Justia Legal Ethics Opinion Summaries

Minority partners in various cellular telephone partnerships hired attorney Michael A. Pullara to pursue breach of fiduciary duty claims against the majority partner, AT&T. The client agreements allowed Pullara to hire joint venture counsel, and he retained Ajamie LLP. Both firms agreed to a 50% discount on their hourly rates in exchange for a contingency fee if they prevailed. After lengthy litigation, the minority partners reached a favorable settlement with AT&T. However, a dispute arose between Pullara and Ajamie over the fee division, leading Ajamie to file for a charging lien to secure its fee.The Court of Chancery of the State of Delaware granted a charging lien to preserve Ajamie’s claim against the settlement proceeds. Ajamie then sought to enforce the lien. The court held that the fee-sharing agreement between Pullara and Ajamie was unenforceable under the Texas Disciplinary Rules of Professional Conduct because the clients had not consented to the specific terms of the fee-sharing arrangement. However, the court ruled that Ajamie was still entitled to reasonable compensation under the principle of quantum meruit.The court calculated Ajamie’s lodestar at $13,178,616.78, based on market rates adjusted annually. Considering the Mahani factors, the court found that an upward adjustment was warranted due to the complexity and duration of the litigation, the significant results obtained, and the partially contingent nature of the fee arrangement. The court awarded Ajamie a total fee of $15,814,340.14, including a 20% increase for the contingency risk. After deducting amounts already paid, Ajamie was awarded $13,014,721.87 plus pre- and post-judgment interest. The court ordered the escrow agent to release this amount to Ajamie. View "Cellular Telephone Company Litigation cases" on Justia Law

In this case, the plaintiff, Shandor S. Badaruddin, was sanctioned by the Nineteenth Judicial District Court, Lincoln County, for his conduct as defense counsel in a criminal trial involving his client, Kip Hartman, who faced multiple felony charges related to securities and insurance fraud. The trial was conducted under strict time constraints due to the COVID-19 pandemic, and the court allocated equal time for both the prosecution and defense. Badaruddin was accused of mismanaging his allotted time, leading to a mistrial declaration by the District Court.The District Court found that Badaruddin had deliberately delayed the trial, which led to the mistrial. Consequently, the court imposed monetary sanctions amounting to $51,923.61 against Badaruddin for the costs associated with the trial. Badaruddin appealed the sanctions, arguing that he was not given adequate notice of the court's concerns and that his actions were not deliberate but rather a result of the challenging circumstances.The Supreme Court of the State of Montana reviewed the case and noted that the U.S. District Court had previously ruled that the mistrial declaration was erroneous. The U.S. District Court found that Badaruddin's actions did not constitute deliberate delay and that his efforts to manage the trial time were competent. The U.S. District Court's ruling was affirmed by the U.S. Court of Appeals for the Ninth Circuit, which held that Hartman could not be retried due to double jeopardy protections.Given the federal court's findings, the Supreme Court of Montana concluded that there was no basis for the sanctions under § 37-61-421, MCA, as there was no multiplication of proceedings. The court reversed the District Court's sanction order, determining that the costs incurred were not "excess costs" as defined by the statute. View "Badaruddin v. 19th Judicial District" on Justia Law

The case involves a dispute over the control of a nonprofit corporation, which was dissolved by the State due to the executive director’s failure to pay taxes and fees and renew corporate registration. Despite the dissolution, the directors and members continued the corporation’s activities, unaware of the loss of corporate status. When the issue was discovered, some individuals filed paperwork to incorporate a new entity with the same name, offices, and bank account. A national affiliate proposed elections to resolve the leadership, but the new incorporators denied affiliation with the old corporation. Elections were held, and new directors were chosen, leading to litigation over who had authority to act on behalf of the new corporation.The Superior Court of Alaska, Third Judicial District, Anchorage, ruled that the new corporation was essentially the same entity as the old one, with the same members. The court concluded that the disputed election was valid and that the newly elected individuals had authority to act on behalf of the corporation. The court ousted the individuals who had filed the incorporation paperwork and awarded attorney’s fees to the prevailing parties but exempted individual litigants from liability for these fees.The Alaska Supreme Court largely affirmed the Superior Court’s rulings but vacated and remanded the dismissal of one third-party claim for a more detailed explanation. The court also vacated and remanded the Superior Court’s decision to excuse individual litigants from liability for attorney’s fees, finding the reason for this ruling invalid. The main holding was that the new corporation was the same entity as the old one, and the election of new directors was valid, giving them authority to act on behalf of the corporation. View "Aiken v. Alaska Addiction Professionals Association" on Justia Law

The case involves a group of bond investors (plaintiffs) who bought and sold certain types of corporate bonds from and to a group of financial institutions and major dealers in the corporate bond market (defendants). The plaintiffs alleged that the defendants violated antitrust laws by engaging in a pattern of parallel conduct and anticompetitive collusion to restrict forms of competition that would have improved odd-lot pricing for bond investors. The district court granted the defendants' motion to dismiss the case.Several months after the district court's order, it was discovered that the district court judge had presided over part of the case while his wife owned stock in one of the defendants. Although she had divested that stock before the district court judge issued his decision, the plaintiffs appealed, arguing that the district court judge should have disqualified himself due to this prior financial interest of his wife.The United States Court of Appeals for the Second Circuit was tasked with deciding whether, pursuant to 28 U.S.C. § 455, vacatur was warranted because the district court judge was required to disqualify himself before issuing his decision. The court concluded that while there was no outright conflict when the district court judge ruled on the merits of this action, § 455(a) and related precedents required pre-judgment disqualification, thus vacatur was warranted. As a result, the court vacated the judgment and remanded the case to the district court for further proceedings. View "Litovich v. Bank of America Corp." on Justia Law

The case revolves around a lawsuit filed by Masimo Corporation against John Bauche, BoundlessRise, LLC (Boundless), and Skyward Investments, LLC (Skyward), represented by The Vanderpool Law Firm (Vanderpool). The lawsuit was based on Bauche's misappropriation of corporate funds while he was a Masimo employee. Bauche had fraudulently engaged Boundless, a company he solely owned, as an "outside vendor" for Masimo, and later transferred the money paid for fraudulent vendor services to Skyward, another company he solely owned. Masimo's attempts to obtain substantive discovery responses from the defendants were met with boilerplate objections, leading to a motion to compel responses and a request for discovery sanctions.The case was stayed twice, first due to Bauche's appeal from the denial of an anti-SLAPP motion, and then to allow a federal criminal case against him to be resolved. The referee supervising discovery recommended that the motion to compel be granted and Masimo be awarded $10,000 in discovery sanctions. The trial court agreed and entered an order to that effect, awarding sanctions against Vanderpool and the three defendants.In the Court of Appeal of the State of California Fourth Appellate District Division Three, Vanderpool appealed the order, arguing that it had substituted out of the case as counsel before the motion to compel was filed and was therefore unsanctionable. The court rejected this argument, stating that it is not necessary to be counsel of record to be liable for monetary sanctions for discovery misuse. The court affirmed the order, concluding that Vanderpool and its clients were liable for discovery misuse. The court also criticized Vanderpool for its lack of civility in the proceedings. View "Masimo Corporation v. The Vanderpool Law Firm, Inc." on Justia Law

The case involves a group of appellants who allegedly purchased luxury vehicles with funds provided by Dilmurod Akramov, the owner of CBC and D&O Group. The appellants would then transfer the vehicle titles back to Akramov's D&O Group without receiving cash or equivalent in exchange. They would then claim a "trade-in credit" against the sales tax due on the purchase of a vehicle. The Arkansas Department of Finance and Administration (DFA) argued that these were not valid sales as required by Arkansas law and denied the sales-tax-refund claims.The appellants challenged the DFA's decision through the administrative review process, which affirmed the DFA's decision. The appellants then appealed to the Pulaski County Circuit Court for further review. The circuit court found that the appellants' attorney, Jason Stuart, was a necessary witness and therefore disqualified him from further representing the appellants. The court also held the appellants in contempt for failing to provide discovery per the court's order.The Supreme Court of Arkansas affirmed the circuit court's decision. The court held that the circuit court did not abuse its discretion in disqualifying Stuart. The court applied the three-prong test from Weigel v. Farmers Ins. Co., which requires that the attorney's testimony is material to the determination of the issues being litigated, the evidence is unobtainable elsewhere, and the testimony is or may be prejudicial to the testifying attorney’s client. The court found that all three prongs were satisfied in this case. The court also affirmed the circuit court's decision to strike the third amended and supplemental complaint filed by Stuart after his disqualification. View "STUART v. WALTHER" on Justia Law

This case involves attorney Grant Bursek's departure from Johnson Family Law, P.C. (MFL). When Bursek left MFL, 18 clients chose to continue their representation with him, prompting MFL to enforce an agreement that required Bursek to pay a per-client fee. Bursek argued that this fee violated the Colorado Rules of Professional Conduct, which prohibit attorneys from making employment agreements that restrict the right to practice after the termination of the relationship. The Supreme Court of the State of Colorado agreed with Bursek, holding that while a firm may seek reimbursement of specific client costs when a client leaves the firm to follow a lawyer, a firm cannot require a departing attorney to pay a non-specific fee in order to continue representing clients who wish to retain their relationship with that attorney. The court found that such an agreement constitutes an impermissible restriction on the attorney's right to practice and on the clients' right to choose their counsel. The court also held that this provision of the employment agreement was unenforceable, as it violated public policy as expressed in the Colorado Rules of Professional Conduct. The court affirmed in part and reversed in part the Court of Appeals' decision. It affirmed the decision that the per-client fee was unenforceable but reversed the Court of Appeals' decision to sever and attempt to enforce other parts of the agreement. The case was remanded for further proceedings consistent with the opinion. View "Johnson Family Law v. Bursek" on Justia Law

The case involves the district attorneys of Los Angeles and San Francisco (the People) filing a complaint against the law firm Potter Handy, LLP and several of its attorneys (collectively, Potter) for violation of the Americans with Disabilities Act of 1990 (ADA). The People allege that Potter Handy has filed numerous ADA complaints containing false standing allegations as part of a scheme to extract settlements from small business owners in California. The People claim that this conduct constitutes an “unlawful” business practice under California's unfair competition law (UCL).Potter Handy demurred on the ground that the litigation privilege, which generally protects communications made as part of a judicial proceeding, immunizes their alleged conduct. The People argued that the litigation privilege does not bar their UCL claim as it is predicated on violations of a regulatory statute or rule that is itself exempt from the privilege. The trial court sustained Potter’s demurrer without leave to amend, and the People appealed.The Court of Appeal of the State of California, First Appellate District, Division Three, affirmed the trial court's decision. The court held that the litigation privilege does apply to the People's UCL claim. The court concluded that carving out an exception to the litigation privilege for the People’s UCL claim would not be proper because the Legislature’s prescribed remedies—prosecution directly under section 6128(a) and State Bar disciplinary proceedings—remain viable. View "People v. Potter Handy, LLP" on Justia Law

A limited liability partnership and one of its partners retained a lawyer but limited the scope of representation to having the lawyer represent the partnership in a specific, ongoing case. After the partnership lost the case, the partner sued the lawyer for malpractice. In an amended complaint, the partnership was added as a plaintiff. The partner’s complaint was filed before the statute of limitations ran; the amendment was filed after. The trial court issued its judgment of dismissal, the partner filed a motion for reconsideration along with a proposed second amended complaint. The trial court denied the motion as untimely and without merit because the proffered second amended complaint did not “present any new allegations which could support the claim.   The Second Appellate District affirmed. The court concluded as a matter of law that the partner has suffered no damage as a result of the attorney’s alleged malpractice to the LLP during the Wells Fargo litigation and that the partner’s malpractice claims were properly dismissed. Further, the court held that given that all damages for any malpractice claims were suffered by and belong to the LLP, there is no “reasonable possibility” that the partner can amend the complaint to state a viable malpractice claim. View "Engel v. Pech" on Justia Law

This appeal arose from a district court’s decision denying a motion for sanctions and attorney fees against Roy Gilbert’s former attorney, William Mitchell. The underlying litigation giving rise to the sanctions request stemmed from a dispute over a medical transport business and the business relationship between Gilbert and Richard Radnovich. Gilbert was the sole member of two LLCs: Resilient Transportation Leasing, LLC, and Resilient Transport LLC. According to Gilbert’s complaint, Radnovich was allegedly the owner of two business entities: Injury Care Emergency Medical Services (ICEMS) LLC and “Injury Care EMS,” as well as other entities not at issue in this appeal. In 2017, Gilbert executed an agreement purporting to sell Resilient Transport, LLC, to Injury Care EMS, LLC. According to Gilbert, Injury Care EMS, LLC, was never formed. Gilbert alleged that this “fictitious” LLC was an alter ego of Radnovich. The parties signed a supplement to the agreement which amended the business name for ICEMS, LLC to ICEMS, P.C, and clarified that Resilient Transport, LLC, would be subsumed by ICEMS, P.C. into another fictitious business called “Resilient Transport Operated by Injury Care EMS,” and that Resilient Transport, LLC would later be dissolved. Following a breakdown in both the agreement and the relationship, Gilbert sued Radnovich and the business entities. Mitchell filed the initial and amended complaint on behalf of Gilbert against Radnovich. Later in the proceedings, a second attorney substituted for Mitchell and soon after, both sides stipulated to dismiss the case with prejudice. A few weeks later, Radnovich filed a motion for sanctions and attorney fees against Mitchell. The district court denied the motion. Radnovich appealed, arguing the district court abused its discretion in denying sanctions and attorney fees against Mitchell. Finding no reversible error or abuse of discretion, the Idaho Supreme Court affirmed the district court’s decision. View "Gilbert v. Radnovich" on Justia Law