Justia Professional Malpractice & Ethics Opinion Summaries

Rosemann hired attorney Sigillito after Sigillito falsely informed Rosemann that he was an expert in international investments. In 2007, Rosemann received a $15.6 million buyout from the sale of his family’s company. Sigillito instructed Rosemann to loan $5 million of the buyout to Metis, a Turkish contractor. When Rosemann resisted, Sigillito told him “the loan was guaranteed by [North Atlantic Treaty Organization] contracts and that Sigillito would structure the deal to protect Rosemann and defer taxes.” Rosemann transferred $15.6 million to Sigillito, who wrote a $5 million check to Metis. For that service, Sigillito charged Rosemann $100,000. Sigillito took some money for his own use and loaned $10.8 million to another party in England. Approximately $2.75 million was repaid. In 2009, Metis defaulted and filed for bankruptcy protection in Turkey. Sigillito filed suit against Metis but the suit eventually was dismissed. The loan remains in default. In 2012, Sigillito was convicted of nine counts of wire fraud, four counts of mail fraud, six counts of money laundering, and conspiracy to commit mail and wire fraud. He was sentenced to 480 months’ imprisonment. Rosemann sued for legal malpractice. The Eighth Circuit affirmed dismissal because Rosemann failed to name an expert who would testify about the appropriate standard of care. View "Rosemann v. Sigillito" on Justia Law

In 2010, Debra Hackett was seriously injured in an accident in Sacramento County in which a tractor and trailer owned by Silva Trucking, Inc. and driven by Elaine McDonold jackknifed and collided with the vehicle being driven by Hackett. In 2012, the Hacketts filed a personal injury action in Sacramento County against Silva Trucking and McDonold. The jury awarded the Hacketts $34.9 million in damages. Silva Trucking was insured by Carolina Casualty Insurance Company (CCIC), who retained the law firm Cholakian & Associates to provide a defense. Silva Trucking had an excess liability insurance policy with Lexington Insurance Company (LIC), who retained the law firm Lewis, Brisbois, Bisgaard & Smith, LLP (Lewis Brisbois) as counsel. In 2014, Silva Trucking and McDonold brought suit in Sacramento County against LIC, CCIC, Cholakian & Associates and individual attorneys Kevin Cholakian and Jennifer Kung (collectively Cholakian), and Lewis Brisbois and individual attorney Ralph Zappala (collectively Lewis Brisbois). As to LIC and CCIC, the complaint alleged bad faith and breach of contract. As to the law firms and attorneys, the complaint alleged legal malpractice. The gravamen of the complaint was that the insurers unreasonably refused to accept the policy limit demand when the insured’s liability was clear and damages were known to be in excess of the policy limit. The attorneys failed to advise their insurer clients to accept the demand and the consequences of failing to do so, and failed to advise Silva Trucking and McDonold of their need for personal counsel. LIC and CCIC responded with demurrers. Lewis Brisbois answered with a general denial and asserted 22 affirmative defenses. Under Code of Civil Procedure section 396b, subdivision (a), where an action has been filed in the “wrong venue,” a defendant may move to transfer the case to the “proper court for the trial thereof.” In such a case, “if an answer is filed,” the court may consider opposition to the motion to transfer and may retain the action in the county where filed to promote the convenience of witnesses or the ends of justice. The question this case presented for the Court of Appeal's review was whether, in a multi-defendant case, an answer must be filed by all defendants before the court may consider opposition to the motion to transfer venue. The Court concluded the answer was yes. In this case, the trial court considered opposition to the motion before all defendants had answered the complaint. Accordingly, the Court issued a preemptory writ of mandate directing the trial court to vacate its order denying the motion to transfer and to issue a new order granting the motion. View "Cholakian & Assoc. v. Super. Ct." on Justia Law

In 2004 the law firm was engaged to bring a medical malpractice action on behalf of a 14-year-old girl who had become paralyzed after surgery. The firm filed two complaints in Virginia state court. Each was dismissed: the first without prejudice for failure to correctly caption a pleading; the second with prejudice for filing outside the statute of limitations. Shortly thereafter, the firm applied for and obtained a new professional liability insurance policy. Asked whether there were “any circumstances which may result in a claim being made,” the firm responded “no.” The firm informed the insurer of the incident in 2009, but represented that it had occurred in 2008. In 2011, the insurance company noticed that the firm had made the caption error in 2006, before the policy period. In 2012, it notified the firm that it reserved its rights to deny coverage under the known risk exclusion. The girl filed a legal malpractice action in 2012, and was awarded $1,750,000 in 2013. The court found, as a matter of law and without expert testimony, that the firm was on notice of the potential malpractice claim and rejected arguments that the insurer had forfeited or waived its right to deny coverage. The D.C. Circuit affirmed. View "Chicago Ins. Co. v. Paulson & Nace, PLLC" on Justia Law

Plaintiff brought this legal malpractice action for himself and three other individuals for whom he served as attorney in fact (collectively, Plaintiff). Plaintiff named as defendants an attorney and the firm at which the attorney practiced at the time the alleged malpractice occurred (collectively, Attorney), claiming that Attorney negligently failed to obtain signatures on a guaranty for a loan that Plaintiff made to a third party and failed to inform Plaintiff of the missing signatures. When the third party defaulted on the loan, Plaintiff could not obtain a judgment against the intended guarantors for the full amount of the third party’s obligation. A jury returned a general verdict for Attorney. The district court granted Plaintiff’s motion for a new trial, concluding that plain error permeating the proceedings. The Supreme Court vacated the district court’s order sustaining Plaintiff’s motion for a new trial and remanded with instructions to reinstate the judgment for Attorney, holding that the district court incorrectly concluded that plain error permeated the trial and thus abused its discretion in sustaining Plaintiff’s motion for a new trial. View "Balames v. Ginn" on Justia Law

Paul retained attorney Patton to draft an amendment to his revocable living trust. Paul signed the “Trust Amendment,” which, as drafted by Patton, named his wife, Helen, and his children, Stephen, David, Alan, and Nancy, as beneficiaries. Stephen and David also are the successor trustees. Following Paul’s death, they petitioned the probate court to modify the Trust Amendment, alleging it failed to conform to Paul’s intentions by erroneously granting Helen an interest in brokerage accounts and personal and real property. In that probate court action, Patton admitted the Trust Amendment did not reflect Paul’s intention that his brokerage accounts and personal and real property be divided among his children. Stephen and David settled the probate court action with Helen. The children filed the legal malpractice action, alleging that Patton failed to exercise reasonable care in performing legal services by failing to draft the Trust Amendment in a manner consistent with the decedent’s intentions. The trial court dismissed. The court of appeal reversed. The trial court erred in concluding as a matter of law that the children could not establish Patton owed them a duty as beneficiaries; they should be permitted to amend their complaint to allege such a duty. View "Paul v. Patton" on Justia Law

Municipal Workers Compensation Fund, Inc. ("the Fund"), appealed a circuit court's order denying the Fund's motion to vacate a judgment entered on an arbitration award. The Fund entrusted the management and investment of approximately $50 million in assets to Morgan Asset Management, Inc. ("MAM"), and Morgan Keegan & Company, Inc. ("Morgan Keegan"). MAM served as an investment advisor for a managed account and certain mutual funds owned by the Fund. Morgan Keegan served as the broker-dealer for the Fund's managed account and had the authority as the broker-dealer to execute transactions in that account as directed by the Fund. A second account at Morgan Keegan held the mutual funds that had been sold to the Fund through a Morgan Keegan broker. The Fund stated that it directed MAM and Morgan Keegan to invest its funds conservatively and that it relied on MAM and Morgan Keegan for sound financial advice and management. However, according to the Fund, MAM and Morgan Keegan disregarded this mandate by recommending that the Fund purchase and hold what the Fund says were unsuitable investments, by overconcentrating the Fund's assets in investments that had undue exposure to the sub-prime mortgage market and in other risky investments, and by misrepresenting and failing to disclose material facts pertaining to the investments. The Fund claims that it sustained losses in excess of $15 million in 2007 and 2008 as a result of the actions of MAM and Morgan Keegan. The Fund initiated arbitration proceedings against MAM and Morgan Keegan by filing a statement of claim with the Financial Industry Regulatory Authority ("FINRA") pursuant to the arbitration provision contained in its contracts with MAM and Morgan Keegan, asserting claims of breach of fiduciary duty; breach of contract; negligence; fraud; violations of NASD and NYSE Rules; and violations of the Alabama Securities Act. Upon review, the Supreme Court concluded from the admissible evidence entered at trial, the Fund established an evident partiality on the part of one of the arbitrators, and that the Fund was entitled to have the judgment entered on the arbitration award vacated. The Court remanded the case for further proceedings. View "Municipal Workers Compensation Fund, Inc. v. Morgan Keegan & Co." on Justia Law

Plaintiffs were represented by defendant attorneys in an action against State Farm arising out of the 1994 Northridge earthquake. Court-appointed retired judges presided over a 1997 aggregate settlement. In 2012, one of the plaintiffs conducted a random sampling of other plaintiffs’ awards in the action, which, they claimed, revealed that the defendants had not properly disbursed or accounted for the settlement funds and had concealed this conduct from plaintiffs. Plaintiffs sought damages for failure to obtain their informed consent to an aggregate settlement and misappropriation of and failure to account for the settlement funds. The trial court dismissed, finding the claims based on speculation and barred by the statute of limitations. The court of appeal affirmed, rejecting arguments that the statute of limitations had not run under Probate Code section 16460 because they had no notice of wrongdoing and that actions for violations of Business and Professions Code section 6091 in failing to provide an accounting are not barred because their action was filed within one year of failure to comply with the statute. Where there are facts sufficient to put one on inquiry notice, the fraud statute of limitations starts running even when the defendant is a fiduciary. View "Britton v. Girardi" on Justia Law

Plaintiff, a New Jersey resident who was admitted to the practice of law in New York, maintained her only law office in New Jersey. When Plaintiff learned of the statutory requirement that nonresident attorneys must maintain an office within New York in order to practice in the State under N.Y. Jud. Law 470, Plaintiff commenced this action alleging that Judiciary Law 470 violated the Privileges and Immunities Clause of the U.S. Constitution. The U.S. Court of Appeals for the Second Circuit asked the New York Court of Appeals to set forth the minimum requirements necessary to satisfy the mandate that nonresident attorneys maintain an office within the State “for the transaction of law business” under Judiciary Law 470. The Court of Appeals answered by holding that the statute requires nonresident attorneys to maintain a physical office in New York. View "Schoenefeld v. State" on Justia Law

Ronald Hines was a Texas-licensed veterinarian who practiced since the mid-1960s. He worked mainly in traditional veterinary practices until he retired in 2002. After his retirement, he founded a website and began to post articles about pet health and care. These general writings soon turned to more targeted guidance and, as he acknowledged in his complaint, he began “to provide veterinary advice to specific pet owners about their pets.” This advice was given via email and telephone calls, and Hines “never physically examine[d] the animals that are the subject of his advice,” though he did review veterinary records provided by the animal owners. Texas required veterinarians to conduct a physical examination of an animal or its premises before they can practice veterinary medicine with respect to that animal. In 2012, the Texas Board of Veterinary Medical Examiners informed Hines that by providing veterinary advice without a physical examination, he had violated Texas law. Hines eventually agreed to: abide by the relevant state laws, including the physical examination requirement, one year of probation; a stayed suspension of his license; a $500 fine; and to retake the jurisprudence portion of the veterinary licensing exam. Hines thereafter filed suit in federal court, seeking declaratory and injunctive relief. He argued that the physical examination requirement violates his First Amendment right to free speech as well as his rights under the Due Process and Equal Protection Clauses of the Fourteenth Amendment. The Board moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). The district court granted the Board’s motion in part and denied it in part. With respect to the equal protection claim, the court concluded that because the law did not discriminate on the basis of any suspect classification, the count was evaluated pursuant to rational basis review, and held that the physical examination requirement passed that deferential standard. The court dismissed Hines’s substantive due process claim for similar reasons. The district court denied the motion to dismiss the First Amendment claims. It recognized that states have broad power to regulate professionals, but determined that because the physical examination requirement “regulate[s] professional speech itself,” it is subject to the First Amendment. Relying on federal Supreme Court precedent, the district court held that Hines had stated a plausible claim that the Board had infringed his First Amendment rights. The Board moved to certify for interlocutory review the district court’s order. The issue this case presented for the Fifth Circuit's review thus centered on whether Hines' First or Fourteenth Amendment rights were violated. The Court concluded it offends neither, reversing the district court’s denial of the defendants’ motion to dismiss the plaintiff’s First Amendment counts and affirming the district court’s granting of the defendants’ motion to dismiss the plaintiff’s Fourteenth Amendment counts. View "Hines v. Alldredge" on Justia Law

The Georgia Supreme Court granted certiorari to the Court of Appeals in “Fisher v. Gala,” (754 SE2d 160 (2014)) to determine if that the appellate court properly held that, in a professional malpractice action, when a plaintiff files a complaint accompanied by an affidavit from a person not competent to testify as an expert in the action, OCGA 9-11-9.1 (e) permits the plaintiff to cure this defect by filing an amended complaint with the affidavit of a second, competent expert. Finding that the Court of Appeals was correct in holding that the pleading could be so amended, the Supreme Court affirmed the Court of Appeals’ judgment. View "Gala v. Fisher" on Justia Law