Winston & Strawn LLP v. McLean
| Decision Date | 24 October 2018 |
| Docket Number | Civil Action No. 13-524 (EGS) |
| Parties | WINSTON & STRAWN LLP, Plaintiff, v. JAMES P. MCLEAN, JR, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Plaintiff Winston & Strawn LLP ("W&S") sues defendants Crumens Ltd. ("Crumens") and James P. McLean, Jr. ("Mr. McLean"), proceeding pro se, for breach of contract. W&S, a law firm with an office in the District of Columbia, argues that it provided legal services pursuant to a contract and Mr. McLean refuses to pay. Pending before the Court is W&S's motion for summary judgment. After careful consideration of the motion, the response, the reply thereto, the entire record, and the applicable law, W&S's motion for summary judgment is GRANTED.
In April 2012, Mr. McLean—on behalf of Crumens—agreed in writing to pay W&S to provide legal services to Edward S. Warneck.1 See Engagement Agreement ("E.A."), ECF No. 51-2 at 2-6.2 Mr. McLean lived with "the mother of [Mr. Warneck's] daughter-in law" and in March 2012 "contacted [Mr. Warneck] by phone and offered to pay [his] legal fees involving [] various investigations." Warneck Aff., ECF No. 51-8 ¶ 3. Mr. Warneck accepted Mr. McLean's offer and met with Thomas Buchanan, a W&S attorney who Mr. McLean had recommended. Id. ¶ 5.
On April 11, 2012, W&S prepared an Engagement Agreement, which clarified that W&S represented Mr. Warneck "individually in connection with potential litigation involving the Department of Justice, the Department of Transportation, Creditors of Direct Air, and other matters relating to your employment at Direct Air ('the Litigation')." E.A., ECF No. 51-2 at 2. As set forth in the Engagement Agreement, Crumens "agreed to pay [Mr. Warneck's] costs and legal expenses in connection with the litigation." Id. The Engagement Agreement also explained the nature of W&S's services, the fees for those services, and that payment was due "within thirty days of . . . receipt of [W&S's] statement." Id. at 3. Mr. Warneck signed the Engagement Agreement on April 13, 2012. Id. at 5. Mr. McLean signed theEngagement Agreement, on behalf of Crumens "c/o Johnson & McLean, LLC" on April 16, 2012. Id. at 6.
Pursuant to the Engagement Agreement, W&S began representing Mr. Warneck in April 2012. See, e.g., Def.'s Exs., ECF No. 55-1 at 11-86; ECF No. 55-2 at 26-41 (). Beginning in June 2012, W&S sent Mr. Warneck and Mr. McLean monthly invoices. See, e.g., Statement of Account, ECF No. 51-6 at 2; Def.'s Ex., ECF No. 55-1 at 11-86 (billing statements); id. at 87-88 (). W&S represented Mr. Warneck through March 2013. At that time, W&S stopped providing legal services because it had not been paid. Statement of Account, ECF No. 51-6 at 2.
From April 2012 through March 2013, W&S provided $495,053.60 worth of legal services to Mr. Warneck. Id. For almost a year, Mr. McLean promised he would pay W&S's invoices. See Def.'s Ex., ECF No. 55-1 at 87-160 (). Indeed, Mr. McLean never challenged or objected to an invoice. McLean Dep., ECF No. 51-3 at 45:10-13. To date, Mr. McLean has not paid W&S for the legal services it provided Mr. Warneck. Id. 47:6-9.
On August 19, 2014, the Court granted W&S's motion for summary judgment as conceded pursuant to Local Rule 7(b), as Mr.McLean had not timely filed his memorandum in opposition. See Order, ECF No. 54. Mr. McLean appealed the Court's Order to the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit"). In December 2016, the D.C. Circuit reversed the Court's Order and remanded for further proceedings, concluding that Local Rule 7(b) was inconsistent with Federal Rule of Civil Procedure 56. See Mandate, ECF No. 70; USCA Case Number 14-7197. In January 2017, the Court ordered supplemental briefing. W&S's motion for summary judgment is now ripe for review.
Pursuant to Federal Rule of Civil Procedure 56, summary judgment should be granted only "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Waterhouse v. District of Columbia, 298 F.3d 989, 991 (D.C. Cir. 2002). The moving party must identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotations omitted). On the other hand, to defeat summary judgment, the nonmoving party must demonstrate that there is a genuine issue of material fact. Id. at 324. Amaterial fact is one that is capable of affecting the outcome of the litigation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine dispute is one in which "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. Further, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255.
As an initial matter, Mr. McLean argues that he never agreed to "personally pay for legal services" because he signed the Engagement Agreement on behalf of Crumens, a corporation. Def.'s Opp'n, ECF No. 55 at 5. Therefore, Mr. McLean contends that he is "not liable for any legal fees." Id. at 3-4.
Generally, a corporation is liable for its own debts. "The general rule is that a corporation is regarded as an entity separate and distinct from its shareholders.'" Ruffin v. New Destination, LLC, 773 F. Supp. 2d 34, 40 (D.D.C. 2011) (quoting Lawlor v. District of Columbia, 758 A.2d 964, 975 (D.C. 2000)). To that end, a corporation is treated as separate and distinct from its owner, even if it is wholly owned by one individual or entity. Alkanani v. Aegis Def. Servs., 976 F. Supp. 2d 1, 8 (D.D.C. 2013) (citing Quinn v. Butz, 510 F.2d 743, 757 (D.C. Cir. 1975)). Consequently, a plaintiff attempting tohold an individual liable for the actions or obligations of a corporation must establish that there is some reason to disregard the corporate form. See id.
Here, however, Mr. McLean may not escape personal liability because he signed the Engagement Agreement on behalf of a legal entity that never existed. "In [the District of Columbia,]3 an agent who enters into a contract is held personally liable on it, and he does not escape liability by purporting to act for a fictitious or nonexistent principal." Resnick v. Abner B. Cohen Advert., Inc., 104 A.2d 254, 255 (D.C. 1954). Indeed, if an individual acts on behalf of a corporation before incorporation, the individual is jointly and severally liable for the corporation's debts. Robertson v. Levy, 197 A.2d 443, 447 (D.C. 1964)( an individual personally liable because the corporation did not exist at the time of the contract and therefore, the individual "assumed to act as a corporation without any authority so to do"); see Geier v. Conway, Homer & Chin-Caplan, P.C., 983 F. Supp. 2d 22, 38 (D.D.C. 2013)(citing Robertson v. Levy for the proposition that "when an individual purports to act on behalf of a corporation and the corporationhas not yet been formed, the individual is liable for the debts he incurred").
Despite Mr. McLean's arguments to the contrary, see Def.'s Opp'n, ECF No. 55 at 3-4, it is clear that he was acting as a principal on behalf of Crumens when he signed the Engagement Agreement, see Def.'s Dep., ECF No. 51-3 at 40:7-10 ( ); see E.A., ECF No. 51-2 at 6 (). And it is undisputed that Crumens did not exist at the time Mr. McLean signed the Engagement Agreement. Indeed, Crumens never existed as a corporate entity. See, e.g., Def.'s Dep., ECF No. 51-3 at 29:10-18 ( ); Def.'s Interrog., ECF No. 51-5 at 18 ( ).
Therefore, because the record establishes that: (1) Mr. McLean signed the Engagement Agreement on behalf of Crumens; and (2) Crumens did not exist at that time, Mr. McLean may not "escape liability" for Crumen's debts. Resnick, 104 A.2d at 255.
W&S argues that it is entitled to summary judgment because Mr. McLean agreed to pay the law firm for its legal services and failed to do so. Pl.'s Mot., ECF No. 51 at 11-12.4 Mr. McLean puts forward several non-meritorious arguments, all of which are addressed below. See Def.'s Opp'n, ECF No. 55.
Under District of Columbia law, a plaintiff may prevail on a breach of contract claim if it establishes: "'(1) a valid contract between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of that duty; and (4) damages caused by breach.'" CapitalKeys, LLC v. Democratic Republic of Congo, 278 F. Supp. 3d 265, 285 (D.D.C. 2017) (quoting Francis v. Rehman, 110 A.3d 615, 620 (D.C. 2015)).
First, to prove there was a valid contract between the parties, W&S must establish "'mutual assent of the parties to all the essential terms of the contract.'" Id. (quoting Duffy v. Duffy, 881 A.2d 630, 633 (D.C. 2005)). The Engagement Agreement set forth the essential terms of the contract: the scope ofW&S's legal services, the associated fees, Mr. McLean's...
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