Justia Legal Ethics Opinion Summaries

In a case alleging that Abbott's baby formula contained a harmful bacteria that caused permanent brain damage to J.M.K., the jury found in favor of Abbott. The district court then ordered defense counsel Ghezzi to show cause why she should not be sanctioned under FRCP 30(d)(2) for obstructing each deposition in which she had participated. Defense counsel was subsequently ordered to produce a discovery training video dealing with the impropriety of form objections, witness coaching, and excessive interruptions and to distribute the video to most of the attorneys in her national law firm, Jones Day. The Eighth Circuit reversed. While the court had authority to impose Rule 30 sanctions, generally sanctions should be imposed within a time frame that has a nexus to the behavior sought to be deterred and no advance notice was given of the unusual nature of the sanction being considered. The court noted that once information about an unusual sanction appears in public, the damage to the subject's career, reputation, and future professional opportunities can be difficult if not impossible to repair. View "Sec. Nat'l Bank of Sioux City v. Jones Day" on Justia Law

Plaintiff, an attorney, appealed from the revised judgment entered by the trial court following this court’s reversal with instructions to enter a new judgment in Chodos v. Borman. Plaintiff contended that the trial court erred when it failed to include postjudgment interest in the final judgment, with interest to run on the $1,717,921 from September 19, 2013, the date of the original judgment. Defendant argued that interest should only run from the date of entry of the judgment following remittitur, November 14, 2014. The court held that interest ran on the $1,717,921 judgment from the date of the original judgment - September 19, 2013 - and that plaintiff is entitled to the costs claimed and interest on those costs from that date. Accordingly, the court modified and affirmed the judgment. View "Chodos v. Borman" on Justia Law

In 2013 the Seventh Circuit held unconstitutional a provision of the Indiana Unclaimed Property Act, Ind. Code 32-34-1-1 that stated that “property” is “presumed abandoned if the owner or apparent owner has not communicated in writing with the holder concerning the property or has not otherwise given an indication of interest in the property” within a specified period varying according to the type of property. By filing a valid claim, the owner could reclaim the property up to 25 years after it was delivered to the attorney general, but was entitled only to principal and not to any interest. Several months later, the state amended the Act to provide for payment of interest. The district court dismissed the remand as moot and denied plaintiff attorneys’ fees. The Seventh Circuit reversed, opining that the judge was annoyed at the plaintiff because on remand she asked permission to file an amended complaint to convert the suit to a class action, based on intimations that the state would compensate only the plaintiff. She withdrew that request when the state amended the Act. The state’s concession did not deprive the plaintiff of her status as the prevailing party. The court also opined that the amount sought—$258,462.50 for 375.75 hours—is excessive. View "Cerajeski v. Zoeller" on Justia Law

Smith, a California partnership, hired attorney Moncrief to perform due diligence for its purchase of equipment from Texas Hill in Arizona. Texas Hill was represented by Clark, an Arizona attorney. Moncrief performed a UCC search, called Clark, and left a voicemail. Clark called Moncrief in response and represented that Texas Hill was the sole owner of the equipment. Afterwards Clark sent Moncrief an e-mail, stating: “I have been the attorney for Texas Hill . . . and can state unequivocally that the cooling equipment you are buying is free and clear and is owned by Texas Hill.” Based on Clark’s representations, Moncrief advised Smith to go forward with the purchase. Smith later learned that Texas Hill did not own the equipment when they completed the transaction; New York Community Bank had acquired an interest in the equipment. Smith sued Moncrief for legal malpractice. Moncrief cross-complained against Clark. Clark moved to quash service, arguing that California lacked personal jurisdiction over him. The court granted the motion. Clark’s conduct and his intentional misrepresentations were required to close the sale. Clark personally availed himself of the benefits of California when he reached into California to induce Moncrief’s client to complete the purchase. Moncrief’s claims arise out of Clark’s contacts with California. lark has not demonstrated that exercise of jurisdiction would be unreasonable. View "Moncrief v. Clark" on Justia Law

Sanctionees Hancock, Musnuff, and Goodyear appealed from the district court's award of sanctions, arguing that the district court abused its discretion in relying upon its inherent power to impose sanctions, and in determining the amount and the nature of the sanctions imposed. The court concluded that Sanctionees’ argument that the district court should have relied on Federal Rule of Civil Produce 37 fails because the district court's inherent power is not limited by overlapping statutes or rules. The court held that it was not an abuse of discretion for the district court to rely on its inherent power to sanction the conduct at issue in this case, and to determine that Rule 37 did not provide the appropriate remedy, especially since the discovery fraud was not discovered until after the case had settled. In this case, it is clear the district court did not abuse its discretion in concluding that Hancock, Musnuff, and Goodyear acted in bad faith in this litigation; the district court acted well within its discretion in awarding all the attorneys’ fees and costs incurred by plaintiffs after Goodyear served its supplemental responses to plaintiffs’ First Request; and the court affirmed the monetary and non-monetary sanctions set forth in the district court’s Order. View "Haeger v. Goodyear Tire & Rubber Co." on Justia Law

Taylor’s brother died in an accident. Caiarelli, the decedent’s ex-spouse and guardian of their minor child, obtained a state court declaration that the child was entitled to assets distributed to Taylor ($1.4 million). The estate assigned the judgment to Caiarelli. Taylor sought a probate court declaration that the assignment was void. Before resolution, Taylor filed for Chapter 11 bankruptcy, triggering the automatic stay. Caiarelli initiated an adversary proceeding, objecting to discharge of the judgment. The bankruptcy court dismissed, finding that Caiarelli failed to establish standing. The judgment was discharged, and Taylor’s creditors enjoined from collecting, 11 U.S.C. 524(a)(2). Caiarelli returned to probate court, which ratified the assignment. Taylor claimed that Caiarelli and her attorneys violated the discharge and plan injunctions. The bankruptcy court entered a civil contempt order and issued a damages order and judgment for $165,662.36 in attorney’s fees. While appeal was pending, Taylor notified the district court that he reached a settlement with the legal malpractice insurance carrier for Caarelli’s attorneys. The attorneys denied that a full settlement had been reached. The bankruptcy court indcated that vacatur would be approved if the parties returned to the court, so the district court denied Taylor’s motion to dismiss but reversed the contempt order, damages order, and judgment, finding no violation of the statutory discharge or plan injunctions. The Seventh Circuit affirmed, finding that the appeal was not moot. View "Taylor v. Caiarelli" on Justia Law

Plaintiffs in this case alleged their former bankruptcy trustee breached professional duties due them because of conflicting obligations the trustee owed the bankruptcy estate. Plaintiffs sought recovery under state law. However, plaintiffs filed suit in federal court against the trustee alleging diversity jurisdiction and the right to have the case resolved in an Article III court. The trustee maintained the case should have been heard in an Article I bankruptcy court because the alleged-breached professional duties arose from the bankruptcy proceedings. The district court concluded the case should have been heard in the Article I court, and certified its decision for immediate appeal. The Tenth Circuit concluded that an Article III court had jurisdiction, and reversed the district court's order. View "Loveridge v. Hall" on Justia Law

Plaintiff-appellant James McKenzie appealed a trial court’s order awarding him only $28,350 of the nearly $48,000 in attorney fees he sought in this case, following the parties’ settlement of McKenzie’s claim under the automobile “lemon law” provisions of the Song-Beverly Consumer Warranty Act. The trial court refused to award McKenzie any of the attorney fees incurred in the wake of Ford’s initial offer because it viewed the compromise offer ultimately accepted by McKenzie as essentially identical to the offer he had initially rejected – distinguished only by his “demand that [he] be allowed to file [a fee] motion.” The court concluded McKenzie unreasonably delayed settlement for the sole purpose of ginning up his fee award. The Court of Appeal reversed. The Court found the trial court’s comparative assessment of Ford’s two settlement offers was erroneous as a matter of law. "Even Ford concedes its initial settlement offer incorporated numerous extraneous provisions – including broad releases of both Ford and nonparties, an illegal confidentiality clause characterized as 'material' to the settlement, and what amounted to an opt-out provision in Ford’s favor – all of which were excised from the offer McKenzie later accepted. These differences are significant, and thus McKenzie’s rejection of the initial offer was reasonable, requiring his counsel to continue working on the case." The Court held further that the trial court’s erroneous comparison of Ford’s initial compromise offer with the offer McKenzie later accepted fatally undermined its conclusion that the entire amount of hours billed by McKenzie’s counsel in the wake of that initial offer was unjustified. The court’s additional finding, that McKenzie’s two attorneys also engaged in instances of duplicative billing after Ford’s initial offer, did not support a complete denial of fees for that period. Consequently, the case was remanded back to the trial court with directions to reconsider the fee award. View "McKenzie v. Ford Motor Co." on Justia Law

"This is a case of egregious attorney misconduct." Because of the cumulative effect of the attorney's misconduct, the Court of Appeal felt compelled to reverse the judgment she obtained on behalf of her client, Caltrans. "While Judge Di Cesare showed the patience of Job – usually a virtue in a judge – that patience here had the effect of favoring one side over the other. He allowed [the attorney] to emphasize irrelevant and inflammatory points concerning the plaintiff's character so often that he effectively gave CalTrans an unfair advantage." View "Martinez v. Dept. of Transportation" on Justia Law

Choice Hotels sued SBQI, its managers, and investors, for breach of a franchise agreement. The defendants did not answer the complaint. The court entered a default. One defendant, Chawla, an Illinois attorney, had represented the others. Other defendants asked Chawla to find a new attorney. They claimed that they had been unaware that their signatures were on the franchise agreement and that the signatures are forgeries. Johnson agreed to try to vacate the default, negotiate a settlement, and defend against the demand for damages. Johnson filed an appearance and took some steps, but did not answer the complaint or move to vacate the default, engage in discovery concerning damages, or reply to a summary judgment motion on damages. In emails, Johnson insisted that he was trying to settle the litigation. He did not return phone calls. The court set damages at $430,286.75 and entered final judgment. A new attorney moved to set aside the judgment more than a year after its entry, under Fed. R. Civ. P. 60(b)(6), which covers “any other reason that justifies relief” and requires “extraordinary circumstances.” The Seventh Circuit affirmed. The defendants must bear the consequences of their inaction. They were able to monitor the proceedings, but did not follow through. View "Choice Hotels Int'l Inc. v. Grover" on Justia Law