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Kylin Network (Beijing) Movie & Culture Media Co. LTD v. Fidlow

United States District Court, E.D. Virginia, Richmond Division

March 6, 2017

KYLIN NETWORK BEIJING MOVIE & CULTURE MEDIA CO. LTD, Plaintiff,
v.
BENNETT J. FIDLOW et at., Defendants.

          MEMORANDUM OPINION (GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS)

          Henry E. Hudson United States District Judge.

         THIS MATTER is before the Court on Defendants Bennett J. Fidlow and Schroder Fidlow, PLC's (collectively "Defendants") Motion to Dismiss, filed on January 16, 2017. (ECF No. 4.) For the reasons that follow, the Motion to Dismiss will be granted in part and denied in part.

         I. BACKGROUND

         As required by Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court assumes Plaintiffs well-pleaded allegations to be true and views all facts in the light most favorable to it. T.G. Slater & Son v. Donald P. & Patricia A. Brennan, LLC, 385 F.3d 836, 841 (4th Cir. 2004) (citing Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). Viewed through this lens, the facts are as follows.

         The relationship between Kylin, a Chinese company, and Defendants began with Kylin's decision in 2014 to produce a movie about the life of martial arts legend Bruce Lee, entitled "Birth of the Dragon." (Compl. ¶ 4, ECF No. I.)[1] Kylin partnered with another company, Bliss Media Limited ("Bliss"), to obtain the movie rights. (Id.) Bliss's attorney, Fidlow, drafted the partnership agreement. (Id. ¶ 7.) At the time, Fidlow was a member of the defendant law firm, Schroder Fidlow, PLC. (Id. ¶ 3.)

         After Kylin partnered with Bliss, Fidlow represented both entities in their attempt to obtain the rights to "Birth of the Dragon." (Id. ¶ 8.) Kylin entered into a legal services agreement with Fidlow on June 25, 2014. (Id; Compl. Ex. B, ECF No. 1-2.) Despite Kylin and Bliss working together to obtain the movie rights, each had its own individual and competing interests. (Compl. ¶ 9.) However, Fidlow never disclosed to Kylin or Bliss that his representation of them created a conflict of interest, and neither Kylin nor Bliss signed a waiver consenting to joint representation. (Id. ¶ 10.)

         In his representation of Kylin and Bliss, Fidlow failed to conduct a diligent and comprehensive review of the chain of title of "Birth of the Dragon." (Id. ¶ 14.) He negotiated on behalf of Kylin and Bliss to purchase the movie rights from QED Pictures, LLC, ("QED Pictures"). (Id. ¶ 12.) But QED Pictures did not own those rights. (Id. ¶ 13.) "Birth of the Dragon" was actually owned by two other entities, QED Holdings, LLC and QED Writing, LLC. (Id.) Despite QED Pictures's lack of ownership in "Birth of the Dragon, " Fidlow facilitated a financing agreement whereby Kylin paid $ 1 million to QED Pictures for the nonexistent movie rights. (Id. ¶¶ 17-18, 20.) Under the impression that it had acquired the rights to "Birth of the Dragon, " Kylin paid an additional $1 million to Bliss pursuant to their partnership agreement. (Id. ¶ 20.)

         According to Kylin, while Fidlow was negotiating with QED Pictures, he "actually knew or, alternatively, had constructive knowledge that QED Pictures did not hold the rights which his clients ostensibly purchased." (Id. ¶ 15.) In support of this assertion, Kylin alleges that Fidlow had access to documents indicating that QED Pictures did not own the movie rights. (Id. ¶¶ 15-16.) Those documents were even referenced in the agreement that he negotiated. (Id. ¶ 15.)

         Fidlow also failed to provide Kylin with a Chinese translation of the agreement. (Id. ¶ 19.) Nor did he fully explain the terms of the agreement to Kylin's principals. (Id.)

         In February, 2015, Kylin discovered that it had not, in actuality, acquired the rights to "Birth of the Dragon." (Id. ¶ 23.) Without the assistance of Fidlow or Bliss, Kylin then entered into an agreement with QED Holdings, LLC to actually obtain the movie rights. (Id. ¶24.)

         On April 2, 2015, without Kylin's knowledge or authorization, Fidlow filed UCC-1 financing statements with the California and Delaware Secretaries of State. (Id. ¶ 26; Compl. Ex. D, ECF No. 1-4.) These financing statements indicated that Kylin and Bliss each had a security interest in the movie rights. (Compl. Ex. D.) However, because Kylin and Bliss's original joint attempt to purchase the rights from QED Pictures was ineffective, Bliss never actually had any rights-including a security interest-in "Birth of the Dragon." (Compl. ¶ 27.)

         Kylin alleges that Fidlow's filing of the financing statements clouded the title of "Birth of the Dragon, " the rights to which Kylin had independently acquired from QED Holdings, LLC. (Id. ¶ 32.) Kylin further asserts that in filing the financing statements, Fidlow placed the interests of one client, Bliss, over those of another, Kylin. (Id. ¶ 34.)

         Once Kylin learned that the false financing statements had been filed, it demanded that Fidlow withdraw them. (Id. ¶ 31.) Fidlow refused. (Id.) Kylin hired separate counsel who continued to demand that Fidlow withdraw the financing statements and accused him of fraud, malpractice, breach of contract, and breach of fiduciary duty. (Compl. Exs. E, F.) In response, Fidlow threatened to file a bar complaint against Kylin's new attorney. (Id.)

         As a result of Fidlow's conduct, Kylin filed a three-count Complaint alleging legal malpractice, ...


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