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AL Jazeera International v. Dow Lohnes PLLC

United States District Court, D. Maryland

September 2, 2014

AL JAZEERA INTERNATIONAL
v.
DOW LOHNES PLLC, et al.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for resolution in this legal malpractice case is the motion to dismiss filed by Defendants Dow Lohnes PLLC and Leslie H. Wiesenfelder. (ECF No. 19). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, Defendants' motion will be denied.

I. Background[1]

In 2005, Plaintiff Al Jazeera International ("AJI") entered into a construction contract with Winmar, Inc. to build a television studio and offices in Washington, D.C. ("the Contract"). Janson Design Group ("the Architect") was the architect for the project. The Contract established a payment process under which Winmar would submit periodic invoices for review by the Architect as AJI's agent. If the Architect was satisfied, it would issue certificates of payment to AJI. Between October and December 2005, Winmar submitted four invoices totaling $1, 838, 140. The Architect certified each of these four invoices. AJI alleges that the Architect breached the duty of care owed to it by not taking reasonable steps to determine whether the invoices were accurate and complete. AJI paid only one of the invoices, in the amount of $474, 677. Winmar sent AJI a notice of default and direction to cure alleging that AJI was in material breach of the Contract for failing to pay the remaining certified invoices. AJI engaged a construction manager to resolve the disputed billing issues. The construction manager concluded that Winmar overbilled AJI. Consequently, AJI made no further payments. The Architect sent a letter to Winmar, rescinding its certification for the three remaining invoices, stating that the certifications had been made in error and were withdrawn on account of "a number of discrepancies in the... Application documents, as well as the lack of appropriate supporting documentation." The Architect asked Winmar for additional documents supporting the invoices, which Winmar refused to provide. Thereafter, pursuant to Section 14 of the Contract, AJI terminated the contract for convenience.

On July 24, 2006, AJI's bank, Qatar National Bank, filed suit against Winmar in the United States District Court for the District of Columbia. Winmar filed a third-party complaint against AJI, alleging that AJI breached the Contract by not making payment pursuant to the Architect's certifications. AJI retained Defendants to represent it and filed a counterclaim against Winmar, denying any liability and asserting that AJI had overpaid Winmar pursuant to the termination for convenience provisions of the Contract. In its answer, Winmar alleged that, prior to the time AJI terminated the Contract for convenience, AJI had materially breached the Contract and, therefore, Winmar was entitled to the full amount of every invoice certified by the Architect. AJI alleges that this raised a substantial material issue regarding the accuracy of the Architect's certification. Despite this fact, Defendants failed to investigate the Architect's role in the events, including whether the Architect breached its duty of care. By ignoring Winmar's allegations regarding the Architect, Defendants left AJI with no factual defense to Winmar's principal claim: i.e., that the certifications were prima facie evidence of the amount AJI owed Winmar. Consequently, Defendants were completely unprepared at trial, leaving AJI greatly exposed. The trial began on June 30, 2010. Winmar continually raised the certifications, but Defendants offered no rebuttal. On September 29, 2010, the district court issued a memorandum opinion and order, granting judgment in favor of Winmar and against AJI. Winmar, Inc. v. Al Jazeera Int'l, 741 F.Supp.2d 165 (D.D.C. 2010). Judge Gladys Kessler concluded that the Architect's certifications were the best evidence of the work performed. The court went on to note that "Al Jazeera offered no evidence at trial showing how the Architect arrived at the decision to certify the Payment Applications.... In the absence of any evidence from Al Jazeera that the Architect neglected its duties under the Contract in making the certification decisions, the certified Payment Applications are the most reliable evidence of the services performed by Winmar in the periods covered." (ECF No. 1 ¶ 36 (emphasis added by AJI)). Judge Kessler also stated that she "has never been able to understand why neither party ever called the Architect to testify." ( Id. ¶ 37). Judgment was granted in favor of Winmar and against AJI for $1, 472, 625.50. Defendants appealed the judgment to the United States Court of Appeals for the District of Columbia Circuit. While that appeal was pending, AJI decided to settle the dispute for $2, 000, 000 rather than run the risk of an unfavorable outcome on appeal.[2]

On September 19, 2013, Plaintiff filed a complaint in this court for legal malpractice, citing diversity jurisdiction. (ECF No. 1).[3] Plaintiff alleges that Defendants, as AJI's attorney during the Winmar litigation, owed AJI a duty of care to conduct a thorough and competent investigation of the facts and circumstances surrounding AJI's dispute with Winmar, and to exercise sound and reasonable judgment in planning and executing a defense to Winmar's claims against AJI. According to Plaintiff, Defendants breached this duty by ignoring Winmar's allegations regarding the Architect's certificates of payment and failing to depose the Architect or calling the Architect as a witness at trial. Plaintiff contends that but for Defendants' failure to depose or call the Architect as a witness, AJI would have prevailed in the Winmar litigation. In the alternative, Plaintiff maintains that Defendants breached the duty of care by failing to advise AJI to join the Architect as a third-party defendant in the Winmar litigation. Defendants' breach left AJI with no defense to Winmar's claims regarding the Architect's payment certifications.

On November 18, 2013, Defendants filed a motion to dismiss. (ECF No. 7). On December 31, 2013, Plaintiff opposed the motion (ECF No. 10), to which Defendants replied on January 28, 2014 (ECF No. 13).

II. Standard of Review

The purpose of a motion to dismiss under Rule 12(b)(6) is to test the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). A plaintiff's complaint need only satisfy the standard of Rule 8(a), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "Rule 8(a)(2) still requires a showing, ' rather than a blanket assertion, of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007). That showing must consist of more than "a formulaic recitation of the elements of a cause of action" or "naked assertion[s] devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted).

At this stage, all well-pleaded allegations in a complaint must be considered as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and all factual allegations must be construed in the light most favorable to the plaintiff. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999) ( citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). In evaluating the complaint, unsupported legal allegations need not be accepted. Revene v. Charles Cnty. Comm'rs, 882 F.2d 870, 873 (4th Cir. 1989). Legal conclusions couched as factual allegations are insufficient, Iqbal, 556 U.S. at 678, as are conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979).

III. Analysis[4]

"To prove legal malpractice under D.C. law, a plaintiff must (a) show an applicable standard of care; (b) prove a breach of that standard; and (c) demonstrate a causal relationship between the violation and the harms enumerated in the complaint." Jones v. Lattimer, ___ F.Supp.2d ___, 2014 WL 869470, at *3 (D.D.C. Mar. 6, 2014) ( quoting In re Estate of Curseen, 890 A.2d 191, 193 (D.C. 2006) (internal quotation marks omitted)). Plaintiff alleges legal malpractice in two forms: first, Defendants' failure to advise Plaintiff to sue the Architect, and second, if it was not advisable to sue the Architect, Defendants' failure to interview, depose, or call the Architect as a witness in the Winmar litigation.

A. Failure to Sue the Architect

Defendants argue that Plaintiff has not pled that AJI had a viable claim against the Architect. District of Columbia law requires a plaintiff pursuing a claim for legal malpractice to demonstrate that he had a viable claim that the attorney negligently failed to pursue. Niosi v. Aiello, 69 A.2d 57, 60 (D.C. 1949) ("The rule to be applied in a case where an attorney is accused of negligence in the conduct of litigation is that such attorney is not liable for negligence if, notwithstanding the negligence, the client had ...


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