Justia Legal Ethics Opinion Summaries

Gulfport OB-GYN was a professional association of physicians specializing in obstetrical and gynecological care. In 2008, it hired the law firm Dukes, Dukes, Keating & Faneca, P.A., to assist in negotiating the hiring of Dr. Donielle Daigle and to prepare an employment agreement for her. Five years later, Dr. Daigle and another physician left Gulfport OB-GYN to establish their own practice. They sued Gulfport OB-GYN for unpaid compensation and sought a declaratory judgment that the noncompetition covenant was unenforceable. The departing physicians ultimately prevailed, with the chancery court holding the noncompetition covenant not applicable to Dr. Daigle because she left voluntarily and was not “terminated by the Employer.” The chancery court decision was initially appealed, but the dispute was later settled through mediation when Gulfport OB-GYN agreed to pay Dr. Daigle $425,000. Gulfport OB-GYN then filed this legal-malpractice suit against the attorney who drafted the employment agreement and her firm. The circuit court granted summary judgment to the defendants after finding Gulfport OB-GYN had failed to produce sufficient evidence that it would have received a better deal but for the attorneys’ alleged negligence, i.e., Gulfport OB-GYN failed to prove that the alleged negligence caused it damages. The Mississippi Supreme Court agreed and affirmed. View "Gulfport OB-GYN, P.A. v. Dukes, Dukes, Keating & Faneca, P.A." on Justia Law

C. Randall Caldwell, Jr. worked for George Woerner, who owned several businesses headquartered in Foley. In 2009, Caldwell was promoted to president of Woerner Landscape, Inc., one of those businesses. Caldwell stated that, at that time, he was a licensed attorney in good standing in Alabama even though he was not engaged in private practice. During his employment with Woerner, the BP oil spill occurred in the Gulf of Mexico. Caldwell contacted an attorney with Cunningham Bounds, LLC, a law firm in Mobile, regarding the possibility of referring Woerner's businesses to Cunningham Bounds for Cunningham Bounds to handle their claims arising out of the spill. In April 2011, the Woerner companies retained Cunningham Bounds; Cunningham Bounds executed representation agreements with each of the Woerner companies. Those agreements provided that Cunningham Bounds would be paid a contingency fee for the work. In 2014, the Woerner companies retained Sirote & Permutt, P.C. to assist Cunningham Bounds in the BP oil-spill litigation. Additionally, each of the Woerner companies sent Caldwell a letter in which they stated that Caldwell had previously assisted with a BP oil-spill claim asserted on behalf of that Woerner company; that the claim had been principally handled by Cunningham Bounds; and that at the time Caldwell provided assistance he was working as in-house counsel for one or more of the Woerner companies. Each letter went on to assert that the claim would have to be reworked "based on newly announced guidelines from appellate courts hearing BP's objections to some of the previously filed claims"; that the owners and management of the Woerner companies felt that it would be in their best interest to retain a firm with experienced tax and business attorneys to assist in the claims; that the Woerner companies wished to continue their representation by Cunningham Bounds; that they were terminating the attorney-client relationship between Caldwell and the Woerner companies; and that they were retaining Sirote to assist Cunningham Bounds in reworking the claims asserted by the Woerner companies. After receiving this letter, Caldwell contacted one of the attorneys at Cunningham Bounds and told him that it was his position that he was entitled to the referral fees discussed in the representation agreements because, he said, he had referred the Woerner companies' claims to Cunningham Bounds. Summary judgment was ultimately entered in favor of Caldwell; the Alabama Supreme Court determined the trial court erred in finding Caldwell was owed a referral fee. Judgment was reversed and the matter remanded for further proceedings. View "Sirote & Permutt, P.C. v. Caldwell" on Justia Law

The defendants are Fair, an attorney, and limited liability companies Fair formed in 2007, which own Arizona apartment units. Plaintiffs are a California limited partnership and a nonattorney individual investor, who invested $150,000 and $100,000, respectively, in those LLCs. Plaintiffs asserted that defendants made fraudulent representations. The following years involved an attempt to negotiate a settlement; a lawsuit and amended complaints; two motions to stay the action and compel arbitration, pursuant to the arbitration provision contained in each LLC’s operating agreement; two appeals; a special motion to strike (anti-SLAPP motion); an award to plaintiffs of $12,609 in attorney fees and costs; refusal to comply with an alleged settlement; summary adjudications; and an additional award of $4,918.00 in attorney fees for the SLAPP proceedings. The court of appeal affirmed summary adjudication regarding the breach of the settlement agreement, rejecting an argument that there were triable issues of material fact regarding whether the parties entered into a binding settlement agreement. The court also affirmed the award of fees, rejecting an argument that the court should have awarded attorney fees for the entire dispute, consistent with Civil Code section 1717’s mutuality requirement and public policy or, at least, should have awarded fees as prevailing parties on defendants’ failed motions to compel arbitration and a related appeal. The court imposed monetary sanctions on defendants and their attorneys for bringing a frivolous appeal. View "J.B.B. Investment Partners v. Fair" on Justia Law

Brooks, Debtor's CEO, was charged with financial crimes. In class action and derivative lawsuits, Debtor proposed a global settlement that indemnified Brooks for liability under the Sarbanes Oxley Act (SOX), 15 U.S.C. 7243. Cohen, Debtor’s former General Counsel and a shareholder, claimed that the indemnification was unlawful. The district court approved the settlement, Cohen, represented by CLM, appealed. The Second Circuit vacated, noting that the EDNY would determine CLM’s attorneys’ fees award. Debtor initiated Chapter 11 bankruptcy proceedings. The Bankruptcy Court confirmed Debtor’s liquidation plan, with a trustee to pursue Debtor’s interest in recouping its losses from the ongoing actions.Brooks died in prison. Because his appeal had not concluded, some of his convictions and restitution obligations were abated. Stakeholders negotiated a second global settlement agreement, under which $142 million of Brooks’ restrained assets were to be distributed to his victims; $70 million has been remitted to Debtor. The Bankruptcy Court awarded CLM fees for the SOX 304 claim; the amount would be determined if Debtor received any funds on account of the claim. CLM’s Fee Appeal remains pending at the district court.CLM requested a $25 million reserve for payment of its fees. The Bankruptcy Court ordered Debtor to set aside $5 million. CLM’s Fee Reserve Appeal remains pending. CLM then moved, unsuccessfully, for a stay of Second Settlement Agreement distributions. In its Stay Denial Appeal, CLM’s motion requesting a stay of distributions was denied. The Third Circuit affirmed. The $5 million reserve is sufficient. A $5 million attorneys’ fees award for 1,502.2 hours of legal work totaling $549,472.61 of documented fees would yield an hourly rate of $3,328.45 and a lodestar multiplier of over nine. In common fund cases where attorneys’ fees are calculated using the lodestar method, multiples from one to four are the norm. View "SS Body Armor I, Inc. v. Carter Ledyard & Milburn, LLP" on Justia Law

Jarvis Properties, a limited partnership, owns a parcel of land. Its general partners, Todd and James (brothers), each own a 50 percent interest in the partnership, which is less than the majority consent required to act on behalf of the partnership (Corp. Code, 15904.06(a)). The brothers cannot agree on what to do about the parcel. Their partnership agreement does not address decision-making deadlocks. James sought partition by sale, naming Todd and Jarvis Properties as defendants. Todd hired his own lawyer and hired a separate lawyer, Roscoe, to represent the partnership. James objected to having Roscoe represent the partnership and moved to disqualify Roscoe. James argued that Roscoe was not authorized to act by the requisite majority of the general partners and that Roscoe, who took the position that he was not subject to the direction of either partner and was being paid by Todd, was not acting in the best interests of the partnership and would run up unnecessary litigation costs and deplete the partnership’s limited assets. The court of appeal affirmed an order disqualifying Roscoe. James had a sufficient interest to challenge Roscoe’s authority, having demonstrated a risk that Roscoe's representation may advance Todd’s interests and may not be in the Partnership's best interests. On remand, the court may wish to explore options for resolving deadlock at the entity level and consider appointing a receiver or other neutral. View "Jarvis v. Jarvis" on Justia Law

When O'Gara Coach moved to disqualify Richie Litigation from representing its former senior executive, Joseph Ra, in litigation, O'Gara Coach argued that Darren Richie had been a client contact for outside counsel investigating the charges of fraudulent conduct that ultimately led to an action alleging that O'Gara Coach and Ra had committed fraud in connection with Marcelo Caraveo's acquisition of luxury vehicles from O'Gara Coach.The Court of Appeal reversed the trial court's order denying the motion to disqualify Richie Litigation. The court held that Darren Richie could not act as Ra's counsel because he obtained privileged information relating to the pending litigation as O'Gara Coach's President and CEO. Furthermore, Richie Litigation, not just Richie, must be disqualified under established rules for vicarious disqualification. View "O'Gara Coach Co. v. Ra" on Justia Law

Maynard, Cooper & Gale, P.C. ("MCG"), petitioned the Alabama Supreme Court for a writ of mandamus to direct the Jefferson Circuit Court to vacate its July 30, 2018 order denying MCG's motion for a change of venue and to enter an order transferring the underlying action to the Madison Circuit Court on the basis of the doctrine of forum non conveniens. In late 2017, AAL USA, Inc. ("AAL"), a Delaware corporation doing business in Alabama, and Oleg Sirbu, a resident of Dubai, United Arab Emirates (collectively, "the plaintiffs"), sued MCG, asserting a claim of legal malpractice pursuant to the Alabama Legal Services Liability Act ("the ALSLA"), and seeking, among other relief, disgorgement of all attorney fees paid by the plaintiffs to MCG. AAL maintained, repaired, and overhauled helicopters through various government contracts or subcontracts on United States military bases. MCG represented the plaintiffs from 2014 through October 28, 2016; two MCG attorneys, Jon Levin and J. Andrew Watson III, were shareholders of MCG whose allegedly wrongful conduct was performed within the line and scope of their employment with MCG. The events giving rise to this litigation began in September 2016, when AAL received a "base-debarment" letter notifying it that it no longer had access to certain military bases outside the continental United States. MCG chief financial officer Keith Woolford forwarded this letter to MCG, and, according to the plaintiffs, MCG "immediately embarked in a central role in [MCG CEO Paul] Daigle's and Woolford's scheme to steal the assets of AAL." The complaint alleged that Levin worked closely with Woolford and Daigle to draft the APA pursuant to which Black Hall Aerospace, Inc., Daigle, and Woolford would purchase all of AAL's assets, as a way to cure the base-debarment problem. The plaintiffs alleged that MCG knew that the APA would "gut" the plaintiffs –- its current clients –- while simultaneously benefiting Daigle, Woolford, and BHA –- other clients of MCG -- and that this "clear and irreconcilable conflict of interest ... was never disclosed to [the plaintiffs]." The Alabama Supreme Court concluded MCG carried its burden of showing that Madison County's connection to the action was strong and that Jefferson County's connection to the action was weak. Thus, the circuit court exceeded its discretion in refusing to transfer the case to the Madison Circuit Court in the interest of justice. MCG's petition for a writ of mandamus was granted. View "Ex parte Maynard, Cooper & Gale, P.C." on Justia Law

T. Mark Sledge left the law firm Grenfell Sledge and Stevens, PLLC. When he did, an issue arose regarding the fee distribution for several of the firm’s and Sledge’s cases, more specifically, the interpretation of the firm’s partnership agreements and related documents. Sledge filed suit against his former firm and its individual members. Following a hearing, the Chancery Court granted the motion for summary judgment filed by Grenfell Sledge and Stevens, PLLC, and its individual members and also a declaratory judgment in their favor. Sledge challenged the chancery court’s rulings; however, the Mississippi Supreme Court was unpersuaded by his arguments on appeal and affirmed. View "Sledge v. Grenfell Sledge And Stevens, PLLC d/b/a Grenfell & Stevens, PLLC" on Justia Law

The Johnston Law Office appeals from a judgment dismissing its claims against Jon Brakke and Vogel Law Firm (collectively "Vogel"). Johnston argued the district court erred in granting summary judgment and dismissing its claims. Vogel represented PHI Financial Services, Inc. in an action against Johnston to recover damages for a fraudulent transfer. The district court entered judgment against Johnston in that action. In April 2016 Johnston sued Vogel for tortious interference with a business relationship, tortious interference with attorney-client business relationships, and abuse of process. Johnston alleged Vogel violated state law while attempting to execute on the judgment entered against Johnston. Johnston claimed Vogel improperly attempted to garnish funds from Johnston's lawyer trust account, operating account and fees owed by Johnston's clients, and Vogel's unlawful actions interfered with Johnston's business relationships with its lending bank and clients. In July 2017 Vogel moved for summary judgment, arguing Johnston was unable to prove the required elements of its claims and Vogel was entitled to dismissal of the claims. Vogel also moved to quash a subpoena duces tecum Johnston served on PHI Financial seeking billing information between Vogel and PHI Financial. The district court granted Vogel's motion as to all claims. Finding no reversible error, the North Dakota Supreme Court affirmed dismissal. View "Johnston Law Office, P.C. v. Brakke" on Justia Law

Under the Defend Trade Secrets Act, a defendant is not eligible for fees when the plaintiff obtains a dismissal without prejudice because such a dismissal does not establish the winner of the dispute. The Fifth Circuit held that taking the lead early in the lawsuit did not make defendants eligible for fees, nor did the trial court's postponement of the litigation when it allowed plaintiff to dismiss the federal suit without prejudice. Accordingly, the court affirmed the district court's denial of fees. View "Dunster Live, LLC v. LoneStar Logos Management Co." on Justia Law