Justia Professional Malpractice & Ethics Opinion Summaries

Articles Posted in U.S. 3rd Circuit Court of Appeals
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Ciavarella and another state court judge, Conahan, received $2.8 million in three years from a commercial builder, Mericle, and an attorney and businessman, Powell, during the “Kids for Cash” scandal in Luzerne County, Pennsylvania . Ciavarella committed hundreds of juveniles to detention centers co-owned by Powell, including many who were not represented by counsel, without informing the juveniles or their families of his conflict of interest. The judges, aware that they were under investigation, met with Mericle and Powell to coordinate their stories in 2008. Powell was wearing a recording device, exposing the judges’ efforts to obstruct justice. The judges pled guilty to wire fraud and conspiracy in exchange for an agreed 87-month sentence. Noting that the stipulated sentences were significantly lower than the advisory Sentencing Guidelines for the offenses, the district court rejected the plea agreement; the judges withdrew their pleas. Ciavarella proceeded to trial, was convicted of racketeering, honest services mail fraud, money laundering conspiracy, filing false tax returns, and several other related crimes and was sentenced to 336 months’ imprisonment, restitution, forfeiture, and a special assessment. The Third Circuit remanded for modification of the special assessment for mail fraud, but otherwise affirmed, rejecting an argument that the trial judge was biased. View "United States v. Ciavarella" on Justia Law

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On May 25, 2011, Lassiter filed a complaint alleging Fourth Amendment violations for excessive force and false arrest. The complaint stated that the incident giving rise to Lassiter’s cause of action took place on May 22, 2009. On August 2, 2011, defendants filed an answer asserting six affirmative defenses, but did not raise the two-year statute of limitations as a defense. During a pretrial conference on September 20, 2011, without being prompted by either party, the district court observed that the statute of limitations appeared to have expired but that defendants failed to raise the issue in their answer. Defendants’ counsel acknowledged that they had missed this issue. The court suggested that defendants could amend their answer. On February 23, 2012, over Lassiter’s opposition, the court granted leave to amend the answer. On May 29, the court dismissed the complaint as time-barred. The Third Circuit affirmed, holding that the court had authority to raise the statute of limitations issue during the Rule 16 conference. View "Lassiter v. City of Philadelphia" on Justia Law

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In connection with a loan, Bayonne provided Nuveen with an audit report authored by accounting firm, Withum and an opinion letter from Bayonne’s counsel, Lindabury. Soon after the transaction, Bayonne filed a Chapter 11 bankruptcy petition, 11 U.S.C. 101. Nuveen claimed that the audit report and opinion letter concealed problems with Bayonne’s financial condition and that, had it known about these financial issues, it would not have entered into the transaction. The district court dismissed claims of fraud (Withum), negligent misrepresentation, and malpractice (Lindabury) based on Nuveen’s noncompliance with New Jersey’s Affidavit of Merit statute, N.J. Stat. 2A:53A-26, which requires an affidavit of merit for certain actions against professionals. The Third Circuit remanded for reconsideration of diversity jurisdiction. On remand, the court accepted an argument that the action was “related to” Bayonne’s bankruptcy proceeding, establishing jurisdiction under 28 U.S.C. 1334(b), and again dismissed. The Third Circuit affirmed as to jurisdiction and held that the AOM Statute can be applied by a federal court without conflicting with FRCP 8. If the AOM Statute applies, noncompliance requires dismissal. The court certified to the New Jersey Supreme Court questions relating to the “nature of the injury” and “cause of action” elements of the statute. View "Nuveen Mun. Trust v. Withumsmith Brown PC, et al" on Justia Law

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Plaintiff’s counsel failed to file a notice of appeal within 30 days of the judgment or order (Federal Rule of Appellate Procedure 4(a)(1)(A)). Defendant sought attorneys’ fees and costs under FRCP 68. The motion was withdrawn. Plaintiff then moved for issuance of an order pursuant to RCP 58(e), or, in the alternative, for an order granting an extension of time to file a notice of appeal, arguing that his attorney’s failure to file a timely notice of appeal was caused by excusable neglect as the result of a busy caseload. The court granted the extension. The Third Circuit vacated the extension as improvidently granted and dismissed plaintiff’s appeal. A ruling in favor of plaintiff “in the current circumstances could be read as condoning and even rewarding otherwise avoidable mistakes—and even outright incompetence—on the part of even experienced attorneys.” View "Ragguette v. Premier Wines & Spirits" on Justia Law

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After an error resulted in omission of a will's residual clause, litigation between the decedent's son and a charitable trust settled with the son receiving $5,600,000 and property and the trust receiving $11,721,141. The Estate filed a claim for federal estate tax charitable deduction. The IRS disallowed the deduction, finding that the contribution was made by the son via the settlement. The district court granted the Estate summary judgment, but found the government's position substantially justified and did not award fees or costs. The Third Circuit affirmed. The award for prevailing parties under 26 U.S.C. 7430 incorporates the Equal Access to Justice Act, 28 U.S.C. 2412(d)(1)(B), under which recovery of fees is barred if a party’s net worth exceeds the statutory amount. Parties seeking to recover under either the prevailing party provision or the qualified offer provision must satisfy the net worth requirements. Although the trust satisfied the net worth requirements as a tax-exempt charitable organization with fewer than 500 employees, the court rejected an argument that it was the real party in interest. View "Estate of Palumbo v. United States" on Justia Law

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Petitioners, citizens of Mexico, entered the U.S. unlawfully in 1993 and 1998, respectively. Since 2000, husband has been seeking employment-based permanent residency. An individual who would not ordinarily qualify for lawful permanent residency because he entered without inspection, may apply as the beneficiary of a labor certification application or a visa petition filed on or before April 30, 2001, 8 U.S.C. 1255(i). According to the court, petitioners' former attorney provided incompetent, and at times ethically questionable, representation throughout the visa petition process, missing filing deadlines and sending associates to hearings without adequate information about the case, so that an IJ granted voluntary departure and the BIA affirmed denial of a motion to reopen. The Third Circuit denied review. The Due Process Clause does not guarantee an alien effective assistance of counsel in preparing, filing, and appealing a labor certification application and a visa petition before the start of removal proceedings. By the time removal proceedings began, petitioners had accrued more than one year of unlawful presence and would have been ordered removed regardless of counsel's actions.View "Contreras v. Attorney Gen. of U.S." on Justia Law

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Dissatisfied with the settlement of a trademark case, plaintiffs filed suit on March 30, 2009 in the Superior Court of New Jersey, alleging legal malpractice and related claims. The complaint was served on one defendant on April 14, but others (law firm) were served on April 23. More than 30 days after the first defendant was served but less than 30 days after the law firm was served, the law firm filed a notice of removal. On May 22, plaintiffs filed a motion to remand the action to state court. The federal district court denied remand, finding that the removal was timely under the later-served rule. The Third Circuit affirmed. The later-served rule, under which each defendant gets his own 30-day window, represents a better reading of the language of 28 U.S.C. 1446(b) and results in more equitable treatment to later-served defendants. View "Delalla v. Hanover Ins. Co" on Justia Law

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Plaintiff, acting pro se, sued an attorney, claiming that her medical malpractice case had been dismissed because the attorney failed to retain an expert as required by state law. Plaintiff failed to file a certificate of merit within 60 days, as required by state law in professional malpractice cases. Given extensions, plaintiff filed various documents reflecting that she did not understand the rule. The district court dismissed. The Third Circuit remanded. The state rule does not conflict with any federal rule and is substantive law that must be applied by a federal court in a diversity case, but plaintiff complied with the rule when she indicated that expert testimony of an appropriate licensed professional was unnecessary for the prosecution of her complaint (PA.R.CIV.P. 1042.3(a)(3)). The district court lacked discretion to reject the filing. View "Liggon-Redding v. Estate of Sugarman" on Justia Law

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The United States Trustee, Region 3, appealed a district court’s reversal of sanctions originally imposed by the bankruptcy court on attorneys Mark Udren and Lorraine Doyle and HSBC for violating the Federal Rules of Bankruptcy Procedure. "This case [was] an unfortunate example of the ways in which overreliance on computerized processes in a high-volume practice, as well as a failure on the part of client and lawyers alike to take responsibility for accurate knowledge of a case, can lead to attorney misconduct before a court." At issue were two pleadings that HSBC’s attorneys filed in bankruptcy court. Both documents contained imperfect information and were filed with the court. The attorneys appealed the sanctions order arguing that the facts contained in the filed documents were "actually literally true." Upon review, the Third Circuit found that the statements therein were not wholly true, and faulted counsel for "rubber-stamping" the information taken from its computerized database without additional investigation as to their veracity: "[w]here a lawyer systematically fails to take any responsibility for seeking adequate information from her client, makes representations without any factual basis because they are included in a "form pleading" she has been trained to fill out, and ignores obvious indications that her information may be incorrect, she cannot be said to have made reasonable inquiry." The Court concluded the bankruptcy court did not abuse its discretion in imposing sanctions on Doyle or the Udren Firm itself. However, it found the lower court abused its discretion in imposing sanctions on Udren individually. View "In re: Taylor, et al" on Justia Law

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After an injury trial, plaintiff's attorney called jurors to ask about the award of damages and assignment of fault between the parties, apparently believing that there had been a clerical error on the verdict form. After a juror informed the magistrate judge, the judge concluded that the attorney had violated ABA Model Rule of Professional Conduct Rule 3.5 by initiating post-verdict contact with a juror. The Third Circuit vacated, first holding that the attorney had standing to appeal. The judge abused his discretion and denied the attorney's due process rights by not following the disciplinary procedures outlined in Local Rule 83.2(b) of the District Court of the Virgin Islands and by failing to give sufficient notice and an opportunity to be heard prior to finding misconduct and imposing sanctions. View "Adams v. Ford Mtr. Co." on Justia Law