Hall v. Sullivan

• Decision Date: 07 December 2006
• Docket Number: Civil No. WDQ-04-2846.
• Citation: 465 F.Supp.2d 475
• Parties: Christopher U. HALL, Plaintiff, v. Roger J. SULLIVAN, et al., Defendants.
• Court: U.S. District Court — District of Maryland

Page 475

465 F.Supp.2d 475

Christopher U. HALL, Plaintiff, v. Roger J. SULLIVAN, et al., Defendants.

Civil No. WDQ-04-2846.

United States District Court, D. Maryland, Northern Division.

December 7, 2006.

Michael Patrick Coyle, Law Offices of Michael P. Coyle, Richard I. Chaifetz, Law Office of Richard Chaifetz, Columbia, MD, for Plaintiff.

Kathleen Howard Meredith, Stephan Y. Brennan, Iliff and Meredith PC, Patriots PLZ, Pasadena, MD, Richard A. Simpson, Ross Dixon and Bell LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

QUARLES, District Judge.

Christopher U. Hall has sued Roger J. Sullivan, Esq., Mark Devan, Esq., DiPaula & Sullivan, LLC, and Covahey, Boozer, Devan & Doore, LLC ("CBDD"), for legal malpractice. Pending are the parties' cross-motions for summary judgment. For the following reasons, the Defendant motion will be granted, and Hall's motion will be denied.

I. Background

In 1998, Hall retained Sullivan at CBDD ¹ to represent him in the purchase and financing of Smoothie King franchises in Boston, Massachusetts, Greensboro and Wilmington, North Carolina, and Columbia, South Carolina. Compl. ¶ 9. For tax and liability purposes, Sullivan recommended that Hall form a corporation to serve as the Columbia Smoothie King franchise (the "Columbia SK") franchisee, and promised that the initial franchise-related documents would be structured to preserve Hall's interests by allowing him to become the owner of the franchise if necessary. Id. ¶¶ 9-14.

Hall appointed his associate, Ryan Beck, to operate the Columbia SK on his behalf, and with Beck formed Rybek, Inc. ("Rybek"), to purchase the franchise. Id. Hall contends that Sullivan and Devan, a colleague at CBDD, prepared and reviewed the franchise agreement documents, but erroneously directed Smoothie King Franchises, Inc. ("SKFI"), to award the Columbia SK to Beck, not Rybek, by designating Beck as the franchisee in the Columbia SK Franchise Agreement, as well as in the valuable Area Development Agreement, which provided exclusive development options in the Columbia area. Id. ¶¶ 13-16; Defs.' Mem. in Supp. of Defs.' Mot. to Dismiss ("Defs.' Mem.") Ex. 22 (the "Franchise Agreement"); Defs.' Mem. Ex. 24 (the "Area Development Agreement").

As part of the initial transaction, Hall also executed the Guaranty Agreement with SKFI, by which he guaranteed the obligations of the Columbia SK franchisee under the Franchise and Area Developed Agreements, and became bound to the non-compete and confidentiality provisions of those agreements. Defs.' Mem. Ex. 23 (the "Guaranty Agreement").² The Columbia SK opened for business in February 1999. Compl. ¶ 18.

In 2001, Sullivan negotiated a termination of Hall's agreements with SKFI for the undeveloped Massachusetts and North Carolina franchises. Id. ¶ 20. The June 15, 2001 Mutual Termination Agreement, prepared by Sullivan, terminated the agreements and released the parties from claims and obligations related to the Boston and Wilmington franchises. Defs.' Resp. to PL.'s Cross Mot. for Summ. J. ("Defs.' Resp.") Ex. 11 (the "Termination Agreement"). Hall alleges that, by executing the Termination Agreement under Sullivan's advice, he unknowingly surrendered his right to become the Columbia SK franchisee and sue for any disputes relating to that franchise. Compl. ¶20.

Hall alleges that in 1999, Sodexho USA ("Sodexho"), the University of South Carolina's ("USC") food service provider, contracted Rybek to open two Smoothie King franchises on the USC campus in Columbia. Id. ¶ 19. But Hall avers that, in 2001, Sodexho entered into a conflicting agreement with SKFI by which Sodexho, not Rybek, would open the on-campus franchises. Id. ¶ 21. Believing that the SKFI-Sodexho agreement violated his contract with Sodexho and the exclusive development rights of his franchise, Hall sought to block the agreement. Id. ¶ 25. On Hall's behalf, Sullivan sent Sodexho and SKFI a series of "cease and desist" letters threatening legal action and seeking to negotiate a settlement. Id. Hall claims that these letters, sent despite Sullivan's alleged knowledge that Hall could not gain standing as the Columbia SK franchisee, foreclosed a settlement that would have yielded Hall sizable royalties. Id. ¶¶ 30-32.

Hall alleges that, in 2003, he finally learned that he could not obtain control of the Columbia SK without SKFI's consent, which was not forthcoming, and thus he lacked standing to pursue various causes of action against SKFI and Sodexho. PL.'s Resp. in Opp'n to Defs.' Mot. for Summ. J. 14, 22 ("Pl.'s Resp.") Ex. B ¶ 15 (Hall Decl.). Unable to bring suit against SKFI or Sodexho, Hall sued the Defendants for legal malpractice.

II. Discussion

A. Standards of Review

1. Summary Judgment

Under Rule 56(c), summary judgment is appropriate when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Only "facts that might affect the outcome of the suit under the governing law" are material. Anderson v. Liberty Lobby, Inc., All U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

In considering a motion for summary judgment, "the judge's function is not ... to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249, 106 S.Ct. 2505. Thus, "the judge must ask ... whether a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Id. at 252, 106 S.Ct. 2505. The court must also view any inferences drawn from the underlying facts "in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

A plaintiff must present affirmative evidence of a genuine issue that requires trial. Anderson, 477 U.S. at 257, 106 S.Ct. 2505. The mere existence of a "scintilla" of evidence is insufficient to preclude summary judgment. Id. at 252, 106 S.Ct, 2505.

2. Legal Malpractice

Hall demands relief for legal malpractice under two counts, one in tort (Count 1) and the other in contract (Count 2). In Maryland, "a legal malpractice claim is always at once both contract and tort." Montgomery County, Md. v. Jaffe, Raitt, Heuer & Weiss, P.C., 897 F.Supp. 233, 237 (D.Md.1995) citing Baker, Watts & Co. v. Miles & Stockbridge, 95 Md.App. 145, 189 n. 11, 620 A.2d 356 (1993). Whether an action for professional malpractice is brought in tort or in contract, the plaintiff must prove a negligent breach of duty to establish liability. Mumford v. Staton, Whaley and Price, 254 Md. 697, 708, 255 A.2d 359 (1969), see also Flaherty v. Weinberg, 303 Md. 116, 134, 492 A.2d 618 (1985). The Court thus evaluates Hall's two counts under the same legal standard for attorney negligence.

In Maryland, "a plaintiff must prove the following elements to recover against an attorney in negligence: (1) the attorney's employment;³ (2) his neglect of a reasonable duty; and (3) loss to the client proximately caused by that neglect of duty." Flaherty v. Weinberg 303 Md. 116, 128, 492 A.2d 618 (1985) citing Kendall v. Rogers, 181 Md. 606, 611-12, 31 A.2d 312 (1943). "In order to be a proximate cause, the negligence must be 1) a cause in fact, and 2) a legally cognizable cause." Atlantic Mut. Ins. Co. v. Kenney, 323 Md. 116, 127-28, 591 A.2d 507 (1991).

"Expert testimony as to the relevant standard of care is necessary in an attorney malpractice case, except in those cases where the common knowledge or experience of laymen is sufficient to allow the fact finder to infer negligence from the facts." Franch v. Ankney, 341 Md. 350, 357 n. 4, 670 A.2d 951 (1996) (citing Hooper v. Gill, 79 Md.App. 437, 441, 557 A.2d 1349, cert. denied, 317 Md. 510, 564 A.2d 1182 (1989), and cert. denied, 496 U.S. 906, 110 S.Ct. 2588, 110 L.Ed.2d 269 (1990)). "In malpractice cases where expert testimony is required, such as this case, summary judgment is proper when a plaintiffs expert testifies at deposition that a defendant's conduct was not a breach of the standard of care, regardless of the expert's initial conclusions concerning certain conduct." Royal Ins. Co. of Am. v. Miles & Stockbridge, P.C., 138 F.Supp.2d 695, 701 (D.Md.2001) (citing McCoy v. Hatmaker, 135 Md.App. 693, 714-15, 763 A.2d 1233 (2000); Tatum v. Gigliotti, 80 Md.App. 559, 569, 565 A.2d 354 (1989), aff'd, 321 Md. 623, 583 A.2d 1062 (1991); Mastalski v. Int'l Bus. Machines Corp., 974 F.2d 1331, 1992 WL 207789, at *5 (4th Cir. 1992)).

B. Analysis

Hall demands $17 million in damages for the Defendants' legal malpractice. Compl. ¶¶ 33, 38, 42. He alleges that the Defendants are liable for:

(1) preparing and advising Hall to execute the initial Columbia SK franchise documents that failed to preserve his rights to: (a) become the Columbia SK franchisee; and thus (b) have standing to sue SKFI and Sodexho for Columbia-SK-related claims;

(2) preparing and advising Hall to execute the Termination Agreement that released SKFI from: (a) its obligation to allow Hall to become the Columbia SK franchisee; and (b) liability for any of Hall's past or future Columbia-SK-related claims;

(3) charging Hall unnecessary attorney's fees to pursue meritless claims against SKFI and Sodexho; and

(4) destroying Hall's opportunity to settle his claims against SKFI and Sodexho by making meritless settlement demands to them in a series of threatening letters.

1. The Initial Columbia Franchise Documents

Hall alleges that the Defendants breached the applicable standard of care by "negligently failing to investigate the relevant facts, and by failing to review and prepare documents which preserved Hall's rights to ownership of the [Columbia SK] and...