Justia Legal Ethics Opinion Summaries

Plaintiffs are minority limited partners in Urban Shopping Centers, L.P., in which defendants acquired a majority interest in 2002. Plaintiffs allege breach of fiduciary and contractual duties, claiming that, pursuant to the operating agreement, defendants were not to compete with them in business opportunities. They alleged that defendants stopped growing plaintiffs’ business, disregarded partnership agreement terms, and stole plaintiffs’ opportunities. During discovery, plaintiffs moved to compel production of documents concerning business negotiations in which each defendant’s attorney discussed with nonclients liability and obligations as Urban’s general partner and use of a “synthetic partnership” to avoid partnership obligations. Defendants claimed privilege, but plaintiffs argued that, having disclosed legal advice on these subjects with each other outside of any confidential relationship, defendants could not later object that those subjects were privileged. The motion was granted; defendants refused to comply and were held in contempt. The appellate court affirmed. The supreme court reversed, holding that attorney-client privilege had not been waived because the sought-after disclosures had occurred in an extrajudicial context and were not thereafter used by the clients to gain a tactical advantage in litigation. The “subject-matter waiver” doctrine was not shown to be applicable.View "Ctr. Partners, Ltd. v. Growth Head GP, LLC, " on Justia Law

Appellant RFT Management Co., L.L.C. (RFT) brought this action against respondents Tinsley & Adams, L.L.P. and attorney Welborn D. Adams (collectively, Law Firm) based on their legal representation of RFT during the closing of its purchase of two real estate investment properties in Greenwood County. RFT alleged claims for (1) professional negligence (legal malpractice), (2) breach of fiduciary duty, (3) violation of the South Carolina Unfair Trade Practices Act1 (UTPA), and (4) aiding and abetting a securities violation in contravention of the South Carolina Uniform Securities Act of 2005 (SCUSA). The trial court granted a directed verdict in favor of Law Firm on RFT's causes of action regarding the UTPA and SCUSA, and it merged RFT's breach of fiduciary claim with its legal malpractice claim. The jury returned a verdict in favor of Law Firm on RFT's remaining claim for legal malpractice. RFT appealed, and the Supreme Court certified the case from the Court of Appeals for its review. Upon review of the matter, the Supreme Court affirmed the trial court with respect to all issues brought on appeal. View "RFT Management Co. v. Tinsley & Adams" on Justia Law

A jury returned a special verdict that: (a) awarded damages against an attorney and his girlfriend based upon the jury's finding that they had breached their fiduciary duties to a former client of the attorney by purchasing half of his stock in a closely held corporation for less than its fair market value; and (b) cancelled debts owing by the corporation to the attorney and his girlfriend based upon the jury's finding that they had breached their fiduciary duties to a shareholder, the former client's widow, by making loans to the corporation. The district court granted a new trial on the ground that there was insufficient evidence to justify the verdict, and this appeal followed. Finding sufficient evidence to support the jury's verdict, the Supreme Court affirmed the grant of a new trial. View "Berry v. McFarland" on Justia Law

Petitioners Club Vista Financial Services and others (Club Vista) entered into a real estate development project with real parties in interest Scott Financial Corporation and others (Scott Financial). When a loan guaranteed by some of the Petitioners went into default, Club Vista filed an action against Scott Financial. During discovery, Scott Financial obtained a deposition subpoena for Club Vista's attorney, K. Layne Morrill. An Arizona court granted Morrill's motion to quash the subpoena. The Nevada district court, however, denied Morrill's motion for a protective order and permitted Scott Financial to depose Morrill as to the factual matters supporting the allegations in the complaint. The Supreme Court granted Morrill's petition for writ of mandamus or prohibition in part after adopting the framework espoused by the Eighth Circuit Court of Appeals in Shelton v. American Motors Corp., which states that the party seeking to depose opposing counsel must demonstrate that the information sought cannot be obtained by other means, is relevant and nonprivileged, and is crucial to the preparation of the case. Because the district court did not analyze the Shelton factors, the Court directed the district court to evaluate whether, applying the Shelton factors, Scott Financial may depose Morrill. View "Club Vista Fin. Servs., LLC v. Dist. Court" on Justia Law

Attorneys Jordan and Moses formed a two-member partnership in 2003 for an indefinite term and in 2006, Jordan communicated to Moses that he was contemplating ending the relationship, and later that month, stated that he was doing so. At issue was whether the Court of Appeals applied the proper legal analysis to the claim of wrongful dissolution of a partnership. Given that the Court of Appeals cited the disapproved language regarding "new prosperity" under Wilensky v. Blalock, it was unclear whether that court considered the evidence as indicative solely of Jordan's state of mind at the time he decided to dissolve the partnership, with a coincident intent to deprive Moses of some unidentified prospective business opportunity of the partnership, or whether the Court of Appeals considered the above evidence as showing that Jordan intended, through the dissolution, to retain a fee that was misappropriated from partnership funds. Accordingly, the court reversed the judgment of the Court of Appeals and remanded the case to that court for further proceedings. View "Jordan v. Moses" on Justia Law

The Vice Chancellor made an interim fee award of $2.5 million to plaintiff's attorneys, after the Court of Chancery's decision in Kurz v. Holbrook and the court's decision in Crown EMAK Partners, LLC v. Kurz. Delaware law rewarded plaintiffs' attorneys who provided a benefit to a Delaware corporation, even if the benefit did not produce immediate monetary rewards. The court held that the record supported the Vice Chancellor's factual finding that the voting rights preserved by the litigation were meaningful, and the court declined the invitation to fine tune the amount he awarded. Accordingly, the court affirmed the judgment of the Court of Chancery. View "Emak Worldwide, Inc. v. Kurz, et al." on Justia Law

Plaintiff, a former shareholder of XTO, moved for an award of attorneys' fees and expenses following the stipulated dismissal of her derivative action, which was largely mooted by measures taken by XTO's Board shortly after plaintiff's complaint was served. In addition to XTO, the former members of XTO's Board were named as defendants. Plaintiff objected to the fact that the cash bonuses paid to XTO's CEO and four other officers were not tax-deductible because they did not meet the requirements of section 162(m) of the Internal Revenue Code. The court denied the motion because an arguably poor business judgment, without more, did not excuse demand on the Board in a derivative action. View "Freedman v. Adams, et al." on Justia Law

Companion was authorized to license space in Wal-Mart stores to companies that sell durable medical equipment and entered into licensing agreements with defendants. In 2007, defendants shut down operations. Companion sued. Problems arose during discovery, including defense counsel motions to withdraw, allegations of inadequate responses to discovery requests, objections to the scope of discovery, refusal to attend depositions, motions to compel, multiple extensions, and claims of obstruction. After three years, the district judge imposed a default as to all counts, based on discovery violations by the defendants. The court eventually lifted the default except as to Companion's veil piercing claim, allowing the substantive claims to go to trial. A jury found for Companion and awarded more than $1 million in damages. Defendants, personally liable as a result of the default, appealed. The First Circuit vacated the default and remanded, "because the district court imposed such a severe sanction based on a very limited slice of the relevant facts." View "Companion Health Servs, v. Majors Mobility, Inc." on Justia Law

The parties disputed the amount that defendant, Fitracks, must advance to Noam Danenberg in connection with his defense of claims asserted against him by Aetrix, Fitracks' parent, in litigation pending before the district court (Underlying Action). They also disputed the amount that Fitracks must pay Danenberg as indemnification for this proceeding. Judgment was entered in favor of Danenberg for advancements in the amount of $292,019.91 and indemnification in the amount of $276,332.13. Interest on these amounts, compounded quarterly, shall accrue at the legal rate beginning February 27, 2012 through the date of payment. Going forward, unless modified by stipulation, the parties shall follow the procedures set forth in this opinion. View "Danenberg v. Fitracks, Inc." on Justia Law

The Town of Little Compton filed a complaint against the town firefighters union, contending that the union, or its representative, had engaged in the unauthorized practice of law when the union allowed its nonlawyer business agent to represent it at a labor arbitration hearing. The Unauthorized Practice of Law Committee concluded that the union representative's action constituted a technical violation of the statute governing the unauthorized practice of law. Mindful that this type of lay representation of unions in labor arbitrations is a common practice, the Committee petitioned the Supreme Court on how to proceed. The Supreme Court held that, although the conduct involved in this case may have been the practice of law pursuant to the statute, because of the long-standing involvement of nonlawyer union employees at public grievance arbitrations, the Court would not limit this involvement at this time. View "In re Town of Little Compton" on Justia Law