Weinberger v. Tucker

510 F.3d 486 (4th Cir. 2017)

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Nature of the Case

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Facts

P is the founder and CEO of ASCII. TechnologyNet, Inc. is a separate corporation, incorporated by Pand others. ASCII retained D in May 1998. D was primarily responsible for representing ASCII. D moved to a new firm in 2000, and Ps went with him as clients. D introduced Ps and Volftsun. D arranged a meeting between P and Volftsun where Volftsun agreed to loan TechNet $250,000 and to become a member of the Board. In conjunction with the January meeting, D sent both parties a waiver letter, stating that with regard to the loan D had only represented Voftsun's interests. TechNet began to decline, and P sought to protect his estate, as well as ASCII, from TechNet creditors. D advised him to create a separate holding company. Ps sought the assistance of another attorney, Paul Rogers. Rogers presented the proposal to the TechNet Board on July 13, 2001. In Summer 2001, Volftsun agreed to loan TechNet an additional $150,000. ASCII was to guarantee both Volftsun's January 2001 and July 2001 loans. All the TechNet and ASCII shareholders were made an offer to exchange their shares for shares in ATH. According to P, all the shareholders but Volftsun complied. P attempted to convince Volftsun to convert his debt into equity but ultimately failed. Volftsun, represented by Venable, sued ASCII, ATH, and TechNet to enforce the guarantee. ASCII filed a motion to disqualify counsel, alleging a conflict of interest. Volftsun filed a brief in opposition to the motion to disqualify. The court held a hearing on the motion and denied the motion to disqualify, based on the January 2001 waiver letter. The court found the guarantee binding on ASCII and entered a final judgment in favor of Volftsun. Ps then filed a suit against D for fraud, breach of fiduciary duty, and professional negligence. D moved to dismiss, based on collateral estoppel. It was denied. The case was transferred, and D filed a renewed motion to dismiss, also based on collateral estoppel. The district court dismissed P's claim based on collateral estoppel and entered a judgment for D. Ps appealed.