George C. Papageorge v. Jonathan Zucker & Patricia Daus ( 2017 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 16-CV-226
GEORGE C. PAPAGEORGE, APPELLANT,
V.
JONATHAN ZUCKER & PATRICIA DAUS, APPELLEES.
Appeal from the Superior Court
of the District of Columbia
(CAB-462-15)
(Hon. Herbert B. Dixon, Jr., Trial Judge)
(Argued April 14, 2017 Decided September 21, 2017)
Emily Whelden, with whom Patrick C. Horrell was on the brief, for
appellant.
Matthew D. Berkowitz, with whom Mariana D. Bravo and Sarah W.
Conkright were on the brief, for appellee.
Before BECKWITH and EASTERLY, Associate Judges, and REID, Senior Judge.
BECKWITH, Associate Judge: The appellant, George Papageorge, had a
contract with his acquaintance, Matt Banks, that entitled Mr. Papageorge to most
of the proceeds of a wrongful eviction claim Mr. Banks was pursuing. When that
claim was settled, Mr. Papageorge informed Mr. Banks‘s lawyers, appellees
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Jonathan Zucker and Patricia Daus, of his purported right to the proceeds, and then
sued them for negligence and conversion when they disbursed the proceeds to their
client, Mr. Banks, instead of to Mr. Papageorge. The trial court dismissed Mr.
Papageorge‘s claims, and we now affirm that judgment.
I.
Mr. Banks was renting a room in a single-family house in the District of
Columbia when Eastern Savings Bank (ESB) foreclosed on the property. Mr.
Banks assigned his rights under the Tenant Opportunity to Purchase Act (TOPA),
D.C. Code §§ 42–3404.01 et seq. (2012 Repl.), to Mr. Papageorge, but continued
living in the house for several years until ESB evicted him unlawfully. A week
after this court held for Mr. Banks in the appeal from the eviction proceeding and
reversed the judgment for possession that the trial court had entered in ESB‘s
favor, see Banks v. E. Sav. Bank, 8 A.3d 1239 (D.C. 2010), Mr. Banks and his
cotenant entered into an agreement with Mr. Papageorge. That agreement stated
that the two tenants planned to sue ESB for unlawful eviction and that Mr.
Papageorge, who had financed ―extensive litigation to enforce, maintain and
protect‖ the tenants‘ rights since 2001, would receive the lion‘s share of the
proceeds from the wrongful eviction claim. Specifically, it provided that ―[a]ny
and all monies obtained from a suit for wrongful eviction and/or the
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relinquishment of tenant rights and/or any other sources shall be distributed‖ in the
following manner: Mr. Papageorge would be reimbursed ―for all legal costs
expended since 2001 involving ESB and the subject property‖ and would also
receive 75 percent of the remaining sum, while Mr. Banks and his cotenant would
each receive 12.5 percent. The agreement stated that ―[i]t is further understood and
agreed that Papageorge has financed all rent monies and will be reimbursed at the
rate of 100%.‖
Mr. Banks hired Mr. Zucker and Ms. Daus to represent him in the wrongful
eviction case against ESB. Before any suit was filed, Mr. Banks signed a
settlement with ESB that gave Mr. Banks $100,000 in exchange for a release of the
wrongful eviction and other claims. Mr. Papageorge learned of the settlement two
days later, and his lawyer told Mr. Zucker that Mr. Papageorge had a claim to the
settlement money. The same day, Mr. Papageorge showed Ms. Daus a copy of his
agreement with Mr. Banks and his cotenant along with documentation of
$88,740.86 in costs and fees he claimed he was owed. Despite Mr. Papageorge‘s
repeated demands, Mr. Zucker and Ms. Daus refused to pay him out of the
settlement money, and instead disbursed the money to their client, Mr. Banks. Mr.
Papageorge asked the lawyers to stop payment on a check they had already given
Mr. Banks, warning that the money would soon be gone because Mr. Banks would
spend it, but they rebuffed him.
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Mr. Papageorge subsequently brought a breach of contract suit against Mr.
Banks for the money. The trial court granted summary judgment against Mr.
Papageorge, but this court reversed. See Papageorge v. Banks, 81 A.3d 311, 313
(D.C. 2013). After our remand, Mr. Papageorge and Mr. Banks reached a
settlement under which Mr. Banks gave Mr. Papageorge $20,000 in exchange for
Mr. Papageorge‘s dismissal of the lawsuit with prejudice and release of his claims
against Mr. Banks. The following month, Mr. Papageorge sued Mr. Banks‘s
attorneys for conversion and, in the alternative, negligence. The trial court granted
the attorneys‘ motion to dismiss under Rule 12 (b)(6).1 Mr. Papageorge appeals
from this dismissal.
II.
Because this is an appeal from a motion to dismiss, we take all factual
allegations in the complaint as true. Solers, Inc. v. Doe, 977 A.2d 941, 947-48
(D.C. 2009). Our review of legal questions is de novo. Id.
A. Negligence
To prevail on a claim of negligence, a plaintiff must show that the defendant
1
The court also denied as moot Mr. Papageorge‘s motion for leave to
amend his complaint, while nonetheless indicating that it considered the amended
complaint in deciding the motion to dismiss.
5
owed him a duty of care, that the defendant breached the duty, and that the plaintiff
suffered damages as a result. Hedgepeth v. Whitman Walker Clinic, 22 A.3d 789,
806 (D.C. 2011). It is the first element that is at issue here. Mr. Papageorge
acknowledges that, in general, attorneys owe a duty of care only to their clients.
See Scott v. Burgin, 97 A.3d 564, 566 (D.C. 2014); but see Needham v. Hamilton,
459 A.2d 1060, 1062 (D.C. 1983) (―The rule requiring privity is not, however,
without exception.‖). Citing In re Bailey, 883 A.2d 106, 116 (D.C. 2005),
however, he contends that an attorney also owes a duty of care to a nonclient third
party who presents the attorney with a ―just claim‖ against property in the
attorney‘s possession.
The ―just claim‖ concept stems from Rule 1.15 of the District of Columbia
Rules of Professional Conduct, which governs the ethical obligations of a lawyer
who is in possession of property in which others claim an interest. In particular,
the rule requires a lawyer to ―promptly deliver to the client or third person any
funds or other property that the client or third person is entitled to receive.‖ Rule
1.15 (c). Comment 8 on Rule 1.15 states:
Third parties, such as a client‘s creditors, may have just
claims against funds or other property in a lawyer‘s
custody. A lawyer may have a duty under applicable law
to protect such third-party claims against wrongful
interference by the client, and accordingly may refuse to
surrender the property to the client.
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In Bailey, we applied this concept to hold that an attorney violated Rule 1.15 when
he failed to use settlement money to pay a doctor he had hired to treat his client.
883 A.2d at 116–21. The attorney had contracted ―to withhold such sums from
any settlement(s), judgment(s) or verdicts due said patient/client as may be
necessary to adequately protect said doctor‖ but had not done so. Id. at 120. In
that case, the ―applicable law‖ under which the lawyer‘s duty arose was the law of
contractual obligations.
In contrast, Mr. Papageorge identifies no source of ―applicable law‖ under
which Mr. Zucker and Ms. Daus owed him a duty of care other than Rule 1.15
itself and the case law interpreting that rule. Yet as Mr. Papageorge concedes, the
Rules of Professional Conduct do not give rise to a private cause of action for their
violation. The section of the Rules describing their scope states:
Nothing in these Rules, the Comments associated with
them, or this Scope section is intended to enlarge or
restrict existing law regarding the liability of lawyers to
others . . . . Moreover, nothing in the Rules or associated
Comments or this Scope section is intended to confer
rights on an adversary of a lawyer to enforce the Rules in
a proceeding other than a disciplinary proceeding.
While the ethical rules governing lawyers may be relevant to establishing the
standard of care in malpractice actions, see Waldman v. Levine, 544 A.2d 683,
690-91 (D.C. 1988), they are not the source of a duty of care enforceable in tort.
See, e.g., Ayyildiz v. Kidd, 266 S.E.2d 108, 112 (Va. 1980); Bob Godfrey Pontiac,
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Inc. v. Roloff, 630 P.2d 840, 848 (Or. 1981). Lacking a basis to conclude that Mr.
Zucker and Ms. Daus owed Mr. Papageorge such a duty of care here, we affirm the
dismissal of his negligence claim.
B. Conversion
The tort of conversion consists of ―an unlawful exercise of ownership,
dominion, and control over the personalty of another in denial or repudiation of his
right to such property.‖ Washington Gas Light Co. v. Pub. Serv. Comm’n, 61 A.3d
662, 675 (D.C. 2013) (quoting Baltimore v. District of Columbia, 10 A.3d 1141,
1155 (D.C. 2011)). The personal property at issue is generally chattel, but money
can also be the subject of a conversion claim ―if the plaintiff has the right to a
specific identifiable fund of money.‖ McNamara v. Picken, 950 F. Supp. 2d 193,
194 (D.D.C. 2013).
Mr. Papageorge primarily argues that he had a valid contractual lien that Mr.
Zucker and Ms. Daus refused to accept, and that the attorneys‘ wrongful failure to
ratify the lien entitled him to an equitable lien. ―Broadly speaking, equity may
impose a lien to effectuate some underlying agreement between debtor and creditor
or in other circumstances where justice requires.‖ Wolf v. Sherman, 682 A.2d 194,
197 (D.C. 1996). But here, regardless of the contractual rights that Mr.
Papageorge‘s agreement with Mr. Banks and his cotenant may have given him
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against those tenants, Mr. Zucker and Ms. Daus were not parties to that agreement
and had no legal duty to ratify it. Cf. Travelers Ins. Co. v. Haden, 418 A.2d 1078,
1084 (D.C. 1980) (―In general, an attorney may be liable for failure to protect a
lien imposed on his client‘s settlement proceeds, where he expressly agrees with
the client and the creditor to do so.‖). As a general matter, there is no legal duty to
make or join a contract. See Emerine v. Yancey, 680 A.2d 1380, 1383 (D.C. 1996)
(―‗Contract‘ imports a voluntary agreement to make an exchange.‖). And while
Mr. Papageorge again points to the ―just claim‖ theory to establish that the
attorneys owed him this duty, as with the negligence claim above, this concept is
drawn from the law of attorney discipline and depends on a duty created by some
other ―applicable law.‖ Mr. Papageorge therefore cannot establish that he is
entitled to an equitable lien.
Mr. Papageorge advances one other basis for his conversion claim: he
asserts that he had a property right in the settlement money in the court registry,
and that Mr. Zucker and Ms. Daus, though on notice of that right, unlawfully
interfered with that right by signing off on the disbursement forms. In
circumstances like those here, where Mr. Banks‘s attorneys came into possession
of the property lawfully and where independent indications of conversion are
lacking, ―the settled rule‖ is that ―a demand for [the property‘s] return is necessary
to render [their] possession unlawful and to show its adverse nature.‖ Shea v.
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Fridley, 123 A.2d 358, 361 (D.C. 1956).
Mr. Papageorge made such a demand for the settlement money and it was
rejected, and he thus has a viable conversion claim against the attorneys if the
money was indeed his property. But it is in that regard that his conversion claim
falls short. While contractual rights are in personam rights that bind only the
parties to the contract, property rights are in rem rights that are ―good and
enforceable against all the world.‖ Harlan Fiske Stone, Law and its Administration
57 (1915); see also Thomas W. Merrill & Henry E. Smith, The Property/Contract
Interface, 101 Colum. L. Rev. 773, 776–77 (2001). Here, Mr. Papageorge signed a
contract with Mr. Banks and his cotenant that gave him a right to the proceeds
from the tenants‘ wrongful eviction claims, but this right was a contractual right
enforceable against Mr. Banks and the cotenant, not a property right enforceable
against whomever might be in possession of those proceeds. As Mr. Papageorge‘s
only entitlement to the settlement money stemmed from the as-yet-unperformed
contract with Mr. Banks and his cotenant, he did not have any property rights in
the settlement money when he made his demand, and his conversion claim
therefore fails.
III.
Finding no error, we affirm the trial court‘s dismissal of Mr. Papageorge‘s
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negligence and conversion claims.2
So ordered.
2
In light of our disposition, we need not address appellees‘ argument—
raised for the first time on appeal—that Mr. Papageorge‘s claims are barred by res
judicata. See Calomiris v. Calomiris, 3 A.3d 1186, 1190 (D.C. 2010).