Justia Professional Malpractice & Ethics Opinion Summaries

A discovery dispute arose out of claims for legal malpractice and breach of fiduciary duty brought by Moreland/Manoogian, LLC and Tamsen Investments, LLC (collectively "M/M"). Richard Judd, Stephen Waters and their firm Robinson Waters & O'Dorisio, PC (RWO) represented M/M in a real estate development deal. Cedar Street Venture, LLC and M/M sought to solidify their partnership, but in the final phases of the deal, Cedar Street's attorney withdrew. RWO continued to represent M/M in the transaction but at times also advised and acted on behalf of Cedar Street. Because of these actions, Cedar Street viewed RWO as its attorney. Eventually the relationship between M/M and Cedar Street soured, and the parties went to arbitration to settle their differences. The basis of M/M and Cedar Street's complaints pertained to RWO's fees. During discovery, M/M sought RWO's financial records. RWO refused to turn them over. With minimal explanation, the trial court found that these documents were directly relevant to the case. In its holding, the Supreme Court took the opportunity to set the framework that trial courts should use when deciding on discovery requests that implicate the right to privacy: (1) the party requesting the information must prove the information is relevant to case; (2) the party opposing the request must show that the materials are confidential and will not otherwise be disclosed; (3) if the court determines there is a legitimate expectation of privacy in the materials, the requesting party must prove disclosure serves a compelling interest; and (4) if successful, the requesting party must show that the information is not available through other sources.

Barbara Roberts sued Steve Lanier and his firm Steve Lanier, PC, and Rodney Stallings and his firm Coggin & Stallings, LLC. In 2006, Ms. Roberts was arrested on murder charges and sent to the Cherokee County jail. She contacted Attorney Lanier, who then met with her and agreed to represent her in her criminal proceedings. The contract between them provided that Ms. Roberts would pay a "nonrefundable retainer" of $50,000. At that time, Ms. Roberts executed a power-of-attorney authorizing Mr. Lanier to withdraw the retainer from her bank accounts. Ms. Roberts testified at trial that she first learned that Mr. Lanier was not licensed to practice law in Alabama when she appeared for her first hearing at the district court. It was then that she was introduced to Mr. Stallings, who "associated" on her case. Seeing no need for two lawyers, she tried to terminate Mr. Lanier's representation. Mr. Stallings eventually managed Ms. Roberts' case, having all her mail sent to his office so that he could "oversee every aspect" of her personal life, including payment of all outstanding bills and expenses. Ms. Roberts alleged that instead of using her money for the purposes she intended, Mr. Stallings misappropriated approximately $100,000 of her funds. Ms. Roberts was eventually convicted of capital murder and sentenced to life without parole. She later learned that the "nonrefundable retainer" language in her contract with Mr. Lanier was unenforceable under Alabama law, and sued her former lawyers for legal malpractice. The circuit court granted summary judgment to the lawyers. Upon review, the Supreme Court reversed the circuit court's grant of summary judgment in favor of the lawyers only with respect to employment contract and the "nonrefundable retainer" and the misappropriation of Ms. Roberts' money for expenses while she awaited trial. The Court remanded the case for further proceedings.

Petitioner filed suit against respondent for breach of contract and breach of fiduciary duty. Respondent had been employed by petitioner since 1983 and rose to become a managing director. In 2005, respondent signed a Non-Solicitation Agreement and notice form stating that he wanted to exercise a stock option to acquire 3000 shares of stock of petitioner's parent company. At issue was whether a covenant not to compete signed by a valued employee in consideration for stock options, designed to give the employee a greater stake in the company's performance, was unenforceable as a matter of law because the stock options did not give rise to an interest in restraining competition. The court held that, under the terms of the Covenants Not to Compete Act (Act), Tex. Bus. & Com. Code 15.50, 52, the consideration for the noncompete agreement (stock options) was reasonably related to the company's interest in protecting its goodwill, a business interest the Act recognized as worthy of protection. Therefore, the noncompete was not unenforceable on that basis. Accordingly, the court reversed the court of appeal's judgment and remanded to the trial court for further proceedings.

The SEC brought suit against senior officers of Gateway Incorporated ("Gateway") claiming that they unlawfully misrepresented Gateway's financial condition in the third quarter of 2000 in order to meet financial analysts' earnings and revenue expectations. After a three week trial, a jury found former Gateway financial executives, John J. Todd and Robert D. Manza, liable on all claims by the SEC. All parties appealed the district court's order in part. The court reversed the district court's order granting in part Todd's and Manza's motions for judgment as a matter of law on the antifraud claims under the Securities and Exchange Act of 1934, 15 U.S.C. 78a et seq., because substantial evidence supported the jury's verdict that Todd and Manza at least recklessly misrepresented revenue related to the Lockheed transaction, and that Todd recklessly misrepresented revenue as to the VenServ transaction, in the third quarter of 2000. The court also reversed the district court's order granting Jeffrey Weitzen's, former Gateway President and CEO, motion for summary judgment as to the Section 10(b) and Rule 10b-5 violations because there were genuine issues of material fact regarding whether Weitzen knowingly misrepresented Gateway's financial growth as "accelerated" given his knowledge of the unusual Lockheed and AOL transactions. There were also issues of material fact as to whether Weitzen was a "control person" under Section 20(a). The court affirmed Weitzen's motion for summary judgment as to the Rule 13b2-2 claim because there was no evidence that Weitzen signed a letter to Gateway's auditors knowing that it misrepresented Gateway's financial position. The court also affirmed the district court's order denying in part Todd's and Manza's motions for judgment as a matter of law on the aiding and abetting claims and their motions for a new trial.

The Mississippi Commission on Judicial Performance filed a formal complaint against Walthall County Justice Court Judge Marion McKenzie for alleged ticket-fixing and for certain ex-parte communications. During a three-year period from January 2006 to January 2009, the Judge disposed of or attempted to dispose of nine citations for misdemeanor offenses. The offenses involved hunting over bait, failing to wear hunter orange, hunting without a license, and littering. On three occasions, the Judge attempted to intervene in cases assigned to another judge. On each occasion, the Judge obtained the violator's ticket and asked the deputy clerk to give the ticket to the citing officer so that the officer could "help" the defendant. The Judge acknowledged his wrongdoing and joined the motion for approval of a recommended public reprimand and $500 fine. After conducting its independent inquiry and giving consideration to the Commission's finding of fact, the Supreme Court ordered a thirty-day suspension from office without pay in addition to the recommended sanctions.

Plaintiffs Michael Ashby and Randy O'Brien, inmates at the state department of correction, asserted professional malpractice complaints against attorney C. Bruce Davidson to The Bar Plan Mutual Insurance Company, Davidson's professional liability carrier. Bar Plan then intervened in consolidated actions for damages filed on behalf of plaintiffs against Davidson, asserting a cross-claim that it was not obligated to indemnify Davidson for the claims of plaintiffs because Davidson had failed to notify Bar Plan of any claims against him pursuant to Bar Plan's policy. The trial court granted summary judgment to Bar Plan. The Supreme Court held that Davidson's failure to comply with Bar Plan's policy was not dispositive because plaintiffs opposed summary judgment on grounds of waiver and estoppel. The Court then reversed summary judgment, holding that genuine issues of fact remained regarding whether Bar Plan's misrepresentation of valid coverage resulted in plaintiffs sustaining actual detriment. Remanded.

Appellants in this derivative action, who are shareholders of Primedia, Inc., appealed the Court of Chancery's decision granting the Primedia Special Litigation Committee's ("SLC") Motion to Dismiss claims arising out of a series of alleged violations of fiduciary duty by defendants. As a preliminary matter, the court invoked the exception to mootness doctrine in this case because it was a matter of public importance that was capable of repetition yet could evade review where other litigants have raised the Brophy v. Cities Co. issue in actions now pending before the Court of Chancery. The court held that Brophy did not require an element of harm to the corporation before disgorgement was an available remedy and to the extent Pfeiffer v. Toll conflicted with this holding, it was wrong. In Brophy, the court relied on the principles of restitution and equity and as the Brophy court recognized, it was inequitable to permit the fiduciary to profit from using confidential corporate information. The court also held that the Vice Chancellor's analysis of the SLC's Motion to Dismiss under Zapata Corp. v. Maldonado's second prong could not be affirmed in the shadow of Pfeiffer's incorrect holding. Accordingly, the judgment of the Court of Chancery was reversed and the case remanded for further proceedings.

Plaintiff sued defendant, a county judge in Mississippi, under 42 U.S.C. 1983 for allegedly causing plaintiff to be prosecuted without probable cause. At issue was whether the district court properly denied defendant's motion, concluding that genuine issues of material fact precluded summary judgment. The court held that defendant was entitled to qualified immunity where the district court did not explain the constitutional right that he had purportedly violated and, under the circumstances of the case, plaintiff had not shown that defendant's actions tainted the deliberations of the magistrate who issued the arrest warrant or the grand jury that returned the indictment. The court also held that, because the appeal was resolved on grounds of qualified immunity, the court need not address whether defendant was entitled to judicial immunity. Accordingly, the court reversed the district court's denial of summary judgment.

Based on the six-year statute of repose, (735 ILCS 5/13–214.3(c), the trial court dismissed a malpractice claim alleging that defendant negligently prepared a quitclaim deed in 1997 that failed to convey real estate to plaintiff and her husband as joint tenants with right of survivorship. In 2007, when her husband died, plaintiff discovered that the property was still in trust and that ownership would pass to her stepson. The appellate court reversed and remanded. The Illinois Supreme Court reinstated the dismissal. The statute of repose is not tied to discovery of injury; the period of repose in a legal malpractice case begins to run on the last date on which the attorney performs the work involved in the alleged negligence.

In a medical malpractice case, alleging failure to diagnose apendicitis, the court gave Civil Jury Instruction 105.01 (2006), which refers to a "reasonably careful," as opposed to a "reasonably well-qualified" (the 2005 instruction) professional. The jury returned a verdict in favor of plaintiffs and the appellate court affirmed. The Illinois Supreme Court held that the jury instruction does not accurately state the law, but affirmed. The 2006 instruction eliminated the distinction between institutional negligence, which can be proven without expert testimony, and professional negligence, which requires expert testimony. The hospital was not prejudiced by the instruction because expert testimony was presented in connection with a vicarious liability claim. The court rejected the hospital's argument that the instruction was confusing and allowed jurors to consider personal knowledge in determining what is reasonable.