Law Offices of Joseph Q. Mirarchi Legal Servs., P.C. v. Thorpe

THE LAW OFFICES OF JOSEPH Q. MIRARCHI LEGAL SERVICES,P.C., SILVER LEGAL SERVICES, P.C., Plaintiffs, v. DALE THORPE, RENEE THORPE h/w, HERBERT MCDUFFY, JR.,ROGER ASHODIAN, BB&T CORPORATION,LITITIZ PROPERTIES, LLC AND JOHN FIORILLO, Defendants.

CIVIL ACTION NO. 16-6604

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

August 29, 2017

MEMORANDUM OPINION

This case is one portion of attorney Joseph Q. Mirarchi's multi-forum attempt to recover a contingency fee from bankrupt clients Renee and Dale Thorpe, who terminated him after learning of his undisclosed administrative suspension from the practice of law. The Court has already considered - and rejected - The Law Offices of Joseph Q. Mirarchi's ("Mirarchi") entitlement to the fees in a separate matter originating in the Thorpes' Chapter 12 bankruptcy case. This case was filed before the Court issued its opinion in that matter. Here, Mirarchi's solo legal practice proceeds alongside co-Plaintiff Silver Legal Services in attempting to recover the fees not only from the Thorpes, but also from the attorney they hired to complete Mirarchi's work (Herbert McDuffy, Jr.), the Thorpes' bankruptcy attorney (Roger Ashodian), the Thorpes' primary debtors (BB&T Corporation and Lititz Properties, LLC), and the attorney for those debtors (John Fiorillo). Plaintiffs assert thirteen state-law claims and allege a wide-ranging conspiracy to deny Plaintiffs their fees. All Defendants other than McDuffy have filed motions to dismiss. Those motions shall be granted.

I. BACKGROUND

The core of this case is straightforward: Plaintiffs seek to recover legal fees arising from a contingency fee arrangement concerning the representation by Mirarchi of the Thorpes in a dispute with their property insurer, Nationwide Mutual Insurance Company ("Nationwide"). Complicating matters, however, Renee Thorpe was in the midst of a Chapter 12 bankruptcy proceeding at the time, and the dispute over Mirarchi's legal fees became intertwined with the settlement of the bankruptcy. After other parties to the bankruptcy refused to allocate a portion of the settlement to Mirarchi, the funds were placed in escrow, and Mirarchi filed a motion seeking disbursement of the funds to his solo legal practice.

The Bankruptcy Court denied Mirarchi's motion and issued Proposed Findings of Facts and Law that were adopted by this Court after de novo review. In adopting those findings, the Court ruled that Mirarchi was terminated for unlawful activity (i.e., the unauthorized practice of law and the failure to disclose his suspension to clients) and was thus not entitled to the disputed legal fees. See U.S. Trustee v. Thorpe, No. 17-cv-857, 2017 WL 3084388, at *4 (E.D. Pa. July 19, 2017). That ruling is now on appeal in the Third Circuit. Nevertheless, Mirarchi continues to press its claims here alongside co-Plaintiff Silver Legal Services, a firm which was not a party to the agreement between Mirarchi and the Thorpes.¹

A. Nationwide Insurance Settlement

Herbert McDuffy, Jr., one of the lawyers who represented the Thorpes, referred them to Joseph Mirarchi to take over from him a case they were litigating against Nationwide. Mirarchi sent them a proposed contingency fee agreement but started work on the case - filing an Amended Complaint - before they signed it. Although the Thorpes did, eventually sign the agreement (the "Fee Agreement"), they did so in March 2015, several months after he began work on the matter. Compl. ¶ 80, 81, 94.

There was little activity on the case until August 25, 2015, when Joseph Mirarchi entered into informal settlement negotiations with Nationwide's counsel. Compl. ¶¶ 105-06. Nationwide soon proposed a settlement offer of $324,000, and Joseph Mirarchi attempted, by phone and by text message, to relay this offer to the Thorpes and obtain consent to accept the offer. Compl. ¶¶ 107-08. He also attempted to contact Roger Ashodian, Renee Thorpe's bankruptcy counsel. Compl. ¶ 108.

In response to these inquiries, Ashodian's office requested a copy of both the Fee Agreement and Joseph Mirarchi's resume. Compl. ¶ 112. Ashodian also contacted Gary Silver, an attorney with Plaintiff Silver Legal Services, to request a copy of the Amended Complaint previously filed by Mirarchi.² Compl. ¶¶ 117-18. Ashodian's assistant then prepared an application for nunc pro tunc approval of Mirarchi as special litigation counsel in Renee Thorpe's bankruptcy case, which was sent to Mirarchi with the disclaimer: "Roger Ashodian hasdecided for strategic reasons not to file the application yet, but he would like everything in place to file it soon." Compl. ¶¶ 122, 124.

Despite numerous attempts by Joseph Mirarchi to elicit consent throughout the fall of 2015, the Thorpes did not agree to accept the Nationwide settlement. Instead, after learning that he had been administratively suspended from the practice of law from August 14, 2015 to September 16, 2015 (i.e., during most of his negotiations with Nationwide),³ the Thorpes terminated Mirarchi's representation by e-mail dated November 23, 2015, following up on December 31 with a signed termination letter. Compl. ¶¶ 126-34, 150-63, 171, 175. On January 27, 2016, McDuffy (who was then also representing two creditors in the Thorpe bankruptcy matter) re-entered his appearance in the Nationwide case and accepted the settlement offer primarily negotiated by Joseph Mirarchi. Compl. ¶ 207.

B. The Fee Dispute in Bankruptcy Court

While Joseph Mirarchi was attempting to obtain the Thorpes' consent to the Nationwide settlement, the Thorpes' family farm was sold at auction on September 15, 2015 pursuant to their bankruptcy plan. Compl. ¶ 135. The proceeds from the auction were not enough to cover the Thorpes' debts, and the Bankruptcy Court referred the matter to mediation before the Honorable Ashely M. Chan. Compl. ¶ 177. At the first mediation conference in early January 2016 (prior to the Thorpes' acceptance of the Nationwide settlement), Renee Thorpe, Ashodian, McDuffy (on behalf of two creditors), and John Fiorillo (on behalf of creditors Lititz Properties, LLC ("Lititz") and BB&T Corporation ("BB&T")) agreed to a global settlement by which Fiorillo,Lititz, and BB&T would receive $220,000 and discharge the remainder of Renee Thorpe's financial liabilities. Compl. ¶¶ 179-82, 184-85.

The Bankruptcy Court scheduled a second mediation conference for March 10, 2016 and Joseph Mirarchi sought leave to attend on behalf of Mirarchi. Compl. ¶¶ 214, 217. During the conference, all of the named Defendants in this case maintained that the Thorpes had never retained Mirarchi and that, accordingly, it was not entitled to a 35% contingency fee. Compl. ¶¶ 225-26. On April 19, Fiorillo, Lititz, and BB&T filed a motion to approve a settlement between all named Defendants. Compl. ¶ 230. The Bankruptcy Court granted the motion and ordered that Mirarchi's attorney's lien, totaling $113,400 (the "Disputed Fees"), be placed in escrow with the Clerk of the Court, and the balance of the Nationwide settlement, $210,600, be paid the Fiorillo, Lititz, and BB&T immediately. Compl. ¶ 234.

On June 22, 2016, Mirarchi filed a motion with the Bankruptcy Court seeking payment of the Disputed Fees (the "Mirarchi motion"), alleging that it was owed the fees under the Fee Agreement or, in the alternative, under the equitable doctrine of quantum meruit. That motion was considered by the Bankruptcy Court during a three-day hearing, after which the Bankruptcy Court determined that the fee dispute was a non-core matter that it could not resolve without the parties' consent, and therefore issued proposed findings of fact and law which were submitted to this Court for de novo consideration. See In re Thorpe, 563 B.R. 576 (Bankr. E.D. Pa. 2017). On July 19, 2017, this Court issued its final order adopting the Bankruptcy Court's findings and holding that Mirarchi did not have a contractual or equitable entitlement to the disputed funds because the Thorpe's terminated the representation for Joseph Mirarchi's unlawful conduct (i.e., the unauthorized practice of law). See U.S. Trustee, 2017 WL 3084388, at *4. Two days later, Mirarchi appealed that decision to the Third Circuit.

C. This Case

While the Mirarchi motion was pending before the Bankruptcy Court, Mirarchi, joined by Plaintiff Silver Legal Services, filed this case alleging a breach of contract, detrimental reliance, and unjust enrichment against the Thorpes (Counts I, II, and III); conversion, civil conspiracy, and abuse of process against all seven Defendants (Counts IV, VII, and XIII); intentional and negligent misrepresentation against the Thorpes, McDuffy, and Ashodian (Counts V and VI); quasi-contract and unjust enrichment against BB&T (Count VIII); and intentional and negligent interference with contractual relations against McDuffy, Ashodian, BB&T, Lititz, and Fiorillo (Counts IX, X, XI, and XII).

II. LEGAL STANDARD

Defendants have filed motions to dismiss under both Rule 12(b)(1) and 12(b)(6). In evaluating a Rule 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction, "a court must first determine whether the movant presents a facial or factual attack." In re Schering Plough Corp. Intron/Temodar Consumer Class Action Litig., 678 F.3d 235, 243 (3d Cir. 2012). A facial attack "contests the sufficiency of the pleadings," and the court is limited to considering only "the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." Id. (internal quotation marks omitted). A factual attack, on the other hand, "concerns the actual failure of a plaintiff's claims to comport factually with the jurisdictional prerequisites." Constitution Party of Pa. v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014) (internal quotation marks and modifications omitted). When considering a factual attack, "a court may weigh and consider evidence outside the pleadings." Id. (internal quotation marks...