Justia Professional Malpractice & Ethics Opinion Summaries

Plaintiff Stacy Cales, a nurse practitioner, owned Road to Recovery, LLC, a substance abuse treatment business in West Virginia. In 2020, Cales engaged attorney Kristopher Justice, from the Ohio firm Theisen Brock, LPA, to assist in selling her business. Justice drafted sales documents, including a Promissory Note that defined payment terms and specified a liquidated damages amount in the event of default. Cales expressed concern to Justice about the damages provision, fearing it would limit her recovery if the buyer defaulted. Justice reassured her that the contract’s implied covenant of good faith would prevent the buyer from exploiting the provision. After the buyer ceased payments, litigation ensued in West Virginia, where the buyer asserted that damages should be limited to the liquidated amount. Dissatisfied with her representation and the contract, Cales hired a new attorney, who later advised her that she was entitled only to liquidated damages, prompting her to settle.Plaintiffs subsequently filed a legal malpractice claim and a vicarious liability claim in the United States District Court for the Southern District of Ohio. Both sides moved for summary judgment. The district court granted summary judgment for defendants, holding that the Ohio one-year statute of limitations barred plaintiffs' claims. The court reasoned that the statute began running when Cales terminated her prior attorney in March 2022, as that constituted a “cognizable event.”On appeal, the United States Court of Appeals for the Sixth Circuit held that the statute of limitations began on April 13, 2023, when Cales was advised by her new attorney about the consequence of the liquidated damages provision. Since the complaint was filed within one year of that date, the claims were timely. The appellate court reversed the district court’s judgment and remanded for further proceedings. View "Cales v. Theisen Brock LPA" on Justia Law

MTG, Inc., a company specializing in tooling for the auto industry, filed for Chapter 11 bankruptcy in 1995, which was later converted to a Chapter 7 proceeding in 1996. Charles Taunt was appointed as the Chapter 7 trustee and, during his tenure, entered into a fee agreement with Comerica Bank, MTG's largest secured creditor. Taunt failed to disclose this agreement to the bankruptcy court, despite rules requiring disclosure of such connections. Several orders were issued during this time that benefited Comerica, including allowance of its claim, relief from stay, and settlement of pre-petition lender liability claims. After Taunt's undisclosed conflict of interest was revealed, litigation ensued over whether the resulting orders should be set aside and whether Taunt, his law firms, and Comerica were liable for fraud, conversion, and unauthorized transfers.Following discovery of Taunt's conflict, the United States Bankruptcy Court for the Eastern District of Michigan vacated the orders benefitting Comerica and found Taunt and his law firm had committed fraud on the court. Taunt was disqualified as trustee, his firm was denied fees, and Guy Vining was appointed as successor trustee. Vining initiated an adversary proceeding with multiple claims, primarily post-petition claims alleging fraud on the court, avoidable transfers, and conversion. The bankruptcy court granted summary judgment for defendants on most claims, awarding only limited attorney’s fees for exposing the fraud. The United States District Court for the Eastern District of Michigan affirmed these rulings.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court’s decision. The court held Comerica was not directly or vicariously liable for fraud on the court, as it was not an officer of the court and did not control Taunt. The court also ruled that the challenged post-petition transfers were authorized by valid court orders and thus not avoidable under bankruptcy law. Finally, the court found Taunt’s actions as trustee were authorized, rejecting the conversion claim. The limited attorney’s fees award and denial of punitive damages were upheld as within the bankruptcy court’s discretion. View "Vining v. Plunkett Cooney, P.C." on Justia Law

NonDoc Media and William W. Savage III submitted open records requests to the University of Oklahoma seeking two reports prepared by the law firm Jones Day. The reports resulted from investigations into allegations of misreporting alumni donor data and possible sexual misconduct involving high-ranking University officials. Jones Day was retained under an attorney-client relationship, and the reports included confidential interviews and legal analysis. Portions of the reports were provided to law enforcement under joint-interest agreements and excerpts of the sexual misconduct report were shared with the parties involved pursuant to Title IX protocols.The District Court of Cleveland County conducted an in camera review of both reports. It granted summary judgment in favor of the University, finding the documents protected by attorney-client privilege. The court also found that the reports were exempt under the Open Records Act’s personnel record exemption, and that the sexual misconduct report was further protected by work-product and informer privileges. The court did not find that the University had waived any of these protections, and rejected NonDoc’s arguments to the contrary. NonDoc appealed, and the Supreme Court of Oklahoma retained the case.The Supreme Court of the State of Oklahoma reviewed the summary judgment de novo and affirmed the district court’s decision. The Supreme Court held that the attorney-client privilege protects the reports from disclosure, and clarified that the privilege does not expire when the underlying investigation or action concludes. The court also found that the University did not waive the privilege by sharing the reports with law enforcement under joint-interest agreements or by limited disclosure required by law. Summary judgment for the University was affirmed. View "NONDOC MEDIA v. STATE Ex Rel. BOARD OF REGENTS of the UNIV. of OKLAHOMA" on Justia Law

Austin Knudsen, the Montana Attorney General, was charged with 41 counts of attorney misconduct by the Office of Disciplinary Counsel (ODC) for actions taken while representing the Montana State Legislature in litigation before the Montana Supreme Court and the United States Supreme Court. The underlying events involved Knudsen and his office’s response to subpoenas issued by the Legislature seeking judicial branch emails, and subsequent orders by the Montana Supreme Court to return those materials. During the litigation, Knudsen and his subordinates made critical statements about the Court and delayed compliance with a direct order to return subpoenaed documents.The Commission on Practice of the Supreme Court of the State of Montana held a contested hearing, ultimately finding that Knudsen violated five provisions of the Montana Rules of Professional Conduct and recommending a 90-day suspension from the practice of law. Knudsen objected, raising separation of powers arguments and claiming multiple due process violations during the disciplinary proceedings. The Commission’s findings of fact and conclusions of law were brief, lacking detailed explanation for each alleged rule violation.The Supreme Court of the State of Montana, exercising de novo review, found that Knudsen violated Rule 3.4(c) by knowingly failing to seek a stay or otherwise comply with the Court’s order to return subpoenaed materials, and Rule 5.1(c) by failing to ensure that his subordinates also complied. However, the Court determined that the Commission failed to prove violations of Rules 8.2(a), 8.4(d), and 8.4(a), finding that Knudsen’s critical statements about the Court were either opinions or facts not proven false, and that no prejudice to a specific proceeding was demonstrated. Due to significant due process violations in the Commission proceedings, the Supreme Court dismissed the case without imposing discipline. View "In re Knudsen" on Justia Law

Two siblings, Ryan and Nancy, disputed the administration of their father Hal’s estate and the status of his ownership interest in Tautphaus Park Storage, LLC (TPS), an Idaho storage facility business. Hal, who suffered from progressive dementia before his death, was TPS’s sole voting member and manager, with Nancy assisting in legal and management matters. Several amendments to TPS’s operating agreement changed ownership and management, culminating—after Hal’s death—in Nancy executing further amendments that retroactively transferred Hal’s economic interest to herself and changed accounting records. Nancy, an attorney, served as both Hal’s lawyer and later as personal representative of his estate. Ryan questioned whether Hal’s interest in TPS remained an estate asset and sought access to business records, which Nancy resisted.The siblings litigated issues in two related cases in Bonneville County: a probate case in the Magistrate Court regarding Hal’s estate, and a separate TEDRA (Trust and Estate Dispute Resolution Act) civil action in District Court initiated by Ryan. Both courts and parties at times treated the cases as consolidated. Ryan’s TEDRA complaint sought judicial determination of estate assets, breach of fiduciary duty, fraud, and appointment of a receiver, naming Nancy in both her individual and representative capacities and TPS as defendants. The magistrate court dismissed Ryan’s claims and removed Nancy and TPS as parties, finding that estate matters should be decided exclusively in probate. The district court affirmed, denying Ryan’s motions and dismissing his amended complaint, reasoning that Ryan’s claims were matters for probate only.On appeal, the Supreme Court of the State of Idaho vacated both lower courts’ judgments. It held that Ryan’s claims for judicial determination of estate assets and breach of fiduciary duty fall within TEDRA’s definition of “matters” and may be raised in a separate civil action, not only in probate. The Court reversed the orders dismissing claims and parties, remanded the case for further proceedings, and awarded costs and reasonable attorney fees to Ryan against Nancy personally. View "Monson v. Monson" on Justia Law

HRT Enterprises pursued a takings claim against the City of Detroit after losing a jury verdict in state court in 2005. Subsequently, HRT filed suit in federal court in 2008, alleging a post-2005 violation under 42 U.S.C. § 1983. The United States District Court for the Eastern District of Michigan dismissed the federal action, citing the requirement from Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), to exhaust state remedies first. HRT then returned to state court, where its claim was dismissed on claim preclusion grounds, a decision affirmed by the Michigan Court of Appeals. After the state court denied compensation, HRT initiated a federal § 1983 action in 2012. The case was stayed when the City filed for bankruptcy, prompting HRT to participate in bankruptcy proceedings to protect its compensation rights. Ultimately, the bankruptcy court excepted HRT’s takings claim from discharge, allowing the federal case to proceed. After two jury trials, the district court entered judgment for HRT in September 2023.Following its success, HRT moved for attorney fees under 42 U.S.C. § 1988, presenting billing records that included work from related state and bankruptcy proceedings. The district court applied a 33% discount to the claimed hours due to commingled and poorly described entries, set an average hourly rate, and awarded $720,486.25, which included expert witness fees. Both parties appealed aspects of the fee award to the United States Court of Appeals for the Sixth Circuit.The Sixth Circuit held that the district court erred by concluding it had no discretion to award fees for work performed in the related state-court and bankruptcy proceedings, as such fees are recoverable when the work is necessary to advance the federal litigation. The court also found the district court erred in awarding expert witness fees under § 1988(c) in a § 1983 action, as the statute does not authorize such fees for § 1983 claims. The appellate court vacated the fee award and remanded for recalculation consistent with its opinion. View "HRT Enterprises v. City of Detroit" on Justia Law

The plaintiff shot and killed her uncle outside her grandmother’s house, claiming ongoing abuse and financial exploitation. She recorded the incident on her cellphone, which was seized and later returned by police, who did not review the video. After being charged with manslaughter and released on bail, the trial court appointed the defendant as her new criminal defense attorney. The plaintiff informed the defendant about the video and gave him her cellphone. Without her consent, the defendant sent the video to the district attorney, who then presented it to a grand jury, resulting in an amended indictment for murder. Her bail was revoked due to the murder charge, leading to 20 months of pretrial incarceration. The defendant subsequently withdrew from the case; the murder charge was later dismissed, and the plaintiff pleaded guilty to second-degree manslaughter.In Jackson County Circuit Court, the defendant moved for summary judgment, arguing under Stevens v. Bispham, 316 Or 221 (1993), that the plaintiff had not suffered “legally cognizable harm” because she had not been exonerated of her crime. The circuit court granted the motion, and the Oregon Court of Appeals affirmed, holding that exoneration was a necessary element for a legal malpractice claim following a criminal conviction.The Supreme Court of the State of Oregon reviewed the case and reversed both lower courts. It held that Stevens applies only when the alleged harm is the conviction itself or flows from the conviction. Here, the plaintiff alleged harms unrelated to her conviction, such as reputational damage, emotional distress, and economic losses from being charged with murder and pretrial incarceration. The court concluded that a legal malpractice plaintiff need not always allege exoneration to state a claim when the alleged attorney negligence caused harm independent of the conviction. The case was remanded for further proceedings. View "Moore-Reed v. Griffin" on Justia Law

Alan Cartwright was the beneficiary of a family trust managed by his sister, Alice Garner, and her husband, Alan Garner. Over more than a decade, Cartwright, represented by attorneys Jerry Mitchell and later his son Justin Mitchell, brought six lawsuits against the Garners challenging their administration of the trust. All of these lawsuits were ultimately resolved in favor of the Garners. After the trust litigation concluded, Cartwright, dissatisfied with his legal representation, sued the Mitchells for legal malpractice and fraudulent concealment. The Garners also sued the Mitchells and their law firms under the tort-of-another doctrine, seeking to recover attorney’s fees, costs, and expenses incurred during the trust litigation.In the Circuit Court for Shelby County, the Mitchells moved to dismiss the Garners’ suit under the Tennessee Public Participation Act (TPPA), arguing that the claims were filed in response to their exercise of the right to petition. The trial court denied the motion, reasoning that the TPPA did not protect attorneys alleged to have acted inconsistently with their client’s interests. On appeal, the Tennessee Court of Appeals reversed, holding that the Mitchells had met their initial burden under the TPPA by showing the Garners’ suit related to the underlying trust lawsuits.The Supreme Court of Tennessee reviewed the case and held that, under the TPPA, an attorney filing a lawsuit on behalf of a client does not personally exercise the right to petition; rather, the attorney facilitates the client’s exercise of that right. Therefore, the Mitchells failed to demonstrate that the Garners’ suit was filed in response to the Mitchells’ own exercise of the right to petition. The Supreme Court of Tennessee reversed the Court of Appeals’ decision and remanded the case for further proceedings, denying the Mitchells’ petition for dismissal under the TPPA. View "Garner v. Thomason, Hendrix, Harvey, Johnson & Mitchell" on Justia Law

A beneficiary of a family trust, dissatisfied with the outcome of multiple lawsuits against his sister and her husband concerning trust administration, brought claims for legal malpractice and fraudulent concealment against the lawyers who had represented him in those actions. He alleged that the lawyers filed nonmeritorious lawsuits primarily to obtain a contingency fee and failed to keep him informed, ultimately leaving him responsible for attorney’s fees when the cases were resolved against him.The lawyers and their associated law firms responded by seeking dismissal under the Tennessee Public Participation Act (TPPA), arguing that the malpractice suit was filed in response to their “exercise of the right to petition”—specifically, the act of filing lawsuits on the beneficiary’s behalf. The Circuit Court for Shelby County denied this petition, holding that an attorney sued by a former client for malpractice cannot establish that the suit was in response to the attorney’s own exercise of the right to petition. The Court of Appeals reversed, finding that legal malpractice claims are not categorically excluded from the TPPA and that, in this instance, the lawyers had made a prima facie showing that the complaint related to their exercise of the right to petition.The Supreme Court of Tennessee granted permission to appeal and held that, even assuming filing a lawsuit is an “exercise of the right to petition” under the TPPA, an attorney who files suit on behalf of a client does not personally exercise that right—the attorney merely facilitates the client’s exercise of it. Thus, the lawyers could not show that the malpractice and concealment suit was brought in response to their own exercise of the right to petition. The Supreme Court of Tennessee reversed the Court of Appeals, denied the lawyers’ TPPA petition, and remanded the case for further proceedings. View "Cartwright v. Thomason Hendrix, P.C." on Justia Law

The petitioner was convicted following a jury trial for filing a fraudulent tax return and theft of government funds, after he submitted a tax form claiming a large refund based on a mistaken belief about a government “trust” linked to Social Security. He received and spent the refund, then requested another, which was denied. The IRS investigated, and he later filed a document stating he was deceased. His defense at trial centered on his claim that he misunderstood tax law due to information from an online forum and advice from an IRS agent.The United States District Court for the Northern District of Indiana oversaw the criminal trial, where the petitioner was represented by attorney John Davis. During trial, Davis pursued motions under Brady v. Maryland, seeking exculpatory evidence, but the motions were denied. After conviction, Davis was removed from the Seventh Circuit Bar for misconduct in an unrelated case. The petitioner then moved for a new trial and, later, for relief under 28 U.S.C. § 2255, arguing ineffective assistance of counsel based on Davis’s disciplinary history and alleged trial errors. The district court denied both motions, finding Davis’s performance did not prejudice the petitioner’s defense and that his disciplinary issues in other cases did not establish ineffectiveness in the present case.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s denial of collateral relief de novo for legal issues and for clear error regarding factual findings. The court held that there is no per se rule that concurrent or subsequent attorney discipline renders counsel ineffective; instead, a petitioner must show specific deficient performance and resulting prejudice under Strickland v. Washington. The petitioner failed to demonstrate that counsel’s alleged errors affected the outcome of the trial. The Seventh Circuit affirmed the district court’s denial of the § 2255 motion. View "Blake v USA" on Justia Law