Justia Legal Ethics Opinion Summaries

Crockett’s former law firm subscribed to a LexisNexis legal research plan that allowed unlimited access to certain databases for a flat fee. Subscribers could access other databases for an additional fee. According to Crockett, LexisNexis indicated that a warning sign would display before a subscriber used a database outside the plan. Years after subscribing, Crockett complained that his firm was being charged additional fees without any warning that it was using a database outside the Plan. LexisNexis insisted on payment of the additional fees. The firm dissolved. Crockett’s new firm entered into a LexisNexis subscription agreement, materially identical to the earlier plan; it contains an arbitration clause. Crockett filed an arbitration demand against LexisNexis on behalf of two putative classes. One class comprised law firms that were charged additional fees. The other comprised clients onto whom such fees were passed. The demand sought damages of more than $500 million. LexisNexis sought a federal court declaration that the agreement did not authorize class arbitration. The district court granted LexisNexis summary judgment. The Sixth Circuit affirmed. “The idea that the arbitration agreement … reflects the intent of anyone but LexisNexis is the purest legal fiction,” but the one-sided adhesive nature of the clause and the absence of a class-action right do not render it unenforceable. The court observed that Westlaw’s contract lacks any arbitration clause.View "Reed Elsevier, Inc. v. Crockett" on Justia Law

Thomas Konrad accepted a loan from Bob Law upon the advice of attorney Douglas Kettering. Law and Kettering had been partners in at least one of Law's business ventures and had an attorney-client relationship. Thomas's parents (the Konrads) provided their land as collateral for Thomas's loan. Thomas later defaulted on the note. Seven months after Kettering passed away, Law brought suit to enforce the note and mortgage against Thomas and the Konrads. Law settled with Thomas and the Konrads. Law then sought to recover from the Kettering Estate the amounts outstanding on the note, claiming that Kettering's acts - including his conflict of interest with Law and his alleged fraudulent inducement of the Konrads into signing the note and mortgage - voided the note and mortgage, and therefore, the Estate was liable to Law for the interest due on the note. The circuit court granted summary judgment for the Estate. The Supreme Court affirmed, holding (1) the contract between Law and Thomas did not contravene public policy because it was drafted by an attorney who failed to disclose a conflicting attorney-client relationship; and (2) the theory that Kettering fraudulently induced the Konrads into signing the note and mortgage rested on mere speculation. View "Law Capital, Inc. v. Kettering" on Justia Law

Plaintiffs filed an action against Defendants relating to "forward corn contracts." Counsel for Defendants conveyed confidential information to a grain industry expert in attempting to retain him. Plaintiff's counsel later retained that same expert. Defendant subsequently filed a motion to disqualify the expert from testifying and moved to disqualify Plaintiffs' counsel. The district court disqualified the expert but did disqualify Plaintiffs' counsel, finding that Defendants failed to advance any evidence that Defendants' trial strategy, work product, or mental impressions had been communicated by the expert to Plaintiffs' counsel. Thereafter, Defendants applied for leave to file an original action for a writ of mandamus requiring the district court to disqualify Plaintiffs' counsel. The Supreme Court denied the writ, holding that Plaintiffs rebutted the presumption that the expert shared confidences gained from Defendants' counsel with Plaintiffs' counsel, and therefore, disqualification of Plaintiffs' counsel was not required. View "Mid Am. Agri Products/Horizon, LLC v. Dist. Court" on Justia Law

Petitioner here was Gaddy Engineering Company, and Respondents were an individual lawyer, Thomas Lane, and a law firm in which Lane was a partner (Bowles Rice). Petitioner contended that the Lane agreed to pay Petitioner one-third of all sums Bowles Rice received in connection with its legal representation of a group of land companies in a case to be filed against a company for alleged underpayment of gas royalties. The circuit court granted summary judgment to Respondents as to all claims. The Supreme Court affirmed, holding, inter alia, that the trial court (1) correctly applied the doctrine of impracticability as to Petitioner's breach of contract claims; (2) did not err in ruling that no attorney-client relationship existed between Petitioner and Respondents, and thus the trial court did not err in granting summary judgment on Petitioner's professional negligence claim; (3) correctly granted summary judgment on Petitioner's claim of fraud; and (4) did not err in granting summary judgment on Petitioner's claim seeking relief in quantum meruit. View "Gaddy Eng'g Co. v. Bowles Rice McDavid Graff & Love, LLP" on Justia Law

Plaintiffs were two limited liability companies that made loans to Goldan, LLC. Goldan failed to repay the loans. Plaintiffs later discovered that their mortgages had not been recorded as agreed upon. Plaintiffs sued Goldan and its two principals, Mark Goldman and Jeffrey Daniels, alleging a number of claims. One claim was asserted against Daniels, a lawyer, for legal malpractice for failing to record the mortgages. Daniels' malpractice carrier, American Guarantee and Liability Insurance Company (American) refused to provide defense or indemnity coverage. Daniels defaulted in Plaintiffs' action against him. Daniels assigned to Plaintiffs his rights against American. Plaintiffs subsequently brought an action against American for breach of contract and bad faith failure to settle the underlying lawsuit. Supreme Court granted Plaintiffs' motions as to the breach of contract claims and dismissed the bad faith claims. The Appellate Division affirmed. The Court of Appeals affirmed, holding (1) by breaching its duty to defend Daniels, American lost its right to rely on policy exclusions to escape its duty to indemnify; and (2) the lower courts properly dismissed Plaintiffs' bad faith claims. View "K2 Inv. Group, LLC v. Am. Guar. & Liab. Ins. Co." on Justia Law

After Sarah West was involved in a motor vehicle accident, West made a claim against her insurer, State Farm, for underinsured motorist benefits of $75,000. State Farm paid only $20,000 in benefits. Attorney Tracey Morin subsequently filed a complaint against State Farm on behalf of Sarah and her parents, Ausra and James West, for breach of contract, violation of the Montana Unfair Trade Practices Act, and breach of the implied covenant of good faith and fair dealing. At the conclusion of the action, the district court imposed sanctions on Morin individually under Mont. R. Civ. P. 11. Morin appealed, contending that the depth and breadth of the sanctions constituted an abuse of discretion. The Supreme Court affirmed, holding that the district court did not abuse its discretion in imposing the level of sanctions imposed in this case. View "Morin v. State Farm Mut. Auto. Ins. Co." on Justia Law

Exact developed business software. Infocon began distributing Exact’s software in 1998. A conflict arose when Exact allegedly abandoned a scheduled upgrade, leaving distributors like Infocon out to dry, and Infocon allegedly failed to remit fees. Exact sued Infocon in 2003. According to the district court, Exact showed “persistent noncompliance with… ever more stringent” discovery orders. When Infocon moved for a default judgment, Exact fired its lawyer, hired new counsel and entered settlement negotiations. . On the eve of settlement, Infocon fired its lawyer, DeMoisey. DeMoisey placed a charging lien on the settlement proceeds. Exact delivered the $4 million settlement to the district court, which distributed most of it to Infocon and placed the remaining $1.2 million in escrow pending resolution of the fee dispute. Nine months later, Infocon sued DeMoisey in Kentucky state court for malpractice. After a summary judgment ruling in favor of the lawyer, the district court held a bench trial and awarded DeMoisey $1.4 million in quantum meruit relief. The Sixth Circuit affirmed, rejecting arguments that the amount was too high, that Infocon had a right to a jury trial and, for the first time on appeal, that the district court lacked jurisdiction because DeMoisey and Infocon are both from Kentucky. View "Exact Software N. Am., Inc. v. Infocon Sys., Inc." on Justia Law

In a reformation action concerning cash flow distributions in three real estate joint venture agreements, the Supreme Court held that the Vice Chancellor properly reformed the agreements on the basis of unilateral mistake and knowing silence by the other party. "Negligence in discovering an alleged mistake does not bar a reformation claim unless the negligence is so significant that it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. Ratifying a contract does not create an equitable bar to reformation unless the ratifying party had actual knowledge of the mistake giving rise to the reformation claim." In this matter, the Court reversed the Vice Chancellor's fee award because a contractual fee-shifting provision incorporating the words "incurred" and "reimburse" did not apply where counsel for the party seeking fees represented the party free of charge to avoid a malpractice claim. View "Scion Breckenridge Managing Member, LLC, et al. v. ASB Allegiance Real Estate Fund, et al." on Justia Law

Sprint entered into interconnection agreements with incumbent local exchange carriers (CenturyLink Plaintiffs) providing for the mutual exchange of telecommunications traffic pursuant to the provisions of the Telecommunications Act of 1996, 47 U.S.C. 151 et seq. When Sprint began to withhold payments under the agreement, CenturyLink brought a breach of contract claim in federal district court. The court held that the 1996 Act did not require a State commission to interpret and enforce an interconnection agreement (ICA) in the first instance; neither the text of the 1996 Act nor prudential considerations compelled federal deference to State commissions in the first instance; the district court judge's ownership of shares in plaintiff did not constitute a financial interest in plaintiff for purposes of 28 U.S.C. 455(b); the district court did not violate the recusal statute and therefore did not abuse his discretion in deciding that neither recusal nor vacatur was appropriate; when viewed in conjunction with the ambiguity in the ICA's coverage of voice-over Internet Protocol (VoIP) traffic over Feature Group D (FGD) trunks, the parties' course of dealing reinforced the court's conclusion that the district court did not err in entering judgment for plaintiff on its breach of contract claim; and, in the face of ambiguity, the court construed the relevant provisions of the North Carolina ICA against Sprint and in favor of plaintiff. Accordingly, the court affirmed the judgment. View "Central Telephone Co. v. Sprint Communications Co." on Justia Law

Plaintiff filed a lawsuit against his employer, Union Pacific, for injuries he sustained at a railyard operated by Gunderson. Union Pacific filed a third-party complaint for indemnity against Gunderson, and Union Pacific and Gunderson settled with plaintiff, each agreeing to pay half of plaintiff's settlement demand. After settling with plaintiff, Union Pacific and Gunderson proceeded to trial to determine whether Gunderson should also be liable for Union Pacific's half of the settlement. The court affirmed the district court's award to Union Pacific of half of its attorney's fees and costs incurred as of the settlement pursuant to the parties' Track Lease Agreement but denied Union Pacific's motion for additional attorney's fees arising out of the post-settlement indemnification proceedings. View "Rice v. Union Pacific RR Co." on Justia Law