Justia Professional Malpractice & Ethics Opinion Summaries

Minority partners in various cellular telephone partnerships hired attorney Michael A. Pullara to pursue breach of fiduciary duty claims against the majority partner, AT&T. The client agreements allowed Pullara to hire joint venture counsel, and he retained Ajamie LLP. Both firms agreed to a 50% discount on their hourly rates in exchange for a contingency fee if they prevailed. After lengthy litigation, the minority partners reached a favorable settlement with AT&T. However, a dispute arose between Pullara and Ajamie over the fee division, leading Ajamie to file for a charging lien to secure its fee.The Court of Chancery of the State of Delaware granted a charging lien to preserve Ajamie’s claim against the settlement proceeds. Ajamie then sought to enforce the lien. The court held that the fee-sharing agreement between Pullara and Ajamie was unenforceable under the Texas Disciplinary Rules of Professional Conduct because the clients had not consented to the specific terms of the fee-sharing arrangement. However, the court ruled that Ajamie was still entitled to reasonable compensation under the principle of quantum meruit.The court calculated Ajamie’s lodestar at $13,178,616.78, based on market rates adjusted annually. Considering the Mahani factors, the court found that an upward adjustment was warranted due to the complexity and duration of the litigation, the significant results obtained, and the partially contingent nature of the fee arrangement. The court awarded Ajamie a total fee of $15,814,340.14, including a 20% increase for the contingency risk. After deducting amounts already paid, Ajamie was awarded $13,014,721.87 plus pre- and post-judgment interest. The court ordered the escrow agent to release this amount to Ajamie. View "Cellular Telephone Company Litigation cases" on Justia Law

Hamzah Ali, a legal immigrant from Yemen and Dubai, retained Azhar Chaudhary as his attorney in February 2017 and paid him $810,000 over three months. Chaudhary claimed this was a nonrefundable retainer, while Ali asserted it was for hourly billing. The bankruptcy court found that Chaudhary did little work of value for Ali and that much of his testimony was false. Ali fired Chaudhary in October 2017 and later learned from another attorney that most of Chaudhary’s advice was misleading or false.Ali sued Chaudhary and his law firm in Texas state court in 2018 for breach of contract, quantum meruit, breach of fiduciary duty, fraud, negligence, and gross negligence. In October 2021, Riverstone Resort, an entity owned by Chaudhary, filed for Chapter 11 bankruptcy. In May 2022, Ali sued Chaudhary, his law firm, and Riverstone in bankruptcy court, alleging breach of fiduciary duty and unjust enrichment, and seeking a constructive trust over Riverstone’s property. The bankruptcy court dismissed Ali’s claims against Chaudhary and his firm, citing lack of jurisdiction or abstention, and granted a take-nothing judgment for Riverstone based on the statute of limitations.The United States District Court for the Southern District of Texas dismissed all appeals and affirmed the bankruptcy court’s judgment. Ali appealed to the United States Court of Appeals for the Fifth Circuit, arguing that the bankruptcy court erred in not equitably tolling the statute of limitations and that Chaudhary had fraudulently concealed his cause of action.The Fifth Circuit dismissed the appeals of Chaudhary, his law firm, and Riverstone, as they were not aggrieved parties. The court reversed the district court’s judgment in favor of Riverstone and remanded the case to the bankruptcy court to consider whether equitable tolling should apply due to Chaudhary’s alleged misconduct. View "Azhar Chaudhary Law v. Ali" on Justia Law

Two Connecticut attorneys, Mario Cerame and Timothy Moynahan, challenged Connecticut Rule of Professional Conduct 8.4(7), which prohibits harassment or discrimination by lawyers based on fifteen protected categories. They argued that the rule violates the First and Fourteenth Amendments by imposing content-based and viewpoint-based restrictions on speech and being unconstitutionally vague. They claimed that the rule's broad language could potentially sanction their speech on controversial topics, thus chilling their First Amendment rights.The United States District Court for the District of Connecticut dismissed their complaint, ruling that Cerame and Moynahan lacked standing to bring a pre-enforcement challenge. The court found that they did not demonstrate a "real and imminent fear" of enforcement under Rule 8.4(7) and that their allegations were too general to establish a credible threat of enforcement.The United States Court of Appeals for the Second Circuit reviewed the case and concluded that Cerame and Moynahan have standing to seek pre-enforcement relief. The court held that they had sufficiently alleged an intention to engage in conduct arguably proscribed by Rule 8.4(7) and faced a credible threat of enforcement. The court noted that the rule's broad language and the lack of clear guidelines for enforcement created a substantial risk of disciplinary action, which was sufficient to establish an injury in fact. Consequently, the Second Circuit vacated the district court's judgment and remanded the case for further proceedings to consider whether the Eleventh Amendment bars the plaintiffs' claims. View "Cerame v. Slack" on Justia Law

In July 2009, veteran John H. Casey filed a Notice of Disagreement (NOD) with the VA challenging the denial of service connection for disabilities. In June 2010, Robert Goss entered into a contingent fee agreement with Casey, agreeing to represent him in his pursuit of benefits from the VA and receive twenty percent of any past-due benefits awarded. Goss filed the necessary forms with the VA, and in January 2011, Casey terminated their attorney-client relationship. Despite this, the VA awarded past-due benefits to Casey in September 2011 and February 2012, and paid Goss twenty percent of these benefits. Casey challenged the payment of fees to Goss, arguing that Goss did not perform any work on his case.The VA issued a Statement of the Case (SOC) denying Casey’s challenge, and Casey appealed to the Board of Veterans Appeals (Board). The Board remanded the case to the VA Regional Office (RO) three times, instructing the RO to request an itemized account of Goss’s work to determine the reasonableness of the fees. Goss refused to provide this information, and the RO repeatedly denied Casey’s claim without providing full reasons and bases. In November 2020, the Board found the twenty percent fee unreasonable, as Goss had not contributed significantly to the case, and Casey’s NOD was filed before Goss’s appointment.Goss appealed to the United States Court of Appeals for Veterans Claims, arguing that the Board lacked jurisdiction over the reasonableness of the fee award. The VA initially opposed but later conceded this point. The Veterans Court accepted the VA’s concession, vacated the Board’s decision on reasonableness, and dismissed the appeal for lack of jurisdiction. Goss then appealed to the United States Court of Appeals for the Federal Circuit.The Federal Circuit reversed the Veterans Court’s decision, holding that the Board did have jurisdiction to review the reasonableness of the fee award. The case was remanded for further proceedings consistent with this determination. View "Goss v. McDonough" on Justia Law

Niv Goomai and Bar Hajbi purchased a property in Cincinnati and contracted with H&E Enterprise, L.L.C., Ohad Investment Group, and Avi Ohad for renovations. The renovations were not completed, leading Goomai to sell the property. Goomai then sued the defendants for breach of contract, violation of the Deceptive Trade Practices Act, and fraudulent misrepresentation, seeking actual damages but not injunctive relief.A jury trial was held before a magistrate, where the jury found that H&E had breached its contract and awarded Goomai $30,604.09 in damages. The jury also found that H&E and Ohad had engaged in deceptive trade practices but awarded $0 in damages for this violation. The jury ruled in favor of the defendants on the fraudulent misrepresentation claim. Goomai subsequently filed a motion for attorney’s fees and costs, which the magistrate denied, reasoning that Goomai did not qualify as a prevailing party under the Deceptive Trade Practices Act since they did not obtain any relief on the merits of their claim. The trial court adopted the magistrate’s decision, and Goomai appealed.The First District Court of Appeals reversed the trial court’s decision, holding that a prevailing party under the Deceptive Trade Practices Act is one who obtains a judgment in their favor, regardless of whether they received a remedy. The court remanded the case to the trial court to determine the amount of attorney’s fees to which Goomai was entitled.The Supreme Court of Ohio reviewed the case and concluded that to be a prevailing party under the Deceptive Trade Practices Act, a plaintiff must obtain actual damages or injunctive relief. Since Goomai did not receive any monetary damages or injunctive relief, they were not considered prevailing parties. The Supreme Court of Ohio reversed the judgment of the First District Court of Appeals and reinstated the trial court’s judgment denying attorney’s fees. View "Goomai v. H&E Enterprise, L.L.C." on Justia Law

The case involves a medical malpractice suit brought by the parents of a stillborn child against the midwives who attended the birth. The plaintiffs alleged that the midwives failed to obtain informed consent for delivery by midwife at a birth center instead of by a physician at a hospital. They claimed the midwives did not disclose the risks associated with midwife delivery for an expectant mother of advanced maternal age with a history of miscarriage. The superior court granted summary judgment in favor of the midwives, ruling that the plaintiffs failed to present evidence that midwife delivery caused the stillbirth.The superior court found that the plaintiffs did not provide sufficient evidence to establish proximate cause, a necessary element in informed consent claims. The court noted that the plaintiffs needed to show both that they would not have consented to the treatment if properly informed and that the treatment caused the injury. The midwives presented expert testimony indicating that their care did not cause the stillbirth, and the plaintiffs failed to rebut this with their own expert evidence.The Supreme Court of the State of Alaska reviewed the case and affirmed the superior court's summary judgment in favor of the midwives. The court held that the plaintiffs did not present admissible evidence to dispute the midwives' expert opinion that the stillbirth was caused by an infection unrelated to the midwives' care. The court also affirmed the superior court's award of enhanced attorney’s fees to the midwives, finding that the plaintiffs engaged in vexatious or bad faith conduct during the litigation. The court concluded that the plaintiffs' failure to provide necessary expert testimony on causation was fatal to their claims. View "Goodwin v. Mat-Su Midwifery, Inc." on Justia Law

PS Products, Inc. and Billy Pennington (collectively, PSP) own a U.S. Design Patent for a long-spiked electrode for a stun device. They filed a lawsuit in the Eastern District of Arkansas against Panther Trading Company, Inc. (Panther) for patent infringement. Panther responded with a Rule 11 letter and a motion to dismiss, arguing the infringement claims were frivolous and the venue was improper. PSP did not respond to these communications and later moved to voluntarily dismiss the case with prejudice. Panther then sought attorney fees and sanctions, claiming the lawsuit was frivolous.The United States District Court for the Eastern District of Arkansas dismissed the case with prejudice and awarded Panther attorney fees and costs under 35 U.S.C. § 285, deeming the case exceptional. The court also imposed $25,000 in deterrence sanctions on PSP under its inherent power, citing PSP's history of filing meritless lawsuits. PSP filed a motion for reconsideration of the sanctions, which the district court denied.The United States Court of Appeals for the Federal Circuit reviewed the case. PSP appealed the $25,000 sanctions, arguing the district court lacked authority to impose them in addition to attorney fees and that the court applied the wrong legal standard. The Federal Circuit held that the district court did not err in imposing sanctions under its inherent power, even after awarding attorney fees under § 285. The court found that PSP's conduct, including filing a meritless lawsuit and citing the wrong venue statute, justified the sanctions. The Federal Circuit affirmed the district court's decision and declined Panther's request for attorney fees for the appeal, determining the appeal was not frivolous as argued. View "PS Products, Inc. v. Panther Trading Co., Inc." on Justia Law

Hurricane Katrina destroyed Paul and Sylvia Minor’s home in 2005. The Minors had a homeowner’s insurance policy with United Services Automobile Association (USAA) that covered wind damage but excluded storm surge or flood damage. USAA issued payments for wind damage but not for storm surge or flood damage, leading to a dispute. The Minors claimed a total loss due to wind and demanded policy limits. In 2013, a jury awarded the Minors $1,547,293.37 in compensatory damages.The Minor Estate appealed a pretrial order granting partial summary judgment to USAA on the Minors’ bad faith claim. The Mississippi Court of Appeals reversed the trial court’s decision, finding a genuine issue of material fact regarding USAA’s denial and delay of payment. The case was remanded for further proceedings on the bad faith claim. On remand, a jury awarded the Minors $10,000,000 in punitive damages and $457,858.89 in extra-contractual damages (attorneys’ fees). USAA appealed, and the Minor Estate cross-appealed the denial of its post-trial motion for additional attorneys’ fees.The Supreme Court of Mississippi reviewed the case and found no reversible error, affirming the jury’s award of $10,457,858.89 in damages. The court also reversed and rendered attorneys’ fees on behalf of the Estate in the amount of $4,500,000, plus post-judgment interest. The court held that the trial judge did not err in submitting the issue of punitive damages to the jury and that the $10 million punitive damages award was not unconstitutionally disproportionate. The court also found no error in the jury’s award of extra-contractual damages and no errors warranting a new trial. View "United Services Automobile Association v. Estate of Minor" on Justia Law

Nolan D. Palmer appealed a circuit court order enforcing sureties' liability related to a fee dispute among attorneys Barry Wade Gilmer, Seth Little, and Chuck McRae. McRae had initially sued Barry in Hinds County Chancery Court, and Barry subsequently filed a complaint in Madison County Circuit Court against Little, McRae, and McRae's attorneys, Michele Biegel and Bettie Ruth Johnson. The Madison County Circuit Court transferred the entire suit to Hinds County Chancery Court, but the Mississippi Supreme Court reversed this transfer for the claims against Biegel and Johnson, remanding the case back to Madison County Circuit Court. On remand, the circuit court dismissed Barry's complaint against Biegel and Johnson as frivolous and ordered Barry to pay their costs.Barry appealed and filed an appeal bond with supersedeas, signed by Barry, Matthew Gilmer, and Palmer. The bond was not signed by the circuit clerk. The Mississippi Supreme Court affirmed the circuit court's orders, and Biegel and Johnson moved to enforce the sureties' liability, claiming Barry had not satisfied the judgments. The circuit court found the bond enforceable as a contract, holding Barry and Palmer liable.Palmer appealed, arguing he was denied due process, the bond was invalid, and the circuit court erred in enforcing the bond as a contract. The Mississippi Supreme Court reviewed the case de novo and found that Palmer waived his arguments by failing to appear or defend the motion in the circuit court. The court held that Palmer was provided due process as required under Rule 8(d) and affirmed the circuit court's order enforcing sureties' liability. View "Palmer v. McRae" on Justia Law

Attorney Stephen Eberhardt filed a 102-page, 19-count complaint against 11 defendants, including the Village of Tinley Park, its officials, attorneys, and residents, alleging a scheme to prevent him from making public comments at Village board meetings and on Village-related Facebook pages, violating his constitutional rights. He also brought claims against the Village’s outside counsel, Patrick Walsh, under the Illinois Open Meetings Act. The district court dismissed the complaint without prejudice for being too lengthy and jumbled. Eberhardt then filed an amended complaint, which was also dismissed, and the court entered final judgment.Following the judgment, Walsh’s attorney filed a motion for sanctions under Rule 11 of the Federal Rules of Civil Procedure, arguing that Eberhardt’s claims were frivolous and filed in bad faith to harass Walsh. The district court granted the motion, ordering Eberhardt to pay $26,951.22 in attorneys’ fees, finding that his claims were frivolous and brought with inadequate investigation into the relevant law and facts. The court noted Eberhardt’s history of filing numerous lawsuits and motions, which indicated bad faith.Eberhardt appealed to the United States Court of Appeals for the Seventh Circuit, challenging the district court’s decision to sanction him and its denial of his motion to reconsider. The Seventh Circuit reviewed the case and found no abuse of discretion in the district court’s decisions. The court affirmed the sanctions order, agreeing that Eberhardt’s claims were frivolous and brought in bad faith, and that a hearing was not necessary as the record was adequate to determine the need for sanctions. The court also affirmed the denial of the motion to reconsider, finding no manifest errors of law or fact. View "Eberhardt v. Walsh" on Justia Law