Justia Legal Ethics Opinion Summaries

Askew formed Vantage to trade securities. He recruited investors, including the plaintiffs. Vantage filed a Securities and Exchange Commission (SEC) Form D to sell unregistered securities in a 2016 SEC Rule 506(b) stock offering. The plaintiffs became concerned because Askew was not providing sufficient information but they had no right, based on their stock agreements, to rescind those investments. They decided to threaten litigation and to report Vantage to the SEC to pressure Askew and Vantage to return their investments. Before filing suit, the plaintiffs engaged an independent accountant who reviewed some of Vantage’s financial documents and concluded that he could not say “whether anything nefarious is going" on but that the “‘smell factor’ is definitely present.”The Third Circuit affirmed summary judgment for the defendants in subsequent litigation. The district court then conducted an inquiry mandated by the Private Securities Litigation Reform Act (PSLRA) and determined that the plaintiffs violated FRCP 11 but chose not to impose any sanctions. The Third Circuit affirmed that the plaintiffs violated Rule 11 in bringing their federal securities claims for an improper purpose (to force a settlement). The plaintiffs’ Unregistered Securities and Misrepresentation Claims lacked factual support. Askew was not entitled to attorney’s fees because the violations were not substantial. The PSLRA, however, mandates the imposition of some form of sanctions when parties violate Rule 11 so the court remanded for the imposition of “some form of Rule 11 sanctions.” View "Scott v. Vantage Corp" on Justia Law

McCormick sought disability retirement based on symptoms caused by her office environment. The California Public Employees’ Retirement System (CalPERS) denied her application. The court of appeal held that CalPERS members are eligible for disability retirement under the Public Employees’ Retirement Law (Gov. Code 20000) when they can no longer perform their usual duties at the location where they are required to work. A CalPERS member need not request an accommodation to become eligible for disability retirement. On remand, McCormick sought "prevailing party" attorneys' fees under Code of Civil Procedure section 1021.5, which applies when the action has conferred a significant benefit "on the general public or a large class of persons.”The court of appeal reversed the denial of that motion, finding that its prior opinion conferred a significant benefit on the public and that McCormick is otherwise entitled to attorney fees under section 1021.5. The conclusions reached in the earlier decision confer a benefit on a group larger than those CalPERS members who might seek disability retirement in factual circumstances similar to McCormick’s. The opinion emphasized that disability must be judged in light of a member’s actual job location and duties and that members need not seek an accommodation to become eligible. View "McCormick v. California Public Employees’ Retirement System" on Justia Law

Unhappy with the result in the underlying litigation, two family members -- Mary Beasley Schaeffer ("Mary") and Ellis Beasley Long ("Ellis"), as the personal representative of the estate of Emma Glass Beasley -- sued their attorney, Jan Garrison Thompson, claiming that he committed malpractice when he represented them. Thompson moved for summary judgment and presented evidence that he did not commit malpractice. In response, Mary and Ellis submitted expert testimony stating that Thompson violated the standard of care owed by attorneys. The trial court ruled for Thompson and entered summary judgment in his favor. Mary and Ellis appealed. Finding no reversible error, the Alabama Supreme Court affirmed. View "Schaeffer et al. v. Thompson" on Justia Law

The Pennsylvania Secretary of the Commonwealth decertified certain voting equipment that Fulton County acquired from Dominion Voting Systems, Inc. (“Dominion”) in 2019 and used in the 2020 general election. The Secretary decertified the voting equipment after learning that, following the 2020 election, Fulton County had allowed Wake Technology Services, Inc. (“Wake TSI”), to perform a probing inspection of that equipment as well as the software and data contained therein. The Secretary maintained that Wake TSI’s inspection had compromised the integrity of the equipment. Fulton County and the other named Petitioner-Appellees petitioned in the Commonwealth Court’s original jurisdiction to challenge the Secretary’s decertification authority generally and as applied in this case. During the pleading stage, the Secretary learned that Fulton County intended to allow another entity, Envoy Sage, LLC, to inspect the allegedly compromised equipment. The Secretary sought a protective order from the Commonwealth Court barring that inspection and any other third-party inspection during the litigation. The court denied relief. The Secretary appealed that ruling to the Pennsylvania Supreme Court, which entered a temporary order on January 27, 2022, to prevent the inspection and to preserve the status quo during the Court's review of the Secretary’s appeal. Months later—and with no public consideration, official proceedings, or notice to the courts or other parties to this litigation—the County allowed yet another party, Speckin Forensics, LLC to inspect the voting equipment and electronic evidence at issue in this litigation. Upon learning of this alleged violation of the temporary order, the Secretary filed an “Application for an Order Holding [the County] in Contempt and Imposing Sanctions.” The Supreme Court found Fulton County willfully violated the Supreme Court's order. The Court found Fulton County and its various attorneys engaged in a "sustained, deliberate pattern of dilatory, obdurate, and vexatious conduct and have acted in bad faith throughout these sanction proceedings." Taken as a whole, that behavior prompted the Court to sanction both the County and the County Attorney. View "County of Fulton, et al. v. Sec. of Com." on Justia Law

Law firm Halscott Megaro, P.A. (“Halscott Megaro” or “the firm”) sued former clients and their guardians (collectively “former clients”), seeking to recover unpaid legal fees and expenses. A district court dismissed the action under Federal Rule of Civil Procedure 12(b)(6). The district court took judicial notice of a North Carolina State Bar Disciplinary Hearing Commission (“Commission”) decision that found the firm’s lead partner misled the former clients and engaged in other unethical conduct. The court then held the firm was precluded from relitigating issues decided by the Commission. It held that Halscott Megaro failed to plausibly plead claims for which relief could be granted. Halscott Megaro appealed, arguing the district court improperly considered matters outside the pleadings and failed to accept its allegations and all reasonable inferences from them as true in concluding that the Commission’s decision as to its lead partner bound the law firm.   The Fourth Circuit affirmed and held that the district court committed no reversible error in granting the former clients’ motion to dismiss or in denying the law firm’s motion for recusal. The court wrote that it agreed with the district court’s conclusion that the Commission was acting in a judicial capacity when it entered its discipline order against Megaro. The court also agreed that Megaro received a full and fair opportunity to litigate the issues and due process protections. Further, the court held that the firm’s allegations of impartiality were not related to any particular facts, sources or statements. A presiding judge is not required to recuse himself simply because of unsupported or highly tenuous speculation. View "Halscott Megaro, P.A. v. Henry McCollum" on Justia Law

When A.F. was 11 years old, she applied for a domestic violence restraining order (DVRO) against her father, Jeffrey F., who held joint legal custody with her mother, Andrea F. Mother was the original guardian ad litem (GAL), and she retained attorney Edward Castro to represent A.F. Father successfully moved to disqualify Mother as the GAL and Castro as A.F.’s counsel. A.F. appealed the order disqualifying Castro. A new GAL was not appointed. Although A.F. brought the petition on her own behalf, the family court in her parents’ dissolution matter, appointed a “minor’s counsel” to represent her best interests there, in anticipation of changes to the custody and visitation arrangement that could result from the outcome in the DV matter. A.F. retained attorney Aaron Smith, to represent her in the DV matter. The court disqualified Smith for numerous reasons, including that there was a potential conflict of interest from having her maternal grandfather serve as a third-party guarantor. The court also interviewed A.F. and determined she was not competent to retain counsel independently, and it found Smith did not meet the requirements detailed by the California Rules of Court to serve as a “minor’s counsel.” The court appointed counsel in the DV matter, and prohibited Smith from replacing the attorney the court appointed as a “minor’s counsel.” A.F. appealed, contending that the issue of selecting her attorney should have been stayed pending the appeal of the court’s order disqualifying Castro. She also contended it was error to appoint counsel in the DV matter and to disqualify the attorney she chose to represent her there. The Court of Appeal: (1) concluded the court had subject matter jurisdiction to act in the DV matter while the first appeal was pending because her original attorney substituted out of the case; (2) reversed the appointment of a “minor’s counsel,” which was improper in a DV matter where a minor seeks a restraining order under the Domestic Violence Prevention Act (DVPA); (3) affirmed the order voiding the agreement between A.F. and Smith and removing Smith as her attorney on the basis that A.F. lacked competency to select her attorney independently; (4) reversed the order prohibiting Smith from serving as A.F.’s attorney in the matter because it was an abuse of discretion to completely disqualify him on the basis that the court rejected the fee agreement or that he failed to meet the requirements of Rule 5.242. View "A.F. v. Jeffrey F." on Justia Law

SE Property Holdings, LLC (“SEPH”) obtained a deficiency judgment against Neverve LLC (“Neverve”) after Neverve defaulted on loans secured by a mortgage on its property. Following this judgment, Neverve received the proceeds from an unrelated settlement. But Neverve transferred those proceeds to attorneys representing Neverve’s principal in payment of attorney’s fees relating to the principal’s personal bankruptcy proceedings. SEPH then sued Neverve based on Neverve’s allegedly fraudulent transfer of those settlement proceeds. The district court granted summary judgment in favor of Neverve, finding that the Florida Uniform Fraudulent Transfer Act’s (“FUFTA”) “catch-all” provision did not allow for (1) an award of money damages against the transferor, (2) punitive damages, or (3) attorney’s fees. The court also granted summary judgment in favor of Neverve on SEPH’s equitable lien claim, as Neverve no longer possessed the settlement proceeds at issue.   The Eleventh Circuit affirmed. The court held that based on the narrow interpretation of FUFTA in Freeman v. First Union National Bank, 865 So. 2d 1272 (Fla. 2004), the court believes the Florida Supreme Court would determine that FUFTA’s catch-all provision does not allow for an award of money damages against the transferor, an award of punitive damages, or an award of attorney’s fees. Thus, the district court was correct in granting summary judgment in favor of Neverve on SEPH’s FUFTA claims. And the court concluded that the district court did not err in granting summary judgment in favor of Neverve on SEPH’s equitable lien claim. View "SE Property Holdings, LLC v. Neverve LLC" on Justia Law

Attorney and his law firm, Pesner Kawamato Conway, P.C. (collectively, Conway), appealed the district court’s order rejecting the bankruptcy court’s report and recommendation to enjoin Smith Development, Inc.’s legal malpractice suit against Conway and to impose sanctions for violating the Barton doctrine and the automatic stay.   The Fourth Circuit dismissed the appeal, finding that it lacks subject-matter jurisdiction because the district court’s decision rests on the abstention principles. The court explained that Conway suggests the district court had no authority to enter an abstention order because, under Barton, the district court itself lacked jurisdiction over Smith Development’s malpractice claims. However, the court wrote that this argument fares no better than the first. Barton concerns subject-matter jurisdiction over a separate action, not jurisdiction over the proceedings in which a party seeks Barton protection in the first place. And even if the court accepted the argument’s doubtful premise, it fails on its own logic because the bankruptcy court issued a report and recommendation to the district court, thereby authorizing the district court to rule on the matter. Further, the court found that even if it recognized a narrow exception to Section 1334(d)’s clear jurisdictional bar, the district court’s order would not fall within it. View "Martin Conway v. Smith Development, Inc." on Justia Law

After (Decedent) died, two of his three adult children brought a pro se diversity action in the District of Minnesota against Defendant, Decedent’s second wife. They asserted multiple claims arising from Defendant’s alleged use of her power as Decedent’s attorney-in-fact to close two Certificates of Deposit and keep funds that Decedent intended would benefit his children. Defendant moved to dismiss, alleging lack of diversity jurisdiction because Decedent’s third child, like Defendant, is a resident of California and is an indispensable, non-diverse party. Defendant filed a second motion to dismiss, arguing that Plaintiffs’ incomplete assignment did not establish diversity jurisdiction. The district court determined it has diversity subject matter jurisdiction and dismissed the FAC claims with prejudice because they fail to state a claim and Plaintiffs are not real parties in interest. Plaintiffs appealed the district court’s dismissal.   The Eighth Circuit affirmed. The court found that the district court properly granted Defendant’s Rule 12(b)(6) motion because Plaintiffs’ FAC failed to state plausible claims of fraudulent misrepresentation and civil theft. Therefore, the court wrote it need not separately consider the district court’s alternative ruling that Plaintiffs are not “real parties in interest” under Rule 17(a). Further, the court concluded the district court did not abuse its discretion in dismissing with prejudice the claims asserted in the FAC. The court explained it does not agree that additional claims regarding Defendant’s use of the CD proceeds after she was done acting as Attorney-in-Fact would necessarily have been futile. But without a proposed amended complaint to consider, the district court did not abuse its discretion by assuming they would be. View "Eric Sorenson v. Joanne Sorenson" on Justia Law

Defendants appealed an order granting plaintiffs' motion to compel compliance with prior discovery orders and imposing monetary and issue sanctions. The trial court imposed 11 potentially case-dispositive issue sanctions and $37,575 in monetary sanctions against defendants for having “repeatedly disregarded their obligations in Discovery” and having “repeatedly fought the Court Orders that tell them they must comply.” The court-appointed discovery referee, who recommended those sanctions, commented that in his almost 20 years of service as a neutral, mediator, arbitrator, and referee he had never seen “such blatant disregard of discovery and discovery orders.” In their notice of appeal, defendants asserted their appeal included both the monetary sanctions and the issue sanctions. The Court of Appeal found the order imposing monetary sanctions was directly appealable under California Code of Civil Procedure section 904.1(a)(11) and (12). However, the order imposing issue sanctions was not directly appealable. The issue sanctions were not inextricably intertwined with the monetary sanctions. The Court therefore granted plaintiffs’ motion to dismiss the appeal regarding issue sanctions. The Court also found defendants failed to establish the trial court should have found they acted with substantial justification or that other circumstances made the imposition of monetary sanctions unjust. Accordingly, the Court affirmed the award of monetary sanctions and dismissed the appeal in all other respects. View "Deck v. Developers Investment Co., Inc." on Justia Law