Naegele v. Albers , 110 F. Supp. 3d 126 ( 2015 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
TIMOTHY D. NAEGELE, )
)
Plaintiff, )
)
v. ) Civil Action No. 03-2507 (ABJ)
)
DEANNA J. ALBERS, et al., )
)
Defendants. )
____________________________________)
MEMORANDUM OPINION
Plaintiff Timothy D. Naegele brought this diversity action against Deanna J. Albers and
Raymond H. Albers (“the Albers defendants”), former defendant Lloyd J. Michaelson, 1 and
unnamed individuals “Does 1–10” (“the Doe defendants”), asserting thirteen common law claims
sounding in contract and tort. 2d Am. Compl. [Dkt. # 109]. The Albers defendants have moved
to dismiss, contending that several of plaintiff’s claims are barred by res judicata in light of the
decision of the California Court of Appeals in Albers v. Naegele, No. B240455, 2013 WL 5945676
1 Defendant Michaelson was dismissed from this case in January 2005, when the court then
assigned to the matter determined that plaintiff’s first amended complaint failed to show that the
court could exercise personal jurisdiction over Michaelson. Naegele v. Albers (Naegele I), 355 F.
Supp. 2d 129, 137–39 (D.D.C. 2005). Plaintiff then named Michaelson again as a defendant in
his second amended complaint. 2d Am. Compl. [Dkt. # 109] ¶ 5. But the court at that juncture
noted that the second amended complaint “offers no new jurisdictional facts that would establish
that Michaelson is now subject to personal jurisdiction in the District of Columbia, and thus that
would justify hauling Michaelson back into this dispute.” Naegele v. Albers (Naegele IV), 958 F.
Supp. 2d 17, 20 n.2 (D.D.C. 2013). Accordingly, the court “agree[d] that Michaelson rightly
remains dismissed as a defendant from this action.” Id. After the case was transferred to this
Court, it reiterated that holding in a minute order on November 5, 2014, and it ordered plaintiff
not to refer to Michaelson as a defendant in any future pleadings. Minute Order (Nov. 5, 2014).
Plaintiff appealed that determination to the D.C. Circuit, Notice of Appeal [Dkt. # 132], but his
appeal was denied for lack of a final order. Order (D.C. Cir. Feb. 5, 2015) [Dkt. # 142]. Thus,
Michaelson, who is no longer a defendant to this action, is mentioned in this memorandum opinion
only as a former defendant and as a party to relevant prior proceedings.
(Cal. Ct. App. Nov. 6, 2013). Defs.’ Mot. for an Order of Dismissal [Dkt. # 140] (“Defs.’ 3d Mot.
to Dismiss”); Defs.’ Mem. of P. & A. in Supp. of Defs.’ 3d Mot. to Dismiss [Dkt. # 140] (“Defs.’
Mem.”) at 2. The Albers defendants further argue that the Court lacks subject matter jurisdiction
over the remaining claims against them and that there is no basis for exercising personal
jurisdiction over them in the District of Columbia. Defs.’ Mem. at 3–7. Plaintiff opposed the
motion, Pl.’s Resp. to Court’s Order [Dkt. # 143] (“Pl.’s Opp.”), and at the Court’s direction, he
also filed a supplemental pleading regarding the applicability of the res judicata doctrine to his
claims. Pl.’s Resp. to Court’s Order [Dkt. # 138].2
Upon review of the parties’ pleadings, the prior decisions in this and related cases, and the
relevant case law, the Court will grant the Albers defendants’ motion and dismiss Counts I through
VI against them as precluded by res judicata. Further, the Court finds no basis for the exercise of
personal jurisdiction over the Albers defendants with regard to the remaining claims against them.
And because the Court finds that Counts V and VII through XIII of the second amended complaint
fail to state a plausible claim against the Doe defendants, it will dismiss those counts pursuant to
Federal Rule of Civil Procedure 12(b)(6). Accordingly, the case will be dismissed in its entirety.
BACKGROUND
This action, which began in 2003, has a long and complex factual and procedural history
which has been discussed at length in prior opinions of this court and others. See, e.g., Naegele v.
Albers (Naegele III), 940 F. Supp. 2d 1, 2–6 (D.D.C. 2013); Naegele v. Albers (Naegele IV), 958
F. Supp. 2d 17, 19–22 (D.D.C. 2013); Albers, 2013 WL 5945676, at *2–*6. The Court takes
2 Because the arguments advanced in plaintiff’s supplemental res judicata pleading are
reproduced nearly verbatim in his opposition to the Albers defendants’ motion to dismiss, the
Court will cite only to plaintiff’s opposition throughout its opinion, although it considered fully
the arguments advanced on the res judicata issue in both of plaintiff’s pleadings.
2
judicial notice of its own docket and it also relies upon those prior opinions for the purpose of
recounting the history of this action. See Covad Commc’ns Co. v. Bell Atl. Corp., 407 F.3d 1220,
1222 (D.C. Cir. 2005) (stating that, in deciding a motion to dismiss, a court may take “‘judicial
notice of facts on the public record’” by “consult[ing] the relevant opinions” in prior cases),
quoting Marshall Cnty. Health Care Auth. v. Shalala, 988 F.3d 1221, 1228 (D.C. Cir. 1993). The
Court also provides the relevant statutory framework for background.
I. Statutory Framework
This case arises out of an attorney-client fee dispute between plaintiff and the Albers
defendants related to a lawsuit filed by plaintiff on the Albers defendants’ behalf in California
federal court. Such fee disputes are governed by the California Mandatory Fee Arbitration Act
(“MFAA”), Cal. Bus. & Prof. Code § 6200 et seq., and the provisions of that statute form part of
the backdrop of this case:
The MFAA was first proposed by the Board of Governors of the State Bar
of California in 1976 when, finding that disputes concerning legal fees were
the most serious problem between members of the bar and the public, the
board sought to create a mechanism for arbitrating disputes over legal fees
and costs. Recognizing the disparity in bargaining power in attorney fee
matters which favors the attorney in dealings with infrequent consumers of
legal services, that many clients could not afford hiring additional counsel
to litigate fee disputes in the civil courts, and that previous schemes that
called for voluntary arbitration were ineffective, the Legislature enacted the
MFAA.
Schatz v. Allen Matkins Leck Gamble & Mallory LLP, 198 P.3d 1109, 1113 (Cal. 2009) (internal
citations and quotation marks omitted).
Under the MFAA, “when there is a fee dispute between an attorney and a client, the client
may choose to submit the matter to arbitration by a local bar association.” Id. at 1111. “[A] client
may invoke the MFAA and proceed to arbitration despite the absence of any prior agreement to
do so.” Id. at 1114. Section 6200(c) of the MFAA provides that “arbitration under this article
3
shall be voluntary for a client and shall be mandatory for an attorney if commenced by a client.”
Cal. Bus. & Prof. Code § 6200(c). “In other words, whereas a client cannot be forced under the
MFAA to arbitrate a dispute concerning legal fees, at the client’s election an unwilling attorney
can be forced to do so.” Schatz, 198 P.3d at 1114.
Pursuant to the MFAA, an “arbitration will be binding . . . only if the attorney and client
so agree in writing after the dispute has arisen.” Id. at 1111; see also Cal. Bus. & Prof. Code
§ 6204(a). “Otherwise, either party may request a trial de novo within 30 days after the arbitration
has concluded.” Schatz, 198 P.3d at 1111; see also Cal. Bus. & Prof. Code § 6204(a). But the
right to a trial de novo is subject to an important exception: a “party shall not be entitled to a trial
after arbitration” if that party “willfully fails to appear at the arbitration hearing in the manner
provided by the rules adopted by the board of trustees.” Cal. Bus. & Prof. Code § 6204(a). “The
determination of willfulness shall be made by the court,” and “[t]he party who failed to appear at
the arbitration shall have the burden of proving that the failure to appear was not willful.” Id. In
making its determination, the court may consider any findings made by the arbitrators on the
subject of a party’s failure to appear.” Id.
II. Factual and Procedural History
Plaintiff Naegele is an attorney, litigating this case pro se, who formerly represented the
Albers defendants in a lawsuit in the United States District Court for the Central District of
California, and later, on appeal before the Ninth Circuit (“the California litigation”). 3 2d Am.
Compl. ¶¶ 3, 7–9. The parties entered into a fee agreement, subject to three written addenda, with
3 The California litigation was dismissed on standing grounds, and that dismissal was
affirmed by the Ninth Circuit. Order, Albers v. Brooks, No. 2:99-cv-03573-GAF-SH, (C.D. Cal.
Aug. 28, 2002) [Dkt. # 140] (dismissing case); Albers v. Guthy-Renker Corp., 92 F. App’x 497
(9th Cir. 2004) (affirming dismissal).
4
respect to the California litigation. Id. ¶ 8; see also Attach. A to Decl. of Timothy D. Naegele in
Supp. of Pl.’s Opp. to Def.’s Mot. to Dismiss [Dkt. # 42-1] (“Fee Agreement”). 4 The Fee
Agreement and the addenda each state that the “venue for any disputes or litigation arising out of
this agreement shall be in a court of the District of Columbia and/or in the United States District
Court for the District of Columbia,” and that the Albers defendants “hereby consent to the
jurisdiction of such court or courts with respect to any disputes or litigation arising out of this
agreement.” Fee Agreement at ECF 4, 8, 11, 16. 5
A. The Albers defendants seek mandatory fee arbitration pursuant to the MFAA.
A dispute arose between the parties regarding the fees plaintiff charged for the California
litigation, and the Albers defendants invoked their statutory right to mandatory fee arbitration
under the MFAA. Naegele III, 940 F. Supp. 2d at 2. The Albers defendants were represented by
former defendant Michaelson in the fee arbitration, and he notified plaintiff by a letter dated
August 28, 2003 of the Albers defendants’ intention to arbitrate the fee dispute. Id. at 2–3. The
Los Angeles County Bar Association Dispute Resolution Services (“DRS”) – the entity tasked
with administering fee arbitrations under the MFAA – forwarded a copy of arbitration petition to
plaintiff on September 22, 2003. Id. at 3. Plaintiff acknowledged receipt of the Michaelson letter
and the DRS notice via email on October 3, 2003. Naegele IV, 958 F. Supp. 2d at 20.
4 Plaintiff attached the Fee Agreement to his initial complaint and he incorporated it by
reference in his second amended complaint. Exs. A–D in Supp. of Compl. [Dkt. ## 1-1, 1-2, 1-3,
1-4]; 2d Am. Compl. ¶ 8. The Court therefore cites to and relies upon the Fee Agreement in ruling
on the Albers defendants’ motion to dismiss. See EEOC v. St. Francis Xavier Parochial Sch., 117
F.3d 621, 624 (D.C. Cir. 1997) (“In determining whether a complaint fails to state a claim, we may
consider only the facts alleged in the complaint, any documents either attached to or incorporated
in the complaint and matters of which we may take judicial notice.”). However, because the
version of the agreement plaintiff attached to his complaint was unsigned, the Court instead cites
to a signed version provided by plaintiff in a later pleading. See Fee Agreement.
5 For ease of reference, where the internal pagination of a pleading, attachment, or exhibit is
not clear, the Court cites to the ECF page number.
5
B. Plaintiff files this federal action against the Albers defendants in the District
of Columbia.
The initiation of fee arbitration pursuant to the MFAA precludes the concurrent prosecution
of any court action surrounding the fee dispute, and any judicial action that was pending prior to
the commencement of fee arbitration is “automatically stayed until the award of the arbitrators is
issued or the arbitration is otherwise terminated.” Cal. Bus. & Prof. Code § 6201(c). Despite this
requirement and with the knowledge that the Albers defendants had initiated arbitration
proceedings, plaintiff filed the complaint that launched the instant case in this court on December
8, 2003, on the grounds that the forum selection clause in the Fee Agreement provided that “any
disputes or litigation arising out of this agreement shall be in a court of the District of Columbia
and/or in the United States District Court for the District of Columbia.” Naegele III, 940 F. Supp.
2d at 3; see also 2d Am. Compl. ¶ 8; Fee Agreement at ECF 4. In response, on January 5, 2004,
the Albers defendants and former defendant Michaelson sought an automatic stay of the District
of Columbia proceedings pursuant to California Business and Professions Code § 6201(c). Notices
of Automatic Stay Under Cal. Bus. & Prof. Code § 6201(c) [Dkt. ## 2–4].
Shortly thereafter, on April 20, 2004, plaintiff filed an amended complaint, Am. Compl.
[Dkt. # 7], which caused the Albers defendants and Michaelson to file a second round of requests
for an automatic stay on May 3, 2004. Notices of Automatic Stay Under Cal. Bus. & Prof. Code
§ 6201(c) [Dkt. ## 19–21].
On June 18, 2008, while those requests were pending, plaintiff was ordered to show cause
that the court had subject matter jurisdiction over the dispute, in light of questions raised as to the
diversity of citizenship between the parties. Order (June 18, 2004) [Dkt. # 35]. On January 3,
2005, after the parties had briefed the issue, the court ruled that it could properly exercise subject
matter jurisdiction over the dispute based on the record before it, but it dismissed defendant
6
Michaelson for lack of personal jurisdiction and it granted the Albers defendants’ request for a
stay pending the outcome of the California arbitration proceedings. Naegele v. Albers (Naegele
I), 355 F. Supp. 2d 129 (D.D.C. 2005).
C. The arbitration panel issues an award in the Albers defendants’ favor.
Meanwhile, the fee arbitration proceedings in California had commenced. Naegele III, 940
F. Supp. 2d at 3. Naegele objected to the DRS panel’s exercise of jurisdiction over the fee dispute
on the grounds that the forum selection clause in the Fee Agreement gave the District of Columbia
exclusive jurisdiction. Id. at 3 n.2. DRS overruled plaintiff’s objection and concluded that it had
jurisdiction to arbitrate the dispute under the MFAA. Id. Plaintiff appealed that finding of
jurisdiction to the California Supreme Court, which denied his petition for review on February 16,
2005. Id.
The DRS panel held an arbitration hearing on November 17, 2004, and Naegele failed to
appear, although he was represented by an attorney. Naegele IV, 958 F. Supp. 2d at 21. The panel
issued an award in the Albers defendants’ favor on January 14, 2005. Naegele III, 940 F. Supp.
2d at 3–4. It reviewed the reasonableness of the fees paid to plaintiff in connection with the
California litigation, which amounted to $735,481.32, along with the $82,000.00 promissory note
plaintiff had secured from the Albers defendants in anticipation of his work on the appeal before
the Ninth Circuit. Id. The panel made the following determinations:
1. The panel finds that the total amount of fees and other costs which should
have reasonably and necessary [sic] been charged in this matter are
$8500.00 (20 hours at $425/hr.).
2. 7KH FOLHQWV $OEHUV KDYH RYHUSDLG 1DHJHOH   í
$8500.00).
3. Naegele shall refund clients (Albers) the sum of $726,981.32 forthwith.
7
4. The panel finds Naegele willfully failed to appear at the hearing for
nonbinding arbitration and produce documents as required under the Rules,
and should not be entitled to a new trial after arbitration pursuant to Rule 40
of the Rules For Conduct of Arbitration of Fee Disputes and Other Related
Matters for the Los Angeles County Bar Association Dispute Resolution
Services, Inc.
5. All arbitration related fees and costs shall be paid or reimbursed by
Respondent Naegele.
Id. at 4, quoting Ex. D to Decl. of Raymond H. Albers, II in Supp. of Defs.’ Mot. for Order of
Dismissal [Dkt. # 92-3] (“Arb. Award”) at 10–11. The panel concluded that plaintiff’s failure to
appear personally at the arbitration hearing was willful. Id., quoting Arb. Award. at 10 (“‘The
conduct of Naegele upon learning of the decision . . . that this panel did have jurisdiction to
adjudicate the fee dispute between Albers and Naegele, in not appearing as he was compelled to
do . . . was willful.’”).
D. Plaintiff files a rejection of the arbitration award and a request for trial in the
District of Columbia case.
On February 22, 2005, back in the District of Columbia proceedings, plaintiff filed a
document entitled, “Rejection of Arbitration Award and Request for Trial,” invoking California
Business and Professions Code § 6204(b). 6 Rejection of Arb. Award & Request for Trial [Dkt.
# 64]. Plaintiff asserted that “the arbitration award is a nullity as a matter of law” because “the
arbitrators had no jurisdiction ab initio owing to a valid and binding forum-selection clause that
provides for the District of Columbia’s exclusive jurisdiction with respect to ‘any disputes or
litigation’ arising between Plaintiff and the Albers.” Id. at 2. Shortly thereafter, on April 20, 2005,
the Albers defendants filed a motion to dismiss for lack of subject matter jurisdiction, arguing that
6 Section 6204(b) provides that a trial after arbitration must be initiated before the court in
which an action is pending “by filing a rejection of arbitration award and request for trial after
arbitration in that action within 30 days after service of notice of the award.” Cal. Bus. & Prof.
Code § 6204(b).
8
complete diversity between the parties was absent because plaintiff and the Albers defendants were
both residents of California, and for lack of personal jurisdiction. Defs.’ Mot. for Order of
Dismissal [Dkt. # 68]. On August 8, 2005, the court denied plaintiff’s request for a trial for the
time being: “Because the court is on notice of the plaintiff’s objection to the arbitration award,
and in light of the defendants’ pending motion to dismiss, the court denies without prejudice the
plaintiff’s motion for trial.” Minute Order (Aug. 8, 2005).
On May 11, 2006, while the Albers defendants’ motion to dismiss was still pending,
plaintiff filed a motion to stay the District of Columbia case in light of criminal bankruptcy fraud
charges brought against him by the United States Attorney for the District of Columbia relating to
alleged misstatements plaintiff made in his bankruptcy filings. Mot. to Stay [Dkt. # 87]. The court
granted the motion on June 6, 2006. Order (June 6, 2006) [Dkt. # 89]. Plaintiff was eventually
acquitted of the criminal charges on February 27, 2008. United States v. Naegele, 537 F. Supp. 2d
36 (D.D.C. 2008).
On April 14, 2008, the Albers defendants moved to lift the stay, and after no action was
taken for more than nine months, they re-filed the motion. Motion to Lift Stay [Dkt. ## 90, 91].
The stay was vacated on June 17, 2009. Minute Order (June 17, 2009). Nine more months passed
without any developments until the Albers defendants renewed their still-pending motion to
dismiss on March 31, 2010. Defs.’ Mot. for Order of Dismissal [Dkt. # 92] (“Defs.’ 2d Mot. to
Dismiss”). Less than two weeks later, plaintiff sought leave to file a second amended complaint,
asserting five additional counts against the Albers defendants, the Doe defendants, and former
defendant Michaelson stemming from their alleged involvement in the initiation of the criminal
bankruptcy fraud proceedings against plaintiff. Pl.’s Opp. to Defs.’ 2d Mot. to Dismiss, Mot. for
Sanctions, & Mot. for Leave to File 2d Am. Compl. [Dkt. # 93]; 2d Am. Compl. ¶¶ 49–64.
9
E. The Albers defendants petition the California Superior Court to confirm the
arbitration award, and plaintiff seeks injunctive relief in this court.
On January 13, 2009, while their request to lift the stay was still pending in this District,
the Albers defendants petitioned the California Superior Court to confirm their arbitration award. 7
Naegele III, 940 F. Supp. 2d at 5. Almost three years later, on December 23, 2011, plaintiff sought
injunctive relief in this court, seeking a stay of the California action until the case in this District
was resolved. Mot. for Stay of State Court Proceedings & for Permanent Inj. Relief [Dkt. # 99].
In plaintiff’s words, his delay in seeking injunctive relief was due to the fact that the confirmation
proceedings “effectively sat dormant until a new judge was assigned to the case.” Id. at 5.
On February 16, 2012, before the court could rule on the injunction, plaintiff sought a
temporary restraining order for the same relief. App. for Temporary Restraining Order [Dkt.
# 102] (“TRO Mot.”). By that date, the California Superior Court had already confirmed the
Albers defendants’ arbitration award, and it had directed them to submit a proposed judgment by
no later than February 28, 2012. Naegele III, 940 F. Supp. 2d at 5. Plaintiff asserted that the
temporary restraining order was necessary to prevent the entry of judgment in the California action,
and he averred that “[o]nce the Albers and Michaelson have a judgment in hand, there will be no
way to stop them and the Plaintiff will be irreparably injured.” Proposed Scheduling Order for
Briefing on TRO Mot. [Dkt. # 103] at 2.
The court denied plaintiff’s motion for a temporary restraining order on February 21, 2012,
finding that he had failed to demonstrate a likelihood of success on the merits and that he was
7 The Albers defendants had previously filed a petition to confirm the arbitration award in
Los Angeles Superior Court back in 2005, but they agreed to dismiss that petition without
prejudice, in light of their motion to dismiss pending in this District. Naegele III, 940 F. Supp. 2d
at 5 n.3. Ultimately, however, it seems that the Albers defendants were running up against a statute
of limitations in California and, to preserve their rights, they refiled the confirmation petition in
January 2009. Id.
10
unable to articulate the requisite irreparable harm. Naegele v. Albers (Naegele II), 843 F. Supp.
2d 123, 127–29 (D.D.C. 2012). Plaintiff did not appeal. Two days later, the Albers defendants
filed a motion asking the court to rule on their motion to dismiss, which had been pending since
March 31, 2010. Request that the Court Rule on Defs.’ 2d Mot. to Dismiss [Dkt. # 106]. Instead,
on March 9, 2012, the court granted plaintiff’s motion for leave to file a second amended
complaint, and it denied the motion to dismiss as moot on the grounds that “plaintiff’s amended
complaint supersedes the original complaint.” Mem. Order (Mar. 9, 2012) [Dkt. # 107]; Minute
Order (Mar. 9, 2012).
F. The California Superior Court enters judgment in the Albers defendants’
favor and plaintiff appeals to the California Court of Appeals.
Back in California, on February 24, 2012, the Superior Court confirmed the arbitration
award and entered a judgment of $781,831.25 in favor of the Albers defendants, which included
their arbitration fees and court costs. Naegele III, 940 F. Supp. 2d at 5–6. Plaintiff appealed that
decision to the California Court of Appeals on April 16, 2012. Id. at 6.
G. The District of Columbia court denies plaintiff’s renewed request for trial and
stays the federal action pending the resolution of the California appeal.
On April 9, 2012, plaintiff moved for reconsideration of the District of Columbia court’s
denial of his rejection of the arbitration reward and request for a new trial. Mot. for Reconsid.
[Dkt. # 110]. The case was then transferred to a new District judge who, on April 18, 2013, ordered
plaintiff to show cause “as to why the Court should not stay this action in its entirety pending the
resolution of [the] parallel and/or overlapping California state court litigation surrounding the same
11
fee dispute at the center of this action.” Naegele III, 940 F. Supp. 2d at 2. 8 The court also ordered
plaintiff to show cause “as to why the Court should not find that he ‘willfully fail[ed] to appear at
the arbitration hearing’ before [DRS], within the meaning of California Business and Professions
Code § 6204(a).” Id., quoting Cal. Bus. & Prof. Code § 6204(a).
On July 18, 2013, after the parties had briefed the issues, the court denied plaintiff’s motion
for reconsideration. Naegele IV, 958 F. Supp. 2d at 26. It found that plaintiff “willfully failed to
appear at the arbitration hearing on November 17, 2004, which means that he is unable to pursue
a trial de novo and that the award rendered by the arbitration panel is binding.” Id., citing Cal.
Bus. & Prof. Code §§ 6203(b), 6204(a) (“[I]f either party willfully fails to appear at the arbitration
hearing in the manner provided by the rules . . . that party shall not be entitled to a trial after
arbitration.”). The court then ordered the District of Columbia action stayed in its entirety pending
the outcome of the California case. Id. Plaintiff appealed the denial of the motion for
reconsideration to the D.C. Circuit on July 26, 2013. Notice of Appeal [Dkt. # 124].
H. The California Court of Appeals affirms the Albers defendants’ arbitration
award.
On November 6, 2013, the California Court of Appeals affirmed the trial court’s entry of
judgment in favor of the Albers defendants and against plaintiff. Albers, 2013 WL 5945676. In
8 In questioning whether the case should be stayed, the court noted that the outcome of the
California appeal “may have a preclusive impact on these proceedings.” Naegele III, 940 F. Supp.
2d at 8, citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005). It
observed that “under California law – which this Court would necessarily look to in determining
whether to apply the doctrine of res judicata to a California judgment – it is well settled that a
judicially-confirmed arbitration award is afforded res judicata effect.” Id. at 8–9, citing Cal. Civ.
Proc. Code § 1287.4; Dial 800 v. Fesbinder, 12 Cal. Rptr. 3d 711, 724 (Cal. Ct. App. 2004) (“As
a general matter, an arbitration award is the equivalent of a final judgment which renders all factual
and legal matters in the award res judicata.”). Accordingly, the court warned that, if the Albers
defendants’ arbitration award “remains in place, the California judgment will likely have res
judicata impact on at least some aspects of this action.” Id. at 9.
12
rejecting plaintiff’s argument that the forum selection clause in the Fee Agreement deprived the
arbitration panel and the California courts of jurisdiction, the Court of Appeals looked to California
Supreme Court precedent examining the effect of pre-dispute contractual arbitration agreements
on the mandatory arbitration provision of the MFAA:
[T]he MFAA’s provision for a trial de novo after arbitration “does not
purport to speak to whether the parties to a nonbinding MFAA arbitration
may otherwise agree, or have agreed, on how to resolve the case if the
MFAA arbitration leaves one or both parties dissatisfied.” Rather, the
statute contemplates that, subject to the exception for a willful failure to
attend the arbitration hearing, “unless the parties agree to be bound by the
MFAA arbitration, and thus to end the dispute then and there, the case may,
following MFAA arbitration, proceed by normal means. . . . [T]hose normal
means may include not only court litigation, but ‘other proceedings’ such
as binding arbitration pursuant to a predispute agreement between the
parties.” Therefore, even where the parties have entered into a pre-dispute
contractual arbitration agreement . . . the client retains the statutory right to
arbitration under the MFAA. If the client properly invokes the right to
arbitrate, the MFFA arbitration takes place first and any award issued by the
arbitrators is non-binding unless the parties otherwise agree or a party
willfully fails to appear at the arbitration hearing. Once the non-binding
MFAA arbitration is completed, either party is free to seek enforcement of
the preexisting arbitration agreement.
Id. at *8 (emphasis added), quoting Schatz, 198 P.3d at 1118–19. Applying those principles, the
Court of Appeals held that “the existence of a pre-dispute forum selection clause in a fee
agreement, in which a client agrees to litigate fee disputes in a designated judicial forum, does not
deprive the client of the right to arbitration under the MFAA.” Id. Rather, it found that “[i]f the
client timely requests and maintains a MFAA arbitration, the forum selection clause only comes
into play after the arbitration proceedings have concluded.” Id.
The California Court of Appeals also found that the trial court had jurisdiction to confirm
the arbitration award, despite the existence of the forum selection clause and plaintiff’s filing of
the rejection of the arbitration award in the District of Columbia, id. at *9–*11, and that the Albers
defendants’ petition to confirm the award was not time-barred. Id. at *12–*13. Accordingly, the
13
Court of Appeals confirmed the trial court judgment in the Albers defendants’ favor. Id. at *13.
Plaintiff did not appeal that decision. See Docket, Albers v. Naegele, No S214758 (Cal. Ct.
App.), available at http://appellatecases.courtinfo.ca.gov/search/case/dockets.cfm?dist=2&doc_
id=2011066&doc_no=B240455.
I. The D.C. Circuit remands plaintiff’s appeal and the Supreme Court denies his
petition for review.
On June 23, 2014, the D.C. Circuit remanded the case to the District Court “for further
proceedings in light of Albers v. Naegele, 2013 WL 5945676 (Cal. Ct. App. Nov. 6, 2013).”
Naegele v. Albers, No. 13-7110, 2014 WL 4980898 (D.C. Cir. June 23, 2014). The case was then
transferred to the undersigned. Reassignment of Civil Case [Dkt. # 127]. On November 18, 2014,
plaintiff sought review from the United States Supreme Court of the D.C. Circuit’s order
remanding the case, and he presented a host of questions regarding the enforceability of the forum
selection clause, the ability of the District Court and the D.C. Circuit to rely on the unpublished
California Court of Appeals decision, and the propriety of the dismissal of former defendant
Michaelson. Pet. for Writ of Cert., Naegele v. Albers, 2014 WL 6467871 (U.S. Nov. 18, 2014).
The Supreme Court denied plaintiff’s petition on January 26, 2015. Naegele v. Albers, 135 S. Ct.
1177 (2015). On the same day, the Albers defendants filed the motion to dismiss that is the subject
of this memorandum opinion, arguing that many of plaintiff’s claims are barred by res judicata,
that subject matter jurisdiction is lacking, and that there is no basis for the exercise of personal
jurisdiction over them. Defs.’ 3d Mot. to Dismiss; Defs.’ Mem. 9
9 The Albers defendants’ motion refers to both the first amended complaint, filed on April
20, 2004, and the second amended complaint, filed on March 9, 2012. Defs.’ Mem. at 1–2. In
light of their pro se status and because the substance of the motion focuses on the counts of the
second amended complaint, the Court will treat the motion as properly addressed to that complaint.
14
STANDARD OF REVIEW
I. Subject Matter Jurisdiction
In evaluating a motion to dismiss under Rule 12(b)(1), the Court must “treat the
complaint’s factual allegations as true . . . and must grant plaintiff ‘the benefit of all inferences that
can be derived from the facts alleged.’” Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113
(D.C. Cir. 2000) (internal citations omitted), quoting Schuler v. United States, 617 F.2d 605, 608
(D.C. Cir. 1979); see also Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011).
Nevertheless, the Court need not accept inferences drawn by the plaintiff if those inferences are
unsupported by facts alleged in the complaint, nor must the Court accept plaintiff’s legal
conclusions. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002).
The plaintiff bears the burden of establishing jurisdiction by a preponderance of the
evidence. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); Shekoyan v. Sibley Int’l
Corp., 217 F. Supp. 2d 59, 63 (D.D.C. 2002). Federal courts are courts of limited jurisdiction and
the law presumes that “a cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life
Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Gen. Motors Corp. v. EPA, 363 F.3d 442, 448
(D.C. Cir. 2004) (“As a court of limited jurisdiction, we begin, and end, with an examination of
our jurisdiction.”). “[B]ecause subject-matter jurisdiction is ‘an Art[icle] III as well as a statutory
requirement . . . no action of the parties can confer subject-matter jurisdiction upon a federal
court.’” Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003), quoting Ins. Corp.
of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982).
When considering a motion to dismiss for lack of jurisdiction, unlike when deciding a
motion to dismiss under Rule 12(b)(6), the court “is not limited to the allegations of the complaint.”
Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other grounds, 482 U.S.
15
64 (1987). Rather, “a court may consider such materials outside the pleadings as it deems
appropriate to resolve the question [of] whether it has jurisdiction to hear the case.” Scolaro v.
D.C. Bd. of Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C. 2000), citing Herbert v. Nat’l
Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992); see also Jerome Stevens Pharms., Inc. v. FDA,
402 F.3d 1249, 1253 (D.C. Cir. 2005).
II. Personal Jurisdiction
It is the plaintiff who bears the burden of establishing personal jurisdiction over each
defendant. Crane v. N.Y. Zoological Soc’y, 894 F.2d 454, 456 (D.C. Cir. 1990). In order to survive
a motion to dismiss for lack of personal jurisdiction, the “plaintiff must make a prima facie
showing of the pertinent jurisdictional facts.” First Chi. Int’l v. United Exch. Co., 836 F.2d 1375,
1378 (D.C. Cir. 1988). To establish that personal jurisdiction exists, the plaintiff must allege
specific acts connecting the defendant with the forum. In re Papst Licensing GMBH & Co. KG
Litig., 590 F. Supp. 2d 94, 97–98 (D.D.C. 2008), citing Second Amendment Found. v. U.S.
Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001). A plaintiff “cannot rely on conclusory
allegations” to establish personal jurisdiction. Atlantigas Corp. v. Nisource, Inc., 290 F. Supp. 2d
34, 42 (D.D.C. 2003).
“A court may consider material outside of the pleadings in ruling on a motion to dismiss
for lack of . . . personal jurisdiction[.]” Artis v. Greenspan, 223 F. Supp. 2d 149, 152 (D.D.C.
2002). However, “plaintiffs are not limited to evidence that meets the standards of admissibility
required by the district court. Rather, they may rest their argument on their pleadings, bolstered
by such affidavits and other written materials as they can otherwise obtain.” Mwani v. bin Laden,
417 F.3d 1, 7 (D.C. Cir. 2005). Any factual discrepancies should be resolved in favor of the
plaintiff. Crane, 894 F.2d at 456. But, the Court need not treat all of the plaintiff’s jurisdictional
16
allegations as true. United States v. Philip Morris Inc., 116 F. Supp. 2d 116, 120 n.4 (D.D.C.
2000). “Instead, the court ‘may receive and weigh affidavits and any other relevant matter to assist
it in determining the jurisdictional facts.’” Papst Licensing, 590 F. Supp. 2d at 98, quoting United
States v. Phillip Morris Inc., 116 F. Supp. 2d 116, 120 n.4 (D.D.C. 2000).
III. Failure to State a Claim
“To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In Iqbal,
the Supreme Court reiterated the two principles underlying its decision in Twombly: “First, the
tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable
to legal conclusions,” and “[s]econd, only a complaint that states a plausible claim for relief
survives a motion to dismiss.” Id. at 678–79.
A claim is facially plausible when the pleaded factual content “allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. “The
plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer
possibility that a defendant has acted unlawfully.” Id., quoting Twombly, 550 U.S. at 556. A
pleading must offer more than “‘labels and conclusions’” or a “‘formulaic recitation of the
elements of a cause of action,’” id., quoting Twombly, 550 U.S. at 555, and “[t]hreadbare recitals
of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
When considering a motion to dismiss under Rule 12(b)(6), the complaint is construed
liberally in the plaintiff’s favor, and the Court should grant the plaintiff “the benefit of all
inferences that can be derived from the facts alleged.” Kowal v. MCI Commc’ns Corp., 16 F.3d
1271, 1276 (D.C. Cir. 1994). Nevertheless, the Court need not accept inferences drawn by the
17
plaintiff if those inferences are unsupported by facts alleged in the complaint, nor must the Court
accept plaintiff’s legal conclusions. Id.; see also Browning, 292 F.3d at 242. In ruling upon a
motion to dismiss for failure to state a claim, a court may ordinarily consider only “the facts alleged
in the complaint, documents attached as exhibits or incorporated by reference in the complaint,
and matters about which the Court may take judicial notice.” Gustave-Schmidt v. Chao, 226 F.
Supp. 2d 191, 196 (D.D.C. 2002), citing EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d
621, 624 (D.C. Cir. 1997).
ANALYSIS
I. The Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332.
The Court begins with the threshold issue of whether it may properly exercise subject
matter jurisdiction over this dispute. The Albers defendants argue that subject matter jurisdiction
is lacking because there is no diversity of citizenship between the parties: they assert that they are
citizens of California and that “plaintiff has resided at all relevant times in the State of California.”
Defs.’ Mem. at 3–5.
This question has already been addressed in this action. After former defendant
Michaelson moved to dismiss this case under Rule 12(b)(1), the court specifically ordered plaintiff
to show cause that the court possessed subject matter jurisdiction. Order (June 17, 2004) [Dkt.
# 35]. Plaintiff responded, declaring that he was a domiciliary of the state of Florida 10 and
submitting as evidence “a copy of his Florida driver’s license; a copy of the Declaration of
Domicile and Citizenship filed with the Clerk of the Circuit Court of Monroe County, Florida; and
10 The Court notes that this assertion is conspicuously absent from plaintiff’s initial complaint
or any of his amended complaints, each of which state with regard to citizenship only that
plaintiff’s law firm, Timothy D. Naegele & Associates, conducts business in the District of
Columbia. Compl. [Dkt. # 1] ¶ 3; Am. Compl. ¶ 3; 2d Am. Compl. ¶ 3.
18
proof of his membership in the Ocean Reef Club, located in the Florida Keys.” Naegele I, 355 F.
Supp. 2d at 135; see also Decl. of Timothy D. Naegele in Supp. of Pl.’s Opp. to Def.’s Mot. to
Dismiss [Dkt. # 53] ¶¶ 2, 4–6; Attachs. to Decl. of Timothy D. Naegele in Supp. of Pl.’s Opp. to
Def.’s Mot. to Dismiss [Dkt. # 50] (filed under seal). In light of that evidence, the court was
persuaded at that juncture “that the plaintiff’s domicile is indeed Florida,” and it found that “there
is complete diversity between the plaintiff and the defendants.” Naegele I, 355 F. Supp. 2d at 135.
Where, as here, “appellants have not demonstrated that there is an intervening change in the law
or that the previous decision was ‘clearly erroneous and would work a manifest injustice,’” “[t]he
court’s prior ruling is law of the case and may not be revisited.” United States v. Krizek, No. 01-
5452, 2002 WL 1364262, at *1 (D.C. Cir. May 9, 2002), quoting Kimberlin v. Quinlan, 199 F.3d
496, 500 (D.C. Cir. 1999).
The Albers defendants also argue that this Court lacks diversity jurisdiction because the
amount in controversy does not exceed $75,000.00, as required by 28 U.S.C. § 1332(a). Defs.’
Mem. at 5–6. But “[t]he amount in controversy is established at the commencement of the action.”
Nwachukwu v. Karl, 223 F. Supp. 2d 60, 66 (D.D.C. 2002), citing 28 U.S.C. § 1335(a).
“Subsequent events reducing the amount in controversy will not divest the court of its jurisdiction.”
Id., citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289–90 (1938) (“Events
occurring subsequent to the institution of suit which reduce the amount recoverable below the
statutory limit do not oust jurisdiction.”); see also King v. Morton, 520 F.2d 1140, 1145 (D.C. Cir.
1975) (“Normally, [the] jurisdictional amount is determined as of the filing of the complaint.”).
As the court found in ruling on former defendant Michaelson’s Rule 12(b)(1) motion to dismiss,
the amount in controversy requirement had been satisfied by plaintiff’s claim for “$160,071.74 in
legal fees and expenses incurred by his representation” of the Albers defendants on their appeal,
19
and by “plaintiff’s punitive damages claim, which here is an amount of $4 million.” Naegele I,
355 F. Supp. 2d at 135–36. Accordingly, the amount in controversy requirement was satisfied as
of the lawsuit’s inception, and the Court concludes that it may properly exercise subject matter
jurisdiction pursuant to 28 U.S.C. § 1332 in this case.
II. The Court will dismiss Counts I through VI against the Albers defendants because
they are barred by res judicata.
On June 23, 2014, the D.C. Circuit remanded this case to this Court “for further
proceedings in light of Albers v. Naegele, 2013 WL 5945676 (Cal. Ct. App. Nov. 6, 2013),” the
California Court of Appeals decision which confirmed the Albers defendants’ arbitration award.
Naegele, 2014 WL 4980898. In light of that mandate, and because “res judicata belongs to courts
as well as to litigants,” Stanton v. D.C. Court of Appeals, 127 F.3d 72, 77 (D.C. Cir. 1997), the
Court ordered the parties to brief “whether Counts I through VIII of the second amended complaint
should or should not be dismissed on res judicata grounds.” Order (Dec. 2, 2014) [Dkt. # 136].11
The Albers defendants argue that “Counts I to VIII of the Second Amended Complaint all grow
out of the attorney-client fee dispute which has been resolved by a final judgment in California
Courts,” and therefore, the Court should “give res judicata effect” to the California Court of
Appeals decision confirming their arbitration award. Defs.’ Mem. at 2, citing Albers, 2013 WL
5945676. The Court agrees.
As a threshold matter, plaintiff contends that the California Court of Appeals decision
cannot properly be relied upon by the Albers defendants or considered by this Court because that
11 The Court notes that, while it ordered the parties to brief the applicability of res judicata to
Counts I through VIII, on the grounds that all stem from the same Fee Agreement, only Counts I
through VI were asserted against the Albers defendants. Counts VII and VIII were brought against
former defendant Michaelson and the Doe defendants. The Court will not dismiss those claims
against the Doe defendants on res judicata grounds, but for the reasons discussed in Section IV, it
will dismiss those counts for failure to state a claim pursuant to Rule 12(b)(6).
20
decision was unpublished. Pl.’s Opp. at 7–8 (“[T]he California Rules Of Court prohibit parties
such as the Albers Defendants from citing or relying on unpublished decisions.”). It is true that
the California Court of Appeals decision was not selected for publication, and that California Rule
of Court 8.1115 provides that “an opinion of a California Court of Appeal . . . that is not certified
for publication or ordered published must not be cited or relied on by a court or a party in any other
action.” Cal. R. Ct. 8.1115(a). But that rule also contains an explicit exception, which provides
that “[a]n unpublished opinion may be cited or relied on: [w]hen the opinion is relevant under the
doctrines of law of the case, res judicata, or collateral estoppel.” Cal. R. Ct. 81115(b)(1). Further,
because it is well established that “[t]he court may take judicial notice of public records from other
court proceedings” in determining whether res judicata applies, Lewis v. Drug Enforcement
Admin., 777 F. Supp. 2d 151, 159 (D.D.C. 2011), citing Covad Commc’ns, 407 F.3d at 1222, the
Court finds that it may consider the California Court of Appeals decision in ruling on the Albers
defendants’ motion to dismiss on res judicata grounds.
“The doctrine of res judicata prevents repetitious litigation involving the same causes of
action or the same issues.” I.A.M. Nat’l Pension Fund v. Indus. Gear Mfg. Co., 723 F.2d 944, 946
(D.C. Cir. 1983). Under that doctrine, also known as claim preclusion, “‘a final judgment on the
merits of an action precludes the parties or their privies from relitigating issues that were or could
have been raised in that [prior] action.’” Sheppard v. District of Columbia, 791 F. Supp. 2d 1, 4–
5 (D.D.C. 2011), quoting Drake v. FAA, 291 F.3d 59, 66 (D.C. Cir. 2002); see also I.A.M. Nat’l
Pension Fund, 723 F.2d at 949 (noting that res judicata “forecloses all that which might have been
litigated previously”), citing Brown v. Felsen, 442 U.S. 127, 139 n.10 (1979). Therefore, a party
cannot escape application of the doctrine by raising a different legal theory or seeking a different
remedy in the new action that was available to him in the prior action. See Apotex, Inc. v. FDA,
21
393 F.3d 210, 218 (D.C. Cir. 2004) (observing that “simply raising a new legal theory . . . is
precisely what is barred by res judicata”). However, “[c]laim preclusion does not bar a ‘plaintiff
from later bringing claims that either could not have been anticipated when the first suit was filed
or would have been utterly impracticable to join at that time.’” Ramey v. Potomac Elec. Power
Co., 580 F. Supp. 2d 40, 44 (D.D.C. 2008), quoting U.S. Indus., Inc. v. Blake Const. Co., 765 F.2d
195, 205 n.21 (D.C. Cir. 1985).
Under res judicata, “‘a subsequent lawsuit will be barred if there has been prior litigation
(1) involving the same claims or cause of action, (2) between the same parties or their privies, and
(3) there has been a final, valid judgment on the merits, (4) by a court of competent jurisdiction.’”
Porter v. Shah, 606 F.3d 809, 813–14 (D.C. Cir. 2010), quoting Capitol Hill Grp. v. Pillsbury,
Winthrop, Shaw, Pittman, LLC, 569 F.3d 485, 490 (D.C. Cir. 2009). If those factors have been
satisfied, a court may dismiss a case or claims precluded by res judicata under Rule 12(b)(6). See,
e.g., Nader v. Democratic Nat’l Comm., 590 F. Supp. 2d 164, 169 (D.D.C. 2008), citing Stanton,
127 F.3d at 76–77; Hemphill v. Kimberly-Clark Corp., 530 F. Supp. 2d 108, 111 (D.D.C. 2008).
In contrast, under issue preclusion or collateral estoppel, “‘once a court has decided an
issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue
in a suit on a different cause of action involving a party to the first case.’” Yamaha Corp. of Am.
v. United States, 961 F.2d 245, 254 (D.C. Cir. 1992), quoting Allen v. McCurry, 449 U.S. 90, 94
(1980). Issue preclusion applies if three criteria are met: (1) in the prior litigation, the issue was
“actually litigated, that is, contested by the parties and submitted for determination by the court;”
(2) the prior litigation was “actually and necessarily determined by a court of competent
jurisdiction;” and (3) “preclusion in the second trial [does] not work an unfairness.” Otherson v.
Dep’t of Justice, 711 F.2d 267, 273 (D.C. Cir. 1983) (internal citations omitted). In short, “claim
22
preclusion forecloses all that which might have been litigated previously,” I.A.M. Nat’l Pension
Fund, 723 F.2d at 949, citing Brown, 442 U.S. at 139 n.10, while issue preclusion “prevents the
relitigation of any issue that was raised and decided in a prior action.” Novak v. World Bank, 703
F.2d 1305, 1309 (D.C. Cir. 1983), citing Allen, 449 U.S. at 94. In this way, res judicata helps
“conserve judicial resources, avoid inconsistent results, engender respect for judgments of
predictable and certain effect, and [ ] prevent serial forum-shopping and piecemeal litigation.”
Hardison v. Alexander, 655 F.2d 1281, 1288 (D.C. Cir. 1981); see also Allen, 449 U.S. at 94.
Applying the four res judicata factors, the Court determines that the doctrine bars the claims
asserted against the Albers defendants in Counts I through VI of the second amended complaint.
Plaintiff does not dispute that the California action and this case are between the same parties, and
so the Court finds that requirement to be satisfied. However, plaintiff does challenge the remaining
three factors, which the Court will address in turn.
A. The California decision and this case involve the same claims or causes of
action.
Plaintiff argues that “because the state and federal actions involve different claims, the
California Court of Appeal decision must not be given res judicata effect.” Pl.’s Opp. at 6, 8–10.
But this argument is not persuasive.
Res judicata bars not only claims that were actually brought in the prior action, but also
those claims or causes of action that “‘could have been raised in that action.’” Drake, 291 F.3d at
66 (emphasis in original), quoting Allen, 449 U.S. at 94; see also Hardison, 655 F.2d at 1288
(“[P]arties to a suit . . . may not relitigate any ground for relief which they already have had an
opportunity to litigate – even if they chose not to exploit that opportunity whether the initial
judgment was erroneous or not.”). For that reason, for res judicata purposes, a “‘cause of action
23
is determined by the factual nucleus, not the theory on which a plaintiff relies.’” Sheptock v. Fenty,
707 F.3d 326, 330 (D.C. Cir. 2013), quoting Faulkner v. GEICO, 618 A.2d 181, 183 (D.C. 1992).
To determine whether claims derive from the same nucleus of facts, this Circuit has
adopted a transactional, pragmatic approach. Smalls v. United States, 471 F.3d 186, 192 (D.C.
Cir. 2006), citing Stanton, 127 F.3d at 78. A court looks at “‘whether the facts are related in time,
space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment
as a unit conforms to the parties’ expectations.’” Stanton, 127 F.3d at 78, quoting Restatement
(Second) of Judgments § 24(2) (1982).
Here, the Court finds that Counts I through VI of the second amended complaint share the
same factual nucleus as the California arbitration and the subsequent Court of Appeals decision:
the fee dispute between plaintiff and the Albers defendants. And in each of those counts, plaintiff
seeks to recover the very fees for the California litigation to which the arbitration panel found he
was categorically not entitled, as well as damages arising from the Albers defendants’ allegedly
improper deprivation of those fees.
In Count I – Breach of Contract, plaintiff alleges that the Albers defendants have “failed to
pay the nonrefundable retainer” of $82,000.00 provided for in the Fee Agreement. 2d Am. Compl.
¶¶ 11–12. In Count II – Breach of Contract (Anticipatory Breach), plaintiff asserts that the Albers
defendants are in anticipatory breach of the Fee Agreement because they have indicated that, “in
the event that there is a recovery of any monies” from the California litigation, they will not pay
plaintiff the fifty percent “bonus or contingent fee” to which he claims he is entitled. 12 Id. ¶¶ 13–
12 The matter for which plaintiff alleges he is entitled to a contingent fee – the California
litigation – was unsuccessful, and that decision has been final since 2004. Guthy-Renker Corp.,
92 F. App’x 497 (affirming dismissal). Therefore, plaintiff’s claims in Count II and Count III for
damages based on the purported contingent fee are likely moot, since the Albers defendants have
not received, and will never receive, any recovery for that case.
24
14. In Count III – Estoppel, plaintiff claims that he relied to his detriment on the Albers
defendants’ representations that he would be paid “(1) the $82,000 nonrefundable retainer, (2) the
bonus or contingent fee, and (3) additional monies” about which plaintiff provides no further detail
or description. Id. ¶¶ 15–17. In Count IV – Fraud and Deceit, and Count V – Conspiracy to
Commit Fraud and Deceit, plaintiff argues that the Albers defendants, former defendant
Michaelson, and the Doe defendants had no intention of compensating plaintiff for his legal
services, but that defendants “failed to inform [plaintiff] and others of that fact and allowed them
to continue providing legal services,” made false representations concerning eventual payment,
and conspired to procure legal services from plaintiff without compensating him. Id. ¶¶ 18–29.
And finally, in Count VI – Negligent Misrepresentation, plaintiff again claims that the Albers
defendants decided they would not pay plaintiff for his work, and that they “knew or should have
known they had a duty” to disclose that decision to him, but failed to do so. Id. ¶¶ 30–36.
At bottom, each of these counts is based on plaintiff’s assertion that he was entitled to
certain attorneys’ fees pursuant to the Fee Agreement, and that the Albers defendants wrongfully
denied him those fees. But the arbitration award in the Albers defendants’ favor, and its subsequent
confirmation by the California trial court and the Court of Appeals, precludes his recovery on those
claims. That is because the arbitration panel determined that plaintiff was only entitled to a total
of $8,500.00 in fees for his work on the California litigation, and that the Albers defendants had
already paid plaintiff that amount. Naegele III, 940 F. Supp. 2d at 4, citing Arb. Award at 10–11.
Indeed, the panel found that the Albers defendants had overpaid plaintiff by a whopping
$726,981.32. Id. In other words, the panel determined that plaintiff was not entitled to any
additional fees for the California litigation, and instead, that plaintiff was required to “‘refund
25
clients (Albers) the sum of $726,981.32 forthwith.’” Id., quoting Arb. Award at 11. The Court of
Appeals confirmed this award and the panel’s findings. Albers, 2013 WL 5945676, at *13.
Because Counts I through VI all arise out of the fee dispute between plaintiff and the Albers
defendants that was the subject of the California arbitration and the Court of Appeals decision, the
Court finds that this case and the California action arise out of the same nucleus of fact, and that
they therefore involve the same claims or causes of action for res judicata purposes. The fact that
plaintiff’s claims here are premised on different legal theories of relief than the specific claims
adjudicated before the arbitration panel and confirmed by the Court of Appeals is insufficient to
defeat the claim-preclusive effect of that decision. See Apotex, 393 F.3d at 218 (“[S]imply raising
a new legal theory . . . is precisely what is barred by res judicata.”).
B. The California courts were courts of competent jurisdiction and the
arbitration award reflects a final, valid judgment on the merits.
The Court next finds that the arbitration award, as confirmed by the California Court of
Appeals, reflects a final, valid judgment on the merits by a court of competent jurisdiction.
“A judgment on the merits is one that ‘reaches and determines the real or substantial
grounds of action or defense as distinguished from matters of practice, procedure, jurisdiction[,]
or form.’” Sheppard, 791 F. Supp. 2d at 7, quoting Saylor v. Lindsley, 391 F.2d 965, 968 (2d Cir.
1968). It is a “settled principle that ‘[t]he decisions of binding arbitration proceedings are final
decisions on the merits for purposes of res judicata.’” Camp v. Kollen, 567 F. Supp. 2d 170, 173
n.6 (D.D.C. 2008), quoting Century Int’l Arms, Ltd. v. Fed. State Unitary Enter. State Corp.
‘Rosvoorouzheinie’, 172 F. Supp. 2d 79, 95 (D.D.C. 2001); see also Naegele III, 940 F. Supp. 2d
at 8 (“[U]nder California law – which this Court would necessarily look to in determining whether
to apply the doctrine of res judicata to a California judgment – it is well settled that a judicially-
confirmed arbitration award is afforded res judicata effect.”), citing Cal. Civ. Proc. Code § 1287.4;
26
Dial 800 v. Fesbinder, 12 Cal. Rptr. 3d 711, 724 (Cal. Ct. App. 2004) (“As a general matter, an
arbitration award is the equivalent of a final judgment which renders all factual and legal matters
in the award res judicata.”).
As discussed above, the arbitration panel addressed the merits of the fee dispute between
the parties, and it found that plaintiff was only entitled to a total of $8,500.00 in attorneys’ fees
under the Fee Agreement. Naegele III, 940 F. Supp. 2d at 4, citing Arb. Award at 2, 10–11. The
California Court of Appeals affirmed that award, finding that the arbitration panel “had jurisdiction
to hear the parties’ fee dispute and to issue an arbitration award in the Alberses’ favor,” and that
the trial court properly exercised its jurisdiction in confirming the award. Albers, 2013 WL
5945676, at *9–*11, *13. Because plaintiff has not appealed that decision, it has now become
final under California law. See, e.g., Agarwal v. Johnson, 603 P.2d 58, 72 n.11 (Cal. 1979) (“Under
the California rule, the instant judgment . . . is not final for purposes of res judicata during the
pendency of and until the resolution of the appeal.”), disapproved of on other grounds by White v.
Ultramar, Inc., 981 P.2d 944 (Cal. 1999).
Plaintiff offers nine separate arguments in support of his claim that the California Court of
Appeals decision is not a final, valid judgment of a court of competent jurisdiction, and that it
therefore cannot be given res judicata effect. Pl.’s Opp. at 5–13. But the majority of those
arguments attack the validity of the decision on the same interrelated jurisdictional and substantive
grounds. Specifically, plaintiff contends that the California courts never properly had jurisdiction
over the fee dispute because the forum selection clause in the Fee Agreement designated the
District of Columbia as the exclusive forum for disputes arising out of that agreement, and that the
arbitration panel, the trial court, and the Court of Appeals each ignored binding Supreme Court
27
precedent when they undertook to exercise jurisdiction over the fee dispute. Pl.’s Opp. at 5–6, 8–
12, citing M/S Bremen v. Zapata Off-Shore Co. (The Bremen), 407 U.S. 1 (1972).
This argument has already been raised before the arbitration panel, the California Superior
Court, the California Court of Appeals, the California Supreme Court, the United States Court of
Appeals for the District of Columbia, and the U.S. Supreme Court. Each of those courts has either
expressly rejected it or denied plaintiff’s request for review. 13 This Court will join the chorus.
Plaintiff claims that the California Court of Appeals decision is “fatally flawed” because it
“ignored ‘black letter law’ as enunciated by the U.S. Supreme Court in The Bremen and its
progeny” in failing to recognize that the forum selection clause in the Fee Agreement gave the
District of Columbia, and not California, exclusive jurisdiction over the fee dispute. Pl.’s Opp. at
5–6; see also id. at 10–11 (claiming that plaintiff can collaterally attack the California decision
“based on the absence of authority of the earlier tribunals to issue their decisions, owing to the
instant forum-selection clause and the applicable law nationally that governs its effect”). As
plaintiff puts it:
Because this forum-selection clause controls, the California arbitrators
never had jurisdiction to do anything, much less render an adverse
arbitration award against the plaintiff; the California Superior Court never
had jurisdiction to confirm the arbitration award that was illegal ab initio,
13 See Naegele III, 940 F. Supp. 2d at 3 n.2 (noting that DRS overruled plaintiff’s objection
to the arbitration panel’s jurisdiction over the fee dispute, and that plaintiff appealed that decision
to the California Supreme Court, which denied his petition for review); Albers, 2013 WL 5945676,
at *7–*11 (finding that both the arbitration panel and the trial court had properly exercised
jurisdiction over the fee dispute, despite plaintiff’s forum selection clause arguments based on The
Bremen); Appellant’s Brief, Naegele v. Albers, No. 13-7110, 2013 WL 6072990 (Nov. 18, 2013)
(plaintiff’s appeal to the D.C. Circuit presenting the same jurisdictional arguments based on The
Bremen and the forum selection clause in the Fee Agreement); Naegele, 2014 WL 4980898 (D.C.
Circuit order remanding plaintiff’s appeal for further proceedings consistent with the California
Court of Appeals decision); Pet. for Writ of Cert., Naegele v. Albers, 2014 WL 6467871 (plaintiff’s
petition to the Supreme Court for review of the D.C. Circuit’s remand decision, raising the same
jurisdictional arguments); Naegele, 135 S. Ct. 1177 (2015) (Supreme Court decision denying
plaintiff’s petition for a writ of certiorari).
28
or render a judgment pursuant to it; and the California Court of Appeal
never had jurisdiction to decide anything either, much less in an
unpublished opinion.
Id. at 10.
In The Bremen, the case to which plaintiff repeatedly refers in support of his jurisdictional
argument, the Supreme Court held that pre-dispute forum selection clauses “are prima facie valid
and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable’
under the circumstances.” 407 U.S. at 10. The D.C. Circuit has adopted that view. See, e.g.,
Commerce Consultants Int’l, Inc. v. Vetrerie Riunite, S.p.A., 867 F.2d 697, 700 (D.C. Cir. 1989).
But the Court finds that this general principle of law does not conflict with the DRS panel’s
exercise of what was, at the time it agreed to hear the dispute, temporary and nonbinding
jurisdiction under the MFAA.
As the California Court of Appeals observed in applying analogous California Supreme
Court precedent, a pre-dispute contractual agreement – such as a forum selection clause – does not
preclude the parties from first engaging in nonbinding arbitration under the MFAA:
[E]ven where the parties have entered into a pre-dispute
contractual . . . agreement . . . the client retains the statutory right to
arbitration under the MFAA. If the client properly invokes the right to
arbitrate, the MFFA arbitration takes place first and any award issued by the
arbitrators is non-binding unless the parties otherwise agree or a party
willfully fails to appear at the arbitration hearing. Once the non-binding
MFAA arbitration is completed, either party is free to seek enforcement of
the preexisting . . . agreement.
Albers, 2013 WL 5945676, at *8, citing Schatz, 198 P.3d at 1109; Aguilar v. Lerner, 88 P.3d 24
(Cal. 2004). Normally, “unless the parties agree to be bound by the MFAA arbitration, and thus
to end the dispute then and there, the case may, following MFAA arbitration, proceed by normal
means.” Schatz, 198 P.3d at 1119. Such normal means could include the rejection of the
arbitration award and the trial de novo of the dispute in a jurisdiction specified by a forum selection
29
clause, for example. In other words, the MFAA typically acts only as a brief, nonbinding detour
on the route to the eventual litigation of the dispute in the forum agreed to by the parties.
But the statute further provides that where, as here, a party willfully fails to appear at the
arbitration hearing, the award becomes binding, and “that party shall not be entitled to a trial after
arbitration” by rejecting the award. Cal. Bus. & Prof. Code § 6204(a). So, it was not, as plaintiff
contends, the DRS panel’s exercise of jurisdiction that permanently lodged the matter in the
California courts instead of in the forum specified in the Fee Agreement. Rather, as it has already
been held in this case, it was plaintiff’s willful failure to appear at the arbitration that transformed
the non-binding arbitration decision into a binding award and destroyed plaintiff’s ability to reject
the award and to obtain a trial de novo:
Naegele made his jurisdictional objections abundantly clear for the record,
and DRS considered his arguments and ultimately disagreed, finding
jurisdiction. Had Naegele simply participated in the arbitration proceedings
and appeared for the hearing notwithstanding – obviously preserving his
objections along the way (as he did) – and thereafter filed a timely request
for trial (as he did), it seems he could have achieved the very result he was
seeking: to have the fee dispute and his related claims adjudicated anew
before this Court as though the MFAA arbitration had never happened.
Instead, Naegele doubled down on his obstinance, refusing to abide by the
MFAA’s provisions and willfully failing to appear at the arbitration hearing.
Naegele IV, 958 F. Supp. 2d at 25 n.8 (internal citations omitted). Plaintiff cannot rely on his own
failure to participate in the mandatory arbitration to attack the validity of that award now on
jurisdictional or substantive grounds. In light of plaintiff’s willful failure to appear, the Court finds
that the DRS panel had jurisdiction to issue a decision on the fee dispute under the MFAA, and
the California Superior Court and Court of Appeals had jurisdiction to confirm that award.
Therefore, plaintiff’s unsupported assertion that the arbitration award was not final or
binding and cannot be given res judicata effect “[b]ecause [plaintiff] never agreed to be bound by
the California arbitration proceeding [and] he filed his rejection of the arbitration award and a
30
request for trial” within the statutory timeframe, Pl.’s Opp. at 8–10, is simply incorrect as a matter
of law. See Naegele IV, 958 F. Supp. 2d at 26 (“[T]he Court concludes that Naegele willfully
failed to appear at the arbitration hearing on November 17, 2004, which means that he is unable to
pursue a trial de novo and that the award rendered by the arbitration panel is binding.”), citing Cal.
Bus. & Prof. Code §§ 6203(b), 6204(a). Accordingly, the Court finds that the arbitration award,
as confirmed by the California Court of Appeals, constitutes a final, valid judgment on the merits,
and that the California courts were courts of competent jurisdiction for the purposes of res judicata.
C. Plaintiff’s other arguments against the applicability of res judicata to his
claims are unavailing.
Plaintiff also claims that “all of the issues with respect to the fees paid by the Albers to the
plaintiff . . . were addressed thoroughly in plaintiff’s criminal case in this Court,” and that because
“no wrongdoing was found, even after experts considered such fees in great detail, plaintiff is
entitled to res judicata effect instead of the Albers.” Pl.’s Opp. at 11, citing United States v.
Naegele, 537 F. Supp. 2d 36; see also Pl.’s Opp. at 13 (arguing that “all claims by the Albers
Defendants against the plaintiff were discharged in the plaintiff’s bankruptcy before this Court”
and that “no wrongdoing was found on the part of plaintiff” in the criminal case). Plaintiff offers
no specifics to guide the Court in determining whether, and to what extent, plaintiff’s entitlement
to fees from the Albers defendants was addressed “in great detail” in his criminal case. But in any
event, that decision held only that the government had “failed to present evidence sufficient to
sustain a conviction” – that is, proof beyond a reasonable doubt – that plaintiff made false
statements on his bankruptcy filings and in a creditors’ meeting regarding whether he had any
contingent fee agreements with clients of his law practice. United States v. Naegele, 537 F. Supp.
2d at 38–39, 43. It did not answer the question of the reasonableness of the fees plaintiff sought
from the Albers defendants, and more importantly, it was decided well after the arbitration panel
31
issued its award. Finally, the Albers defendants were not parties to that proceeding; it was the
United States versus Timothy Naegele. So the Court cannot find, based on that decision, that
plaintiff is entitled to res judicata on these issues.
Plaintiff also asserts that “[t]he statute of limitations has run against enforcement of
[defendants’] arbitration award, and [the award] is time barred” because plaintiff was not served
with the petition to confirm the arbitration award until after the time to do so had elapsed. Pl.’s
Opp. at 12–13. But this argument was already directly addressed, and squarely rejected, by the
California Court of Appeals:
Naegele next asserts that . . . the petition [to confirm the arbitration award]
was time-barred as a matter of law by the four-year statute of limitations set
forth in Code of Civil Procedure section 1288. While it is undisputed that
the Alberses failed to serve Naegele with their re-filed petition within the
limitations period, we conclude that the trial court did not abuse its
discretion in granting equitable relief from the untimely service. . . .
[T]he Alberses timely filed and served their original petition to confirm the
arbitration award by April 2005, approximately two months after service of
the award. Therefore, long before the statute of limitations expired, Naegele
was on notice that the Alberses intended to seek enforcement of the
arbitration award and to argue that Naegele was not entitled to a trial de
novo based on his willful failure to appear at the arbitration hearing. After
Naegele demanded that the petition be withdrawn in light of his pending
request for trial and further threatened to seek sanctions against the Alberses
if they failed to do so, the Alberses agreed to dismiss their petition without
prejudice pending the federal court’s ruling on their motion to dismiss for
lack of jurisdiction. The Alberses also informed Naegele of their intent to
re-file the petition in California if their motion to dismiss was granted.
For the reasons previously discussed, the Alberses did not re-file the petition
to confirm the arbitration award until January 13, 2009, shortly before the
expiration of the statute of limitations. Although the Alberses timely filed
that petition, they were unable to locate Naegele to serve him with a copy
within the limitations period. The Alberses’ attorney submitted a
declaration to the trial court in which he detailed his year-long effort to
locate and serve Naegele, and based on such evidence, the trial court
reasonably could find that Naegele had evaded service. On appeal, Naegele
insists that he never attempted to evade service and had no basis for
knowing that the Alberses intended to file a second petition. However, it
32
was the exclusive province of the trial court to resolve conflicts in the
evidence and to determine the credibility of witnesses, and it is not the role
of this court to second-guess the trial court’s credibility determinations. On
this record, there was substantial evidence to support the trial court’s
conclusion that, based on the respective actions of the parties, the Alberses
were entitled to equitable relief from their delayed service of the petition.
The petition accordingly was not time-barred.
Albers, 2013 WL 5945676 at *12–13. Because this issue was actually litigated in the California
Court of Appeals, which this Court has already determined was a court of competent jurisdiction,
the Court finds that the doctrine of issue preclusion applies to prevent plaintiff from rearguing this
point now.
For all those reasons, the Court finds that plaintiff’s claims stemming from the fee dispute
which was the subject of the California arbitration proceedings are barred by res judicata, and the
Court will dismiss Counts I through VI against the Albers defendants pursuant to Rule 12(b)(6).
III. The Court will dismiss Counts IX through XIII against the Albers defendants for lack
of personal jurisdiction.
The Court will also dismiss the remaining counts against the Albers defendants, which
arise out of their alleged involvement in initiating the criminal bankruptcy fraud prosecution
against plaintiff in the District of Columbia: Count IX – Intentional Infliction of Emotional
Distress, Count X – Conspiracy to Commit Intentional Infliction of Emotional Distress, Count XI
– Negligent Infliction of Emotional Distress, Count XII – Malicious Prosecution, and Count XIII
– Conspiracy to Commit Malicious Prosecution. 2d Am. Compl. ¶¶ 49–64.
The Albers defendants, who are residents of California, contend that the case against them
must be dismissed because there is no basis for exercising personal jurisdiction over them under
the District of Columbia Long Arm Statute, D.C. Code § 13-423, the Constitution, or the minimum
contacts doctrine. Defs.’ Mem. at 6–7. Plaintiff, who bears the burden of proof on the issue of
personal jurisdiction, does not address the Albers defendants’ Rule 12(b)(2) argument in his
33
opposition in great detail, other than to state that the Albers defendants consented to this Court’s
jurisdiction through the Fee Agreement’s forum selection clause and that they “have caused
tortious injuries to the plaintiff in the District of Columbia.” Pl.’s Opp. at 4 n.4, 6. The Court
finds that plaintiff has provided no independent basis for exercising personal jurisdiction over the
Albers defendants in relation to Counts IX through XIII, and that in light of the dismissal of Counts
I through VI of the second amended complaint – the counts related to the Fee Agreement asserted
against the Albers defendants – the forum selection clause no longer operates as the Albers
defendants’ consent to the jurisdiction of this Court. Accordingly, the Court will dismiss the
Albers defendants from this case for lack of personal jurisdiction.
“To establish personal jurisdiction over a non-resident, a court must engage in a two-part
inquiry: A court must first examine whether jurisdiction is applicable under the state’s long-arm
statute and then determine whether a finding of jurisdiction satisfies the constitutional
requirements of due process.” GTE New Media Servs., Inc. v. BellSouth Corp., 199 F.3d 1343,
1347 (D.C. Cir. 2000), citing United States v. Ferrara, 54 F.3d 825, 828 (D.C. Cir. 1995).
First, a plaintiff must show that personal jurisdiction may be grounded in one of the several
bases provided by the D.C. Long Arm statute. D.C. Code § 13-423; GTE New Media Servs., 199
F.3d at 1347. The statute provides, in part, that a court may exercise personal jurisdiction over an
individual as to claims arising from a person’s
(1) transacting any business in the District of Columbia;
(2) contracting to supply services in the District of Columbia;
(3) causing tortious injury in the District of Columbia by an act or omission
in the District of Columbia;
(4) causing tortious injury in the District of Columbia by an act or omission
outside the District of Columbia if he regularly does or solicits business,
engages in any other persistent course of conduct, or derives substantial
34
revenue from goods used or consumed, or services rendered, in the District
of Columbia; [or]
(5) having an interest in, using, or possessing real property in the District of
Columbia.
D.C. Code §§ 13-423(a)(1)–(5). Subsection (b) of the Long Arm Statute qualifies its reach by
noting that “[w]hen jurisdiction over a person is based solely upon this section, only a claim for
relief arising from acts enumerated in this section may be asserted against him.” Id. § 13-423(b).
Second, the Due Process Clause of the Fifth Amendment requires the plaintiff to
demonstrate “‘minimum contacts’ between the defendant and the forum establishing that ‘the
maintenance of the suit does not offend traditional notions of fair play and substantial justice.’”
GTE New Media Servs., 199 F.3d at 1347, quoting Int’l Shoe Co. v. Washington, 326 U.S. 310,
316 (1945); see also Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82, 95 (D.C.
Cir. 2002). It is “‘essential in each case that there be some act by which the defendant purposefully
avails itself of the privilege of conducting activities within the forum State, thus invoking the
benefits and protections of its laws.’” Creighton Ltd. v. Gov’t of State of Qatar, 181 F.3d 118, 127
(D.C. Cir. 1999), quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958). In short, “‘the defendant’s
conduct and connection with the forum State [must be] such that he should reasonably anticipate
being haled into court there.’” GTE New Media Servs., 199 F.3d at 1347, quoting World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
A. There is no independent basis for the exercise of personal jurisdiction over the
Albers defendants in Counts IX through VI of the second amended complaint.
The Court first addresses whether it can properly exercise jurisdiction over the Albers
defendants pursuant to the D.C. Long Arm Statute. Plaintiff does not allege that the Albers
defendants transacted any business in the District, contracted to supply services in the District, or
own any property in the District. See D.C. Code § 13-423(a)(1), (a)(2), (a)(5). However, plaintiff
35
does argue that “[i]t is clear that the Albers Defendants have caused tortious injuries to the plaintiff
in the District of Columbia.” Pl.’s Opp. at 4 n.4. Specifically, plaintiff alleges that the Albers
defendants “initiat[ed] criminal proceedings against [him] on or about May 24, 2004,” 2d Am.
Compl. ¶¶ 50, 52, 61, and that they “played an active role in the case” by “contact[ing] the Criminal
Division of the Justice Department in Washington, D.C. . . . and request[ing] that the Department
conduct an investigation with respect to the proper reporting of legal fees paid by the Albers, in
Naegele’s calendar year 2000 bankruptcy filings.” Id. ¶ 58. In support of those allegations,
plaintiff points to a letter from the Albers defendants to attorneys in the Justice Department’s
Criminal Division Fraud Section, describing their telephonic and written request for an
investigation. Id. ¶¶ 50, 58, citing Attach. A to Pl.’s Opp. to Defs.’ 2d Mot. to Dismiss [Dkt. # 93-
1] (“DOJ Letters”). 14 Based on these actions, plaintiff asserts several tort claims against the Albers
defendants in Counts IX through XIII of the second amended complaint. But the Court finds that
this limited conduct does not suffice to bring the Albers defendants within the Court’s jurisdiction
under either tortious injury provision of the Long Arm Statute.
First, the Court concludes that plaintiff has failed to allege facts sufficient to show the
Albers defendants caused him “tortious injury in the District of Columbia by an act or omission in
the District of Columbia.” D.C. Code § 13-423(a)(3). The only acts plaintiff identifies in his
second amended complaint are the two communications with the Department of Justice in the
District: the Albers defendants’ phone call on May 24, 2004, and their letter dated June 1, 2004.
2d Am. Compl. ¶¶ 50, 58, citing DOJ Letters. But the letter indicates that it was sent from the
14 Because “[a] court may consider material outside of the pleadings in ruling on a motion to
dismiss for lack of . . . personal jurisdiction,” Artis, 223 F. Supp. 2d at 152, the Court relies on
these letters, which plaintiff incorporates in his second amended complaint and which were
attached to plaintiff’s opposition to the Albers defendants’ second motion to dismiss, in
determining whether it may properly exercise personal jurisdiction over the Albers defendants.
36
Albers defendants’ address in California, and plaintiff has provided no evidence from which the
Court could conclude that the phone call was not also placed from California. Communications
from California cannot provide a basis for the exercise of personal jurisdiction in the District of
Columbia under section 13-423(a)(3). See, e.g., Moncrief v. Lexington Herald–Leader Co., 807
F.2d 217, 219, 221 (D.C. Cir. 1986) (finding no basis for jurisdiction under section 13-423(a)(3)
where libelous statements were printed in Maryland and mailed from there into the District of
Columbia, because the tortious “act” occurred in Maryland). Indeed, as the D.C. Circuit observed
in a case where an allegedly slanderous telephone call was made from Wisconsin to the District:
The “act,” of course, is the act of the alleged tortfeasor – here that act,
uttering defamatory statements, occurred in Wisconsin. . . . The additional
facts that other third party acts were necessary to consummate the tort, or
that the injury itself took place within the District, cannot under our reading
of the [statute] grant jurisdiction that is otherwise lacking. Unless we wish
to delve into a magical mystery tour of “projecting presences,” we must find
that no jurisdiction can be afforded by virtue of section (a)(3).
Margoles v. Johns, 483 F.2d 1212, 1218 (D.C. Cir. 1973). Because plaintiff has not identified any
act or omission by the Albers defendants in the District that caused his tortious injuries, he has
failed to show that section 13-423(a)(3) of the Long Arm Statute has been satisfied.
Plaintiff also cannot satisfy section 13-423(a)(4), which permits a court to exercise
jurisdiction over a person “causing tortious injury in the District of Columbia by an act or omission
outside the District of Columbia.” D.C. Code § 13-423(a)(4). Plaintiff has alleged that the Albers
defendants caused him tortious injury in the District by contacting government authorities by
phone and by letter from California, 2d Am. Compl. ¶¶ 50, 52, 58, 61, and so the first requirement
of that provision is satisfied. However, “because the harm-generating act (or omission) occurred
outside” the District, section 13-423(a)(4) “calls for something more” – that is, regularly doing or
soliciting business in the District, engaging in any persistent course of conduct in the District, or
37
deriving substantial revenue from activities in the District. Crane v. Carr, 814 F.2d 758, 763 (D.C.
Cir. 1987); D.C. Code § 13-423(a)(4). These “plus factor[s] . . . serve to filter out cases in which
the inforum impact is an isolated event and the defendant otherwise has no, or scant, affiliations
with the forum.” Carr, 814 F.2d at 763.
Plaintiff does not argue that the Albers defendants conducted or solicited business in the
District or that they derived any revenue from the District. He broadly asserts that “[d]efendants
played an active role in procuring and continuing the criminal case” against him, 2d Am. Compl.
¶ 58, but the only actions plaintiff identifies by the Albers defendants that could possibly be
considered a “persistent course of conduct” – his allegations of their early involvement in bringing
plaintiff’s alleged misconduct to the prosecutors’ attention – took place in California, as discussed
above, and not in the District. And such calls and emails do not, standing alone, constitute a
persistent course of conduct. See, e.g., FC Inv. Grp. LC v. IFX Mkts., Ltd., 529 F.3d 1087, 1095
nn.8–9 (D.C. Cir. 2008) (finding that even regular telephone calls from the London defendant to
the District were insufficient to establish long-arm jurisdiction under sections 13-423(a)(1) and
(a)(4)). The Court finds that plaintiff’s allegations do not show even “scant” affiliations with the
District as required to satisfy section 13-423(a)(4), see Carr, 814 F.2d at 763, and it therefore
concludes that the Long Arm Statute cannot serve as a basis for exercising personal jurisdiction
over the Albers defendants.
B. The Court declines to exercise pendent personal jurisdiction over the Albers
defendants based on the forum selection clause in the Fee Agreement.
As was true when plaintiff opposed former defendant Michaelson’s motion to dismiss on
personal jurisdiction grounds, the opposition to the Albers defendants’ present motion “focuses on
the fee agreement rather than contesting the defendant[s’] argument that minimum contacts lack
between [defendants] and the District of Columbia.” Naegele I, 355 F. Supp. 2d at 138. The Court
38
will therefore examine plaintiff’s chief argument: that the Albers defendants opened themselves
up to the jurisdiction of this Court by signing the Fee Agreement. See Pl.’s Opp. at 6 (“The Albers
Defendants have expressly consented to this Court’s exclusive jurisdiction; and they have never
challenged this forum-selection clause or its effect.”).
Plaintiff is correct that the Albers defendants agreed that any disputes or litigation arising
out of the Fee Agreement “shall be in a court of the District of Columbia and/or in the United States
District Court for the District of Columbia,” and that the Albers defendants “consent[ed] to the
jurisdiction of such court or courts with respect to any disputes or litigation arising out of this
agreement.” 2d Am. Compl. ¶ 2 (emphasis added); see also Fee Agreement at ECF 4, 8, 11, 16.
But in signing that agreement, the Albers defendants did not consent to being sued in the District
of Columbia for any other disputes. Thus, the forum selection clause in the Fee Agreement
provides the Court with no basis for haling the Albers defendants into court on the remaining
counts of the second amended complaint, all of which stem from the Albers defendants’ alleged
involvement in initiating the criminal case against plaintiff related to his bankruptcy filings, and
not from the dispute over the attorneys’ fees described in the Fee Agreement.
It is true that this Circuit has adopted the doctrine of “pendent personal jurisdiction,” which
permits a court to exercise personal jurisdiction over a defendant “‘with respect to a claim for
which there is no independent basis of personal jurisdiction so long as it arises out of a common
nucleus of operative facts with a claim in the same suit over which the court does have personal
jurisdiction.’” Geier v. Conway, Homer & Chin-Caplan, P.C., 983 F. Supp. 2d 22, 31 (D.D.C.
2013), quoting Oetiker v. Jurid Werke GmbH, 556 F.2d 1, 5 (D.C. Cir. 1977). But the remaining
counts do not share a common nucleus of operative fact with the now-dismissed counts stemming
from the Fee Agreement, so the doctrine does not apply. And even if it did, the D.C. Circuit has
39
observed that a “district court may have discretion to dismiss the pendent claims where
‘considerations of judicial economy, convenience and fairness to litigants’ so dictate.” Oetiker,
556 F.2d at 4–5, citing United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966). The
Court finds that these considerations also weigh heavily in favor of declining to exercise pendent
personal jurisdiction.
Finally, the Court finds that haling the Albers defendants into court in the District of
Columbia on the counts remaining against them, based only on their conduct in California and the
Fee Agreement, would likely “‘offend traditional notions of fair play and substantial justice.’”
GTE New Media Servs., 199 F.3d at 1347, quoting Int’l Shoe, 326 U.S. at 316. Therefore, because
plaintiff has not shown that the Long Arm Statute provides a basis for the exercise of personal
jurisdiction over the Albers defendants, because the Court declines to exercise pendent personal
jurisdiction over the remaining claims, and because the due process requirements of the
Constitution would likely not be satisfied in any event, the Court will dismiss Counts IX through
XIII against the Albers defendants for lack of personal jurisdiction.
IV. The Court will dismiss Counts V and VII through XIII against the Doe defendants
pursuant to Rule 12(b)(6).
The second amended complaint asserts a litany of claims against the ten unnamed Doe
defendants: Count V – Conspiracy to Commit Fraud and Deceit, Count VII – Tortious Interference
with Contract, Count VIII – Conspiracy to Commit Tortious Interference with Contract, Count
IX – Intentional Infliction of Emotional Distress, Count X – Conspiracy to Commit Intentional
Infliction of Emotional Distress, Count XI – Negligent Infliction of Emotional Distress, Count
XII – Malicious Prosecution, and Count XIII – Conspiracy to Commit Malicious Prosecution. 2d
Am. Compl. ¶¶ 25–29, 37–48, 49–64. Yet the sum total of the facts alleged about the Doe
defendants is that the Albers defendants “sought the advice of one or more persons including, but
40
not limited to, one or more attorneys including Michaelson . . . who have advised the Albers to
take certain actions or engage in action, which has resulted in the injuries to Naegele.” Id. ¶ 10.
Plaintiff has been unable to ascertain “the true names and capacities” of these individuals, despite
the pendency of this case and the parallel actions since 2003. Id. ¶ 6.
The D.C. Circuit has stated that a “district court may sua sponte dismiss a claim pursuant
to Rule 12(b)(6) without notice where it is ‘patently obvious’ that the plaintiff cannot possibly
prevail based on the facts alleged in the complaint.” Rollins v. Wackenhut Servs., Inc., 703 F.3d
122, 127 (D.C. Cir. 2012), quoting Baker v. Dir., U.S. Parole Comm’n, 916 F.2d 725, 727 (D.C.
Cir. 1990); see also Baker, 916 F.2d at 726 (stating that, “in cases where the plaintiff has not
advanced a shred of a valid claim,” the standard approach of requiring notice to the plaintiff before
Rule 12(b)(6) dismissal sua sponte “can only lead to a waste of judicial resources”). Here, the
Court finds that plaintiff has failed to plausibly allege that the Doe defendants did anything at all,
let alone that they engaged in the tortious acts of which they have been accused.
In Count VII, plaintiff asserts that the Doe defendants interfered with his entitlement to
fees under the Fee Agreement. 2d Am. Compl. ¶¶ 37–43. To state a claim for tortious interference
with contract, a plaintiff must “establish ‘(1) the existence of a contract, (2) defendant’s knowledge
of the contract, (3) defendant’s intentional procurement of the contract’s breach, and (4) damages
resulting from the breach.’” Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 403 (D.C. Cir.
2012), quoting Cooke v. Griffiths–Garcia Corp., 612 A.2d 1251, 1256 (D.C. 1992). As to the
issue of the Doe defendants’ intentional procurement of the Albers defendants’ breach of the Fee
Agreement, the second amended complaint contains no facts from which the Court could draw a
“reasonable inference that the defendant[s] [are] liable for the misconduct alleged.” See Iqbal, 556
U.S. at 678.
41
Plaintiff alleges “[o]n information and belief,” the Doe defendants “advised” the Albers
defendants not to pay plaintiff, that the Doe defendants “had knowledge of the [Fee]
Agreement . . . yet they engaged in malicious and intentional efforts to injure and interfere” with
the Fee Agreement, and that they “induced the Albers to take actions that injured Naegele . . . by
telling the Albers that they did not have to pay Naegele and others, and by falsely stating that the
present and future money claimed by Naegele and others was not owed and did not have to be
paid.” 2d Am. Compl. ¶¶ 37–41. But these allegations are entirely conclusory, and plaintiff has
alleged no facts to support his claims of wrongdoing by the Doe defendants. That plaintiff was
not ultimately paid all of the fees to which he believed he was entitled is not enough to give rise
to a plausible inference that the contract was breached, that the Doe defendants are responsible for
that breach, or that they intentionally caused the breach. See Patton Boggs, 683 F.3d at 404. And
plaintiff’s insistence that the Doe defendants interfered with his entitlement to fees is contradicted,
at least in part, by the arbitration panel’s finding that plaintiff was generously compensated by the
Albers defendants, and that they actually overpaid paid him by more than $700,000. See Naegele
III, 940 F. Supp. 2d at 4, quoting Arb. Award at 10–11. For those reasons, the Court finds that
Count VII of the second amended complaint fails to state a claim for tortious interference against
the Doe defendants, and it will dismiss that count.
The Court will also dismiss Count V – Conspiracy to Commit Fraud and Deceit, and Count
VIII – Conspiracy to Commit Tortious Interference with Contract. “Under both federal and
District of Columbia law, civil conspiracy is not actionable in and of itself.” Riddell v. Riddell
Washington Corp., 866 F.2d 1480, 1493 (D.C. Cir. 1989). Because the Court has determined that
underlying tort claims upon which the conspiracy claims in Counts V and VIII are based – the
alleged fraud and deceit claim in Count IV, and the alleged tortious interference with contract
42
claim in Count VII – will be dismissed, it necessarily follows that the conspiracy counts must fail,
as well. See, e.g., Barnstead Broad. Corp. v. Offshore Broad. Corp., 886 F. Supp. 874, 883
(D.D.C. 1995).
As for Counts IX through XIII, which allege tortious injuries arising from the Doe
defendants’ purported involvement in instigating the criminal investigation into plaintiff’s
bankruptcy, a review of the second amended complaint reveals that plaintiff does not offer a single
fact concerning the Doe defendants that would give rise to liability for those claims, nor does he
claim that the Doe defendants engaged in any specific acts that caused the alleged tortious injuries.
Plaintiff lumps the Doe defendants in with all of the other defendants, but the only conduct he
describes was that of the Albers defendants:
The Defendants played an active role in the [criminal] case. For example,
they contacted the Criminal Division of the Justice Department in
Washington, D.C. on or about May 24, 2004, and requested that the
Department conduct an investigation with respect to the proper reporting of
legal fees paid by the Albers, in Naegele’s calendar year 2000 bankruptcy
filings. See, e.g., Letter from the Albers [defendants] to Joshua Hochberg
and Mike Koenig, dated June 1, 2004.
2d Am. Compl. ¶ 58; see also id. ¶¶ 50, 52, 61. The letter plaintiff cites was written and sent by
the Albers defendants, and there is no indication in that letter – or in any of the other letters
included in the same exhibit – that any other parties besides former defendant Michaelson were
involved in the communications with the Department of Justice. See DOJ Letters at ECF 6–9
(letter, email, and fax sent by Michaelson, listing only Michaelson and “Law Offices of Lloyd J.
Michaelson”). 15 So, plaintiff has not even offered conclusory allegations, let alone the “sufficient
15 Because plaintiff incorporates these letters in his second amended complaint, 2d Am.
Compl. ¶¶ 50, 58, the Court may properly rely on them in determining whether plaintiff’s
complaint fails to state a claim against the Doe defendants. See St. Francis Xavier Parochial Sch.,
117 F.3d at 624 (stating that a court may consider “any documents either attached to or
incorporated in the complaint” “[i]n determining whether a complaint fails to state a claim”).
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factual matter” required to state a plausible claim for relief, Iqbal, 556 U.S. at 678, that would
show that the Doe defendants played any role in the criminal investigation that underlies plaintiff’s
claims in Counts IX through XIII of the second amended complaint. For that reason, the Court
will also dismiss those counts pursuant to Rule 12(b)(6).
CONCLUSION
Because the Court finds that Counts I through VI of the second amended complaint against
the Albers defendants are barred by res judicata, it will dismiss those claims. In addition, because
the Court finds no basis for the exercise of personal jurisdiction over the Albers defendants as to
Counts IX through XIII, it will dismiss those claims, as well. And finally, because the Court finds
that plaintiff has failed to state any viable claim against the Doe defendants, it will also dismiss
Counts V and VII through XIII as to those defendants. Therefore, the Court will dismiss the case
in its entirety.
A separate order will issue.
AMY BERMAN JACKSON
United States District Judge
DATE: June 23, 2015
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