Sopkin v. Lopatto

1

BARBARA SOPKIN, Plaintiff, v. JOHN LOPATTO, Defendant.

Civil Action No. 22-cv-03300 (TSC)

United States District Court, District of Columbia

September 8, 2023

MEMORANDUM OPINION

TANYA S. CHUTKAN United States District Judge.

Defendant John Lopatto has moved to dismiss, ECF No. 12, this action filed by pro se Plaintiff Barbara Sopkin. For the reasons explained below, Lopatto's Motion to Dismiss will be GRANTED and this case will be dismissed pursuant to Federal Rule 12(b)(1).^[1]

BACKGROUND

Interlase L.P.

Decades ago, Dr. Ken Fox invented and obtained patents for specialized catheters. See Compl., ECF No. 1 ¶¶ 4-6. At the time, Dr. Fox and Coster Family Limited Partnership were the limited partners, and Lucre Investments Ltd. (“Lucre”) was the general partner, of Interlase L.P. (“Interlase”), which held a license agreement for those patents in exchange for royalties. See id. ¶ 12; MTD Ex. 1, ECF No 12-3, Order Denying Plea in Bar ¶ 1, In Re Interlase Limited Partnership, Chancery No. 98-505 (Arlington County Cir. Ct., dated Dec. 18, 1998).

Mendelson Appointed as Receiver for Interlase

During Dr. Fox's divorce, his former spouse, Wendy Fox, and Coster Family Limited Partnership asked the Arlington County Circuit Court overseeing the divorce proceedings to appoint a receiver for Interlase, due to their concern that Dr. Fox was diverting Interlase's royalty payments to foreign bank accounts under his sole control. See Compl. ¶ 9; see also MTD Ex. 1 ¶¶ 7-8, 10-11; MTD Ex. 2, ECF No. 12-4, Order Appointing Special Receiver In Re: Interlase Limited Partnership, Chancery No. 98-505 (Arlington Cnty. Cir. Ct, September 14, 1998). The Arlington County Circuit Court determined that Lucre was a sham entity used as a shell company, and to protect Interlase's assets, it granted the request for a receivership appointment. See Compl. ¶¶ 9-10; see also MTD Ex. 2. Richard Mendelson was thus appointed as receiver, and was ordered to, inter alia, assume responsibility for the collection of Interlase's patent-license royalties. See Compl. ¶¶ 9-10; see also MTD Ex. 2. Notably, the court did not authorize Mendelson to pay any collected royalties to Dr. Fox. See MTD Ex. 1.

On December 18, 1998, the Arlington County Circuit Court entered an Order (“Injunction Order”) enjoining Lucre “and its officers, managers, directors, and agents,” from claiming to be Interlase's general partner, taking any actions on behalf of Interlase, and from otherwise interfering with the receivership. See id. at 10; Compl. ¶ 9. Lucre was also ordered to immediately deliver to Mendelson any assets that it held on behalf of Interlase. See MTD Ex. 1 at 10.

From 1998 until 2006 or 2007, when the patents expired,^[2]Mendelson collected royalty payments due to Interlase, providing a quarterly accounting to the Arlington County Circuit Court totaling the royalties collected, as well as the portions of those royalties that were paid to Wendy Fox as part of her equitable distribution and child support award. See Compl. ¶¶ 9-10, 18; MTD Mem. at 3; see also Fox v. Fox, 41 Va.App. 88, 93, 581 S.E.2d 904, 907 (2003).

Mendelson was released from his role as receiver in June 2009. See Compl. ¶ 22.

Interlase Files for Bankruptcy

In 1999, in an effort to challenge Mendelson's appointment in another court, the then-general partners of Interlase filed a Chapter 7 Bankruptcy Petition for Interlase in the United States District Court for the Northern District of Georgia, where Interlase was chartered. See id. ¶ 16. Mendelson filed a Motion to Transfer, which was granted, and the matter was then transferred to the United States District Court for the Eastern District of Virginia. See id. The bankruptcy court then appointed a Chapter 7 trustee, but determined that the trustee should defer entirely to Mendelson, and stayed the proceedings for the duration of his receivership. See id. The Eastern District of Virginia released the Chapter 7 trustee in September 2011. See id. ¶ 25.

Sopkin's Introduction

In 2003, Lucre assigned its 2% general partnership interest in Interlase to Sopkin. See Id. ¶ 12. During the bankruptcy proceedings, Sopkin filed a Proof of Interest, in which she claimed that she held the 2% general partner interest in Interlase, but she later withdrew that filing with prejudice. See Sopkin v. Mendelson, et al., 746 Fed.Appx. 157, 159, 160 n.6 (4^th Cir. 2018) (per curiam). Sometime in 2016, Dr. Fox assigned Sopkin his remaining 98% limited partnership interest in Interlase. See Compl. ¶ 12.

Lopatto's Introduction

On December 15, 2016, Dr. Fox and Sopkin retained Lopatto to pursue a claim on behalf of Interlase, seeking damages against Mendelson for alleged negligent under-collection of patent-license royalties for the full duration of his receivership. See id. ¶ 31; MTD Mem. at 4. Dr. Fox and Sopkin alleged-and Sopkin continues to allege-that Mendelson failed to extend Interlase's patents in the United States, negligently under-collected royalty payments, and permitted the licensees to under-report the sales upon which those royalties were calculated, costing Interlase millions of dollars. See Compl. ¶¶ 14-24, 26-30, 33, 38-42, 44, 48, 56; ad damnum clause.

First Lawsuit-Sopkin I

On September 8, 2016, while represented by Lopatto, Sopkin, “in her capacity as assignee of Lucre Investments, Ltd., general partner of Interlase Limited Partnership, a Georgia Limited Partnership, and in a derivative action for Interlase Limited Partnership,” filed suit in the Eastern District of Virginia against several defendants, including the now late-Mendelson's estate and his associated executers (the “Mendelson defendants”), and demanded more than $20 million to compensate for Interlase's alleged lost patent-license royalties. See id. ¶ 51; MTD Ex. 3, ECF No. 12-5, Complaint filed in Sopkin v. Mendelson, et al., No. 16-cv-1146 (E.D. Va. filed Sept. 8, 2016) (“Sopkin I”); see also MTD Ex. 4, ECF No. 12-6, copy of Sopkin I Dkt. Sopkin alleged that the Mendelson defendants violated the Virginia Business Conspiracy Act, committed wrongful interference with contract, violated 42 U.S.C. § 1983, and committed negligence and breach of fiduciary duty under VA Code § 8.01-597 (authorizing suit against special receivers for breach of fiduciary duty). See Sopkin, No. 16-cv-1146, 2017 WL 1536434 (E.D. Va. Apr. 27, 2017), at *3. The trial court ultimately dismissed the case, finding that the plaintiffs failed to state a claim under the Virginia Business Conspiracy Act or for wrongful interference with contract, that they were beyond the two-year statute of limitations set by VA Code § 8.01-248 (catch-all statute of limitations statute to file a claim under § 8.01-597), and that they were beyond the applicable two-year statute of limitations to file a § 1983 claim under federal law. See id. at *3-*7.

Sopkin, still represented by Lopatto, appealed the dismissal to United States Court of Appeals for the Fourth Circuit. See Compl. ¶ 52; MTD Ex. 4, at Dkt. No. 132. The Fourth Circuit affirmed the trial court. See Sopkin, 746 Fed.Appx. at 158, 161. And although the trial court did not address the issue of standing-raised by the Mendelson defendants below-the Fourth Circuit analyzed the issue in full. See id. at 158-161. It found that although Dr. Fox assigned Sopkin his 98% limited partnership interest in 2016, Sopkin nonetheless lacked standing to sue on behalf of Interlase because she could not escape her status as an assignee of Lucre, thus prohibiting her from filing suit on behalf of Interlase due to the state-issued Injunction Order. See id. It also noted that her lack of standing was further evidenced by her withdrawal, with prejudice, of her Proof of Interest in the bankruptcy proceedings, see id. at 159, 160, n.6, and that the rulings in both the Arlington County Circuit Court and the Eastern District of Virginia Bankruptcy Court were preclusive pursuant to collateral estoppel, see id. at 159-160.

The Fourth Circuit also found that Sopkin could not file a derivative suit on behalf of Interlase because her allegations failed to comply with Federal Rule 23.1(b)(1), and the record did not support her standing to do so. See id. at 160-61. Indeed, the partnership agreement itself was devoid of any indication that Dr. Fox's 2016 assignment to Sopkin “included any claims belonging to Interlase,” and the record did not otherwise show “that Dr. Fox's interest in Interlase devolved on Sopkin by operation of law.” See id. at 161.

Second Lawsuit-Sopkin II

In January 2019, Lopatto, on behalf of Fox and Sopkin, filed another lawsuit against the Mendelson defendants, among others, in the Eastern District of Virginia. See MTD Ex. 8, ECF No. 12-10 Amended Complaint filed in Sopkin, No. 16-cv-1146 (filed Jan. 31, 2017) (“Sopkin II”); see also MTD Ex. 7, ECF No. 12-9, copy of Sopkin II Dkt., at Dkt. No. 50. The lawsuit was brought by Sopkin, “in her capacity as assignee of Lucre Investments, Ltd., general partner of Interlase Limited Partnership, a Georgia Limited Partnership, and in a derivative action for Interlase Limited Partnership,” MTD Ex. 8 at 1, and according to Lopatto, his strategy was to “plead around the injunction barring Lucre as general partner to sue for Interlase[,]” see MTD Mem. at 5. While the Amended Complaint asserted the same claims against the Mendelson defendants as in Sopkin I see Ex. 8 at 45-54, the plaintiffs now sought more than $30 million dollars in “unrecovered income” owed to Interlase, see id. at 15, and now claimed that Sopkin was Lucre's assignee and designee only as to Interlase's financial interests, but that Lucre's actual general partnership was not assigned to Sopkin, who was instead elected a general partner in her own right in 2014,...