Keyes Law Firm, LLC v. Napoli Bern Ripka Shkolnik, LLP
Decision Date | 14 September 2020 |
Docket Number | Civil Action No. RDB-17-2972 |
Parties | KEYES LAW FIRM, LLC, Plaintiff, v. NAPOLI BERN RIPKA SHKOLNIK, LLP, et al., Defendants. |
Court | U.S. District Court — District of Maryland |
Currently pending before this Court is Defendants Paul J. Napoli, Napoli Shkolnik, PLLC, Napoli Shkolnik & Associates, PLLC, Paul Napoli Law, PLLC, Napoli Law, PLLC, Napoli Bern Ripka Shkolnik, LLP, Napoli Bern, LLP, Napoli Bern & Associates, LLP, Napoli Bern Ripka, LLP, Napoli Bern Ripka Shkolnik & Associates, LLP, Law Offices of Napoli Bern, LLP, Law Offices of Napoli Bern Ripka & Associates, LLP, Law Offices of Napoli Bern Ripka Shkolnik LLP, and Law Offices of Napoli Bern Ripka Shkolnik & Associates LLP's (collectively, "Defendants") Motion for Judgment as a Matter of Law on Count VI - Constructive Trust (ECF No. 550).1 The parties' submissions have been reviewed, and nohearing is necessary. See Local Rule 105.6 (D. Md. 2018). For the reasons set forth below, Defendants' Motion for Judgment as a Matter of Law on Count VI - Constructive Trust (ECF No. 550) is GRANTED. Judgment will be entered in favor of Defendants on Count VI - Constructive Trust, and against Plaintiff Keyes Law Firm.
This case arises out of 2,174 "association agreements" between Plaintiff Keyes Law Firm ("Keyes"), Paul Napoli, Marc Bern, and multiple law firm Defendants (collectively, "Defendants"). Pursuant to these agreements, Plaintiff Keyes and an associated Bankruptcy Firm, formerly known as the David Law Firm and now known as The Cooper Hart Firm ("the Bankruptcy Firm")2, referred thousands of asbestos-related claims to Defendant Napoli Bern Ripka Shkolnik ("NBRS"). In the event that the clients prevailed, Keyes, the Bankruptcy Firm, and NBRS were to divide any contingency fees earned in most cases as follows: NBRS was to receive 24% of the fees, the Bankruptcy Firm was to receive 10% of the fees, and Keyes was to receive 6% of the fees.3 (Joint Trial Exhibit 2, Association Agreements.) Under the association agreements, NBRS was to send Keyes a single check representing both Keyes' share and the Bankruptcy Firm's share and Keyes was to then forward the Bankruptcy Firm its 10% share. (See July 18, 2013 Association Agreement, ECF No. 552-1 () .)
(12/8/2019 Bankruptcy Firm Letter, ECF No. 407-2.)
In light of this last-minute development, the parties and the Court agreed that the issue of the Bankruptcy Firm's share would be addressed as a post-trial matter within the context of relief sought under the constructive trust count (Count VI). The record reflects that counsel for the Plaintiff and Defendants agreed that the issue of any constructive trust and distribution of the Bankruptcy Firm's share would be addressed in that fashion. The jury rendered a verdict against the Napoli Defendants and the majority of the Legacy Defendants, determining that the total settlement recovery for the 2,174 subject clients is $45,300,000, resulting in a verdict in favor of Keyes in the amount of $1,502,882.00. (Jury Verdict, ECF No. 445.) On September 4, 2020, this Court ordered that the total settlement recovery amount should be amended to $31,700,000. (ECF No. 562.) Accordingly, ten percent of that amount representing the potential Bankruptcy Firm's share would be $3,170,000.
The parties agree that the amount previously remitted to the Bankruptcy Firm pursuant to the fee-sharing agreement among the parties and Subject Clients is $1,072,422.76. Thus, the Bankruptcy Firm's 10% share would have been $3,170,000 (i.e. 10% of the total recoveries) minus $1,072,422.76 (i.e. the amount remitted to the Bankruptcy Firm). Accordingly, there is no dispute that the net Bankruptcy Firm share would have been $2,097,577.24. The parties disagree about whether and how this amount should be disbursed. On July 15, 2020, this Court held a telephonic conference to address the constructive trust count, and ordered that the parties submit additional briefing on the issue. (ECF Nos. 545, 547.) The issue has now been fully briefed.
The Defendants contend that Keyes lacks standing to pursue any claim as to the 10% share to which the Bankruptcy Firm would have been entitled. Accordingly, the Defendants contend that this Court lacks subject matter jurisdiction on the constructive trust claim, initially set forth in Count VI of the Second Amended Complaint.
A party may challenge the subject matter jurisdiction of a federal court "at any time, including on direct appeal." In re Bulldog Trucking, Inc., 147 F.3d 347, 352 (4th Cir. 1998); see also Wright & Miller, Civ. Prac. & Proc. § 1350 (3d ed. 2020). After judgment has been entered, a party may do so by motion for relief from judgment under Rule 60(b)(4) of the Federal Rules of Civil Procedure. See Wright & Miller, § 1350. An assertion of lack of subject matter jurisdiction challenges a court's authority to hear the matter brought by a complaint. See Davis v. Thompson, 367 F.Supp.2d 792, 799 (D. Md. 2005).
Under Article III of the United States Constitution, the judicial power of the UnitedStates extends only to "cases" and "controversies." Already, LLC v. Nike, Inc., 568 U.S. 85, 90, 133 S.Ct. 721, 184 L.Ed.2d 553 (2013). "A case becomes moot—and therefore no longer a 'Case' or 'Controversy' for purposes of Article III—'when the issues presented are no longer "live" or the parties lack a legally cognizable interest in the outcome.' " Id. at 91, 133 S.Ct. 721 (quoting Murphy v. Hunt, 455 U.S. 478, 481, 102 S.Ct. 1181, 71 L.Ed.2d 353 (1982)). "No matter how vehemently the parties continue to dispute the lawfulness of the conduct that precipitated the lawsuit, the case is moot if the dispute 'is no longer embedded in any actual controversy about the plaintiff's particular legal rights.'" Id. (quoting Alvarez v. Smith, 558 U.S. 87, 92, 130 S.Ct. 576, 175 L.Ed.2d 447 (2009)). Accordingly, a court's subject matter jurisdiction depends on the existence of an actual case or controversy. S.C. Coast. Conservation League v. U.S. Army Corps. of Eng'rs, 789 F.3d 475, 482 (4th Cir. 2015). "[T]he absence of jurisdiction may be raised at any time during the case, and may be based on the court's review of the evidence." Lovern v. Edwards, 190 F.3d 648, 654 (4th Cir. 1999).
Finally, if a party lacks standing, the court automatically lacks subject matter jurisdiction. See Pitt County v. Hotels.com, L.P., 553 F.3d 308, 312 (4th Cir. 2009). To meet the standing requirement, a plaintiff must show "injury in fact," which is an "invasion of a legally protected interest which is (a) concrete and particularized, ... and (b) actual or imminent, not conjectural or hypothetical." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 119 L.Ed.2d 351 (1992) (internal citations and quotation marks omitted). Second, the injury must be "fairly traceable to the challenged action of the defendant." Friends for Ferrell Parkway, LLC v. Stasko, 282 F.3d 315, 320 (4th Cir. 2002) (citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81, 120 S. Ct. 693, 145 L.Ed.2d 610 (2000); Lujan, 504U.S. at 560-61, 112 S. Ct. 2130; Allen v. Wright, 468 U.S. 737, 751 (1984)). Third, it must be "likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Id. It is the plaintiff's burden to establish both standing and subject matter jurisdiction. Id.; Lovern, 190 F.3d at 654.
Defendants seek judgment in their favor as a matter of law on Plaintiff's constructive trust claim, asserting that this Court lacks subject matter jurisdiction because Plaintiff lacks standing to pursue the claim. As a preliminary matter, Keyes is incorrect in its assertion that the Court determined at trial that Plaintiff was entitled to a constructive trust. While the Court contemplated ways to address the Bankruptcy Firm's abandoned share, it did not render a final decision and specifically determined that the constructive trust claim would be handled as a post-judgment matter:
(12/16/2019 P.M. Trial Tr. at 126:10-14, ECF No. 522; 12/17/2019 P.M. Trial Tr. at 91:4-92:6, ECF No. 516.) Indeed, the Court's jury instructions provided:
The issue of the ten percent fee is not an issue you need to consider. In calculating damages, you are not to include the ten percent fee as monies owed the Keyes Law Firm. The Court will address the handling of the ten percent fee as a matter of law after the trial through the imposition of a constructive trust.
(12/18/2019 Trial Tr. at 13:9-14, ECF No. 436.)
Consequently, with the benefit of post-trial briefing, the Court finds that judgment must be entered in favor of Defendants on the constructive trust claim (Count VI), becausePlaintiff does not have...
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