Novak v. Lines, CASE NO: 1:11-cv-00468(JMF)

• Decision Date: 14 February 2012
• Docket Number: CASE NO: 1:11-cv-00468(JMF)
• Parties: DOMINIC NOVAK, et al. Plaintiffs v. DOUGLAS A. LINES, P.C., et al. Defendants
• Court: U.S. District Court — District of Columbia

DOMINIC NOVAK, et al. Plaintiffs

v.DOUGLAS A. LINES, P.C., et al. Defendants

CASE NO: 1:11-cv-00468(JMF)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

Dated: February 14, 2012

DEFENDANTS' MOTION TO DISMISS FOR LACK OF SUBJECT MATTER

JURISDICTION, OR, IN THE ALTERNATIVE, TO ABSTAIN

Defendants Douglas A. Lines, P.C. and Douglas A. Lines, Esq., by and through their attorneys, Aaron L. Handleman, Justin M. Flint, Christopher F. Copenhaver, and Eccleston and Wolf, P.C., hereby file their Motion to Dismiss Plaintiffs Dominic Novak (hereinafter "Novak"), Regan Zambri & Long, P.L.L.C. (hereinafter "RZL"), and Patrick M. Regan, Esq.'s (hereinafter "Regan") Complaint for Lack of Subject Matter Jurisdiction, or, in the Alternative, to Abstain, pursuant to Federal Rule of Civil Procedure 12(b)(1) and Local Rule 7, and in support thereof states as follows:

1. Plaintiffs bring claims for Breach of Fiduciary and Ethical Duties (Count I), Breach of Contract (Count II), and Quantum Meruit (Count III).

2. However, Plaintiffs fail to allege that they have suffered an actual injury. As such, Plaintiffs lack Article III standing to bring Counts I and II, therefore, they should be dismissed.

3. Further, Plaintiffs' claims are unripe and, therefore, not justiciable at this time. This action is contingent upon the outcome of the parallel action first filed in Chesterfield County,Virginia (hereinafter "the Virginia action"), and as such this action is premature and need not occur at all.

4. Alternatively, a careful weighing of the factors set forth by the Supreme Court in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) and later in Moses H. Cone Memor'l Hosp. v. Mercury Const. Corp., 460 U.S. 1 (1983) indicates that this Court should abstain from exercising its jurisdiction over Counts I and II in favor of the parallel Virginia action.

5. Similarly, to the extent that this Court finds that Count III has properly sets forth a claim for declaratory relief, the Court should exercise its "substantial discretion" and abstain from exercising its jurisdiction over Count III in favor of the parallel Virginia action. See Wilton v. Seven Falls Company, 515 U.S. 277, 286 (1995).

6. This is a dispositive motion and therefore LCvR 7(m) is inapplicable.

7. Defendants hereby incorporate the attached Memorandum of Points and Authorities. WHEREFORE, for the reasons set forth in this Motion, as well as, the attached

Memorandum of Points and Authorities, Defendants Douglas A. Lines, P.C. and Douglas A. Lines, Esq. respectfully request that this Court dismiss Plaintiffs' Complaint for lack of subject matter jurisdiction, or, in the alternative, abstain from exercising its jurisdiction over Plaintiffs' claims in favor of the parallel Virginia action.

Respectfully submitted,

ECCLESTON & WoLF, PC

Justin M. Flint

Aaron L. Handleman (#48728)

Justin M. Flint (#491782)

Christopher F. Copenhaver (pro hac vice)

Counsel for Defendants

REQUEST FOR ORAL ARGUMENT

The Defendants, by and through undersigned counsel, respectfully request that the Court hear oral arguments regarding this Motion to Dismiss for Lack of Subject Matter Jurisdiction, or in the Alternative, to Abstain.

__________

Justin M. Flint

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 31st day of August, 2011, a copy of the aforegoing Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction, or in the Alternative, to Abstain, Memorandum of Point and Authorities, and proposed Order was served via the PACER ECF/electronic filing system on:

Patrick M. Regan (#336107)

Paul Cornoni (#489398)

Regan Zambri & Long, PLLC

Counsel for Plaintiffs

__________

Justin M. Flint

DOMINIC NOVAK, et al. Plaintiffs

v.

DOUGLAS A. LINES, P.C., et al. Defendants

CASE NO: 1:11-cv-00468(JMF)

DEFENDANTS' MEMORANDUM OF POINT AND AUTHORITIES

IN SUPPORT OF THEIR MOTION TO DISMISS

FOR LACK OF SUBJECT MATTER JURISDICTION,

OR IN THE ALTERNATIVE TO ABSTAIN

Defendants Douglas A. Lines, P.C. and Douglas A. Lines, Esq., by and through their attorneys, Aaron L. Handleman, Justin M. Flint, Christopher F. Copenhaver, and Eccleston and Wolf, P.C., hereby file this Memorandum of Points and Authorities in Support of their Motion to Dismiss Plaintiffs Dominic Novak's (hereinafter "Novak"), Regan Zambri & Long, P.L.L.C.'s (hereinafter "RZL"), and Patrick M. Regan, Esq.'s (hereinafter "Regan") Complaint for Lack of Subject Matter Jurisdiction, or in the Alternative, to Abstain, pursuant to Federal Rule of Civil Procedure 12(b)(1) and Local Rule 7, and in support thereof states as follows:

I. Introduction

Plaintiffs bring claims for Breach of Fiduciary and Ethical Duties (Count I), Breach of Contract (Count II), and Quantum Meruit (Count III). However, Plaintiffs lack Article III standing to bring Counts I and II, therefore, they should be dismissed. Further, all of Plaintiffs' claims are unripe and, therefore, not justiciable at this time. As such, the Court should dismiss this action in favor of the parallel Virginia action. Alternatively, to the extent this Court findsthat it has jurisdiction over any of Plaintiffs' claims, this Court should abstain from exercising that jurisdiction.

II. Statement of Facts

Underlying this action is a lawsuit filed in the United States District Court for the District of Columbia on or around January 8, 2001, styled Novak v. Capital Management, et al., Civil Action No. 01-00039 (HHK/JMF) (herinafter "the Novak litigation"). Compl. ¶ 15. The Novak litigation, brought by Plaintiff Dominic Novak, concerned injuries he received when he was assaulted while leaving the Zei Club in Washington D.C. Id.¶ 10.

Plaintiffs allege that "[i]n approximately 2000, Plaintiff Novak originally retained attorney E. Wayne Powell and the law firm of Powell & Parrish, P.C. to represent him in his claims for damages against the owners and operators of the Zei Club for failing to provide reasonable security for patrons as they exited the club." Id. ¶ 12. The Plaintiffs further allege that "[o]n or around January 7, 2001, Mr. Powell chose to associate with the Lines Defendants with respect to the representation of Plaintiff Novak and another individual, George D. Valdivia, for injuries suffered as a result of the violent attack outside the Zei Club on March 22, 1998." Id. ¶ 14. It is undisputed that Novak agreed that attorney's fees associated with Novak litigation would be paid on a contingency basis.

Plaintiffs claim that "[i]n approximately June 2002, Mr. Powell and/or Defendant Douglas Lines, Esq. contacted Plaintiff Patrick M. Regan . . . and requested that Regan and his law firm enter its appearance and take over the representation of Mr. Novak and Mr. Valdivia in this matter." Id.¶ 20. Plaintiffs claim that "[i]n June of 2003, and as a result of the difficult and complex nature of the litigation, as well as the complete failure of Douglas A. Lines, Esq. to perform any legal work, Plaintiffs Dominic Novak, RZL and Patrick M. Regan, as well asWayne E. Powell, entered into a supplemental retainer agreement." Id. [ 23. "The Novak litigation was ultimately tried to a jury in May 2007 and resulted in a verdict of $4,111,772.00. Following an appeal to the United States Court of Appeals for the District of Columbia, the verdict was upheld in August 2009." Id. ¶ 17.

Plaintiffs further claim that,

[d]espite Plaintiff Novak's entering into the new agreement with Plaintiffs Patrick M. Regan and RZL, which discharged Douglas Lines from the case in 2003, Douglas Lines has now attempted to unethically assert claims for several hundred thousand dollars of legal fees for work allegedly performed on a case pending in a jurisdiction in which he was not licensed to practice law.

Id. ¶ 29. Plaintiffs assert that "[t]he Lines Defendants have filed a frivolous lawsuit in Chesterfield, Virginia seeking legal fees to which they are not entitled" and that this lawsuit "represents a breach of the Lines Defendants' fiduciary, contractual and ethical duties to Plaintiff Dominic Novak since they are seeking to obtain a fee from Novak to which they are not entitled." Id. ¶¶ 30, 31. The Virginia action was filed on August 24, 2010, see Ex. A, and is styled as Douglas A. Lines, P.C., et al. v. Patrick M. Regan, et al., CL10-2380. See Ex. B. Novak is not a party to the Virginia action. See id.

Plaintiffs further allege that they "have placed sufficient funds in a trust account in an amount more than adequate to compensate Defendant Lines, on a quantum meruit basis . . . ." Id. ¶ 33. In fact, all but $69,000 dollars of the proceeds of the Novak litigation have been dispersed from Plaintiff RZL's client trust account. See Ex. C at 8-9. Plaintiffs state that "to the extent that this Court ultimately determines that Lines is entitled to any of the funds in the escrow account, any remaining funds are to be distributed directly to Plaintiff Dominic Novak." Id. ¶ 33.

Plaintiffs Regan and RZL were served with the complaint in the Virginia action on March 2, 2011. See Ex. D. Plaintiffs filed this action on the following day, alleging that "[j]urisdiction is vested in this Court pursuant to 28 U.S.C. 1332 as complete diversity exists between all adverse parties and the claims herein exceed the jurisdictional amount." Compl. ¶ 1.¹ In Count I of their Complaint, the Plaintiffs state that "notwithstanding the ethical and fiduciary duties the Defendants owed to Plaintiff Novak, Defendants breached the applicable fiduciary and ethical duties owed to Plaintiff." Id. ¶ 38. In support of Count I, Plaintiffs allege that Defendants breached the duties owed to Plaintiff Novak by "seeking to obtain a legal fee which Defendants did not earn and are not entitled to under the law and the D.C. Rules of Professional Conduct." Id. ¶ 39. Plaintiffs further allege that,

as a direct and proximate result of the Defendants' combined breaches of their fiduciary and ethical duties, the Plaintiffs suffered financial harm, including but excluding, the

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