Justia Legal Ethics Opinion Summaries

Plaintiff filed a compliant against Defendants in order to enforce a mechanics lien. Wells Fargo was named in the complaint because it was the trustee and secured party of certain property. Wells Fargo filed a motion for leave to file answer out of time and requested its fees and costs incurred with regard to the motion. The trial court granted Wells Fargo’s motion and ordered Plaintiff’s counsel to reimburse Wells Fargo’s counsel $1200 for fees and costs incurred regarding the motion for leave to file answer out of time. The trial court also granted Plaintiff’s motion for default judgment against Defendants. In its final order, the trial court stated that the mechanics lien had been released and that it had issued the $1200 sanctions award against Plaintiff’s counsel for its failure to voluntarily extend the time in which Wells Fargo might file its answer. The Supreme Court reversed the trial court’s judgment regarding sanctions, as Plaintiff’s counsel did not engage in behavior that could be characterized as unprofessional, an ethics violation or behavior that is subject to statutory sanctions. View "Env’t Specialist, Inc. v. Wells Fargo Bank" on Justia Law

This appeal arises from a trial court’s grant of summary judgment dismissing Ike Thrash’s and Dawn Investments LLC’s claims for negligence and breach of fiduciary duty against Deutsch Kerrigan & Stiles, LLP (DKS). The dispute underlying this appeal arose over the purchase of land at a trustee sale. Joel Blackledge, the acting trustee, prepared a trustee's deed in favor of Dawn Investments. Thrash deposited $5.6 million dollars into the trust account of his attorney, Charliene Roemer. The trustee’s deed was then delivered to Dawn Investments, and Thrash authorized the transfer of the funds. The former owner of the property, Coastal Land Development Company, filed for Chapter 11 Bankruptcy. Neither Thrash nor Blackledge was aware of the bankruptcy filing, but William Little Jr., Coastal’s bankruptcy attorney, notified Roemer through email. Subsequently, Thrash and Roemer discovered that the foreclosure sale had been conducted improperly. According to statute, the foreclosure sale must occur one week following the last day of publication; however, the foreclosure sale was conducted one day after the last day of publication. Thrash notified the seller of the error and demanded the funds be returned, but the request was refused. DKS filed suit in circuit court against Thrash, Dawn Investments, and the seller seeking a declaratory judgment that the failure of Blackledge to conduct a foreclosure sale properly was not the proximate cause of Thrash’s and Dawn Investments’ damages. Thrash and Dawn Investments counterclaimed, alleging that Blackledge was negligent and breached his fiduciary duty by improperly conducting the foreclosure sale, leading to Thrash and Dawn Investments to suffer damages. The parties agreed to dismiss DKS’s complaint for declaratory judgment and proceed under Thrash’s and Dawn Investments’ counterclaim. The parties were realigned, naming Thrash and Dawn Investments as Plaintiffs and DKS as Defendant. Both parties filed motions for summary judgment, and the trial court granted DKS’s motion. The Dawn Plaintiffs then filed this appeal. The Supreme Court found that the trial court was correct in finding that DKS did not owe the Dawn Plaintiffs a duty. View "Thrash v. Deutsch, Kerrigan & Stiles, LLP" on Justia Law

Landowners filed a class action suit challenging the federal Surface Transportation Board’s approval of King County using a Burlington Northern Railroad corridor as a public trail, pursuant the National Trails Systems Act Amendments of 1983, 16 U.S.C. 1247(d). The Claims Court approved a $110 million settlement agreement and an award to class counsel of approximately $35 million in attorney fees under the common fund doctrine. Two class members challenged the approval and award. The Federal Circuit vacated, noting that the government also challenged the approval, claiming that class counsel failed to disclose information necessary to allow class members to assess the fairness and reasonableness of the proposed settlement. The government had standing to raise its challenge under the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA), 42 U.S.C. 4654(c) and its arguments were not barred by waiver or estoppel.The Claims Court erred in approving a settlement agreement where class counsel withheld critical information not provided in the mailed notice to class members, but which had been produced and was readily available. Although a “common fund” exists in this case, the URA attorney fee provision provides for reasonable fees and preempts application of the common fund doctrine. View "Haggart v. United States" on Justia Law

After claimants defeated the Government's attempts to forfeit property seized in connection with a criminal investigation, claimants received significant awards of attorney's fees. Claimants' lawyer asked the district court that he be paid those fees directly, pursuant to an assignment in their representation agreement. The Government asserts that the Anti-Assignment Act, 31 U.S.C. 3727, voids such an assignment. The court concluded that the Government is not estopped from asserting the Anti-Assignment Act; the Act applies to and voids an award of attorney's fees pursuant to Civil Asset Forfeiture Reform Act (CAFRA), 28 U.S.C. 2465; and an award of attorney's fees under CAFRA is a claim against the United States to which the Act applies. The Act does not prevent an attorney from taking an interest in the fees that is effective against the Government; it merely forbids an assignment of the right to be paid directly from the United States Treasury. The court vacated the district court's order awarding attorney's fees directly to the lawyer because the Act applies to void the assignment in the representation agreement between claimants and the lawyer. The court remanded for further proceedings. View "United States v. Kim" on Justia Law

Amber Johnson filed suit against her closing attorney, Stanley Alexander, arguing he breached his duty of care by failing to discover the house Johnson purchased had been sold at a tax sale the previous year. The trial court granted partial summary judgment in favor of Johnson as to Alexander's liability. On appeal, the court of appeals held Alexander could not be held liable as a matter of law simply because the attorney he hired to perform the title work may have been negligent. Instead, the court determined the relevant inquiry was "whether Alexander acted with reasonable care in relying on [another attorney's] title search"; accordingly, it reversed and remanded. The Supreme Court reversed the court of appeals: even absent Alexander's admissions, the Court found it was error to equate delegation of a task with delegation of liability. The Court therefore agreed with Johnson that an attorney was liable for negligence in tasks he delegates absent some express limitation of his representation. Applying this standard to the facts, the Court found the grant of summary judgment was proper because there was no genuine issue of material fact as to liability. The case was remanded back to the trial court for a determination of damages. View "Johnson v. Alexander" on Justia Law

After prevailing in a condemnation action, petitioners-landowners moved for an award of attorneys' fees pursuant to section 28-2-510(B)(1) of the Eminent Domain Procedure Act. Contrary to petitioners' view, the circuit court determined attorneys' fees should be awarded based on an hourly rate via a lodestar calculation rather than the contingency fee agreement between Petitioners and their attorney. The Court of Appeals affirmed. The Supreme Court interpreted section 28-2-510 and concluded the General Assembly intended for attorneys' fees to be awarded based on a constellation of factors. Specifically, section 28-2-510(B)(1) mandated that in order for a prevailing landowner to recover reasonable attorneys' fees he or she must submit an application for fees "necessarily incurred." Therefore, by implication, the General Assembly precluded a landowner from recovering attorneys' fees based solely on a contingency fee agreement without regards for section 28-2-510. The Court explained that even though the contingency fee agreement is not the sole element in the calculation, it is still a significant component as it may be used to explain the basis for the fee charged by the landowner's counsel. "Our decision should not be construed as somehow condemning or eliminating an attorney's use of a contingency fee agreement. To the contrary, we recognize that the use of these agreements is a legitimate and well-established practice for attorneys throughout our state. This practice may still be pursued. Yet, it is with the caveat that the terms of the agreement are not controlling. Rather, they constitute one factor in a constellation of factors for the court's consideration in determining an award of reasonable litigation expenses to a prevailing landowner under section 28-2-510(B)(1). The court may, in fact, conclude that the contingency fee agreement yields a reasonable fee. However, the court is not bound by the terms of the agreement. " For this case, the Supreme Court held that the Court of Appeals misapplied case law precedent. Furthermore, the Court concluded the circuit court failed to conduct the correct statutory analysis, and remanded this matter to the circuit court. Petitioners' counsel was instructed to submit an itemized statement in compliance with section 28-2-510(B)(1) as counsel's original affidavit failed to identify the "fee charged" and the actual number of hours expended. View "South Carolina Dept. of Trans. v. Revels" on Justia Law

The Nelsons sued Chicago law firm Freeborn & Peters for malpractice, seeking $1.3 million in damages and were awarded more than $1 million. The malpractice claim arose from a transaction that the law firm handled involving acquisition of a shopping center under construction in Algonquin, Illinois. The law firm represented both the contract purchaser and the Nelsons, who invested in the venture, which suffered losses following the downturn of September 2008. The Seventh Circuit affirmed, finding that any error in the allocation of damages did not hurt the law firm or any creditors. View "Nelson Bros. Prof'l Real Estate, LLC v. Freeborn & Peters, LLP" on Justia Law

This appeal arose from contempt sanctions issued by the bankruptcy court against the Diazes for failing to transfer a Mexican coastal villa to Kismet. The court concluded that: (1) the bankruptcy court had jurisdiction to substitute Axolotl as transferee; (2) the bankruptcy court did not violate due process in imposing certain sanctions; (3) the ACJ was sufficiently specific to support a finding of contempt; (4) even if "legal impossibility" excused noncompliance, the Diazes have not demonstrated that compliance with the ACJ was legally impossible; (5) the bankruptcy court's findings of contempt for the period up to November 25 were not clearly erroneous; (6) the Diazes' claim that the bankruptcy court lacked jurisdiction to quantify fees and costs in its order of December 18, 2008 was moot where the order was vacated by the district court; and (7) the bankruptcy court properly abrogated attorney-client privilege where Mr. Diaz implicitly waived privilege with regard to communications on certain subjects. The court also concluded that the district court did not err in vacating the compulsory sanctions of $25,000 per day for the period from November 26, 2008 to December 4, 2008. Finally, the court granted requests for judicial notice. Accordingly, the court affirmed the judgment of the district court.View "In re: Icenhower" on Justia Law

Spencer stopped paying her mortgage in 2008. In Wisconsin state court foreclosure proceedings, Spencer’s attorney, Nora, adopted an “object-to-everything litigation strategy and buried the state court in a blizzard of motions.” While a hearing on a summary judgment motion was pending in state court, Nora removed the case to federal court. Finding no objectively reasonable basis for removal, the district court remanded the case and awarded attorney’s fees and costs to the lender, 28 U.S.C. 1447(c). The Seventh Circuit dismissed Spencer’s appeal as frivolous; the district court did not order her to pay anything. The court affirmed the award as to Spencer “because she has not offered even a colorable argument that removal was reasonable” and ordered Nora to show cause why she should not be sanctioned for litigating a frivolous appeal. View "PNC Bank, N.A. v. Spencer" on Justia Law

The Jicarilla Apache Nation's ("Tribe") reservation contained natural resources that were developed pursuant to statutes administered by the Interior Department and proceeds from these resources were held by the United States in trust for the Tribe. The Tribe filed a breach-of-trust action in the Court of Federal Claims ("CFC") seeking monetary damages for the Government's alleged mismanagement of the Tribe's trust funds in violation of 25 U.S.C. 161-162a and other laws. During discovery, the Tribe moved to compel production of certain documents and the Government agreed to the release of some documents but asserted that others were protected by, inter alia, the attorney-client privilege. At issue was whether the fiduciary exception to the attorney-client privilege applied to the general trust relationship between the United States and Indian tribes. The Court held that the fiduciary exception did not apply where the trust obligations of the United States to the Indian tribes were established and governed by statute rather than the common law and, in fulfilling its statutory duties, the Government acted not as a private trustee but pursuant to its sovereign interest in the execution of federal law. The reasons for the fiduciary exception, that the trustee had no independent interest in trust administration, and that the trustee was subject to a general common-law duty of disclosure, did not apply in this context. Accordingly, the Court reversed and remanded for further proceedings.View "United States v. Jicarilla Apache Nation" on Justia Law