Justia Legal Ethics Opinion Summaries

Sir John Thouron died in 2007 at the age of 99, leaving a substantial estate. Thouron’s grandchildren are his only heirs. His named executor retained Smith, an experienced tax attorney. The Estate’s tax return and payment were due November 6, 2007. On that date, the Estate requested an extension of time and made a payment of $6.5 million, much less than it would ultimately owe. The Estate timely filed its return in May 2008 and requested an extension of time to pay. It made no election to defer taxes under 26 U.S.C. 6166, it had conclusively determined it did not qualify. The provision allows qualifying estates to elect to pay tax liability in installments over several years. The IRS denied as untimely the Estate’s request for an extension and notified the Estate that it was imposing a failure-to-pay penalty. The Estate unsuccessfully appealed administratively. The Estate then filed an appropriate form and paid all outstanding amounts, including a penalty of $999,072, plus accrued interest, then filed a request with the IRS for a refund. After not receiving a response from the IRS, the Estate filed a complaint, alleging that its failure to pay resulted from reasonable cause, reliance on Smith’s advice, and not willful neglect and was not subject to penalty. The district court granted the government summary judgment, holding that under Supreme Court precedent the Estate could not show reasonable cause. The Third Circuit vacated, reasoning that the precedent did not apply to reliance on expert advice.View "Estate of Thouron v. United States" 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

Bill Graham, a successful promoter of rock and roll concerts, died testate and his will created individual trusts for his sons, Alexander and David. Nicholas Clainos was the trustee of the trusts and the executor of the estate and Richard Greene, through his firm, provided Clainos legal counsel. On appeal, Alexander and David challenged the district court's disposition of a motion to dismiss, a special motion to strike under California's anti-SLAPP statute, Cal. Proc. Code 425.16(b)(1), and related attorney's fees awards. The court affirmed the disposition of the motion to strike in part and reversed in part. The court concluded that striking plaintiffs' conversion and unjust enrichment claims against Clainos was erroneous. The court also concluded that striking plaintiffs' breach of fiduciary duty claim against Clainos was erroneous. The court further concluded that plaintiffs sufficiently alleged claims for conversion, copyright infringement, and declaratory relief against the BGA Defendants and that dismissal of those claims was erroneous. In regards to attorney's fees, the court vacated the post-motion-to-strike fee award to Clainos, as well as the post-motion-to-dismiss fee award to the BGA Defendants. The court affirmed in all other respects. View "Graham-Sult v. Clainos" on Justia Law

Thirteen years after the divorce was finalized, the Lamar County Chancery Court found that the former husband, Appellee John David Gatwood, was in arrears on certain financial obligations imposed by the divorce decree. Because of various extenuating circumstances, the chancellor ordered Gatwood to pay off his debt in monthly installments. More than a year after the chancery court judgment, the former wife's attorney, Jack Parsons, successfully filed a suggestion for writ of garnishment, significantly accelerating payment of Gatwood's financial obligations. Circumstances related to the manner in which the writ of garnishment was obtained resulted in sanctions against Parsons; the garnishment proceedings also gave rise to other rulings which were appealed to this Court. After review, the Supreme Court declined to find the trial court erred: evidence at trial supported that court's finding that attorney's fees and sanctions against Parsons and his client were appropriate. Accordingly, the circuit court's decision was affirmed. View "Cooper v. The Estate of William David Gatwood" on Justia Law

The Kivers retained C&T, an Illinois law firm, to prepare trusts to benefit their daughters, Diane and Maureen, among others. Maureen and Diane each served as trustee of various trusts. Maureen died in 2007. Her husband, Minor, represents Maureen’s estate, which filed suit against C&T, alleging that C&T failed to disclose the existence and terms of certain trusts to Maureen, to her detriment, and failed to make distributions to her. The estate filed a separate state court suit against Diane, alleging that Diane breached her duties as trustee by failing to disclose the existence of certain trusts to Maureen or make distributions to her. Diane was a client of C&T during the relevant period. The district court entered an agreed protective order governing discovery disclosure to deal with privilege issues and denied the estate’s motion to compel production. The estate violated the protective order. The district court imposed sanctions and dismissed several of the estate’s claims. The Seventh Circuit affirmed, stating that “The complexity of the multiple trusts … the untimely death of Maureen, the pursuit of concurrent state and federal suits … the length of this litigation, and the disorderly nature of the estate’s presentation… evoke a middle installment of Bleak House." View "Scott v. Chuhak & Tecson, PC" on Justia Law

This case stemmed from disputes over the estate of the late Texas oil magnate and billionaire J. Howard Marshall. J. Howard died in 1995, leaving nearly all his assets to his son, Pierce, but excluding his wife, Anna Nicole Smith (Vickie), and his other son, Howard, from receiving any part of his fortune. Howard and his Wife eventually filed for Chapter 11 bankruptcy and their case was assigned to Judge Bufford, who had previously presided over Vickie's Chapter 11 bankruptcy case. Judge Bufford published three separate opinions: (1) denying Pierce's motion for reassignment or recusal; (2) confirming the Plan and denying Pierce's motion to dismiss with respect to his constitutional arguments; and (3) confirming the Plan and denying Pierce's motion to dismiss with respect to his statutory arguments. Elaine, Pierce's widow, now appeals the district court's decision, contending that the district court erred in affirming the bankruptcy court's orders. The court addressed the various issues on appeal related to the motion for recusal or reassignment, constitutional issues, and non-constitutional issues, and ultimately affirmed the district court's decision. View "In the Matter of: Marshall" on Justia Law

Defendant appealed the district court's denial of his 28 U.S.C. 2255 federal habeas corpus petition based upon the Supreme Court's decision in Skilling v. United States, which narrowed the scope of the honest services fraud theory. Defendant,a former attorney and trustee of private trusts, pleaded guilty to honest services fraud. The government conceded that defendant was actually innocent of honest services fraud in light of Skilling, which confined the reach of the offense to cases of bribes and kickbacks. The court vacated the district court's dismissal of defendant's honest services fraud claim where no evidence suggested that defendant either engaged in bribery or received kickbacks. View "United States v. Avery" on Justia Law

The Supreme Court granted Dana Medlock's petition for certiorari to determine whether a non-attorney who files a claim in probate court for a business entity engages in the unauthorized practice of law. Upon review, the Supreme Court concluded that a non-attorney may present claims against an estate on behalf of a business without unduly engaging in the practice of law. View "Medlock v. University Health Services" on Justia Law

Manning, a lawyer who served as the executor of Barney’s estate and the trustee of a trust for Mrs. Barney, set up accounts at National City Bank, one for the estate and one for the trust. He then wired funds, totaling about $1,250,000, from the bank accounts into the account of his business in violation of his fiduciary duties. Manning’s business failed and Manning confessed to Mrs. Barney that he had absconded with the money from the two accounts. The estate, trust, and Mrs. Barney sued Manning’s law firm in state court, but the suit was rejected on summary judgment. The Barneys then sued the successor to National City Bank to try to recover the money Manning stole. The district court dismissed, citing the affirmative defense of Ohio’s version of the Uniform Fiduciaries Act. The Sixth Circuit affirmed, stating that the Barneys failed to plead facts giving rise to an inference that the Bank committed any wrongdoing. View "Estate of Barney v. PNC Bank, Nat'l Ass'n" on Justia Law

Boyar died in 2010, suffering from dementia. His will, under which his son Robert was administrator, distributed all property to a trust for the benefit of Boyar’s children and grandchildren. Under the trust, Robert and a bank were named co-trustees, with a provision that a trustee could be removed by beneficiaries. Less than a month before his death, Boyar had executed an amendment naming a lawyer who was his neighbor as trustee, not be subject to removal by beneficiaries. The trust provided that personal property should be divided among the children by their own agreement, which they began to do about a week after the demise. A few weeks later the lawyer informed Robert of the amendment and demanded a personal property itemization. Robert believed that the amendment, not changing substantive dispositions, was orchestrated to permit the lawyer to maintain control of the trust and collect fees. The circuit court rejected a claim of undue influence and dismissed the petition challenging the amendment. The appellate court affirmed. The Illinois Supreme Court reversed, reasoning that there was no need to address whether the “doctrine of election” (applicable to will contests) should be extended to living trusts that serve the same purpose as a will, since that doctrine could not be invoked under the circumstances. Allowing Robert to challenge the amendment had no impact on substantive distribution. By accepting the items of personal property, he cannot be said to have made a “choice” that precludes the challenge. View "In re Estate of Boyar" on Justia Law