George C. Papageorge v. Jonathan Zucker & Patricia Daus

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DISTRICT OF COLUMBIA COURT OF APPEALS

No. 16-CV-226

GEORGE C. PAPAGEORGE, APPELLANT,

V.

JONATHAN ZUCKER & PATRICIA DAUS, APPELLEES.

Appeal from the Superior Court of the District of Columbia (CAB-462-15)

(Hon. Herbert B. Dixon, Jr., Trial Judge)

(Argued April 14, 2017 Decided September 21, 2017)

Emily Whelden, with whom Patrick C. Horrell was on the brief, for appellant.

Matthew D. Berkowitz, with whom Mariana D. Bravo and Sarah W. Conkright were on the brief, for appellee.

Before BECKWITH and EASTERLY, Associate Judges, and REID, Senior Judge.

BECKWITH, Associate Judge: The appellant, George Papageorge, had a

contract with his acquaintance, Matt Banks, that entitled Mr. Papageorge to most

of the proceeds of a wrongful eviction claim Mr. Banks was pursuing. When that

claim was settled, Mr. Papageorge informed Mr. Banks‘s lawyers, appellees  2

Jonathan Zucker and Patricia Daus, of his purported right to the proceeds, and then

sued them for negligence and conversion when they disbursed the proceeds to their

client, Mr. Banks, instead of to Mr. Papageorge. The trial court dismissed Mr.

Papageorge‘s claims, and we now affirm that judgment.

I.

Mr. Banks was renting a room in a single-family house in the District of

Columbia when Eastern Savings Bank (ESB) foreclosed on the property. Mr.

Banks assigned his rights under the Tenant Opportunity to Purchase Act (TOPA),

D.C. Code §§ 42–3404.01 et seq. (2012 Repl.), to Mr. Papageorge, but continued

living in the house for several years until ESB evicted him unlawfully. A week

after this court held for Mr. Banks in the appeal from the eviction proceeding and

reversed the judgment for possession that the trial court had entered in ESB‘s

favor, see Banks v. E. Sav. Bank, 8 A.3d 1239 (D.C. 2010), Mr. Banks and his

cotenant entered into an agreement with Mr. Papageorge. That agreement stated

that the two tenants planned to sue ESB for unlawful eviction and that Mr.

Papageorge, who had financed ―extensive litigation to enforce, maintain and

protect‖ the tenants‘ rights since 2001, would receive the lion‘s share of the

proceeds from the wrongful eviction claim. Specifically, it provided that ―[a]ny

and all monies obtained from a suit for wrongful eviction and/or the  3

relinquishment of tenant rights and/or any other sources shall be distributed‖ in the

following manner: Mr. Papageorge would be reimbursed ―for all legal costs

expended since 2001 involving ESB and the subject property‖ and would also

receive 75 percent of the remaining sum, while Mr. Banks and his cotenant would

each receive 12.5 percent. The agreement stated that ―[i]t is further understood and

agreed that Papageorge has financed all rent monies and will be reimbursed at the

rate of 100%.‖

Mr. Banks hired Mr. Zucker and Ms. Daus to represent him in the wrongful

eviction case against ESB. Before any suit was filed, Mr. Banks signed a

settlement with ESB that gave Mr. Banks $100,000 in exchange for a release of the

wrongful eviction and other claims. Mr. Papageorge learned of the settlement two

days later, and his lawyer told Mr. Zucker that Mr. Papageorge had a claim to the

settlement money. The same day, Mr. Papageorge showed Ms. Daus a copy of his

agreement with Mr. Banks and his cotenant along with documentation of

$88,740.86 in costs and fees he claimed he was owed. Despite Mr. Papageorge‘s

repeated demands, Mr. Zucker and Ms. Daus refused to pay him out of the

settlement money, and instead disbursed the money to their client, Mr. Banks. Mr.

Papageorge asked the lawyers to stop payment on a check they had already given

Mr. Banks, warning that the money would soon be gone because Mr. Banks would

spend it, but they rebuffed him.  4

Mr. Papageorge subsequently brought a breach of contract suit against Mr.

Banks for the money. The trial court granted summary judgment against Mr.

Papageorge, but this court reversed. See Papageorge v. Banks, 81 A.3d 311, 313

(D.C. 2013). After our remand, Mr. Papageorge and Mr. Banks reached a

settlement under which Mr. Banks gave Mr. Papageorge $20,000 in exchange for

Mr. Papageorge‘s dismissal of the lawsuit with prejudice and release of his claims

against Mr. Banks. The following month, Mr. Papageorge sued Mr. Banks‘s

attorneys for conversion and, in the alternative, negligence. The trial court granted

the attorneys‘ motion to dismiss under Rule 12 (b)(6).1 Mr. Papageorge appeals

from this dismissal.

II.

Because this is an appeal from a motion to dismiss, we take all factual

allegations in the complaint as true. Solers, Inc. v. Doe, 977 A.2d 941, 947-48

(D.C. 2009). Our review of legal questions is de novo. Id.

A. Negligence

To prevail on a claim of negligence, a plaintiff must show that the defendant

1 The court also denied as moot Mr. Papageorge‘s motion for leave to amend his complaint, while nonetheless indicating that it considered the amended complaint in deciding the motion to dismiss.  5

owed him a duty of care, that the defendant breached the duty, and that the plaintiff

suffered damages as a result. Hedgepeth v. Whitman Walker Clinic, 22 A.3d 789,

806 (D.C. 2011). It is the first element that is at issue here. Mr. Papageorge

acknowledges that, in general, attorneys owe a duty of care only to their clients.

See Scott v. Burgin, 97 A.3d 564, 566 (D.C. 2014); but see Needham v. Hamilton,

459 A.2d 1060, 1062 (D.C. 1983) (―The rule requiring privity is not, however,

without exception.‖). Citing In re Bailey, 883 A.2d 106, 116 (D.C. 2005),

however, he contends that an attorney also owes a duty of care to a nonclient third

party who presents the attorney with a ―just claim‖ against property in the

attorney‘s possession.

The ―just claim‖ concept stems from Rule 1.15 of the District of Columbia

Rules of Professional Conduct, which governs the ethical obligations of a lawyer

who is in possession of property in which others claim an interest. In particular,

the rule requires a lawyer to ―promptly deliver to the client or third person any

funds or other property that the client or third person is entitled to receive.‖ Rule

1.15 (c). Comment 8 on Rule 1.15 states:

Third parties, such as a client‘s creditors, may have just claims against funds or other property in a lawyer‘s custody. A lawyer may have a duty under applicable law to protect such third-party claims against wrongful interference by the client, and accordingly may refuse to surrender the property to the client.  6

In Bailey, we applied this concept to hold that an attorney violated Rule 1.15 when

he failed to use settlement money to pay a doctor he had hired to treat his client.

883 A.2d at 116–21. The attorney had contracted ―to withhold such sums from

any settlement(s), judgment(s) or verdicts due said patient/client as may be

necessary to adequately protect said doctor‖ but had not done so. Id. at 120. In

that case, the ―applicable law‖ under which the lawyer‘s duty arose was the law of

contractual obligations.

In contrast, Mr. Papageorge identifies no source of ―applicable law‖ under

which Mr. Zucker and Ms. Daus owed him a duty of care other than Rule 1.15

itself and the case law interpreting that rule. Yet as Mr. Papageorge concedes, the

Rules of Professional Conduct do not give rise to a private cause of action for their

violation. The section of the Rules describing their scope states:

Nothing in these Rules, the Comments associated with them, or this Scope section is intended to enlarge or restrict existing law regarding the liability of lawyers to others . . . . Moreover, nothing in the Rules or associated Comments or this Scope section is intended to confer rights on an adversary of a lawyer to enforce the Rules in a proceeding other than a disciplinary proceeding.

While the ethical rules governing lawyers may be relevant to establishing the

standard of care in malpractice actions, see Waldman v. Levine, 544 A.2d 683,

690-91 (D.C. 1988), they are not the source of a duty of care enforceable in tort.

See, e.g., Ayyildiz v. Kidd, 266 S.E.2d 108, 112 (Va. 1980); Bob Godfrey Pontiac,  7

Inc. v. Roloff, 630 P.2d 840, 848 (Or. 1981). Lacking a basis to conclude that Mr.

Zucker and Ms. Daus owed Mr. Papageorge such a duty of care here, we affirm the

dismissal of his negligence claim.

B. Conversion

The tort of conversion consists of ―an unlawful exercise of ownership,

dominion, and control over the personalty of another in denial or repudiation of his

right to such property.‖ Washington Gas Light Co. v. Pub. Serv. Comm’n, 61 A.3d

662, 675 (D.C. 2013) (quoting Baltimore v. District of Columbia, 10 A.3d 1141,

1155 (D.C. 2011)). The personal property at issue is generally chattel, but money

can also be the subject of a conversion claim ―if the plaintiff has the right to a

specific identifiable fund of money.‖ McNamara v. Picken, 950 F. Supp. 2d 193,

194 (D.D.C. 2013).

Mr. Papageorge primarily argues that he had a valid contractual lien that Mr.

Zucker and Ms. Daus refused to accept, and that the attorneys‘ wrongful failure to

ratify the lien entitled him to an equitable lien. ―Broadly speaking, equity may

impose a lien to effectuate some underlying agreement between debtor and creditor

or in other circumstances where justice requires.‖ Wolf v. Sherman, 682 A.2d 194,

197 (D.C. 1996). But here, regardless of the contractual rights that Mr.

Papageorge‘s agreement with Mr. Banks and his cotenant may have given him  8

against those tenants, Mr. Zucker and Ms. Daus were not parties to that agreement

and had no legal duty to ratify it. Cf. Travelers Ins. Co. v. Haden, 418 A.2d 1078,

1084 (D.C. 1980) (―In general, an attorney may be liable for failure to protect a

lien imposed on his client‘s settlement proceeds, where he expressly agrees with

the client and the creditor to do so.‖). As a general matter, there is no legal duty to

make or join a contract. See Emerine v. Yancey, 680 A.2d 1380, 1383 (D.C. 1996)

(―‗Contract‘ imports a voluntary agreement to make an exchange.‖). And while

Mr. Papageorge again points to the ―just cause‖ theory to establish that the

attorneys owed him this duty, as with the negligence claim above, this concept is

drawn from the law of attorney discipline and depends on a duty created by some

other ―applicable law.‖ Mr. Papageorge therefore cannot establish that he is

entitled to an equitable lien.

Mr. Papageorge advances one other basis for his conversion claim: he

asserts that he had a property right in the settlement money in the court registry,

and that Mr. Zucker and Ms. Daus, though on notice of that right, unlawfully

interfered with that right by signing off on the disbursement forms. In

circumstances like those here, where Mr. Banks‘s attorneys came into possession

of the property lawfully and where independent indications of conversion are

lacking, ―the settled rule‖ is that ―a demand for [the property‘s] return is necessary

to render [their] possession unlawful and to show its adverse nature.‖ Shea v.  9

Fridley, 123 A.2d 358, 361 (D.C. 1956).

Mr. Papageorge made such a demand for the settlement money and it was

rejected, and he thus has a viable conversion claim against the attorneys if the

money was indeed his property. But it is in that regard that his conversion claim

falls short. While contractual rights are in personam rights that bind only the

parties to the contract, property rights are in rem rights that are ―good and

enforceable against all the world.‖ Harlan Fiske Stone, Law and its Administration

57 (1915); see also Thomas W. Merrill & Henry E. Smith, The Property/Contract

Interface, 101 Colum. L. Rev. 773, 776–77 (2001). Here, Mr. Papageorge signed a

contract with Mr. Banks and his cotenant that gave him a right to the proceeds

from the tenants‘ wrongful eviction claims, but this right was a contractual right

enforceable against Mr. Banks and the cotenant, not a property right enforceable

against whomever might be in possession of those proceeds. As Mr. Papageorge‘s

only entitlement to the settlement money stemmed from the as-yet-unperformed

contract with Mr. Banks and his cotenant, he did not have any property rights in

the settlement money when he made his demand, and his conversion claim

therefore fails.

III.

Finding no error, we affirm the trial court‘s dismissal of Mr. Papageorge‘s  10

negligence and conversion claims.2

So ordered.

2 In light of our disposition, we need not address appellees‘ argument— raised for the first time on appeal—that Mr. Papageorge‘s claims are barred by res judicata. See Calomiris v. Calomiris, 3 A.3d 1186, 1190 (D.C. 2010).