Justia Legal Ethics Opinion Summaries

In 2006, the district court adopted a consent order to resolve Dispatch's suit for an accounting of the gold from the S.S. Central America shipwreck. The order required defendants to produce financial documents regarding the period starting January 1, 2000. The court later issued a contempt order, citing defendants’ failure to produce an inventory of the gold recovered and sold. Defendants then produce an inventory of gold that they sold to California Gold Group from February 15 to September 1, 2000. They did not produce any prior inventories, which would have provided a complete accounting of treasure recovered from the ship. At a 2007 contempt hearing, the parties argued about whether the defendants possessed any earlier inventories. The court issued another contempt order in 2009. Defendants continued to assert that they had no such inventories. In 2013, Dispatch obtained the appointment of a receiver that it had first sought in 2008 to take control of and wind down the defendants. The receiver recovered found numerous inventories created before the California Gold sale, in a duplex owned by defendants' attorney and leased to defendants. The court concluded that defendants’ attorney engaged in bad-faith conduct, rejected Dispatch’s request for $1,717,388 (its total litigation expenses) and limited sanctions to the cost of pursuing the motion for sanctions, plus the expenses to uncover the fraud and locate the inventories. Dispatch submitted bills for $249,359.85. The Sixth Circuit affirmed a reduced award of $224,580. View "Williamson v. Recovery Ltd. P'ship" on Justia Law

Ambac guaranteed payments on residential mortgage-backed securities issued by Countrywide. When those securities failed during the financial crisis, Ambac sued, alleging fraud. Ambac named Bank of America (BoA) as a defendant, based on its merger with Countrywide. Discovery ensued, and in 2012, Ambac challenged BoA's withholding of approximately 400 communications between BoA and Countrywide after the signing of the merger plan in January 2008 but before its closing in July. BoA claimed they were protected by the attorney-client privilege because they pertained to legal issues the companies needed to resolve jointly in anticipation of the closing. Although the parties were represented by separate counsel, the merger agreement directed them to share privileged information and purported to protect the information from outside disclosure. A Referee concluded that the exchange of privileged communications waives the attorney-client privilege and that the communications would be entitled to protection only if BoA could establish an exception, such as the common interest doctrine, which permits limited disclosure of confidential communications to parties who share a common legal (as opposed to business or commercial) interest in pending or reasonably anticipated litigation. The court held that the doctrine applies only if there is "reasonable anticipation of litigation." The Appellate Division reversed. The New York Court of Appeals reversed, reinstating the trial court order holding that privilege did not apply because the communication did not relate to pending or anticipated litigation. View "Ambac Assur. Corp. v Countrywide Home Loans, Inc." on Justia Law

The Seventh Circuit held, in Irish v. BNSF (2012), that the plaintiffs, injured by a 2007 flood in Bagley, Wisconsin, had forfeited an argument concerning the scope of Wis. Stat. 88.87. The statute concerns liability for negligent design and maintenance of a railroad grade that causes an obstruction to a waterway or drainage course. Plaintiffs’ counsel assembled a new group of plaintiffs and refiled the same litigation in Arkansas state court to pursue that argument. The new suit was removed and transferred to the Western District of Wisconsin, which dismissed it for failure to state a claim. The defendant asked the court to sanction plaintiffs’ counsel under FRCP 11 or 28 U.S.C. 1927 for pursuing frivolous claims and engaging in abusive litigation tactics. The court denied that request, reasoning that although the claims were all but foreclosed by the decision in Irish, they were not frivolous. The Seventh Circuit affirmed the dismissal of the complaint but reversed the denial of sanctions. The record indicated that counsel unreasonably and vexatiously multiplied the proceedings by filing suit in Arkansas, which had no connection to the case. Pursuant to section 1927, the defendant is entitled to its fees and costs for removing the case and successfully seeking its transfer. View "Boyer v. BNSF Ry. Co." on Justia Law

In 2001, the decedent presented to the Wetzel County Hospital Emergency Room in New Martinsville and came under the care of Dr. Murthy, a surgeon; she slipped into shock and died the next day. Her estate filed a medical negligence action, alleging that Murthy failed to perform exploratory surgery to identify, diagnose and correct the decedent’s “intraabdominal condition.” A jury awarded $4,000,000 in compensatory damages. After the trial, the circuit court allowed amendment of the complaint to add Murthy’s insurance carrier, Woodbrook, alleging that Woodbrook made all relevant decisions for Murthy’s defense and acted vexatiously and in bad faith. Following a remand, Murthy paid a reduced judgment, plus interest, in the total amount of $1,162,741.60 and filed motions in limine to preclude certain matters from consideration on the issue of attorney fees and costs, including an unrelated case that resulted in a $5,764,214.75 verdict against Dr. Murthy in March 2007. The court dismissed Woodbrook as a party-defendant and awarded the estate attorney fees and costs. The precise calculation was to be later determined. The Supreme Court of Appeals of West Virginia reversed, concluding that the lower court’s reliance on certain conduct by Murthy did not justify the award. View "Murthy v. Karpacs-Brown" on Justia Law

This case stems from an investigation into improprieties in the Court-Supervised Settlement Program (CSSP) responsible for a class of claims related to the Deepwater Horizon oil spill. Movants Glen Lerner and Jonathan Andry appeal the district court’s sanction order disqualifying them from further participation in the CSSP related to the Deepwater Horizon oil spill, and Andry Lerner, L.L.C. appeals the denial of its motion to alter or amend the restrictions imposed on related attorneys’ fees that were escrowed in connection with the sanction. The district court found that Andry and Lerner had violated multiple rules under the Louisiana Rules of Professional Conduct. The court affirmed the district court's sanction order because that court acted within its inherent authority to supervise the settlement program and did not abuse its discretion in imposing the sanction. The court held that, in light of the Special Master’s representation that the parties intend to agree to appropriate amendments to the restrictions on the escrowed fees, the district court did not abuse its discretion in denying Andry Lerner, L.L.C.’s motion to alter or amend. The court left open to the district court the possibility of amending its orders upon submission of a properly supported motion. View "Lake Eugenie Land & Dev. v. BP" on Justia Law

As part of a malicious prosecution lawsuit against Chicago, the plaintiffs sought by subpoena to discover documents from the Cook County State’s Attorney’s Office. Lawyers representing the Office, including McClellan, stated that the files no longer existed. A year later, the Presiding Judge ordered the Office to allow the plaintiffs’ lawyers to inspect 181 boxes of documents stored in a warehouse. The documents at issue were quickly found. Plaintiffs moved to sanction McClellan and others for obstructing discovery. After the tort suit ended in the plaintiffs’ acceptance of an offer of judgment, the judge granted the motion and ordered McClellan and the State’s Attorney’s Office to pay fees and costs ($35,522.94) that their misconduct had imposed on the plaintiffs, based on a finding of attorney misconduct under 28 U.S.C. 1927 and the inherent authority of a federal court to punish attorney misconduct in a case before it. The Seventh Circuit affirmed, characterizing the criticisms of McClellan as “apt and accurate” and, because the sanction had been paid, holding that a district court order imposing a sanction on a lawyer for misconduct in a case before the court can be appealed even if the sanction lacks a monetary component. View "Martinez v. City of Chicago" on Justia Law

Appellants received less than $6,000 in damages from their employers for unpaid overtime wages after eight years of litigation. In this appeal, appellants challenge the district court's fee award as too low, while the employers challenge it as too high. The court concluded that, while appellants’ fee petition originally was untimely, the court’s entry of an amended judgment created “[a] new period for filing” and cured that untimeliness, notwithstanding the fact that the petition was filed before entry of the new judgment. Therefore, appellants satisfied Fed. R. Civ. P. 54(d)(2)(B)’s dictates, leaving no ground on which to deny appellants’ fee petition in its entirety for lack of timeliness. On the merits, the court concluded that there is no support in the record for the district court’s finding that appellants failed to promptly provide a damages calculation that could have facilitated early settlement. This clear factual error requires remand. Additionally, because the court cannot ascertain whether or how significantly this mistaken factual finding impacted other aspects of the district court’s fee reasonability assessment, the court vacated the entire decision and remanded. View "Radtke v. Caschetta" on Justia Law

Appellant filed a personal injury suit after she was hurt in a hay bale accident. In this case, the trial court dismissed with prejudice the complaint for personal injuries during jury trial as a sanction for repeated violations of its orders excluding hearsay and opinion testimony. Appellant contends the trial court abused its discretion in granting the terminating sanction and erred when it granted respondents' motions in limine. Because the orders in limine did not have the effect of granting a nonsuit or judgment on the pleadings, the court determined that the abuse of discretion standard of review applies. In this case, the court concluded that the trial court did not abuse its discretion when it made orders excluding evidence that were tantamount to a nonsuit and when it granted the terminating sanction where appellant could not, and did not, demonstrate her opinions about the appearance of hay bales had any rational basis. The trial court also correctly granted respondents' Motion in Limine No. 4, to exclude hearsay regarding the source of the hay bales. The trial court also correctly excluded appellant's proffered testimony that she saw Todd's delivery person with a delivery "ticket" or receipt identifying Berrington as the source of the hay bale. The trial court also did not abuse its discretion in issuing the terminating sanction. Accordingly, the court affirmed the judgment. View "Osborne v. Todd Farm Serv." on Justia Law

Li is a 78-year-old Chinese-American, with limited English and experience with the legal system. Attorney Yan became a member of the bar in 2008. Ignoring blatant conflicts of interest, beginning in 2007, Yan advised and represented Li in a matter involving a contract in which Yan was the obligor and Li was the assignee. In 2010 Li sued, alleging professional negligence, breach of fiduciary duty, unlawful business practices, breach of contract, and fraud. The court awarded $254,411.06, plus prejudgment interest. Following posttrial proceedings, during which the California Bar began disciplinary proceedings, the judge filed an amended judgment awarding Li $552,412.30, including $149,667.29 in prejudgment interest. After an unsuccessful appeal by Yan, Li’s new attorney began efforts to collect the judgment. During examination of Yan, as a judgment debtor, the court upheld service of a subpoena duces tecum by mail (Yan was unable to be located for personal service) and denied Yan’s claim of privilege with respect to his tax returns. The court of appeal affirmed, stating that “enough is enough” and awarding Li costs. View "Li v. Yan" on Justia Law

The Almanor Lakeside Villas Owners Association sought to impose fines and related fees of $19,979.97 on the Carsons for alleged rule violations related to the Carsons’ use of their properties as short-term vacation rentals. The Carsons cross-complained for breach of contract, private nuisance, and intentional interference with prospective economic advantage. The Carsons had engaged in short-term rental for many years and believed that they were exempt from new regulations and enforcement efforts. The court ruled against the Carsons on their cross-complaint but also rejected many of the fines as unreasonable. The court upheld fines pertaining to the use of Almanor’s boat slips and ordered the Carsons to pay $6,620.00 in damages. The court determined Almanor to be the prevailing party and awarded $101,803.15 in attorney’s fees and costs. The court of appeal affirmed, concluding that the award of attorney’s fees, compared to the “overall relief obtained” by Almanor, was not so disproportionate as to constitute an abuse of discretion. View "Almanor Lakeside Villas Owners Ass'n. v. Carson" on Justia Law