Monday, September 20, 2021

Claim Of Fiduciary Breach Survives

The United States District Court for the District of Columbia (Judge Contreras) denied defendant's motions in a legal malpractice case

Rothschild Broadcasting, LLC (“Plaintiff” or “RBLLC”) brings this action against Evan D. Carb (“Carb”) and The Law Offices of Evan D. Carb, PLLC, (collectively, “Defendants”) for legal malpractice, breach of fiduciary duty, and fraud resulting from Carb’s representation of Plaintiff regarding sales of radio stations. Plaintiff alleges, among other things, that Carb undertook legal representation of Plaintiff despite Carb co-owning a company that was actively negotiating a contract with Plaintiff, and that Carb made false representations to Plaintiff that intentionally resulted in a better position for Carb at the expense of Plaintiff. Defendants move to dismiss the complaint on four grounds: (1) Plaintiff did not adequately plead a claim for legal malpractice, (2) the claim for breach of fiduciary duty is duplicative of the legal-malpractice claim, (3) fraud is not pleaded with particularity, and (4) the punitive damages request fails as a matter of law. For the reasons given below, Defendants’ motion is denied.

As to the fiduciary breach claim

But here, Plaintiff’s fiduciary-duty claim does not merely restate a claim for malpractice. Although Plaintiff’s complaint references the same facts to support the two claims, the facts alleged include conduct uniquely relevant to a fiduciary-duty claim, such as allegations of divided loyalty and self-serving. This does not appear to be an example of a plaintiff adding a claim for breach of fiduciary duty premised on factual allegations already covered by other claims. If anything, the issue here seems to be that Plaintiff included additional factual allegations to support its malpractice claim that are more naturally suited to a claim for breach of fiduciary duty. That does not justify dismissal of Plaintiff’s fiduciary-duty claim as duplicative.

Punitive damages

The Court will not grant Defendants’ motion to dismiss Plaintiff’s request for punitive damages. Defendants present limited analysis attempting to show that Plaintiff’s request for punitive damages cannot succeed as a matter of law. They do not grapple with the allegations discussed above—and accepted as true for purposes of this motion to dismiss—that Defendants entered into representation of Plaintiff despite knowledge of conflicts of interest, and then used their representation of Plaintiff to benefit themselves. Accordingly, Defendants have not demonstrated that, as a matter of law, Plaintiff’s request for punitive damages cannot succeed.

(Mike Frisch)

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