Justia Professional Malpractice & Ethics Opinion Summaries

A dispute arose from a contingency fee agreement between the heirs of an Alaska Native allotment and an attorney who helped them recover substantial compensation from the federal government for mismanagement of oil and gas leases on their land. After a settlement was reached, years later, one of the heirs was sued by the attorney in federal court for allegedly failing to make required payments under the fee agreement. The heir then invoked mandatory fee arbitration under Alaska Bar Association rules, which prompted the federal court to stay the proceedings pending the outcome of arbitration.The arbitration was conducted before an Alaska Bar Association panel, which, following guidance from Bar Counsel, limited its review to whether the amount of the attorney’s fee was reasonable, and declined to address broader challenges to the enforceability of the fee agreement, including claims of duress and illegality under federal Indian law. The panel ultimately found the fee amount reasonable. Dissatisfied, the heir petitioned the Alaska Superior Court to vacate the panel’s decision, arguing that the panel exceeded its authority by not deciding enforceability issues and raising other statutory grounds under the Revised Uniform Arbitration Act (RUAA). The Superior Court denied the petition, confirmed the arbitration award, and granted enhanced attorney’s fees to the attorney for post-arbitration litigation.On appeal, the Supreme Court of the State of Alaska affirmed the Superior Court’s confirmation of the arbitration award. The Supreme Court held that a fee arbitration panel’s decision to narrow the scope of review is subject to a “reasonably possible” standard and that the panel did not exceed its authority in this case. The court also held that awards of attorney’s fees under Alaska Civil Rule 82 are permissible in post-arbitration proceedings governed by the RUAA and found no abuse of discretion in the Superior Court’s award. View "Oenga v. Givens" on Justia Law

480 King Street, LLC hired Glick/Boehm & Associates, Inc. (GBA), an architectural firm, to design and administer construction of a stair tower. 480 King alleged that GBA negligently designed elements of the project, including the elevator, electrical, HVAC, windows, and stairs, and also failed to properly administer construction, resulting in code violations and additional costs. As the statute of limitations was approaching, 480 King filed its complaint without the expert affidavit required by the South Carolina Frivolous Civil Proceedings Sanctions Act, later submitting an affidavit from Louis Hackney, a professional engineer, attesting to deviations from the standard of care in both design and contract administration.The Circuit Court of Charleston County, after allowing time for the affidavit, ultimately dismissed all claims against GBA, finding Hackney was not qualified to opine on the standard of care for architects. On appeal, the South Carolina Court of Appeals affirmed the dismissal of negligent design claims but reversed as to claims for negligent construction administration, finding Hackney qualified under statutory standards for expert witnesses. The appellate court also reversed dismissal of breach of contract and warranty claims, remanding them for further proceedings.The Supreme Court of South Carolina affirmed in part and reversed in part. It held that the expert witness affidavit requirement under section 15-36-100 does not mandate the affiant be from the same profession as the defendant, provided the statutory qualifications are met. Hackney’s affidavit was sufficient for the negligent construction administration claim, but not for negligent architectural design, as he declined to opine on the latter. Claims for negligent supervision were subsumed under construction administration. The breach of contract claim may proceed only as to construction administration, while breach of warranty and negligent design claims were properly dismissed. The disposition was affirmed in part and reversed in part. View "Blanchard v. 480 King Street, LLC" on Justia Law

An attorney filed a petition for a writ of mandate on behalf of a client, seeking to have the trial court refer a statement of disqualification to a different judge. The petition included only the trial court’s order striking the statement of disqualification and did not provide the statement itself or any supporting evidence for the serious accusations made against the trial judge, such as alleged retaliation, discrimination, collusion with opposing counsel, and forgery of court orders. The attorney asserted that these claims were based on his and his client’s “earnest belief,” but failed to present any evidence from the court record to support them.The Superior Court of Orange County had previously struck the statement of disqualification, and the attorney’s petition to the appellate court was denied due to lack of supporting evidence. Following this denial, the California Court of Appeal, Fourth Appellate District, Division Three, issued an order to show cause as to why sanctions should not be imposed for filing a frivolous writ petition and for failing to support factual contentions with citations to the record. The attorney responded but continued to provide no substantive evidence, instead relying on personal beliefs and documents not included in the trial record.The California Court of Appeal, Fourth Appellate District, Division Three, found that the petition was frivolous and that the attorney had unreasonably violated procedural rules by making unsupported assertions, particularly serious accusations against the trial judge. The main holding is that an attorney may not make factual assertions or accusations against a judge without evidentiary support and must adhere to procedural requirements for appellate filings. The court imposed monetary sanctions of $25,000 against the attorney and ordered that notice be given to the State Bar. View "N.D. v. Superior Ct." on Justia Law

A debtor filed for bankruptcy in 2017 and retained an attorney to serve as counsel in the Chapter 11 proceedings. The bankruptcy court appointed the attorney as counsel for the estate. In early 2018, a trustee was appointed due to concerns about liens on the debtor’s properties, and the trustee began liquidating assets. Following these events, the debtor sued her former bankruptcy attorney and his law firm in California state court for legal malpractice related to the bankruptcy representation.In state court, the attorney moved to dismiss the malpractice suit, arguing that the Barton doctrine, res judicata, and lack of standing barred the action. The Los Angeles County Superior Court dismissed the suit solely based on the Barton doctrine, which requires leave from the bankruptcy court before suing court-appointed officers in another forum. On appeal, the California Court of Appeal for the Second District held that the Barton doctrine applied to claims arising from the attorney’s actions while serving as debtor-in-possession counsel but not to actions taken after the trustee’s appointment. The appellate court allowed leave to amend for certain post-trustee claims if standing was established.The debtor then moved in bankruptcy court for leave to continue her malpractice suit under the Barton doctrine. The bankruptcy court granted leave for certain time periods but did not precisely tailor its order to the state appellate decision. The attorney appealed to the Ninth Circuit Bankruptcy Appellate Panel (BAP), which vacated the bankruptcy court’s order, holding it violated the Rooker-Feldman doctrine by modifying state court judgments. On further appeal, the United States Court of Appeals for the Ninth Circuit held that granting Barton leave does not violate Rooker-Feldman, and the bankruptcy court may cure a jurisdictional defect after state court proceedings have begun. However, the Ninth Circuit found the bankruptcy court abused its discretion by not aligning its order with the state appellate decision and by granting Barton approval for claims not subject to the doctrine. The Ninth Circuit reversed the BAP, vacated in part, and remanded with instructions for the bankruptcy court to issue a tailored order consistent with the California appellate decision. View "Akhlaghpour v. Orantes" on Justia Law

A cloud-based real estate services company faced persistent and grave allegations that two top agents, along with several others, drugged and sexually assaulted company agents at events. Reports began surfacing in 2020, including a viral social media post and a memo sent to company executives detailing numerous incidents. Despite these warnings, the board initially terminated one perpetrator but continued paying him, and allowed others implicated to continue working. A whistleblower director raised these issues repeatedly at board meetings and with outside counsel, but the board’s responses were limited to internal investigations led by insiders and did not result in meaningful change. The company only took further action after survivors filed federal anti-trafficking lawsuits in 2023 and the story became public.Prior to the current litigation, federal courts sustained anti-trafficking claims against the company and its leadership, finding sufficient allegations that the leadership benefited from retaining perpetrators due to the company’s revenue-sharing structure. The defendants in this derivative action are not accused of direct misconduct, but of harming the company by allowing and covering up systemic sexual abuse. The plaintiff, a shareholder, alleges the board and certain officers actively covered up abuse and breached their fiduciary duties, and that some board members failed their oversight obligations in the face of numerous red flags.The Delaware Court of Chancery reviewed the defendants’ motions to dismiss. It held that workplace sexual misconduct can constitute a corporate trauma supporting a breach of fiduciary duty claim under Delaware law. The court denied dismissal as to claims against the officer alleged to have benefited from covering up abuse, and against the directors for failing to respond in good faith to clear red flags. However, it granted dismissal of a novel claim seeking to extend oversight duties to a control group of shareholders, declining to make new law in that area. View "Los Angeles City Employees' Retirement System v. Sanford" on Justia Law

This case concerns a business dispute between two individuals, Alan Weigel and Jason Albertson, regarding Veritas Crane LLC, a company providing crane and hoist services. Albertson founded Veritas in 2018, and Weigel joined the business in 2019, with both claiming at least 50% ownership. Their relationship deteriorated, leading Albertson to request the company’s bank to restrict access to its accounts due to allegations of fraudulent activity. In response, Weigel limited Albertson’s access to company facilities. Weigel then filed a complaint, naming himself and Veritas as plaintiffs, asserting both derivative claims on behalf of Veritas and direct claims against Albertson.The District Court of Cass County, East Central Judicial District, reviewed the matter after Albertson moved to disqualify Weigel’s attorney, Joel Fremstad. The court found that Fremstad had a lawyer-client relationship with both Weigel and Veritas, relying on evidence such as Fremstad’s signing of pleadings for both plaintiffs and communications indicating he advised Weigel in his role as CEO of Veritas. The court concluded that this concurrent representation violated North Dakota Rule of Professional Conduct 1.7(a), which prohibits representation of adverse clients, and ordered Fremstad’s disqualification.The Supreme Court of North Dakota addressed Weigel’s appeal and his petition for a supervisory writ. It determined the disqualification order was not immediately appealable under statutory law or the collateral order doctrine and dismissed the appeal for lack of jurisdiction. Exercising its supervisory authority, the Supreme Court reviewed the district court’s order for abuse of discretion and clear error. Although it noted a harmless legal error in the district court’s reasoning regarding derivative suits, the Supreme Court held that the underlying factual findings were supported by the record. The Court denied the petition for a supervisory writ, upholding the disqualification of Fremstad. View "Weigel v. Albertson" 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

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

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