Thursday, April 2, 2015
The Nevada Supreme Court has held a law firm not liable for estate planning work that transferred a client's assets to a trust.
The suit was brought by a creditor of the client
In this case, we consider whether, under Nevada's fraudulent transfer law, a nontransferee law firm may be held liable for its client's fraudulent transfers under the accessory liability theories of conspiracy, aiding and abetting, or concert of action. We hold that Nevada, like most other jurisdictions, does not recognize accessory liability for fraudulent transfers. We therefore affirm the district court's judgment in favor of the law firm. We further hold, however, that the district court abused its discretion by awarding costs to the law firm without sufficient evidence showing that each cost was reasonable, necessary, and actually incurred. Thus, we reverse, in part, the district court's post-judgment order awarding costs.
In 2004, Robert Krause retained respondent law firm Woods & Erickson, LLP, for estate planning services. The following year, Woods & Erickson created for Krause various legal entities, including an asset protection trust, into which Krause eventually transferred his assets. Meanwhile, appellant The Cadle Company (Cadle) was attempting to collect on a California judgment against Krause. After learning of the transferred assets, Cadle sued Krause and Woods & Erickson in the underlying action, alleging that Krause had fraudulently transferred assets in order to escape execution of the judgment and that Woods & Erickson had unlawfully facilitated the fraudulent transfers.
Plaintiff loses; law firm wins.
The case is Cadle Co. v. Woods & Erickson LLP, decided March 26, 2015. (Mike Frisch)
Wednesday, March 4, 2015
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)
Tuesday, February 24, 2015
A recent opinion from the District of Columbia Bar Legal Ethics Committee.
Headnote summary of Opinion No. 368:
A law firm may not provide for or impose liquidated damages on a lawyer who, after departure, competes with the firm. A firm and a departing lawyer may have liability to one another, though, for work done before the lawyer's departure. Also, a firm may not restrict a departed lawyer's subsequent professional association or affiliation with partners or employees of the firm, except insofar as such activity is subject to legal limitations outside the Rules of Professional Conduct. Whether a choice of law provision in a partnership or employment agreement can avoid application of the D.C. Rule governing lawyer departures usually will depend on the location where the departing lawyer principally practiced.
The opinion also deals with choice of law issues. (Mike Frisch)
Thursday, February 12, 2015
The District of Columbia Court of Appeals has affirmed the dismissal of claims brought by a former Wiley Rein employee against the firm.
Alvin Hoff, formerly an at-will employee at the Wiley Rein law firm, seeks reversal of the trial court‟s dismissal of his two-count lawsuit against the firm. He claims: (1) "wrongful termination" of his employment because he refused the firm‟s demand to violate a criminal law, and (2) "retaliatory discharge" because that refusal, contrary to the direction of his supervisor, was protected by the District of Columbia Human Rights Act (DCHRA). More specifically, appellant Hoff, a former records coordinator for appellee Wiley Rein, claims that he was fired unlawfully because he had not been willing to enhance, and thus falsify, the performance evaluation of another employee at the request of Hoff‟s supervisor, who allegedly had tender feelings for that employee. Hoff contends that the trial court erred in granting Wiley Rein‟s motion to dismiss on the ground that he had failed to plead facts sufficient to support either count in his complaint. Perceiving no error, we affirm.
Senior Judge Ferren for a unanimous division of the court
whatever reason Wiley Rein may have had for firing Hoff, his complaint offers no explanation beyond the fanciful proposition that [supervisor] McCleskey fired Hoff because Hoff had filed an "unsatisfactory" evaluation of Ward—an evaluation that, as Hoff‟s own complaint acknowledges, McCleskey himself had requested.
Thursday, December 4, 2014
We don't report on many (indeed any) worker's compensation cases but this one from the West Virginia Supreme Court of Appeals caught our eye.
The employee worked as a legal secretary for a law firm. She was diagnosed with carpel tunnel syndrome and cubital tunnel syndrome.
The court affirmed the findings below that the condition was not the result of her clerical work
This Court agrees with the reasoning of the Office of Judges and the conclusions of the Board of Review. Under West Virginia Code of State Rules § 85-20-41.5, clerical work is not a high risk job for producing or developing carpal tunnel syndrome, and Ms. Whitten does not have any of the contributing factors listed under § 85-20-41.5. Ms. Whitten also has a non-occupational risk factor of obesity. Dr. Mukkamala and Dr. Thaxton found Ms. Whitten’s condition was not related to her work duties. Dr. Bolano opined Ms. Whitten’s condition was occupationally related, but not until January of 2013 after he had already been treating Ms. Whitten for these diagnoses and symptoms since February 27, 2012. In addition, her symptoms began in November of 2010, but she did not mention that her symptoms were caused by her work or related to her job duties until January of 2013.
The work responsibilities did not include "[a]wkward wrist position, vibratory tools, significant grip force, and high force of repetitive manual movements" that can lead to the diagnosed conditions. (Mike Frisch)
Sunday, November 30, 2014
A decision issued last week by the California Court of Appeals, Second District, Division Three holds
The question before us is whether the attorney-client privilege applies to intrafirm communications between attorneys concerning disputes with a current client, when that client later sues the firm for malpractice. We conclude that when an attorney representing a current client seeks legal advice from an in-house attorney concerning a dispute with the client, the attorney-client privilege may apply to their confidential communications. Adoption of the so-called "fiduciary" and "current client" exceptions to the attorney-client privilege is contrary to California law because California courts are not at liberty to create implied exceptions to the attorney-client privilege. In the unpublished portion of the opinion, we hold that the exceptions to the attorney-client privilege embodied in Evidence Code sections 958 and 962 do not apply to the circumstances presented here. Accordingly, we grant in part the petition of Edwards Wildman Palmer LLP and Dominique Shelton for a writ of mandate, and remand to the trial court for further proceedings.
The client had retained the law firm to pursue an invasion of privacy claim against the Daily Mail. As the court noted
The relationship between [client] Mireskandari and the Firm was short lived and, for the most part, contentious.
The court rejected the suggestion that internal counsel and the client were "joint clients" of the firm
Shelton and Mireskandari were not joint clients for purposes of section 962. Shelton and Mireskandari did not retain the Firm "upon a matter of common interest." Mireskandari retained the Firm and Shelton to represent him in the Daily Mail case; Shelton consulted with in-house counsel not as a party to that action, but to obtain advice on how best to address Mireskandari's complaints about billing and his threats to hold the firm responsible for any damages he suffered. Mireskandari and Shelton were not co-parties; they did not employ the same attorney to oppose claims of an adversary or pursue a claim as joint plaintiffs; they were not represented by the same attorney in a business transaction.
The court vacated an order that had permitted discovery into the firm's internal communications.
Thank you to my former student Daniel Woofter for sending me the case. His article from the Georgetown Journal of Legal Ethics is cited in the opinion. (Mike Frisch)
Friday, November 14, 2014
The New Jersey Appellate Division has reversed a lower court order and dismissed a legal malpractice claim.
Under the facts of this case, [attorney] Ward argues that he is shielded from liability as a partner in a limited liability partnership ("LLP") and is therefore not vicariously liable for the alleged legal malpractice of his former partner, defendant John Olivo. Ward also contends that he is otherwise entitled to a dismissal of the complaint because plaintiff Mortgage Grader, Inc. ("MG") failed to serve an affidavit of merit ("AOM") on Ward or substantially comply with the AMS.
The primary issue is whether Ward loses his liability protection as a partner in an LLP if the LLP failed to purchase a tail insurance policy. We disagree with the motion judge that such a sanction is authorized and hold that when attorneys practice law as an LLP, and the LLP fails to obtain and maintain professional liability insurance as required by Rule 1:21-1C(a)(3), the LLP does not revert to a general partnership ("GP") under the Uniform Partnership Act ("UPA"),
if attorneys practice as an LLP, and the LLP fails to maintain malpractice insurance as required by the court rules, then the Supreme Court may terminate or suspend the LLP's right to practice law or otherwise discipline it. As currently written, however, the court rules do not authorize a trial court to sanction a partner of an LLP for practicing law as an LLP without the required professional liability insurance by converting an otherwise properly organized LLP into a GP.
Wednesday, October 22, 2014
My favorite issue of the Georgetown Journal of Legal Ethics -our yearly compilation of student notes on current developments in ethics law - has just hit the street.
This issue holds up well with the past editions and gives the reader excellent exposure to the hottest legal ethics issues that face 21st century members of the legal profession.
As co-faculty advisor (along with my colleague Professor Mitt Regan) to the journal, I am biased in its favor.
With that disclaimer, I highly recommend that all practitioners with an interest in ethics take a look.
Kudos to the journal staff for their hard work and dedication to this notable contribution to the profession. (Mike Frisch)
Wednesday, August 13, 2014
The New Hampshire Supreme Court has reversed an order dismissing a legal malpractice case.
The court held that there is no per se rule that requires a legal malpractice plaintiff to offer expert testimony
...the trial court granted the defendants’ motion to dismiss because "the plaintiff . . . failed to disclose an expert capable of establishing the standard of care and the breach of that standard of care as well as the proximate cause of the alleged injuries." The trial court based its decision on a categorical rule that, "[b]ecause the extent to which an attorney, in the exercise of due care, should investigate a claim to file a timely action is not a matter of common knowledge, a jury would not be able to evaluate the adequacy of the attorney’s actions without the aid of expert testimony." (Quotation omitted.) Because we have not adopted such an unqualified rule, the trial court erred as a matter of law in granting the motion to dismiss. See, e.g., Carbone, 151 N.H. at 528-29 (explaining case was not "one of those exceptional cases where [the defendant’s] breach of the standard of care was so obviously the legal cause of [the plaintiff’s] injuries that expert testimony was not required"); Wong, 148 N.H. at 374 (affirming dismissal of legal malpractice claim for lack of expert testimony because evidence of negligence was not "so patent and conclusive that reasonable persons c[ould] reach only one conclusion" (quotation omitted)).
The underlying case was brought by the plaintiff against a defendant wjo was alleged to have removed timber from his property. That case was dismissed on statute of limitations grounds. (Mike Frisch)
Tuesday, August 5, 2014
Collection of papers on "Jews and the Law" and in the legal profession: now published as a book and ebook
Collecting essays presented in a conference held at Cardozo Law School a few years ago, editors Ari Mermelstein, Victoria Saker Woeste, Ethan Zadoff and Marc Galanter have published a new book on Jews and Judaism in the legal profession and law. Called Jews and the Law, it is a book of legal history and current insights about the profession, law firms, networks, assimilation, and antisemitism. Here is a story about it by Dan Ernst on Legal History Blog. It was published through my Quid Pro Books publishing project, and so it no longer sits as a collection of unpublished papers from a conference but is now -- I am proud to say -- a resource that can be read by anyone or recommended to a library to acquire. Its Amazon page for the paperback is here, and it can also be bought at many other places and in ebook sites such as Apple, Play, Kindle and Nook. [Alan Childress]
Monday, July 28, 2014
The District of Columbia Bar Legal Ethics Committee has a new opinion on an important real-world issue
When a lawyer is seeking employment with an entity or person adverse to his client, or with the adversary's lawyer, a conflict of interest may arise under Rule 1.7(b)(4) if the lawyer’s professional judgment on behalf of the client will be, or reasonably may be, adversely affected by the lawyer’s own financial, business, property, or personal interests (for purposes of this Opinion, a lawyer’s own financial, business, property, or personal interests are collectively referred to as a “personal interest conflict”). Both subjective and objective tests must be applied to determine whether a personal interest conflict exists.
There is no “bright line” test for determining the point during the employment process when a personal interest conflict arises, and that point may vary. There are a number of factors to consider in determining whether a personal interest conflict exists, including whether the individual lawyer is materially and actively involved in representing the client and, if so, whether the lawyer’s interest in the prospective employer is targeted and specific, and/or has been communicated to, and reciprocated by, the prospective employer.
Where the prospective employer is affiliated with, but separate and distinct from, the entity adverse to the job-seeking lawyer's client, there may be no personal interest conflict in the first instance, because the adversary and the prospective employer may be separate entities for conflicts purposes.
If a personal interest conflict arises, there are three possible courses of action that may be available to the individual lawyer, each of which is subject to applicable requirements of the D.C. Rules of Professional Conduct: (a) disclosing to the client the existence and nature of the personal interest conflict and the possible adverse consequences of the lawyer's representation of the client and obtaining the client's informed consent to the representation; (b) withdrawing from the representation; or, (c) discontinuing seeking employment with the client's adversary or the adversary's lawyer until all pending matters relating to that potential new employment have been completed.
The personal interest conflict of an individual lawyer in a law firm, nonprofit, or corporate legal department is not imputed to the other lawyers in the law firm, nonprofit, or corporate legal department, so long as the personal interest conflict does not present a significant risk of adversely affecting the representation of the client by such other lawyers. The imputation rule does not apply to a government agency.
A subordinate lawyer who discusses a potential personal interest conflict with his supervisory lawyer, and acts in accordance with the supervisory lawyer's reasonable determination of whether the subordinate lawyer has a personal interest conflict and follows the supervisory lawyer's recommended course of action, will not be held professionally responsible even if it is subsequently determined that the supervisory lawyer's determination of whether there was a personal interest conflict, and/or the recommended course of action, were incorrect under the Rules.
I have found this issue to arise with some frequency. Guidance always is helpful. (Mike Frisch)
Tuesday, July 1, 2014
The New York Court of Appeals has answered a question posed by the United States Court of appeals for the Second Circuit as follows
We hold that pending hourly fee matters are not partnership "property" or "unfinished business" within the meaning of New York's Partnership Law. A law firm does not own a client or an engagement, and is only entitled to be paid for services actually rendered.
The litigation involved trustee claims against Thelan and Coudert Brothers.
The notion that law firms will hire departing partners or accept client engagements without the promise of compensation ignores commonsense and marketplace realities. Followed to its logical conclusion, the trustees' approach would cause clients, lawyers and law firms to suffer, all without producing the sought-after financial rewards for the estates of bankrupt firms.
Treating a dissolved firm's pending hourly fee matters as partnership property, as the trustees urge, would have numerous perverse effects, and conflicts with basic principles that govern the attorney-client relationship under New York law and the Rules of Professional Conduct. By allowing former partners of a dissolved firm to profit from work they do not perform, all at the expense of a former partner and his new firm, the trustees' approach creates an "unjust windfall," as remarked upon by the District Court Judge in Geron (476 BR at 740)...
Ultimately, what the trustees ask us to endorse conflicts with New York's strong public policy encouraging client choice and, concomitantly, attorney mobility...
Tuesday, June 3, 2014
The civil claims of an associate attorney against her former firm may proceed in some respects, according to a decision issued today by the New York Appellate Dvision for the First Judicial Department.
In January 2008, plaintiff Ji Sun Jennifer Kim was hired as an associate attorney in the tax certiorari department of defendant law firm Goldberg, Weprin, Finkel, Goldstein, LLP. In January 2009, plaintiff learned she was expecting a child and informed the law firm of her pregnancy. In June 2009, while visibly pregnant, plaintiff was reprimanded by a partner at the law firm for allegedly reading a book during work hours. According to plaintiff, the partner stood extremely close and screamed at her, causing plaintiff to fear that she would be hit.
Plaintiff promptly emailed a complaint about the incident to defendants Arnold Mazel and Barry Zweigbaum, both partners in the law firm. In that complaint, plaintiff alleged that two other attorneys, both male, were engaging in similar behavior at the same time but were not admonished. Plaintiff's email expressed concern that she was singled out and treated unfairly due to her pregnancy. Defendant Andrew Albstein, the law firm's managing partner, wrote an email to plaintiff reiterating that reading a book during work hours was inappropriate, and denying that plaintiff was reprimanded due to her pregnancy. Plaintiff also alleges that Mazel told her that she made her situation worse by complaining.
In September 2009, plaintiff took 12 weeks' maternity leave. Upon her return to work in December 2009, plaintiff began to express breast milk at the office. At some point in February 2010, Zweigbaum, within earshot of plaintiff, is alleged to have made an inappropriate gender-based comment. The next day, plaintiff complained to Zweigbaum and another partner about the offensive remark. Plaintiff alleges that after she complained, Zweigbaum barely spoke to her.
At around the same time, plaintiff asked if she could work a reduced schedule so she could take care of her baby at home, but Mazel denied the request. According to Mazel, February was the tax certiorari department's busy season, and firm policy did not allow lawyers to work a reduced work schedule. Albstein confirmed that in the previous 10 years, the law firm had never allowed any associate attorney to work part-time. In April 2010, the law firm terminated plaintiff's employment, purportedly for budgetary reasons.
The court affirmed the dismissal of claims of gender discrimination and hostile work environment.
The retaliation claim can go forward.
Law360 had this earlier report. (Mike Frisch)
Monday, May 12, 2014
An interesting decision last week from the Georgia Supreme Court on disqualification premised on a non-attorney employee
We granted certiorari in this case to determine whether the Court of Appeals correctly held that a conflict of interest involving a nonlawyer can be remedied by implementing proper screening measures in order to avoid disqualification of the entire law firm. For the reasons set forth below, we hold that a nonlawyer’s conflict of interest can be remedied by implementing proper screening measures so as to avoid disqualification of an entire law firm. In this particular case, we find that the screening measures implemented by the nonlawyer’s new law firm were effective and appropriate to protect against the nonlawyer’s disclosure of confidential information. However, we remand this case to the trial court for a hearing to determine whether the new law firm promptly disclosed the conflict.
The case involves a wrongful death action brought by the estate of a person who was shot and killed at an apartment complex. The paralegal was the plaintiff 's primary contact and worked on the fact investigation before moving (with an intervening stop at another job) to the firm that represented the defendant apartment complex.
The conflict was not discovered when the paralegal first moved to the defendant's firm, as suit had not yet been filed and the paralegal did not know that the firm represented the defendant.
Screening was implemented after the conflict was discovered.
The court set forth a test for disqualification under the circumstances
...the new firm will be disqualified where (1) the nonlawyer has already revealed the confidential information to lawyers or other personnel in the new firm; (2) screening would be ineffective; or (3) “the nonlawyer necessarily would be required to work [or has actually worked at the new firm] on the other side of the same or a substantially related matter on which the nonlawyer [previously] worked.”
Justice Nahmias concers but has concerns about the state of screening in Georgia
It should be noted... that this is yet another case that raises questions about whether Rule 1.10, and in particular its implicit rejection of the use of screening measures to avoid imputed disqualification of an entire law firm when one of their lawyers would be disqualified, should be reconsidered and amended or at least clarified. After all, the rules already allow the use of screening to avoid conflicts imputed from some lawyers – former government lawyers, judges, and arbitrators. See Rules 1.11 (a) and 1.12 (c). And many of the factors that the Court discusses in support of our conclusion that screening measures, rather than imputed disqualification, may be appropriate for nonlawyers also apply to many other lawyers – especially associates. In addition, we should acknowledge that, as in the rest of our economy, it is becoming far less common for lawyers and their nonlawyer assistants to remain with the same firm for an entire career, whether by choice or due to layoffs or merger and dissolution of firms. This Court can continue deciding – or avoiding deciding – the impact of Rule 1.10 on a case-by-case basis, but the process for amending the Bar Rules provides opportunities for greater and broader input from those whose interests may be affected by imputed disqualification as well as consideration of facts and circumstances beyond those presented in the record of a particular case. That seems a preferable way to address these issues.
Wednesday, April 30, 2014
The Minesota Supreme Court has remanded the order that had disqualified Covington & Burling in civil litigation
This case presents several issues regarding disqualification of legal counsel because of a violation of Minn. R. Prof. Conduct 1.9(a) arising from a conflict of interest with a former client. These issues include who has standing to appeal a district court order granting a motion to disqualify, the legal standard for determining whether Rule 1.9(a) has been violated, and whether the right to seek disqualification can be waived. Appellant State of Minnesota retained appellant Covington & Burling, LLP (Covington) to represent it in a natural resource damages (NRD) case against respondent 3M Company involving the manufacture and disposal of perfluorochemicals (PFCs). Covington previously had represented 3M in legal and regulatory matters related to 3M’s fluorochemicals (FC) business from 1992 to 2006. Covington first appeared on behalf of the State in this action in January 2011. In October 2012, the district court granted 3M’s disqualification motion. Both the State and Covington appealed. The court of appeals dismissed Covington’s appeal for lack of standing and affirmed the disqualification of Covington. We granted Covington’s and the State’s respective petitions for review. For the reasons that follow, we affirm in part, reverse in part, and remand to the district court.
Here, the district court concluded, based on the evidence in the record, that Covington obtained confidential information in its prior representation of 3M, and the district court presumed that the information was shared with all Covington attorneys. But the district court did not meaningfully assess Covington’s claims that this information was no longer confidential either because the information had been disclosed to regulatory authorities and the public or because 3M waived the attorney-client privilege by initiating a separate, concurrent lawsuit against Covington for breach of fiduciary duty and breach of contract. The district court also did not analyze whether there is a substantial risk that any remaining confidential information would materially advance the State’s position in the NRD case. Therefore, the district court abused its discretion by failing to consider all legally relevant factors before concluding that the matters are substantially related...
Because we conclude that the district court did not consider legally relevant factors in conducting its disqualification analysis under Rule 1.9(a) and we conclude that a party can waive the right to seek disqualification of opposing counsel, we remand this case to the district court for its full consideration of these issues in a manner consistent with this opinion. The decision whether to reopen the record on remand rests within the discretion of the district court.
The ABA Journal had reported the trial court's order. (Mike Frisch)
Friday, January 17, 2014
A law firm organized in and with its main office in Maine (hah!) also has an office with resident partners in Concord, New Hampshire.
The law firm filed a Freedom of Access Act request with the Maine Revenue Service "for documents containing methodologies, formulas, or calculations relating to apportionment of Maine income tax liability for nonresident partners of a professional services partnership entity based in or with a significant business presence in Maine."
The service denied the law firm's request. The decision was affirmed in Superior Court and in a decision issued yesterday by the Maine Supreme Judicial Court. (Mike Frisch)
Wednesday, January 8, 2014
The date of termination of representation was the key issue in an appeal of a trial court determination that declined to dismiss a legal malpractice claim on statute of limitations grounds.
The law firm represented the client in a matrimonial matter.
The client sent the firm an e-mail on August 7, 2008 questioning the handling of her matter. The representation was formally terminated on August 19.
The client sued for legal malpractice by complaint filed August 9, 2011.
The firm claimed that the e-mail ended their representation and that the former client was SOL (here, a polite way of saying that the three-year statute had run).
The New York Appellate Division for the Second Judicial Department agreed with the trial court
Here, the plaintiff's email message dated August 7, 2008, does not conclusively contradict the allegation, set forth in paragraph 103 of her complaint, that the defendants were not discharged as her counsel until August 19, 2008. The email message makes demands and accusations but does not necessarily or unequivocally terminate the parties' attorney-client relationship. The email message states, inter alia, that, "without the judgment being signed, I have no money with which to pay," which suggests the need for further legal work to be performed, and also states that since the plaintiff and counsel both attend the same synagogue, "it will be a pity to have bad blood between us." In light of those statements, and the Consent to Change Attorney that was not executed until August 19, 2008, the defendants failed to conclusively establish that the attorney-client relationship did not continue until the latter date. Accordingly, the defendants' motion to dismiss the complaint was properly denied.
Clarity on such matters favors the attorney. (Mike Frisch)
An order dismissing a legal malpractice claim based on allegedly erroneous tax advice was reversed by the New York Appellate Division for the Second Judicial Department.
The facts of the alleged malpractice
The plaintiff commenced this action to recover damages allegedly sustained as a result of the defendants' legal malpractice. As alleged in the complaint, the plaintiff retained the defendants to represent it in connection with the sale of certain real property and a related exchange of "like-kind property" pursuant to the Internal Revenue Code (see 26 USC § 1031). According to the allegations in the complaint, the plaintiff, based upon the defendants' advice, selected LandAmerica 1031 Exchange Services, Inc. (hereinafter LandAmerica), as the qualified intermediary to hold a portion of the sale proceeds, totaling $5.5 million, for the exchange of like-kind property pursuant to 26 USC § 1031. The complaint alleged, inter alia, that the defendants negligently represented the plaintiff inasmuch as they reviewed, and advised the plaintiff to execute, an agreement with LandAmerica, under which the exchange funds were to be held in a commingled account and not a qualified escrow account or trust. Soon after the sale proceeds were transferred to LandAmerica, its parent corporation, LandAmerica Financial Group, Inc., declared bankruptcy. According to the complaint, the plaintiff's funds were frozen for several years during the bankruptcy proceedings, and the plaintiff lost a portion of the funds because they were not held in a qualified escrow account or trust. The complaint further alleged that the plaintiff could not defer the taxes on the capital gains from the initial sale, as it did not have access to its funds to purchase a replacement property within the required 180-day period.
The defendant law firm failed to demonstrate that dismissal was appropriate
Here, construing the complaint liberally, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible inference, as we are required to do, the plaintiff stated a cause of action to recover damages for legal malpractice (citations omitted) The plaintiff alleged in the complaint that the defendants were negligent in failing, inter alia, to advise it to keep its exchange funds in a qualified escrow account or trust, and that this negligence was a proximate cause of its damages. The defendants' contentions that it was the conduct of the plaintiff's manager and unforeseeable events that were the proximate causes of the plaintiff's damages, and that the defendants did not depart from the standard of care, concern disputed factual issues that are not properly raised and resolved on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7).
Tuesday, November 5, 2013
Tuesday, October 15, 2013
The Tennessee Court of Appeals has reversed and remanded an order dismissing claims brought against a Washington, D.C. attorney by a Memphis law firm.
The D.C. attorney sought the assistance of the Memphis firm in connection with a lawsuit filed in Maryland. A contract was entered into for the attorney and the firm to serve as co-counsel.
The Memphis firm sued the attorney for not paying one-half of the expenses, as provided for in the contract.
The trial court dismissed for lack of personal jurisdiction. The court here disagreed and reinstated the suit. (Mike Frisch)