July 21, 2008
In an opinion issued today, the New Jersey Appellate Division held that breach of contract and fraud claims against law firms and individual lawyers were improperly dismissed based on a motion judge's mistaken reliance on earlier precedent. Plaintiffs had also sued the lawyers on a theory of legal malpractice although they had never been represented by the lawyers-defendants. Plaintiffs were minority shareholders who had sued the corporation's counsel. The court held:
Plaintiffs cite no New Jersey authority for the proposition that defendants owed a separate, independent fiduciary duty to them as individual minority shareholders, and we have found no such authority. Therefore, plaintiffs' individual claims againdt defendants for breach of any fiduciary duty are also dismissed with prejudice.
The court reinstated the complaint "limiting the claims made for legal malpractice and breach of fiduciary duty to derivative shareholder causes of action." The court "express[es] no opinion about the relative merits" of the claims. (Mike Frisch)
False Expenses Charges
The Illinois ARDC has filed a complaint alleging that an attorney, a salaried associate in a law firm who handled primarily defense of medical malpractice cases, falsely sought reimbursement of expenses on 52 occasions in an amount totalling over $5,700. The complaint notes that the lawyer was discharged from the firm and had made restitution. (Mike Frisch)
July 20, 2008
An attorney who had been indefinitely suspended in Kansas in 1999 was permitted to practice in Kansas federal district court under the supervision of another attorney. He was charged with ethical misconduct in connection with two cases in federal court. The Kansas Supreme Court affirmed findings of misconduct and ordered disbarment. The court rejected the assertion that it lacked subject matter jurisdiction to adjudicate the charges:
The question as to whether the hearing panel--or, by extension, this court--has jurisdiction to hear a case is a question of law over which this court has unlimited review. See Foster v. Kansas Dept. of Revenue, 281 Kan. 368, 369, 130 P.3d 560 (2006). The hearing panel's final hearing report indicated that there was no objection to the panel's jurisdiction to hear the case. The respondent takes issue with this statement on appeal, claiming he did object to the panel's subject matter jurisdiction when he argued that all of the conduct at issue took place in federal court. Whatever the resolution of this dispute, we may consider the respondent's jurisdictional challenge because the issue of subject matter jurisdiction may be raised at any time. See Vorhees v. Baltazar, 283 Kan. 389, 397, 153 P.3d 1227 (2007).
That said, this court rejected the exact argument raised by the respondent in this case in In re Arnold, 274 Kan. 761, 771-72, 56 P.3d 259 (2002), where we explained:
"KRPC 8.5 states: 'A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction although engaged in practice elsewhere.'
"There is no conflict between state and federal jurisdiction. Arnold's actions were not proper in federal court just as they were not proper in state court. We retain the power to discipline attorneys for conduct committed outside of and beyond our Kansas courts."
The respondent argues that there is a potential conflict in this case because the disciplinary panel for the United States District Court for the District of Kansas may impose a different discipline from that imposed in this jurisdiction. This argument is without merit. The comments to KRPC 8.5 state that "[i]f the rules of professional conduct [of Kansas and another jurisdiction] differ, principles of conflict of laws may apply." KRPC 8.5, comment (2007 Kan. Ct. R. Annot. 579). The respondent has not demonstrated that the federal court's rules of professional conduct differ from those in Kansas or that his conduct would not have been subject to discipline in the federal district court. In fact, the federal disciplinary panel has stayed its proceedings against the respondent pending the outcome of these disciplinary proceedings.
Because the respondent is an attorney licensed to practice in this state, we conclude that the hearing panel had subject matter jurisdiction to consider the disciplinary action against him pursuant to KRPC 8.5.
A woman alleged injuries after she was thrown from a horse when part of the ceiling of a riding stable collapsed. Through counsel, suit was filed against the stable, its owner and a number of persons and entities that were believed to be involved in the construction of the stable. When it turned out that one of the defendants was not so involved, the suit was dismissed as to that defendant. Under those circumstances, the New York Appellate Division for the Second Judicial Department held that sanctions against the plaintiff were improperly imposed by the trial court:
The Supreme Court incorrectly found that sanctions were warranted. The court did not set forth in a written decision the conduct which was the basis of the sanction (see 22 NYCRR 130-1.2). In any event, under the circumstances of this case, the information available to the plaintiff's counsel concerning the contractor involved in the construction of the riding stable was sufficiently ambiguous to justify the plaintiff's reluctance to discontinue the action against the defendant (see Watson v City of New York, 178 AD2d 126).
In addition, the plaintiff offered to discontinue the action against the defendant once a deposition of the owner of the riding stable revealed that the defendant was not a contractor in the construction of the stable. Approximately five months passed from when the defendant served an answer until a stipulation of discontinuance was sent to his counsel. Under these circumstances, the plaintiff's conduct did not rise to the level of "harassment" or "prolonging the resolution of the litigation" so as to constitute frivolous conduct.
Accordingly, the Supreme Court erred in granting that branch of the defendant's motion which was to impose sanctions against the plaintiff and to recover an award of an attorney's fee from the plaintiff pursuant to 22 NYCRR 130-1.1.