Lannan Foundation v. Gingold
Civil Action No. 2013-1090
| D.D.C. | Oct 25, 2017Background
- Between 1998 and 2005 the Lannan Foundation made seven refundable grants totaling $6,425,000 to the Blackfeet Reservation Development Fund (BRDF) to finance the Cobell litigation; each grant contained reversion language requiring repayment “one-half of any attorney’s fees and/or costs and/or expenses … recovered from the United States, until the grant is repaid in full.”
- Dennis M. Gingold, lead plaintiffs’ counsel in Cobell, signed each Grant Agreement under the heading “Plaintiffs’ Counsel” and the named plaintiffs executed an assignment to BRDF of “all rights to any attorney’s fees and/or costs and/or expenses of the Litigation.”
- Interim fee awards in 2006 yielded a partial payment to the Foundation; the Cobell settlement later allocated up to $99 million in fees, $85.4 million of which was allocated to class counsel (including Gingold) and distributed in late 2012.
- The Foundation alleges Gingold refused to repay the outstanding grant balance from the fee award; the Foundation (after receiving an assignment from BRDF) sued Gingold for breach of contract, breach of contract as assignee, tortious interference, breach of fiduciary duty, aiding and abetting, unjust enrichment, and sought declaratory relief.
- Gingold moved to dismiss for lack of standing, statute of limitations, and failure to state claims; the Foundation moved to supplement to change the assignment choice-of-law to D.C.; the court denied dismissal in large part, dismissed the declaratory count as duplicative, and granted leave to supplement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing (prudential & Article III) | Foundation contends it holds rights assigned by plaintiffs and BRDF and suffered concrete loss from unpaid fee proceeds | Gingold argues assignments were repudiated by settlement and ethical rules make claimed rights unenforceable, so no standing | Court: Prudential and Article III standing exist; assignment language (“all rights”) and Fee Agreement/settlement context permit suit; ethical fee-splitting concerns do not defeat injury-in-fact |
| Contract formation / Gingold’s signature | Foundation: Grant language and Gingold’s signature create enforceable obligations to repay from recovered fees | Gingold: “acknowledges” does not create obligation; he signed only as agent; no consideration | Court: Plausible contract claim survives; meaning of “acknowledges” and agency/consideration require extrinsic evidence; dismissal denied |
| Statute of limitations | Foundation: each failure to repay when fees were paid is a separate breach; suit filed within three years of final fee distribution | Gingold: limitations ran from 2006 interim award or last partial payment | Court: Installment-breach rule applies; alleged post-settlement nonpayment falls within limitations; dismissal denied |
| Assignability of fiduciary-duty claims / futility of supplement | Foundation: D.C. law favors free assignability; assignment to BRDF then to Foundation valid for pecuniary claims | Gingold: public policy bars wholesale assignment of fiduciary or malpractice-type claims, especially to parties with conflicting interests | Court: D.C. presumption favoring assignability controls; Edens (distinguishable) concerns (collusion/inconsistent positions) do not apply; leave to supplement granted; assigned breach-of-fiduciary-duty claim not futile |
Key Cases Cited
- Lexmark Int’l v. Static Control Components, 134 S. Ct. 1377 (2014) (prudential standing and zone-of-interests framework)
- Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard and legal conclusions)
- Antal’s Rest., Inc. v. Lumbermen’s Mut. Cas. Co., 680 A.2d 1386 (D.C. 1996) (D.C. policy favoring free assignability of claims)
- Edens Techs., LLC v. Kile Goekjian Reed & McManus, 675 F. Supp. 2d 75 (D.D.C. 2009) (distinguishing assignments that risk collusion or inconsistent positions)
- Richter v. Analex Corp., 940 F. Supp. 353 (D.D.C. 1996) (permitting assignment of pecuniary malpractice-type claims to related parties)