Justia Legal Ethics Opinion Summaries

W. Steve Smith, trustee of a complex Chapter 7 estate, appealed the bankruptcy court's removal of him as trustee. Smith also appealed his removal from all of his other pending cases. Smith had traveled with his wife and children to New Orleans for an oral argument related to his work as trustee, billing the the firm for work that included estate funds for trip expenses. The district court affirmed. The court concluded that the bankruptcy court applied a proper legal standard, and its determination that Smith’s conduct violated that standard was not clearly erroneous. Therefore, the bankruptcy court did not abuse its discretion in finding cause sufficient to remove Smith as trustee. The court rejected Smith's notice argument as well as his as-applied constitutional argument to section 324(b) of the Bankruptcy Code. Finally, the court's ruling moots the issue of whether the bankruptcy and district courts wrongly refused to stay his removal pending appeal. Accordingly, the court affirmed the judgment. View "Smith v. Robbins" on Justia Law

Petitioner, a law firm, was retained as counsel for a gaming company (“the company”) in a lawsuit against the company’s former employees and an entity they created. Petitioner prepared a second amended complaint adding real parties in interest (collectively, “Himelfarb”) as defendants. The jury rejected the company’s claims against Himelfarb and found for Himelfarb on its counterclaims. The district court eventually determined that the company would be liable for Himelfarb’s attorney fees and costs and determined that Petitioner was jointly and severally liable with the company for those fees and costs pursuant to Nev. Rev. Stat. 7.085. Petitioner subsequently sought a writ of mandamus vacating the portion of the district court’s order making Petitioner jointly and severally liable for Himelfarb’s attorney fees. The Supreme Court granted the petition, holding (1) Nev. R. Civ. P. 11 does not supersede section 7.085 because each represents a distinct, independent mechanism for sanctioning attorney misconduct, and therefore, the award against Petitioner was not improper; but (2) the district court abused its discretion in sanctioning Petitioner under section 7.085 without making adequate findings. View "Watson Rounds v. Eighth Judicial Dist. Court" on Justia Law

A Chapter 7 petition was filed against Connolly in 2001. Shapiro, then the bankruptcy trustee, initiated an adversary proceeding. In 2007, the bankruptcy court concluded that Shapiro and his attorney had breached their discovery obligations due to gross negligence and dismissed Shapiro’s claims with prejudice. Connolly’s unsecured creditors, including Coface, successfully sought to remove Shapiro as trustee. French, Shapiro’s successor, then commenced an adversary proceeding against Shapiro, his law firm, and his professional-liability insurer. The parties reached a court-approved settlement. The bankruptcy court recognized that at least some of the work that Coface paid its attorneys to do substantially benefitted the bankruptcy estate and the unsecured creditors, and contributed greatly to a significant increase in funds that unsecured creditors would receive. Coface sought reimbursement of $164,336.28 in attorney fees and costs under 11 U.S.C. 503(b). The bankruptcy court denied Colface’s motion. The district court agreed. The Sixth Circuit reversed, holding that administrative expenses are allowable in these circumstances under section 503(b) in a Chapter 7 case. Denying creditors reimbursement of administrative expenses in such circumstances would disincentivize participation in the bankruptcy process and would impugn the fundamental notion of bankruptcy as equitable relief View "Coface Argentina v. McDermott" on Justia Law

Colleen O’Toole is currently a judge and announced her intention to run for election in 2016 to one of the three contested seats on the Supreme Court of Ohio. O’Toole and her judicial campaign committee challenged the constitutionality of several provisions of the Ohio Code of Judicial Conduct, including Rule 4.4(E) and sought a temporary restraining order and preliminary injunction only with respect to Rule 4.4(E) which states that: The campaign committee of a judicial candidate may begin soliciting and receiving contributions no earlier than one hundred twenty days before the first Tuesday after the first Monday in May of the year in which the general election is held. If the general election is held in 2012 or any fourth year thereafter, the campaign committee of a judicial candidate may begin soliciting and receiving contributions no earlier than one hundred twenty days before the first Tuesday after the first Monday in March of the year in which the general election is held. The district court denied relief. The Sixth Circuit affirmed, finding that the campaign committee failed to demonstrate likelihood of success on the merits or likelihood of irreparable harm. View "O'Toole v. O'Connor" on Justia Law

Investors in Central Sleep filed suit against the company, Dachman, its promoter, and others, claiming fraud, RICO violations, conversion, fraudulent conveyance, civil conspiracy, and securities fraud. Dachman was also convicted for his fraudulent conduct. He spent the funds he stole from investors on a tattoo parlor, vacations and cruises, a new Land Rover, rare booksm and to fund personal stock trading and gambling. Goodman represented the defendants. A judge ordered Central Sleep into receivership and issued a stay against “all civil legal proceedings” involving the defendants. The receivership closed; victims received pennies on the dollar. Goodman obtained a judgment for unpaid legal fees and submitted a claim, but also filed a lien against the proceeds of the Dachmans' state court medical-malpractice lawsuit. Neither Goodman nor the Dachmans informed the receiver or the judge of those proceedings. The receiver learned of the malpractice suit and recovered the settlement proceeds. When the receiver proposed a distribution plan, Goodman argued that his lien entitled him to be paid in full from the malpractice suit proceeds, rather than pro rata from the receivership estate like other creditors. The judge offered Goodman the opportunity to post a bond to delay distribution, pending appeal. Goodman did not post a bond. The judge approved the plan and the funds were distributed. The Seventh Circuit affirmed and granted the receiver’s motion for sanctions against Goodman. View "Duff v. Central Sleep Diagnostics, LLC" on Justia Law

On February 19, 2015, the Florida Judicial Qualifications Commission (JQC) filed in the Supreme Court a notice of formal charges charging Eleventh Judicial Circuit Judge Jacqueline Schwartz with violations of the Code of Judicial Conduct. Judge Schwartz admitted her misconduct and stipulated to the sanctions of a public reprimand and a letter of apology. On April 29, 2015, the Supreme Court rejected the parties’ stipulation, concluding that the terms of the stipulation were inadequate to address the violations committed by Judge Schwartz. Judge Schwartz and the JQC subsequently filed a revised consent judgment in which the parties agreed to the terms outlined in the April 29, 2015 order. The Supreme Court approved the revised consent judgment, which imposed the following sanctions upon Judge Schwartz: a public reprimand before the Supreme Court, a thirty-day suspension without pay, a requirement that Judge Schwartz write a letter of apology, and a $10,000 fine. View "Inquiry Concerning Judge Jacqueline Schwartz" on Justia Law

The Mississippi Commission on Judicial Performance (the Commission) filed a “Formal Complaint” against Chancery Court Judge Joe Dale Walker alleging conduct prejudicial to the administration of justice which brings the judicial office into disrepute in violation of Section 177A of the Mississippi Constitution. The Commission recommended that Judge Walker be removed from office following various allegations regarding Judge Walker's mismanagement of a conservatorship. Due to various irregularities occurring in his handling of the conservatorship, the matter was investigated by the Federal Bureau of Investigation as well as the Commission. As a result of that investigation, a grand jury was convened and witnesses called to testify regarding the administration of the conservatorship. In association therewith, Judge Walker entered a guilty plea related to a charge of attempting to corruptly influence a witness subpoenaed to appear before a Federal Grand Jury proceeding and attempting to impede the provision of documents by the witness to the Federal Grand Jury with the intent to influence the outcome of the proceeding. "Due to the seriousness of his admitted criminal acts and judicial misconduct," the Mississippi Supreme Court removed Judge Joe Dale Walker from the office of Chancery Court Judge, Post Two, of the Thirteenth Chancery Court District of Mississippi. View "Mississippi Comm'n on Jud. Perf. v. Walker" on Justia Law

The County seeks attorneys' fees from the Government under the Voting Rights Act of 1965's (VRA), 52 U.S.C. 10310(e), fee-shifting provision after the County prevailed in a challenge to the constitutionality of the VRA. The court agreed with the district court that the County is not entitled to attorneys’ fees because its lawsuit did not advance any of the purposes that Congress meant to promote by making fees available. Even though the County has based its argument for fees entirely on Newman v. Piggie Park Enterprises, Inc., the district court considered whether the County might also be entitled to fees under the Christiansburg Garment Co. v. EEOC standard, which would allow a fee award only if the Government’s defense of the coverage formula’s constitutionality was frivolous or without foundation. But since the County has never maintained that it could even theoretically obtain fees under that standard, the court did not resolve whether Christiansburg Garment should sometimes apply in cases like this one. The court concluded that it is enough to resolve this fee dispute by holding that the County is not entitled to fees under the only standard it has urged the court to apply. Accordingly, the court affirmed the district court's denial of attorneys' fees. View "Shelby County v. Lynch" on Justia Law

Knight is a licensed attorney, and the charges against him stem from his representation of a Barber in a bankruptcy proceeding, in 2008-2010. Knight was convicted of conspiracy to commit bankruptcy fraud, 18 U.S.C. 371 and 157; aiding and abetting bankruptcy fraud; aiding and abetting the making of a false statement in relation to a bankruptcy case; and five counts of aiding and abetting money laundering, 18 U.S.C. 1957 and 2. The district court granted Knight a new trial on the conspiracy, bankruptcy fraud, and money laundering counts, granted his motion for judgment of acquittal on the false statement count, and conditionally granted him a new trial on the false statement count in the event of reversal on appeal. The Eighth Circuit reversed the acquittal on the false statement charge, but affirmed the decision to grant Knight a new trial on all counts of conviction, noting evidence that Knight and Barber used the IOLTA to keep Barber's creditors from learning that he had money available and evidence concerning a sham entity that was used to divert money to Barber's own pocket. View "United States v. Knight" on Justia Law

Kaass Law challenged the district court's grant of Wells Fargo's motion for sanctions against it under 28 U.S.C. 1927. The district court ruled that “Kaass Law acted in bad faith by knowingly raising frivolous arguments against Wells Fargo and other defendants[.]” The court reversed and vacated the district court's order, holding that section 1927 does not permit the imposition of sanctions against a law firm. View "Kaass Law v. Wells Fargo" on Justia Law