Justia Legal Ethics Opinion Summaries

Claimants filed a $2,142,000 non-priority unsecured proof of claim in jointly administered Chapter 11 bankruptcy cases. That claim was disallowed by the bankruptcy court; the district court and the Sixth Circuit affirmed. As a result of the multitude of filings, strategies employed and positions taken over a six year period, the bankruptcy court sanctioned the attorney, Grossman, the sum of $207,004 pursuant to 28 U.S.C. 1927 and the court’s inherent authority under 11 U.S.C. 105, representing the attorney fees expended by counsel for the Official Committee of Unsecured Creditors and, post-confirmation, the Liquidation Trustee and his counsel, directly or indirectly related to the claim litigation. Grossman appealed the sanction and an order denying a motion which sought the recusal of the bankruptcy judge pursuant to 28 U.S.C. 455. In a separate appeal, Grossman challenged the retention of special counsel to collect the judgment against him and an order requiring him to submit to a debtor’s examination and provide written discovery. Consolidating the appeals, the Sixth Circuit Bankruptcy Appellate Panel affirmed. Grossman vexatiously pursued arguments and filed documents throughout the litigation that were frivolous; his claims about the judge were misstatements. View "In re: Royal Manor Mgmt., Inc." on Justia Law

Plaintiff, a law firm, appealed the district court's dismissal of its implied-in-fact contract and quasi-contract claims against Kraft. The dispute stemmed from the Firm's advice to Kraft regarding an antitrust claim. The court concluded that the Firm's implied-in-fact contract claim failed because the complaint does not plausibly allege that Kraft was "reasonably notified" that the Firm expected to be paid for any work completed before that point. The Firm's quasi-contract claim failed because the Firm's services were rendered simply in order to gain a business advantage. Accordingly, the court affirmed the judgment of the district court. View "Berry Law v. Kraft Foods Group" on Justia Law

Anten and the Rubins jointly retained Gelfand and Kirios of the Weintraub law firm to advise and represent them on a matter of common interest: incorrect advice given by their prior tax attorneys. Anten filed a malpractice action against those lawyers concerning that representation. In response to discovery propounded by Anten, the lawyers objected that Anten’s discovery sought communications between the lawyers and the Rubins that were protected by the attorney-client privilege, which the Rubins expressly declined to waive. The superior court denied a motion to compel further responses, on the basis of the attorney-client privilege objection. The court of appeal granted Anten writ relief. In a lawsuit between the attorney and one or more of the attorney’s joint clients, based on an alleged breach of a duty arising from the attorney-client relationship, relevant communications between the attorney and any of the joint clients, made in the course of the attorney-joint-client relationship, are not privileged. View "Anten v. Super. Court" on Justia Law

Almanza was charged with nonforcible lewd or lascivious act on a child under age 14 (Pen. Code, 288(a)), forcible sodomy (286(c)(2)), and forcible lewd or lascivious act on a child under age 14 (288(b)(1)) with respect to his girlfriend’s daughter. At one point the victim stated that she had lied about the molestations because she was angry about having been disciplined. The court was aware, before trial, that the prosecutor threatened to prosecute the defense investigator and insinuated that defense counsel could also be prosecuted, for hiring and revealing the victim’s name to an investigator who was not licensed. After a bench trial, Almanza was found guilty of the lewd-act counts but not guilty of the sodomy counts and was sentenced to 16 years in prison. The court of appeal affirmed, despite finding that the prosecutor precipitated a serious conflict of interest between defendant and defense counsel, that “the trial court did little to try to remedy and that defense counsel could have done more to address.” The court noted the evidence of guilt and cited the California Supreme Court’s statement that prejudice will be presumed only when counsel is representing multiple defendants concurrently and a conflict of interest arises from that circumstance. View "People v. Almanza" on Justia Law

Stephens, an attorney, is controlling principal of Southwest Medical, the Debtor, and has an interest in Southeast, the debtor in a separate bankruptcy. The Chapter 7 Trustee filed an adversary proceeding against Southeast and Stephens based on assets that were transferred post-petition by the Debtor to Southeast, and sought imposition of a constructive trust. By joint stipulation, Stephens was dismissed from the Adversary Proceeding. In 2013, following a trial, the Bankruptcy Court denied Stephens’ Motion to Intervene in the Adversary Proceeding; entered an order that allowed the Trustee an unsecured claim against Southeast ($1,190,000); and denied a constructive trust against Southeast’s assets. While Stephens’ appeal was pending, and on the last day of the one-year limitation period under FRCP 60(b), Stephens moved for Relief from Judgment or Order, alleging that the Trustee’s attorney had colluded with Southeast’s attorneys, amounting to a “fraud on the court.” The court denied Stephens’ Rule 60 Motion because, he was not a party in the Adversary Proceeding; held that Stephens’ allegations of fraud on the court violated Rule 9011(b)(2) and (b)(3); and ordered Stephens to pay $19,188.42 in attorney fees plus $1,659.10 as a sanction under Rule 9011(c)(2). The Eighth Circuit affirmed. View "Williams v. Stephens" on Justia Law

CLC’s principal, Erwin, was general counsel for the bank. CLC deferred invoicing the bank in 2008 when it fell on hard times. In 2009 the Office of Thrift Supervision put the bank into receivership. CLC claims that, days before the takeover, the bank granted it security interests in bank properties. CLC waited months to record attorney liens for the security interests. CLC sought $176,750 in deferred legal fees. The FDIC denied the claim. CLC initially denied possessing the original retainer agreement, claiming oral agreements, until, in 2013, Erwin produced a 1989 agreement. The district court granted the FDIC summary judgment, finding the evidence prejudicial and the delay not “substantially justified.” The fees arrangement did not comply with 12 U.S.C. 1823(e)’s documentation requirements and the security interests were similarly deficient and “taken in contemplation of” insolvency. The court rejected CLC’s argument that the statutory documentation requirements and the D’Oench doctrine (an estoppel rule shielding the FDIC from claims and defenses based on unwritten agreements that reduce bank assets) apply only to secret agreements affecting traditional banking transactions, like loans. The court acknowledged evidence indicating that Erwin and the bank may have backdated the security interests. The Sixth Circuit reversed; D’Oench and its statutory progeny do not apply to its legal services arrangement with the bank. View "Commercial Law Corp., P.C. v. Fed. Deposit Ins. Corp." on Justia Law

Prosser filed a Chapter 11 bankruptcy petition in 2006, which was converted to a Chapter 7 petition. Carroll was appointed as trustee. At a 2008 trial to adjudicate creditors’ objections to Prosser’s claim of exemptions, Stelzer, Prosser’s former “valet and personal assistant,” testified that Prosser asked him to destroy computer hard drives after Prosser filed for bankruptcy. The Bankruptcy Court denied the exemptions. Carroll and others initiated an adversary proceeding, seeking denial of discharge under 11 U.S.C. 727(a), Prosser deposed Stelzer in an effort to undermine his testimony; Prosser Counsel inquired into the payment of Stelzer’s legal fees by third parties and contacts Stelzer had with Carroll and Carroll’s counsel. Prosser Counsel later sought an evidentiary hearing into “a bribery scheme,” asserting that Stelzer gave unfavorable testimony during the Exemptions Trial in exchange for payment of his attorney fees in multiple litigations and that Carroll’s counsel had misrepresented Carroll’s contacts with Stelzer. Ultimately, Carroll obtained an award of legal fees and expenses against Prosser Counsel (28 U.S.C. 1927) contending that the Adversary Complaint, the Fee Objections, and the Conflicts Motion were patently meritless. The district court vacated, holding that the Adversary Complaint and Fee Objections could not have “multiplied” the adversary proceedings. The Third Circuit reversed, reinstating the sanctions. View "In re: Prosser" on Justia Law

The Fergusons offered to sell their attorney, Yaspan, an interest in a London flat they owned. At Yaspan’s suggestion, the Fergusons hired independent counsel and the parties exchanged five drafts before signing a written agreement in 1995. This agreement enabled the Fergusons to recover nearly all of their original purchase price for the flat and still own half of it. Both the Fergusons and the Yaspans wanted to be partners with each other and not each others’ children, so they agreed that whichever couple outlived the other would have the right to buy out the deceased couple’s interest before that interest could pass to anyone else. The Fergusons were then 70 and 68 years old; the Yaspans were 49 and 47. The trial court concluded that Mrs. Ferguson’s 2011 petition to set aside the agreement as a product of Yaspan’s undue influence was untimely and without merit. The court of appeal affirmed, rejecting arguments that the trial court erred by looking at the fairness of the Agreement as a whole rather than focusing on terms Ferguson identified as unfair, and giving insufficient weight to the statistical likelihood that the buyout provision would favor the Yaspans. View "Ferguson v. Yaspan" on Justia Law

Sprinkle applied for supplemental social security income. After exhausting administrative remedies, Sprinkle sought judicial review of a final decision that he was not disabled. The district court held that the agency failed to properly evaluate evidence of Sprinkle’s disability and reversed. Sprinkle sought attorney’s fees under the Equal Access to Justice Act. While the EAJA contains a presumptive rate cap of $125 an hour, courts may award enhanced fees if justified because of an increase in the cost of living. The court found that Sprinkle was entitled to fees, but rejected his request for a cost-of-living enhancement. The Seventh Circuit vacated. An EAJA claimant seeking an adjustment need not offer proof of the effects of inflation on the particular attorney’s practice or proof that no competent attorney could be found for less than the requested rate. The claimant may rely on a readily available measure of inflation such as the Consumer Price Index, as well as proof that the requested rate does not exceed the prevailing market rate in the community for similar services by lawyers of comparable skill and experience. An affidavit from a single attorney testifying to the prevailing market rate may suffice to meet that burden. View "Sprinkle v. Colvin" on Justia Law

The North Carolina Judicial Standards Commission recommended that Brenda G. Branch, a judge of the General Court of Justice, District Court Division, Judicial District 6A, should be publicly reprimanded for conduct prejudicial to the administration of justice that brings the judicial office into disrepute and which violates the North Carolina Code of Judicial Conduct. The recommendation was based on the Commission’s findings that Branch engaged in misconduct that resulted from insufficient inquiry into her obligations regarding a certain case and her insufficiently-based conclusions regarding the parties. The Supreme Court adopted the Commission’s findings and concluded that Branch be publicly reprimanded. View "In re Inquiry Concerning a Judge" on Justia Law