Naegele v. Albers, Civil Action No. 03-2507 (RMU).

Citation355 F.Supp.2d 129
Decision Date03 January 2005
Docket NumberCivil Action No. 03-2507 (RMU).
PartiesTimothy D. NAEGELE, Plaintiff, v. Deanna J. ALBERS, Raymond H. Albers II, Lloyd J. Michaelson, and Does 1-10, Defendants.
CourtUnited States District Courts. United States District Court (Columbia)

Jeffrey Sherman, O'Rourke & Cundra, Washington, DC, for Plaintiff.

MEMORANDUM OPINION

URBINA, District Judge.

GRANTING IN PART AND DENYING IN PART DEFENDANT MICHAELSON'S MOTION TO DISMISS; DENYING THE PLAINTIFF'S MOTIONS FOR SANCTIONS; DENYING THE PLAINTIFF'S MOTION TO STRIKE DEFENDANT MICHAELSON'S RESPONSE DOCUMENT; DENYING THE PLAINTIFF'S MOTION TO STRIKE THE NOTICE OF AUTOMATIC STAY; GRANTING THE DEFENDANTS' MOTION TO STAY; AND DENYING ALL REMAINING MOTIONS AS MOOT
I. INTRODUCTION

The plaintiff brings this eight count complaint against Deanna Albers, Raymond Albers, II, Lloyd Michaelson, and Does 1 through 10 (collectively, "the defendants") alleging, inter alia, breach of contract, anticipatory breach of contract, fraud and deceit, common law conspiracy to commit fraud and deceit, negligent misrepresentation, tortious interference with contract, and conspiracy to commit tortious interference with contract. The parties bombarded the court with a multitude of motions before even sufficiently addressing the subject-matter jurisdiction of this court to hear any of their sundry claims. Currently pending before the court are the defendants' notices of automatic stay, which the court treats as a collective motion for stay; the plaintiff's motion to strike the defendants notices of automatic stay ("plaintiff's motion to strike stay"); defendant Michaelson's motion to dismiss; the plaintiff's motion for sanctions; defendant Michaelson's motion to continue the summary judgment hearing ("defendant Michaelson's motion to continue"); the plaintiff's motion to quash notice of deposition by defendant Michaelson ("plaintiff's motion to quash"); the plaintiff's second motion for sanctions; and the plaintiff's motion to strike the defendant's response to the court's June 18, 2004 order ("plaintiff's motion to strike"). Before ruling on the pending motions, the court takes a moment to review the somewhat tangled procedural posture of this case.

The court faces a contractual dispute between two parties, each tugging for jurisdiction — either in California or in the District of Columbia. With a suit filed in this court and arbitration proceedings commencing in California, the parties have refused to play in the same judicial ballpark. Instead, they have engaged in Rambo-style litigation tactics, each arguing for proceedings to commence in his respective venue, and bombarded the court with a series of motions, including oppositions to motions that do not exist and multiple oppositions to a single motion. The court has ruled only on a motion to seal documents and a motion for extension of time. After wading through the flood of submissions offered by the parties, the court denies defendant Michaelson's motion to dismiss for lack of subject matter jurisdiction, but grants his motion for lack of personal jurisdiction; denies both of the plaintiff's motions for sanctions; denies the plaintiff's motion to strike the defendants' notices of automatic stay; denies the plaintiff's motion to strike defendant Michaelson's response document; grants the defendants Albers' motion to stay; and denies all remaining motions as moot. Moreover, the court dismisses defendant Michaelson from this action and stays all proceedings pending arbitration in California.

By providing the parties with a single forum for debate, that is, arbitration in California, the court hopes that the parties will resolve at least some of their issues before returning to this jurisdiction. The parties are required to jointly notify the court of the results of the arbitration in California. Furthermore, should the parties return to this court, the parties are on notice that the first matters of inquiry will again be the subject matter jurisdiction of this court and the real parties in interest. The court now addresses the convoluted background of this case.

II. Background

Timothy D. Naegele brings this action against Deanna J. Albers ("D.Albers"), Raymond H. Albers II ("R.Albers"), Lloyd J. Michaelson, and John Does # 1-10 to recover fees and damages for legal services he claims his firm rendered to the Albers. Pl.'s Am. Compl. ¶¶ 4-6. All of the defendants are citizens of California, see id., and the plaintiff is an attorney licensed to practice law in California and the District of Columbia. Pl.'s Opp'n to Mot. to Dismiss ("Pl.'s Opp'n to MTD") at ¶ 2. In December 1998, the Albers asked the plaintiff to represent them in a separate legal dispute ("the Suit"). Pl.'s Am. Compl. ¶ 7. They signed a contract ("the Fee Agreement") on December 18, 1998, with three subsequent addenda detailing costs. Id. ¶ 8. These addenda included a forum-selection clause that states that "a court of the District of Columbia and/or ... the United States District Court for the District of Columbia" shall be the forum for the resolution of any dispute or litigation arising from the attorney-client agreement. Pl.'s Resp. to MTD, Ex. A (Fee Agreement) at 3.

The plaintiff claims that in December 2002, attorney Lloyd J. Michaelson and other agents and/or lawyers (Does # 1-10)1 advised the Albers to take certain actions or engage in inaction which resulted in injuries to the plaintiff. Pl.'s Am. Compl. ¶ 10. But the Albers signed the third and final addendum in January 2003 with one extra stipulation: an $82,000 retainer that required them to sign a note placing a lien on their home. Pl.'s Resp. to MTD, Attach. A (Third Addendum). In August 2003, Michaelson notified the plaintiff that he was now representing the Albers in the Suit. Pl.'s Resp. to MTD at ¶ 8(D)(6). The plaintiff responded by suing the defendants for breach of contract, conspiracy, and tortious interference with the contract. Pl.'s Am. Compl. ¶¶ 11-48.

Back in their home state, California, the defendants filed a notice of automatic stay under the California Business and Professions Code ("Cal. Prof. & Bus.Code"), § 6201(c), to halt the current suit and allow the parties to arbitrate this fee dispute in Los Angeles. Yet, the plaintiff is denying the terms of the California stay and attempting to proceed with this suit. He first filed a motion to strike the notice of automatic stay, setting off an avalanche of successive motions that now inundate this court. The defendants, all filing pro se, continue to insist the stay freezes any further court action. Reply to Opp'n to Pl.'s Mot. to Strike Not. of Automatic Stay at 4.

In May 2004, pro se defendant Michaelson filed a motion to dismiss for lack of subject matter and personal jurisdiction. Def. Michaelson's Mot. to Dismiss ("Def. Michaelson's MTD"). On June 18, 2004, this court directed the plaintiff to show cause that the court has subject matter jurisdiction over the present suit. Order dated June 18, 2004. In the plaintiff's declaration and in his supplemental memorandum, he claims that diversity jurisdiction exists and requests the dismissal of Michaelson's motion with prejudice. The parties continued to fire motions directed at one another, and currently have six motions pending before the court. The court faces a tangle of issues all blinking for attention, and the court now addresses each motion in turn.

III. ANALYSIS
A. The Court Grants in Part and Denies in Part the Defendant Michaelson's Motion to Dismiss
1. Legal Standard for Diversity Jurisdiction

A federal district court has subject-matter jurisdiction over a suit when the amount in controversy exceeds $75,000 and the parties are diverse in citizenship. 28 U.S.C. § 1332(a); DeBerry v. First Gov't Mortgage & Investors Corp., 170 F.3d 1105, 1106 n. 1 (D.C.Cir.1999); see also Stevenson v. Severs, 158 F.3d 1332, 1334 (D.C.Cir.1998) (per curiam) (identifying the $75,000 amount-in-controversy requirement for federal diversity jurisdiction under 28 U.S.C. § 1332(a)). The amount in controversy is established at the commencement of the action. 28 U.S.C. § 1335(a). Subsequent events reducing the amount in controversy will not divest the court of its jurisdiction. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289-90, 58 S.Ct. 586, 82 L.Ed. 845 (1938). If it becomes apparent during the course of litigation that from the outset the maximum conceivable amount in controversy was less than the jurisdictional minimum, the court must dismiss the case for lack of subject matter jurisdiction. Watson v. Blankinship, 20 F.3d 383, 387-88 (10th Cir.1994); Jones v. Knox Exploration Corp., 2 F.3d 181, 182-83 (6th Cir.1993). Where the plaintiff has alleged a sum certain that exceeds the requisite amount in controversy, that amount controls if made in good faith. St. Paul, 303 U.S. at 289-90, 58 S.Ct. 586. Additionally, to justify dismissal, it must appear to a legal certainty that the claim is for less than the jurisdictional amount. Id. at 288-89, 58 S.Ct. 586; Hartigh v. Latin, 485 F.2d 1068, 1071 (D.C.Cir.1973) (citing Gomez v. Wilson, 477 F.2d 411 (D.C.Cir.1973)).

Punitive damages are properly considered as part of the amount in controversy. Hartigh, 485 F.2d at 1072 (citing Bell v. Preferred Life Assurance Soc'y, 320 U.S. 238, 240, 64 S.Ct. 5, 88 L.Ed. 15, (1943)). In considering punitive damages to satisfy the jurisdictional minimum in a diversity case, the court must conduct a two-part inquiry. Bell, 320 U.S. at 240, 64 S.Ct. 5; Cadek v. Great Lakes Dragaway, Inc., 58 F.3d 1209 (7th Cir.1995). First, the court must determine whether the plaintiff can recover punitive damages as a matter of governing substantive law. Bell, 320 U.S. at 240, 64 S.Ct. 5. If so, the court has subject-matter jurisdiction unless it is clear beyond a legal certainty that the plaintiff would under no circumstances be entitled to recover the jurisdictional amount. Ca...

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