Wise v. Eskow

• Court: District Court, W.D. Washington
• Decided: May 15, 2023
• Docket: 3:22-cv-05033
• Status: Unknown

Opinion

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5 6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT TACOMA 9 10 SAM WISE and; GERMAN WISE CASE NO. 3:22-cv-05033-DGE 11 DENTAL, LLC d/b/a LOWER COLUMBIA ORAL HEALTH, a ORDER DENYING PLAINTIFFS’ 12 Washington Limited Liability Company, MOTION FOR PARTIAL SUMMARY JUDGMENT (DKT. 13 Plaintiffs, NO. 51) v. 14 JONATHAN T. ESKOW, an individual; 15 and ESKOW LAW GROUP, LLC, f/k/a JTE LAW, LLC, a Massachusetts limited 16 liability company, 17 Defendants. 18

19 I INTRODUCTION 20 This matter comes before the Court on Plaintiffs’ motion for partial summary judgment. 21 (Dkt. No. 51.) After reviewing the record and the parties’ briefing, the Court DENIES Plaintiffs’ 22 motion for the reasons discussed herein. 23 24 1 II BACKGROUND 2 This lawsuit relates to alleged legal malpractice committed by Defendants Jonathan T. 3 Eskow (“Mr. Eskow”) and Eskow Law Group LLC (“Eskow Law Group”). In 2019, Plaintiffs 4 Dr. Sam Wise (“Dr. Wise”) and German Wise Dental LLC (“German Wise Dental”)1 contracted

5 with Defendants to advise Dr. Wise on the purchase of a dental practice in Longview, 6 Washington owned by Dr. Daniel S. Haghigi (“Dr. Haghigi”). (Dkt. No. 52 at 34, 39.) Plaintiffs 7 signed an engagement letter with Defendants on April 1, 2019. (Id. at 39.) Though the scope of 8 the engagement is disputed, the parties agree Defendants were retained to advise Dr. Wise on the 9 purchase and sale agreement of the dental practice from Dr. Haghighi, including review of Dr. 10 Wise’s lease agreement. (Id. at 12, 14–15.) At the time of the engagement, neither Mr. Eskow 11 nor any attorney at Eskow Law Group were licensed to practice law in Washington. (Dkt. Nos. 12 15 at 5; 52 at 9.) The Defendants also did not retain a Washington lawyer or enter into an 13 association agreement with a Washington law firm to advise them on Washington law. (Dkt. No. 14 52 at 9.) After consulting with Mr. Eskow, Dr. Wise entered into contract to purchase Dr.

15 Haghighi’s practice on April 16, 2019, for a sum of $1,250,000 and other consideration. (Dkt. 16 No. 15 at 3.) Plaintiffs allege the purchase and sale agreement ultimately negatively impacted 17 their finances due to alleged deficiencies in the due diligence conducted by Defendants and poor 18 contract drafting. (Dkt. No. 1 at 4–5.) For example, after executing the sale Dr. Wise discovered 19 that 60 percent of patients at the practice purchased from Dr. Haghighi were Medicaid patients, 20 who are substantially less profitable for a dental practice than patients with private insurance. 21 (Dkt. No. 52 at 34–36.) 22

1 German Wise Dental declared bankruptcy on June 24, 2022, and has been substituted in this suit 23 as party plaintiff by Don Thacker, Trustee in the Bankruptcy of German Wise Dental. (See Dkt. Nos. 33, 42.) 24 1 On January 18, 2022, Plaintiffs brought suit, alleging legal malpractice on the part of Mr. 2 Eskow and Eskow Law Group. (Dkt. No. 1 at 5.) Plaintiffs also allege Mr. Eskow committed 3 the unauthorized practice of law in violation of Washington Revised Code § 2.48.180, since he is 4 not currently, and has never been, admitted to practice law in Washington (id. at 7.), breached his

5 fiduciary duty to Plaintiffs (id. at 8), and violated the Washington Consumer Protection Act (id. 6 at 10). 7 On March 2, 2023, Plaintiffs filed a motion for partial summary judgment asking the 8 Court to hold as a matter of law “that Defendant Jonathan T. Eskow engaged in the unauthorized 9 practice of law when he represented Wise and German Wise Dental as their transactional 10 attorney.” (Dkt. No. 51 at 2.) Plaintiffs seek disgorgement of fees as a remedy for Defendants’ 11 alleged unauthorized practice of law. (Id. at 18–19.) Defendants filed their response in 12 opposition to Plaintiffs’ motion on March 27, 2023. (Dkt. No. 55.) In their response, 13 Defendants raised the argument that “Plaintiffs’ [m]otion incorrectly presumes that RCW 14 2.48.180 provides for a separate private cause of action for unauthorized practice of law against a

15 lawyer in a legal malpractice case.” (Id. at 1.) The Court sought the parties’ input on whether 16 the Court should certify a question or questions to the Washington Supreme Court on whether 17 Washington Revised Code § 2.48.180 creates a private right of action for the unlawful practice 18 of law. (Dkt. No. 61.) The parties timely filed supplemental briefs. (Dkt. Nos. 63, 65.) 19 III DISCUSSION 20 A. Legal Standard 21 “Summary judgment is appropriate when, viewing the evidence in the light most 22 favorable to the nonmoving party, there is no genuine dispute as to any material fact.” Zetwick v. 23 Cnty. of Yolo, 850 F.3d 436, 440 (9th Cir. 2017) (quoting United States v. JP Morgan Chase

24 1 Bank Account No. Ending 8215, 835 F.3d 1159, 1162 (9th Cir. 2016). The “party seeking 2 summary judgment always bears the initial responsibility of informing the district court of the 3 basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to 4 interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes

5 demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 6 317, 323 (1986). The Court must construe the facts and pleadings in the light most favorable to 7 the non-moving party. See England v. Mack Trucks, Inc., No. C07-5169-RBL, 2008 WL 8 168689, at *2 (W.D. Wash. Jan. 16, 2008); see also Ramirez v. Chow, No. 12-CV-05630 JRC, 9 2013 WL 3724947, at *2 (W.D. Wash. July 12, 2013). 10 B. Unauthorized Practice of Law 11 The Court finds Plaintiffs have not demonstrated, as a matter of law, that they are entitled 12 to summary judgment on their unauthorized practice of law claim.2 13 Plaintiffs assert they are entitled to bring a private cause of action for the unauthorized 14 practice of law pursuant to Washington Revised Code § 2.48.180. (Dkt. Nos. 1 at 7; 51 at 8.)

15 According to Plaintiffs, “Washington indisputably authorizes a cause of action against those who 16 engage in the unauthorized practice of law” and cites to In re Estate of Marks, 957 P.2d 235 17 (Wash. Ct. App. 1998), Barbanti v. Quality Loan Serv. Corp., 2006 WL 1889255 (E.D. Wash. 18 July 7, 2006), among other cases. (Dkt. No. 58 at 2.) In response, Defendants argue Plaintiffs 19 may not bring a separate cause of action pursuant to Washington Revised Code § 2.48.180 20 because the statute does not authorize a private cause of action. (Dkt. No. 55 at 8.) Defendants 21 22

2 After review of the parties’ supplemental briefing, the Court believes certification of a question 23 to the Washington Supreme Court on whether Washington Revised Code § 2.48.180 creates a private right of action is not warranted. 24 1 also argue Plaintiffs’ motion is improper because their request for damages—disgorgement—is 2 “a remedy specific to ethical violations.” (Dkt. No. 65 at 5.) 3 The plain text of Washington Revised Code § 2.48.180, which Plaintiffs cite as the basis 4 for their unauthorized practice of law claim in their complaint and motion (see Dkt. Nos. 1 at 7;

5 52 at 8), does not authorize a private cause of action for the unauthorized practice of law. None 6 of the cases cited by Plaintiffs specifically recognize a private cause of action for the 7 unauthorized practice of law based on Washington Revised Code § 2.48.180 or are 8 distinguishable. In re Estate of Marks, for example, concerns the disposition of a will and the 9 question for the appellate court was whether certain individuals had “unwittingly engaged in the 10 unauthorized practice of law while assisting” the decedent with the preparation of her will such 11 that, as a matter of public policy, the beneficiaries of the will should be divested of the bequests 12 in the will. 957 P.2d at 239. The district court in Barbanti assumed a cause of action for 13 unauthorized practice of law was permitted by citing to Bennion, Van Camp, Hagen & Ruhl v. 14 Kassler Escrow, Inc., 635 P.2d 730 (Wash. 1981). See Barbanti, 2006 WL 1889255, at *8.

15 However, Bennion concerned whether a state law “authorizing escrow agents and other lay 16 persons to perform certain actions with regard to real estate or personal property transactions” 17 was constitutional under the Washington Constitution. See 635 P.2d at 731. Though the 18 plaintiffs in Bennion “alleg[ed] that the escrow company had engaged in the unauthorized 19 practice of law in violation of RCW 2.48.170, .180 and .190,” the Washington Supreme Court 20 did not directly address whether a suit pursuant to Washington Revised Code § 2.48.180 was 21 permitted. Id. at 731. Additionally, the respondents in Bennion only sought “a permanent 22 injunction enjoining petitioner from performing any acts constituting the practice of law.” Id. 23

24 1 In other rulings, Washington and federal courts have suggested that a claim for 2 unauthorized practice of law sounds in negligence, legal malpractice, the Washington Consumer 3 Protection Act3, or must be addressed through other disciplinary means. The Washington 4 Supreme Court has held, for example, that “a layman who attempts to practice law is liable for

5 negligence,” Bowers, 675 P.2d at 198, but also that “breach of an ethics rule provides only a 6 public, e.g., disciplinary, remedy and not a private remedy,” Hizey v. Carpenter, 830 P.2d 646, 7 651 (Wash. 1992). 8 United States District Judge Benjamin Settle, when faced with a similar claim, 9 “construe[d] Plaintiffs’ unauthorized practice of law claim to mean negligent practice of law, 10 consistent with the term of art found in Washington case law.” Singleton v. Nationwide Ins. Co. 11 of Am., No. C20-5688 BHS, 2020 WL 6287124, at *2 (W.D. Wash. Oct. 27, 2020). However, 12 the procedural posture of that case is distinct from the instant one. In Singleton, the defendant 13 had moved to dismiss the plaintiff’s claims pursuant to Federal Rule of Civil Procedure 12(b)(6) 14 and therefore the court had to construe the complaint in the plaintiff’s favor. See id. at *1. Here,

15 on Plaintiffs’ motion for summary judgment, the Court must construe the facts and the pleadings 16 in Defendants’ favor and cannot construe Plaintiffs’ claim as a poorly pled negligence claim. 17 Plaintiffs’ motion fails for a second reason—the Court may not award the remedy 18 requested based on Plaintiffs’ current unauthorized practice of law claim. Plaintiffs are correct 19 that the courts retain inherent power to discipline attorneys for ethical violations and may 20 authorize equitable relief in the form of disgorgement. (See Dkt. No. 51 at 18.) “RCW 2.48 was 21 adopted in the interest of uniformity of standard and to remedy and prevent mischief in the 22 profession. It did not restrict or take away any of the courts’ . . . inherent power to regulate the 23

3 See Bowers v. Transamerica Title Ins. Co., 675 P.2d 193, 200 (Wash. 1983) 24 1 practice of law,” Cultum v. Heritage House Realtors, Inc., 694 P.2d 630, 635 (Wash. 1985). 2 Where an attorney fails to adhere to their ethical obligations, a court may order disgorgement of 3 fees under the court’s inherent power to regulate the legal profession. See Eriks v. Denver, 824 4 P.2d 1207, 1213 (1992) (“The general principle that a breach of ethical duties may result in

5 denial or disgorgement of fees is well recognized.”) (emphasis added). However, the Court 6 agrees with Defendants that, construing the pleadings in Defendants’ favor, Plaintiffs’ 7 unauthorized practice of law claim is based on a violation of Washington Revised Code 8 § 2.48.180, not Washington Rule of Professional Conduct (“RPC”) 5.5. (See Dkt. No. 65 at 4.) 9 Indeed, Plaintiffs do not mention RPC 5.5 in their complaint. The Court cannot, therefore, use 10 its inherent authority to order an equitable remedy of disgorgement. 11 For the aforementioned reasons, the Court finds Plaintiffs are not entitled as a matter of 12 law to summary judgment on their unauthorized practice of law claim and DENIES their motion. 13 IV CONCLUSION 14 Accordingly, and having considered Plaintiffs’ motion (Dkt. No. 51), the briefing of the

15 parties, and the remainder of the record, the Court finds and ORDERS Plaintiffs’ motion for 16 summary judgment is DENIED.4 17 Dated this 15th day of May, 2023. 18 A 19 David G. Estudillo 20 United States District Judge

22 4 The Court takes no position on the issue of whether Plaintiffs may amend their complaint to properly plead a negligent practice of law claim or to address Plaintiffs’ alleged violations of the 23 Washington Rules of Professional Conduct. Should Plaintiffs seek to amend their complaint, they will need to establish why an amendment is appropriate at this stage of the litigation. 24