United States District Court, D. South Carolina, Charleston Division
Charles Dombek, Justin T. Foxx, The Optimal Insurance Group, Paul Cassano & Paul LoPiccolo, Plaintiffs,
F. Miles Adler, Defendant.
ORDER AND OPINION
Richard Mark Gergel United States District Court Judge
matter is before the Court on the Motion to Dismiss
Counterclaims (Dkt. No. 32) by Plaintiffs Charles Dombek,
Justin T. Foxx, The Optimal Insurance Group, Paul Cassano,
and Paul LoPiccolo (collectively, "Plaintiffs").
For the reasons set forth below, the Court grants in part and
denies the motion.
assert claims for breach of fiduciary duty, legal
malpractice, negligence, and unfair trade practices against
Defendant F. Miles Adler regarding a gold-investment scheme.
(Dkt. No. 22.) The operative First Amended Complaint alleges,
generally, that the Plaintiffs invested hundreds of thousands
of dollars in a venture to export freshly mined gold ingots
from the Democratic Republic of Congo through an attorney in
Nairobi, Kenya. (Dkt. No. 22 at ¶¶ 22 -25.) Adler
allegedly represented that he would serve as legal counsel
for the enterprise and any risk of loss would be covered by
his insurance. (Id.) However, the plan fell apart
and the gold shipment was ultimately seized and retained by
the sellers even after the Plaintiffs paid hundreds of
thousands of dollars to secure its release. (Id. at
¶¶ 30 - 31.) The Plaintiffs allege that Adler
failed to do basic due diligence on the sellers, failed to
set up appropriate legal instruments to protect their
investments, and paid himself for his work in the scheme.
(Id. at 33 - 40.)
Adler denies any misconduct or liability related to the gold
investments. (Dkt. No. 30.) Additionally, Adler brings ten
counterclaims against the Plaintiffs for their alleged roles
in the failed scheme. Specifically, Adler alleges that he and
Plaintiffs Dombek and Cassano entered into a partnership, and
therefore they are all jointly and severally liable for any
claims against the partnership. (Dkt. No. 30 at ¶ 95.)
Based on this allegation, Adler brings the following
counterclaims: declaratory judgment, defamation, breach of
contract, breach of fiduciary duty, promissory estoppel,
breach of good faith and fair dealing, negligent
misrepresentation, misappropriation of partnership
opportunities, quantum meruit, and complete set off. (Dkt.
No. 30 at 14 - 21.) Plaintiffs now seek to dismiss all of
Adler's counterclaims, and Adler opposes the
motion. (Dkt. Nos. 32, 36.)
12(b)(6) of the Federal Rules of Civil Procedure permits the
dismissal of an action if the complaint fails "to state
a claim upon which relief can be granted." Such a motion
tests the legal sufficiency of the complaint and "does
not resolve contests surrounding the facts, the merits of the
claim, or the applicability of defenses.... Our inquiry then
is limited to whether the allegations constitute 'a short
and plain statement of the claim showing that the pleader is
entitled to relief.'" Republican Party of N.C.
v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (quotation
marks and citation omitted). In a Rule 12(b)(6) motion, the
Court is obligated to "assume the truth of all facts
alleged in the complaint and the existence of any fact that
can be proved, consistent with the complaint's
allegations." E. Shore Mas., Inc. v. J.D. Assocs.
Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000).
However, while the Court must accept the facts in a light
most favorable to the non-moving party, it "need not
accept as true unwarranted inferences, unreasonable
conclusions, or arguments." Id.
survive a motion to dismiss, the complaint must state
"enough facts to state a claim to relief that is
plausible on its face." Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570(2007). Although the
requirement of plausibility does not impose a probability
requirement at this stage, the complaint must show more than
a "sheer possibility that a defendant has acted
unlawfully." Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). A complaint has "facial plausibility"
where the pleading "allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged." Id.
preliminary matter, Defendant Adler has withdrawn his
counterclaims for quantum meruit and for a complete set-off.
(Dkt. No. 36 at 1, 15.) Therefore, Plaintiffs' motion to
dismiss as to the claims for quantum meruit (Ninth
Counterclaim) and complete set-off (Tenth Counterclaim) is
granted. The Court discusses the other counterclaims in
First Counterclaim: Declaratory Judgment
seeks a declaratory judgment under S.C. Code § 15-53-10
et seq. that Adler and Plaintiffs Dombek and Cassano
entered into a partnership, rather than some other form of
relationship. South Carolina's declaratory judgment law
makes clear that, "[t]he court may refuse to render or
enter a declaratory judgment or decree when such judgment or
decree, if rendered or entered, would not terminate the
uncertainty or controversy giving rise to the
proceeding." S.C. Code Ann. § 15-53-70. See Pee
Dee Elec. Co-op., Inc. v. Carolina Power & Light
Co., 279 S.C. 64, 66, 301 S.E.2d 761, 762 (1983)
(affirming dismissal of action where declaratory judgment
would not have terminated the controversy underlying the
proceedings). Here, a declaration would not resolve or
terminate the controversy in the proceedings. An
attorney-client relationship can exist regardless of whether
the attorney also has a separate business relationship with
the client. See Ellis v. Davidson, 358 S.C. 509,
523, 595 S.E.2d 817, 824 (Ct. App. 2004) (reversing grant of
summary judgment on legal malpractice claim where attorney
and client also formed corporation); Matter of
Conway, 305 S.C. 388, 392, 409 S.E.2d 357, 359 (1991)
("An attorney who enters into business with his client
does not...shed his professional standing and obligation, and
there is no just reason why he should be permitted to do
so."). Regardless of the determination of the
declaratory judgment, Plaintiffs claims, including for legal
malpractice, and many of Adler's counterclaims would be
unaffected and therefore declaratory judgment is
inappropriate here. Furthermore, as discussed below, Adler
also fails to allege that a partnership existed, and
therefore his request for a declaratory judgment of a
partnership is subject to dismissal. Therefore, Adler's
first counterclaim for a declaratory judgment is dismissed.
Second Counterclaim: Defamation Per Se
elements of defamation are: "1) a false and defamatory
statement concerning another; (2) an unprivileged publication
to a third party; (3) fault on the part of the publisher; and
(4) either action ability of the statement irrespective of
special harm or the existence of special harm caused by the
publication." McNeil v. S.C. Dep't of
Corr.,404 S.C. 186, 195, 743 S.E.2d 843, 848 (Ct. App.
2013). Adler's counterclaim is nothing more than a
recitation of these elements. Importantly, regarding the
allegedly defamatory statement, Adler merely states that
"on multiple occasions," including in an email
dated "19 September 2015" the Plaintiffs
"publish[ed] unprivileged statements alleging that Adler
engaged in crimes of moral turpitude and acted in a manner
unfit for Adler's lawful business or profession."
(Dkt. No. 30 at ¶ 115.) Adler argues that the inclusion
of "crime of moral turpitude" and "unfit in
his profession" suffice to make out a claim for
defamation per se. (Dkt. No. 36 at 7.) However,
those statements are nothing more than a recitation of one
form of defamation, slander per se. See Murray v. Holnam,
Inc.,344 S.C. 129, 142, 542 S.E.2d 743, 749 (Ct. App.
2001) ("Slander is actionable per se if it
charges the plaintiff with...: (1) commission of a crime of
moral turpitude; ...; or (5) unfitness in one's business
or profession."). The counterclaim includes no other
details regarding the allegedly defamatory statements.