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Sheridan and Murray, LLC v. The Roberts Law Firm

United States District Court, E.D. Pennsylvania

December 11, 2019

THOMAS W. SHERIDAN and SHERIDAN AND MURRAY, LLC, Plaintiffs,
v.
THE ROBERTS LAW FIRM, Defendant.

          MEMORANDUM

          JOSHUA D. WOLSON, J.

         This is a dispute between two law firms about a referral fee. Plaintiffs Sheridan & Murray, LLC and its named partner Thomas Sheridan (collectively, “S&M”) move this Court to dismiss most of the counterclaims against them. For the reasons that follow, the Court will dismiss the claims for breach of fiduciary duty (Counterclaim IV) and conversion (Counterclaim VI). The Court will deny the remainder of the Motion.

         I. FACTUAL BACKGROUND

         In 2013, James and Kay Burgess (the “Clients”) hired The Roberts Law Firm, a Professional Corporation doing business as Roberts & Roberts (“R&R”), to represent them in connection with injuries that James Burgess suffered while working on an oil rig in Pennsylvania. (ECF No. 20, ¶ 5.) R&R referred the Clients' personal injury claims to S&M. (Id. ¶ 6.)

         In September of 2014, R&R, S&M, and the Clients agreed in writing that R&R would receive 40 percent of the gross attorney's fee and that S&M would receive the remaining 60 percent of the fee. (Id., Ex. A.) In February 2018, Mr. Sheridan called Randell Roberts of R&R with a pessimistic status update on the case. (Id. ¶ 9.) During that call, Mr. Sheridan asked that R&R reduce its referral fee to a maximum amount of $320, 000, in order to maintain an economically viable lawsuit for S&M to pursue. (Id.) Mr. Roberts agreed to this proposed revision. (Id. ¶ 10.) Later that year, the case settled for $44 million. (Id. ¶ 11.)

         The Parties now have a dispute about the terms of their referral arrangement. R&R alleges that Mr. Sheridan did not initially disclose the $44 million settlement amount to Mr. Roberts. (Id. ¶ 12.) Once R&R learned of the settlement amount, Mr. Roberts expressed concern to Mr. Sheridan about Mr. Sheridan's representations that led to the revision of the original 2014 referral fee agreement. (Id. ¶ 13.) After some correspondence between the two individuals, Mr. Sheridan and his firm filed this lawsuit against R&R. (Id, Ex. B.) R&R, in turn, asserts the following counterclaims: intentional misrepresentation (Count I); negligent misrepresentation (Count II); intentional nondisclosure (Count III); breach of fiduciary duty (Count IV); constructive fraud (Count V); conversion (Count VI); breach of contract (Count VII); promissory estoppel (Count VIII); and unjust enrichment (Count IX). S&M seeks to dismiss all of R&R's counterclaims except for the breach of contract claim.

         II. LEGAL STANDARD

         Dismissal for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) is proper if “the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007). In other words, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). In evaluating a 12(b)(6) motion to dismiss, a court must accept all factual allegations in the complaint as true and construe the complaint in the light most favorable to the plaintiff. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). While factual allegations need not be detailed, they “must be enough to raise a right to relief above the speculative level.” Bell Atl.

         Corp., at 555; Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). However, under Fed.R.Civ.P. 9(b), when a party alleges fraud or mistake, it “must state with particularity the circumstances constituting fraud or mistake.” The Court must disregard legal conclusions, conclusory statements, and rote recitals of the elements of a cause of action. James v. City of Wilkes-Barre, 700 F.3d 675, 679 (3d Cir. 2012); Iqbal, 556 U.S. at 678.

         III. ANALYSIS

         A. Choice Of Law Issues

         S&M argues that Pennsylvania law applies here. R&R assumes Pennsylvania law applies for purposes of this Motion. For the Court to resolve a choice-of-law issue, it will have to conduct a fact-intensive analysis that the record before it does not permit. Therefore, the Court will apply Pennsylvania law for purposes of this Motion. However, the Court reserves final judgment on any choice-of-law question until it has a more fulsome record before it.

         B. Conversion

         R&R's conversion claim fails because it has not demonstrated that S&M has taken anything from it. Instead, R&R's claim, properly understood, is that S&M has not paid it a debt. Although money can be the subject of a claim for conversion, the failure to pay a debt is not conversion. See Shonberger v. Oswell, 530 A.2d 112, ...


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