Justia Legal Ethics Opinion Summaries

This appeal stemmed from mass litigation between thousands of corn producers and an agricultural company (Syngenta). On one track, corn producers filed individual suits against Syngenta; on the second, other corn producers sued through class actions. The appellants were some of the corn producers who took the first track, filing individual actions. (the “Kellogg farmers.”) The Kellogg farmers alleged that their former attorneys had failed to disclose the benefits of participating as class members, resulting in excessive legal fees and exclusion from class proceedings. These allegations led the Kellogg farmers to sue the attorneys who had provided representation or otherwise assisted in these cases. The suit against the attorneys included claims of common-law fraud, violation of the Racketeer Influenced and Corrupt Practices Act (RICO) and Minnesota’s consumer-protection statutes, and breach of fiduciary duty. While this suit was pending in district court, Syngenta settled the class actions and thousands of individual suits, including those brought by the Kellogg farmers. The settlement led to the creation of two pools of payment by Syngenta: one pool for a newly created class consisting of all claimants, the other pool for those claimants’ attorneys. For this settlement, the district court allowed the Kellogg farmers to participate in the new class and to recover on an equal basis with all other claimants. The settlement eliminated any economic injury to the Kellogg farmers, so the district court dismissed the RICO and common-law fraud claims. The court not only dismissed these claims but also assessed monetary sanctions against the Kellogg farmers. The farmers appealed certain district court decisions, but finding that there was no reversible error or that it lacked jurisdiction to review certain decisions, the Tenth Circuit Court of Appeals affirmed. View "Kellogg, et al. v. Watts Guerra, et al." on Justia Law

Melendez purchased a used 2015 Toyota from Southgate under a retail installment sales contract. Southgate assigned the contract to Westlake. Weeks later, Melendez sent a notice alleging Southgate violated the Consumer Legal Remedies Act (CLRA) and demanded rescission, restitution, and an injunction. Melendez later sued Southgate and Westlake, alleging violations of the CLRA, the Song-Beverly Consumer Warranty Act, Civil Code 1632 (requiring translation of contracts negotiated primarily in Spanish), the unfair competition law, fraud, and negligent misrepresentation. Westlake assigned the contract back to Southgate. Default was entered against Southgate. Westlake agreed to pay $6,204.68 ($2,500 down payment and $3,704.68 Melendez paid in monthly payments). Melendez would have no further obligations under the contract.The parties agreed Melendez could seek attorney fees, costs, expenses, and prejudgment interest. Westlake was entitled to assert all available defenses, “including the defense that no fees at all should be awarded against it as a Holder” The FTC’s “holder rule” makes the holder of a consumer credit contract subject to all claims the debtor could assert against the seller of the goods or services but caps the debtor’s recovery from the holder to the amount paid by the debtor under the contract. The trial court awarded attorney fees ($115,987.50), prejudgment interest ($2,956.62), and costs ($14,295.63) jointly and severally against Westlake, Southgate, and other defendants. The court of appeal affirmed. The limitation does not preclude the recovery of attorney fees, costs, nonstatutory costs, or prejudgment interest. View "Melendez v. Westlake Services, Inc." on Justia Law

Alevy was an owner, officer, and board member of Amusement, a real estate company, engaged in the ongoing Stern Litigation. In 2010, Alevy offered Missakian employment as in-house counsel at Amusement, including working on the Stern Litigation. Under the Oral Contract, Missakian would receive a salary of $325,000, and, after the Stern Litigation ended, Missakian would receive a bonus of $6,250 for each month he had worked on that litigation plus 10 percent of the recovery, excluding ordinary litigation costs. The parties exchanged multiple written drafts but never signed a written contract. Missakian left Amusement in 2014. The Stern Litigation settled months later. Amusement received $26 million. Missakian never received the Monthly Bonus or the Stern Litigation Bonus.A jury issued a verdict in favor of Missakian on the claims for breach of oral contract and promissory fraud and made special verdict findings in favor of Alevy on promissory fraud. The trial court granted judgment notwithstanding the verdict (JNOV) on Missakian’s promissory fraud claim against Amusement.The court of appeal reversed. The Oral Contract is void under Business and Professions Code section 6147, 2 which requires contingency fee agreements to be in writing. The jury’s special verdict on promissory fraud was inconsistent because it found Alevy did not make a false promise, but that Amusement (acting only through Alevy) did. Because the court cannot choose between the jury’s inconsistent responses, the court should have ordered a new trial. View "Missakian v. Amusement Industry, Inc." on Justia Law

The Sellers bought an Oakland property to “flip.” After Vega renovated the property, they sold it to Vera, providing required disclosures, stating they were not aware of any water intrusion, leaks from the sewer system or any pipes, work, or repairs that had been done without permits or not in compliance with building codes, or any material facts or defects that had not otherwise been disclosed. Vera’s own inspectors revealed several problems. The Sellers agreed to several repairs Escrow closed in December 2011, but the sewer line had not been corrected. In January 2012, water flooded the basement. The Sellers admitted that earlier sewer work had been completed without a permit and that Vega was unlicensed. In 2014, the exterior stairs began collapsing. Three years and three days after the close of escrow, Vera filed suit, alleging negligence, breach of warranty, breach of contract, fraud, and negligent misrepresentation. Based on the three-year limitations period for actions based on fraud or mistake, the court dismissed and, based on a clause in the purchase contract, granted SNL attorney’s fees, including fees related to a cross-complaint against Vera’s broker and real estate agent.The court of appeal affirmed. Vera’s breach of contract claim was based on fraud and the undisputed facts demonstrated Vera’s claims based on fraud accrued more than three years before she filed suit. Vera has not shown the court abused its discretion in awarding fees related to the cross-complaint. View "Vera v. REL-BC, LLC" on Justia Law

The Appellants, with a $594,000 Small Business Administration loan, bought a Harrisburg, Pennsylvania property that became a pub. They executed a note, mortgage, and unconditional guarantees, providing that federal law would control the enforcement of the note and guarantees and that they could not invoke any state or local law to deny their obligations. The Appellants defaulted on the loan and sold the property. The SBA allowed the sale to proceed but declined to release the Appellants from their loan obligations, which were assigned to CBE for collection. The Appellants sued, citing the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681, and the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL). CBE sought sanctions under Federal Rules 11 and 37, arguing that the Appellants brought frivolous claims and disobeyed discovery orders. The Appellants filed an untimely brief opposing sanctions and summary judgment, which did not include the separate responsive statement of material facts required by Local Rule. The district court granted summary judgment and denied the sanctions motions, reasoning that neither FDCPA not UTPCPL applies to commercial debts and the Appellants identified no material facts supporting their other claims. The Third Circuit affirmed and granted CBE FRAP 38 damages. The Appellants filed a brief that was essentially a copy of the one filed in the district court. The substance of their appeal “is as frivolous as its form.” View "Conboy v. United States Small Business Administration" on Justia Law

Azarax filed suit against defendant and his law firm, alleging legal malpractice and breach of fiduciary duty. Azarax claimed that defendant and his firm were negligent in their representation of Convey Mexico and that Azarax had claims against defendant and his firm as a successor by merger to Convey Mexico.The Eighth Circuit affirmed the district court's dismissal of the complaint and agreed with the district court that Azarax was not a valid successor in interest to Convey Mexico. In this case, the summary judgment record established that the shareholders of Convey Mexico did not unanimously provide written consent for the merger with Azarax Holding, so the merger was not valid. Therefore, Azarax lacked standing to sue defendant and his law firm. The court modified the judgment to dismiss the complaint without prejudice. View "Azarax, Inc. v. Syverson" on Justia Law

In 2010, Appellants Meso Scale Diagnostics, LLC and Meso Scale Technologies, LLC (collectively “Meso”) filed suit in Delaware against Appellee entities Roche Diagnostics GmbH, Roche Diagnostics Corp., Roche Holding Ltd., IGEN LS LLC, Lilli Acquisition Corp., IGEN International, Inc., and Bioveris Corp. (collectively “Roche”), all of which were affiliates or subsidiaries of the F. Hoffmann -- La Roche, Ltd. family of pharmaceutical and diagnostics companies. Meso alleged two counts of breach of contract. Roche prevailed at trial, and the Delaware Supreme Court affirmed the judgment in 2014. Then in 2019, Meso brought a new action asking the court to reopen the case, vacate the judgment entered after trial, and order a new trial. Meso alleged that the Vice Chancellor who decided its case four years earlier had an undisclosed disabling conflict, namely, that Roche’s counsel had been simultaneously representing him in an unrelated federal suit challenging the constitutionality of Delaware’s law providing for confidential business arbitration in the Court of Chancery (“Section 349”). In that federal litigation, which ended in 2014, the Chancellor and Vice Chancellors of the Court of Chancery, as the parties responsible for implementing the challenged statute, were nominal defendants. The Court of Chancery denied relief and dismissed the action. Meso appealed. Finding no reversible error, the Delaware Supreme Court affirmed dismissal. View "Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH" on Justia Law

In 2010, Appellants Meso Scale Diagnostics, LLC and Meso Scale Technologies, LLC (collectively “Meso”) filed suit in the Delaware Court of Chancery against Appellee entities Roche Diagnostics GmbH, Roche Diagnostics Corp., Roche Holding Ltd., IGEN LS LLC, Lilli Acquisition Corp., IGEN International, Inc., and Bioveris Corp. (collectively “Roche”), all of which were affiliates or subsidiaries of the F. Hoffmann -- La Roche, Ltd. family of pharmaceutical and diagnostics companies. Meso alleged two counts of breach of contract. Roche prevailed at trial, and the Delaware Supreme Court affirmed the judgment in 2014. In 2019, Meso brought a new action asking the court to reopen the case, vacate the judgment entered after trial, and order a new trial. Meso alleged that the Vice Chancellor who decided its case four years earlier had an undisclosed disabling conflict, namely, that Roche’s counsel had been simultaneously representing him in an unrelated federal suit challenging the constitutionality of Delaware’s law providing for confidential business arbitration in the Court of Chancery, 10 Del. C. 349. In that federal litigation, which ended in 2014, the Chancellor and Vice Chancellors of the Court of Chancery, as the parties responsible for implementing the challenged statute, were nominal defendants (hereinafter, the “Judicial Officers”). The Court of Chancery denied relief and dismissed the action. Meso appealed. Finding no reversible error, the Supreme Court affirmed the Court of Chancery. View "Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH" on Justia Law

In 2005-2007, Merchant purchased Michigan hotel properties from NRB and financed the purchases through NRB, using corporate entities as the buyers. Merchant sold interests in those entities to investors. The hotels had been appraised at inflated amounts and sold for about twice their fair values. When the corporate entities defaulted on their loan payments, NRB foreclosed in 2009. Merchant claimed that NRB’s executives colluded with an appraiser to sell overvalued real estate to unsuspecting purchasers, wait for default, foreclose, and then repeat the process.In 2010, an investor sued Merchant, Merchant’s companies, NRB, and 12 others for investor fraud. In 2014 the FDIC took NRB into receivership and substituted for NRB as a defendant. Merchant and his companies brought a cross-complaint, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and state laws. A Fifth Amended Cross-Complaint raised 14 counts against 10 defendants, including two law firms that provided NRB’s legal work. The district court dismissed several counts; others remain active.The Seventh Circuit affirmed the dismissal of claims against the law firms. The counts under state law are untimely under Illinois’s statute of repose. The cross-complaint effectively admits that one firm played no role in NRB’s alleged fraud perpetrated against Merchant in 2005-2007. The cross-complaint failed to allege that either law firm conducted or participated in the activities of a RICO enterprise; neither firm could be liable under 18 U.S.C. 1962(c). View "Muskegan Hotels, LLC v. Patel" on Justia Law

Two counties sued Sherwin-Williams in state court, seeking abatement of the public nuisance caused by lead-based paint. Anticipating suits by other counties, Sherwin-Williams sued in federal court under 42 U.S.C. 1983. Sherwin-Williams claimed that “[i]t is likely that the fee agreement between [Delaware County] and the outside trial lawyers [is] or will be substantively similar to an agreement struck by the same attorneys and Lehigh County to pursue what appears to be identical litigation” and that “the Count[y] ha[s] effectively and impermissibly delegated [its] exercise of police power to the private trial attorneys” by vesting the prosecutorial function in someone who has a financial interest in using the government’s police power to hold a defendant liable. The complaint pleaded a First Amendment violation, citing the company’s membership in trade associations, Sherwin-Williams’ purported petitioning of federal, state, and local governments, and its commercial speech. The complaint also argued that the public nuisance theory would seek to impose liability “that is grossly disproportionate,” arbitrary, retroactive, vague, and “after an unexplainable, prejudicial, and extraordinarily long delay, in violation of the Due Process Clause.”The Third Circuit affirmed the dismissal of the suit. Sherwin-Williams failed to plead an injury in fact or a ripe case or controversy because the alleged harms hinged on the County actually filing suit. View "Sherwin Williams Co. v. County of Delaware" on Justia Law