Great W. Mining & Mineral Co. v. ADR Options, Inc.

882 F.Supp.2d 749

GREAT WESTERN MINING & MINERAL COMPANY, Plaintiff,

v.ADR OPTIONS, INC., Brownstein and Vitale, P.C., Brownstein, Vitale & Weiss, P.C., Defendants.

Civil Action No. 09–2907 (FLW).

United States District Court, D. New Jersey.

Feb. 8, 2012.

Benjamin C. Weiner, Livingston, NJ, for Plaintiff.

Kerri E. Chewning, Michael Patrick Hackett, Archer & Greiner PC, Haddonfield, NJ, Jeffrey B. McCarron, Candidus K. Dougherty, Swartz, Campbell LLC, Philadelphia, PA, for Defendants.

OPINION

WOLFSON, District Judge:

Presently before the Court are numerous motions filed by Plaintiff Great Western Mining & Mineral Company (“Great Western” or “Plaintiff”) and Defendants ADR Options, Inc. (“ADR”), Brownstein and Vitale, P.C. and Brownstein, Vitale & Weiss, P.C. (“Brownstein”) (collectively “Defendants”). This action represents the fifth of at least six lawsuits concerning a legal malpractice action that was originally commenced in the Philadelphia Court of Common Pleas in 1999. Specifically, in this action, Plaintiff alleges that Defendants failed to disclose certain relationships prior to a 2003 arbitration arising from the alleged legal malpractice, and that such failures affected the outcome of the arbitration. Plaintiff asserts causes of action for Breach of Contract, Negligent Misrepresentation, Fraud, Violations of the New Jersey Consumer Fraud Act, Violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law and for Punitive Damaes. The following motions are currently pending before this Court: Plaintiff's Motion to Change Venue (Dkt. 41); Plaintiff's Motion for Leave to File a Second Amended Complaint (Dkt. 54); ADR's Motion to Dismiss or, in the Alternative, for Summary Judgment (Dkt. 45); Brownstein's Motion to Dismiss or, in the Alternative, for Summary Judgment (Dkt. 47); ADR's Cross–Motion for Sanctions (Dkt. 50); and Brownstein's Cross–Motion for Sanctions (Dkt. 52). For the reasons that follow, Plaintiff's motions are denied and Defendants' motions are granted.

I. FACTUAL BACKGROUND

As other courts have aptly observed, this case has a “tortured procedural history” spanning nearly 13 years and a multitude of state and federal courts. See, e.g., Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 2009 WL 704335, at *1 (D.N.J.2009); Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 2006 WL 1769616, at *1 (Pa.Com.Pl.2006). Because the parties are intimately familiar with the facts and procedural history of this case, the Court will summarize the relevant portions herein, and will also adopt the factual statement set forth in Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir.2010).

A. Initial Litigation and Subsequent Arbitration

This case originates out of a dispute involving the construction of a miniature golf course in which Active Entertainment Inc., (“Active”) was the losing party. Active retained Brownstein to represent it in litigation against the third party with whom Active had contracted to build the golf course. Dissatisfied with the damages awarded in that litigation, in 1999, Active brought a legal malpractice suit against Brownstein in the Philadelphia Court of Common Pleas. Fox Rothschild LLP (“Fox Rothschild”) acted as defense counsel for Brownstein in the malpractice action. After the lawsuit was filed, the parties agreed to submit to binding arbitration before Thomas Rutter (“Rutter”) and ADR; the Common Pleas case was discontinued in March 2002.

Before beginning the arbitration proceedings, the parties entered into a binding ADR Options Arbitration Agreement, that provided, in relevant part:

Each party and participating attorney has disclosed any past or present relationship with the arbitrator, direct or indirect, whether financial, professional, social or any other kind. The arbitrator has also disclosed any past or present relationship with any party or attorney. It is understood that any doubt has been resolved in favor of disclosure.

Pl's Am. Compl. ¶ 14 (“Arbitration Agreement and Stipulation”).

The arbitration was conducted on June 16, 2003. On September 19, 2003, Rutter issued a decision in favor of Brownstein. Thereafter, Great Western became the assignee of Active's interest. Subsequently, on March 17, 2011, Benjamin C. Weiner, the attorney for Great Western, became the assignee of Great Western. In that connection, Weiner seeks leave to amend the action to name himself as an individual Plaintiff.

B. First Subsequent Action: Active Entertainment, Inc. v. Brownstein et al., October Term, 2003 (“2003 Petition Action”)

On or around October 21, 2003, Great Western filed a Petition to Vacate the arbitration award in the Court of Common Pleas, Philadelphia County. In that action, Plaintiff alleged that ADR had undisclosed conflicts of interest involving ADR and a Fox Rothschild attorney who represented Brownstein in the 2003 arbitration. Dougherty Cert., Ex. G. Specifically, Plaintiff alleges that this relationship should have been disclosed pursuant to the “Arbitration and Agreement Stipulation.” Id. The petition to vacate the arbitration award was denied on December 18, 2003. Dougherty Cert., Ex. F. Plaintiff filed a motion for reconsideration, which was denied on January 16, 2004. Id.

Thereafter, on May 10, 2004, Plaintiff filed an appeal with the Superior Court of Pennsylvania. On September 22, 2005, the Superior Court affirmed. In its opinion, the Superior Court explained that the questions before it “concern[ed] an alleged violation by the arbitrator and Appellees' counsel of their ethical and contractual obligations to disclose that they had a prior relationship. Specifically, Active asserts that ... defense counsel himself has a professional relationship with the arbitrator, which involves ‘prior arbitrations and mediations' ... Engaging in the practice of representing clients in cases subject to arbitration necessarily requires repeated appearances before attorneys serving as arbitrators, and it is not uncommon that one will encounter the same arbitrator. This is not the type of “relationship” that creates a conflict or is contemplated as requiring disclosure.” Dougherty Cert., Ex. I. at 3–5.

In August 2006, the Supreme Court of Pennsylvania denied review. Dougherty Cert., Ex. F.

C. Second Subsequent Action: Great Western Mineral & Mining Co. v. ADR Options, Inc. et al., Court of Common Pleas, Philadelphia County June Term 2005

While Active's appeal was pending before the Superior Court of Pennsylvania, Great Western filed a separate civil action in the Philadelphia Court of Common Pleas against, in relevant part, Rutter, ADR and Fox Rothschild. The Complaint alleged a failure to disclose improper relationships and asserted various claims including: breach of contract, negligence, fraudulent inducement, fraudulent concealment, misrepresentation, false pretense, and unfair methods of competition/unfair or deceptive acts or practices under Pennsylvania's Unfair Trade Practices and Consumer Protection Law. The basis for this lawsuit was the “Arbitration Agreement and Stipulation” and the 2003 arbitration. Dougherty Cert., Ex. K.

On May 25, 2006, the Court of Common Pleas dismissed the action as collaterally estopped by the 2003 action. Dougherty Cert., Ex. L. Specifically, the Court of Common Pleas explained that “[t]here is no denying that collateral estoppel bars Plaintiff from re-litigating its claims. The issues are identical, the parties are the same, Plaintiff was afforded the opportunity to fully litigate its claim and there was a final judgment on the merits.” Id.

The Superior Court of Pennsylvania affirmed the decision and the Supreme Court of Pennsylvania denied Great Western's petition for appeal.

D. Third Subsequent Action: Great Western Mining & Mineral Co. v. Fox Rothschild, LLP, No. 2:08–1093 (D.N.J. Feb. 29, 2008)

Thereafter, in February 2008, Plaintiff filed suit in the United States District Court for the District of New Jersey against, in relevant part, ADR Options, Fox Rothschild and Rutter. In that action, Great Western asserted due process violations arising from the alleged breach of the “Arbitration Agreement and Stipulation” and 2003 arbitration pursuant to 42 U.S.C. § 1983. Dougherty Cert., Ex. N. Specifically, Great Western alleged that defendants failed to “disclose essential information” to which it was “contractually entitled to prior to it's [sic] acceptance of arbitrator Rutter,” and that these claims were “part of a petition to vacate the arbitration award and motion for reconsideration; both were denied.” Id. ¶ 19. Further, Great Western alleged that it was deprived of due process concerning the failures to disclose because “[t]he judiciary was beholden to the authority and influence of defendants ADR Options and Rutter.” Id. ¶¶ 22, 23, 43. The Honorable William H. Walls, United States District Judge, dismissed Plaintiff's complaint for failure to state a claim. Great Western Mining v. Fox Rothschild, No. 08–1093, 2009 WL 704335 (D.N.J. Mar. 16, 2009).

Subsequently, Great Western filed a Motion for Reconsideration with Leave to Amend. While this motion was pending, Great Western filed two subsequent Motions for Leave to Substitute the Attached Complaint to Plaintiff's Motion for Reconsideration. Importantly, and in relevant part, on April 30, 2009, Plaintiff filed its first Motion to Substitute and attached a second proposed amended complaint for the court's consideration. In that motion, Great Western asserted that it was only after the court had dismissed its complaint that Great Western “discovered that ADR Options/Rutter had an attorney-client relationship with the defendant before it during the underlying arbitration, and this information was withheld from Plaintiff. The defendant was ADR Options/Rutters [sic] attorney and it was not disclosed to plaintiff.” Civ. A. No. 08–1093, Dkt. 23 at 2. Similarly, the attached second proposed complaint asserted that ...