United States District Court, D. Maryland
DEBORAH K. CHASANOW, United States District Judge.
pending and ready for resolution are (1) the motion to
dismiss or alternatively for summary judgment filed by
Defendants David Albert and David Albert & Associates
(“Defendants”) (ECF No. 5), and (2) a renewed
joint motion to seal by Plaintiff Richard Vogel
(“Plaintiff”) and Defendants (ECF No. 11). The
motions have been briefed, and the court now rules, no
hearing being deemed necessary. Local Rule 105.6. For the
following reasons, the motion to dismiss or alternatively for
summary judgment will be DENIED, and the motion to seal will
complaint alleges that Plaintiff was the founder, President,
CEO, Secretary, majority shareholder, and sole voting
shareholder of Innovative Therapies, Inc.
(“ITI”), a Delaware corporation. (ECF No. 1
¶¶ 1, 5, 9). In 2007, Plaintiff and ITI retained
Defendants to provide legal advice related to changing
ITI's corporate structure. (Id. ¶ 10). In
2011, Plaintiff again sought to restructure. Acting on
Defendants' advice, Plaintiff drafted and ITI's Board
approved the issuance of new stock in several different forms
without providing notice to ITI's non-voting
shareholders. (Id. ¶¶ 15-16). Even though
those shareholders lacked voting rights under ITI's
certificate of incorporation, Delaware law required that they
be given the opportunity to vote on an action, like this one,
that would increase the aggregate number of authorized
shares. (Id. ¶ 18). The issuance of stock and
the resolution passed by the Board were thus void under
Delaware law. (Id. ¶ 19). This mistake resulted
in the distribution of a greater portion of ITI's equity
than planned; excessive distribution of dividends to
Plaintiff as a majority shareholder, which he later repaid; a
significant loss in profit for shareholders when ITI was sold
to Cardinal Health (“Cardinal”) in 2014; costs
for services to correct the stock split; and additional legal
costs for Plaintiff and ITI. (Id. ¶¶
of the Agreement and Plan of Merger for the sale to Cardinal,
Plaintiff signed a release dated August 29, 2014 (the
“Release”). (ECF No. 5-3). The Release named as
parties Cardinal, ITI, and Plaintiff, “as an individual
and as the representative for all of the Stockholders.”
(Id. at 1). The stockholders are the
“Releasors” under the Release. The other three
parties and their specified associates are the
“Releasees.” (Id.). Plaintiff both
releases certain other parties as a stockholder and is
released by the stockholders in his other capacities.
(Id. ¶¶ 2-3).
Release contains several definitions. First, the
“Company Releasees” are ITI and “its
Subsidiaries and each of their respective individual, joint
or mutual, past, present, and future representatives,
officers, directors, employees (both current and former),
predecessors, successors, and assigns.” (Id.
¶ 2). Second, the “Vogel Releasees” are
Plaintiff and “his respective past, present, and future
representatives, affiliates, subsidiaries, insurers,
attorneys, successors and assigns.” (Id.
¶ 3). Third, the Releasees are released by the Releasors
from the “Released Claims, ” which include, as
[A]ny and all claims, demands, proceedings, causes of action,
orders, obligations, damages, interest, contracts,
agreements, debts, liabilities, attorneys' fees, and
expenses, whatsoever, whether in law or equity, whether known
or unknown, suspected or unsuspected, which such Releasor now
has, has ever had or may hereafter have against the
respective  Releasees arising contemporaneously with or
prior to the Closing or on account of or arising out of any
matter, cause, or event occurring contemporaneously with or
prior to the Closing, including, but not limited to, . . .
(c) breach of fiduciary duty, . . . (f) any amendment,
whether effective or ineffective, to the Company's
Certificate of Incorporation or Bylaws, (g) the
capitalization of the Company, (h) the Performance Unit Plan
(including any amendments thereto) and the Performance Units
issued thereunder . . . . Further, Releasor waives the right
to recover from any complaints, charges, lawsuits,
administrative proceedings . . ., False Claims Act
proceedings or qui tam proceedings, filed by the Releasor or
by any federal or state agency on the Releasor's behalf,
concerning the Releasees (as defined below) or any Released
(Id. ¶ 2). The Release also states that it
“may not be changed except in a writing signed by the
person(s) against whose interest such a change will
operate.” (Id. ¶ 10).
the Release was raised in pre-suit discussions relating to
this dispute, Plaintiff and Cardinal signed an Amendment to
the Agreement and Plan of Merger (“Amendment”) in
June 2015. (ECF No. 5-4). In Paragraph 3.c of the Amendment,
Cardinal and Plaintiff included a “Clarification of
Prior Release” that states:
[N]othing in the August 2014 Release or in this Amendment was
or is intended to release any claims that Vogel or any other
Stockholder Releasor has or had against any attorney or
accountant who represented ITI, Vogel, and/or any other
Stockholder Releasor prior to Closing in connection with the
authorization or issuance of any shares, any amendments or
restatements of the articles of incorporation of ITI stock
splits, creation or elimination of any classes or categories
of shares or shareholders, transfers of shares, or any
matters relating to the capitalization of ITI (the
“Advisor Claims”), specifically including, but
not limited to, any claims whatsoever against [Defendants];
and to the extent necessary to give effect to subsection (ii)
immediately preceding this clause, the August 2014 Release is
amended to explicitly exclude any release of [Defendants],
and that amendment shall be nunc pro tunc to the
date of the August 2014 Release.
(Id. ¶ 3.c). Under Paragraph 3.d. of the
Amendment, “[a]ny claims that ITI has or had against
any of the [Defendants] are irrevocably assigned to
Vogel.” (Id. ¶ 3.d).
filed this suit alleging a single count of negligent legal
malpractice on his own behalf and as the assignee of
ITI's legal claims. (ECF No. 1 ¶¶ 27-32).
Defendants filed the instant motion to dismiss, or in the
alternative, for summary judgment, on November 23, 2015,
raising the defense that Plaintiff released all claims
against them as Vogel Releasees under the Release. (ECF No.
5). Plaintiff responded and Defendants replied. (ECF Nos. 12;
Standard of Review
motion is styled as a motion to dismiss, or in the
alternative, for summary judgment. A court may, without
converting a motion to dismiss into a motion for summary
judgment, “consider documents attached to the complaint
as well as those attached to the motion to dismiss, so long
as they are integral to the complaint and authentic.”
Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176,
180 (4th Cir. 2009) (citation omitted). “An
affirmative defense, such as release, is not ordinarily
considered on a motion to dismiss because the plaintiff is
not required to negate it in the complaint.”
Alexander v. UIP Prop. Mgmt., No. DKC-14-2469, 2015
WL 1472004, at *3 (D.Md. Mar. 30, 2015); see Goodman v.
Praxair, Inc., 494 F.3d 458, 464 (4th Cir.
2007). An affirmative defense can be considered on a motion
to dismiss only “if all facts necessary to the
affirmative defense ‘clearly appear on the face of
the complaint.'” Goodman, 494 F.3d at
464 (quoting Richmond, Fredericksburg & Potomac R.R.
v. Forst, 4 F.3d 244, 250 (4th Cir. 1993)).
“[A] movant cannot merely show that the elements of the
defense appear on the face of the complaint or in properly
considered documents, but must also ‘show that the
plaintiff's potential rejoinder to the affirmative
defense was foreclosed by the allegations in the
complaint.'” Alexander, 2015 WL 1472004,
at *2 (quoting Goodman, 494 F.3d at 466). Here,
although the parties have stipulated to the authenticity of
Defendants' exhibits (ECF No. 5-1, at 2 n.2), the
exhibits are integral only to Defendants' defense, not
the complaint. Defendants' motion will be construed as a
motion for summary judgment.
motion for summary judgment will be granted only if there
exists no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.
See Fed.R.Civ.P. 56(a); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986);
Emmett v. Johnson, 532 F.3d 291, 297 (4th
Cir. 2008). A dispute about a material fact is genuine
“if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Liberty
Lobby, 477 U.S. at 249. In undertaking this inquiry, a
court must view the facts and the reasonable inferences drawn
therefrom “in the light most favorable to the party
opposing the motion, ” Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting
United States v. Diebold, Inc., 369 U.S. 654, 655
(1962)); see also EEOC v. Navy Fed. Credit Union,
424 F.3d 397, 405 (4th Cir. 2005), but a
“party cannot create a genuine dispute of material fact
through mere speculation or compilation of inferences,
” Shin v. Shalala, 166 F.Supp.2d 373, 375
bear the burden of proving that the elements of release are
satisfied.” Auslander v. Helfand, 988 F.Supp.
576, 580 (D.Md. 1997) (citing Allen v. Zurich Ins.
Co., 667 F.2d 1162, 1164 (4th Cir. 1982)).
“A defendant asserting an affirmative defense in a
summary judgment motion must initially prove that no disputed
material fact exists regarding the defense, ” at which
point “the burden shifts to the plaintiff to
demonstrate specific disputed material facts precluding
application of the affirmative defense; if the ...