Equitas Disability Advocates, LLC v. Daley, Debofsky & Bryant, P.C.
| Decision Date | 29 March 2016 |
| Docket Number | Civil Action No. 15-611 (RDM) |
| Citation | 177 F.Supp.3d 197 |
| Court | U.S. District Court — District of Columbia |
| Parties | Equitas Disability Advocates, LLC, Plaintiff, v. Daley, Debofsky & Bryant, P.C. ; Jonathan Feigenbaum, Defendants. |
Eric C. Rowe, Whiteford Taylor & Preston, Washington, DC, for Plaintiff.
Kenneth Gordon Stallard, Autumn Rose Agans, Randell Hunt Norton, Thompson O'Donnell, LLP, Arlington, VA, for Defendants.
RANDOLPH D. MOSS
Plaintiff Equitas Disability Advocates, LLC was formerly engaged in the practice of law. Dkt. 2-4 at 23 (Abeles Aff. ¶ 2). Its affairs are being wound
up by its only remaining principal, Brian Abeles. Id. Defendant Jonathan M. Feigenbaum is a Boston lawyer, Dkt. 16-2 at 1 (Feigenbaum Aff. ¶ 3), and Defendant Daley, Debofsky & Bryant, P.C. (“DDB”) was an Illinois law firm until it was dissolved by the Illinois Secretary of State in 2013, Dkt. 2 at 4. This case arises out of an arbitration regarding legal fees that Feigenbaum and DDB (“Defendants”) purportedly owed Equitas based on two fee-sharing agreements.
governs such proceedings and, under the FAA, Equitas's motion to vacate is untimely. Dkt. 16-1 at 3–4. Defendants further contend that irrespective of whether the FAA or the DCRAA applies, the arbitrator's denial of a postponement withstands scrutiny and, accordingly, the motion to confirm must be granted. Id. at 5–17.
For the reasons that follow, Equitas's motions to remand the case, Dkt. 14, and to vacate the arbitration award, Dkt. 2-4 at 4, are DENIED , and Defendants' motion to confirm the arbitration award, Dkt. 17, is GRANTED.
Brian Abeles previously worked in the disability-insurance industry as an insurance broker, benefits consultant, and claims consultant, which enabled him to amass over 100,000 pages of industry documents providing insight into theories of recovery for disability-insurance claimants. Dkt. 2-4 at 31–32. Although Abeles is not a lawyer, id. at 23 (Abeles Aff. ¶ 3), he believed that access to these documents, known as “the Archive,” could be useful to disability-insurance lawyers and their clients, id. at 31–32. He thus sought to partner with lawyers who could use the Archive to pursue recoveries for their clients. Id. at 32. Abeles ultimately co-founded the D.C. law firm Fulcrum Law Group, LLC, with attorney Joshua Rose.1 Id. at 31. Fulcrum is the predecessor-in-interest of Plaintiff Equitas. Id. at 34 n.4. Fulcrum entered into two agreements with Defendants Feigenbaum and DDB in May and June of 2008, to which Equitas later became a party. See Dkt. at 9–2 at 25–63. Pursuant to the Strategic Alliance Co-Counsel Agreement (“SACCA”) and the Fulcrum-Alliance Archive Sublicense Agreement (“FAASA”), Defendants obtained access to the Archive and to consultant and/or co-counsel services in exchange for a percentage of the fees recovered in specified cases. See id. ; Dkt. 2-4 at 31, 33. The SACCA included choice-of-law and arbitration clauses:
(g) Governing Law; Dispute Resolution. This Agreement shall be deemed to have been entered into under the laws of the District of Columbia, and the rights and obligations of the parties hereunder shall be governed and determined according to the laws of said state without giving any effect to conflict of laws. All disputes arising under or in connection with this Agreement or involving the interpretation, performance or breach of this Agreement will be finally settled by final and binding arbitration administered by and in accordance with the then existing [Judicial Arbitration, Mediation, and ADR Services (“JAMS”) ] Streamlined Arbitration Rules and Procedures [ ] (the “Rules of Arbitration”) by a single arbitrator appointed in accordance with the Rules of Arbitration. Any such arbitration shall be held in Washington, DC, unless the parties hereto mutually agree in writing upon some other location for arbitration. There shall be no consolidation of this arbitration with any other dispute or proceeding involving third parties. The provisions of this Agreement shall prevail in case of inconsistency between the Rules of Arbitration and this Agreement. Judgment may be entered into in any court of competent jurisdiction to enforce any final decision by the arbitrators.
Dkt. 9-2 at 39. The FAASA included similar provisions, which are, for purposes of this case, materially indistinguishable from the SACCA provisions.2 Id. at 57.
On December 20, 2013, Equitas, represented by the law firm Zuckerman Spaeder, demanded arbitration against Defendants pursuant to the SACCA and FAASA, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and fraud, and seeking return of all Archive documents.3Dkt. 2-4 at 38–39; id. at 24 (Abeles Aff. ¶ 9). Equitas alleged that DDB and Feigenbaum had failed to pay Equitas its share of the fees earned in cases allegedly covered by the SACCA and FAASA. Id. at 33. An arbitrator was assigned on February 6, 2014. Id. at 45.
After a hearing on May 20, 2014, the arbitrator dismissed Equitas's claims for unjust enrichment and fraud for failure to state a claim. Id. at 8; Dkt. 16-3 at 3. Subsequent to briefing on the construction of the parties' agreements, the arbitrator issued a decision on August 6, 2014, concluding that there remained material questions of fact with respect to Equitas's claims for breach of contract and breach of the covenant of good faith and fair dealing. Dkt. 2-4 at 8. The arbitrator explained that Defendants were asserting a unilateral-mistake defense based on the deletion of a key sentence limiting the scope of the cases covered from a prior draft of the SACCA and that the question of who was responsible for the sentence's deletion “cannot be resolved on the papers.” Dkt. 16-3 at 3. He also cautioned that “[t]his matter has already greatly exceeded the reasonable expectations of the parties when they agreed to proceed under the JAMS Streamlined Arbitration Rules” and that “[t]he merits hearing of this case must be scheduled and conducted without further delay.” Id. at 3–4.
On August 15, 2014, by agreement of the parties, a hearing was scheduled for the week of December 8, 2014. Dkt. 2-4 at 46. At the same time, JAMS informed the parties that “[a]ll fees must be paid by 10/9/14 to proceed with the ... hearing;” that “[a]ny cancellation or continuance must be approved by the arbitrator;” and that if the hearing was canceled or continued after October 9, “the party canceling or continuing the hearing is responsible for all fees associated with the reserved time” unless JAMS could otherwise fill it. Id. at 46. On October 9, 2014, JAMS reminded the parties that payment was due and that it was the last day to cancel the hearing without incurring cancelation fees. Id. at 47. Equitas paid its share of the fees that day. Id. at 63. Defendants, however, did not pay their share of the fees at that time. Id. at 62.
According to Abeles, in mid-October 2014, he realized that Equitas's relationship with Zuckerman Spaeder “had to end.” Id. at 25 (Abeles Aff. ¶ 13). The relationship had deteriorated after the lead attorney on the matter left the firm during the preceding summer. Id. Equitas learned in mid-June 2014 that the lead attorney planned to depart, and she left Zuckerman Spaeder on July 1, 2014. Id. at 61. On October 14, 2014, Abeles notified the JAMS case administrator that Zuckerman Spaeder was withdrawing from the case and that he “was certain that Equitas would need a postponement of the hearing.” Id. at 25 (Abeles Aff. ¶ 15). During the last week of October, the case administrator allegedly told Abeles that the arbitration hearing would likely be canceled anyway because Defendants had not paid their share of the fees. Id. at 25–26 (Abeles Aff. ¶ 16); see also id. at 62. Abeles replied that Equitas would not advance Defendants' share of the fees. Id. at 26 (Abeles Aff. ¶ 16). Under the JAMS Streamlined Arbitration Rules, “JAMS may order the suspension or termination of the proceedings” if a party fails to pay and no other party advances the payment owed.4 Equitas did not, however, move for a continuance at that time.
On October 30, 2014, JAMS notified the parties that if payment was not received by November 7, 2014, the hearing would be canceled. Dkt. 2-4 at 48. Defendants then paid their share of the fees on November 7, and JAMS informed Abeles of this “[a] few days later.” Id. at 26 (Abeles Aff. ¶ 19). On November 11, 2014, Abeles told the case administrator that he had not retained new counsel and would need a postponement...
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