Friday, May 7, 2010
The Maryland Court of Special Appeals affirmed the dismissal of a defamation action brought against attorneys who had sued the plaintiff company in a federal court class action alleging mortgage fraud. The court held that the plaintiff did not have standing to sue.
The court concluded that, even if standing were conferred, the case would fail on the merits because of absolute judicial immunity. The fact that a defendant had "regurgitated" the civil complaint on a web page did not abrogate the immunity. (Mike Frisch)
The South Dakota Supreme Court affirmed a trial court's permanent injunction prohibiting the unauthorized practice of law by a graduate of the University of South Dakota School of Law3 who has never been admitted to practice in South Dakota. The enjoined graduate had contacted represented criminal defendants, which resulted in complaints from the public defender. The accused also had attempted to participate in a child abuse case, calling herself an "independent investigator and advocate." She defended her conduct by stating that she had "merely assisted individuals whose attorneys had failed them. "There were also a number of other incidents that the trial court found amounted to the unauthorized practice of law.
The court also rejected a number of challenges to the trial court's order, including that a case involving a defendant named Fast Horse was referred to as the Fast Wolf case. The court found that this error created no valid appeal issue.
The court also found that a provision of the injunction that prohibited the accused from contacting represented defendants without permission of counsel did not violate her rights of association.
A news report from last year in the Rapid City Journal provides additional details about the subject of the injunction. (Mike Frisch)
An attorney who was disbarred in 1989 and reinstated in 2003 offered his resignation in lieu of disbarment and was disbarred by the Massachusetts Supreme Judicial Court. The summary of the matter from the web page of the Board of Bar Overseers tells the tale of a failed second chance:
The respondent was reinstated to the bar on August 25, 2003. Matter of Sites, 19 Mass. Att’y Disc. R. 448 (2003). In November 2007, the respondent represented a buyer at a closing in which the seller was a bank. There was a problem with the title. The respondent issued a check for $48,000 to the bank’s lawyer, and the bank’s lawyer and the respondent agreed that the bank’s lawyer would not negotiate the check and the respondent would hold the funds in escrow until the title problem could be resolved.
The title problem was not resolved until May 2008. In the meantime, the respondent converted the escrow funds to his own use in violation of Mass. R. Prof. C. 1.15(b)(1) and (f)(1)(C) and (f)(1)(E)(ii) and 8.4(c) and (h). In May, the respondent notified the bank’s lawyer that he had successfully recorded all the documents necessary to complete the sale, but when the bank’s lawyer attempted to negotiate the check, it was rejected as stale. The respondent had less than $650 in his IOLTA account when the check was rejected, so he arranged to borrow $50,000. He deposited these loan proceeds to his trust account and, in early June 2008, issued a new check, which was honored.
On October 16, 2008, the respondent admitted to sufficient facts to driving under the influence, and the case was continued without a finding for one year. On December 18, 2008, the respondent was convicted of negligent operation of a motor vehicle, for which he was placed on probation for two years, and operating under the influence, second offense, for which he was sentenced to the house of correction for sixty days, all suspended, and required to enter a fourteen-day inpatient program and abstain from alcohol. On September 30, 2009, the respondent was convicted of operating under the influence, third offense, a felony for which he was sentenced to two and one-half years in the house of correction, and negligent operation of a motor vehicle, for which he was sentenced to four years’ probation. On November 13, 2009, the respondent was found in violation of probation ordered on the second driving-under offense and ordered to serve sixty days. The respondent did not report any of these convictions to bar counsel, thereby violating S. J. C. Rule 4:01, § 12(8).
The respondent’s convictions violated Mass. R. Prof. C. 8.4(b) and (h), and his violation of probation constituted a violation of Mass. R. Prof. C. 3.4(c) and 8.4(d) and (h). The respondent’s failure to report his convictions to bar counsel within ten days of the conviction violated Mass. R. Prof. C. 3.4(c) and 8.4(d) and (h).
The original misconduct had involved conversion of entrusted funds. The case is Matter of Sites, order entered March 18, 2010. (Mike Frisch)
The Indiana Supreme Court has held that a law firm defendant did not waive the statute of limitations defense in a legal malpractice case by failing to raise the issue in response to the plaintiff's motion for partial summary judgment. The underlying case was a medical malpractice action against a VA hospital. The court majority concluded:
...[plaintiff] moved for partial summary judgment, seeking only a decision that the defendants were negligent as a matter of law. If [plaintiff] wanted to move for partial summary judgment on the issue of liability, her motion should have so stated .She did not. She cannot now claim a victory greater than she sought and greater than she placed in issue.
Justice Rucker dissented and would find the defense waived:
The New York Appellate Division for the Second Judicial Department struck from its rolls an attorney deemed automatically disbarred as a result of a felony conviction. The court described the circumstances:
On January 29, 2009, the respondent entered a plea of guilty to the aforesaid [bribery] crime before the Honorable James Hudson. During the plea allocution, the respondent admitted that he had been an elected legislator in Suffolk County from 1990 through 2005. Dating back to the Spring of 1996, the respondent had engaged in conversations with a friend and later business associate, Neil Trabich, with respect to Trabich's interest in securing the right to manage the Northport Veterans Administration Hospital Golf Course. Trabich operated a number of local municipal golf courses and needed to be associated with a local nonprofit organization in order to be deemed eligible to effectively bid on this golf course. To that end, the respondent, acting as a Suffolk County legislator, agreed to introduce Trabich to one such organization, the Northport American Legion. The respondent admitted that he arranged introductory meetings for the two parties in his legislative office. In return for the introduction, the respondent requested from Trabich the sum of $18,000 in the event he succeeded in securing the right to the golf course. Trabich did succeed and paid the respondent the requested sum in three installments. The American Legion was unaware of the arrangement. The respondent failed to disclose the sum received from Trabich on his yearly disclosure statements filed with the Suffolk County Ethics Commission. During the month of October 2002, after a debate in the county legislature, the respondent voted in favor of a resolution affecting Trabich's business venture. The respondent failed to disclose his relationship with Trabich to the legislature before debating and later voting on that resolution.
Thursday, May 6, 2010
The New York Appellate Division for the Third Judicial Department affirmed the denial of a plaintiff's motion for partial summary judgment in a legal malpractice case. The plaintiff is a former Olympic wrestler who suffered a head injury in T.G. I. Friday's while dining with his wife and child, allegedly as a result of an employee's negligence. He was struck in the head with a moving highchair. The underlying negligence case had been dismissed as a result of non-compliance with discovery obligations.
The court here found that there were questions of facts concerning whether the plaintiffs had failed to provide the attorneys with "pertinent economic and financial information together with the information and documents necessary for motion practice after the underlying action was dismissed." There were also caustion issues because the plaintiff had "sustained multiple head injuries with a loss of consciousness" as an Olympic wrestler in 1984 and 1988. (Mike Frisch)
The web page of the Ohio Supreme Court reports:
(May 5, 2010) The Supreme Court of Ohio ruled today that a nurse employed in a hospital, who steals drugs in the course of her employment, does not occupy a “position of trust” and is not categorically ineligible for Intervention in Lieu of Conviction (ILC).
The Court’s 6-0 decision, authored by Justice Maureen O’Connor, affirmed a ruling by the 9th District Court of Appeals.
R.C. 2951.041 allows Ohio trial courts, at their discretion, to refer a first-time offender charged with a qualifying offense who meets certain requirements to a period of rehabilitation if the court has reason to believe that drug or alcohol usage was a factor leading to the offense. If the defendant successfully completes the intervention plan, the trial court dismisses the proceedings against the offender without a finding of guilt and may seal the records relating to the offense. Among other requirements, to be eligible for ILC, an offender must qualify for community control sanctions (rather than a prison sentence) under R.C. 2929.13(B)(2)(b). A separate statutory provision, R.C. 2929.13(B)(1) lists several findings that disqualify an offender from eligibility for sentencing under R.C. 2929.13(B)(2)(b) and, therefore, for placement in an ILC program. One of these findings, set forth in R.C. 2929.13(B)(1)(d), bars from eligibility an offender who “held a public office or position of trust and [whose] offense related to that office or position.”
In this case nurse Sally Massien was charged with taking drugs from the Akron hospital where she was employed. As a first-time offender, she requested ILC. The trial court granted Massien’s request over the objection of the Summit County prosecutor’s office. The prosecutor appealed, arguing that because Massien was entrusted with special access to drugs as a nurse, and had abused that trust by taking drugs illegally in the course of her employment, she violated a “position of trust,” and was therefore barred from participation in an ILC program. On review, the 9th District Court of Appeals affirmed the trial court’s judgment that Massien did not occupy a position of trust for purposes of the sentencing statute, and the trial court had not erred in finding her eligible for ILC.
The 9th District subsequently certified that its decision in this case was in conflict with State v. France, a 2006 decision in which the 10th District Court of Appeals held that a nurse who stole drugs in the course of her employment at a hospital had abused a position of trust and was ineligible for ILC. The Supreme Court agreed to review the case to resolve the conflict between appellate districts.
Writing for the Court in today’s decision, Justice O’Connor noted that a number of Ohio’s district courts have interpreted the phrase “position of trust,” as used in R.C. 2929.13(B)(1)(d), and have reached conflicting results. While some districts have construed that language narrowly to apply only to government officials and public servants, other courts have construed it more broadly to apply to virtually any public or private individual whose offense involved a breach of trust.
Justice O’Connor wrote: “By including the phrase ‘position of trust’ in R.C. 2929.13(B)(1)(d) without limitation, the General Assembly evidenced its intent not to limit its application to public officials. However, we do not believe that the legislature intended the phrase to apply to all individuals who breach any private expectation of trust.” After reviewing the specific statutory language at issue, and analyzing it in context with eight parallel provisions of R.C. 2929.13(B)(1) that each identify a specific aggravating circumstance that justifies a sentence of imprisonment rather than community control, she wrote: “Each sentencing factor crafted by the legislature applies to a narrow aggravating circumstance that may justify the imposition of a prison sentence rather than the preferred community control for fourth- and fifth-degree felonies. ... Given the narrow application of the sentencing factors identified in R.C. 2929.13(B)(1) and (B)(1)(d), ... we believe that the General Assembly intended a limited application of the phrase ‘position of trust’ in R.C. 2929.13(B)(1)(d). Limiting the application of the section to private individuals who occupy a special relationship of trust and confidence equivalent to a fiduciary relationship and whose offense relates to that fiduciary relationship prevents the disqualification of persons who are not clearly meant to be excluded from ILC.”
Applying this standard, the court considered whether Massien occupied a special relationship of trust and confidence equivalent to a fiduciary relationship as a result of her employment as a nurse. In analyzing the relationship of a nurse with a hospital employer, Justice O’Connor quoted earlier court decisions defining a fiduciary as “a person having a duty, created by his undertaking, to act primarily for the benefit of another in matters connected with his undertaking.” She wrote: “Nurses are persons of ‘superior knowledge and skill,’ who have a duty to their patients to employ the degree of care, skill, and diligence that a nurse of ordinary care should employ in like circumstances. ... However, the duty of care imposed by law on a nurse toward his or her patients does not create a fiduciary relationship between the nurse and his or her employer-hospital. Further, a nurse’s job duties are not sufficiently discretionary to transform the relationship with his or her employer-hospital into a fiduciary relatio
“A nurse occupies a necessary and important supportive role in caring for patients and administering medication. However, as is illustrated by the respective duties of nurses and physicians, discretion relating to the diagnosis and treatment of a patient is statutorily in the hands of the physician, not the nurse. A nurse employed by a hospital does not occupy a position of discretion and, therefore, does not occupy a fiduciary relationship. Because a nurse is not a fiduciary by virtue of his or her employment with a hospital, he or she does not occupy a ‘position of trust’ for the purpose of R.C. 2929.13(B)(1)(d). Therefore, a nurse who steals drugs from the hospital in which he or she is employed is not categorically ineligible for ILC by virtue of his or her employment.”
Justice O’Connor’s opinion was joined by Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Terrence O’Donnell and Judith Ann Lanzinger.
Justice Robert R. Cupp concurred with the majority judgment, but entered a separate opinion stating that in his view the “position of trust” language relied upon by the state in this case applies only to public officials, public servants and those holding public positions of trust. He wrote: “R.C. 2929.13(B)(1)(d) addresses three situations. It is the first category that is at issue in this case: offenders who ‘held a public office or position of trust and the offense related to that office or position.’ The statute uses the phrase ‘a public office or position of trust,’ indicating that the ‘office’ and the ‘position of trust’ are both of a public nature. In this regard, the article ‘a’ operates as a grammatical signal that both ‘office’ and ‘position of trust’ are parallel terms modified by ‘public.’ ... I do not believe that positions of trust held by private individuals which positions are not in the nature of a public trust are included within the first category listed in R.C. 2929.13(B)(1)(d).”
Chief Justice Eric Brown did not participate in the Court’s deliberations or decision in the case.
The opinion is linked here. (Mike Frisch)
Wednesday, May 5, 2010
An Illinois attorney was suspended for three months in 2005 for making a campaign contribution that did not disclose the true source of the funds. The payment was intended to assist a judge in retiring campaign debts. The donor's motivation was to be a "big shot" rather than to buy a judgeship.
The attorney was then charged with unauthorized practice based on conduct that took place during the period of suspension. The Hearing Board recommended that the charges be dismissed as unproven. The Administrator noted an exception and sought a one-year suspension.
The Review Board found the charged misconduct and has recommended a three month suspension.
The post-suspension conduct at issue:
This case also involves additional conduct beyond just preparing a draft brief, to be reviewed, and which was reviewed, by a licensed attorney prior to filing. [Respondent] prepared a motion for leave to file the brief instanter and filed the motion with the brief. He also contacted opposing counsel and discussed a legal issue with him. There can be no serious question that [his] preparation of the motion for leave to file the brief and his discussion of legal issues with opposing counsel constituted the practice of law.
The board noted the difficulties that face an attorney suspended for a relatively short period of time:
We are sympathetic to the dilemma facing an attorney, such as [respondent], who is suspended for a relatively short period of time. This is especially problematic for a sole practitioner. Absent help from a friend, as [another attorney] provided here, a sole practitioner does not have another attorney readily available to cover his or her practice during the period of suspension. There are practical realities that must be addressed, including how to deal with pending cases and protect client interests. Supreme Court Rule 764 clearly specifies what is required of attorneys who are disbarred, disbarred on consent, or suspended for six months or more. However, Rule 764, on its face, does not apply to attorneys suspended for less than six months. Such an attorney is not, and should not be, required to shut down his or her practice; the shorter suspension recognizes that the attorney is not a person who should be put out of business. Yet, the attorney still must refrain from engaging in activity that would constitute the practice of law. Navigating this maze poses significant practical obstacles, even where, as here, the respondent has the advice of counsel.
We also recognize that some attorneys may not be familiar with the case precedent cited in this majority report that establishes conduct such as [his] as improper. Even opposing counsel, who ultimately determined that he should report the conduct, struggled with the question of whether or not [he] had crossed the line. Attorneys suspended for any length of time must comply with their obligation to refrain from practicing law, as established by the cases. Present law is not entirely clear as to the practical steps required of attorneys suspended for less than six months. Therefore, we respectfully suggest that the Court may wish to consider giving further guidance to the bar, either by rule changes or an opinion, with regard to those practical steps.
[Respondent] clearly tried to comply with his obligations and to protect his clients during the period of his suspension. This intent is critical and distinguishes this case from others in which attorneys were severely sanctioned for effectively continuing to practice law, despite a suspension, in a clear and intentional disregard of the suspension order. [His] efforts, and those of his attorney, are significant factors in our sanction recommendation.
A dissent would find that the charges were not proven. (Mike Frisch)
The Wisconsin Supreme Court has affirmed a determination that the Milwaukee Symphony Orchestra must pay a 5% tax on the sale of concert tickets. The symphony had argued that the concerts were primarily intended to be for education, rather than entertainment, and were thus exempt from taxation. The court found that there was an evidentiary basis for the conclusions of the Tax Appeals Commission that the concerts were properly treated as entertainment.
There is a concurring/dissenting opinion that would hold that the primary purpose of certain youth concerts was educational, applying an analysis of the question:
...because the Youth Concerts will cause a child's knowledge to expand as the child is presented with a new musical genre or the exposure to orchestral instruments with which he is not familiar, thereby educating the child, and during the concerts the child's time will pass agreeably, thereby entertaining the child, I must determine how the Youth Concerts' taxable and nontaxable attributes are to be evaluated. See Webster's Third New International Dictionary, 723, 757 (1961) (defining educate and entertainment). In so determining, I examine the Youth Concerts' attributes first from the perspective of the Milwaukee Symphony, the entity that presented the concerts, and then from the perspective of the educators who took their classes to the concerts during the school day, based in part on the way in which the Youth Concerts were marketed.
The concurring/dissenting opinion examined the various performances to high school, middle school and other venues including Kinderkonzerts. (Mike Frisch)
The Massachusetts Supreme Judicial Court had reinstated an award by an arbitrator to a public school teacher dismissed for alleged lack of fluency in English. The facts:
An arbitrator found that the school committee of Lowell (school committee) did not establish just cause to terminate the employment of Phanna Kem Robishaw, a first-grade teacher dismissed for failure to demonstrate satisfactory English fluency. Thereafter, a judge in the Superior Court granted the school committee's application to vacate the arbitrator's award pursuant to G.L. c. 150C, §§ 11 and 12, concluding that the arbitrator's decision exceeded his authority and violated public policy. Robishaw appealed, and we transferred the case on our own motion. Applying the well-settled limitations on judicial review of an arbitrator's decision, we conclude that the arbitrator's award in this case should be affirmed.
The court concluded:
Here, the judge determined that "(1) the proper instruction of students is a clearly defined public policy; (2) English fluency is integral to the teaching profession; (3) reinstatement of [Robishaw] would offend the goals of Massachusetts education law; and (4) the Superintendent's inability to assure [Robishaw's] fluency required [her] dismissal from teaching in an English-speaking classroom." The arbitrator, however, made a factual finding that the school committee failed to meet its burden of establishing that Robishaw could not speak English fluently. We are bound by this determination and, therefore, "need not parse the application of the public policy exception to such a scenario, because it is a factual scenario that the arbitrator expressly determined had not been proved." (citations and footnotes omitted)
Massachusetts voters had passed the fluency law in November 2002. The case is School Committee of Lowell v. Robishaw. (Mike Frisch)
The Ohio Supreme Court agreed with recommendations by a hearing panel and its Board and imposed an indefinite suspension rather than the 18 month suspension that had been jointly proposed by the attorney and disciplinary counsel. The attorney had been convicted of conspiracy to commit bank fraud in connection with his title insurance business. The court explained its reasoning as to sanction:
At the hearing, the panel expressed concern that the adoption of the parties' stipulated 18-month suspension would create an inconsistency between the disciplinary sanction and the conditions imposed in the supervised release. In support of the 18-month suspension stipulation, respondent submitted an affidavit stating that the probation officer would petition the district court to lift the condition prohibiting respondent from practicing law after respondent had served one year of his postrelease supervision. We find that indefinite suspension is the proper sanction in these circumstances. Imposing an indefinite suspension will avoid inconsistency between this court's disciplinary sanction and the federal court's criminal sentence and will allow for proper resolution of the underlying criminal case prior to any application for reinstatement to the practice of law.
The court credited time served on the interim suspension that resulted from the conviction. (Mike Frisch)
Tuesday, May 4, 2010
The New York Appellate Division has agreed with a trial court order quashing a subpoena issued by the Commission on Judicial Conduct to the then New York County District Attorney. The genesis of the matter is described in the court's opinion:
Between October 20, 2006 and September 19, 2007, the Commission authorized investigations of four additional complaints against Justice W., one of which was the result of a letter submitted by then Chief Assistant District Attorney, James M. Kindler, and three which arose from the already existing investigation. According to intervenor-respondent Robert H. Tembeckjian, Administrator of the Commission and prosecutor of the case, "[a]ll of the new complaints alleged misconduct by [Justice W.] toward the Office of the District Attorney or individual Assistant District Attorneys or in cases being prosecuted by the District Attorney's Office."
The investigations led to three formal written complaints, pursuant to Judiciary Law § 44(4), which consisted of five charges: (1) that Justice W. made inappropriate personal and political comments from the bench; (2) that Justice W. failed to report misconduct of another judge; (3) that Justice W. improperly interfered with an application for a judicial appointment; (4) that Justice W. improperly failed to recuse himself from cases where his impartiality may be questioned; and (5) that Justice W. improperly accepted a jury verdict in the prosecutor's absence. In answers to the complaints, Justice W. asserted that Tembeckjian's conduct in proceeding against him was "politically motivated."
The subpoena was properly quashed:
Here, respondent has failed show that any testimony that the District Attorney could offer would be relevant or material to the subject matter of the charges, that is, Justice W.'s alleged misconduct. On the contrary, the record clearly indicates that the District Attorney's involvement was limited to permitting the Administrator to conduct interviews with certain members of his staff who might have information pertinent to an investigation of alleged judicial misconduct. The District Attorney asserts, and the Administrator concurs, that the District Attorney was neither the complainant nor the source of the information leading to the investigation.
The subject of the investigation demonstrates, at best, that the District Attorney allowed the Commission to approach possible witnesses on his staff and then kept himself informed as to the developments in the investigation. There is absolutely no indication in the record that the District Attorney witnessed any alleged misconduct nor had any factual information other than that provided by his staff.
Even were we to accept as true Justice W.'s contentions that the District Attorney had a political bias against him, and that he referred the complaints to the Commission himself, neither of these are relevant to the issue of Justice W.'s guilt or innocence of the misconduct charged. Even the amount and type of support the District Attorney may have provided to his staff in the matter has no bearing on the issue of Justice W.'s guilt or innocence. Hence, we find that the Referee applied an entirely erroneous standard when he stated he found a subpoena should issue because Kindler's testimony was "enough to raise some question as to whether the District Attorney was involved in this in any fashion" (emphasis added). Subpoenaing the District Attorney with the mere hope of developing relevant testimony once on the stand is precisely the kind of investigatory fishing expedition that the law forbids. (citation omitted)
The New York Appellate Division for the First Judicial Department affirmed an order denying an attachment sought by a law firm suing for unpaid fees. The court's concluded:
Order, Supreme Court, New York County...entered October 5, 2009, which, in an action for unpaid attorneys' fees, denied petitioner law firm's application to attach in aid of arbitration respondent former client's interest in the action that petitioner had first been retained to represent respondent wherein respondent sought, inter alia, the return of a down payment on an airplane, but enjoined respondent from assigning his interest in that action, unanimously affirmed, with costs.
The denial of an attachment was a provident exercise of the court's discretion, as there was no showing that a potential arbitration award may be rendered ineffectual without an attachment. Petitioner's papers contain no details as to respondent's financial condition, nor is there any assertion that respondent "will secrete, dissipate or otherwise squander his assets" before the arbitration award is rendered. There is also no evidence or allegation contradicting respondent's sworn statement that he has never had any judgments rendered against him, and that he is financially solvent and stable. (citations omitted)
[I enjoyed reading Shubha Ghosh's trip in TV Land, and it looks like a lot of other blogs or forums pointed their way to his posts; here is his Epilogue.--Alan]
The recent Jeopardy posts may have come across as somewhat of a light hearted lark. But in my desire to show rather than tell, some of the parallels between games shows and legal education and legal profession may have come across as elliptical. The lottery mentality of games shows, the organization of economic power in terms of managers, workers, and contestants, and the implied promise of the contests do parallel, in my view, how legal education and legal process are structured. My emphases and perspectives in the posts were meant to draw out these parallels without being too obvious or strident.
At the risk now of being strident, I have to say that the experiences on the game show (and some of the aftermath) reminded me of what our students go through as they quest for the right answer in order to get whatever rewards the profession has to offer and what many clients, whether well-healed or, more often, not, progress through in the quest for justice. To look for these points in a game show may seem misguided, but the larger point of the posts is to show that the tournament for reward and justice has common roots with other parts of our culture and society.
Finally, to end this commentary on a game show note, during the taping, one of my contestants had toured the set for the show "Wheel of Fortune" and told me how surprisingly small the wheel was when compared to how it appeared on television. I pointed out that the Wheel has to be just large enough to allow the average American to spin it. Constraints of practicality, which often mask those of power, define market society and the legal profession that services it.
The web page of the Ohio Supreme Court reports:
The Supreme Court of Ohio ruled today that an award of attorney fees in a civil lawsuit is distinct from an award of punitive damages, and the public policy of the state does not prevent an insurance policy from providing coverage for attorney fees when they are awarded solely as a result of an award for punitive damages.
Applying that analysis to a Cuyahoga County personal injury case, the Court found that an auto insurance policy issued to Linda Lahman provided coverage for a jury’s award of attorney fees to another motorist, Kimberly Neal-Pettit, who was injured in an auto accident caused by Lahman. The court’s 4-2 majority decision was authored by Justice Judith Ann Lanzinger.
Neal-Pettit was injured in 2003 when her vehicle was hit by Lahman, who was driving while intoxicated and fleeing the scene of an earlier collision. Neal-Pettit sued Lahman for damages arising from her injuries.
A jury awarded Neal-Pettit compensatory damages of $113,800 and an additional $75,000 in punitive damages. Based on a finding that Lahman had acted “with malice” in causing Neal Pettit’s injuries, the jury also awarded Neal-Pettit attorney fees that the court later set at $46,825 along with an additional sum for litigation expenses. Lahman’s insurance company, Allstate, paid Neal-Pettit the amounts awarded as compensatory damages, interest and expenses, but denied any coverage under its policy for either the punitive damages or attorney fees awarded by the jury.
Neal-Pettit filed suit against Allstate in the Cuyahoga County Court of Common Pleas seeking payment for the attorney fee portion of the jury verdict. The trial court granted summary judgment in favor of Neal-Pettit. Allstate appealed, arguing that it had not contracted to pay attorney fees and that an attorney-fee award is an element of punitive damages, which public policy prevents an insurer from covering. The 8th District Court of Appeals affirmed the trial court’s decision, holding that attorney fees are “conceptually distinct” from punitive damages and that attorney fees were not expressly excluded from coverage by the language of the Allstate policy issued to Lahman. Allstate sought and was granted Supreme Court review of the 8th District’s decision.
In today’s decision affirming the 8th District, Justice Lanzinger rejected Allstate’s argument that the attorney fee award is an element of the jury’s award of punitive damages because both types of relief are based on a finding that the defendant acted “with malice.” Quoting from the Supreme Court of Ohio’s 1859 decision in Roberts v. Mason, she wrote: “(T)he fact that the awards have similar bases is irrelevant. We have recognized that attorney-fee awards and punitive-damages awards are distinct: ‘In an action to recover damages for a tort which involves the ingredients of fraud, malice, or insult, a jury may go beyond the rule of mere compensation to the party aggrieved, and award exemplary or punitive damages ... In such a case, the jury may, in their estimate of compensatory damages, take into consideration and include reasonable fees of counsel employed by the plaintiff in the prosecution of his action.’”
With regard to an exclusion of coverage in Lahman’s policy for “punitive or exemplary damages, fines or penalties,” Justice Lanzinger wrote: “(T)he exclusion does not refer in any way to attorney fees or litigation expenses. It specifically mentions only punitive or exemplary damages, which, as we have discussed, are conceptually distinct from attorney fees. Therefore, the term ‘punitive or exemplary damages’ does not clearly and unambiguously encompass an award of attorney fees. We decline to read such language into the contract. We instead construe the policy strictly against the insurer. ... Allstate, as the drafter, is responsible for ensuring that the policy states clearly what it does and does not cover.”
Finally, the Court disagreed with Allstate’s claim that it would be against public policy for an insurer to pay attorney fees on behalf of a policyholder when those fees are awarded solely as a result of a punitive damages award.
Justice Lanzinger wrote: “It is true that public policy prevents insurance contracts from insuring against claims for punitive damages based upon an insured’s malicious conduct. … In addition, R.C. 3937.182(B) prohibits insurance coverage of punitive damages: ‘No policy of automobile or motor vehicle insurance ... shall provide coverage for judgments or claims against an insured for punitive or exemplary damages.’ But R.C. 3937.182(B) mentions only punitive and exemplary damages, not attorney fees. The General Assembly chose not to mention attorney fees when it drafted the statute, and we decline to add them. ... Our holding will not encourage wrongful behavior merely because it permits insurers to cover attorney fees for which tortfeasors become liable. The tortfeasors remain liable for punitive damages awarded for their malicious actions, and these punitive damages remain uninsurable. Payment by the insurer of an attorney-fee award violates neither public policy nor R.C. 3937.182(B).”
Justice Lanzinger’s opinion was joined by Justices Paul E. Pfeifer, Maureen O’Connor and Robert R. Cupp.
Justice Evelyn Lundberg Stratton entered a dissenting opinion, joined by Justice Terrence O’Donnell, in which she disputed the majority’s conclusion that an award of attorney fees that is based solely on an award of punitive damages is nevertheless separate and distinct from those punitive damages.
Justice Stratton wrote: “The Allstate policy here agrees to pay for damages because of bodily injury and property damage. The policy excludes coverage for ‘punitive or exemplary damages, fines or penalties.’ There is an attorney-fee award in this case only because of the punitive-damages award; thus, the attorney-fee award is a ‘penalty’ designed to punish. The attorney fees are not compensable damages ‘because of bodily injury.’ I believe that the award is punitive in nature and is expressly excluded by the Allstate policy. Because of the punitive nature of an attorney-fee award, I also believe that it is against public policy for an insurer to pay attorney fees on behalf of its insured when the fees are awarded in connection with and as a direct result of a punitive-damages award.”
Chief Justice Eric Brown did not participate in the Court’s deliberations or decision in the case.
The decision is linked here. (Mike Frisch)
The Tennessee Board of Professional Responsibility has imposed a public censure of an attorney. The news release on the matter reports:
[The attorney] represented to a client that he would help protect his business while the client was deployed overseas in Iraq. To that end, [the attorney] acted as gatekeeper in giving authorization to handle the client's real estate transactions. [The attorney] fell victim to fraud by entering into a proposed lucrative real estate transaction at the advice of an individual who had previously handled transactions for the client. [The attorney] failed to verfify the circumstances surrounding the real estate transaction and entered into a loan agreement on behalf of the client which contained terms adverse to the client and without the client's express consent. [His] conduct caused substantial monetary loss to the client and has resulted in the filing of civil litigation against the client.
A case decided on May 3 by the Massachusetts Supreme Judicial Court affirmed abuse of process and malicious prosecution claims brought by an attorney who had represented a divorce client. The attorney had been sued by the opposing husband, his business partner, and their corporation. the court summarized the facts:
The defendants-in-counterclaim, Millennium Equity Holdings, LLC (Millennium), and two of its partners, David Rabinovitz and Joseph P. Zoppo (collectively defendants), appeal from the decision of a Superior Court judge holding them liable for abuse of process and the malicious prosecution of Attorney Edward M. Mahlowitz. The underlying dispute in this bitter litigation arose when Mahlowitz, representing Rabinovitz's wife in her divorce action against Rabinovitz, obtained an attachment on her behalf in the Probate and Family Court on Rabinovitz's interest in property owned by Millennium. The attachment was secured after the wife discovered by happenstance that Rabinovitz was concealing from her the imminent sale of the property.
The defendants made no attempt to dissolve or modify the attachment in the Probate and Family Court, despite ample opportunity and specific court rules permitting them to do so. Rather, eighteen months after the attachment had issued, and approximately one year after the attachment had been dissolved, Rabinovitz, Zoppo, and Millennium brought suit against Mahlowitz for abuse of process, malicious prosecution, and interference with contractual rights for obtaining the attachment. After failing to secure dismissal of the lawsuit, Mahlowitz counterclaimed against the defendants for abuse of process and malicious prosecution in connection with their suit against him.
After an eight-day, jury-waived trial in the Superior Court on the defendants' abuse of process claim, and on Mahlowitz's counterclaims, the judge ruled in favor of Mahlowitz both on the defendants' claims against him and on his counterclaims against them, awarding damages to Mahlowitz for the latter. She denied Mahlowitz's motion for sanctions pursuant to Mass. R. Civ. P. 11, 365 Mass. 753 (1974), against Robert S. Sinsheimer, the attorney representing Rabinovitz, and Isaac H. Peres, the attorney representing both Zoppo and Millennium at trial.
The Appeals Court reversed the judgment in favor of Mahlowitz on his counterclaims; it otherwise affirmed the trial judge in all respects. Millennium Equity Holdings, LLC v. Mahlowitz, 73 Mass.App.Ct. 29 (2008). None of the defendants sought further appellate review. We granted Mahlowitz's application for further appellate review on his counterclaims against the defendants, as well as the judge's order denying his request for sanctions.
Contrary to the defendants' assertion that the judge's findings were replete with error, we first conclude that the record supports Mahlowitz's claim of abuse of process against Rabinovitz. Specifically, the evidence, including the reasonable inferences therefrom, supports the judge's conclusion that the only motivation Rabinovitz had in bringing his lawsuit against Mahlowitz was to cause the removal of Mahlowitz as counsel for his wife in their divorce action. The judge also acted within proper bounds as a finder of fact in concluding that Zoppo and Millennium acted in concert with Rabinovitz to that same end. We thus affirm Mahlowitz's abuse of process claim against all of the defendants.
Mahlowitz's malicious prosecution claim is substantially similar to his abuse of process claim, and his damages under each are identical. Because we affirm the judgment on the abuse of process claim, we need not and do not reach Mahlowitz's malicious prosecution claim against the defendants.
As to damages, we conclude that the judge made errors in her evaluation of some aspects of the damages that require remand for recalculation of two discrete issues pertaining to damages alone. Last, we agree with the judge that Mahlowitz has not met his burden of proving that Peres and Sinsheimer acted in bad faith in representing the defendants in their claims against Mahlowitz, and that he is not entitled to sanctions against them.
Among other things, the court affirmed the award for damages to the attorney's reputation:
We are in full accord with the judge's observation that "an attorney is not much more than his reputation and that once sullied it is very difficult ... to undo the tarnish." The judge found that several pieces published about the lawsuit in Massachusetts Lawyers Weekly, "damaged Mr. Mahlowitz, both in the esteem with which he is held in the community of divorce lawyers and judges in the Probate Court." In particular, Mahlowitz testified that since the appearance of the Massachusetts Lawyers Weekly items, he had not received any appointments from Probate and Family Court judges in Middlesex County, who had often appointed him in the past. This evidence alone is compelling: we cannot imagine a more damaging result for an attorney than the loss of his credibility on the part of judges before whom he routinely must appear.
The judge additionally found, and we agree, that the publications in Massachusetts Lawyers Weekly were a foreseeable consequence of the lawsuit, and that the adverse publicity against Mahlowitz was "orchestrated," at least in part, by Rabinovitz. Among the four items published in that newspaper, one was a letter to the editor from Rabinovitz that sharply criticized Mahlowitz's conduct as dishonest, and suggested that he had lied to a judge in the Probate and Family Court. Although one article was arguably in favor of Mahlowitz-- remarking that it was "scary" that lawyers could be sued for abuse of process when placing ordinary liens in the course of divorce proceedings--the judge's finding that the widespread publicity about the case in the legal community damaged Mahlowitz's reputation is well supported.
The defendants nevertheless assert that Mahlowitz cannot recover for harm to reputation because he did not prove "real business loss" or other pecuniary harm resulting from damage to his reputation. We do not discern authority for such a requirement in this context, nor have the defendants directed us to any relevant source. In the context of defamation, we have explained that actual injury is "not limited to out-of-pocket loss" but instead includes "impairment of reputation and standing in the community, personal humiliation, and mental anguish and suffering."...Here, Mahlowitz can recover for intangible harm to his reputation separate from and in addition to any loss of business or other pecuniary harm he may have suffered. There was no error. (citations and footnotes omitted)
The case is Millenium Equity Holdings LLC and others v. Mahlowitz. (Mike Frisch)
Monday, May 3, 2010
The New Jersey Appellate Division affirmed the dismissal of a case brought by a father against a mother (the two had children together but had never married) for intentional infliction of emotional distress caused by conduct that had alienated the affections of his children. The court found that the cause of action was not barred by the Heart Balm Act. However, the court concluded that public policy that accords consideration of the best interests of children warranted dismissal of this action. The court did allow for the possibility of such a suit in extreme circumstances (such as a false claim of sexual abuse) not present on the facts here and stated:
We are not being asked to solve a law school riddle.
The court concluded that sanctions for frivolous litigation could not be sustained. The legal theory was novel but presented in good faith based on arguments for a modification of existing law. (Mike Frisch)