UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
ORGANIZATION OF CHINESE AMERICANS, INC. D/B/A OCA-ASIAN PACIFIC AMERICAN ADVOCATES et al., Civil Action No. 22-178 (BAH) Plaintiffs, Chief Judge Beryl A. Howell v.
MICHAEL DOUGLAS DAMRON, et al.,
Defendants.
MEMORANDUM OPINION
This case arises from a botched real estate transaction. The plaintiffs, Organization of
Chinese Americans, Inc., d/b/a OCA–Asian Pacific American Advocates, and OCA Property
LLC (collectively “OCA”), bring numerous state law claims against their real estate brokers and
lawyers: (1) G&E Real Estate Inc., d/b/a Newmark, and its employees Michael Damron and
Christopher Lucey (collectively, “the Brokers”), and (2) Mark Moorstein and his law firm, Offit
Kurman P.C. and P.A. (collectively, “the Lawyers”). The Brokers allegedly misrepresented the
rentable square footage of OCA’s commercial property located at 18th Street N.W. in
Washington, D.C., and the Lawyers allegedly committed malpractice in failing properly to
advise OCA when OCA contracted to sell the property and in providing OCA conflicted
representation in the ensuing litigation over that sale. Now, both groups of defendants seek
dismissal of the Complaint with prejudice under Federal Rule of Civil Procedure 12(b)(6). See
generally Defs. Brokers’ Mot. Dismiss (“Brokers’ Mot.”), ECF No. 20; Defs. Brokers’ Mem.
Supp. Mot. Dismiss (“Brokers’ Mem.”), ECF No. 20-1; Defs. Lawyers’ Mot. Dismiss
(“Lawyers’ Mot.”), ECF No. 19; Defs. Lawyers’ Mem. Supp. Mot. Dismiss (“Lawyers’ Mem.”),
1 ECF No. 19-1. For the reasons explained below, the Brokers’ Motion is denied, and the
Lawyers’ Motion is granted in part and denied in part.
I. BACKGROUND
Plaintiffs are suing the professionals who brokered the 2017 sale of their historic Dupont
Circle building located at 18th Street N.W. in downtown D.C., which sale resulted in plaintiffs
receiving only two-thirds of the expected purchase price due to an apparent misunderstanding
regarding the size of the building. In 2016, when deciding to sell the property, OCA had owned
the building for approximately ten years. See Defs. Lawyers’ Notice of Removal of a Civil
Action (“Not. of Removal”), Ex. A (“Compl.”) ¶¶ 10, 12, ECF 1-1. To find a buyer, OCA
retained the Brokers following discussions, in which Damron had represented that the Brokers
would work to “maximize the sale price” and “devote all of [their] resources to get [OCA] the
results [it] desire[s].” Id. ¶¶ 12–13.
In December of 2016, OCA and the Brokers executed both an Exclusive Representation
Agreement and a Listing Agreement (together, the “Brokerage Agreements”). 1 Id. ¶ 13. The
listing agreement defined the Brokers’ “Scope of Work” as including a duty to: (1) “analyze all
reasonable options and make recommendations;” (2) “provide market data;” (3) “research and
advise OCA in its negotiations with prospective purchasers;” (4) “conduct tours of the Property
with prospective purchasers;” and (5) “work with legal counsel in the negotiations requested by
1 Although plaintiffs did not attach either the Exclusive Representation Agreement or the Listing Agreement to the Complaint nor their briefing regarding the Motions to Dismiss, see generally Compl., the Court may nonetheless consider the agreements, which were attached to the Brokers’ Motion to Dismiss and whose authenticity was not challenged by plaintiffs. A document outside the complaint may be considered on a motion to dismiss under Rule 12(b)(6), without converting the motion to one for summary judgment, if it is “referred to in the complaint” and is “integral to” plaintiffs’ claim. Kaempe v. Myers, 367 F.3d 958, 965 (D.C. Cir. 2004); see also Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007); Stewart v. Nat'l Educ. Ass'n, 471 F.3d 169, 173 (D.C. Cir. 2006); Saunders v. Mills, 842 F. Supp. 2d 284, 293 n.2 (D.D.C. 2012); Pearson v. District of Columbia, 644 F. Supp. 2d 23, 29 n.1 (D.D.C. 2009). Here, plaintiffs’ Complaint plainly references the terms of the agreements and alleges that defendants breached those terms, see, e.g., Compl. ¶¶ 13, 16, 17, 23, so these documents may properly be considered.
2 OCA.” Id. ¶ 16. The listing agreement further laid out the Brokers’ responsibilities to provide
“deliverables” to OCA, including: (1) “sales and/or leasing package”; (2) “market analyses and
surveys”; (3) “financial analyses”; (4) “correspondence”; (5) “requests for proposals”; (6)
“letters of intent”; (7) “recommendation memoranda”; and (8) “any other work products
reasonably requested by OCA.” Id. ¶ 17.
The alleged misunderstanding as to the building’s true size stemmed from the Brokers’
initial actions upon their retainer. The Brokers began their efforts by sending the property floor
plans to a local architect, Justin Clark, with the request that he provide an “‘estimate’ of the
square footage on a pro bono basis.” Id. ¶ 24. An employee of Clark provided the requested
information, estimating the property to be 18,796 square feet, and explaining to the Brokers that
she had based the estimate on a perimeter site review that “relied solely on PDF floor plans” of
the property that the Brokers had provided. Id. ¶¶ 25–27. In both her email transmitting the
estimate to the Brokers and the attachment detailing her area calculations, she cautioned that the
area estimates “should be verified in [the] field,” noting that she attempted to measure the
“interiors of each unit” only without including “demising or exterior walls,” and that she “didn’t
have good scalable drawings of the 3rd floor” so instead copied the second-floor numbers for
that floor. Id. ¶¶ 26–27. Despite these caveats, the Brokers ran with the estimate, creating and
distributing marketing materials stating that the property contained 18,796 rentable square feet,
which they also provided to OCA. Id. ¶¶ 30–31. The Brokers then listed the property for $9
million, once again representing that the building had 18,796 rentable square feet. Id. ¶ 34. At
no point did the Brokers inform OCA that the square footage estimate was of gross square feet as
opposed to rentable square feet, nor did they mention any of the disclaimers the Clark employee
had communicated to them. Id. ¶ 33.
3 Once buyers began approaching with offers to purchase the property, OCA engaged the
services of Mark Moorstein and his firm to help with the potential sale. Id. ¶¶ 35–36, 52.
OCA’s first serious offer came from Urban Realty Advisers LLC (“URA”) in March 2017. Id.
¶ 35. This potential sale fell through within a matter of months, however, because after
investigating the size of the building itself, URA sought to reduce the purchase price by $1.25
million, explaining that “the [dollar] number [the parties] had contracted for really was based on
a larger building” and that it would be “‘highly unlikely’ URA would be able to use the Property
as it had hoped.” Id. ¶¶ 38–39 (first alteration in original). OCA was “unwilling to agree to a
building-size reduction to the purchase price,” and declined URA’s new offer. Id. ¶ 40.
Shortly thereafter, OCA entered negotiations with a second potential buyer, Richard
Gersten, who initially offered $6.5 million for the property. Id. ¶ 43. Gersten sent the Brokers
an initial draft contract, which the Brokers passed along to OCA a mere 15 minutes later with the
note that “‘we reviewed’ it and it ‘looks in order.’” Id. ¶¶ 45–46. The Brokers did not inform
OCA that the contract described the property as containing 15,000 rentable square feet—a
number that neither reflected the Broker’s estimate of 18,796 gross square feet nor any other
calculation known to the Brokers that would have determined the rentable square footage of the
building. Id. ¶¶ 47–48. The Brokers likewise did not flag for OCA the fact that the contract
averred that “there is no asbestos or asbestos containing material in the Building or the
Property,” even though this is “not a standard term for the sale of a historic property.” Id. ¶¶ 49–
50. OCA sent the draft contract to Moorstein to review as well; he likewise did not flag or
propose edits to the language in the draft, but rather drafted a letter that was then sent to Gersten
informing him that only “minor areas” needed “additional consideration.” Id. ¶¶ 53–56.
4 As negotiations with Gersten progressed, edits were made to the provisions regarding the
square footage and purchase price of the property that would dramatically reduce the ultimate
purchase price, allegedly without either the Lawyers or the Brokers bringing those modifications
to OCA’s attention. Gersten responded to Moorstein’s letter forwarding a revised contract, with
three critical differences from the original version. Id. ¶ 57. First, the revised contract now
stated that the Property contained “approximately 18,796 rentable square feet,” rather than the
15,000 number included in the original draft. Id. Second, an entirely new “price adjustment
provision” was added that tied the final purchase price to the actual rentable area of the property.
Id. ¶ 57. In particular, this provision provided that the proposed $6.5 million purchase price was
“based upon rentable area in the Building of 18,796 square feet,” which area must be “measured
by a licensed architect in accordance with the Standard Method for Measuring Floor Area in
Office Buildings, 1996 (‘BOMA’),” and that “the Purchase Price shall be reduced” upon receipt
of the BOMA measurement “based on a per rentable sq. ft. price of $346.31.” Id. ¶ 58. Finally,
the revised draft contained language that allowed Gersten—but not OCA—unilaterally to
terminate the contract upon completion of due diligence. Id. ¶ 67. After reviewing the revised
contract, neither the Brokers nor Moorstein discussed the implications of these changes with
OCA. See id. ¶¶ 59, 62. In fact, Moorstein advised OCA that it was a “good agreement,”
advised OCA to accept the price adjustment provision, and prepared a letter to send to Gersten
on OCA’s behalf explaining that the latter “remain[s] pleased with” the revised contract. Id.
¶¶ 62–64 (alteration in original).
While Moorstein offered some changes to the crucial provisions in the ensuing
negotiations, none addressed the core issue that the $6.5 million purchase price was now
premised on a square footage estimate that was unlikely to stand. His letter to Gersten noted that
5 “the reduction of $346.31 per square foot is fine,” provided that “the same figure is used for any
increases in the square footage” as well. Id. ¶ 64 (emphasis omitted). While the letter went on to
explain that “[i]t might be simpler . . . to leave the price alone because the building is not being
sold or purchased on a per square foot basis,” Moorstein seemingly did not pursue this
suggestion any further and contented himself with making the purchase price adjustable in both
directions, without seeking to limit the extent to which the purchase price could fall substantially
below $6.5 million or to provide a reciprocal right of termination to OCA. Id. ¶¶ 64, 66–67. He
did so, moreover, without making any inquiries “regarding whether the 18,796 estimate was
based on ‘gross’ square footage or ‘rentable’ square footage,” without “advis[ing] OCA
regarding the potential impact of using the BOMA 1996 method for determining rentable square
footage,” and without “undert[aking] any inquiry to determine whether the 18,976 estimate was
based on the BOMA 1996 standard.” Id. ¶ 65.
Gersten adopted Moorstein’s request to make the price adjustment provision bi-
directional for the final draft of the contract, such that it now read: “If the results of such
measurement shall indicate a measurement of more or less than 18,796 rentable square feet the
Purchase Price shall be adjusted based upon a per rentable sq. ft. price of $346.31.” Id. ¶ 69.
Once again, upon receipt of the new draft, the Brokers did not offer any comment or analysis to
either Moorstein or OCA. Id. ¶¶ 70–73. Moorstein opined to OCA that “because the language
in the Final Draft ‘works in both directions . . . this is parity and seems fair,’” still without
acknowledging the risk that the existing square footage estimate would fall apart when subjected
to the BOMA 1996 standard and without addressing the non-reciprocal termination rights. Id.
¶¶ 74–75. When pressed on the meaning of the new provision, Moorstein incorrectly explained
to OCA that “more or less than 18,796 rentable square feet” “meant a ‘de minimis’ change of no
6 more than 2 or 3 percent,” such that the change in price would be “no more than a few hundred
thousand dollars,” and that if the final measurement deviated from the original by more than 2 or
3 percent, “then the parties did not have a contract and the deal was off.” Id. ¶ 76. In fact,
however, Moorstein should have known from the recent negotiations that the “more or less”
language “was designed to address Moorstein’s request for parity in the price adjustment . . . not
to act as a cap on the price adjustment.” Id. ¶ 76. Following the advice of Moorstein and the
Brokers, OCA executed a final version of the contract containing an unchanged price adjustment
provision. Id. ¶¶ 77, 79.
Ultimately, that price adjustment provision entitled Gersten to demand a drastic reduction
of the purchase price. After closing, Gersten proceeded to measure the building according to the
specified BOMA 1996 standard and found that the property consisted of only 12,855 rentable
square feet—over 31% less than the estimate adopted in the contract. Id. ¶ 81. He promptly
informed OCA and “demand[ed] a reduction of the purchase price from $6.5 million to
$4,436,631.29,” citing the price adjustment provision. Id. ¶ 82. Moorstein attempted to reject
the reduction on the basis that “the Property’s sale price was not based on the square footage of
the Building and that the price adjustment provision in the [contract] contemplated only a de
minimis adjustment, not a substantial price change,” and accordingly advised OCA not to close at
the reduced price. Id. ¶¶ 83–85. He reassured OCA about prevailing in any ensuing litigation,
because, first, “the price wasn’t based on the square footage at all,” and, second, any reference to
square footage in the contract referred to “gross square footage” rather than “rentable square
footage”—neither of which was true, under the plain terms of the contract. Id. ¶ 85. In reliance
on this advice, OCA refused to close the transaction at Gersten’s demanded price. Id. ¶ 86.
7 When negotiations failed, Gersten sued OCA for specific performance of the contract in
the Superior Court of the District of Columbia. Id. ¶ 87. Moorstein and his firm represented
OCA in the trial, but never explained to OCA the potential conflict of interest that representation
created: the weaknesses in OCA’s current litigating position arose from Moorstein’s prior advice
in the contract negotiation and closing, and giving competent, impartial advice regarding
litigation strategy would have entailed acknowledging those prior deficiencies. Id. ¶¶ 89–91, 97.
This Moorstein was unprepared to do, instead “advis[ing] OCA that it had a strong position with
respect to [Gersten] and the Litigation” and pursuing “an expensive and aggressive litigation
campaign that was shaped by the Attorneys’ desire to protect themselves,” including pursuing a
“fraudulent inducement theory” against Gersten “that was certain to fail.” Id. ¶¶ 89, 92–94. He
also “advised OCA to take unreasonably aggressive positions that prevented settlement”
throughout the course of the litigation. Id. ¶ 96. These strategies ultimately failed: the jury
found that OCA breached the PSA by failing to sell Gersten the property at the reduced price
based on the rentable square footage, and the court ordered specific performance of the contract
at Gersten’s reduced price. Id. ¶ 98. Additionally, the court awarded Gersten fees and costs. Id.
¶ 101.
Taking into account those fees and costs—and another $150,000 credit Gersten
demanded for asbestos remediation, given the express, false representation in the contract that
the property contained no asbestos—all told, OCA would be out $2,842,485.62 from the $6.5
million it originally expected from the sale of the property. See id. ¶¶ 105–07. In addition, OCA
paid Moorstein and his firm $771,722 in legal fees, “most of which was for the unsuccessful
Litigation.” Id. ¶ 108.
8 On December 28, 2021, plaintiffs brought this action in the Superior Court of the District
of Columbia against both the Lawyers and the Brokers, alleging breach of contract, breach of
fiduciary duty, professional negligence, and negligent misrepresentation against the Brokers, and
legal malpractice in transaction, legal malpractice in pre-litigation and litigation, breach of
fiduciary duty, and breach of contract against the Lawyers, all relating to the botched sale of the
property. See generally id. The Lawyers then removed to this Court based on diversity
jurisdiction. See Notice of Removal, ECF No. 1. Both groups of defendants have moved to
dismiss all counts for failure to state a claim, which motions are now ripe for resolution. See
Brokers’ Reply Supp. Mot. Dismiss (“Brokers’ Rep.”), ECF No. 26; Lawyers’ Reply Supp. Mot.
Dismiss (“Lawyers’ Rep.”), ECF No. 27.
II. LEGAL STANDARD
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), “[a]
plaintiff need not make ‘detailed factual allegations,’” but the “complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” VoteVets
Action Fund v. McDonough, 992 F.3d 1097, 1104 (D.C. Cir. 2021) (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)). A facially plausible claim pleads facts that are not “‘merely
consistent with’ a defendant’s liability” but that “allow[] the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556–57 (2007)); see also Rudder v. Williams,
666 F.3d 790, 794 (D.C. Cir. 2012). Consequently, “[a] complaint survives a motion to dismiss
even ‘[i]f there are two alternative explanations, one advanced by [the] defendant and the other
advanced by [the] plaintiff, both of which are plausible.’” VoteVets Action Fund, 992 F.3d at
9 1104 (quoting Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1129 (D.C. Cir. 2015))
(alteration in original).
In deciding a motion under Rule 12(b)(6), the court must consider the whole complaint,
accepting all factual allegations as true, “even if doubtful in fact.” Twombly, 550 U.S. at 555;
see also Atchley, v. AstraZeneca UK Limited, et al., 22 F.4th 204, 210–11 (D.C. Cir. 2022).
Courts do not, however, “assume the truth of legal conclusions, nor do [they] ‘accept inferences
that are unsupported by the facts set out in the complaint.’” Arpaio v. Obama, 797 F.3d 11, 19
(D.C. Cir. 2015) (citation omitted) (quoting Islamic Am. Relief Agency v. Gonzales, 477 F.3d
728, 732 (D.C. Cir. 2007)). “Threadbare recitals of the elements of a cause of action, supported
by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678; see also id. at 687
(explaining that a failure to allege any of a claim’s elements beyond “a sheer possibility that a
defendant has acted unlawfully” results in a dismissal). In addition, courts may “ordinarily
examine” other sources “when ruling on Rule 12(b)(6) motions to dismiss, in particular,
documents incorporated into the complaint by reference, and matters of which a court may take
judicial notice.” Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308, 322 (2007); see also
English v. District of Columbia, 717 F.3d 968, 971 (D.C. Cir. 2013); FED. R. CIV. P. 10(c) (“A
copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all
purposes.”).
III. DISCUSSION
The Brokers and the Lawyers have moved separately to dismiss all four claims against
each group of defendants. As explained below, plaintiffs have sufficiently alleged all four claims
against the Brokers, and accordingly the Brokers’ motion to dismiss must be denied. As to
plaintiffs’ claims against the Lawyers, two of their claims are duplicative of the remaining two
10 malpractice claims, and while they have plausibly established their entitlement to relief on the
latter, the governing state law requires dismissal of the duplicative remainder. The Lawyers’
motion to dismiss will accordingly be denied in part and granted in part.
A. The Brokers
The Brokers have moved, under Federal Rule of Civil Procedure 12(b)(6), to dismiss all
four of plaintiffs’ state law claims for breach of contract, breach of fiduciary duty, professional
negligence, and negligent misrepresentation. See Brokers’ Mem at 1. 2
The Court addresses the sufficiency of each of plaintiffs’ claims seriatim below.
1. Count I: Breach of Contract Against Newmark
In order “[t]o prevail on a claim of breach of contract, a party must establish (1) a valid
contract between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of
that duty; and (4) damages caused by breach.” Mawakana v. Bd. of Trs. of the Univ. of the
District of Columbia, 926 F.3d 859, 869 (D.C. Cir. 2019) (quoting Tsintolas Realty Co. v.
Mendez, 984 A.2d 181, 187 (D.C. 2009)) (alteration in original).
Here, plaintiffs allege that the Brokers violated the terms of their own Brokerage
Agreements by failing to fulfill their obligations to “analyz[e] all reasonable options; mak[e]
recommendations; provid[e] market data; research[] and advis[e] OCA in its negotiations with
prospective purchasers; conduct[] tours of the Property with prospective purchasers; work[] with
legal counsel in negotiations; and provid[e] weekly reports concerning efforts to market the
Property,” all while “ensur[ing] that any information provided to OCA and to potential
purchasers pursuant to its obligations under the Brokerage Agreements was accurate,” pursuant
to the ordinary standard of care applicable to brokers in the industry. Compl. ¶¶ 112–13.
2 District of Columbia law governs the Brokers’ state law claims in this diversity case. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Burke v. Air Serv Int’l, Inc., 685 F.3d 1102, 1107 (D.C. Cir. 2012).
11 Neither the validity of the Brokerage Agreements nor the existence of these duties is disputed.
See Broker’s Mot., Ex. 1 (“Listing Agreement”) at 1, ECF No. 20-2; Brokers’ Mem. at 3–4
(explaining the Brokerage Agreements as imposing the same obligations as recounted in
plaintiffs’ Complaint).
The Brokers focus their arguments on plaintiffs’ establishment of the third element for a
contract claim, arguing that plaintiffs’ only theories of breach are that the Brokers failed to
obtain a precise measurement of the rentable square footage of the property and that they failed
to provide legal advice regarding the price adjustment provision in the property sale agreement,
but that the Brokerage Agreements never imposed these specific duties. Brokers’ Mem. at 9–13.
As plaintiffs correctly assert, this argument “cherry-pick[s] allegations from the Complaint and
entirely ignore[es] others” an in “overly-narrow framing” of the relevant contract. Pls.’ Opp’n
Defs. Brokers’ Mot. Dismiss (“Pls.’ Opp’n to Brokers’ Mot.”) at 14, ECF No. 25.
Contrary to the Brokers’ portrayal of the breach of contract claim, the complaint lays out
several explicit obligations imposed by the Brokerage Agreements, many of which plaintiffs
allege the Brokers breached. For example, plaintiffs specifically allege that the relevant contract
obligated the Brokers to “advis[e] OCA in its negotiations with prospective purchasers” and
“work[] with legal counsel in negotiations,” Compl. ¶ 112, and yet that during the negotiations
with Gersten the Brokers never informed either OCA or the Lawyers that the 18,796 square
footage figure, which originated with the Brokers and was included in the final version of the
property sale agreement, was not obtained in accordance with the BOMA 1996 standard and thus
was likely to result in a price adjustment under the provision as written, id. ¶ 71. The latter
allegations amount to a breach of the former. See Campbell v. Nat’l Union Fire Ins. Co. of
Pittsburgh, 130 F. Supp. 3d 236, 262 (D.D.C. 2015) (“[T]o state a claim for breach of contract so
12 as to survive a Rule 12(b)(6) motion to dismiss, it is enough for the plaintiff to describe the terms
of the alleged contract and the nature of the defendant’s breach.” (quoting Francis v. Rehman,
110 A.3d 615, 620 (D.C. 2015)). Plaintiffs do not need to allege that the Brokerage Agreements
required the Brokers to obtain the area measurements in any particular way or provide legal
advice beyond the Brokers’ professional expertise; they have alleged other specific duties under
the contract that the Brokers failed to perform, and the Brokers do not attempt to grapple with
these allegations.
As to the final requirement of damages, plaintiffs’ allegations allow the “reasonable
inference” to be drawn, see Iqbal, 556 U.S. at 678, that they would not have signed the property
sale agreement had the Brokers fulfilled their contractual obligations to provide all the relevant
information regarding the property and to assist OCA and the Lawyers in the negotiations, which
would have alerted plaintiffs to the dangers of the purchase price adjustment provision as-written
in the final sale. See Compl. ¶¶ 69–73, 77–78.
Accordingly, the Brokers’ motion is denied as to plaintiffs’ breach of contract claim set
out in Count I.
2. Counts II and III: Breach of Fiduciary Duty and Professional Negligence Against Damron, Lucey, and Newmark
Plaintiffs next bring claims, in Counts II and III, for breach of fiduciary duty and
professional negligence, respectively, against defendants Damron, Lucey, and Newmark. Both
claims are predicated on the same underlying conduct, see Compl. ¶¶ 121–22 (breach of
fiduciary duties), 125–26 (professional negligence), and because the law governing these two
causes of action is similar, they are properly analyzed together. See, e.g., Shapiro, Lifschitz &
Schram, P.C. v. Hazard, 24 F. Supp. 2d 66, 74 (D.D.C. 1998); Rocha v. Brown & Gould, LLP,
101 F. Supp. 3d 52, 78 (D.D.C. 2015); Teltschik v. Williams & Jensen, PLLC, 683 F. Supp. 2d
13 33, 44–45 (D.D.C. 1010); In re Belmar, 319 B.R. 748, 752–53 (D.D.C. Bankr. 2004); Mills v.
Cooter, 647 A.2d 1118, 1120 n.6 (D.C. 1994).
To prevail on “a claim for breach of fiduciary duty under District of Columbia law, a
plaintiff must allege facts sufficient to establish: (1) the defendant owed plaintiff a fiduciary
duty; (2) a breach of that duty; and (3) proximate cause and injury to be inferred from those
facts.” Xereas v. Heiss, 987 F.3d 1124, 1130 (D.C. Cir. 2021). The elements of a claim of
professional negligence are the same, except the duty element must be established by allegations
that defendants owed plaintiffs a duty to use “such skill, prudence, and diligence as other
members of [their] profession commonly possess and exercise.” Shapiro, Lifschitz & Schram, 24
F. Supp. 2d at 75. Here, plaintiffs sufficiently allege each of these elements for both claims.
First, District of Columbia law is clear that real estate brokers are fiduciaries of their
clients. See Vicki Bagley Realty, Inc. v. Laufer 482 A.2d 359, 364 (D.C. 1984) (“A real estate
broker, like any other agent, owes a fiduciary duty to his principal.”) (citations omitted). “The
fiduciary duty owed by a real estate agent . . . requires the exercise of the highest fidelity toward
the principal. It encompasses an obligation to inform the principal of every development
affecting his interest . . . .” Id. at 364–65; Jenkins v. Strauss, 931 A.2d 1026, 1032–33 (D.C.
2007). The Brokers’ fiduciary duties are also animated by D.C. statutory law, which requires
brokers to “exercise ordinary care,” D.C. Code § 42-1703(a)(1)(D), and to “disclos[e] to the
seller material facts related to the property or concerning the transaction of which the licensee
has actual knowledge.” Id. § 42-1703(a)(1)(B)(iii). A “material fact” is “information that, if
known, would be likely to induce a reasonable person to enter into or not enter into or
consummate a real estate transaction.” Id. § 43-1702(7B). Additionally, a real estate broker is
required to “perform in accordance with the terms of the brokerage relationship,” see id. § 42-
14 1703(a)(1)(A), which is defined as “the contractual relationship between a client and a real estate
[broker] . . . .” § 42-1702(2A). Thus, the fiduciary duties owed by real estate agents are set by
statute and modified by the contractual agreement of the parties, precisely as alleged in
plaintiffs’ Complaint. See Compl. ¶¶119–20.
That the Brokers owed plaintiffs a duty to use the skill, prudence, and diligence
commonly employed by members of their profession is likewise straightforwardly established.
The generally applicable “duty of reasonable care requires that those with special training and
experience adhere to a standard of conduct commensurate with such attributes,” for “it is this
notion of specialized knowledge and skill which animates the law of professional negligence.”
Morrison v. MacNamara, 407 A.2d 555, 560 (D.C. 1979). Plaintiffs therefore sufficiently allege
that the Brokers, in their capacity “[a]s OCA’s real estate brokers and representatives in the sale
of the Property, . . . owed OCA a duty to exercise the reasonable care, skill, and diligence as is
ordinarily possessed by brokers engaged in the same or similar business.” Compl. ¶ 125.
Plaintiffs also sufficiently allege that the Brokers did not live up to the high bar imposed
by their status as fiduciaries and did not exercise ordinary professional care, most notably by
failing to act in OCA’s best interests in obtaining and using the square footage measurement and
in failing to disclose to plaintiffs all material facts they knew regarding that measurement. Id.
¶ 121. Instead of hiring a professional to measure plaintiffs’ property, defendants asked a local
architect to “estimate” the size of the property and specifically asked that he do so on a pro bono
basis. Id. ¶ 24. The Brokers had reason to question the reliability of the resultant 18,796 square
feet figure in light of the disclaimers and caveats expressed by the architect’s employee
regarding her estimate, id. ¶ 26, yet they did not communicate those deficiencies to plaintiffs nor
proceed as if the square footage figure was merely a rough estimate. Instead, they ran with the
15 number, creating multiple marketing materials advertising that the property contained 18,796
rentable square feet, and never raising the fact that this was a rough approximation even when
the exact figure was incorporated into potential sale agreements. See id. ¶¶ 30–34, 37, 58–61,
71. 3 Notwithstanding the Brokers’ conclusory assertions that they “exercised the ordinary care
expected of real estate brokers under these circumstances,” Brokers’ Mem. at 14, these alleged
actions were inconsistent with their fiduciary and professional duties to act in plaintiffs’ best
interests and to disclose to them all known material facts.
Finally, plaintiffs adequately allege that the Brokers’ breach of their applicable duties
proximately caused them injury. In the final property sale agreement, the purchase price was
directly tied to the rentable square footage, and the final price was reduced by over $2 million
when the area as determined under the BOMA 1996 standard fell far below the Brokers’ rough
estimate. Compl. ¶¶ 81–82. It is reasonable to infer that plaintiffs would not have signed an
agreement with such an unfavorable purchase price adjustment provision if the Brokers had
acted in plaintiffs’ best interests in obtaining the area measurement and communicated all known
material facts regarding that measurement, and thus that the Brokers proximately caused
plaintiffs’ injury. Compl. ¶ 122.
As such, the Brokers’ motion is denied with respect to plaintiffs’ breach of fiduciary duty
and professional negligence claims set out in Counts II and III.
3 The Brokers, in support of their motion to dismiss, seemingly contest many of these factual allegations, arguing that “the information the Plaintiffs allege they did not know was, in fact, known to them” and that the Brokers provided all the required disclosures and advice—all of which plaintiffs continue to vehemently deny. See Brokers’ Mem. at 15–16; Pls.’ Opp’n to Broker’s Mot. at 24–25. Such refutation of the well-pleaded factual matter of plaintiffs’ complaint, however, cannot be credited at this stage of the litigation. See, e.g., Richards v. Gelsomino, 240 F. Supp. 3d 173, 179 (D.D.C. 2017) (“[A] motion to dismiss is not the proper vehicle for [resolving factual disputes].”); see also Nurriddin v. Bolden, 818 F.3d 751, 756 (D.C. Cir. 2016) (“We assume the truth of all well- pleaded factual allegations and construe reasonable inferences from those allegations in a plaintiff's favor.” (citing Sissel v. U.S. Dep’t of Health & Hum. Servs., 760 F.3d 1, 4 (D.C. Cir. 2014))).
16 3. Counts IV: Negligent Misrepresentation Against Damron, Lucey, and Newmark
Plaintiffs’ final claim against the Brokers is one for negligent misrepresentation. To
prevail on a claim for negligent misrepresentation, plaintiffs “must show (1) that the defendant
made a false statement or omitted a fact that he had a duty to disclose; (2) that it involved a
material issue; and (3) that the plaintiff[s] reasonably relied upon the false statement or omission
to [their] detriment.” Heyer v. Schwartz & Assocs. PLLC, 319 F. Supp. 3d 299, 306 (D.D.C.
2018) (quoting Sundberg v. TTR Realty, LLC, 109 A.3d 1123, 1131 (D.C. 2015)).
Here, plaintiffs have sufficiently alleged that they reasonably relied on the Brokers’
representation that the building was approximately 18,796 square feet, when in fact the property
was roughly two-thirds that size—a fact that ended up being highly material in the sale of the
property under the purchase price adjustment provision—and that they lost a substantial amount
of money as a result of that reliance. The complaint alleges that multiple material facts were not
disclosed by the Brokers to plaintiffs regarding the area measurement, including that this figure
was merely an estimate done on a pro bono basis, that the individual who had provided the
estimated square footage also provided several caveats to that number and advised the Brokers to
verify the number, and that the estimate did not reflect rentable square footage in accordance
with the BOMA 1996 standard per the terms of the final purchase agreement. See Compl. ¶¶ 24–
33, 129–30. The Brokers counter that their failure to provide these specifics could not have
amounted to material omissions, because plaintiffs were generally “aware that the rentable
square footage was not an exact measurement and was only an approximation” and because they
never made affirmative misrepresentations about the size of the rentable space. See Brokers’
Mem. at 16–17. Such an argument significantly understates the nature of the Brokers’ duty not
to omit material facts to plaintiffs. Where, as here, defendants are fiduciaries, the duty to
17 disclose is heightened. See Vicki Bagley, 482 A.2d at 364–65 (“The fiduciary duty owed by a
real estate agent . . . requires the exercise of the highest fidelity toward the principal. It
encompasses an obligation to inform the principal of every development affecting his
interest . . . .” (citations omitted) (emphasis added)). As such, the Brokers had a duty to disclose
the specific details of the nature of the area measurement, including the limitations of the
estimate as had been expressly communicated to them and the potential that the estimate could
differ significantly from the purchase agreement’s description of the same number as
representing the rentable square footage in accordance with the BOMA 1996 standard—all of
which affected plaintiffs’ interests in the sale of the property. Even if plaintiffs knew that the
measurement of 18,796 square feet was an approximation, they have plausibly alleged that they
did not know the aforementioned details, see Compl. ¶¶ 30–33, 129, and thus would have
reasonably concluded that the provided figure was significantly closer to that included in the
final purchase agreement than it in fact was. As such, the undisclosed details were material, and
given the Brokers’ status as fiduciaries, plaintiffs were not unreasonable in relying on the
representations that omitted these facts. See Coon v. Wood, 68 F. Supp. 3d 77, 86 (D.D.C. 2014)
(“Where a real estate agent—experienced in a specific type of transaction—makes an affirmative
representation to the principal regarding that same type of transaction, the principal is not
unreasonable as a matter of law to rely upon the representation.”).
Accordingly, the Brokers’ motion is denied with respect to plaintiffs’ professional
negligence claim set out in Count IV.
18 B. The Lawyers
The Lawyers have moved, under Federal Rule of Civil Procedure 12(b)(6), to dismiss all
four of plaintiffs’ state law claims for legal malpractice in transaction, legal malpractice in pre-
litigation and litigation, breach of fiduciary duty, and breach of contract. Lawyers’ Mem. at 3.
As a threshold matter, the applicable state law as to the claims against the Lawyers is
Virginia—not the District of Columbia—because of a choice-of-law provision in the retainer
agreement entered by the Lawyers and plaintiffs. The retainer agreement, signed by Moorstein
and the CEO of OCA, expressly incorporated the law firm’s standard “terms and conditions,” a
provision highlighted on the one-page agreement with markings in bold and italic lettering, with
further directions that those terms and conditions were available both online and “in hard copy at
[] request.” Lawyers’ Mot., Ex. A (“Retainer Agreement”), ECF No. 19-4. Those terms and
conditions include a choice-of-law provision, which sets out that “all . . . claims, disputes, and
actions related to, or arising out of [a client’s engagement of Offit Kurman] shall be governed by
the laws of the Commonwealth of Virginia.” Retainer Agreement at 4.
Under District of Columbia law, which “supplies the applicable choice-of-law standard”
in this diversity case, Sickle v. Torres Advanced Enter. Sols., LLC., No. 11-cv-2224 (KBJ), 2020
WL 5530357, at *7 (D.D.C. Sept. 14, 2020) (quoting Williams v. First Gov’t Mortg. & Invs.
Corp., 176 F.3d 497, 499 (D.C. Cir 1999)), the choice-of-law provision is enforceable. “[C]ourts
[can] enforce express contractual choice-of-law provisions ‘so long as there is some reasonable
relationship with the state specified.’” Id. (quoting Ekstrom v. Value Health, Inc., 68 F.3d 1391,
1394 (D.C. Cir. 1995)). Here, the dispute bears a “reasonable relationship” with Virginia
because plaintiffs’ claims arise from their retention of Moorstein and his firm, and Moorstein
resides and practices out of his firm’s office in Virginia. Compl. ¶ 7; Retainer Agreement at 1.
19 “District of Columbia courts routinely find that” a state is “reasonably connected to the contract”
where, as here, one of the parties to the contract is headquartered in, does business in, or is a
resident of that state. See Sickle, 2020 WL 5530357 at *7; Whiting v. AARP, 637 F.3d 355, 361
(D.C. Cir. 2011); Orchin v. Great-W. Life & Annuity Ins. Co., 133 F. Supp. 3d 138, 146–47
(D.D.C. 2015); cf. PCH Mut. Ins. Co., Inc. v. Casualty & Sur., Inc., 569 F. Supp. 2d 67, 72
(D.D.C. 2008) (concluding that a contract’s purported choice of California law was
unenforceable where “no portion of the Agreement was to be performed in California, neither of
the parties is based in California, [plaintiff] does not do business in California and is not
qualified to do so, and [defendant] did not even qualify to do business in California” at the time
of signing the contract). Moorstein signed the retainer agreement in his capacity as a lawyer
practicing out of a Virginia law office and, thus, Virginia is reasonably connected to that
agreement.
Plaintiffs cannot avoid this result by contending that “no true conflict exists” between
District of Columbia law and Virginia law and that District of Columbia law has the greater
relationship to the dispute—for these are considerations where there is no enforceable choice-of-
law provision and more than one jurisdiction has a potential interest in having its law applied.
See, e.g., In re APA Assessment Fee Litig., 766 F.3d 39, 51–55 (D.C. Cir. 2015); Signature Tech.
Sols. v. Incapsulate, LLC, 58 F. Supp. 3d 72, 80 (D.D.C. 2014). Here, a valid choice-of-law
provision is contained in the Lawyers’ retainer agreement and, therefore, Virginia law will
govern OCA’s claims against the Lawyers, which claims relate to a dispute arising from the
Lawyers’ services under that agreement. Those claims will now be addressed in turn.
20 1. Count V: Legal Malpractice in Transaction Against Moorstein and Offit Kurman
Plaintiffs’ first cause of action against the Lawyers is for legal malpractice in transaction.
To prevail on a claim of legal malpractice under Virginia law, a plaintiff must establish “the
existence of an attorney-client relationship which gave rise to a duty, breach of that duty by the
defendant attorney, and that the damages claimed by the plaintiff client must have been
proximately caused by the defendant attorney’s breach.” Shipman v. Kruck, 267 Va. 495, 501
(Va. 2004) (quoting Rutter v. Jones, Blechman, Woltz & Kelly, P.C., 264 Va. 310, 313 (Va.
2002); Desetti v. Chester, 290 Va. 50, 56 (Va. 2015) (same).
Plaintiffs have pleaded sufficient facts in the Complaint to state a claim for legal
malpractice. Plaintiffs contend that, as a part of the parties’ undisputed attorney-client
relationship, the Lawyers owed them—and subsequently breached—a duty of reasonable care by
failing to protect OCA’s interests during the negotiation of the sale of the 18th St. NW property.
Compl. ¶¶ 136–39. In particular, plaintiffs state that the Lawyers failed to: (1) “[d]raft or
propose changes to the PSA to ensure that the PSA accurately reflected OCA’s intentions and
minimized OCA’s risks”; (2) “[c]onduct adequate inquiry into key terms of the PSA, including
how the 18,796 square footage estimate was calculated and the BOMA 1996 standard’s potential
impact on price”; and (3) “[p]rovide competent advice regarding the risks of the PSA draft
language.” Id. ¶ 138. Further, “Moorstein failed to recommend changes to the Final Draft that
would have protected OCA’s expectation that it would receive $6.5 million for the Property, or
that would have allowed OCA to terminate the agreement and find another purchaser if the price
adjustment was more than a de minimis amount.” Id. ¶ 74.
Plaintiffs have also sufficiently alleged damages proximately caused by the Lawyers’
failure to properly advise and defend plaintiffs’ interests. In reliance on the advice of
21 defendants, plaintiffs signed the PSA, which resulted in them being forced to sell the property for
over $2 million less than their expected price. See id. ¶ 77. Construing the factual allegations in
favor of plaintiffs allows for a “reasonable inference,” Iqbal, 556 U.S. at 678, that had the
Lawyers not misadvised them, plaintiffs would have refused to sign the purchase agreement
absent terms that better protected their interests, such as a reciprocal termination right if the price
adjustment provision resulted in too drastic a reduction based on the square footage. Thus,
plaintiffs allege sufficient facts at this pleading stage to state a claim for transactional legal
malpractice.
The Lawyers counter that the root of plaintiffs’ claim is that the rentable square footage
estimate in the sale contract was inaccurate—a misrepresentation for which Brokers, not the
Lawyers, were responsible. As a result, they argue that they were not the proximate cause of the
harm because “[b]y the time the Offit Kurman Defendants were retained, the Brokers had
already obtained a measurement of the Building.” Lawyers’ Mem. at 13–14, 17–20. Relatedly,
they present as a separate argument the fact that OCA hired the Brokers as independent
contractors before separately hiring the Lawyers and that the Lawyers therefore cannot be said to
have exerted control over the Brokers such that they are responsible for the latter’s actions. Id. at
13–16. Both arguments ignore plaintiffs’ many other factual allegations regarding malpractice in
negotiating and closing the property sale that have nothing to do with the initial measurement of
the property, including the Lawyers’ failure to negotiate for reciprocal termination rights, to
make any inquiries as to the risks of the price adjustment provision and its imposition of the
BOMA 1996 standard, and to explain correctly the meaning of the price adjustment provision in
response to plaintiffs’ inquiries. “There may be more than one proximate cause of an event,”
Westlake Props., Inc. v. Westlake Pointe Prop. Owners Ass’n, Inc., 273 Va. 107, 125 (Va. 2007),
22 and this is precisely what plaintiffs allege here. The fact that the Brokers’ allegedly inadequate
initial efforts to measure the property may have proximately caused plaintiffs’ harm does not
mean that the Lawyers’ actions were thereby immunized from liability.
The Lawyers’ final argument is that both malpractice claims should be dismissed because
plaintiffs “failed to plead the case within the case,” Lawyers’ Mem. at 14, 20–22, but this is
entirely inapposite to the transactional malpractice claim. “A legal malpractice action usually
involves a ‘case within the case,’ in which the plaintiff must present evidence that would have
been presented in the underlying action,” Williams v. Joynes, 278 Va. 57, 62 (Va. 2009) (quoting
Whitley v. Chamouris, 265 Va. 9, 11 (Va. 2003)), but such an analysis plainly does not apply
when the type of attorney negligence alleged is something other than negligence in conducting
litigation. Here, plaintiffs’ claim has to do with the Lawyers’ negligence in representing
plaintiffs in negotiating and closing the property sale, and as discussed supra, they have
adequately pleaded the elements of that transactional malpractice claim. See, e.g., Musselman v.
Willoughby Corp., 230 Va. 337, 343–44 (Va. 1985) (analyzing a transactional malpractice claim
without requiring consideration of a “case within a case”).
Accordingly, the Lawyers’ motion to dismiss Count V will be denied.
2. Claim VI: Legal Malpractice in Pre-Litigation and Litigation Against Moorstein and Offit Kurman
Plaintiffs’ second claim against the Lawyers is also for legal malpractice, this time in pre-
litigation and litigation, the elements for which claim are already set forth, supra in Part III.B.1.
The allegations made to support this claim are sufficiently plausible to withstand a motion to
dismiss.
As to litigation malpractice, plaintiffs contend that the Lawyers breached their duty of
care arising out of their undisputed attorney-client relationship by failing to advise plaintiffs of
23 the Lawyers’ conflict of interest that arose when OCA refused to pay Gersten the reduced
purchase price at the Lawyers’ advice, and Gersten then sued for specific performance of the
contract. Specifically, plaintiffs explain that because Moorstein and his firm had an interest in
covering up the inadequate advice they had provided in the negotiation and closing of the
contract (for which they were “vulnerable to a potential claim of legal malpractice,” as has been
addressed, supra in Part III.B.1), the Lawyers allegedly misled plaintiffs as to the strength of
their litigating position and their viable arguments in the subsequent suit and its settlement
opportunities. See Compl. ¶¶ 89–97, 147. According to plaintiffs, the Lawyers had a duty to
advise plaintiffs of the existence of the conflict so that plaintiffs could have considered retaining
independent counsel in negotiating the fallout of the botched property sale, but the Lawyers
failed to do so. Id. ¶¶ 90–91, 144–47. Finally, plaintiffs allege that this breach caused them
damages, in that the Lawyers’ choice not to mention the conflict and instead to lead plaintiffs
through litigation, which plaintiffs otherwise could have avoided or reasonably settled,
needlessly magnified the total cost. See id. ¶¶ 91, 96, 108. These allegations sufficiently state
the required elements of the litigation malpractice claim.
The Lawyers’ only argument relevant to this claim is that plaintiffs have inadequately
pleaded the “case within the case” by explaining how they would have “prevailed in the
underlying action” absent the Lawyers’ breach, Lawyers’ Mem. at 20–22, but this vastly
overstates the requirements of proximate cause in this context. Plaintiffs never allege that they
would have won the contract suit against Gersten outright had the Lawyers properly advised
them; rather, they claim that had they been informed of the Lawyers’ conflict of interest and
obtained the advice of independent counsel, they would have been informed of the weaknesses
of their legal position under the plain terms of the contract, and thus would have known to avoid
24 the litigation entirely or to engage in meaningful settlement talks sooner. See Compl. ¶¶ 108,
147. Where this is the theory of litigation malpractice, the correct inquiry for the “case within
the case” is not whether plaintiffs would have prevailed outright in the underlying litigation, but
whether plaintiffs would indeed have obtained the more favorable outcomes of altogether
avoiding the litigation or settling for a lower overall payment. See, e.g., Rahbar v. L. Off. of
Arquilla & Poe, PLC, No. 18-cv-1475 (LMB/MSN), 2019 WL 1575191, at *9 (E.D. Va. Apr.
11, 2019) (explaining that to establish the “case within the case,” “the plaintiff must present
sufficient evidence with respect to the subject of the underlying legal representation ‘to convince
the trier of fact . . . that, in the absence of the attorney’s alleged negligence, the plaintiff would
have prevailed’—or at least obtained a measurably better result—‘in the underlying action’”
(quoting Williams, 278 Va. at 62) (emphasis added)). Plaintiffs adequately allege the latter
theory here, so the fact that they do not attempt to establish that they would have won the
contract litigation absent the Lawyers’ malpractice is not fatal to their litigation malpractice
claim.
Accordingly, the Lawyers’ motion to dismiss Count VI will be denied.
3. Counts VII and VIII: Breaches of Fiduciary Duty and Contract Against Moorstein and Offit Kurman
Plaintiffs’ final claims against the Lawyers, for breach of fiduciary duty and breach of
contract, must fail. Virginia law treats such claims as redundant with legal malpractice claims
arising from the same contract for legal services. See Gen. Sec. Ins. Co. v. Jordan, Coyne &
Savits, LLP, 357 F. Supp. 2d 951, 961–62 (E.D. Va. 2005) (explaining that contract and fiduciary
duty claims must fail where “[t]he breach alleged in both the breach of contract and breach of
fiduciary duty claims is the same failure to provide adequate legal services that is the crux of the
legal malpractice claims”). “No matter how the undertaking to exercise ordinary skill and
25 knowledge is characterized, the essential claim is for legal malpractice,” MALLEN & SMITH, 1
LEGAL MALPRACTICE § 8.1, at 769–70, and so these “separately pleaded tort claims are
duplicative of plaintiffs legal malpractice claim and must be dismissed,” Rahbar, 2019 WL
1575191, at *8. See also Doe v. Rawls L. Grp., P.C., No. 20-cv-669, 2022 WL 658557, at *3–4
(E.D. Va. Mar. 4, 2022) (same); Shortt v. Immigr. Reform Law Inst., No. 11-cv-144, 2011 WL
4738657, at *2 (E.D. Va. 2011 Oct. 3, 2011) (same).
Accordingly, the Lawyers’ Motion to Dismiss will be granted as to Counts VII and VIII.
IV. CONCLUSION
For the foregoing reasons, defendants’ Motions to Dismiss the Complaint are granted in
part and denied in part. Specifically, the Brokers’ Motion to Dismiss the Complaint is denied
with respect to plaintiffs’ claims for breach of contract, breach of fiduciary duty, professional
negligence, and negligent misrepresentation. The Lawyers’ Motion to Dismiss the complaint is
denied with respect to plaintiffs’ claims for legal malpractice in transaction and legal malpractice
in pre-litigation and litigation, but granted as to plaintiffs’ claims for breach of fiduciary duty and
breach of contract, and those claims are dismissed with prejudice.
An order consistent with this Memorandum Opinion will be filed contemporaneously.
DATE: March 1, 2023
__________________________ BERYL A. HOWELL Chief Judge