Miller v. Brooks

315 F.3d 417, 2003 U.S. App. LEXIS 748
CourtCourt of Appeals for the Fourth Circuit
DecidedJanuary 17, 2003
DocketNos. 01-2194, 01-2229
StatusPublished
Cited by30 cases

This text of 315 F.3d 417 (Miller v. Brooks) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Miller v. Brooks, 315 F.3d 417, 2003 U.S. App. LEXIS 748 (4th Cir. 2003).

Opinions

Affirmed by published opinion. Senior Judge HAMILTON wrote the opinion, in which Chief Judge HILTON joined. Judge TRAXLER wrote a dissenting opinion.

OPINION

HAMILTON, Senior Circuit Judge.

The United States District Court for the District of Maryland enjoined a husband [430]*430and wife, both citizens of California, from seeking enforcement of a multi-million dollar arbitration award for legal malpractice that the couple had obtained in California against their former attorney, who was also a citizen of California. In entering its injunction (the Injunction), the district court relied upon the All Writs Act, 28 U.S.C. § 1651(a), which provides that “[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” Id. The district court believed the Injunction was necessary “to protect the integrity of [its] processes and prevent the Honda [multi-district litigation] proceedings [that had been before it] from being used for an improper purpose....” In re: American Honda Motor Co., Inc. Dealerships Relations Litig., 162 F.Supp.2d 387, 396 (D.Md.2001).

The couple are parties to a multi-district litigation (MDL) settlement agreement that was formally approved by the district court and over which the district court expressly retained exclusive jurisdiction to rule upon interpretive questions. The district court found the couple had intentionally misled the California arbitrator about the actual nature of the MDL proceedings, and that the couple had knowingly and im mtionally pressed an argument before the arbitrator that necessarily required the arbitrator to resolve a significant interpretive question involving substantive provisions of the MDL settlement agreement.

For reasons that follow, we affirm the district court’s order entering the Injunction.

I.

The couple to which we have just referred are Ruth and Roger Miller (the Millers).1 At the end of 1986, the Millers purchased Huntington Beach Honda Automobile Dealership, partly through owner financing. The Millers later defaulted on their financing obligations under the purchase deal, and as a result, the widow of one of the two former owners of the dealership filed a civil action against the Millers in California state court in March 1994 (the 1994 State Court Action). The Millers, who were not then represented by legal counsel, filed a cross-complaint, and joined the widow of the other former owner as a defendant on the cross-complaint.

In July 1994, California attorney Lawrence Silver (Silver) undertook legal representation of the Millers in the 1994 State Court Action. In this regard, Silver and the Millers entered into a retainer/fee agreement for legal services, under which Silver and the Millers agreed that any disputes between them “shall be subject to mandatory arbitration.” (J.A. 587).

In April 1995, Silver filed an amended cross-complaint on behalf of the Millers naming American Honda Motor Company, Incorporated (American Honda) as a defendant, asserting claims against the company under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., and under California common law. All such claims arose from the Honda bribery scandal that eventually became the subject of the MDL proceedings before the district court in Maryland (the Honda MDL Proceedings).2 The crux of the bribery scandal was that Honda received kickbacks and bribes from certain [431]*431Honda dealerships throughout the United States in return for increased allocations of selective new cars.

American Honda filed a demurrer to the RICO claim in the Millers’ amended cross-complaint, in the 1994 State Court Action, on the ground that the Millers had failed to plead legally sufficient damages under RICO. The demurrer was sustained without leave to amend, but without prejudice to the Millers’ ability to file a motion to reconsider the court’s decision denying leave to amend. In accordance with this order, Silver, on behalf of the Millers, filed a motion for reconsideration, which was denied.

The relationship between the Millers and Silver subsequently deteriorated, and after the Millers threatened to assert claims for legal malpractice against Silver, Silver withdrew his appearance as counsel for the couple in the 1994 State Court Action. Thereafter, against Silver’s advice, the Millers voluntarily dismissed their remaining claims in the 1994 State Court Action and refiled them in the United States District Court for the Central District of California. The Millers’ claims were then transferred to the district court (for the District of Maryland) as part of the Honda MDL Proceedings. Once the Millers’ claims became part of the Honda MDL Proceedings, Honda moved to dismiss them on the basis that the Millers’ voluntary dismissal of those same claims in the 1994 State Court Action constituted dismissal with prejudice.

The law firm of Duane, Morris & Heckscher (Duane/Morris) represented the Millers as well as several other plaintiffs in the Honda MDL Proceedings. Members of Duane/Morris served on the plaintiffs’ executive committee, and the Millers personally participated in the settlement approval process. Ultimately, the Millers opted to accept the settlement agreement which concluded the Honda MDL Proceedings. Hereafter, we will refer to this settlement agreement as “the MDL Settlement Agreement.” Under the MDL Settlement Agreement, the Millers received the largest amount of damages of any dealership — $6.32 million. But according to the district court’s memorandum opinion that accompanied its injunction order presently under review, $6.32 million “was $1 million too high under the allocation formula that was used in determining the amounts to be paid to settling class members.” In re: American Honda, 162 F.Supp.2d at 389. In this regard, the district court explained as follows:

The formula contemplated that each dealer would be paid $4,000 for each car which, as determined by a regression analysis, the dealer had not received because of the bribery scheme. Some dealers, like the Millers, purchased their dealership during the class period, and were entitled to compensation only for those cars that were apportioned under the settlement formula to the dealership after the date of their purchase. This apportionment ordinarily was easy to accomplish because — apparently in all cases other than the Millers — Honda assigned a new dealer number when the dealership changed hands. The Millers, however, were given the same dealer number as their predecessors and therefore received an apportionment of all of the cars to which their dealership was entitled in 1986 despite the fact that they did not purchase the dealership until mid-December of that year. This resulted in a misapportionment to them of 250 cars, which in turn resulted in an excess recovery of $1 million. The error apparently was known both to the Millers and Duane/Morris when the Millers decided to accept the MDL settlement.

Id. at 389-390 (emphasis added).

In March 1997, the Millers sued Silver for legal malpractice in California state [432]*432court.

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Bluebook (online)
315 F.3d 417, 2003 U.S. App. LEXIS 748, Counsel Stack Legal Research, https://law.counselstack.com/opinion/miller-v-brooks-ca4-2003.