Wednesday, July 1, 2015

Apparent Authority Of Attorney Makes Settlement Agreement Enforceable

A recent decision of the Arizona Supreme Court

Agreements between parties or attorneys in civil lawsuits are not binding if disputed unless they are evidenced by a writing or made orally in court. Ariz. R. Civ. P. 80(d). We here consider whether Rule 80(d) makes a written settlement agreement unenforceable because it lacked the written assent of clients who dispute their attorney’s authority to make the agreement. Holding that no such written assent is required and that the agreement here satisfied Rule 80(d), we also conclude that it is enforceable because the attorney acted within the apparent authority given by his clients.

The facts

Petitioners (“the Robertson Group”) sued neighboring property owners (“the Alling Group”) concerning a water line. On January 29, 2013, the parties and their attorneys attended a mediation but did not reach an agreement. At the end of the mediation, the Alling Group, represented by attorney Mark Sifferman, made a settlement offer requiring acceptance within forty-eight hours.Hours before the offer expired, Robert Grasso, the Robertson Group’s attorney, told Sifferman that the Robertson Group needed more time to respond to the offer because one group member had a family emergency. Grasso proposed that the attorneys discuss the offer the next week. Sifferman did not extend the January 31 deadline, and the offer expired.

Sifferman advised his clients of Grasso’s request and recommended they “leave the door open” for settlement. Two of the Alling Group members emailed Sifferman on February 4 stating that they and others favored “removing the settlement offer proposed in the mediation.” But Sifferman did not read the email and mistakenly thought all his clients were willing to settle on the terms previously conveyed to the Robertson Group.

On February 6, after talking with another attorney at Grasso’s law firm, Sifferman sent that attorney an email extending a new settlement offer with terms that mirrored the prior offer but would expire at 5:00 p.m. on February 8. Grasso timely accepted the offer via email. Later, after Grasso’s law firm had informed the trial court of the settlement (the “February 8 settlement”) and circulated draft settlement documents, Sifferman discovered he had lacked authority to extend the settlement offer. After conferring with his clients, Sifferman made a new settlement offer, which materially varied from the February 8 settlement.

The Robertson Group moved to enforce the February 8 settlement. Without an evidentiary hearing, the trial court granted the motion, ruling that Sifferman had actual and apparent authority to extend the settlement offer and, alternatively, that the Alling Group was equitably estopped from disputing that authority. The court also ruled that Arizona Rule of Civil Procedure 80(d) did not apply but, if it did, the emails exchanged between counsel satisfied the rule.

The court here reversed the Court of Appeals, which had found that the settlement was not enforceable.

...we hold that the Alling Group’s actions allowed the Robertson Group to reasonably assume that Sifferman had authority to keep a settlement offer on the table or reoffer the same settlement terms days after the agreement’s expiration, and the Robertson Group reasonably relied on the attorney’s apparent authority...

Rule 80(d) applies only if a party disputes the existence or terms of an agreement. If such a dispute exists, the rule can be satisfied by writings exchanged by counsel. Rule 80(d) does not also require the written assent of a client who disputes that it is bound by the agreement. Because the parties here do not dispute the existence or terms of the February 8 settlement, Rule 80(d) does not apply. Finally, because the evidence shows that Sifferman was cloaked with apparent authority to bind the Alling Group to the February 8 settlement, the trial court correctly enforced the agreement. We vacate the court of appeals’ opinion, affirm the trial court’s judgment, and award the Robertson Group its reasonable attorney fees on appeal.

 (Mike Frisch)

July 1, 2015 in Clients | Permalink | Comments (0)

Tuesday, June 16, 2015

Sporting Chance

A law firm was entitled to summary judgment on fees charged a client in one matter but not a second representation, according to an opinion of the New York Appellate Division for the First Judicial Department.

Plaintiff [Boies, Schiller & Flexner]  established prima facie that it entered into a retainer agreement with defendant and sent her regular invoices pursuant thereto, and that, after plaintiff withdrew from representation, defendant paid more than $400,000 towards those bills, with a promise to pay the remainder in exchange for plaintiff's agreement to represent her a second time in the same or related matters (Morrison Cohen Singer & Weinstein, LLP v Waters, 13 AD3d 51 [1st Dept 2004]; Levisohn, Lerner, Berger & Langsam v Gottlieb, 309 AD2d 668 [1st Dept 2003], lv denied 1 NY3d 509 [2004]). Accordingly, plaintiff is entitled to summary judgment on its account stated claim for the outstanding amount of $30,525 for bills dated July 31, 2012, August 20, 2012, and September 20, 2012, in connection with the first representation.

However, as plaintiff withdrew and then agreed to represent defendant again, defendant's partial payments in connection with the first representation cannot be construed as consent to the amounts due in connection with the second representation. Accordingly, plaintiff is not entitled to summary judgment to the extent the account stated claim is based on work performed and invoiced for October 2012 through February 2013, i.e., during the second representation.

While the parties agree that defendant paid the October 2012 bill, purportedly for work performed in September 2012, the record does not conclusively establish the services billed for in that invoice, including whether the invoice related to the first or second representation. Coupled with defendant's objections to and refusal to pay any subsequent invoice, the payment of the October 2012 bill does not suffice to eliminate any triable issue of fact as to defendant's consent to the amounts due under later invoices.

Moreover, defendant averred that she called plaintiff within a day or two after receiving each invoice, spoke to the lawyer primarily handling her case and her assistant, and objected that she did not understand the charges, that they appeared to be unwarranted, and that she could not pay. This evidence of defendant's oral objections is sufficiently detailed to create a triable issue of fact as to her consent to the amounts due (compare Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000] ["self-serving, bald allegations of oral protests" insufficient to raise issue of fact]; Zanani v Schvimmer, 50 AD3d 445 [1st Dept 2008] [assertion of oral objection to bills insufficient because the defendant failed to state when objection was made or specific substance thereof]).

As plaintiff correctly notes, numerous emails cited in an affidavit by defendant's daughter (who exercised a power of attorney on defendant's behalf) and relied upon by the motion court, when read in context, fail to raise any specific, timely objections to any bills. However, [*2]defendant's oral objections are supported by at least two emails to plaintiff from defendant's daughter, advising plaintiff on December 31, 2012, that she intended to go over the "outlandish bills" with her accountant, and on January 25, 2013, that she would not pay any bills until they were reviewed by the accountant (see RPI Professional Alternatives, Inc. v Citigroup Global Mkts. Inc., 61 AD3d 618 [1st Dept 2009]; see also Herrick, Feinstein v Stamm, 297 AD2d 477, 479 [1st Dept 2002]).

The breach of contract counterclaim should be dismissed since defendant fails to identify any provision of the retainer agreement that promises to produce a particular result, rather than setting forth general professional standards (see Boslow Family Ltd. Partnership v Kaplan & Kaplan, PLLC, 52 AD3d 417 [1st Dept 2008], lv denied 11 NY3d 707 [2008]; Sarasota, Inc. v Kurzman & Eisenberg, LLP, 28 AD3d 237 [1st Dept 2006]).

The motion court correctly declined to dismiss the affirmative defenses at this point in the litigation since they are supported by more than bare legal conclusions (see Robbins v Growney, 229 AD2d 356, 358 [1st Dept 1996]).

The defendant is the widow of the former chairman of Modell's Sporting Goods. (Mike Frisch)

June 16, 2015 in Clients | Permalink | Comments (0)

Friday, June 5, 2015

Not Solely Responsible, Not Liable For Malpractice

A criminal defendant was convicted at trial of multiple counts of sexual conduct against a child. The conviction was reversed based on a finding of ineffective assistance of counsel.

The defendant, represented by new counsel, was acquitted at a second trial.

She then sued her first counsel for legal malpractice.

The New York Appellate Division for the Second Judicial Department held that the trial court should have granted summary judgment to the defendant attorney. 

Here, the defendant met his initial burden of demonstrating, prima facie, that the plaintiff is unable to prove the element of causation. Specifically, the defendant submitted admissible evidence demonstrating that the plaintiff's convictions after her first trial were not due solely to the defendant's conduct, but were also the result of other factors, including those arising from "some consequence of [her] guilt" (Britt v Legal Aid Socy., 95 NY2d at 447). The evidence submitted by the defendant included graphic testimony of the plaintiff's own children, admitted into evidence at the first trial, which detailed numerous acts of sexual abuse committed by the plaintiff against them. In opposition, the plaintiff failed to raise a triable issue of fact as to whether her convictions after the first trial were due solely to the defendant's conduct (see id.)

The court further held that "the plaintiff's claims for nonpecuniary damages, including physical and psychological injuries allegedly sustained while she was incarcerated following the first trial, are not recoverable in a legal malpractice action."  (Mike Frisch) 

June 5, 2015 in Clients | Permalink | Comments (0)

Sunday, May 31, 2015

Risk v. Reward

The Montana Supreme Court has reversed and remanded with spoilation sanctions a verdict in favor of defendant BNSF Railway based on its failure to preserve a video of the accident of an employee plaintiff.

BNSF is a seasoned and sophisticated corporate litigant well aware of its obligations when responding to workplace violations and employee injuries and accidents. These obligations include the retention of evidence relevant to injury claims. In this case, BNSF supervisors took immediate action within minutes of Spotted Horse’s alleged accident. While Price drove Spotted Horse to the hospital for medical treatment, BNSF supervisors began gathering and analyzing information related to the incident. Within hours of the alleged accident, according to testimony, three individuals viewed a brief portion of the video footage from one camera in the shop stall where Spotted Horse and Syverson were apparently working. And yet–inexplicably–this and other video footage from the shop was not retained...

We reject the notion that BNSF is entitled to unilaterally determine which evidence is relevant or valuable when investigating an alleged work-related accident preceding litigation. Such a decision must be left to the trial court.

Justice Wheat would order default

I agree with the Court’s decision to reverse the judgment of the District Court and to order more serious spoliation sanctions against BNSF on remand. I would, however, remand to the District Court with an instruction to enter default judgment, because the audacity of the spoliation in this case warrants more than a mere negative inference in favor of Spotted Horse...

Montana courts should not shrink from granting default judgment where, as here, spoliation is willful, in bad faith, or knowingly committed in order to obscure the truth and to prevent accurate decision making. By failing to take such action when it is warranted, we fail the spoliation victim and our system of justice, while at the same time rewarding the spoliator with the result he or she sought: an advantage in litigation. By failing to take such action, we set the stage with perverse incentives and encourage further spoliation. Until we are willing to respond with sanctions commensurate to the damage caused by intentional spoliation – that is, with default judgment – the reward from destroying evidence will continue to outweigh the risk.

Justice McKinnon dissented and would affirm the trial court's exercise of discretion. (Mike Frisch)

May 31, 2015 in Clients, Law & Business | Permalink | Comments (0)

Wednesday, May 6, 2015

Failure To Pursue Winning Appeal Bars Legal Malpractice Claim

A client's failure to pursue a potentially successful appeal barred a claim of legal malpractice against the attorney, according to an opinion of the New York Appellate Division for the Second Judicial Department.

Summary judgment was also affirmed where the attorneys discontinued a claim against a non-negligent defendant in the underlying medical malpractice case.

Karen Buczek, and her husband asserting a derivative cause of action, commenced this action alleging, inter alia, that the defendants committed legal malpractice in the prosecution of an underlying medical malpractice action. The plaintiffs alleged that the underlying medical malpractice action was voluntarily discontinued by the defendant attorneys insofar as asserted against North Shore University Hospital (hereinafter the Hospital) due to the defendants' legal malpractice, and that the complaint insofar as asserted against the other defendants in the  underlying action was dismissed due to the defendants' failure to prosecute the action.

The defendants moved for summary judgment dismissing the complaint. They argued that the alleged instances of legal malpractice did not proximately cause the plaintiffs' damages. The defendants contended that the plaintiffs' action insofar as asserted against the Hospital would not have been successful since the Hospital staff involved in the underlying medical procedures properly carried out the directions of the attending private physicians and did not engage in any independent negligent acts. They contended, thus, that they properly consented to discontinue the action insofar as asserted against the Hospital. The defendants also contended that the court in the underlying action erred as a matter of law in dismissing the complaint insofar as asserted against the other defendants for failure to prosecute. The defendants argued that if the plaintiffs had appealed from the order dismissing the action, the order would have been reversed and the complaint insofar as asserted against the other defendants would have been reinstated. The Supreme Court denied the defendants' motion.

As to the remaining defendants in the med mal case

The failure to pursue an appeal in an underlying action bars a legal malpractice action where the client was likely to have succeeded on appeal in the underlying action (see Grace v Law, 24 NY3d 203, 206-207; see also Rupert v Gates & Adams, P.C., 83 AD3d 1393, 1396). The Court of Appeals has stated that this "likely to succeed" standard "obviate[s] premature legal malpractice actions by allowing the appellate courts to correct any trial court error and allow[s] attorneys to avoid unnecessary malpractice lawsuits by being given the opportunity to rectify their clients' unfavorable result" (Grace v Law, 24 NY3d at 210). By establishing that an appeal would likely have been successful, a defendant in a legal malpractice action can establish that the alleged negligence did not proximately cause the plaintiff's damages (see id.).

(Mike Frisch)

May 6, 2015 in Clients | Permalink | Comments (0) | TrackBack (0)

Friday, May 1, 2015

Tax Avoidance Advice Suit May Proceed

Claims by the heirs to the Johnson & Johnson fortune against Proskauer Rose LLP on allegations of fraud, excessive legal fees and unjust enrichment may go forward, according to a decision yesterday by the New York Appellate Division for the First Judicial Department.

The court affirmed dismissal of the legal malpractice claim.

The law firm had initiated discussions of the possible sale of long-held J & J stock. The plaintiffs agreed to consider the law firm's proposal. 

The issue involved a complex series of steps recommended "to effectuate the tax [avoidance] strategy."

Between October 13, 2000 and November 30, 2000, plaintiffs took the complex series of steps recommended by TDG [a business that developed tax avoidance strategies] and Proskauer to effectuate the tax strategy. They paid TDG a total of $1,379,650 in fees and costs, of which they allege that $425,000 was paid by TDG to Proskauer to cover its legal fee.

In June 2001, Proskauer sent plaintiffs a 63-page opinion letter, dated December 29, 2000, which concluded that "it was more likely than not" that the scheme, already executed, would not generate any gain or loss, or accrue any penalties if it was disallowed by the IRS.

In January 2002, the IRS announced a tax amnesty program which allegedly would have been applicable to plaintiffs' situation. However, Proskauer did not notify plaintiffs of that program. In April 2006, the IRS sent plaintiffs a letter requesting documents and detailed information about the tax avoidance strategy they had implemented over five years earlier. Plaintiffs sought counsel from Waxenberg, but he informed them that Proskauer was conflicted by its representation of TDG. Concerned that the agency would ultimately challenge the scheme and assess penalties against them, plaintiffs secured a tolling agreement from Proskauer which, after a later extension, tolled the statute of limitations for any claims against Proskauer up to and including July 31, 2011. Ultimately, the IRS ruled the shelter transaction was not entitled to favorable capital gains tax treatment and assessed plaintiffs back taxes, penalties and interest amounting to millions of dollars.

In December 2010, plaintiffs became aware of a decision in a federal case in Massachusetts District Court (Fidelity Intl. Currency Advisor A Fund, LLC v United States, 747 F Supp 2d 49 [D Ma 2010]). That case was brought by a former Proskauer client who had executed a tax avoidance plan similar to that recommended to plaintiffs by Proskauer and Akselrad. The District Court, after a 44-day trial, issued findings of fact and conclusions of law which stated that the attorneys "agreed in advance to provide favorable legal opinions in order to induce taxpayer-investor" to get involved in the shelter opportunity, and that Proskauer and another law firm had "derived substantial profit from the promotion and sale of the tax shelter strategy, and therefore had a financial interest in upholding the strategy" (747 F Supp 2d at 212, 213).

In July 2011, plaintiffs commenced this action against defendants.

Key holding

this Court has stated that, where an attorney enters into a business transaction with a client whereby the two parties' interests may at some point diverge, the ethics rules place on the attorney the burden of obtaining the client's consent, after full disclosure, "irrespective of the sophistication of the client" (Forest Park Assoc. Ltd. Partnership v Kraus, 175 AD2d 60, 62 [1st Dept 1991] [holding that law firm should have been disqualified from representing the plaintiff in a litigation, which was an entity in which 49 of its partners were investors, where the firm had previously represented the defendant in connection with the transaction in which the entity was formed]; accord Schlanger v Flaton, 218 AD2d 597, 602-603 [1st Dept 1995]). Accordingly, defendants were required to place plaintiffs' interests above all else, without regard to their perceived pedigrees, fortunes or business savvy.

Indeed, the mere facts that plaintiffs were wealthy and could afford high-priced counsel are insufficient for us to draw the conclusion that, as a matter of law, they should have known that there was almost a 50% possibility that the tax strategy would not succeed. On this record, defendants cannot establish the specific backgrounds of plaintiffs and their familiarity with the tax code and IRS practices such that defendants can argue that plaintiffs were not justified in relying on defendants' advice. Ironically, this argument by defendants bolsters plaintiffs' excessive fee claim, since it invites the question why, if they were truly so sophisticated, they needed a $425,000 opinion from Proskauer to convince them to pursue the TDG/Proskauer strategy. Further, it is worth noting that one of the things a sophisticated investor is presumed to know to do before entering a transaction is to consult with its attorney (see Stuart Silver Assoc. v Baco Dev. Corp., 245 AD2d 96, 99 [1st Dept 1997]). That is precisely what plaintiffs did, and they were entitled to rely on defendants' advice.

Finally, plaintiffs' claim for punitive damages properly survived dismissal. Defendants' conduct is alleged to have been directed at a wide swath of clients, and the first amended complaint sufficiently alleges intentional and malicious treatment of those clients as well as a "wanton dishonesty as to imply a criminal indifference to civil obligations" (Walker v Sheldon, 10 NY2d 401, 405 [1961]). Indeed, although we offer no opinion regarding whether the particular scheme at issue was criminal in its manipulation of the tax laws, plaintiffs have demonstrated that similar tax avoidance schemes resulted in the indictments of some of their promoters. Accordingly, the demand for punitive damages is adequately stated. Defendants cite Denenberg v Rosen (71 AD3d 187 [1st Dept 2010], lv dismissed 14 NY3d 910 [2010]) for the purported proposition that an attorney's involvement in promoting an unsuccessful tax avoidance scheme can never support a claim for punitive damages. However, this Court made no such declaration in that case. Nor did this Court find in Denenberg that the pension plan at issue was generally defective. Rather, it held that "it was the operation of plaintiff's particular plan that caused the problems with the IRS" (71 AD3d at 195) (emphasis added).

(Mike Frisch)

May 1, 2015 in Clients, Economics, Hot Topics | Permalink | Comments (0) | TrackBack (0)

Friday, April 17, 2015

Client Conduct Negates Malpractice Claim

The Nebraska Supreme Court overturned the grant of a new trial to the plaintiff in a legal malpractice case and reinstated the verdict in favor of the defendant law firm.

Thomas Balames, filed this legal malpractice action against Robert Ginn and Brashear LLP, formerly known as Brashear and Ginn (collectively Ginn), the firm where Ginn practiced when the alleged malpractice occurred. Balames brings this action for himself and three other individuals for whom he serves as attorney in fact (collectively Balames). Balames claimed that Ginn negligently failed to obtain signatures on a guaranty for a loan that Balames made to a third party and failed to inform Balames of the missing signatures. When the third party defaulted, Balames could not obtain a judgment against the individuals who were the intended guarantors for the full amount of the third party’s obligation. The jury returned a general verdict for Ginn, but the court granted Balames a new trial.

The client sought to complete the transaction while the attorney was on vacation. The client had not previously advised the attorney that the situation was urgent and terminated his services shortly thereafter.

The court

[Client] Balames admitted to being pressured by his bank to complete the transaction, and he insisted upon getting the documents to the bank as soon as humanly possible. [Attorney] Ginn’s evidence supported a reasonable inference that because Balames and his business associates had personally guaranteed the loan, they had an immediate need to show the bank that they had renegotiated the debt with Banopu. The crucial point here is that a client has the ultimate authority to determine the objective of a legal representation. Of course, an attorney should make reasonable efforts to explain the legal consequences of a course of conduct that a client insists upon taking. Yet, evidence regarding Ginn’s advisement raised a question of fact whether Ginn had breached a duty of care. That is, if the jury determined that Balames insisted upon closing without Ginn’s review, whether Ginn’s advisements were sufficient to inform Balames of the potential consequences was a question of fact.

The jury verdict sufficiently dealt with the issues

When the jury returns a general verdict for one party, a court presumes that the jury found for the successful party on all issues raised by that party and presented to the jury, particularly when the opposing party did not ask the court to give the jury a special verdict form or require the jury to make special findings. This is true both for Ginn’s failure-of-proof defense and his statute of limitations defense which barred Balames’ recovery even if he proved his malpractice claim. Because the court erred in concluding that plain error permeated the trial, this presumption controlled...

 If the jury believed Ginn’s version of the facts, then Ginn did not breach a duty to ensure that the documents were signed before or after the closing. Instead, Balames’ injury was caused by his failure to follow Ginn’s advice, his failure to review the documents for the required signatures, and his misrepresentation to Ginn that the documents were signed.

 (Mike Frisch) 


April 17, 2015 in Clients, Law & Business, Law Firms | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 4, 2015

When Morgan Stanley Talks

Allegations of conflict of interest were properly alleged in litigation against the Blank Rome law firm, according to this decision of the New York Appellate Division for the First Judicial Department.

the complaint alleges that defendants concealed a conflict of interest that stemmed from defendant law firm's attorney-client relationship with Morgan Stanley while simultaneously representing plaintiff in divorce proceedings against her ex-husband, a senior Morgan Stanley executive, who participated in Morgan Stanley's decisions to hire outside counsel..

plaintiff identifies the nature of the conflict as stemming from defendants' interest in maintaining and encouraging its lucrative relationship with Morgan Stanley and the impact of that interest on defendants' judgement in its representation of plaintiff in the divorce proceedings..

Further, the complaint alleges numerous acts of deceit by defendants, committed in the course of their representation of plaintiff in her matrimonial action. Additionally, the complaint sufficiently alleges that the individual defendants knew of but did not disclose defendant law firm's representation of Morgan Stanley to plaintiff, and it details the calculations of her damages.

The allegations were not subject to strike as scandalous or prejudicial. (Mike Frisch)

March 4, 2015 in Clients, Law Firms | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 25, 2015

Notice Of Claim Lapse Absolves Insurance Company

The Wisconsin Supreme Court has held that an insurance company is not obligated to defend a legal malpractice suit where the attorney fails to (as required by the insurance contract) to notify the carrier during the coverage period.

The basic facts

Melissa and Kenneth Anderson sued their former attorney, Thomas Aul, for legal malpractice.  Wisconsin Lawyers Mutual Insurance Company (WILMIC), Attorney Aul's professional liability insurer, intervened in the lawsuit.  WILMIC sought summary judgment declaring that the insurance policy it issued to Attorney Aul did not cover the Andersons' claim.

The WILMIC insurance policy provides coverage for those "claims that are first made against the insured and reported to the [insurance company] during the policy period" (emphasis added).  This type of policy is commonly known as a claims-made-and-reported policy.

Wisconsin's notice-prejudice statutes, Wis. Stat. §§ 631.81(1) and 632.26(2) (2011-12), provide that an insured's failure to furnish timely notice of a claim as required by the terms of a liability policy will not bar coverage unless timely notice was "reasonably possible" and the insurance company was "prejudiced" by the delay...

The parties agree that the Andersons' claim against Attorney Aul was first made during the policy period, that Attorney Aul did not report the claim during the policy period, and that reporting the claim during the policy period was reasonably possible.  They dispute whether the WILMIC policy's requirement that claims be reported during the policy period is governed by the notice-prejudice statutes and also whether WILMIC was prejudiced by Attorney Aul's failure to report the claim during the policy period.

Chief Justice Abrahamson held

the benefits to insurance companies and insureds of claims-made-and-reported policies, the statutory history underlying Wisconsin's notice-prejudice statutes, the persuasive authority of other courts that have decided the question presented by this case, and the unreasonable results a contrary holding would produce persuade us that Wisconsin's notice-prejudice statutes permit an insurance company to deny coverage without a showing of prejudice when an insured fails to report a claim within a claims-made-and-reported policy period.

The clients who sued lose out

from the Andersons' vantage point, they have been victimized twice: first by Attorney Aul's malpractice and now by his failure to comply with his malpractice insurance policy's reporting requirement.  We reach a harsh result, but one we have determined the law requires.  We conclude that the legislature did not intend to rewrite the fundamental terms of the WILMIC insurance policy or to make the strict reporting requirement underlying claims-made-and-reported policies unenforceable in this state.

Justice Ziegler, joined by three colleagues, concurred

Although I reject the lead opinion's consideration of "consequences of alternative interpretations," I agree with the lead opinion's conclusion that the notice-prejudice statutes, by their plain meaning, do not apply to the reporting requirement at issue.  I also agree with the lead opinion's conclusion, consistent with that plain meaning, that applying these statutes to the reporting requirement at issue would produce unreasonable results.  I join that conclusion only to the extent that it can be construed as engaging in a plain-meaning analysis of these unambiguous statutes.  This writing is intended make clear the majority opinion of the court.

For the foregoing reasons, I respectfully concur.

(Mike Frisch)

February 25, 2015 in Clients | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 24, 2015

No Lien On Me

A recent decision of the Connecticut Supreme Court deals with charging liens in domestic relations matters

The plaintiff, Ralph Olszewski, challenges the Appellate Court’s conclusion that equitable charging liens are permissible in marital dissolution actions in Connecticut. He claims that they are barred by the Rules of Professional Conduct, they are not supported by Connecticut precedent, and the public policy considerations that justify equitable charging liens in other contexts do not apply in marital dissolution actions. The defendants Carlo Forzani and Carlo Forzani, LLC. respond that equitable charging liens against marital assets are permissible in Connecticut because the Rules of Professional Conduct specifically provide for charging liens, the rules do not preclude the use of charging liens in marital dissolution actions, and public policy considerations support their use in domestic relations matters. We agree with the plaintiff and reverse the judgment of the Appellate Court.

The court

in the eight jurisdictions in which the court explicitly held or determined that an attorney’s charging lien could be enforced against an award of alimony and/or child support, the courts in five jurisdictions based their holdings on statutory authority rather than the common law. Id., §§ 4a and 4b, pp. 613–17. We therefore conclude that attorneys are not entitled by operation of law to equitable charging liens on marital assets for fees and expenses incurred in obtaining judgments for their clients in marital dissolution proceedings in Connecticut.

(Mike Frisch)

February 24, 2015 in Billable Hours, Clients | Permalink | Comments (0) | TrackBack (0)

Friday, February 6, 2015

Excusable Law Office Failure

When you are representing a plaintiff suing former counsel for legal malpractice, you need to be careful to keep the case alive whenever possible.

The New York Appellate Division for the Second Judicial Department affirmed an order reinstating a legal malpractice case in which the claims were struck for discovery violations

A party seeking to vacate an order entered upon his or her failure to oppose a motion is required to demonstrate both a reasonable excuse for the default and the existence of a potentially meritorious opposition to the motion (see Bhuiyan v New York City Health & Hosps. Corp., 120 AD3d 1284; Garcia v Shaw, 118 AD3d 943; Oller v Liberty Lines Tr., Inc., 111 AD3d 903). The determination of what constitutes a reasonable excuse lies within the Supreme Court's discretion, and will not be disturbed if the record supports such determination (see White v Incorporated Vil. of Hempstead, 41 AD3d 709, 710). In making that discretionary determination, the court should consider relevant factors, such as the extent of the delay, prejudice or lack of prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits (see Oller v Liberty Lines Tr., Inc., 111 AD3d at 904; Fried v Jacob Holding, Inc., 110 AD3d 56, 60; Moore v Day, 55 AD3d 803, 804; Harcztark v Drive Variety, Inc., 21 AD3d 876, 876-877).

Here, the Supreme Court providently exercised its discretion in excusing the plaintiff's default based upon his counsel's excuse of law office failure (see CPLR 2004), given the minimal delay in moving to vacate the default, the lack of prejudice to the defendants, and the lack of any intent to abandon the action (see Moore v Day, 55 AD3d at 804) motion on the ground that the defendants failed to make a clear showing that the plaintiff's failure to comply with the defendants' discovery demands was willful and contumacious.

(Mike Frisch)

February 6, 2015 in Clients | Permalink | Comments (0) | TrackBack (0)

Thursday, February 5, 2015

No Jurisdiction

The Nevada Supreme Court has held that a Nevada client of a Texas-based law firm cannot assert specific jurisdiction over the firm on claims arising out of investments in a San Antonio real estate venture.

Based on the evidence presented to the district court, we conclude that [client] Verano failed to make a prima facie showing that petitioners are subject to general or specific personal jurisdiction. In particular, we conclude that an out-of-state law firm that is solicited by a Nevada client to represent the client on an out-of-state matter does not subject itself to personal jurisdiction in Nevada simply by virtue of agreeing to represent the client. Moreover, because Verano's additional evidence of petitioners' Nevada contacts have no clear connection to Verano's causes of action against petitioners, we conclude that Verano failed to make a prima facie showing of personal jurisdiction.

The case is Fulbright & Jaworski v. Eighth Judicial District Court. (Mike Frisch)

February 5, 2015 in Clients | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 4, 2015

Conflict Of Interest Cause Of Action Dismissed

The dismissal of a count alleging that a law firm was liable for engaging in a conflict of interest was ordered by the Delaware Superior Court for Sussex County.

According to the plaintiff, on May 28, 2013, Defendants represented Plaintiff in a transaction effectuating a mortgage in order to provide a third-party the funds to purchase a property. Defendants prepared a note to enable Plaintiff to mortgage her property for the benefit of Matthew Chasanov, Plaintiff’s grandson, and his wife, Lindsay Chasanov (collectively the “Chasanovs”).

The note, drafted by Defendants, did not include many of the standard provisions typical of a mortgage transaction. For example, the note lacked clauses for acceleration, amortization, attorney’s fees in the event of default, interest, and the signatures of the Chasanovs. The note was signed only by Plaintiff and her husband, Mathew Dickerson, resulting in their personal liability in the event of default.

 Plaintiff agreed to complete the mortgage transaction with the understanding that the Chasanovs would make her mortgage payments. Upon completion of the transaction, the Chasanovs purchased a home together as husband and wife. Shortly thereafter, the Chasanovs defaulted after making only one payment on the note resulting in damages of approximately $148,000.  Plaintiff subsequently filed the present suit against the Defendants.

The court held that the alleged ethical violation did not amount to a free-standing cause of action. 

 Even if an attorney failed to adequately represent clients with concurrent conflicting interest in accordance with the Rules, it is well-settled and “generally recognized that the intent of professional ethical codes is to establish a disciplinary remedy rather than to create civil liability."

The count alleging negligence was not dismissed. (Mike Frisch)


February 4, 2015 in Bar Discipline & Process, Clients | Permalink | Comments (0) | TrackBack (0)

Saturday, January 31, 2015

No Fees On Alleged Implied-In-Fact Services Agreement

The United States Court of Appeals for the District of Columbia Circuit affirmed the dismissal of a law firm's suit for fees.

In August 2010, Stephen R. Berry of Berry Law advised Kraft that it might have an antitrust claim worth tens of millions of dollars against News Corporation, News America Marketing FSI LLC, and News America Marketing In-Store LLC (collectively “News Corp.” or “News”). (All referenced facts come from the complaint.) The claim related to possible monopolization and tying in the “sale of in-store promotion services and free-standing-insert coupons placed in newspapers.” Kraft’s chief litigation counsel, Douglas Cherry, asked Berry for further legal analysis of the possible claim.

Berry Law then prepared a 42-page evaluation memorandum for Kraft’s top management analyzing liability and damages issues. Berry alleges that he completed that memo by November 10, 2010. At about the same time, Cherry noted that the matter was “moving pretty fast” and that he wished to brief Kraft’s general counsel about the matter. The complaint says that “upon information and belief, [the evaluation memorandum] was forwarded at the very least to Kraft’s General Counsel in early 2011.” It was presumably Cherry who did the forwarding.

In response to an email from the law firm seeking a fee agreement, Kraft's counsel stated in part

we have never paid for that work as far as I know for any outside counsel.

The firm later claimed fees due in an amount over $191,000 on a theory of implied-in-fact contract,

The court

To state a claim for breach of an implied-in-fact contract, Berry Law must plausibly allege that it rendered Kraft valuable services; that Kraft accepted, used, and enjoyed those services; and that the circumstances “reasonably notified” Kraft that Berry “expected to be paid” by Kraft...

Kraft told Berry that it would not compensate him for work completed prior to management approval. No compensation is due where the “plaintiff did not contemplate a personal fee, or the defendant could not reasonably have supposed that he did.” Bloomgarden, 479 F.2d at 212. Rather, in view of Kraft’s unequivocally expressed position on preliminary work, Berry cannot reasonably have contemplated a fee for work completed before Kraft moved forward, nor could Kraft reasonably have known Berry contemplated any such payment. Instead, Berry completed the memorandum and other legal work in the hope that Kraft would retain him as counsel in the event that Kraft “moved forward.” Because Berry Law’s “services were rendered simply in order to gain a business advantage,” its quasicontract claim fails. Id. at 211.

(Mike Frisch)

January 31, 2015 in Billable Hours, Clients | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 27, 2015

Improper Withdrawal Leads To Remand

The North Carolina Court of Appeals held that an attorney improperly withdrew from representation of a client in a termination of parental rights case

In the present case, the record is devoid of any evidence whatsoever that Respondent received any notice from her trial counsel that counsel would seek to withdraw from her representation at the start of the TPR hearing. When the court inquired whether she had any contact with Respondent, [counsel] Ms. Burke replied that she did not know why Respondent was absent, that she had a history of difficulty communicating with Respondent and did not have her telephone number, and that she believed Respondent might have been confused about her court dates. Ms. Burke did state that Respondent had shown up late to court earlier in the week for another matter in which Ms. Burke was representing Respondent, but she offered no elaboration as to what discussion, if any, they had about Respondent’s TPR hearing and the potential consequences that might follow if she failed to appear. The trial court then allowed Ms. Burke to withdraw without any further inquiry.

The court vacated the judgment and remanded for further proceedings. (Mike Frisch)

January 27, 2015 in Clients | Permalink | Comments (0) | TrackBack (0)

Thursday, January 15, 2015

The Meaning Of Award

The word "award" is not ambiguous, according to a recent opinion of the New York Appellate Division for the Second Judicial Department in affirming a decision not to award a portion of settlement proceeds to a law firm.

The respondents, previously represented by the plaintiff, had commenced a lawsuit against the Town of Riverhead and Suffolk County, and thereafter settled the action. The plaintiff commenced this action to enforce the contingency provision of the parties' retainer agreement. The retainer agreement provided for a contingency fee to be paid to the plaintiff "not to exceed twenty percent . . . of any award . . . granted." The respondents contended that the contingency fee provision was not applicable because no award had been granted; rather, the action had been discontinued pursuant to the terms of the settlement.

The Supreme Court correctly found that, pursuant to the plain language of the parties' retainer agreement, no contingency fee was owed to the plaintiff, as no "award" had been given to the respondents (citation omitted) The term "award" is clear and unambiguous and, in common parlance, does not include proceeds paid to purchase real property, whether to settle a lawsuit or otherwise (see Black's Law Dictionary 164 [10th ed 2014]). Moreover, the plain meaning of "award" is consistent with another provision of the parties' retainer agreement which provided that, upon any settlement of the matter, the plaintiff was to be compensated on an hourly basis.

The attorneys may still prove up entitlement to fees on a hourly basis. (Mike Frisch)

January 15, 2015 in Clients | Permalink | Comments (0) | TrackBack (0)

Monday, January 12, 2015

Cell Phone Production Order Reversed

An order of a Superior Court judge that compelled a law firm to produce a cellular telephone has been reversed by the Massachusetts Supreme Judiial Court.

The Commonwealth had contended that the cell phone was given to the firm by a client for the purpose of seeking legal advice and that it contained text messages that were evidence of the crime that was under investigation by the grand jury.

The full court disagreed with the trial court that the privilege of self-incrimination could be overcome by a showing of probable cause. (Mike Frisch)

January 12, 2015 in Clients | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 19, 2014

Incomprehensible Hodgepodge Dooms Malpractice Suit

The Montana Supreme Court affirmed the grant of summary judgment to the defendant in a legal maplractice case.

The pro se plaintiff sought a modest $12 million in damages but failed to identify an expert and gave insufficient responses to discovery requests.

Wylie’s complaint against Balaz was over forty pages long and asked for millions of dollars in damages. The District Court found, however, that the complaint “contains no discernable facts in support of her allegations of legal malpractice” and that Balaz’s discovery requests were “appropriate questions” in a legal malpractice case. Any party to civil litigation has an obligation to provide required responses to discovery requests, and yet after almost a year and an order from the District Court, Wylie did not answer “the most basic discovery requests to show that she had any evidence in support of her claim.” Wylie simply re-served her first incomplete and inadequate discovery responses, but included additional material that the District Court described as a “hodgepodge of sheets of paper that are not identified in any way, not specifically referenced to any discovery answers, and all of which are totally incomprehensible.”

(Mike Frisch)

November 19, 2014 in Clients | Permalink | Comments (0) | TrackBack (0)

Monday, November 10, 2014

Failure To Communicate Plea Offer Amounts To Ineffective Assistance Of Counsel

The South Carolina Court of Appeals has found ineffective assistance of counsel in a case where the defendant was not advised of a ten-year plea offer before going to trial and getting twenty.

In this case, trial counsel testified the plea offer was for ten years imprisonment. Bell was sentenced to twenty years' imprisonment. The difference is evidence of his prejudice. See id. (concluding the difference in the sentence received and the plea offer was proof of prejudice). Furthermore, Bell testified he would have taken the State's plea offer had trial counsel told him about it, and the PCR court found Bell's testimony credible. Although self-serving, the statement is also evidence supporting the PCR court's finding of prejudice. See id. at 613, 675 S.E.2d at 422 ("[D]epending on the facts of the case, a defendant's self-serving statement may be sufficient to establish actual prejudice."). Deferring credibility matters to the PCR court, we find evidence to support the finding. See Simuel, 390  S.C. at 270, 701 S.E.2d at 739 ("This [c]ourt gives great deference to a PCR judge's findings where matters of credibility are involved.").

The offense was armed robbery. (Mike Frisch)

November 10, 2014 in Clients | Permalink | Comments (0) | TrackBack (0)

Friday, October 31, 2014

Local Expert Not Required For Legal Malpractice Claim

The South Dakota Supreme Court affirmed and reversed in part and remanded a trial court grant of summary judgment to the defendants in a legal malpractice case.

The case involved a conflict of interest claim against a law firm that had represented three defendants in litigation over bee sites. The plaintiff here was a beekeeper.

The representation had broken down when the other clients wished to settle. The opposing party insisted that all of the clients settle or none could but the plaintiff here balked.

The trial court erred in excluding the plaintiff's expert witness, then a partner of a Minneapolis law firm and now a justice of the Minnesota Supreme Court.

Analyzing the facts in this case, in regard to the conflicted representation claim, we note that [expert winess] Lillehaug wrote in his expert report that "the applicable standard of care is consistent with, and well stated by, Rule 1.7." He noted how South Dakota’s Rules of Professional Conduct Rule 1.7 is identical to the American Bar Association’s Model Rules of Professional Conduct Rule 1.7. Then, during his deposition, Lillehaug testified that a national standard of care applied to legal ethics...

The Court noted that "in many cases locality is not relevant to the application of the standard of care."  Thus, the expert testimony should have been allowed.

Further, the court found that the trial court improperly weighed the evidence in granting summary judgment to the defendants.

Chief Justice Gilbertson dissented and would retain the locality rule as a consideration in qualifying a legal malpractice expert witness:

The Court’s decision today to remove the consideration of locality from the expert witness qualification process is unnecessary and limits a circuit court’s ability to ensure that expert witnesses do, in fact, possess heightened expertise on whatever issue they are called upon to explain. Simply declaring that we apply a state or national standard does not actually remove the local legal peculiarities that attorneys in this state must handle on a daily basis. For the above reasons I would retain the locality rule.

A thought: perhaps the law of representing multiple clients  in bee site matters is a localized issue.

Then again, perhaps not.

In any event, law professors would have to give the attorneys here a bee grade. (Mike Frisch)

October 31, 2014 in Clients | Permalink | Comments (0) | TrackBack (0)