/or Zefutie failed to alert Harding to the fact that Androus had revised Harding’s

estimate downward.” Id. ¶ 24. So when counsel for Androus confronted Harding with an

estimate significantly lower than the one he had prepared, he became “confused” and his

“credibility [was] diminished.” Id. Androus asked about obtaining new estimates, but Colella

advised that new estimates were not necessary. Id.

       As for Resetco, “[w]ith Colella and Zefutie’s knowledge and consent, Androus himself

prepared a lengthy, detailed report concerning the nature and extent of the construction defects.”

                                                 4
Id. ¶ 23. Androus attached to the report a one-page letter from Resetco, which stated that he had

reviewed Androus’s report and had repeatedly visited the property to confirm that the report’s

description of the construction deficiencies was accurate. Id. The letter also stated that Resetco

agreed with the estimated repair costs in the Harding Report. Id.

       Just before trial, Androus asked about pursuing mediation, but “Colella and Zefutie

responded that there was no time for mediation; all efforts had to be devoted to trial preparation.”

Id. ¶ 25. Androus had also repeatedly told Colella and Zefutie that he was interested in settling

the case. Id. Colella and Zefutie pushed back, “insist[ing] that Counter-Plaintiffs had very

substantial claims and a very good chance to win at trial, and they did not engage in meaningful

settlement discussions with counsel for Thomas.” Id.

       But trial did not go well for Androus and his LLCs. When Androus attempted at trial to

introduce Harding’s estimate (as revised downward by Androus), the trial court excluded it. Id. ¶

24. Thus, “Colella and Zefutie were unable to introduce any estimates for the total repair of all

the construction defects” at trial. Id. ¶ 28. Opposing counsel emphasized to the jury the

conveyance of the Alexandria Property, “which had been sanctioned and abetted by Colella.” Id.

¶ 29. According to Androus, Colella was “overly aggressive” at trial; for example, he called

Thomas a “liar.” Id. ¶ 27. In the end, the jury returned a verdict against Androus and his LLCs

of $2,400,000. Id. ¶ 30. Because of the fee dispute discussed above, Colella and Zefutie refused

to appeal, so Androus had to hire new counsel to do so. Id. ¶ 32.

       Based on these allegations, Androus and his LLCs counterclaim in this action for legal

malpractice, asserting that Colella and Zefutie breached their duties of care in six ways:

   •   “Incorrectly advising Counter-Plaintiffs that they had a viable claim for punitive damages
       against Thomas.” Id. ¶ 37.
   •   “Incorrectly advising Counter-Plaintiffs that they had a very strong case against Thomas
       based on [his] lack of a construction license.” Id.

                                                 5
   •   “Incorrectly advising Counter-Plaintiffs that there was nothing wrong with conveying the
       Property to 2208 RR AVA, assisting them with that transaction, and advising them not to
       convey the Property back to 2208 Russell Road after Counter-Plaintiffs were sued for
       fraudulent conveyance by Thomas.” Id.
   •   “Failing to manage and supervise the selection and preparation of expert witnesses to
       support Counter-Plaintiffs’ claims, including but not limited to failing to alert Harding
       before his deposition that Androus had revised his estimate of repair downward.” Id.
   •   “Failing to engage in significant settlement negotiations with Thomas prior to trial,
       despite Androus’ requests to do so, and instead encouraging Counter-Plaintiffs to go to
       trial with the expectation of a large verdict in Counter-Plaintiffs’ favor.” Id.
   •   “Utilizing an overly aggressive litigation style at trial, which antagonized the judge and
       the jury.” Id.

Androus alleges that these breaches proximately caused damages in the form of the adverse trial

judgment, which remains unpaid and has grown to $2,600,000 with post-judgment interest;

“[o]verpayment” of $300,000 in attorneys’ fees for subpar services; appellate fees to remedy the

trial judgment; and the cost of the required bond pending appeal. Id. ¶ 38.

                                     II. LEGAL STANDARD

       The Federal Rules of Civil Procedure require that a complaint contain “a short and plain

statement of the claim” sufficient to give the defendant fair notice of the claim and the grounds

upon which it rests. Fed. R. Civ. P. 8(a)(2); accord Erickson v. Pardus, 551 U.S. 89, 93 (2007)

(per curiam). A motion to dismiss under Rule 12(b)(6) “tests the legal sufficiency of a

complaint” under that standard; it asks whether the plaintiff has properly stated a claim.

Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). “To survive a motion to dismiss, a

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). This means that a plaintiff’s factual allegations “must be

enough to raise a right to relief above the speculative level, on the assumption that all the

allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555–56

                                                  6
(citations omitted). “Threadbare recitals of the elements of a cause of action, supported by mere

conclusory statements,” are therefore insufficient to withstand a motion to dismiss. Iqbal, 556

U.S. at 678. A court need not accept a plaintiff’s legal conclusions as true, see id., nor must a

court presume the veracity of legal conclusions that are couched as factual allegations, see

Twombly, 550 U.S. at 555. However, a court considering a motion to dismiss must accept the

complaint’s factual allegations as true and construe them liberally in the plaintiff’s favor. See,

e.g., United States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 135 (D.D.C. 2000). Put another

way, the court must “draw all reasonable inferences” in favor of the plaintiff. DC2NY, Inc. v.

Acad. Express, LLC, 485 F. Supp. 3d 113, 118 (D.D.C. 2020).

                                         III. ANALYSIS

       “To succeed on a legal malpractice claim [under District of Columbia law], the plaintiff

must show that (1) the defendant was employed as the plaintiff’s attorney, (2) the defendant

breached a reasonable duty, and (3) that breach resulted in, and was the proximate cause of, the

plaintiff’s loss or damages.”1 Seed Co. Ltd. v. Westerman, Hattori, Daniels & Adrian, LLP, 961

       1
          Both parties draw upon District of Columbia law for their arguments about the legal
malpractice claims. Mem. P. & A. Supp. Pls.’/Counter-Defs.’ Mot. Dismiss Counterclaim at 7
(“Mem.”), ECF No. 28-1; Defs.’/Counter-Pls.’ Opp’n Pls.’/Counter-Defs.’ Mot. Dismiss
Counterclaim at 4, 8 (“Opp’n”), ECF No. 29. Of course, a significant portion of the events
underlying the claims took place in Virginia, and Counter-Plaintiffs state in a passing footnote
that “[t]he question of whether to apply District of Columbia or Virginia law to the issues raised
by this motion has not been briefed and is not clear.” Opp’n at 11 n.2. That passive formulation
elides that the responsibility to brief any choice-of-law issue lies with the parties. The parties
have not established whether there is any conflict between D.C. and Virginia law that is relevant
to the issues presented in the instant motion, and the allegations in the complaint alone do not
provide a sufficient basis to resolve any choice of law question that might arise (for example, it is
unclear at this time whether Colella and Zefutie provided certain of their advice in D.C. or
Virginia). Accordingly, the Court applies D.C. law by default for the purpose of resolving this
motion, but the parties may raise the issue again if they wish “after an opportunity for
discovery.” See Jones v. Lattimer, 29 F. Supp. 3d 5, 10 n.3 (D.D.C. 2014); Beach TV Props.,
Inc. v. Solomon, 306 F. Supp. 3d 70, 92 (D.D.C. 2018).

                                                 7
F.3d 1190, 1196 (D.C. Cir. 2020) (quoting Martin v. Ross, 6 A.3d 860, 862 (D.C. 2010)).

Counter-Defendants argue that the counterclaim fails to plausibly allege the breach and causation

elements in relation to several of Counter-Plaintiffs’ legal malpractice theories. See Mem. at 8.

They further argue that any malpractice claim related to advice regarding the conveyance of the

Alexandria Property between Androus-owned entities is barred by the statute of limitations and

the doctrines of in pari delicto and judicial estoppel. See id. at 15–20. Finally, they assert that

the counterclaim does not sufficiently allege that Zefutie was involved in any of the alleged

breaches of the duty of care, so it fails to state any claims against him. See id. at 8–9. The Court

first addresses the sufficiency of the allegations against Colella before turning to those against

Zefutie. It concludes that the Counterclaim states legal malpractice claims against both Counter-

Defendants.

       One preliminary note: Counter-Defendants attached to their motion to dismiss significant

excerpts from the record of the trial court action, and ask the Court to take judicial notice of

these documents. Counter-Plaintiffs do not object. Public documents from other court

proceedings are judicially noticeable and permissible to consider when resolving a Rule 12(b)(6)

motion, so the Court considers them here. Lewis v. Drug Enf’t Admin., 777 F. Supp. 2d 151, 159

(D.D.C. 2011), aff’d, No. 11-5152, 2012 WL 1155698 (D.C. Cir. Mar. 8, 2012).

           A. The Counterclaim States a Legal Malpractice Claim Against Colella

    1. Counter-Plaintiffs Plausibly Plead the Breach and Causation Elements of their Claims

       Breach and causation regarding VCPA advice. Colella advances three related arguments

to the effect that Counter-Plaintiffs’ allegation that Colella breached his professional duty of care

by advising them “that they had a very strong case against Thomas based on [Thomas’s] lack of

a construction license” fails to state a legal malpractice claim. Counterclaim ¶ 37(b). Colella

contends that this advice was substantively correct and therefore not a breach of his duty; he

                                                  8
alternatively claims that even if the advice was mistaken in some way, it nevertheless cannot

ground a legal malpractice claim because of the judgmental immunity rule. Mem. at 11–12, 13–

14. Colella also argues that the Counterclaim does not sufficiently allege that his VCPA advice

caused Counter-Plaintiffs any harm. Mem. at 13.

       Resolution of these arguments requires the Court to clear up which of two distinct pieces

of advice related to Thomas’s lack of a construction license serves as the basis for Counter-

Plaintiffs’ legal malpractice claim. The Counterclaim alleges that Colella advised Androus that

Thomas’s lack of a license violated the VCPA and therefore gave Counter-Plaintiffs an

affirmative VCPA claim against Thomas for treble damages up to $3,600,000, and that based in

part on this understanding, Colella advised Androus to file and pursue at trial a counterclaim for

damages against Thomas. Counterclaim ¶¶ 11, 13–14. Colella’s brief largely focuses on a

second piece of advice he says he gave regarding the license rule, namely that the lack of a

construction license afforded Counter-Plaintiffs a defense to Thomas’s breach-of-contract claims.

See Mem. at 11–13. But this focus is a distraction: the Court understands Counter-Plaintiffs’

malpractice claim to rest instead on the advice regarding the potential for a large damages

recovery on an affirmative VCPA claim. See Counterclaim ¶¶ 11, 13–14, 35 (“Counter-

Plaintiffs went into the trial expecting to win a substantial verdict, based largely on Counter-

Defendants’ repeated assurances that the licensing issue was an almost sure winner.”); Opp’n at

7 (“[R]ather than explain the murky nature of the law and that the lack of a license was not

necessarily fatal to Thomas’ claims, as the statutory amendments and case law suggest, Counter-

Defendants advised Androus that Counter-Plaintiffs’ claim under the VCPA was worth over

$3,000,000, including treble damages.”).

                                                 9
       The question of whether an attorney breached the professional standard of care is not

easily answered at the Rule 12(b)(6) stage. Indeed, “[u]nless the attorney’s lack of care is so

obvious that the jury can find negligence as a matter of common knowledge, the standard and its

violation must be proved by expert testimony.” Mills v. Cooter, 647 A.2d 1118, 1123 (D.C.

1994). The application of the judgmental immunity rule likewise does not easily submit to

pleading-stage resolution. This “doctrine provides that an informed professional judgment made

with reasonable care and skill cannot be the basis of a legal malpractice claim. Central to the

doctrine is the understanding that an attorney’s judgmental immunity and an attorney’s

obligation to exercise reasonable care coexist such that an attorney’s non-liability for strategic

decisions is conditioned upon the attorney acting in good faith and upon an informed judgment

after undertaking reasonable research of the relevant legal principals and facts of the given case.”

Biomet Inc. v. Finnegan Henderson LLP, 967 A.2d 662, 666 (D.C. 2009) (cleaned up). Thus, in

Biomet, the court noted that “the reasonableness of an attorney’s litigation strategy” is not

always “susceptible to resolution” even at the summary judgment stage. Id. at 665.

       Colella argues that his advice on the license issue was at least a reasonable evaluation of

Virginia law, and relies on Mills to argue that the mere fact that the jury sided against Androus

on the affirmative VCPA claim does not prove otherwise. Mem. at 14. This argument is flawed

in two ways. First, Mills was an appeal of a post-trial motion for judgment notwithstanding the

verdict; Colella does not cite any authority to support the proposition that an adverse jury

determination cannot lend plausibility to Counter-Plaintiffs’ allegation that Colella’s advice of a

strong chance at a VCPA damages recovery breached the standard of care. Mills, 647 A.2d at

1119. Second, the parties’ briefing on Virginia law does not allow the Court, at this stage, to

conclude that Colella’s advice was either substantively correct or based on a reasonably

                                                 10
informed professional judgment such that Counter-Plaintiffs’ claim fails as a matter of law. In

fact, though the Court reserves final judgment until the parties fully brief the issue, it appears that

Colella’s advice may have been substantively wrong. See Biomet, 967 A.2d at 668 (whether an

attorney’s strategy was reasonable in the context of the judgmental immunity “requires

consideration of the state of the law” at the time the attorney made the strategic decision).

       Va. Code Ann. § 54.1-1103 requires that those who engage in contracting work in

Virginia have a state license to do so. Colella spends most of his briefing on this issue

explaining the way this requirement interacts with breach-of-contract disputes involving

unlicensed contractors (so, for that matter, do the Counter-Plaintiffs): “A construction contract

entered into by a person undertaking work without a valid Virginia contractor’s license shall not

be enforceable by the unlicensed contractor undertaking the work unless the unlicensed

contractor (i) gives substantial performance within the terms of the contract in good faith and (ii)

did not have actual knowledge that a license or certificate was required by this chapter to

perform the work for which he seeks to recover payment.” Id. § 54.1-1115(C); see Mem. at 11–

12; Opp’n at 5–7. But as the Court has explained, the legal malpractice claim does not appear to

rely on Colella’s advice concerning this defense. Instead, it relies on Colella’s advice that the

license statute gave Counter-Plaintiffs an affirmative claim for treble damages against Thomas.

Colella devotes a grand total of one sentence to the provision that presumably grounded this

piece of advice. Mem. at 11. Va. Code Ann. § 54.1-1115(B)(i) provides that undertaking

contracting work without a license, in addition to subjecting the contractor to criminal penalties,

“shall also constitute a prohibited practice in accordance with § 59.1-200 [of the Virginia

Consumer Protection Act], provided that the violation involves a consumer transaction as

defined in the Virginia Consumer Protection Act (§ 59.1-196 et seq.), and shall be subject to any

                                                  11
and all of the enforcement provisions of the Virginia Consumer Protection Act.” The

“enforcement provision[] of the Virginia Consumer Protection Act” relevant to Colella’s advice

must have been its private cause of action, which provides:

       Any person who suffers loss as the result of a violation of this chapter shall be
       entitled to initiate an action to recover actual damages, or $500, whichever is
       greater. If the trier of fact finds that the violation was willful, it may increase
       damages to an amount not exceeding three times the actual damages sustained, or
       $1,000, whichever is greater.

Va. Code Ann. § 59.1-204.

       So far, so good for Colella’s advice. But recall that a violation of the contractor license

requirement qualifies as a prohibited practice under the VCPA only “provided that the violation

involves a consumer transaction as defined in the Virginia Consumer Protection Act.” Va. Code

Ann. § 54.1-1115(B)(i). The VCPA defines consumer transaction, in relevant part, as “[t]he

advertisement, sale, lease, license or offering for sale, lease or license, of goods or services to be

used primarily for personal, family or household purposes.” Va. Code Ann. § 59.1-198

(emphasis added). The allegations in the Counterclaim do not make it clear that the Androus and

his LLCs used Thomas’s contracting services primarily for personal, household, or family

purposes. In fact, the counterclaim contains allegations that at least plausibly suggest they did

not. “Androus is in the real estate business and knowledgeable about construction issues.”

Counterclaim ¶ 8. Moreover, the Alexandria Property transaction involved two separate LLCs,

one of which was the direct purchaser—hardly an indicator, though not necessarily preclusive, of

personal, household, or family use. Id. ¶ 10. It is at least plausible that Counter-Plaintiffs never

had a viable affirmative VCPA claim based on plain statutory requirements, and that Colella’s

advice therefore breached his duty of care and was not sufficiently informed to merit the

protection of the judicial immunity rule. To be sure, the Court does not have the benefit of full

briefing on the scope of a lack-of-license-based VCPA cause of action, and does not reach any

                                                  12
firm conclusion on whether Counter-Plaintiffs did or did not have a viable affirmative VCPA

claim. Rather, the Court holds that Colella’s memorandum in support of his motion to dismiss

fails to convince that advising the Counter-Plaintiffs that they had a good chance at a substantial

VCPA recovery was either substantively correct or a reasonably informed judgment as a matter

of law, and that the Counterclaim plausibly alleges otherwise. In other words, the Counterclaim

plausibly alleges that Colella’s advice was based on “oversight or neglect” of a significant

weakness in Counter-Plaintiffs’ VCPA claim, which is enough to plead a breach of the duty of

care outside the protection of the judgmental immunity rule at the motion-to-dismiss stage. See

Biomet, 967 A.2d at 666.

       Colella suggests that his advice must have been correct, or that it at least did not cause

Counter-Plaintiffs any harm, because the Virginia court allowed the affirmative VCPA claim to

go to the jury and instructed the jury that lack of a contractor’s license is a VCPA violation.

“One can only assume,” Colella writes, “that the [Virginia c]ourt would not have allowed a

meritless claim to go the jury.” Mem. at 13. Not so. For one thing, Colella attached only certain

excerpts from the Virginia-court record, and these do not establish whether Thomas even

presented to the Virginia court an argument that the VCPA claim should not go to the jury. The

Court cannot infer anything about the viability of the affirmative VCPA claim from the mere

possibility of a Virginia court ruling on an issue it may not have even confronted. For another, it

is at least plausible that whether the Alexandria Property transaction qualified as a “consumer

transaction” was a disputed issue at trial, and that the jury sided against Counter-Plaintiffs on

their affirmative VCPA claim because they concluded it did not so qualify. The jury instructions

Colella excerpts include an instruction on the “consumer transaction” requirement: “Any person

who undertakes work as a contractor without a valid Virginia contractor’s license . . . has

                                                 13
engaged in a prohibited practice in violation of the Virginia Consumer Protection Act, provided

the violation involves a ‘consumer transaction’ as defined by the Virginia Consumer Protection

Act.” Mot. Dismiss Counterclaim Ex. D at 5, ECF No. 28-5. The excerpted instructions do not

go on to define “consumer transaction,” but Colella does not purport to provide a complete copy

of the jury instructions.

        Moreover, and in response to Colella’s causation argument, Counter-Plaintiffs’

malpractice claim does not rest solely on the fact that they lost at trial on the VCPA claim. They

also allege that they would not have incurred the expense of pursuing a VCPA counterclaim

against Thomas in the first place (and/or would have settled before trial) were it not for Colella’s

advice that they had a “very strong” VCPA claim for substantial treble damages. See

Counterclaim ¶¶ 11, 14, 25, 37, 38. Thus, Colella misconstrues the nature of Counter-Plaintiffs’

claim when he insists that “[a]n adverse jury verdict standing alone cannot be the basis for a

malpractice claim.” Mem. at 13. Read in the light most favorable to Counter-Plaintiffs, the

Counterclaim alleges not only that Colella’s faulty evaluation of the VCPA claim was partially

responsible for Counter-Plaintiffs’ loss at trial, but also that it caused them to “[o]verpay” in

attorneys’ fees by misleading them into pursuing the doomed project of bringing a VCPA

counterclaim and litigating it to trial in the first place. Counterclaim ¶¶ 13–15, 38. This is not a

case in which the plaintiff alleges only that attorney malpractice caused him to fail to recover on

an otherwise viable claim; rather, Counter-Plaintiffs allege that Counter-Defendants negligently

overstated the viability of their claim and therefore caused them to pursue it when they otherwise

would not have.2

2
  For the first time in his reply brief, Colella attaches and invokes a document in which Androus
took notes evidencing an understanding that one possible outcome of the trial was an adverse
judgment of over $2,000,000. Reply Mem. Further Supp. Counter-Defs.’ Mot. Dismiss

                                                 14
       For what it is worth, the Court agrees with Colella that Counter-Plaintiffs’ complaints

about Colella’s presentation style before the jury likely would not on their own suffice to state a

claim for legal malpractice. Mem. at 25–26. The only specific fact alleged in support of the

Counterclaim’s allegations that “Colella exhibited overly aggressive behavior” at trial and that

“the jury was clearly unimpressed” is the allegation that Colella referred to Thomas as liar in his

opening statement. Counterclaim ¶ 27. Casting doubt on the credibility of an adverse party

hardly seems overly aggressive; in any event, Colella’s decision to call Thomas a liar during his

opening statement represents the sort of reasonable choice of “trial tactic[]” that lies at the heart

of the judgmental immunity doctrine. See Biomet, 967 A.2d at 666. But all of this is neither

here nor there, because other Counterclaim allegations suffice to state a legal malpractice claim.

Cf. Harmoni Int’l Spice, Inc. v. Wenxuan Bai, No. 216-cv-00614, 2019 WL 4194306, at *8 (C.D.

Cal. July 2, 2019) (“[T]he Court notes that even if these allegations are immaterial, they provide

‘a background and important factual underpinning’ to Plaintiffs’ claims and provide at least

some context about what happened in this case (citation omitted)).

       Causation regarding remaining alleged errors. For purposes of the motion to dismiss,

Colella appears not to detail an argument that Counter-Plaintiffs’ remaining alleged errors—

including Colella’s failure to advise Androus of Virginia’s punitive damages cap, the

Counterclaim (“Reply”) at 3, ECF No. 30; Reply Ex. J at 3, ECF No. 30-1. Colella suggests that
this document defeats the notion that any of his advice caused Androus to pursue a faulty
litigation strategy. Reply at 3–4. But it does not conclusively so establish; for example, it does
not reveal whether Colella’s advice led Androus to understand that an adverse judgment was a
likely outcome at trial, an unlikely outcome, or something in between. In any event, the
Counterclaim neither attaches, references, nor necessarily relies upon this document, so it is not
properly before the Court at the Rule 12(b)(6) stage. See Kim v. United States, 632 F.3d 713,
719 (D.C. Cir. 2011); Compton v. Alpha Kappa Alpha Sorority, Inc., 64 F. Supp. 3d 1, 11–12
(D.D.C. 2014); Cogdell v. Murphy, No. CV 19-2462, 2020 WL 6822683, at *3 (D.D.C. Nov. 20,
2020).

                                                  15
shortcomings in expert preparation, and the failure to engage in settlement discussions—were

not breaches of the duty of care. He instead focuses on arguing that the Counterclaim does not

plausibly plead that these errors caused any injury. “As with any tort action, legal malpractice

liability is predicated on a finding that the injury was proximately caused by the breach of duty.

Proximate cause exists when there is a substantial and direct causal link between the attorney’s

breach and the injury sustained by the client.” Dalo v. Kivitz, 596 A.2d 35, 41–42 (D.C. 1991)

(cleaned up). Contrary to Colella’s assertions, as the Court will explain, the Counterclaim

plausibly alleges proximate cause with respect to each of these alleged errors.

       In addition to alleging that Colella negligently mischaracterized the prospect of Counter-

Plaintiffs’ recovery on a VCPA claim, Counter-Plaintiffs allege that Colella incorrectly advised

them that they had a viable chance at recovering punitive damages up to $10,800,000.3

Counterclaim ¶ 14, 37. This was a severe misstatement of Virginia law, which caps punitive

damages recoveries at $350,000. See id. ¶ 14; Va. Code Ann. § 8.01-38.1 (“In any action

accruing on or after July 1, 1988, including an action for medical malpractice under Chapter 21.1

(§ 8.01-581.1 et seq.), the total amount awarded for punitive damages against all defendants

found to be liable shall be determined by the trier of fact. In no event shall the total amount

awarded for punitive damages exceed $350,000.”). Colella does not contend that the cap did not

apply to Counter-Plaintiffs’ Virginia case. Instead, he points out that while the Virginia judge

       3
         The record does not entirely clarify in relation to which of their counterclaims against
Thomas Counter-Plaintiffs sought punitive damages. Punitive damages would not have been
recoverable in connection with the breach-of-contract claim against Thomas, but may have been
recoverable in connection with the fraudulent inducement claim against Thomas. See Wackenhut
Applied Techs. Ctr., Inc. v. Sygnetron Prot. Sys., Inc., 979 F.2d 980, 984 (4th Cir. 1992);
Tidewater Beverage Servs., Inc. v. Coca Cola Co., 907 F. Supp. 943, 948 (E.D. Va. 1995); see
also Counterclaim ¶ 15 (noting that Counter-Plaintiffs counterclaimed against Thomas in the
Virginia action for violation of the VCPA, breach of contract, fraudulent inducement, and a
declaratory judgment “to remove a cloud on the title to the Property”).

                                                 16
instructed the jury that it could award punitive damages against Thomas if it found that he had

acted willfully and with actual malice, the instruction did not mention any damages cap. Mem.

at 10. Colella seems to argue that because the jury never had occasion to consider the damages

cap, his failure to advise on the cap could not have caused Counter-Plaintiffs’ failure to recover

punitive damages from Thomas. See id.

       This argument suffers from two fundamental flaws. First, it misapprehends how

Virginia’s punitive damages cap operates by failing to account for the two concluding sentences

of the four-sentence statute. The statute reads in full:

       In any action accruing on or after July 1, 1988, including an action for medical
       malpractice under Chapter 21.1 (§ 8.01-581.1 et seq.), the total amount awarded for
       punitive damages against all defendants found to be liable shall be determined by
       the trier of fact. In no event shall the total amount awarded for punitive damages
       exceed $350,000. The jury shall not be advised of the limitation prescribed by
       this section. However, if a jury returns a verdict for punitive damages in
       excess of the maximum amount specified in this section, the judge shall reduce
       the award and enter judgment for such damages in the maximum amount
       provided by this section.

Va. Code Ann. § 8.01-38.1 (emphasis added). Thus, Colella’s observation that the jury

instructions did not reference the cap is entirely irrelevant; this omission was standard procedure.

The statute plainly contemplates allowing the jury to award whatever punitive damages it sees fit

and requiring the judge to then reduce them consistent with the cap after trial. The jury

instruction only underscores the severity of Colella’s alleged error in advising Androus that he

stood to recover up to $10,800,000 in punitive damages.

       Second, and like the argument about the alleged VCPA error, Colella’s causation

argument about the alleged damages cap error misunderstands the Counterclaim in that it

assumes it to allege that the damages cap error caused harm only by preventing Counter-

Plaintiffs from obtaining a damages verdict in their favor. Once again, Counter-Plaintiffs allege

that this error harmed them by setting them on the strategically misguided and expensive path of

                                                 17
filing and trying a counterclaim for millions of dollars in punitive damages against Thomas—an

effort that, because of the damages cap Colella neglected to advise them of, was destined to fail.

Counterclaim ¶¶ 13–15, 38. Colella’s causation argument is not responsive to these allegations.

       Next comes a set of arguments about the Counterclaim’s allegations related to witness

preparation. Counter-Plaintiffs allege that Colella failed to supervise Randy Harding’s

preparation of an estimate of the costs Thomas’s defective construction had inflicted upon

Androus. Counterclaim ¶ 22. Upon receipt of Harding’s estimate, Androus concluded that it

was too high and revised it downward. Id. This resulted in Harding being confronted with an

estimate he had never seen before and could not personally vouch for at his deposition, and

ultimately, in the Virginia court’s rejection of Counter-Plaintiffs’ attempt to introduce the

estimate at trial. Id. ¶ 24. According to Counter-Plaintiffs, this failure to supervise the witness

preparation process contributed to Counter-Plaintiffs’ “crushing defeat” at trial. Id. ¶ 35. Colella

responds with an argument that the allegations suggest that Androus did not alert Colella that he

had revised the estimate downward, so Colella lacked an opportunity to do anything about it.

Mem. at 22; see Counterclaim ¶ 22 (noting that Androus revised the estimate downward and

“delivered the revised estimate to Colella, who did not ask any questions about what he had

received from Androus”). Colella further notes that his engagement agreement with Androus

(which was attached to the original complaint in this case) provided that the firm was “not

responsible for independently verifying the truth or accuracy of information supplied” by

Androus and that the firm would rely on Androus to review for correctness all documents to be

filed in court. Mem. at 23 (citation omitted). Even so, it was plausibly reasonable for Androus

to expect that his attorney would actively involve himself in understanding the preparation

process behind a witness estimate report. In at least some jurisdictions, “[a]n attorney has an

                                                 18
ethical duty to prepare a witness.” Odone v. Croda Int’l PLC., 170 F.R.D. 66, 69 (D.D.C. 1997)

(Attridge, Mag. J.); State ex rel. Means v. King, 520 S.E.2d 875, 882 (W. Va. 1999) (“[A]n

attorney has an ethical duty to prepare a witness for a deposition.”); see Jeffrey S. Kinsler & Jay

E. Grenig, Consultation with Counsel, Va. Prac. Civ. Discovery § 6:36 (2021) (referring to an

“attorney’s ethical duty to prepare a witness”). Indeed, Androus has alleged that this was his

expectation. See Counterclaim ¶ 22 (alleging that the “entire process” of Harding’s estimate

preparation “was unsupervised by Colella or Zefutie, even though they had been paid hundreds

of thousands of dollars in legal fees by then”); id. ¶ 23 (alleging that Colella and Zefutie had

knowledge of the manner of preparation of the report of Resetco, another witness for Androus).

Thus, Androus has plausibly alleged that Colella’s inaction, and not his own silence, caused the

deficiencies in Harding’s preparation.4

       Moreover, Colella learned of the downward revision to the estimate report at least during

Harding’s deposition. See id. ¶ 24. He could have done something about it then; indeed, after

the deposition, Androus directly asked Colella if he should obtain new estimates and Colella

advised him that doing so was not necessary. Id. This failure to remedy the problem allegedly

caused the later failure to introduce Harding’s estimate at trial, which allegedly helped cause the

adverse verdict. Id. Counter-Plaintiffs have plausibly alleged that the deficiencies in Harding’s

witness preparation were a “substantial and direct” cause of their adverse litigation outcome.5

       4
          To the extent Colella’s contentions on this score are meant to suggest that Counter-
Plaintiffs’ have not plausibly alleged a breach of duty in relation to Harding’s preparation, the
Court rejects this argument for the same reasons it rejects the causation argument.
       5
          The Court agrees with Colella that while the Counterclaim details alleged shortcomings
in the preparation of Resetco’s expert report, Counterclaim ¶¶ 21, 23, it does not specifically
allege how these defects caused Counter-Plaintiffs any harm. Mem. at 21. Counter-Plaintiffs
say that allowing Androus to select Resetco as an expert even though the two men had a personal
relationship “made [Resetco] unnecessarily susceptible to accusations of lack of objectivity and
bias,” but do not allege (in their Counterclaim or briefs) that opposing counsel ever made any

                                                 19
Dalo, 596 A.2d at 42 (cleaned up). Whether they can ultimately so prove is a question for

another day.6

       Colella’s final causation argument responds to Counter-Plaintiffs’ allegations regarding

settlement opportunities, which assert that Counter-Plaintiffs notified Colella and Zefutie

“several times” before trial that they were interested in settling and/or mediating the case, but

Colella and Zefutie refused to engage in settlement discussions—all because of Colella and

Zefutie’s insistence that Counter-Plaintiffs had a good chance of winning a large judgment at

trial. Counterclaim ¶¶ 25, 37. This allegedly caused Counter-Plaintiffs to undertake the expense

of proceeding to trial on a flawed theory, where they suffered a substantial adverse judgment,

which further caused them to incur the costs of appeal. See id. ¶ 37. Colella says that legal

malpractice claims based on the loss of a settlement opportunity are categorically “inherently

speculative” as a matter of law, but each of the authorities he relies on—none of which applies

D.C. law—grounds its conclusion that a claim regarding settlement value was speculative on

record evidence at summary judgment or a later stage, rather than relying on the pleadings. Zee

Co., Inc. v. Williams, Mullen, Clark & Dobbins, P.C., 871 F. Supp. 2d 498, 511–12 (E.D. Va.

2012), aff’d, 547 F. App’x 166 (4th Cir. 2013); Whiteaker v. State, 382 N.W.2d 112, 117 (Iowa

1986); McConwell v. FMG of Kansas City, Inc., 861 P.2d 830, 840–50 (Kan. Ct. App. 1993);

such accusations. Opp’n at 9. In any event, Counter-Plaintiffs’ allegations regarding Harding
are sufficient to plead their legal malpractice claim.
       6
          Colella briefly notes that Harding testified at trial as a fact witness (contrary to the
Counterclaim’s reference to Harding as an expert witness), and that while Counter-Plaintiffs
were unable to introduce Harding’s estimate for the cost of repairs to the interior of the
Alexandria Property because Harding could not authenticate it, they did introduce at trial
Harding’s estimates for costs related to siding and the ridge vent. Mem. at 22, Mot. Dismiss. Ex.
I at 33, 39–40, 42, 44, ECF No. 28-10. The current record does not equip the Court to evaluate
the relative importance of these estimates or the effect of the interior estimate’s omission on the
ultimate outcome of the case.

                                                 20
Thompson v. Halvonik, 43 Cal. Rptr. 2d 142, 146 (Cal. Ct. App. 1995); McCartney v. Dunn &

Conner, Inc., 563 A.2d 525, 530 (Pa. Super. Ct. 1989); Campbell v. Magana, 8 Cal. Rptr. 32, 36

(Cal. Dist. Ct. App. 1960).

       Though the D.C. Court of Appeals does not seem to have directly weighed in on the

subject, at least once court in this district applying D.C. law has observed that “a cause of action

may exist under some circumstances against an attorney for failure to negotiate a reasonable

settlement of a case.” Macktal v. Garde, 111 F. Supp. 2d 18, 22 (D.D.C. 2000), aff’d, No. 00-

7207, 2001 WL 238170 (D.C. Cir. Feb. 23, 2001); see also Seed Co., Ltd. v. Westerman, 840 F.

Supp. 2d 116, 125–26 (D.D.C. 2012) (allowing plaintiffs the opportunity to conduct discovery in

order to adduce evidence in support of their theory “that they acted in reliance on [defendant

attorneys’] erroneous legal advice when they declined . . . settlement offers”). To be sure,

Counter-Plaintiffs do not expressly allege that Thomas would have accepted a settlement offer or

even listened to one. See Mem. at 24. But it is reasonable to infer that Thomas, facing a

counterclaim for substantial damages, would have at least entertained an offer to settle his

original claims. At the very least, accepting the Counterclaim allegations as true, Colella and

Zefutie’s refusal to even explore the possibility of a settlement plausibly may have deprived

Counter-Plaintiffs of the opportunity to avoid an expensive and futile trial undertaking. Again,

whether Counter-Plaintiffs can ultimately establish that Colella and Zefutie’s refusal to even

explore settlement caused them any harm is a question of proof, not pleading. See District of

Columbia v. Zukerberg, 880 A.2d 276, 281 (D.C. 2005) (“Proximate cause is generally a factual

issue to be resolved by the jury . . . .”); cf. Seed Co., 840 F. Supp. 2d at 126 n.10 (declining to

require legal malpractice plaintiffs to “demonstrate that if they had accepted [a] settlement offer,

they would have made more money than they lost” because “such [a] factual showing[] . . . [was]

                                                  21
not appropriate at the pre-discovery stage of [the] litigation” where the “plaintiffs . . . ha[d]

sufficiently alleged that they lost money (an injury) as a result of their reliance on erroneous

legal advice (causation)”).

2. Counter-Defendants’ Statute of Limitations, In Pari Delicto, and Judicial Estoppel Arguments
                          Do Not Justify Dismissal of the Counterclaim

       The remaining way in which Counter-Plaintiffs allege Colella breached his duty of care

was by advising them in relation to the transfer of the Alexandria Property from 2208 Russell

Road, LLC through Androus to 2208 RR AVA without alerting them that these conveyances

could expose them to a fraudulent transfer claim from Thomas, and by advising Androus not to

reverse the transactions once he was hit with the fraudulent transfer suit. Counterclaim ¶¶ 10,

13, 37.7 Colella asks the Court to hold that any claim based on this advice must be dismissed

based on statute of limitations, in pari delicto, and/or judicial estoppel defenses, but the motion-

to-dismiss-stage record does not permit the Court to hold that any of these defenses apply.

       Statute of limitations. Colella characterizes advice related to these transfers as an

engagement distinct from his representation of Counter-Plaintiffs in their dispute with Thomas,

and argues that any claim related to the transfer representation is untimely under D.C.’s three-

year statute of limitations for legal malpractice claims. Mem. at 18–19; see Seed Co., Ltd. v.

Westerman, 832 F.3d 325, 331–32 (D.C. Cir. 2016) (applying the three-year statute of limitations

found in D.C. Code § 12-30(8) to a D.C.-law legal malpractice action brought in federal court).

Specifically, Colella argues that the transfer representation ended when the transfers were

finalized on October 24, 2017, Counterclaim ¶ 10, more than three years before Counter-

       7
          Colella disputes the Counterclaim’s allegation that Androus made the transfers “with
the assistance and knowledge of Colella,” Counterclaim ¶ 10, and therefore denies that he ever
represented Androus in relation to the transfers, Mem. at 18; but this sort of factual dispute is of
course irrelevant to the Court’s evaluation of the instant motion to dismiss.

                                                  22
Plaintiffs counterclaimed on February 24, 2021. Mem. at 18–19. “[A] defendant is entitled to

succeed on a Rule 12(b)(6) motion to dismiss brought on statutes of limitations grounds only if

the facts that give rise to this affirmative defense are clear on the face of the plaintiff’s

complaint.” Hagan v. United States, 197 F. Supp. 3d 30, 35 (D.D.C. 2016) (cleaned up).

        Under D.C.’s discovery rule, the statute of limitations on a legal malpractice claim begins

to run when the plaintiff has knowledge of some injury caused by the defendant’s wrongdoing.

See Knight v. Furlow, 553 A.2d 1232, 1233–34 (D.C. 1989). There is nothing in the

Counterclaim to suggest that Counter-Plaintiffs learned or should have learned that Colella had

failed to advise them of a potential fraudulent transfer problem or that the transfers would injure

them in any way until July 19, 2018, when Thomas filed his fraudulent transfer suit.

Counterclaim ¶ 12. Assuming the statute began to run that day, Counter-Plaintiffs’ February 24,

2021 claim is timely. For this reason alone, Colella’s statute-of-limitations argument cannot

prevail at the motion-to-dismiss stage. Cf. Seed Co., 840 F. Supp. 2d at 123 (“[T]he point in time

at which the plaintiff knew or reasonably should have known is normally a question of fact for a

jury, and a trial judge should only make this determination as a matter of law if no reasonable

person could disagree on this date.”).

        Even assuming for the sake of argument that Counter-Plaintiffs discovered an injury on

October 24, 2017 (the day of the transfers), the continuous representation rule would save their

Counterclaim from a Rule 12(b)(6) dismissal on statute-of-limitations grounds. The District of

Columbia’s “continuous representation rule . . . tolls the statute of limitations on legal

malpractice claims until the attorney’s representation concerning the particular matter in issue is

terminated—even if the client was on actual or inquiry notice of the attorney’s malpractice

before then.” Rocha v. Brown & Gould, LLP, 101 F. Supp. 3d 52, 68 (D.D.C. 2015) (cleaned

                                                   23
up), aff’d, No. 15-7053, 2016 WL 11761481 (D.C. Cir. Mar. 30, 2016). “Under D.C. law . . .

what constitutes the particular matter in issue and when that matter was terminated are questions

of fact about which there is little guidance.” Id. (cleaned up). Colella’s statute-of-limitations

defense depends upon the answer to a factual question about the extent of the transfer

representation that is inappropriate for resolution at the motion-to-dismiss stage. Colella’s

alleged transfer representation arguably lasted at least until some time after the July 19, 2018

filing of Thomas’s complaint, when Androus asked Colella a legal question about the transfers:

whether he should reverse them by deeding the Alexandria Property back to 2208 Russell Road,

LLC as a way of mooting Thomas’s fraudulent transfer complaint. Counterclaim ¶ 13. Colella

advised Androus not to do this. Id. If the representation did last this long, Counter-Plaintiffs’

claim would be timely.

        Colella stresses that the August 2, 2017 engagement agreement “was for representation in

a dispute between Counter-Plaintiffs” and Thomas, Counterclaim ¶ 6, and it is true that

Androus’s July 2018 question about reversing the conveyances arguably related as much to the

litigation as it did to advice on the transfers in the first instance. But nothing in the record at this

stage precludes the possibility that there was a distinct representation related to the transfers or

that the transfer advice was part of pre-litigation strategy covered by the August 2, 2017

engagement letter. More evidence is required to tease out the precise nature of any

representation related to the transfers, whether such a representation was distinct from the

litigation representation, and whether the July 2018 question about reversing the transfers

constituted a continuation of either or both of these representations. Cf. Rocha, 101 F. Supp. 3d

at 69 (resolving a continuous representation question by looking to a summary judgment record

which included the engagement agreement and the plaintiff’s deposition testimony about her

                                                   24
understanding of the scope of the relevant engagement). The existence of these open questions

defeats Colella’s statute of limitations argument insofar as he presents it in support of the instant

motion to dismiss.

       In pari delicto. Colella next invokes the doctrine of in pari delicto, “an affirmative

defense that precludes a plaintiff who participated in the same wrongdoing as the defendant from

recovering damages from that wrongdoing.” In re Derivium Cap. LLC, 716 F.3d 355, 367 (4th

Cir. 2013). Colella seems to acknowledge that the fact-intensive defense of in pari delicto is

suitable for resolution at the pleading stage, if at all, only when there is “no set of facts under

which [Counter-Plaintiffs] would not be subject to the defense.” In re Greater Se. Cmty. Hosp.

Corp. I, 353 B.R. 324, 369 (Bankr. D.D.C. 2006); Yarn v. Hamburger L. Firm, LLC, No. CIV.A.

12-3096, 2013 WL 5375462, at *10 (D. Md. Sept. 24, 2013); see Mem. at 16–17. This case does

not meet that high bar.

       Colella’s argument that “Androus bears equal or greater fault [as compared with Colella]

in the fraudulent transfers at issue,” rests on two faulty premises: that the record conclusively

establishes that Androus acted fraudulently with respect to the transfers and that the record

conclusively establishes that Colella engaged in “no wrongdoing . . . in connection with” the

transfers.8 Mem. at 16–17. For the first premise, Colella points out that “Androus admitted

under oath” in the Virginia trial “that it was his intention to make the transfers, and that he did

transfer the property”; Colella says that it is therefore “clear” that Androus’s “intention [was] to

make the conveyances.” Id. at 16. But establishing that Androus intended to make the transfers

does not establish that he did so fraudulently, that is, “with intent to delay, hinder, or defraud

       8
          The Court does not suggest that establishment of these premises would make
application of the in pari delicto doctrine appropriate in this case. Rather, it declines to reach
that issue because it does not need to at this stage.

                                                  25
creditors.” Va. Code Ann. § 55.1-400. In fact, in the very testimony Colella cites, Androus

identifies an alternative reason behind his conveyances: an estate planning strategy. Mot.

Dismiss Ex. E at 418–19, ECF No. 28-6. So Colella fails to conclusively establish the first

premise, that Androus in fact acted fraudulently.

       Same for the second premise, for which Colella relies on a Virginia court order denying

Thomas’s motion to compel production of certain communications between Androus and

Colella. Colella insists that this one-sentence order constitutes a finding that that there was “no

evidence of wrongdoing by [Androus’s] Counsel,” Mem. at 17, but this misreads the Virginia

litigation record. Androus and Colella had invoked attorney-client privilege over the

communications; in response, Thomas moved to compel based on his assertion that the

documents were subject to the crime-fraud exception to the attorney-client privilege. Thomas

argued to the Virginia court that the application of the crime-fraud exception turned on the

client’s fraudulent intent alone, and that, therefore, the “attorney’s knowledge of the client’s

wrongful intent is irrelevant.” Mot. Dismiss Ex. F at 5–7, ECF No. 28-7 (citing Clark v. United

States, 289 U.S. 1, 15 (1933)). Thus, Thomas premised his argument entirely on the assertion

that Androus had acted with fraudulent intent, id. at 7–8—the Virginia Court could have resolved

the motion without even considering whether Colella did or did not engage in any wrongdoing.

Moreover, the Virginia court denied the motion to compel for another reason altogether, “its

finding that such documents are not relevant to any material issue [in this] matter[.]” Mot.

Dismiss Ex. G at 2, ECF No. 28-8. The Virginia court’s motion-to-compel ruling therefore tells

us nothing about Colella’s (or Androus’s) level of wrongdoing in relation to the property

transfers. Based on the motion-to-dismiss record and the arguments Colella has presented,

Colella’s in pari delicto argument does not add up.

                                                 26
       Judicial estoppel. Colella claims that Androus’s assertion that he transferred the

Alexandria Property between his LLCs “with the assistance and knowledge of Colella and his

then law firm, Duane Morris,” Counterclaim ¶ 10, is barred by the equitable doctrine of judicial

estoppel. Mem. at 19–20. The Court is not persuaded. “Judicial estoppel generally prevents a

party from prevailing in one phase of a case on an argument and then relying on a contradictory

argument to prevail in another phase.” Encyclopaedia Britannica, Inc. v. Dickstein Shapiro,

LLP, 905 F. Supp. 2d 150, 154 (D.D.C. 2012) (cleaned up). Three considerations guide a court’s

exercise of discretion in determining whether to apply judicial estoppel.

       (1) Is a party’s later position clearly inconsistent with its earlier position? (2) Has
       the party succeeded in persuading a court to accept that party’s earlier position, so
       that judicial acceptance of an inconsistent position in a later proceeding would
       create the perception that either the first or the second court was misled? (3) Will
       the party seeking to assert an inconsistent position derive an unfair advantage or
       impose an unfair detriment on the opposing party if not estopped?

Id. (cleaned up); see also Dennis v. Jackson, 258 A.3d 860, 865–66 (D.C. 2021) (describing

these considerations as “basic elements that must be established in order to apply judicial

estoppel.”).

       Colella again points to Androus’s testimony at the Virginia trial, during which he

admitted that he made the transfers as part of an estate planning scheme. “At no time” during

this testimony, Colella stresses, “did Androus claim that the transfers were, in fact, made upon

the advice or assistance of Counsel.” Mem. at 19–20. But Colella does not identify any instance

in which Androus affirmatively stated that he did not receive counsel’s advice on the transfers.

Therefore, Androus’s trial testimony is not “clearly inconsistent” with his current position that

Colella advised him with respect to the transfers; it is irrelevant to this position. Encyclopaedia

Britannica, 905 F. Supp. 2d at 154. And even if Androus’s trial position that the transfers were

not fraudulent were somehow inconsistent with the current allegation that Colella advised him on

                                                 27
the transfers, it is far from clear that he persuaded the Virginia court to accept any of his

assertions regarding the transfers. See id. Though the basis of the Virginia jury’s verdict against

Counter-Plaintiffs is not evident from the Counterclaim or the Virginia-court attachments, it very

well may have rested on a rejection of Androus’s assertions regarding the transfers. See

Counterclaim ¶¶ 16, 30.

       Colella also tries once again to rely on the Virginia-court order denying Thomas’s motion

to compel, but again to no avail. Colella says that the order represents the Virginia court’s

conclusion that Colella did not advise on the transfers. Mem. at 20; Reply at 9. But this

misunderstands the Virginia court’s order: as the Court has explained, all the Virginia court held

was that the documents Thomas sought were not relevant to the litigation. The dispute did not

present the issue of whether Colella had provided advice on the transfer transaction, and the

order said nothing about the issue. Even if it had, there is nothing in the current record to

support a conclusion that the court’s conclusion adopted any assertions from Androus; Colella

has provided only Thomas’s brief in support of the motion to compel. Therefore, Colella’s

judicial estoppel argument fails at the motion-to-dismiss stage.

           B. The Counterclaim States a Legal Malpractice Claim Against Zefutie

       Equipped with its conclusion that the allegations in the Counterclaim plausibly support

Counter-Plaintiffs’ legal malpractice claim against Colella in several ways, the Court turns to

addressing Counter-Defendants’ argument that the Counterclaim does not state a legal

malpractice claim against Zefutie. See Reply at 4–5. To the contrary, the Counterclaim

plausibly alleges that Zefutie, Colella’s co-counsel and law partner, was directly involved in

several of the alleged breaches of the duty of care the Court has concluded are sufficient to state

a legal malpractice claim. Counter-Plaintiffs allege that Zefutie “assisted Colella with the

preparation for and conduct of the trial of the” Virginia litigation; that he consented to the

                                                  28
manner in which Androus prepared a report on behalf of his expert witness Resetco; that he

(along with Colella) heard and rejected Androus’s repeated requests to pursue settlement or

mediation because he insisted that Androus had “very substantial claims and a very good chance

to win at trial”; that he tried and failed to get Harding’s interior repairs estimate admitted into

evidence at trial; and that “Colella and/or Zefutie failed to alert Harding to the fact that Androus

had revised Harding’s estimate downward.” Counterclaim ¶¶ 20, 23, 24, 25, 28; Mot. Dismiss.

Ex. I at 39–40. Thus, the Counterclaim alleges Zefutie’s direct involvement in much of the

conduct at the core of Counter-Plaintiffs’ claims, most notably the alleged failure to prepare

Harding for his deposition, the resultant failure to offer his estimate into evidence, and the

refusal to agree to Androus’s wish to explore settlement. For the same reasons that these alleged

failures suffice to state a legal malpractice claim against Colella, they suffice to state a legal

malpractice claim against Zefutie.

                                        IV. CONCLUSION

        For the foregoing reasons, Counter-Defendants’ Motion to Dismiss Counter-Plaintiffs’

Counterclaim (ECF No. 28) is DENIED. An order consistent with this Memorandum Opinion is

separately and contemporaneously issued.

Dated: 03/25/2022                                                    RUDOLPH CONTRERAS
                                                                     United States District Judge

                                                  29