Justia Legal Ethics Opinion Summaries

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

Wilson Lucom was an American expatriate who wished to bequeath assets worth more than $200 million to a foundation established for impoverished children in Panama. Plaintiff, Lucom's attorney, filed suit against the Arias Group/Arias Family, Lucom's wife and step-children, under the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968, alleging that the Arias Group participated in a criminal conspiracy to thwart plaintiff through acts of intimidation, extortion, corruption, theft, money laundering, and bribery of foreign officials, so that the Arias Group could steal the Estate assets for themselves. At issue on appeal was RICO's four-year statute of limitations on civil actions and the "separate accrual" rule. Under the rule, the commission of a separable, new predicate act within a 4-year limitations period permitted a plaintiff to recover for the additional damages caused by that act. The court concluded that none of the injuries in plaintiff's complaint were new and independent because all of his alleged injuries were continuations of injuries that have been accumulating since before September 2007. The court agreed with the district court that plaintiff had done little more than repackage his 2007 abuse of process complaint. Therefore, plaintiff's civil RICO complaint was untimely, and the district court did not err when it granted summary judgment in favor of the Arias Group. View "Lehman, et al. v. Lucom, et al." 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, Minnesota homeowners represented by the same counsel, brought thirteen separate claims against defendants, nearly all of which rested on a "show me the note" theory. The district court granted defendants' motion to dismiss nearly all of the claims and sua sponte sanctioned counsel, awarding attorney fees to defendants. The court affirmed, concluding that the district court had diversity jurisdiction as the claims against the sole nondiverse defendant lacked a reasonable basis in fact and law; plaintiffs failed to state a plausible claim for relief sufficient to survive a motion to dismiss; the "show me the note" theory had been repeatedly rejected by the Minnesota Supreme Court and this court applying Minnesota law; and the district court did not abuse its discretion in imposing sanctions against counsel under Rule 11 where, at the very least, counsel had lacked a frivolous basis for appeal. View "Welk, et al. v. Ally Financial,Inc., et al." on Justia Law

Plaintiff retained Law Firm and its attorneys (collectively, Law Firm) to accomplish Plaintiff's foreclosure on a mortgage to certain property. A year after the foreclosure sale, while Law Firm was representing Plaintiff in negotiations for the sale of the foreclosed property, another law firm retained by Plaintiff sent a notice of claim to Law Firm alleging that Law Firm breached its obligations to Plaintiff by failing to inform Plaintiff of outstanding liens on the foreclosed property. After Law Firm concluded its representation of Plaintiff, Plaintiff filed an action against Law Firm, alleging, inter alia, legal malpractice and negligent misrepresentation. Law Firm moved for a protective order to preserve, among other things, the confidentiality of allegedly privileged communications to Law Firm's in-house counsel regarding Law Firm's reply to the notice of claim. The judge allowed the motion. The Supreme Court affirmed, holding that the judge correctly allowed Law Firm to invoke the attorney-client privilege to preserve the confidentiality of the communications. View "RFF Family P'ship v. Burns & Levinson, LLP" on Justia Law

Westerfield was a lawyer working for an Illinois title insurance company when she facilitated fraudulent real estate transfers in a scheme that used stolen identities of homeowners to “sell” houses that were not for sale to fake buyers, and then collect the mortgage proceeds from lenders who were unaware of the fraud. Westerfield facilitated five such transfers and was indicted on four counts of wire fraud, 18 U.S.C. 1343. She claimed that she had been unaware of the scheme’s fraudulent nature and argued that she had merely performed the typical work of a title agent. She was convicted on three counts. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence, to admission of a codefendant’s testimony during trial, and to the sentence of 72 months in prison with three years of supervised release, and payment of $916,300 in restitution. View "United States v. Westerfield" on Justia Law

In 2007, Appellant Derick Villanueva acted as the closing attorney for a mortgage-refinance transaction in which Homecomings Financial, LLC served as the lender supplying funds to pay off earlier mortgages on the secured property. Appellee First American Title Insurance Company issued title insurance on the transaction. Pursuant to Villanueva’s instructions, Homecomings wired funds into a specified escrow account. However, the funds were not used to pay off the earlier mortgages; instead, the funds were withdrawn and the account closed by a person not a lawyer. First American paid off the earlier mortgages and, pursuant to its closing protection letter to Homecomings, became "subrogated to all rights and remedies [Homecomings] would have had against any person or property…." First American then filed this lawsuit against appellants, the estate of another attorney, the escrow account, the non-lawyer who withdrew the funds from the escrow account, and others, seeking damages for legal malpractice and breach of a contract with Homecomings. The trial court denied summary judgment to appellants. The issue before the Supreme Court was whether a legal malpractice claims were not per se unassignable. After studying the issue, the Court agreed with the appellate court that legal malpractice claims are not per se unassignable. View "Villanueva v. First American Title Ins. Co." on Justia Law

Homeowners challenged the validity of the foreclosure of their home mortgages. The district court dismissed the suit under Rule 12(b)(6). The court affirmed the district court's dismissal of the law firm as fraudulently joined and concluded that the court had subject matter jurisdiction over the appeal because the doctrine of prior exclusive jurisdiction was inapplicable. The court concluded that Homeowners' pleadings mirrored those in Karnatcheva v. JPMorgan Chase Bank, N.A. and affirmed the district court's dismissal. Homeowners have failed to plead factual content that permitted the court to infer more than the mere possibility of misconduct where the pleadings contained nothing but naked assertions that one or more of the named defendants suspected that Wells Fargo lacked legal title to the mortgages yet chose to publish statements to the contrary. The district court was well within its discretion to file sanctions. Accordingly, the court affirmed the district court's judgment. View "Dunbar, et al v. Wells Fargo Bank, N.A., et al" on Justia Law

Klie purchased property with financing from Coldwell Banker, which assigned its rights to the Federal National Mortgage Corporation (Fannie Mae) but continued to service the loan. The assignment was never recorded. In 2007, servicing rights transferred to JP Morgan. Coldwell Banker assigned its rights in the note and mortgage (none) to JP Morgan, which reassigned to Fannie Mae. Chase, an arm of JP Morgan, serviced the loan until Klie died. With the loan in default, Chase’s law firm, RACJ, prepared an assignment of the note and mortgage that purported to establish Chase’s right to foreclose and filed a foreclosure actionf, naming Glazer, a beneficiary of Klie’s estate. The court entered a decree of foreclosure, but later vacated and demanded that RACJ produce the original note. Chase dismissed the foreclosure without prejudice. Glazer filed suit, alleging that Chase and RACJ violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692, and Ohio law by falsely stating that Chase owned the note and mortgage, improperly scheduling a foreclosure sale, and refusing to verify the debt upon request. Chase and RACJ moved to dismiss. The district court dismissed. The Sixth Circuit reversed, holding that mortgage foreclosure is debt collection under the Act. View "Glazer v. Chase Home Fin. LLC" on Justia Law