United States District Court, S.D. Florida
ORDER DENYING DEFENDANTS' MOTION TO DISQUALIFY
ATTORNEY BELTRANO AS COUNSEL FOR PLAINTIFFS [DE 23');">23]
WILLIAM MATTHEWMAN, UNITED STATES MAGISTRATE JUDGE
CAUSE is before the Court upon Defendants, Congress
Plaza, LLC, and Congress 1010, LLC's
("Defendants") Motion to Disqualify Attorney
Beltrano as Counsel for Plaintiffs ("Motion") [DE
23');">23]. Beltrano & Associates ("B&A"), counsel
for Plaintiff, filed a Response in opposition [DE 25');">25');">25');">25');">25');">25');">25');">25], with
several exhibits attached. This matter was referred to the
undersigned by United States District Judge Kenneth A. Marra
for appropriate disposition. See DE 24. The
undersigned held an evidentiary hearing on July 11, 2017, and
August 1, 2017. The Court also heard additional argument on
the Motion on December 12, 2017. This matter is now ripe for
review. For the reasons set forth below, the undersigned
denies Defendants' Motion.
Plaintiffs 42-page Second Amended Complaint, which was filed
on August 14, 2017, after the parties completed their
briefing on Defendants' Motion and after the completion
of the evidentiary hearing, Plaintiff alleges breach of
contract against Congress Plaza, LLC and Thomas R. Farese
(Count 1); foreclosure of mortgage against Congress Plaza,
LLC and S&J Property Holdings, LLC (Count 2); breach of
fiduciary duty against David M. Goldstein, individually, and
David M. Goldstein, P.A. (Count 3); fraud and deceit against
Congress, Plaza, LLC, Congress 1010, LLC, David Goldstein,
P.A., David M. Goldstein, individually, Barry G. Roderman,
individually, and Suzanne Farese, individually (Count 4); and
civil conspiracy to commit fraud against Barry G. Roderman,
David M. Goldstein, and Suzanne Farese (Count 5). [Second
Amended Compl., DE 65].
Court will provide a brief summary of underlying facts of the
dispute, as alleged by Plaintiff. Plaintiff was the sole
member of Congress Management, LLC, and served as its
Managing Member from 2010 until the dissolution of the
company on March 10, 2015. [DE 65 at ¶12]. On or about
January 19, 2010, Congress Shopping Center, Ltd., executed a
promissory note in favor of Congress Management, LLC, in the
amount of $2.33 million, and the debt was secured by a
mortgage against six parcels of land located in Palm Beach
County, Florida ("the Jeff George Mortgage").
Id. at ¶15. This mortgage was recorded on
January 22, 2010. Id. In the mid-2000s two state
court lawsuits were filed between Harald Dude, Plaintiffs
brother, Thomas R. Farese, and The Palm Steak House, LLC.
Id. at ¶16. A settlement agreement (the
"Settlement Agreement") was entered into on May 28,
2010. Id. at ¶17. The agreement was that
Congress Plaza would purchase the Jeff George Mortgage for
$2.48 million. Id. at ¶18. A portion of the
$2.48 million was a $50, 000 promissory note issued to Aldo
Beltrano, Plaintiffs counsel in this case, to be paid at a
rate of $1, 000 per month for fees owed to him by Harald
Dude, Congress Management, and the Dude Family. Id.
Management later assigned the Jeff George Mortgage to
Congress Plaza, but the assignment was never recorded. [DE 65
at ¶20]. On or about July 21, 2010, Congress Shopping
Center executed a deed conveying the six parcels to Congress
Plaza in fee absolute. Id. at ¶21. This deed
was recorded on October 5, 2010. Id. On or about
September 20, 2012, Congress Plaza delivered to Congress
Management a check in the amount of $400, 000 signed by Barry
G. Roderman for reduction payment/modification of the note.
Id. at ¶23');">23. Congress Management refused to sign
the requested modification, but accepted the $400, 000
strictly as payment towards the principle of the debt.
Id. at ¶¶26-27. Congress Plaza began to
make partial payments following the $400, 000 payment.
Id. at ¶28.
about October 22, 2012, Barry G. Roderman, one of Congress
Plaza's managing members and its current counsel, formed
Congress 1010, LLC. Id. at ¶31. On or about
October 29, 2012, Congress Plaza executed a deed conveying
three of the six parcels to S&J Property Holdings, LLC.
Id. at ¶35. On or about December 5, 2012,
Roderman executed a Satisfaction of the Jeff George Mortgage
on behalf of Congress 1010. Id. at ¶33. On or
about December 6, 2012, Congress 1010 recorded a satisfaction
of the Jeff George Mortgage as to all six parcels.
Id. at ¶36. On January 10, 2014, Roderman
executed an assignment of the Jeff George Mortgage from
Congress Plaza to Congress 1010. Id. The assignment
was recorded on January 14, 2014. Id. at ¶38.
In the fall of 2014, Congress Plaza stopped making payments
toward the note and mortgage after being served with a Notice
of Levy by the IRS. Id. at ¶57. Defendants
still owe Plaintiff $2, 23');">239, 458 in principal and interest.
Id. at ¶62.
are several pending motions to dismiss the Second Amended
Complaint. See DEs 66, 76, 84.
additional relevant procedural history is as follows. The
Notice of Removal [DE 1] in this case was filed on April 25');">25');">25');">25');">25');">25');">25');">25,
2017. On July 17, 2017, Defendants filed a Notice of Filing
Congress Plaza and Congress 1010's Answer and Affirmative
Defenses and Counterclaim and Third Party Claims [DE 33]. The
Counterclaim [DE 33-2] attached to the notice had been filed
in the Fifteenth Judicial Circuit and in for Palm Beach
County, Florida on January 10, 2017. On July 20, 2017,
Plaintiff filed a Notice of Filing Dietmar Dude, Harald Dude,
Aldo Beltrano, and Congress Management, LLC's Motion to
Dismiss Counterclaim and Third Party Claims [DE 34]. The
motion to dismiss [DE 34-1] attached to the notice had been
filed in the Fifteenth Judicial Circuit and in for Palm Beach
County, Florida on January 23');">23, 2017. The Court instructed the
parties at the December 12, 2017, to re-file in federal court
any motions or pleadings that remain pending in the state
court action and have not been rendered moot by subsequent
are moving for an order disqualifying Aldo Beltrano, Esq.,
and his firm, B&A, as counsel for Plaintiff Dietmar Dude,
and Cross and Counter Defendants (and necessary parties),
Harald Dude (Plaintiff Dietmar Dude is, according to
Defendants, the alter ego of Harald Dude), the IRS, Aldo
Beltrano, and Congress Management Inc. [DE 23');">23, p. 1');">p. 1].
According to Defendants, on September 28, 2016, Plaintiff
filed a complaint alleging breach of contract and rescission.
Id. On November 22, 2016, Plaintiff moved to file an
amended complaint while settlement negotiations had been
underway through Beltrano and with Harald Dude. Id.
According to Defendants, "the substantial portions of
the breach of contract and recession [sic] claims alleged
against Defendants stem from transactions to which Aldo
Beltrano was a party and received a $50, 000, 000 payment as
part of the transaction in his individual capacity."
Id. at p. 2.
argue that Beltrano made an "erroneous and misleading
statement" in his pleadings when he said that an IRS
levy on Congress Plaza was no longer effective or active. [DE
23');">23, p. 2]. Defendants explain that they recently spoke with
an IRS collection agent who said that the levy is still in
place. Id. Defendants also assert that Beltrano made
an implicit promise that no further lawsuits would be filed
by Harald Dude, Harald Dude's alter ego and shell
companies, or Dietmar Dude in exchange for payment of $50,
000.00 to Beltrano; however, Harald Dude and Beltrano
breached that promise. Id. at p. 3. Next, Defendants
contend that Beltrano was and still is the escrow agent for
the transaction upon which the Amended Complaint is based.
Id. Therefore, Defendants argue that Beltrano has a
fiduciary duty to Plaintiff, the alter egos of Harald Dude,
and Defendant Congress Plaza, LLC. Id.
argue that Beltrano will be a key witness at trial and is a
cross-defendant in this case for the above reasons and
because he participated in the Settlement Agreement and the
underlying agreements and multiple payments made to Harald
Dude, Congress Management, and Denise Dude. [DE 23');">23, at p. 4].
Defendants state that "Beltrano's actions and
conduct will form the basis for the forthcoming counter
claims in this action against him for civil conspiracy and
other appropriate remedy." Id. Additionally,
Defendants claim that Beltrano was provided with confidential
information "during the preparation for and at the
transaction...closing as related to the $50, 000.00 payment
to Beltrano." Id. Defendants are concerned that
Beltrano told Plaintiff about all of the confidential
conversations he had with Congress Plaza. Id. at p.
6. Defendants explain that that "Congress Plaza would
have had its own counsel present at the transaction had it
not believed that Beltrano would be working in the interests
of both Dude and Congress Plaza after requesting and
accepting the $50, 000.00." Id. Defendants feel
that Congress Plaza is a former client of Beltrano and that
Beltrano should have obtained its consent before representing
Plaintiff in this case. Id. at pp. 7-8.
B&A contends that Beltrano never represented Congress
Plaza or its agents in the preparation and execution of the
Settlement Agreement, but rather the $50, 000.00 note was
issued to Beltrano at the request of his client, Congress
Management, for attorney's fees owed to him by Congress
Management, Harald Dude, and the Dude family. [DE 25');">25');">25');">25');">25');">25');">25');">25, p. 1');">p. 1].
In other words, the parties made the $50, 000 in
attorney's fees part of the purchase price for the Jeff
George Note and Mortgage from Congress Management.
Id. at pp. 1');">p. 1-3. B&A argues that Defendants'
allegations that Beltrano was paid $50, 000 for his
representation of Congress Plaza in preparing and executing
the Settlement Agreement are patently false as shown by the
wording of the Settlement Agreement itself. Id. at
regard to the IRS levy, B&A contends that "[a] 11
statements and representations made by the undersigned
counsel in reference to the IRS levy have been and continue
to reflect undersigned counsel's best knowledge."
[DE 25');">25');">25');">25');">25');">25');">25');">25, p. 4]. Next, B&A argues that the Settlement
Agreement did not contemplate any promise to Congress Plaza
that no further lawsuits would be filed by Harald or Dietmar
Dude in exchange for payment of $50, 000 to Beltrano.
Id. at p. 5. Rather, B&A asserts that the