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Dude v. Congress Plaza, LLC

United States District Court, S.D. Florida

December 15, 2017

DIETMAR DUDE, Plaintiff,
CONGRESS PLAZA, LLC, a Florida Limited Liability Company, CONGRESS 1010 LLC, a Florida Limited Liability Company, et al., Defendants.



         THIS 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.[1]


         In 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].

         The 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")[2] 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.

         Congress 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.

         On or 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.

         There are several pending motions to dismiss the Second Amended Complaint. See DEs 66, 76, 84.

         The 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 events.


         Defendants 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.

         Defendants 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.

         Defendants 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.


         First, 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 p. 3.

         With 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 ...

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