Colonial River Wealth Advisors, LLC v. Cambridge Investment Research, Inc.

CourtDistrict Court, E.D. Virginia
DecidedJanuary 5, 2024
Docket3:22-cv-00717
StatusUnknown

This text of Colonial River Wealth Advisors, LLC v. Cambridge Investment Research, Inc. (Colonial River Wealth Advisors, LLC v. Cambridge Investment Research, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Colonial River Wealth Advisors, LLC v. Cambridge Investment Research, Inc., (E.D. Va. 2024).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division

COLONIAL RIVER WEALTH ) ADVISORS, LLC, ) Plaintiff, ) ) v. ) Civil Action No. 3:22cv717 (RCY) ) CAMBRIDGE INVESTMENT ) RESEARCH, INC., et. al. ) Defendants. ) )

MEMORANDUM OPINION

This matter is before the Court on Defendant Jayne W. Di Vincenzo’s Motion for an Award of Attorneys’ Fees and Costs (ECF No. 89). The Motion has been fully briefed, and the Court dispenses with oral argument because the facts and legal contentions are adequately presented in the materials before the Court, and oral argument would not aid in the decisional process. E.D. Va. Loc. Civ. R. 7(J). For the reasons stated herein, the Court will grant the Motion for Attorneys’ Fees and Costs (ECF No. 89). I. RELEVANT BACKGROUND AND PROCEDURAL HISTORY

The facts of this case have been thoroughly laid out in this Court’s prior Opinions. See, e.g., July 19, 2023 Mem. Op. (hereinafter, “Mem. Op.”), ECF No. 83. Thus, only a brief recitation of the facts and procedural history is necessary here. Plaintiff Colonial River Wealth Advisors (“Plaintiff” or “Colonial River”) is a Virginia company providing investment advice and other financial services. Mem. Op. 2. Its sole member is Devin Garofalo. Id. Defendant Jayne Di Vincenzo (“Defendant,” or “Di Vincenzo”) is an investment advisor who formerly operated Lions Bridge Financial Advisors, Inc. (“Lions Bridge”), an investment advisor and securities brokerage business. Id. In or around September 2019, Di Vincenzo received information that Garofalo and Colonial River might be interested in purchasing Lions Bridge (the “Business”). Id. On February 18, 2020, Garofalo, Colonial River, Di Vincenzo, and Lions Bridge entered into an Asset Purchase Agreement (“APA”) wherein Di Vincenzo and Lions Bridge (collectively, “Sellers”) sold all of the Business’s assets to Garofalo and Colonial River (collectively “Purchasers”). Id. The deal closed on March 3, 2020, when Colonial River wired $1.3 million to Di Vincenzo. Id.

Disputes concerning the parties’ respective obligations under the APA eventually formed the basis of the instant suit. See id. at 2–7. Defendant originally commenced related arbitration proceedings with the Financial Industry Regulation Authority (“FINRA”) on November 10, 2022, against Garofalo and Colonial River. Id. at 5. That arbitration sought declaratory relief and asserted causes of action for breach of contract, breach of covenant of good faith and fair dealing, disparagement and defamation, fraud and misrepresentation, and tortious interference with business expectancy. Id. Garofalo then filed a FINRA counterclaim seeking both injunctive and declaratory relief and alleging tortious interference, defamation, fraud, misrepresentation, and breach of contract. Id. From December 6–14, 2021, the matter was arbitrated before a three-

person panel. Id. Ultimately, the arbitration panel found Garofalo liable, rejected Garofalo’s counterclaims, and awarded Di Vincenzo over $2 million in compensatory damages, fees, and costs. Id. Around the same time Garofalo and Colonial River filed Counterclaims in the FINRA action, they also filed an action in the Circuit Court for James City County and Williamsburg alleging the same claims. Id. at 5–6. Colonial River and Garofalo nonsuited that action after Di Vincenzo filed a Motion to Dismiss. Id. at 6. On March 4, 2022, Di Vincenzo commenced an action in the Circuit Court for the City of Richmond to confirm the FINRA arbitration award, and Garofalo filed a cross-petition to vacate the award based on the alleged misconduct of one of the arbitrators and a claim that the arbitrators exceeded their power by awarding attorney’s fees.1 Id. Then, while that action was pending, Plaintiff Colonial River filed suit in this Court, on November 10, 2022. Compl., ECF No. 1. On December 16, 2022, Plaintiff filed an Amended Complaint2 against Defendants Cambridge Investment Research, Inc., Cambridge Investment

Research Advisors, Inc. (collectively, the “Cambridge Defendants”), and Defendant Di Vincenzo, alleging five counts. ECF No. 11. Plaintiff alleged the following counts against Defendant Di Vincenzo: Business Conspiracy, Common Law Civil Conspiracy, and Breach of Contract. Defendant Di Vincenzo filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6),3 as well as a Counterclaim alleging breach of contract. Mem. Op. 6. Ultimately, this Court granted Defendant’s Motion to Dismiss on res judicata grounds. See Mem. Op. 1, 8–15. Specifically, this Court held that res judicata precluded Plaintiff’s claims because (1) the FINRA proceedings culminated in a valid, final judgment on the merits (as it related to the claims presented in this action); (2) the parties and their respective interests in both

the FINRA action and this action are sufficiently similar as to satisfy the privity prong of the res judicata analysis; and (3) the claims in this action arise from the same conduct, transaction, or occurrence as the claims filed in the first suit. See Mem. Op. 8–14. Thereafter, Defendant Di Vincenzo filed the instant Motion for Attorneys’ Fees and Costs. ECF No. 89. Plaintiff timely filed its Opposition on August 29, 2023. ECF No. 91. Defendant

1 The Circuit Court for the City of Richmond held a two-day hearing on the pending action to confirm or vacate the FINRA arbitration award and, on June 8, 2023, the Circuit Court ruled in favor of Di Vincenzo and confirmed the award. Mem. Op. 7. 2 On November 16, 2022, the Court ordered Plaintiff to amend its pleading to clarify the basis for diversity jurisdiction. Order, ECF No. 7. 3 The Cambridge Defendants filed their own Motion to Dismiss, arguing that the APA obligated Plaintiff to pursue its claims against the Cambridge Defendants in an arbitral forum, rather than federal court. See July 24, 2023 Mem. Op., ECF No. 85. The Court granted the motion on July 24, 2023. Order, ECF No. 86. filed a Reply in Support of her Motion on September 5, 2023. ECF No. 92. Accordingly, this matter is now ripe for disposition. II. LEGAL STANDARD Rule 54(d) of the Federal Civil Rules of Procedure authorizes a court to award attorneys’ fees and expenses to the prevailing party. Fed. R. Civ. P. 54(d). Rule 54(d) creates a division in

the handling of attorneys’ fees claims between claims that are “not part of the underlying substantive claim, which must be made by motion, and claims that are an element of damages, which presumably must be made by a complaint.” Carolina Power & Light Co. v. Dynegy Mktg. & Trade, 415 F.3d 354, 358 (4th Cir. 2005), abrogated on other grounds, Ray Haluch Gravel Co. v. Cent. Pension Fund of Int'l Union of Operating Eng’rs & Participating Emps., 571 U.S. 177, 182–83 (2014). Claims for attorneys’ fees based upon a contractual “prevailing party” provision fall into the latter category and must be made by motion. See Kraft Foods N. Am., Inc. v. Banner Eng'g Sales, Inc., 446 F. Supp. 2d 551, 578 (E.D. Va. 2006); Route Triple Seven Ltd. P'ship v. Total Hockey, Inc., 127 F. Supp. 3d 607, 613 (E.D. Va. 2015).

The party seeking attorneys’ fees bears the burden of proving “that the requested fees are reasonable and that they were necessary.” Sidya v. World Telecom Exch. Comms., LLC, 301 Va. 31, 46 (2022) (quoting West Square, L.L.C. v. Comm. Techs., Inc., 274 Va. 425, 433 (2007)).4

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Colonial River Wealth Advisors, LLC v. Cambridge Investment Research, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/colonial-river-wealth-advisors-llc-v-cambridge-investment-research-inc-vaed-2024.