Fay v. Perles
| Decision Date | 26 March 2007 |
| Docket Number | Civil Action No. 05-1209 (PLF). |
| Citation | 484 F.Supp.2d 6 |
| Parties | Thomas Fortune FAY, Plaintiff, v. Steven R. PERLES and Greenberg Traurig LLP, Defendants. |
| Court | U.S. District Court — District of Columbia |
John W. Karr, Theodore S. Allison, Karr & Allison, P.C., Washington, DC, for Plaintiff.
Edward Paul Henneberry, Bregman, Berbert, Schwartz & Gilday, LLC, Bethesda, MD, Eric C. Rowe, Geoffrey J. Greeves, Greenberg Traurig, L.L.P., Washington, DC, for Defendants.
This matter is before the Court on defendant Perles' motion for summary judgment or, in the alternative, to dismiss the complaint.1 Plaintiff Thomas Fortune Fay filed suit against defendants Steven R. Perles and Greenberg Traurig LLP on June 20, 2005. The Complaint alleges claims of quasi-contract, unjust enrichment and "money had and received," and asserts that this Court has diversity jurisdiction over this action under 28 U.S.C. § 1332. Perles filed a motion for summary judgment or, in the alternative, to dismiss the complaint on September 7, 2005; Greenberg Traurig subsequently filed a motion for judgment on the pleadings.2 Perles argues that he is entitled to summary judgment because Fay's claims are barred by res judicata and collateral estoppel, that Fay has failed to state a claim on which relief can be granted because he is not the real party in interest in this lawsuit, that this Court lacks subject matter jurisdiction due to the fact that the parties are not diverse because Fay's law practice is the real party in interest in this case, and that plaintiff has failed to plead his claims with sufficient particularity under Rule 9(b). See Perles Mot. at 1-3.3 For the reasons explained below, the Court concludes that it has subject matter jurisdiction and denies Perles' motion.
Plaintiff Thomas Fortune Fay and defendant Steven R. Perles are attorneys who worked together in the representation of clients who had been the victims of terrorist attacks. See Complaint ¶¶ 3-4. Anne Marie Kagy is an attorney who worked with Perles on these terrorism cases. See id. ¶ 5. After Fay and Perles were successful in obtaining payment relating to the terrorism litigation, a dispute arose between Kagy and Perles with respect to payments Kagy alleged were due to her, and Kagy asserted an attorney's lien of $2,000,000 against the terrorism litigation proceeds. See id. ¶¶ 3, 5.4 On January 19, 2001, Perles brought a declaratory judgment action against Kagy in this Court, which was assigned first to Judge Thomas Penfield Jackson and then, by consent of the parties, to Magistrate Judge Alan Kay. Fay was not a party to that lawsuit. See id. ¶ 5. Fay and Perles transferred $2,000,000 from the escrow account related to the terrorism litigation into a client trust account held at the law firm of Perles' lawyer in the Kagy litigation, Steven M. Schneebaum, Esq. See id. ¶ 4-5.5 The content of the agreements and the understandings between Fay and Perles with respect to this money are hotly contested issues of fact in the instant lawsuit.
Judge Kay entered judgment for Kagy and against Perles on April 20, 2005. See Complaint ¶ 6. Shortly thereafter, Fay and Perles began to communicate (and disagree) about the $2,000,000 and its permissible uses. See id. ¶¶ 8-13. Fay alleges that he forbade the use of the funds as security for the judgment entered against Perles, or as an appeal bond. See id. ¶¶ 9-10. Perles and Kagy cross-appealed from Judge Kay's decision during May 2005. See Docket, Perles v. Kagy, Civil Action No. 01-0105. Fay moved to intervene before Judge Kay on June 20, 2005 to oppose the proposed use of the trust funds as an appeal bond. See id. Fay filed the instant lawsuit against Perles and Greenberg Traurig on the same day, alleging unjust enrichment, conversion, and "money had and received." See generally Complaint. Judge Kay denied Fay's motion to intervene in Perles v. Kagy on August 29, 2005. See Perles v. Kagy August 29, 2005 Memorandum Opinion at 9-11. Fay filed a motion for reconsideration, which Judge Kay denied. Fay then appealed from that decision.
This Court issued an Order on March 8, 2006 because Greenberg Traurig's Answer and Perles' motion for summary judgment or to dismiss each raised questions regarding this Court's subject matter jurisdiction. Federal courts have a special obligation to determine whether they have subject matter jurisdiction, even when the parties have not raised any jurisdictional questions themselves. See FW/ PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990); Cross-Sound Ferry Servs., Inc. v. ICC, 934 F.2d 327, 339 (D.C.Cir.1991). For jurisdiction to exist under 28 U.S.C. § 1332, there must be complete diversity between the parties, which is to say that the plaintiff may not be a citizen of the same state as any defendant. See Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 373-74, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978).
There are two potential issues with respect to diversity jurisdiction in this case. First — the subject matter of the Court's March 8, 2006 Order — the Court wanted to ensure that Greenberg Traurig was not a citizen of Maryland, because plaintiff is a citizen of Maryland and diversity jurisdiction therefore might not exist. Greenberg Traurig filed a response on March 20, 2006, assuring the Court that its two partners are a New York professional corporation and a Florida professional corporation. See Greenberg Traurig's Submission in Response to the Court's Order Dated March 8, 2006 at 1-2 and attached affidavit of Ronald W. Kleinman ¶ 4. Greenberg Traurig's inclusion as a defendant therefore does not destroy diversity between the parties.
Second, in his motion for summary judgment or, in the alternative, to dismiss the complaint, defendant Perles argues, inter alia, that diversity jurisdiction is lacking because the real party in interest in this case is not plaintiff Thomas Fortune Fay, but Fay's law practice, which Perles claims is a citizen of the District of Columbia. See Perles Mem. at 15-16.6 Greenberg Traurig also discusses this possibility in its response to the Court's March 8, 2006 Order. See Greenberg Traurig's Submission in Response to the Court's Order Dated March 8, 2006 at 2-3. Rule 17(a) of the Federal Rules of Civil Procedure provides that "[e]very action shall be prosecuted in the name of the real party in interest." Fed.R.Civ.P. 17(a); see also Navarro Savings Ass'n v. Lee, 446 U.S. 458, 461, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980) (); see also generally 6A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1556 (2d ed.1990).
The Court cannot conclude that Mr. Fay is not a real party in interest in this lawsuit. The party to the Agreement with Mr. Perles which underlies this case was Thomas Fortune Fay, Esq. — not Thomas Fortune Fay, P.A. or Thomas Fortune Fay, P.C. See Agreement, Exh. B to Perles Mot. The funds at issue in this case were transferred to the client trust account (held first by Patton Boggs LLP and now by Greenberg Traurig LLP) from an account in the name of "Stevn [sic] R. Perles & Thomas Fortune Fay" — again, the individual rather than the professional entity. See Transaction Activity Display, Exh. G to Perles Mot. Because Mr. Fay is a real party in interest and is the plaintiff in this lawsuit, there is diversity between the parties and this Court therefore does not lack subject matter jurisdiction.7
Perles also argues that he is entitled to summary judgment because "Mr. Fay is barred by the doctrines of collateral estoppel and res judicata from relitigating issues and claims in the present suit that were raised and denied in the Kagy litigation or which could have been raised in that prior action." Perles Mot. at 1. In the lawsuit of Perles v. Kagy, Magistrate Judge Kay of this Court issued a Memorandum Opinion and an Order on August 29, 2005 which, inter alia, denied a motion by non-party Thomas Fortune Fay "to intervene to oppose Perles' motion seeking waiver of supersedeas bond." Perles v. Kagy August 29, 2005 Memorandum Opinion at 1-2. Id. at 4. Judge Kay questioned his own jurisdiction over Fay's motion to intervene because Fay filed the motion after judgment had been entered and a notice of appeal filed, but ultimately he concluded that he did have jurisdiction over the motion. See id. at 7-8. Judge Kay determined that Fay's motion to intervene was untimely. See id. Most importantly for the current proceeding, Judge Kay stated that part of the reason that he denied Fay's motion to intervene in Perles v. Kagy was because "Fay has adequate alternative means to protect his interest" — namely, the instant lawsuit, which already had been filed when Judge Kay issued his Memorandum Opinion. Id. at 11.
Under the doctrine of res judicata, or claim preclusion, "a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action." Holland v. Nat'l Mining Ass'n, 309 F.3d 808, 813 (D.C.Cir.2002) (quoting and citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327 n. 5, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979)); See Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) (...
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