Robb v. Robb Jr.

Background

Kathryn Robb sued her brother, George Robb Jr., Glen Feinberg, Coffey Modica, LLP, and Fullerton Beck, LLP. The lawsuit arose from an earlier New York state-court case brought under New York’s Child Victims Act. That case ended in a written settlement under which George agreed to pay Kathryn $3.75 million in three installments. The settlement was incorporated into a state-court judgment. George did not make the first payment, and Kathryn alleged that he had also concealed assets and never intended to comply with the settlement. She asserted claims including fraud, fraudulent inducement, unjust enrichment, tortious interference, and emotional-distress claims against various defendants, as well as a breach-of-contract claim against George.

George removed the case to federal court based on diversity jurisdiction. Kathryn moved to remand it to New York state court. The lawyer defendants opposed remand and argued that they had been fraudulently joined—that is, added only to prevent removal because Kathryn could not state a viable claim against them. They also moved to dismiss the claims against them.

Rulings on the Lawyer Defendants and Remand

The court concluded that the lawyer defendants were fraudulently joined. It held that Kathryn’s first through fifth causes of action, and the portion of her sixth cause of action that challenged the settlement’s validity, were impermissible collateral attacks on the state-court judgment. Under New York law, the court said, Kathryn’s remedy for a judgment allegedly obtained through fraud was to ask the New York Supreme Court that entered the judgment to vacate it under New York Civil Practice Law and Rules section 5015. She could not pursue a separate damages action in this federal case to invalidate the judgment.

The court separately held that the remaining tortious-interference and unjust-enrichment claims against the lawyer defendants failed to state a claim under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not allege enough facts to support a legally viable claim. The court found no adequate factual allegations showing that Fullerton Beck had involvement in the settlement or later events, that Feinberg or Coffey Modica caused George’s nonpayment, or that the lawyers were not entitled to their fees. It also dismissed the negligent and intentional infliction of emotional distress claims against the lawyer defendants, finding that the lawyers owed duties to George rather than Kathryn and that the alleged conduct was not sufficiently extreme or outrageous.

Because the lawyer defendants were fraudulently joined, the court disregarded their citizenship for removal purposes. It determined that Kathryn and George were completely diverse and denied Kathryn’s motion to remand. It also denied her request for attorneys’ fees related to remand. The court granted the motion by Glen Feinberg, Coffey Modica, LLP, and Fullerton Beck, LLP to dismiss the claims asserted against them.

George’s Motion and Bankruptcy Stay

George separately moved to dismiss the claims against him. The court had prepared a decision granting that motion in part and denying it in part, including denying dismissal of Kathryn’s breach-of-contract claim. Before that decision was docketed, however, the court learned that George had filed a voluntary bankruptcy petition. The resulting automatic stay under 11 U.S.C. section 362 prevented the court from deciding the motion against him, so the court recalled the portion of the earlier decision addressing George’s motion.

The court therefore stayed all further proceedings against George, removed his motion to dismiss from the list of open motions, and placed it on the suspense calendar pending resolution of the bankruptcy case. George’s counsel was directed to report to the court every 90 days on the bankruptcy’s progress. The opinion did not decide George’s motion to dismiss in the issued order.