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Cohen v. Rosenthal

United States District Court, D. Connecticut

December 19, 2016

JAMES D. COHEN, Plaintiff,
EDWARD ROSENTHAL, individually and as the sole member of ROSENTHAL LAW FIRM, LLC, Defendant.



         Plaintiff James Cohen brings this action pro se against his former attorney, Defendant Edward Rosenthal, in relation to what he essentially alleges was malpractice on the part of Mr. Rosenthal. Plaintiff brings state common law claims for (1) breach of contract (Count One), (2) breach of the implied covenant of good faith and fair dealing (Count Two), (3) misrepresentation (Count Three), and (4) unjust enrichment (Count Four), invoking this Court's diversity jurisdiction pursuant to 28 U.S.C. § 1332. Defendant has moved to dismiss each of Plaintiff's claims. This Ruling resolves that motion.

         I. Background[1]

         Plaintiff obtained a judgment in Connecticut Superior Court in his favor against Roll-A- Cover, LLC ("RAC") and Michael Morris ("Morris") in the amount of $575, 000 in June 2010. Am. Cmplt. ¶ 3. The Connecticut Superior Court later awarded prejudgment interest and costs of $406, 281 and post judgment interest of $77, 332 in February 2012 to Plaintiff. Id. ¶ 4. On December 1, 2011, Plaintiff retained Defendant, a Connecticut attorney, and the parties signed an "Agreement for Legal Services" authorizing Defendant to collect for Plaintiff the judgment against RAC and Morris. Id. ¶¶ 5, 16. Defendant defined his fees in relation to "any amount he personally collected and deposited into his trust account, " recognizing that others may also be working to collect on the judgment for Plaintiff. Id. ¶ 6. Defendant was able to collect $67, 605 from RAC through the seizure of one of RAC's bank accounts in March 2012, disbursing $39, 823 to Plaintiff-the net amount after paying a retained State Marshal and Defendant his fees associated with this collection. Id. ¶ 7.

         RAC filed a Chapter 11 petition for bankruptcy in April 2012, which stayed all collections against RAC; however, Morris remained liable for the judgment and had sufficient assets to satisfy the remaining amounts owed. Id. ¶¶ 8-9. Defendant ceased all collection efforts against RAC and Morris a month after the bankruptcy filing in May 2012. Id. ¶ 11. Defendant notified Plaintiff that he was "unable and unwilling to represent" Plaintiff in the bankruptcy action with RAC and advised Plaintiff to find other counsel. Id. ¶ 10. The uncollected judgment balance from RAC and Morris when Defendant ceased his collection efforts against RAC was $1, 020, 165. Id. ¶ 21. Plaintiff, without the assistance of Defendant, then negotiated a settlement agreement with RAC and signed a preliminary settlement agreement on November 15, 2012, which was filed with the bankruptcy court. Id. ¶¶ 12, 14. In March 2014, Defendant petitioned for the resolution of a fee dispute with Plaintiff regarding fees allegedly owed related to the settlement agreement between Plaintiff and RAC. Id. ¶ 13. Defendant requested mediation followed by an arbitration to settle the dispute. Id.

         At the beginning of the mediation hearing, it was decided that it would be an arbitration instead of a mediation. Am. Cmplt. ¶ 15. Plaintiff was not provided notice or the rules for the resolution of any dispute. Id. The hearing was held on December 19, 2014 before three attorneys, who were members of the Legal Fee Resolution Board of the Connecticut Bar Association ("CBA"). Id. ¶ 17. On December 24, 2014, the arbitrators issued a decision awarding $109, 683 to Defendant in legal fees related to Defendant's alleged contributions and work on the RAC settlement. Id. Defendant thereafter applied to confirm the arbitration award, which Judge Scholl of the Connecticut Superior Court confirmed without trial on March 17, 2015. Id. ¶ 18. Plaintiff appealed that decision and the Connecticut Appellate Court affirmed the judgment. Id. ¶ 19. As of the date of the Amended Complaint, Plaintiff intended to "further[]" continue the appeal by filing a writ of certiorari to the Connecticut Supreme Court.[2] Id. Defendant ultimately received a prejudgment award of $92, 443.80 through the Connecticut litigation. Id. ¶ 20.

         Plaintiff brought the instant action against Defendant alleging four claims. First, Plaintiff asserts breach of contract based on Defendant's "breach[ of] the Agreement for Legal Services" because Defendant "negligently discontinued his contractual obligation" to collect both the assets of RAC and Morris and "failed in his diligence" to exercise all opportunities to collect the judgment, including from the assets of Morris. Am. Complt., Count One ¶¶ 1-6.[3] Second, Plaintiff asserts breach of the implied covenant of good faith and fair dealing. Id., Count Two ¶¶ 1-3. Third, Plaintiff asserts misrepresentation based on the fact that Defendant negligently and intentionally "misrepresented his experience to become engaged in collections beyond his capabilities." Id., Count Three ¶¶ 1-3. Finally, Plaintiff alleges unjust enrichment because the award of fees in the arbitration to Defendant was "unearned" and based on "fraudulently claimed legal services." Id., Count Four ¶¶ 1-7. Plaintiff seeks to obtain (1) the balance of the amount of the judgment not collected when Defendant terminated his collection efforts, $1, 020, 165, plus prejudgment interest and reasonable costs, based on Defendant's alleged breach of contract, (2) monetary and punitive damages as well as prejudgment interest based on Defendant's alleged breach of the implied covenant of good faith and fair dealing, (3) monetary and punitive damages as well as prejudgment interest based on Defendant's alleged misrepresentation, and (4) monetary damages in the amount of $92, 443.90 (the amount ultimately awarded to Defendant) and punitive damages as well as reasonable costs and prejudgment interest based on unjust enrichment. Id., Prayer for Relief ¶¶ 1-4.

         II. Standard of Review

         To survive a motion to dismiss under Federal Rules of Civil Procedure 12(b)(6), each claim must set forth sufficient factual allegations, accepted as true, that "state[s] a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, (2007)) (internal quotation marks omitted). The Court is guided by "'[t]wo working principles'" in applying this standard. Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal, 556 U.S. at 678). First, all factual allegations in the complaint must be accepted as true and all reasonable inferences must be drawn in Plaintiff's favor. See Id. The Court need not credit "legal conclusions" or "threadbare recitals of the elements of a cause of action supported by mere conclusory statements." Id. (quoting Iqbal, 556 U.S. at 678) (internal quotation marks and alteration omitted). Second, "a complaint that states a plausible claim for relief" will survive a motion to dismiss and "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. (quoting Iqbal, 556 U.S. at 679) (internal quotation marks omitted). Even under this standard, however, the Court must liberally construe pro se pleadings and hold them to a less rigorous standard of review than pleadings drafted by an attorney. See id; see also Boykin v. KeyCorp, 521 F.3d 202, 213-14, 216 (2d Cir. 2008). Moreover, pro se pleadings and briefs must be read "to raise the strongest arguments they suggest." Bertin v. United States, 478 F.3d 489, 491 (2d Cir. 2007) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994)) (internal quotation marks omitted).

         "Dismissal under Federal Rule of Civil Procedure 12(b)(6) is appropriate when 'it is clear from the face of the complaint, and matters of which the court may take judicial notice, that the plaintiff's claims are barred as a matter of law.'" Associated Fin. Corp. v. Kleckner, 480 F.App'x 89, 90 (2d Cir. 2012) (summary order) (quoting Conopco, Inc. v. Roll Int'l, 231 F.3d 82, 86 (2d Cir. 2000)). The Court may properly take judicial notice of "public records, including complaints filed in state court, in deciding a motion to dismiss." Blue Tree Hotels Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004).

         III. Discussion

         Defendant has moved for dismissal of Counts One, Two, and Four, based any of the following grounds: (1) collateral estoppel, (2) the Rooker-Feldman doctrine, or (3) failure to state a claim upon which relief can be granted. Defendant also seeks to dismiss Count Three on the basis of (1) the Rooker-Feldman doctrine, or (2) failure to state a claim upon which relief can be granted.[4]In order to address each of Defendant's arguments, the Court must take judicial notice of, and consider, certain facts within the public record concerning Plaintiff and Defendant's legal fee dispute arbitration and the related state court actions.[5]

         The public record reflects that on March 3, 2014, Defendant filed a petition for resolution of a fee dispute with the Legal Fee Resolution Board of the CBA against Plaintiff based on the settlement agreement Plaintiff ultimately negotiated with RAC. Def. Ex. A at 39-44 (A7-A12). Plaintiff responded to this petition and included a brief statement of facts, which stated that: "MR. ROSENTHAL REFUSED TO REPRESENT ME WHEN THE JUDGMENT DEBTOR FILED FOR BANKRUPTCY. HE IS NOW TRYING TO COLLECT A FEE FOR A SETTLEMENT I NEGOTIATED PRO SE IN THE BANKRUPTCY COURT." Id. at 46 (A14) (emphasis in original). Plaintiff also read a statement at the arbitration hearing which alleged that Defendant refused to represent Plaintiff in the bankruptcy proceeding, Defendant did nothing to assist with the settlement, and Defendant never billed Plaintiff for any alleged work related to the settlement. Def. Ex. D at 79-80 (A15-A15a). Despite Plaintiff's arguments, after a hearing before the Legal Fee Resolution Board of the CBA, see Am. Cmplt. ¶ 17, the arbitrators found that Defendant "has proven his contractual entitlement to attorney's fees on all sums collected by [Plaintiff] from Michael Morris/Roll-A-Cover, LLC." Def. Ex. A at 47 (A15).

         Defendant then filed a motion in Connecticut Superior Court to affirm the award of attorney's fees and Plaintiff filed an application to vacate the arbitration award. See Rosenthal Law Firm, LLC v. Cohen, 165 Conn.App. 467, 469 (Conn. App. 2016). The Superior Court held a hearing on the application to confirm and the application to vacate. See Id. At the conclusion of the hearing, the Superior Court granted Defendant's application to confirm the award, holding that, among other things, the court could not review whether the arbitrators "made errors of facts or even errors of law" and even assuming that the application to vacate the award was timely, and it "appears it wasn't, " the basis of Plaintiff's arguments were that he disagreed with the decision on the facts and the court was without the statutory authority to set the decision aside on such grounds. Id. & n.4. The Connecticut Appellate Court affirmed the Superior Court's decision to grant Defendant's application to confirm the award because Plaintiff's application to vacate the arbitration award was not timely filed. Id. at 473. The Connecticut Supreme Court denied review. Rosenthal Law Firm, LLC v. Cohen, 322 Conn. 904 (2016).

         A. Rooker-Feldman Doctrine

         Defendant claims that the Rooker-Feldman doctrine divests this Court of jurisdiction with respect to each of Plaintiff's claims.[6] The Rooker-Feldman doctrine divests federal courts of jurisdiction "over cases that essentially amount to appeals of state court judgments." Vossbrinck v. Accredited Home Lenders, Inc., 773 F.3d 423, 426 (2d Cir. 2014) (per curiam). "The doctrine is rooted in the principle that 'appellate jurisdiction to reverse or modify a state-court judgment is lodged . . . exclusively in [the Supreme] Court.'" Id. (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 283-84 (2005)). To apply the doctrine, four circumstances must exist: (1) the federal-court plaintiff must have lost litigation before a state court, (2) the federal-court plaintiff must now complain of an injury from the adverse state court judgment, (3) the federal-court plaintiff invites the federal court to review and reject that adverse judgment of the state court, and (4) the state court judgment was rendered before the federal court action. Id.

         Defendant has established both the first and fourth elements of this doctrine here. Plaintiff lost the arbitration and the Connecticut Superior Court subsequently confirmed the arbitration award to Defendant. The Connecticut Superior Court confirmed the award on March 17, 2015, almost four months prior to the filing of this federal action on July 8, 2015.[7] The pertinent issue before the Court is whether the second and third elements with respect to each claim brought by Plaintiff are established.

         These elements are clearly established with regard to Plaintiff's unjust enrichment claim. This claim is barred by the Rooker-Feldman doctrine, divesting this Court of jurisdiction and requiring its dismissal. With his claim of unjust enrichment, Plaintiff is complaining of an injury solely arising from the adverse state court decision to confirm his arbitration award. Specifically, Plaintiff alleges that Defendant "made false claims to obtain money for services that he did not perform, " "exploited the naivetÁ of his pro se former client to . . . obtain a judgment not based on the merit[s], " and "obtained an unearned award for his alleged and fraudulently claimed services." Am. Cmplt., Count Four ¶¶ 1-3. Plaintiff also invites this Court to review and reject the state court's confirmation of that award by requesting the exact amount of fees awarded to Defendant as the damages he is entitled to based on this claim. Id. Prayer for Relief ¶ 4. Thus, he is inviting this Court to, in effect, overturn the state court judgment. See Charles v. Levitt, Nos. 15-9334, 15-9758 2016 WL 3982514, at *4-5 (S.D.N.Y. July 21, 2016) ("[A] prayer for money damages is not sufficient to escape the ambit of Rooker-Feldman where granting such relief would still require the federal court to sit in review of a state court judgment."). Because Plaintiff's unjust enrichment claim amounts to an appeal of the state court's confirmation of the arbitration award, this Court lacks jurisdiction and it must be dismissed. See Vossbrinck, 773 F.3d at 426-27.[8]

         However, Plaintiff's other claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and misrepresentation are not barred by the doctrine of Rooker-Feldman. Each of these claims complains specifically of an injury to Plaintiff caused directly by Defendant prior to the arbitration and the state court judgment affirming the award. The breach of contract and breach of the implied covenant of good faith and fair dealing claims complain of misconduct and negligence by Defendant in his representation of Plaintiff prior to the arbitration and the state court judgment affirming that arbitration. The same is true for the misrepresentation claim, which complains of an injury from Defendant's misrepresentation regarding his experience in collections prior to Plaintiff's engagement of Defendant. See Am. Cmplt., Count Three ¶¶ 1-3. Thus, Plaintiff is complaining of injuries that did not result directly or indirectly from the state court judgment. SeeHoblock v. Albany Cnty. Bd. ...

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