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Asif Javaid v. Elliott B. Weiss

December 19, 2011

ASIF JAVAID, PLAINTIFF
v.
ELLIOTT B. WEISS, DEFENDANT



The opinion of the court was delivered by: (Magistrate Judge Carlson)

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

In this case, which he characterizes as "a professional liability action," Plaintiff Asif Javaid has sued Elliott B. Weiss, his former lawyer, alleging that Mr. Weiss is liable for professional malpractice and breach of contract. It appears that Plaintiff's claims arose out of events which transpired between three and nine years ago: a 2002 loan transaction that resulted in 2008 in Mr. Javaid, as a guarantor on the loan, having a confessed judgment entered against him for $865,910.53 -- an amount that was later reduced to $366,008.79, after Mr. Weiss commenced proceedings in the Court of Common Pleas for Lycoming County in an effort to open or strike the judgment. Mr. Weiss was engaged as Mr. Javaid's counsel both during the original 2002 loan transaction, and again later in 2008 when he endeavored to have the confessed judgment set aside.

As explained below, Mr. Javaid has alleged that Mr. Weiss failed adequately to explain the meaning and significance of a confession-of-judgment clause contained in the 2002 loan agreement, and later, in 2008, failed to effectively represent Mr. Javaid in proceedings that Mr. Elliott initiated in an effort to strike or open the judgment that had been entered against Mr. Javaid following default on the loan. The action was filed in federal court on the basis of diversity of citizenship, as Mr. Javaid is a citizen of the state of New York and alleges damages in excess of $75,000, and Mr. Weiss is a citizen of Pennsylvania who maintains a law practice in Williamsport, Pennsylvania.

Defendant has moved to dismiss the complaint in its entirety pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim. Defendant contends that Plaintiff's claims are inadequately pled, fail under Pennsylvania substantive law, and are otherwise time-barred. In support of its motion, Defendant has provided not only legal argument, but also numerous documents that Plaintiff filed in state-court proceedings relating to the loan transaction and the subsequent judgment entered against him, which Defendants argue make absolutely clear that Plaintiff's claims are meritless. Defendants also urge the Court to find that at least some claims are time-barred by the applicable statute of limitations. Plaintiff has responded by generally arguing that his complaint is sufficient, asserting that the liberal pleading rules should permit the complaint to survive, and arguing that the Court is not permitted to consider application of the statute of limitations on a motion to dismiss.

Upon careful consideration, and taking the allegations pleaded as true for purposes of this opinion, we find that Plaintiff's complaint, as currently drafted, is too speculative, vague, and conclusory to survive Defendant's motion to dismiss, and falls well short of what is now required of a complaint following the Supreme Court's decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal --U.S.--, 129 S.Ct. 1937 (2009) in order to state a claim upon which relief may be granted. Furthermore, we conclude that Defendants have raised substantial questions about whether some or all of the claims raised in the complaint are time-barred by the two-year statute of limitations applicable to legal malpractice claims under Pennsylvania law.

Because of these pleading deficiencies and our conclusion that, as currently pled, the complaint attempts to seek relief for time-barred claims, we will grant the motion to dismiss without prejudice to Plaintiff being given a final opportunity to file an amended complaint to address the deficiencies identified in this opinion. Thus, by this ruling, we give the plaintiff a final opportunity to amend his claim to properly articulate a cause of action within the period of the statute of limitations.

II. FACTUAL BACKGROUND*fn1

In 2002, Plaintiff Asif Javaid retained the legal services of attorney Elliott B. Weiss in connection a loan transaction between ARM Hospitality, Inc. ("ARM"), as borrower, and BLC Capital Corp. ("BMC") as lender. In this transaction, BLC loaned ARM $700,000, which was secured by a stock pledge from ARM's shareholders, and by a personal guaranty by Javaid, who at that time was ARM's president. The express terms of the guaranty that Javaid executed as part of this transaction authorized the lender to confess judgment against Javaid for any unpaid part of the note.

In the complaint, Plaintiff claims that he retained Mr. Weiss to serve as his counsel in connection with this loan transaction, and that Mr. Weiss "explicitly and implicitly agreed to provide competent legal services to [Mr. Javaid] for all services which he was contracted to provide." (Compl., ¶ 6.) Plaintiff does not articulate the precise nature and scope of the legal services that he claims Mr. Weiss was contracted to provide, but it appears that he engaged Mr. Weiss to provide him with legal counsel at the time the loan transaction was being entered into, and again later in 2006 and 2008 when proceedings were commenced in the Court of Common Pleas following an event of default under the loan and the entry of a confessed judgment against Mr. Javaid. According to Mr. Javaid, at the time the loan transaction was entered into, Mr. Weiss failed to explain the existence or significance of a confession of judgment clause that was a part of the loan guaranty, and further failed to explain that as part of the guaranty, Mr. Javaid was waiving his right to notice and a hearing upon an event of default under the loan agreement. (Doc. 1, Compl., at ¶ 9.)

After ARM defaulted on its loan obligations, SPCP Group, Inc., the assignee of BLC's rights under the loan, commenced foreclosure proceedings against the real property that secured the note. On February 1, 2008, the subject property was sold at a sheriff's sale to Little League Baseball, Inc. for $588,500.00. On February 6, 2008, the Court of Common Pleas of Lycoming County entered judgment in favor of SPCP Group, Inc. in the amount of $859,910.53. (Doc. 12, Ex. B.)

Less than one month later, on March 3, 2008, Plaintiff filed a petition to strike or open the confessed judgment. (Doc. 12, Ex. C.) Plaintiff engaged Mr. Weiss to file this petition on his behalf. In the petition, Plaintiff argued that the attorney's fees claimed by SPCP Group were unreasonably excessive; that Plaintiff was entitled to a credit equal to the sale price of the subject property; and that the Deficiency Judgment Act barred the SPCP Group from recovering from Plaintiff. (Id.) On April 22, 2008, the Court of Common Pleas denied the petition, but reduced the judgment to include a credit in the amount of $515,675.92 resulting from the sale of the real property that had secured the loan. (Doc. 12, Ex. D.) Plaintiff appealed to the Pennsylvania Superior Court, which affirmed the Court of Common Pleas's order in an opinion issued on November 10, 2009. (Doc. 12, Ex. B.)

While Plaintiff's appeal before the Pennsylvania Superior Court was pending, SPCP Group took steps to enforce the judgment against Plaintiff in New York state. Thus, on December 12, 2008, SPCP Group filed a complaint in the Supreme Court of the State of New York, Dutchess County, seeking enforcement. (Doc. 12, Ex. E.) Plaintiff, through New York counsel, filed a verified answer in response to the complaint on January 29, 2009. (Doc. 12, Ex. F.) SPCP Group proceeded to move for summary judgment on its enforcement action. (Doc. 12, Ex. G.) Plaintiff, who was at this time apparently represented by other counsel in New York, did not respond to this motion, and on July 22, 2009, judgment was entered against Plaintiff in the amount of $366,008.79, plus costs and interest dating from December 12, 2008. (Doc. 12, Ex. H.)

Plaintiff commenced the instant action in this Court on June 6, 2011. (Doc. 1.) Defendant filed the instant motion to dismiss on August 19, 2011, and after being granted an enlargement of time, filed a brief in support of the motion on September 23, 2011. (Docs. 7, 12.) Plaintiff filed a brief in opposition to the motion on October 10, 2011, to which Defendant replied on October 21, 2011. (Docs. 13, 14.) The motion is now ripe for disposition, and for the reasons that follow it will be granted.

III. STANDARD OF REVIEW

Rule 12(b)(6) provides that a complaint should be dismissed for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). With respect to this benchmark standard for assessing the legal sufficiency of a complaint, the United States Court of Appeals for the Third Circuit has recently described the evolving standards governing pleading practice in federal court, stating that:

Standards of pleading have been in the forefront of jurisprudence in recent years. Beginning with the Supreme Court's opinion in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) continuing with our opinion in Phillips [v. County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008)]and culminating recently with the Supreme Court's decision in Ashcroft v. Iqbal --U.S.--, 129 S.Ct. 1937 (2009) pleading standards have seemingly shifted from simple notice pleading to a more heightened form of pleading, requiring a plaintiff to plead more than the possibility of relief to survive a motion to dismiss.

Fowler v. UPMC Shadyside, 578 F.3d 203, 209-10 (3d Cir. 2009).

In considering whether a complaint fails to state a claim upon which relief may be granted, the Court must accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom are to be construed in the light most favorable to the plaintiff. Jordan v. Fox Rothschild, O'Brien & Frankel, Inc., 20 F.3d 1250, 1261 (3d Cir. 1994). However, a court "need not credit a complaint's bald assertions or legal conclusions when deciding a motion to dismiss." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). Additionally a court need not "assume that a ... plaintiff can prove facts that the ... plaintiff has not alleged." Associated Gen. Contractors of Cal. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). As the Supreme Court held in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), in order to state a valid cause of action a plaintiff must provide some factual grounds for relief which "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of actions will not do." Id. at 555. "Factual allegations must be enough to raise a right to relief above the speculative level." Id. In keeping with the principles of Twombly, the Supreme Court has underscored that a trial court must assess whether a complaint states facts upon which relief can be granted when ruling on a motion to dismiss. In Ashcroft v. Iqbal, __U.S. __, 129 S.Ct. at 1937 (2009), the Supreme Court held that, when considering a motion to dismiss, a court should "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 1950. According to the Supreme Court, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 1949. Rather, in conducting a review of the adequacy of complaint, the Supreme Court has advised trial courts that they must:

[B]egin by identifying pleadings that because they are no more than conclusions are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their ...


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