Justia Legal Ethics Opinion Summaries

Articles Posted in Civil Procedure
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Consolidated appeals arose from two actions based on real estate development disputes. Plaintiffs sued their former legal counsel, two real estate developers, and executives employed by the developers, alleging that defendants’ tortious conduct deprived them of the opportunity to construct an affordable housing complex on a property in Monroe Township, New Jersey; a second development was planned for Egg Harbor. Plaintiffs had formed NJ 322, LLC with a developer to build a market-rate rental and commercial development on the property. Plaintiffs contended that defendants arranged to have the property rezoned so that only affordable housing could be built on it, at which time the developer withdrew and Plaintiff had no alternative but to sell the property. Plaintiffs’ damages expert prepared a report that included his opinion on “the profits that would likely have been earned by [p]laintiffs in the event that their development goals and objectives in connection with the development of the Project had not been frustrated” by defendants’ alleged conduct. The expert presented lost profits damages models for the development: the profit plaintiffs would have achieved if the development had proceeded as originally planned, and the profit had plaintiffs been the ones to construct the affordable housing project that was actually built. Based on the new business rule, the trial court granted defendants’ motion to bar testimony by plaintiffs’ expert in both cases. The Appellate Division affirmed in both cases. The New Jersey Supreme Court rejected a per se ban on claims by new businesses for lost profits damages, and it declined to follow Weiss v. Revenue Building & Loan Association, 116 N.J.L. 208 (E. & A. 1936) to the extent that it barred any claim by a new business for such damages. "Claims for lost profits damages are governed by the standard of reasonable certainty and require a fact-sensitive analysis. Because it is substantially more difficult for a new business to establish lost profits damages with reasonable certainty, a trial court should carefully scrutinize a new business’s claim that a defendant’s tortious conduct or breach of contract prevented it from profiting from an enterprise in which it has no experience and should bar that claim unless it can be proven with reasonable certainty." The Court remanded these cases so that the trial court could decide defendants’ motions in accordance with the proper standard. View "Schwartz v. Menas, Esq." on Justia Law

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Robert Bolinske appealed the dismissal of his claims against former Supreme Court Justice Dale Sandstrom and former District Court Judge Gail Hagerty (“State Defendants”) and awarding them attorney’s fees. In October 2016, Bolinske alleged in a press release that the State Defendants conspired to misfile or hide a petition for supervisory writ that he submitted in a prior case and thus tampered with public records. A few days after this press release, Rob Port published an article on his “Say Anything” blog regarding Bolinske’s press release. The article stated Port contacted Sandstrom and quoted Sandstrom as having said Bolinske’s press release was “bizarre and rather sad” and that “[a]lthough I’ve been aware of his mental health problems for years, I don’t recall ever having seen anything in his email before.” Three days after the article was published, Hagerty filed a grievance complaint against Bolinske, alleging he violated the North Dakota Rules of Professional Conduct. Based on the complaint, a disciplinary action was brought against Bolinske. The Inquiry Committee found Bolinske violated the Rules of Professional Conduct and issued him an admonition. The Disciplinary Board of the Supreme Court affirmed, and the North Dakota Supreme Court affirmed, concluding his procedural due process rights were not violated. The Supreme Court affirmed dismissal of Bolinske’s complaint in part, concluding the district court properly dismissed Bolinske’s claims of procedural and substantive due process, civil conspiracy, malicious prosecution, abuse of process, intentional and negligent infliction of emotional distress, governmental bad faith, and tortious outrage. The Supreme Court reversed in part, concluding the district court erred by dismissing the defamation claim under the statute of limitations. The award of attorney’s fees was vacated and the matter remanded for further proceedings. View "Bolinske v. Sandstrom, et al." on Justia Law

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Realtime filed patent infringement actions against Netflix in the District of Delaware. While that action was ongoing, Netflix filed petitions for inter partes review (IPR) and moved to dismiss the complaint, arguing patent ineligibility under 35 U.S.C. 101. Following the institution of the IPR proceedings and a recommendation from the Delaware magistrate finding certain claims ineligible, Realtime voluntarily dismissed the Delaware action—before the district court ruled on the magistrate’s findings. The next day, Realtime reasserted the same patents against Netflix in the Central District of California—despite having previously informed the Delaware court that transferring the Delaware action to the Northern District of California would be an unfair burden on Realtime. Netflix then moved for attorneys’ fees and to transfer the actions back to Delaware. Before a decision on either motion, Realtime again voluntarily dismissed its case.Netflix renewed its motion for attorneys’ fees for the California actions, the Delaware action, and IPR proceedings. The district court awarded fees for both California actions under 35 U.S.C. 285, and, alternatively, the court’s inherent equitable powers. The court declined to award fees for the Delaware action or IPR proceedings The Federal Circuit affirmed. The district court did not abuse its discretion in awarding fees under its inherent equitable powers or in denying fees for the related proceedings The court did not address whether the award satisfies section 285's requirements. View "Realtime Adaptive Streaming LLC v. Netflix, Inc." on Justia Law

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Attorney Dennise Henderson violated several local court rules governing the timely service and filing of materials preparatory to trial. As a result, the trial court sanctioned her $950 under Code of Civil Procedure section 575.2. The trial court could have imposed a higher amount and was generous in awarding only an amount below that required to be reported by the State Bar. Nonetheless, Henderson appealed, challenging the legal basis for the sanctions on two grounds: (1) a superior court’s power to impose sanctions for violations of its local rules did not extend to violations of local rules regulating the conduct of trial; and (2) she could not be sanctioned for violating local court rules because the trial court exonerated her of acting in bad faith. The Court of Appeal rejected both arguments because the statute by its terms was not limited to pre-trial proceedings and the Legislature did not incorporate, expressly or otherwise, the section 128.5 bad faith standard into section 575.2. View "Shiheiber v. JPMorgan Chase Bank" on Justia Law

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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

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Defendant Reid & Hellyer, APC (Reid & Hellyer) moved for sanctions against plaintiff Transcon Financial, Inc. (Transcon) and its counsel, Ronald Talkov. Reid & Hellyer filed two motions, one under California Code of Civil Procedure section 128.5 and one under section 128.7. Transcon and Talkov appealed the orders granting the sanctions motions. After review, the Court of Appeal held the trial court erred by concluding that the sanctions motions could be filed on the last day of the 21-day safe harbor period, rather than on the first day after the 21-day period expired. Reid & Hellyer filed their sanctions motions on the last day of the 21-day period and therefore did not comply with the safe harbor provisions of the governing statutes. The trial court therefore erred by granting the motions. View "Transcon Financial, Inc. v. Reid & Hellyer, APC" on Justia Law

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Lane was detained on state criminal charges at the LaPorte County, Indiana jail. Lane sued Person, a doctor at the jail, for deliberate indifference to Lane’s medical condition, 42 U.S.C. 1983. While in jail, Lane sought medical care for an acoustic neuroma (non-cancerous tumor). Person did not order surgical removal of the tumor, which Lane believes was required. He later had the surgery. Nelson, a doctor who also treated Lane, testified that Person appropriately addressed Lane’s condition by ordering multiple MRIs and a consultation with a specialist. Person prevailed at summary judgment and was awarded $4,000 in costs; $2,750 was a one-day witness fee for Nelson,The Seventh Circuit affirmed but modified. The court noted that more than 30 days passed between the denial of Lane's motion to reconsider the summary-judgment decision and his notice of appeal, so the appeal was limited to a review of the decision on costs. There is a presumption under Rule 54(d) that a prevailing party recovers costs that are enumerated in 28 U.S.C. 1920. Although section 1920 includes witness fees, another statute, 28 U.S.C. 1821, more specifically addresses the allowable amount to $40 per day, and no other authority allows more. Person may recover total costs of $1,307.59. View "Lane v. Person" on Justia Law

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Appellant, then proceeding pro se, brought an action against Respondent, her brother, alleging he had falsely accused her of committing crimes against him and their elderly parents. Respondent emailed the attorney in this matter (“Attorney”), who was Appellant’s husband since June 2015, her former coworker at his law firm, and later her counsel in this action, warning that if Appellant did not settle the action, Respondent would file a cross-complaint the next day.   The court subsequently dismissed Respondent’s cross-complaint. Appellant retained Attorney to represent her pro bono or at a discounted rate, having been advised by Attorney that he would likely need to testify at trial, and having executed informed written consent to Attorney’s representation notwithstanding his expected dual role as advocate and witness   Two months before trial, Respondent moved to disqualify Attorney as Appellant’s counsel under California’s advocate-witness rule, viz., rule 3.7 of the Rules of Professional Conduct (Rule 3.7). The trial court disqualified Attorney from all phases of the litigation.   The Second Appellate District reversed the trial court’s disqualification order, holding that the trial court failed to apply the proper legal standards, and thereby abused its discretion, in disqualifying Attorney from representing Appellant under the advocate witness rule. The court explained that the trial court failed to apply Rule 3.7’s informed-consent exception. Indeed, the trial court failed even to cite Rule 3.7, instead applying the ABA Rule, which is not binding and lacks any informed-consent exception. The trial court further abused its discretion in failing to apply Rule 3.7’s limitation to advocacy “in a trial.” View "Lopez v. Lopez" on Justia Law

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Wang sued her former attorney Nesse, alleging professional malpractice in his representation of Wang in her marital dissolution action. Following Nesse’s death, his estate moved for summary judgment on the grounds that Wang’s complaint, filed on December 21, 2015, was barred by the one-year statute of limitations, Code of Civil Procedure section 340.6. According to Nesse’s estate, although Wang and Nesse filed a substitution of attorney form on December 30, 2014, Nesse’s representation of Wang had actually ended earlier, on December 3 or December 17 at the latest, when Wang “discharged” Nesse or “consented” to his withdrawal. The trial court agreed and granted the motion. The court of appeal reversed. There is a triable issue of material fact as to whether Nesse continued to represent her on December 21, 2014, so Nesse’s estate failed to establish that the statute of limitations bars her complaint as a matter of law. View "Wang v. Nesse" on Justia Law

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The issue this case presented for the Pennsylvania Supreme Court's review centered on whether Appellant’s legal malpractice claims against Appellees, her former attorneys, were barred under the Court’s decision in Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick, 587 A.2d 1346 (Pa. 1991), which held that a plaintiff could not sue his attorney on the basis of the adequacy of a settlement to which the plaintiff agreed, unless the plaintiff alleged the settlement was the result of fraud. Appellant, Dr. Ahlam Kahlil, owned a unit in the Pier 3 Condominiums in Philadelphia; the unit was insured by State Farm Fire and Casualty Company (“State Farm”). The Pier 3 Condominium Association (“Pier 3”) was insured under a master policy issued by Travelers Property Casualty Company of America (“Travelers”). In May 2007, Appellant sustained water damage to her unit as a result of a leak in the unit directly above hers, which was owned by Jason and Anne Marie Diegidio. Due to the water damage, Appellant moved out of her unit and stopped paying her condominium fees. Appellant filed suit against State Farm and Travelers, alleging breach of contract and bad faith, and against the Diegidios, alleging negligence. A year later, Pier 3 filed a separate lawsuit against Appellant for her unpaid condominium fees and charges. In affirming in part and reversing in part the trial court, the Supreme Court found that by finding Appellant’s claims were barred under Muhammad, the lower courts ignored other averments in Appellant’s complaint which did not allege fraud, but, rather, alleged legal malpractice by Appellees in allowing Appellant to enter into a settlement agreement in the Water Damage Case that subsequently precluded her from raising her desired claims in the Fees Case, while repeatedly advising Appellant that the settlement agreement would not preclude those claims. "[A]s our review of Appellant’s complaint demonstrates that she was not merely challenging the amount of her settlement in the Water Damage Case, but rather alleged that Appellees provided incorrect legal advice regarding the scope and effect the Travelers Release, we hold that Muhammad’s bar on lawsuits based on the adequacy of a settlement is not implicated in this case." View "Khalil v. Williams" on Justia Law