Justia Professional Malpractice & Ethics Opinion SummariesArticles Posted in Banking
Trinity Mortgage Companies, Inc. v. Dryer
Trinity Mortgage Companies, Inc. (Trinity) appealed the district court’s order granting summary judgment in favor of David Dryer and Dryer and Associates, P.C. (Dryer). Trinity, formerly a mortgage brokerage company owned by Shawn Cremeen, entered into a franchise agreement with 1st Class Lending, Inc., which was owned by Dennis Junker and Richard Gheisar. In April 2007, Junker sued Gheisar and Trinity in Oklahoma state court for breach of contract, fraud, defamation, and conversion, all concerning his alleged wrongful termination. Between May 2007 and April 2008, Dryer represented Trinity, without a written contract. In October 2007, while the lawsuit was pending, Trinity entered into an agreement to sell most of its assets and to stop originating loans. Meanwhile, after Trinity failed to file an answer in the pending lawsuit, Junker moved for a default judgment against Trinity. Because Dryer failed to object to entry of default judgment against Trinity, the state court granted the motion against Trinity in January 2008. The another firm replaced Dryer as Trinity’s counsel, who unsuccessfully sought to vacate the default judgment against Trinity. Cremeen and Junker eventually entered into a settlement agreement concerning the lawsuit. Trinity confessed a final judgment in favor of Junker but the only recovery of this amount would be through his ownership interest in Trinity, which was the action against Dryer. Trinity moved for partial summary judgment on its malpractice and breach of contract claims. Dryer moved for summary judgment, contending that all claims were barred as a matter of law because Trinity unlawfully assigned them to Junker. In response, Trinity argued that there had not been an assignment of tort causes of action; there was never any collusion between Trinity and Junker; and that the malpractice case was not contingent upon disproving the merits of the underlying suit against Trinity. The district court granted Dryer’s motion for summary judgment and denied Trinity’s motion for partial summary judgment. Upon review, the Tenth Circuit concluded that the district court properly granted summary judgment in favor of Dryer. View "Trinity Mortgage Companies, Inc. v. Dryer" on Justia Law
Grant Thornton, LLP v. Kutak Rock, LLP
First National Keystone Bank retained an independent accounting firm to audit its records at a time that members of the bank's management were fraudulently concealing the bank's financial condition. The accounting firm issued a clean audit concerning the bank. It was later discovered that the bank had overstated its assets by over $500 million. Upon investigation, the FDIC concluded that the law firm that represented the bank had engaged in legal malpractice. The FDIC settled its claims against the law firm. The accounting firm was later found liable to the FDIC in federal district court for a negligent bank audit. The accounting firm subsequently sued the law firm, alleging fraud, negligent misrepresentation, and tortious interference with the accounting firm's contract to perform the audit. The circuit court granted summary judgment in favor of the law firm. The Supreme Court affirmed, holding that the claims of the accounting firm against the law firm were, in reality, contribution claims rather than direct or independent claims and were, therefore, barred by the settlement agreement between the law firm and the FDIC. View "Grant Thornton, LLP v. Kutak Rock, LLP" on Justia Law
Quad City Bank & Trust v. Jim Kircher & Assocs., P.C.
A bank attempted to prove an accounting negligence claim by using an expert witness to testify regarding the accountant's audit of a lumber company. The district court refused to allow the expert to testify as to generally accepted CPA auditing standards, whether the accountant breached those standards, and causation. The district court left open the question of whether the expert could testify as to the accountant's work papers. At trial, the bank made an offer of proof as to the work papers but did not move to introduce them, and so the court never ruled on their admissibility. The jury returned a verdict finding the accountant did not negligently perform the audit. The court of appeals reversed the district court and remanded for a new trial. The Supreme Court vacated the decision of the court of appeals and affirmed the judgment of the district court, holding (1) the bank failed to preserve error on the work-paper issue, and (2) the expert was not qualified to testify on the ultimate issue of whether the accountant violated generally accepted accounting standards because the expert lacked the knowledge, skill, experience, training, or education to provide an adequate basis for this testimony. View "Quad City Bank & Trust v. Jim Kircher & Assocs., P.C." on Justia Law
United States v. Ferguson, et al.
This criminal appeal arose from a "finite reinsurance" transaction between American International Group, Inc. (AIG) and General Reinsurance Corporation (Gen Re). Defendants, four executives of Gen Re and one of AIG, appealed from judgments convicting them of conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission. Defendants appealed on a variety of grounds, some in common and others specific to each defendant, ranging from evidentiary challenges to serious allegations of widespread prosecutorial misconduct. Most of the arguments were without merit, but defendants' convictions must be vacated because the district court abused its discretion by admitting the stock-price data and issued a jury instruction that directed the verdict on causation. View "United States v. Ferguson, et al." on Justia Law
United States v. MacKay, et al.
Petitioners appealed from a Memorandum and Order and Final Order of Forfeiture entered by the district court dismissing their petition for an ancillary hearing and rejecting their claim as beneficiaries of a putative constructive trust in defendant's forfeiture assets. At issue was whether the remission provision of 21 U.S.C. 853(i) precluded the imposition of a constructive trust in petitioners' favor and whether imposing a constructive trust would be consistent with a forfeiture statutory scheme provided by section 853. Because the court concluded that section 853(i) did not preclude, as a matter of law, recognizing a constructive trust and because a constructive trust was not inconsistent with the forfeiture statute, the court vacated the Final Order of Forfeiture and remanded the case to the district court to consider whether, pursuant to Vermont law, a constructive trust should be recognized in favor of petitioners. View "United States v. MacKay, et al." on Justia Law