UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
_________________________________________ ) Houshang Momenian, et al. ) ) Plaintiffs, ) ) v. ) Civil No. 1:15-cv-00828 (APM) ) Michael M. Davidson, ) ) Defendant. ) _________________________________________ )
MEMORANDUM OPINION AND ORDER
I.
This case returned after the D.C. Circuit vacated this court’s order dismissing as time-
barred claims brought by Plaintiffs Houshang and Vida Momenian and the Houshang Momenian
Revocable Trust. See Momenian v. Davidson, 878 F.3d 381 (D.C. Cir. 2017). The D.C. Circuit
instructed the court on remand to consider Defendant Michael Davidson’s remaining arguments
for dismissal of the Amended Complaint, which the court previously did not address. See id. at
391. There are two such arguments. First, Defendant asserts that the Amended Complaint lacks
any allegation of negligence or wrongdoing by Defendant. See Def.’s Mot. to Dismiss Am.
Compl., ECF No. 14 [hereinafter Def.’s Mot.]; Mem. of P&A in Support of Def.’s Mot.
[hereinafter Def.’s Mem.], ECF No. 14-1, at 8–11. And, second, Defendant maintains that the
complaint alleges only that the Trust was harmed as a result of Defendant’s alleged malpractice,
not the Momenians personally, so the Momenians cannot maintain an action against him. Id. at
12. In addition, Defendant argues that because he did not represent the Trust, he therefore owed it no duty. Id. For the reasons that follow, the court rejects these contentions and denies
Defendant’s Motion to Dismiss.1
II.
Defendant’s first argument rests on the premise that the lawsuit Defendant brought on
behalf of the Momenians against their lenders, Paul and Amelia Interdonato, “stood no chance of
winning.” Def.’s Mem. at 9. Defendant maintains that none of the four transactions the
Momenians claimed that the Interdonatos failed to credit against the Note Modification Agreement
could have been applied to the Momenians’ outstanding indebtedness. Id. at 11 (“Nowhere do the
Plaintiffs allege the existence of a single payment that should have been credited to the Plaintiffs’
Note but was overlooked by [Defendant] . . .”). Defendant points out that three of the four claimed
credits pre-date the Note Modification Agreement, under which the Momenians agreed to a sum
certain owed to the Interdonatos on the original Note ($141,898.47) without reference to the
credits, and thus these could not plausibly apply to their outstanding debt. Id. at 10. With respect
to the fourth transaction, Defendant argues that it is implausible that the $50,000 payment from
Fikru to the Interdonatos on the Fikru Note could be credited to the Momenians. Id. He also
maintains that the alleged oral agreement between Houshang Momenian and Paul Interdonato,
Pls.’s Am. Compl., ECF No. 13, ¶ 18, which forms the basis for the claimed credit of $50,000,
was void under the statute of frauds and therefore could not reduce the amount owed, see generally
Supp. Br. to Def.’s Mot., ECF No. 27.
1 The court, writing primarily for the parties, does not summarize the Amended Complaint’s allegations. Plaintiffs’ factual averments are set forth in detail in the court’s prior decisions, see Momenian v. Davidson, 209 F. Supp. 3d 288, 291–92 (D.D.C. 2016), rev’d Momenian, 878 F.3d at 381; Momenian v. Davidson, Civ. No. 15-cv-00828, 2016 WL 259641, at *1-2 (D.D.C. Jan. 21, 2016).
2 Defendant’s arguments have surface appeal. The Note Modification Agreement, entered
into on January 1, 2002, 2 provides that the Momenians and the Interdonatos agreed that the
“balance due on said Note[3] as of the date hereof is agreed to be [$141,898.47]” and that “[s]aid
balance represents adjustments and Credits agreed upon by the parties hereto.” Pls.’ Submission
in Resp. to Oral Order of the Court, Exs. ECF No. 26-1 [hereinafter Am. Compl. Exs.], Ex. 24, at
56.4 Thus, on its face, the Note Modification Agreement would appear to make clear that, as of
its effective date, the balance due to the Interdonatos included all credits pre-dating the Agreement.
Therefore, if the parties had agreed that the proceeds from any of the first three transactions were
credits, those amounts ought to be subsumed within the sum certain set forth in the Note
Modification Agreement. Moreover, Plaintiffs’ allegation that Houshang Momenian and
Mr. Interdonato agreed that the Fikru Note was additional security against Plaintiffs’ original Note,
and not a straightforward debt owed by Fikru to the Interdonatos, strikes the court as dubious.
Indeed, the Amended Complaint arguably does not even allege a binding agreement at all. It avers
no more than that Houshang asked Mr. Interdonato to acknowledge the Fikru Note as additional
security and that Mr. Interdonato “orally agreed to write such a document, but in fact he never
did.” Am. Compl. ¶ 18 (emphasis added). Such an allegation, at best, supports an inchoate
2 Although the Note Modification Agreement on its face is dated January 1, 2001, the parties agree that the true date is January 1, 2002. See Def.’s Mem. at 10 (referring to Plaintiffs’ execution of the “2002 Note Modification Agreement”).
3 The “Note” referenced in the Agreement is the original promissory Note entered into on August 24, 1990, for $265,000. see Am. Compl. Exs., Ex. 24, at 56. Thus, Plaintiffs’ contention that “the Note Modification Agreement was not a transaction that superseded all prior dealings between the Momenians and Interdonatos, but rather was one in a series of transactions that had no more or less legal meaning than any of the others” is a questionable proposition. Pls.’ Opp’n to Def.’s Mot., ECF No. 18, at 11. 4 The court ordered Plaintiffs to submit for its consideration the documents supporting the factual allegations made in the Amended Complaint. The court may consider these records on a motion under Federal Rule of Civil Procedure 12(b)(6) as they are “incorporated in the complaint.” Washkoviak v. Student Loan Marketing Ass’n, 900 A.2d 168, 178 (D.C. Cir. 2006) (quoting EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997)).
3 intention to enter into a written agreement, but not a final, binding one. See Anchorage-Hynning
& Co. v. Moringiello, 697 F.2d 356, 363 (D.C. Cir. 1983) (“District of Columbia law permits
parties to enter into an arrangement obligating them to prepare and execute a subsequent written
contract, but to achieve enforceability it is necessary that [the] agreement shall have been
expressed on all essential terms that are to be incorporated in the final document.”) (cleaned up)
(citations omitted).
However, this case does not concern a contract dispute, but rather centers on alleged legal
malpractice. Therefore, what matters is Defendant’s perception of the Superior Court suit’s
likelihood of success, his investigation of the facts, and the advice he rendered to the Momenians
about that action.
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
_________________________________________ ) Houshang Momenian, et al. ) ) Plaintiffs, ) ) v. ) Civil No. 1:15-cv-00828 (APM) ) Michael M. Davidson, ) ) Defendant. ) _________________________________________ )
MEMORANDUM OPINION AND ORDER
I.
This case returned after the D.C. Circuit vacated this court’s order dismissing as time-
barred claims brought by Plaintiffs Houshang and Vida Momenian and the Houshang Momenian
Revocable Trust. See Momenian v. Davidson, 878 F.3d 381 (D.C. Cir. 2017). The D.C. Circuit
instructed the court on remand to consider Defendant Michael Davidson’s remaining arguments
for dismissal of the Amended Complaint, which the court previously did not address. See id. at
391. There are two such arguments. First, Defendant asserts that the Amended Complaint lacks
any allegation of negligence or wrongdoing by Defendant. See Def.’s Mot. to Dismiss Am.
Compl., ECF No. 14 [hereinafter Def.’s Mot.]; Mem. of P&A in Support of Def.’s Mot.
[hereinafter Def.’s Mem.], ECF No. 14-1, at 8–11. And, second, Defendant maintains that the
complaint alleges only that the Trust was harmed as a result of Defendant’s alleged malpractice,
not the Momenians personally, so the Momenians cannot maintain an action against him. Id. at
12. In addition, Defendant argues that because he did not represent the Trust, he therefore owed it no duty. Id. For the reasons that follow, the court rejects these contentions and denies
Defendant’s Motion to Dismiss.1
II.
Defendant’s first argument rests on the premise that the lawsuit Defendant brought on
behalf of the Momenians against their lenders, Paul and Amelia Interdonato, “stood no chance of
winning.” Def.’s Mem. at 9. Defendant maintains that none of the four transactions the
Momenians claimed that the Interdonatos failed to credit against the Note Modification Agreement
could have been applied to the Momenians’ outstanding indebtedness. Id. at 11 (“Nowhere do the
Plaintiffs allege the existence of a single payment that should have been credited to the Plaintiffs’
Note but was overlooked by [Defendant] . . .”). Defendant points out that three of the four claimed
credits pre-date the Note Modification Agreement, under which the Momenians agreed to a sum
certain owed to the Interdonatos on the original Note ($141,898.47) without reference to the
credits, and thus these could not plausibly apply to their outstanding debt. Id. at 10. With respect
to the fourth transaction, Defendant argues that it is implausible that the $50,000 payment from
Fikru to the Interdonatos on the Fikru Note could be credited to the Momenians. Id. He also
maintains that the alleged oral agreement between Houshang Momenian and Paul Interdonato,
Pls.’s Am. Compl., ECF No. 13, ¶ 18, which forms the basis for the claimed credit of $50,000,
was void under the statute of frauds and therefore could not reduce the amount owed, see generally
Supp. Br. to Def.’s Mot., ECF No. 27.
1 The court, writing primarily for the parties, does not summarize the Amended Complaint’s allegations. Plaintiffs’ factual averments are set forth in detail in the court’s prior decisions, see Momenian v. Davidson, 209 F. Supp. 3d 288, 291–92 (D.D.C. 2016), rev’d Momenian, 878 F.3d at 381; Momenian v. Davidson, Civ. No. 15-cv-00828, 2016 WL 259641, at *1-2 (D.D.C. Jan. 21, 2016).
2 Defendant’s arguments have surface appeal. The Note Modification Agreement, entered
into on January 1, 2002, 2 provides that the Momenians and the Interdonatos agreed that the
“balance due on said Note[3] as of the date hereof is agreed to be [$141,898.47]” and that “[s]aid
balance represents adjustments and Credits agreed upon by the parties hereto.” Pls.’ Submission
in Resp. to Oral Order of the Court, Exs. ECF No. 26-1 [hereinafter Am. Compl. Exs.], Ex. 24, at
56.4 Thus, on its face, the Note Modification Agreement would appear to make clear that, as of
its effective date, the balance due to the Interdonatos included all credits pre-dating the Agreement.
Therefore, if the parties had agreed that the proceeds from any of the first three transactions were
credits, those amounts ought to be subsumed within the sum certain set forth in the Note
Modification Agreement. Moreover, Plaintiffs’ allegation that Houshang Momenian and
Mr. Interdonato agreed that the Fikru Note was additional security against Plaintiffs’ original Note,
and not a straightforward debt owed by Fikru to the Interdonatos, strikes the court as dubious.
Indeed, the Amended Complaint arguably does not even allege a binding agreement at all. It avers
no more than that Houshang asked Mr. Interdonato to acknowledge the Fikru Note as additional
security and that Mr. Interdonato “orally agreed to write such a document, but in fact he never
did.” Am. Compl. ¶ 18 (emphasis added). Such an allegation, at best, supports an inchoate
2 Although the Note Modification Agreement on its face is dated January 1, 2001, the parties agree that the true date is January 1, 2002. See Def.’s Mem. at 10 (referring to Plaintiffs’ execution of the “2002 Note Modification Agreement”).
3 The “Note” referenced in the Agreement is the original promissory Note entered into on August 24, 1990, for $265,000. see Am. Compl. Exs., Ex. 24, at 56. Thus, Plaintiffs’ contention that “the Note Modification Agreement was not a transaction that superseded all prior dealings between the Momenians and Interdonatos, but rather was one in a series of transactions that had no more or less legal meaning than any of the others” is a questionable proposition. Pls.’ Opp’n to Def.’s Mot., ECF No. 18, at 11. 4 The court ordered Plaintiffs to submit for its consideration the documents supporting the factual allegations made in the Amended Complaint. The court may consider these records on a motion under Federal Rule of Civil Procedure 12(b)(6) as they are “incorporated in the complaint.” Washkoviak v. Student Loan Marketing Ass’n, 900 A.2d 168, 178 (D.C. Cir. 2006) (quoting EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997)).
3 intention to enter into a written agreement, but not a final, binding one. See Anchorage-Hynning
& Co. v. Moringiello, 697 F.2d 356, 363 (D.C. Cir. 1983) (“District of Columbia law permits
parties to enter into an arrangement obligating them to prepare and execute a subsequent written
contract, but to achieve enforceability it is necessary that [the] agreement shall have been
expressed on all essential terms that are to be incorporated in the final document.”) (cleaned up)
(citations omitted).
However, this case does not concern a contract dispute, but rather centers on alleged legal
malpractice. Therefore, what matters is Defendant’s perception of the Superior Court suit’s
likelihood of success, his investigation of the facts, and the advice he rendered to the Momenians
about that action. On that score, the Amended Complaint, and the documents referenced therein,
render it plausible that Defendant in fact believed that the suit had merit at the time he filed it.
Take the complaint filed in D.C. Superior Court. That pleading not only alleged that the
Interdonatos had not properly credited the Momenians with the proceeds of the four transactions,
it also attached correspondence between Defendant and Mr. Interdonato. See Am. Compl. Exs.,
Ex. 31, at 79–94. In a letter dated August 14, 2008, Defendant admitted that he had obtained and
reviewed the Note Modification Agreement. See id. at 92. He nevertheless insisted that the
Interdonatos had failed to apply the proceeds from the three transactions pre-dating the Note
Modification Agreement and the $50,000 payment on the Fikru Note to reduce the Momenians’
remaining amount due on the Note. Id. at 92–93. Defendant then suggested mediation to
Mr. Interdonato who apparently rebuffed the idea of settling, id. at 94, prompting Defendant to file
suit on behalf of the Momenians eight months later on August 18, 2009, id. at 84. As this timeline
shows, Defendant had ample opportunity to consider the legal effect of the Note Modification
Agreement before filing suit, and evidently still concluded that the Momenians’ claims of
4 unapplied credits were “warranted by existing law.” D.C. Super. Ct. Civ. R. 11(b)(2). Yet,
Defendant now contends that the very same Agreement effectively foreclosed the credits sought
by the Momenians, rendering recovery in the Superior Court litigation “purely speculative.”
Def.’s Reply in Support of Def.’s Mot., ECF No. 19, at 3. Defendant cannot have it both ways.
In the end, although the transactions at issue are complicated and, in some cases, of
uncertain legal effect, the central question for purposes of Defendant’s Motion to Dismiss is
whether Plaintiffs have made out plausible claims of professional negligence and breach of
fiduciary duty. The court concludes that they have. Plaintiffs well-pleaded allegations, along with
the supporting records, render plausible that Defendant committed malpractice and breached
fiduciary duties in connection with the Superior Court action. Precisely what Defendant did in
advance of filing suit, during the investigation and litigation of the case, and what advice he gave
the Momenians about its likelihood of success and settling the action, must be addressed through
discovery. See Am. Compl. ¶ 41 (alleging negligence in investigating and analysis in the case, as
well as providing deficient advice concerning settlement).
III.
Next, Defendant urges dismissal on the ground that the Amended Complaint fails to allege
that Plaintiffs suffered harm as a result of Defendant’s purported deficient performance. Def.’s
Mem. at 12. Defendant notes that, according to the Amended Complaint, the Momenians at some
point transferred their property interests into a trust, the Houshang Momenian Revocable Trust.
Id. (citing Am. Compl. ¶¶ 31, 36). Then, in May 2012, Mr. Interdonato issued a notice of
foreclosure on the Trust, after which the Trust sued Mr. Interdonato in D.C. Superior Court,
seeking to prevent foreclosure and challenging the amounts owed. See Am. Compl. ¶ 34–35. That
lawsuit eventually settled, with the Trust agreeing to pay the Interdonatos the sum of $85,000 in
5 full and final satisfaction of the Note. Id. ¶ 36. Under this factual retelling, Defendant argues,
only the Trust was harmed by any malpractice, and not the Momenians. See Def.’s Mem. at 12.
Defendant reads the Amended Complaint too narrowly. It is true that Plaintiffs allege
that the Trust ultimately satisfied the outstanding balance on the Note. But the Momenians also
claim that they personally suffered harm as a result of Defendant’s negligence. For instance, the
Momenians allege that they personally overpaid the Interdonatos on the Note because, by settling
the initial Superior Court action based on Defendant’s advice, they never received full credit for
the claims that they released. See Am. Compl. ¶¶ 29–30. The Momenians further allege that they
incurred costs associated with the accounting done to determine the amount of overpayment on
the Note, though it is not clear on the face of the Amended Complaint whether these expenses
were incurred personally or by the Trust. See id. ¶ 42. Moreover, it might be the case—though
the court reaches no firm conclusion—that Houshang and Vida Momenian, as beneficiaries of the
Trust, id. ¶ 3, also suffered a legally cognizable injury as a result of the Trust’s alleged
overpayment, cf. Reardon v. Riggs Nat’l Bank, 677 A.2d 1032, 1037 n.12 (D.C. 1996) (noting
exception to general rule that a beneficiary cannot bring an action directly against a third-partly
wrongdoer, “if the beneficiary is in possession of the subject matter of the trust”). Accordingly,
the court concludes that Plaintiffs have pleaded sufficient facts of harm arising from Defendant’s
alleged professional malpractice to survive Defendant’s Motion to Dismiss.
Defendant also argues that the Trust cannot maintain a claim against Defendant, because
there is no allegation that Defendant ever represented the Trust. See Def.’s Mem. at 12. That is a
fair point, and one that the court may consider again at a later stage in this litigation, but at this
time the court is reluctant to dismiss the Trust’s claims on that ground. Given the allegation that
“Defendant had been representing Houshang in a variety of matters over a lengthy period of time,”
6 Am. Compl. ¶ 7, discovery could plausibly reveal some connection between Defendant and the
Trust that would give rise to a duty running to the Trust. Therefore, the court will permit the
Trust’s claims to proceed.
IV.
For the foregoing reasons, Defendant’s Motion to Dismiss the Amended Complaint is
denied. Defendant shall file an answer no later than 14 days from the date of this order. See Fed.
R. Civ. P. 12(a)(4)(A).
Dated: November 6, 2018 Amit P. Mehta United States District Judge