United States District Court, D. South Carolina, Charleston Division
Nelson S. Chase, Esq., Plaintiff,
LOP Capital, LLC, Strategic Lending Solutions, LLC, Brian Knight, and Michael Loprieno, Defendants.
REPORT OF MAGISTRATE JUDGE
KEVIN F. McDONALD, Magistrate Judge.
This matter is before the court on the defendants' motion for partial summary judgment (doc. 112). The plaintiff is an attorney proceeding pro se. Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1)(A) and Local Civ. Rule 73.02(B)(2)(e)(D.S.C.), all pretrial matters in cases involving pro se litigants are referred to a United States Magistrate Judge for consideration.
Defendant LOP Capital, LLC ("LOP") is engaged in the commercial lending business. In 2008, LOP agreed to provide bridge financing for a Georgia real estate development. As additional collateral for the Georgia loan, LOP obtained a security interest in property located in Spartanburg County, South Carolina (the "Spartanburg Property"). The instrument by which LOP obtained a security interest in the Spartanburg Property was drafted for LOP by now-disbarred South Carolina attorney F. Scott Pfeiffer.
After the developer defaulted, LOP foreclosed on the Georgia property. In April 2009, following a sheriff's sale of the Georgia real estate, a Georgia court awarded LOP a deficiency judgment in the original principal amount of approximately $163, 944.99. Defendant Michael Loprieno, the principal of LOP, then sought South Carolina counsel to enforce LOP's lien against the Spartanburg Property. Mr. Loprieno first learned of the plaintiff through defendant Brian Knight, the principal of defendant Strategic Lending Solutions, LLC ("Strategic"). Mr. Loprieno contacted the plaintiff in April 2009 (doc. 112-1, Chase dep. 167-68).
The plaintiff did not have a written fee agreement with the defendants at the start of his representation ( id. 205). According to the plaintiff, the defendants paid him $25, 000.00 in early 2009 ( id. 135-36). On December 30, 2009, the plaintiff instituted a foreclosure action on behalf of LOP (the "2009 Civil Action") in the Spartanburg County Court of Common Pleas (C.A. No. 2009-CP-42-6973). The plaintiff did not send an invoice or statement to the defendants for his fees and costs in 2009 or 2010 (doc. 112-1, Chase dep. 141-42). According to defendant Loprieno, he understood that the plaintiff had charged them a flat fee that would take the matter to a final resolution. When he received a bill from the plaintiff in February 2011 that contained an hourly fee and many billable hours, defendant Loprieno states that he was shocked and disturbed (doc. 112-3, Loprieno aff. ¶ 4). The bill was for the period from August 2008 through February 4, 2011, and totaled $81, 526.37, with payments of $40, 000.00 and a balance due of $41, 526.37 (doc. 112-5, bill for period 8/2008 to 2/2011). The plaintiff has acknowledged that there were mistakes in the bill (doc. 112-2, Chase dep. 293-94). The defendants have submitted evidence that they have paid the plaintiff over $70, 000.00 (doc. 112-3, Loprieno aff. ¶ 10; doc. 119-1, 2/26/10 check to plaintiff for $12, 500.00).
In March 2011, the plaintiff filed an action for legal malpractice in the Greenville County Court of Common Pleas on behalf of LOP against now-disbarred attorney F. Scott Pfeiffer (the "Pfeiffer Matter") (C.A. No. 2011-CP-23-1909).
On April 25, 2011, the plaintiff and LOP entered a fee agreement regarding the 2009 Civil Action. This is the only agreement that was ever reduced to writing between the plaintiff and the defendants. The agreement provided as follows: "Lawyer will have an ATTORNEYS EXPRESS CHARGING LIEN for fees and unpaid costs on all the property of Spartanburg until the fees and unpaid costs are paid as provided herein" (doc. 48-1, fee agreement).
On October 31, 2011, the master-in-equity dismissed the 2009 Civil Action without prejudice , citing the plaintiff's failure to respond to counterclaims and his failure to join Strategic as a necessary party (doc. 96-5, dismissal order). The defendants contend that the plaintiff made matters worse by failing to file a timely Rule 59(e) motion addressing the alleged errors in the order of dismissal, which meant that the plaintiff's assignments of error were not properly preserved for appellate review (doc. 112-6, motion to alter or amend (only requesting clarification that the dismissal was granted without prejudice)).
On November 8, 2011, soon after the 2009 Civil Action was dismissed, the plaintiff filed a nearly identical action (the "2011 Civil Action") on behalf of LOP and Strategic (C.A. No. 2011-CP-42-4876). The 2011 Civil Action was removed to federal court on December 6, 2011 (C.A. No. 7:11-3312-JMC). The plaintiff also represented the defendants in a companion case filed against them in federal court by Capital Investment Funding, LLC and Cosimo, LLC contemporaneously with the removal of the 2011 Civil Action (C.A. No. 6:11-3321-MGL). That case was voluntarily dismissed by Capital Investment Funding, LLC and Cosimo, LLC on July 30, 2013, pursuant to a settlement of all litigation reached with the defendants.
On January 23, 2012, the plaintiff filed an appeal of the 2009 Civil Action to the South Carolina Court of Appeals, claiming that the master-in-equity erred in dismissing the case.
On March 8, 2012, the Greenville County Court of Common Pleas dismissed both the legal malpractice and the breach of fiduciary duty claims in the Pfeiffer Matter based on the plaintiff's failure to submit the statutorily required affidavit of merit along with the complaint (doc. 112-9, dismissal order). See S.C. Code Ann. § 15-36-100.
The plaintiff filed a motion to remand the 2011 Civil Action to state court, which was granted on June 27, 2012. According to the defendants, in July 2012, they terminated the plaintiff as counsel in the 2011 Civil Action. On July 20, 2012, the plaintiff filed a motion for attorney fees, costs, and expenses as attorney for LOP and Strategic in the federal case. The Honorable J. Michelle Childs, United States District Judge, granted the motion in part on May 7, 2013, awarding fees directly related to LOP and Strategic's efforts to have the matter remanded to state court in the amount of $11, 812.50 in attorney's fees and $110.00 in administrative fees (C.A. No. 7:11-3312-JMC, doc. 44).
On July 26, 2012, the plaintiff filed in the Spartanburg County Court of Common Pleas a "Notice of Attorney's Charging Lien" purporting to encumber the proceeds of any settlement or judgment that might subsequently be obtained by the defendants in the 2009 and 2011 Civil Actions (doc. 112-10, notice of attorney's charging lien).
On December 17, 2012, the plaintiff filed the instant action against the defendants in state court, and it was removed to federal court by the defendants on January 15, 2013, based upon diversity jurisdiction. In his second amended complaint, which was filed on September 3, 2013, the plaintiff alleges claims for breach of written contract, breach of oral contract, fraud, fraudulent misrepresentation and conspiracy to commit fraud, and quantum meruit (doc. 48, 2nd amended comp.). He alleges that the defendants owe him $272, 431.31 in attorney's fees and costs ( id. at 11; doc. 48-8, summary of attorney's costs and services rendered).
The South Carolina Court of Appeals dismissed the appeal of the 2009 Civil Action on June 19, 2013, based on the opposing party's argument that the plaintiff's decision to file the 2011 Civil Action rendered the appeal moot (doc. 89-7, dismissal order).
On July 26, 2013, the defendants entered into a confidential global settlement agreement with opposing parties as to all matters pending in the various courts.
On August 30, 2013, the plaintiff filed a motion, styled as arising under Federal Rule of Civil Procedure 60(b), in the federal case that had been closed when the 2011 Civil Action was remanded to state court (C.A. No. 7:11-3312-JMC). In the motion, the plaintiff noted that he had been told by his clients, LOP and Strategic, that they had entered into a confidential settlement agreement with opposing parties as to all matters pending in the various courts, which included a waiver of the court's May 7, 2013, order partially granting the motion for attorney fees and dismissal of the plaintiff's attorney's charging lien. The plaintiff alleged that LOP and Strategic "acted fraudulently" by entering into the settlement agreement. He asked that the court enter a declaratory judgment that his rights were violated and reopen the federal case to compel the parties to pay him the attorney fees and costs awarded in the May 7, 2013, order (C.A. No. 7:11-3312-JMC, doc. 47; see also doc. 53, amended motion). Judge Childs denied the motion on April 18, 2014 (C.A. No. 7:11-3312-JMC, doc. 63).
On October 14, 2013, the defendants filed their answer to the plaintiff's second amended complaint in the instant case, alleging counterclaims against the plaintiff for legal malpractice, breach of contract, intentional interference with prospective contractual relations, tortious interference with existing contractual relations, and unjust enrichment (doc. 73). On April 2, 2014, the undersigned issued a report recommending that the plaintiff's motion for partial summary judgment (doc. 89) on the defendants' counterclaims be denied (doc. 116). That recommendation is currently pending before the Honorable Bruce H. Hendricks, United States District Judge.
On March 21, 2014, the defendants filed the instant motion for summary judgment as to the plaintiff's third and fourth causes of action in the second amended complaint (doc. 112). The plaintiff filed a response in opposition on April 1, 2014 (doc. 114), and the defendants filed a reply on April 11, 2014 (doc. 119).
APPLICABLE LAW AND ANALYSIS
The defendants have moved for summary judgment on the plaintiff's third cause of action (fraud) and fourth cause of action (fraudulent misrepresentation and conspiracy to commit fraud). Federal Rule of Civil Procedure 56 states, as to a party who has moved for summary judgment: "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). As to the first of these determinations, a fact is deemed "material" if proof of its existence or nonexistence would affect the disposition of the case under the applicable law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986). An issue of material fact is "genuine" if the evidence offered is such that a reasonable jury might return a verdict for the non-movant. Id. at 257. In determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities against the movant and in favor of the non-moving party. United States v. Diebold, Inc. , 369 U.S. 654, 655 (1962).
The party seeking summary judgment shoulders the initial burden of demonstrating to the district court that there is no genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 325 (1986). Once the movant has made this threshold demonstration, the non-moving party, to survive the motion for summary judgment, may not rest on the allegations averred in his pleadings; rather, he must demonstrate that specific, material facts exist that give rise to a genuine issue. Id. at 324. Under this standard, the existence of a mere scintilla of evidence in support of the party's position is insufficient to withstand the summary judgment motion. Anderson , 477 U.S. at 252. Likewise, conclusory allegations or denials, without more, are insufficient to preclude the granting of the summary judgment motion. Id. at 248. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Id.
In the second amended complaint, the plaintiff alleges the following facts in support of his cause of action for fraud:
30. From the date of the last payment made by Defendants in October 2011 until the present, Plaintiff has continuously requested payment.
31. All Defendants including LOP Capital, LLC, Strategic Lending Solutions, LLC, Michael Loprieno, and Brian Knight have acted fraudulently in the failure to pay Attorney's fees and costs to Plaintiff. All Defendants are financially responsible for the Attorney's fees and cost incurred during Plaintiff's representation of Defendants.
32. Defendants made a false statement of a material fact: Defendant notified Plaintiff that Defendant had the intent to pay Plaintiff attorney's fees and cost based on Plaintiff's services. Defendant promised payment on many occasions, even notifying Plaintiff that payment had been sent, yet Plaintiff never received payment.
33. Defendants had knowledge that the statement was untrue: Plaintiff continually requested payment of both costs and attorney fees that had already been incurred by Plaintiff in order to continue to proceed with the numerous actions including the Appeal of the Master-in-Equity case, which had already been filed. Plaintiff advised Defendant that the costs were going to be significant because of the necessity of making approximately eighteen copies of the Record on Appeal, which consisted of approximately 1000 pages each during numerous conversations with Defendant. Defendant assured Plaintiff that the payment for costs would be sent by overnight mail, which was never sent or intended to be sent by Defendant. Defendants were aware of the time constraints, imposed by the Court Rules, as to the filing of the Record on Appeal. Both the written and oral agreements by the parties was that costs were to be the responsibility of the Defendants. The costs incurred were reasonable and necessary and were itemized to the Defendants. The Defendants challenged the reasonableness of the costs on the record on appeal and Plaintiff provided the Defendants with two bids from other sources, which were higher than that incurred by Plaintiff. After receiving proof of the reasonableness of the costs, Defendants never sent the costs, which they were obligated to pay.
34. Defendants had the intent to deceive Plaintiff: Defendants used this ruse in order not to pay the costs and by representing that it would send those costs by overnight mail inducing Plaintiff to continue to provide the services necessary for the appeal.
35. Plaintiff justifiably relied on the fraudulent statements: Defendants action, in promising to pay fees and costs, was done to induce Plaintiff to continue ...