United States District Court, E.D. Pennsylvania
case arises out of alleged nonpayment of fees owed for legal
services. Plaintiff Jacoby Donner, P.C. filed suit in this
Court on May 12, 2017, seeking recovery of outstanding fees
owed for legal services provided by plaintiff to defendants,
Aristone Realty Capital, LLC, Todd M. Lippiatt, and Patrick
M. McGrath. Defendants answered and asserted counterclaims
against Jacoby Donner for malpractice in connection with the
legal services performed.
before the Court is Jacoby Donner's Motion to Dismiss the
Counterclaims (Document No. 14, filed July 27, 2017). For the
reasons stated below, the Motion is granted in part and
denied in part.
facts of this case as set forth in Aristone Realty Capital,
LLC., Todd M. Lippiatt, and Patrick M. McGrath's
(collectively, “counterclaim plaintiffs”) Amended
Answer, Defenses, and Counterclaims (Document No. 10, filed
July 6, 2017). Aristone is a New York-based real estate
development and investment company. Am. Counterclaim ¶
4. Lippiatt and McGrath are principals of Aristone.
Id. ¶¶ 5, 6. In February of 2010, Aristone
retained Jacoby Donner to provide legal services in
connection with several real estate development projects.
Id. ¶ 7. This case involves those legal
services provided to two non-party entities affiliated with
Aristone: CS Paradiso LLC (“CS Paradiso”) and AH
DB Kitchen Aspen Investors LLC (“AH DB”).
acted through an affiliated company, CS Paradiso to acquire
properties in a Tennessee real estate development called
Tellico Village. Am. Counterclaim ¶15. In 2010, the
Tellico Village Property Owners Association
(“TVPOA”) sued CS Paradiso over unpaid
assessments on certain parcels of land. Id. ¶
16. The parties entered into a Settlement Agreement (the
“TVPOA Settlement Agreement”) to resolve the
claims and, as part of that Agreement, CS Paradiso was
required to execute and record a number of quitclaim deeds
and lien releases by August 19, 2013. Id. ¶ 17.
Aristone asked Jacoby Donner to execute and record quitclaim
deeds and lien releases as required by the TVPOA Settlement
Agreement and Jacoby Donner accepted the assignment.
Id. ¶ 18. Jacoby Donner executed the quitclaim
deeds and lien releases in September 2014, over one year
late, in violation of the terms of the TVPOA Settlement
Agreement. Id. ¶ 19. In May 2015, TVPOA filed
suit against CS Paradiso for breach of the TVPOA Settlement
Agreement. CS Paradiso entered into a second Settlement
Agreement and Release to resolve that claim (the
“Second TVPOA Settlement Agreement”).
Id. ¶ 22. As part of the Second TVPOA
Settlement Agreement, CS Paradiso was required to pay TVPOA
Donner also represented Aristone's affiliated company, AH
DB. In 2013, McGrath and Lippiatt acted through two entities,
AH DB and Rocky Aspen Management 204 LLC (“RAM”),
to develop a restaurant and lounge in Aspen, Colorado. Am.
Counterclaim ¶ 26. Together, the entities formed Rocky
Aspen LLC (“Rocky Aspen”). Under their agreement,
AH DB was to provide the financing for the restaurant and RAM
was to provide restaurant expertise. Id. ¶ 26.
Jacoby Donner represented AH DB. Id. ¶ 27. The
cost of that project soared and AH DB was unable to provide
the necessary capital for the project. Id. ¶
31. In December 2014, the owner of the building in which the
restaurant was located sued Rocky Aspen and McGrath for
non-payment of rent and for construction costs. Id.
¶ 30. Rocky Aspen filed for bankruptcy in March 2016.
Id. ¶¶ 31, 32. In the months leading up to
the bankruptcy, Jacoby Donner failed to enforce existing
contracts. Id. ¶ 33. Jacoby Donner also
instructed associates to cease working on the AH DB matter
and failed to adequately staff its representation of AH DB.
Id. ¶¶ 34, 35. Aristone terminated its
relationship with Jacoby Donner in the spring of 2016. Am.
Counterclaim ¶ 13.
Donner filed the instant suit on May 12, 2017, for nonpayment
of legal fees. On July 6, 2017, Aristone, McGrath, and
Lippiatt filed amended answer with counterclaims asserting
two counts of legal malpractice: Count I for breach of
contract and Count II for negligence, both of which arise out
of the same alleged conduct. Specifically, counterclaim
plaintiffs assert that Jacoby Donner's failure to execute
the quitclaim deeds and lien releases pursuant to the TVPOA
Settlement Agreement caused Aristone to incur significant
legal fees and pay additional funds in settlement. With
respect to Jacoby Donner's representation of AH DB,
counterclaim plaintiffs assert that Jacoby Donner caused
Aristone and McGrath to incur significant legal fees because
Jacoby Donner failed to enforce existing contracts and to
exercise favorable options, failed to adequately staff the AH
DB matter, and instructed attorneys to cease working on the
AH DB matter. The breach of contract claims in Count I and
the negligence claims in Count II are based on the same
purpose of a 12(b)(6) motion to dismiss is to test the legal
sufficiency of the complaint.” Nelson v. Temple
Univ., 920 F.Supp. 633, 634 n.2 (E.D. Pa. 1996). To
survive a motion to dismiss, plaintiff must allege
“sufficient factual matter, accepted as true, to state
a claim for relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662 (2009). “A
claim has facial plausibility when the pleaded factual
content allows the court to draw the reasonable inference
that the defendant is liable for the misconduct
alleged.” Id. at 663. In assessing the
plausibility of the plaintiff's claims, a district court
first identifies those allegations that constitute nothing
more than “legal conclusions” or “naked
assertions.” Bell Atl. Corp. v. Twombly, 550
U.S. 554, 555, 557 (2007). Such allegations are “not
entitled to the assumption of truth.” Iqbal,
556 U.S. at 679. The court then assesses “the
‘nub' of the plaintiff['s] complaint-the
well-pleaded, nonconclusory factual allegation[s]”-to
determine whether it states a plausible claim for relief.
Donner argues that the counterclaims must be dismissed in
their entirety because counterclaim plaintiffs lack standing
to bring suit. In the alternative, Jacoby Donner asserts that
certain of plaintiffs' counterclaims are barred by the
gist of the action doctrine. The Court addresses each
argument in turn.
Donner contends that the counterclaims must be dismissed in
their entirety because, counterclaim plaintiffs lack standing
to assert claims on behalf of affiliated entities CS ...