Justia Legal Ethics Opinion Summaries

Charles Breland was a developer of real property, with properties in Alabama and Florida. In 2002, Breland hired David Hudgens to provide legal services for him and his companies. According to Hudgens, Breland informed him early during their professional relationship that he "was suffering significant cash flow problems." As a result, Hudgens says, the various law firms with which Hudgens worked while providing Breland and his companies with legal services delayed billing "a significant portion of the attorneys' fees and costs" for those services. Breland disputed that, claiming that he and/or his companies paid Hudgens more than $2.7 million for Hudgens's legal services between 2004 and 2010. In 2009, Breland filed a Chapter 11 bankruptcy petition. Breland filed the required schedules, required disclosure statement, and a proposed plan of reorganization that identified Hudgens & Associates, LLC ("H&A") as an unsecured creditor holding a $1 million claim and identified ETC as an unsecured creditor holding a $390,000 claim. Hudgens filed a proof of claim in the Breland bankruptcy on behalf of H&A for "legal fees" in the amount of $2,334,987.08 and filed proofs of claim on behalf of ETC for "guaranty of note" in the amounts of $879,929.55. Breland did not make payments according to the bankruptcy reorganization plan. Breland conveyed property to Gulf Beach Investment Company of Perdido, LLC which Hudgens alleged was in violation of the reorganization plan. Hudgens filed suit against Breland and Gulf Beach seeking enforcement of the plan, monies owed under the plan, and to void transfer of the property to Gulf Beach. The trial court entered a judgment on the parties' motions for a partial summary judgment, noting that it was not addressing the plaintiffs' "mortgage claim" because it had denied that claim in a September 2015 order. After setting forth extensive findings of fact and conclusions of law, the trial court awarded the plaintiffs $2,189,342.96 (consisting of $1.5 million in principal, plus interest); "denied and dismissed" the defendants' fraud, breach-of-contract, and slander-of-title claims; and certified the judgment as final pursuant to Rule 54(b). The trial court denied the defendants' postjudgment motion, and the defendants appealed. That case was assigned case no. 1150876, and the Alabama Supreme Court consolidated case nos. 1150302 and 1150876 for the purpose of writing one opinion. After review, the Court dismissed both appeals, finding the trial court exceeded its discretion in certifying as final the underlying appeals. View "Equity Trust Co. v. Breland" on Justia Law

Richard Watters petitioned the Alabama Supreme Court for a writ of mandamus to direct the Mobile Circuit Court to vacate its order denying his motion for a summary judgment as to count one of an amended complaint filed by Michael Gamble, in Gamble's capacity as administrator of the Estate of Barbara Ruth Findley Long ("Long"), deceased. Count one asserted a legal-malpractice claim against Watters under the Alabama Legal Services Liability Act ("the ALSLA"), alleging breach of a fiduciary duty. This proceeding involved title to real property located in Conecuh County, which was owned by Robert Findley at the time of his death. Long retained Watters & Associates, of which Watters was a partner, to represent her "in obtaining estate assets" of Findley, her deceased father. Watters filed suit seeking a declaration of Long's ownership in family property located in Conecuh County. The Circuit Court declaring that Long owned a one-sixth interest (approximately 30 acres) in the Conecuh County property Shortly thereafter, Long discharged Watters from any further representation in the declaratory-judgment action. Watters filed an attorney's lien against the Conecuh property to secure the payment of his attorney fees. Family members eventually quitclaimed their interests to Long. Taxes for 2006 weren't paid on the property, and Long's cousin Larry Findley purchased the property at a tax sale. According to Watters, Long asked him for a loan to redeem the property from the tax sale. Watters told Long that Langley would not record the quitclaim deed if Long repaid the loan within 30 days of redeeming the property; that, in the event the deed was recorded, any claim Watters might have against Long for services rendered regarding her deceased father's estate would be satisfied; and that Watters and Long agreed to terms concerning the loan arrangement. This arrangement was never reduced to writing. Long executed a quitclaim deed prepared by Watters, conveying title to the Conecuh property to "Langley & Watters, LLP." In 2010, Watters submitted to the Conecuh Probate Court a letter, enclosing "his client's" application for redemption of the Conecuh property. Long died on April 2, 2013, and a few months later, the Conecuh Probate Court appointed Gamble as administrator of Long's estate. Gamble filed a complaint against Watters, asserting claims of legal malpractice among other things. After review of this case, the Alabama Supreme Court concluded that Watters had another adequate remedy (i.e., an appeal) other than a writ of mandamus. Therefore, the Court denied relief. View "Ex parte Richard L. Watters." on Justia Law

Attorney Larry Stoller filed a multicount petition on behalf of NuStar Farms, LLC against Robert and Marcia Zylstra, alleging that the Zylstras agreed to sell NuStar a parcel of farmland but failed to tender the requisite deed and that the Zylstras did not abide by certain terms contained in certain manure easement agreements. The Zylstras filed a motion seeking to disqualify Stoller as the attorney for NuStar based on a conflict of interest. Specifically, the Zylstras alleged that Stoller’s representation of NuStar was a concurrent conflict of interest with his representation of them. The district court denied the motion. The Supreme Court reversed, holding that the district court (1) did not abuse its discretion in holding that Stoller could not be disqualified under the substantial relationship test; but (2) abused its discretion in not disqualifying Stoller from representing NuStar in the action because Stoller did have a concurrent conflict of interest. View "NuStar Farms, LLC v. Zylstra" on Justia Law

The Almanor Lakeside Villas Owners Association sought to impose fines and related fees of $19,979.97 on the Carsons for alleged rule violations related to the Carsons’ use of their properties as short-term vacation rentals. The Carsons cross-complained for breach of contract, private nuisance, and intentional interference with prospective economic advantage. The Carsons had engaged in short-term rental for many years and believed that they were exempt from new regulations and enforcement efforts. The court ruled against the Carsons on their cross-complaint but also rejected many of the fines as unreasonable. The court upheld fines pertaining to the use of Almanor’s boat slips and ordered the Carsons to pay $6,620.00 in damages. The court determined Almanor to be the prevailing party and awarded $101,803.15 in attorney’s fees and costs. The court of appeal affirmed, concluding that the award of attorney’s fees, compared to the “overall relief obtained” by Almanor, was not so disproportionate as to constitute an abuse of discretion. View "Almanor Lakeside Villas Owners Ass'n. v. Carson" on Justia Law

Appellant C. Tucker Cheadle, as administrator of the estate of Robert F. Obarr, appealed an order denying his motion to disqualify counsel for respondent DP Pham LLC. Pham made three loans to Obarr totaling nearly $3 million, and Obarr secured each loan by granting Pham a lien on a mobilehome park he owned in Westminster (Property). This action arose when Obarr allegedly agreed to sell the Property to two different buyers. In March 2013, Obarr allegedly contracted to sell the Property to S.C.D. Enterprises (SCD). SCD promptly assigned the purchase agreement to Westminster MHP Associates, LP (Westminster), which allegedly opened escrow on the Property with Obarr. According to Westminster, it satisfied all contingencies for the sale within 10 days of opening escrow. In April 2013, Westminster filed suit alleging contract claims against Obarr. Obarr died unexpectedly in August. The trial court appointed Cheadle as a special administrator for Obarr’s estate and in that capacity substituted Cheadle for Obarr as a party to this action. Cheadle then filed a cross-complaint alleging an interpleader claim against both Westminster and Pham concerning the Property. Based on Pham’s loans to Obarr, Cheadle also alleged claims against Pham for usury, intentional misrepresentation, negligent misrepresentation, money had and received, unjust enrichment, reformation, and violation of the unfair competition law. Cheadle contended disqualification was required because Pham’s counsel improperly obtained copies of privileged communications between Obarr and his attorney, and used those communications to oppose another party’s summary judgment motion in this case. The trial court denied the disqualification motion because it concluded the communications were not privileged. The Court of Appeal reversed. After reviewing copies of the communications, the trial court concluded they were not privileged based on their content. "A court, however, may not review the contents of a communication to determine whether the attorney-client privilege protects that communication. The attorney-client privilege is an absolute privilege that prevents disclosure, no matter how necessary or relevant to the lawsuit. The privilege attaches to all confidential communications between an attorney and a client regardless of whether the information communicated is in fact privileged. Accordingly, it is neither necessary nor appropriate to review a communication to determine whether the attorney-client privilege protects it." View "DP Pham v. Cheadle" on Justia Law

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