Beach TV Props., Inc. v. Solomon, Civil Action No.: 15-1823 (RC)
| Decision Date | 14 October 2016 |
| Docket Number | Civil Action No.: 15-1823 (RC) |
| Parties | BEACH TV PROPERTIES, INC., et al., Plaintiffs, v. HENRY A. SOLOMON, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Re Document Nos.: 24, 25, 27, 28
Two days before the world bid farewell to the twentieth century, attorney Henry Solomon filed seemingly-routine paperwork with the Federal Communications Commission. Little did he know that omissions on a one-page form would have his client claiming that he lost it hundreds of millions of dollars almost seventeen years later. Plaintiffs allege that Mr. Solomon was negligent both in his filing of the FCC form and in how he handled the administrative appeals. They also seek to hold his employers—Haley Bader & Potts at the time he filed the form and Garvey, Schubert & Barer when he appealed—liable for his malpractice.
Defendants' motions to dismiss present several disparate issues ranging from the purely procedural to the purely substantive. The now-defunct Haley Bader & Potts asks the Court to identify to what extent it is possible for an attorney to practice before a federal agency, yet remain beyond the reach of District of Columbia courts. Garvey, Schubert & Barer asks the Court to resist widening the scope of successor liability vis a vis legal malpractice claims. The same defendant also asks the Court to wade through a web of "what-ifs" hidden in Plaintiffs' theories of causation. Piggy-backing off of his co-defendants' motions, Henry Solomon asks the Court to determine which plaintiff may maintain this action, in light of one plaintiff's attempted assignment of these claims to the other plaintiff. Although these are only four of the many issues that Defendants ask the Court to address, they are sufficient for the Court to resolve the motions before it. The Court will dismiss Plaintiffs' claims against Haley Bader & Potts, P.L.C. for lack of personal jurisdiction, and against Garvey, Schubert & Barer for failure to state cognizable claims. The court will dismiss Plaintiffs' claims pertaining to negligent appeals in Count Two against Henry A. Solomon, and further dismiss all claims made by Beach TV Properties for lack of standing. The sole remaining plaintiff following this order is The Atlanta Channel, and its sole remaining claim is in Count One against Henry Solomon, for filing a defective Statement of Eligibility.
Plaintiffs in this case, Beach TV Properties, Inc. ("Beach TV"), and The Atlanta Channel, Inc. (ACI), allege that defendant Henry Solomon and his former law firms, defendants Haley Bader & Potts, P.L.C. ("Haley Bader") and Garvey, Schubert & Barer ("Garvey"), committed legal malpractice in connection with Plaintiffs' application for an FCC Low-Power Television ("LPTV")1 class A license. See Am. Compl. ¶¶ 122-137, ECF No. 21. Specifically, Plaintiffs allege that, in 1999, Mr. Solomon failed to adequately complete the required Statement ofEligibility, which would have entitled ACI to a class A license. Id. ¶¶ 24-27. They also allege that Mr. Solomon committed malpractice throughout the administrative appeal process for failing to raise procedural errors committed by the FCC. Id. ¶ 125. Plaintiffs seek to hold Haley Bader and Garvey jointly and severally liable for the allegedly deficient application and appeals through theories of respondeat superior, and, in the case of Garvey, successor liability. See id. ¶¶ 126-137.
In 1999, Congress enacted the Community Broadcasters Protection Act ("CBPA"), codified at 47 U.S.C. § 336(f), to preserve LPTV community broadcasting. The CBPA required the FCC to promulgate regulations to establish a class A license for LPTV qualifying stations. See 47 U.S.C. § 336(f)(1)(A). It also required the FCC to, "[w]ithin 30 days after November 29, 1999 . . . send a notice to the licensees of all [LPTV] licenses that describes the requirements for class A designation." See 47 U.S.C. § 336(f)(1)(B). Then, "[w]ithin 60 days after November 29, 1999,2 licensees intending to seek class A designation shall submit to the Commission a certification of eligibility based on the qualification requirements," and, "[a]bsent a material deficiency, the Commission shall grant certification of eligibility to apply for class A status." Id.
On December 27, 1999, Beach TV signed six Statements of Eligibility and sent them to Mr. Solomon for review and filing with the FCC. Am. Compl. ¶ 22. That same day, ACI also sent a Statement of Eligibility for its WTHC-LD license to Mr. Solomon for review and filing. Id. ¶ 23. Two days later, Mr. Solomon, employed by Haley Bader, filed the Statements of Eligibility with the FCC, but failed to complete Parts 3 or 4—the only portions pertaining to theapplicant's substantive eligibility—of the five-part, one-page form3 for ACI's WTHC-LD license. See id. ¶ 24-25; Pls.' Am. Compl. Ex. A, ECF No. 21-1. In early June, 2000, the Mass Media Bureau of the FCC issued class A licenses to Beach TV's six LPTV stations. Am. Compl. ¶ 29. A week later on June 9, despite ACI meeting all eligibility requirements, the Mass Media Bureau dismissed ACI's Statement of Eligibility for WTHC-LD on the grounds that it contained a "material deficiency" because Part 3 of the form was not filled out. Id. ¶¶ 30-32.
Shortly after the dismissal, Mr. Solomon filed a petition for reconsideration with the Mass Media Bureau, submitting an "amended" ACI statement with all parts complete. Id. ¶ 50. In November, 2000, the Bureau denied ACI's petition because the original Statement of Eligibility was "patently defective." Id. ¶ 52. The Bureau reasoned that "the January 28th[, 2000] certification deadline was statutory [so] the Commission [did] not have general authority to waive or extend the deadline, absent extraordinary circumstances." Id. ¶ 53. Mr. Solomon applied for review by the full FCC. Id. ¶ 65. Nearly ten years later in November, 2012, finding that the Mass Media Bureau was reasonable in interpreting "material deficiency" to include "the complete omission of the required certifications, regardless of whether the licensee actually met the statutory qualifications at the time of filing," the FCC rejected ACI's application for review. Id. ¶ 67. Garvey then unsuccessfully petitioned for reconsideration, which the FCC denied on October 7, 2014. Id. ¶¶ 70-72.
Later that year, Beach TV, represented by new counsel, appealed to the United States Court of Appeals for the District of Columbia Circuit. See id. ¶ 73; Mot. of Def. GarveySchubert Barer to Dismiss Am. Compl. Under Rule 12(b)(6) ("Garvey Mot. to Dismiss") Ex. 13, ECF No. 24-14. Beach TV argued that the FCC's interpretation of "material deficiency" and assertion that it could not extend the deadline absent "extraordinary circumstances" constituted legislative rulemaking under the Administrative Procedure Act ("APA"), and that the FCC had not followed APA requirements. See Garvey Mot. to Dismiss Ex. 12, ECF No. 24-13; Am. Compl. ¶¶ 53-55. The D.C. Circuit, per curiam, ruled that it did not have jurisdiction to address Beach TV's new legislative-rulemaking claims. See Garvey Mot. to Dismiss Ex. 13., at 3; Beach TV Properties, Inc. v. FCC, 617 F. App'x 10, 11 (D.C. Cir. 2015). The court further held that the FCC was not arbitrary or capricious in concluding that ACI's failure to complete Parts 3 and 4 of the Statement of Eligibility constituted a material deficiency, and that the statutory deadline of 60 days "is unequivocal." See Beach TV Properties, Inc., 617 F. App'x at 11.
Plaintiffs allege that they would have received a class A license had Defendants made any of the following four arguments during the WTHC-LD administrative appeals, see Am. Compl. ¶¶ 68, 76: first, that Plaintiffs were entitled to formal adjudication under the APA, 5 U.S.C. § 558(c), because they were applying for a license, see id. ¶¶ 36-37; second, that the FCC's interpretations of "material deficiency" and statutory deadline constituted rulemaking under the APA, id. ¶ 51; third, assuming that such interpretations constituted rules, that they must have first been published prior to taking effect, id. ¶ 64; fourth, that the "rules" were unlawfully retroactively applied, id.
In March, 2000, before filing ACI's first petition for reconsideration, Mr. Solomon moved from Haley Bader to Garvey. Am. Compl. ¶ 83-89. He did so along with "all of the attorneys and support staff of the Haley firm," and continued providing legal advice to Plaintiffsthroughout his transition. Id. ¶ 88(c). Shortly thereafter, Haley Bader stopped functioning as a law firm and continued solely to wind up its affairs. See id. ¶ 89; Am. Compl. Ex. B, ECF No. 21-2. Garvey expressly disclaimed responsibility for Haley Bader's accounts receivable, accounts payable, and all liabilities other than certain library subscriptions. Am. Compl. Ex. B, at ¶¶ 6-8. Although Haley Bader received no consideration for its dissolution, Am. Compl. ¶ 87, Garvey did hire all seven of Haley Bader's members as "of counsel." Am. Compl. Ex. B, ¶ 2. These seven members would each become eligible for an ownership interest in the firm "at a future date that is not less than two years" after being employed at Garvey. Id. ¶ 4. Until that time, they would not be entitled to a vote in Garvey management or attend firm-wide ownership meetings. See id.; Am. Compl. Ex. C, at ¶ 1. Garvey conditioned the offers of employment on Haley Bader showing evidence of tail insurance, id. ¶ 7, and all seven members of Haley Bader accepting, id. ¶ 12. At the end of 2005, Haley Bader was cancelled by operation of law due to failure to pay its annual registration fee. See Def. Haley Bader & Potts P.L.C.'s Br....
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