Justia Professional Malpractice & Ethics Opinion Summaries

Dr. Michael Brandner’s hospital privileges at Providence Alaska Medical Center were revoked after he violated hospital policy by failing to disclose an order from the Alaska State Medical Board that he undergo an evaluation of his fitness to practice medicine. Brandner appealed to the hospital’s Fair Hearing Panel and Appellate Review Committee, but the termination was upheld. Brandner filed suit against the hospital and several doctors involved in the termination proceedings, alleging breach of contract and denial of due process. The superior court granted summary judgment in favor of the individual doctors because they were immune from suit. Finding that the executive committee and hearing panel reasonably interpreted the policy, the Supreme Court found Brandner did not raise any material evidence tending to show that the executive committee and hearing panel were motivated by malice. As such, the Court affirmed the superior court's order dismissing Brandner's claims against the individual doctors. View "Brandner v. Bateman" on Justia Law

In 1973, Doe organized his medical practice as a “professional association,” a type of corporation doctors are permitted to form under New Jersey law. Since its creation, Doe has operated his practice through that entity. As of 2011, the entity employed six people. The government alleges that Doe entered into an illicit agreement with OTE, a blood laboratory, whereby it paid him monetary bribes for referring patients to it for blood testing. A grand jury subpoena was served on the entity’s custodian of records, directing it to turn over documents, including records of patients referred to OTE, lease and consulting agreements, checks received by it for reasons other than patient treatment, correspondence regarding its use of OTE, correspondence with specified individuals and entities, and basic corporate records. The district court denied Doe’s motion to quash. Doe persistently refused to let the entity comply; the court found it in civil contempt. Meanwhile, the entity fired its employees and hired independent contractors, tasked with “[m]aint[aining] accurate and complete medical records, kept in accordance with HIPAA and Patient Privacy standards,” and assisting with billing practices. The Third Circuit affirmed, agreeing that Supreme Court precedent indicated that corporations may not assert a Fifth Amendment privilege, and that the subpoena was not overbroad in violation of the Fourth Amendment. View "In Re: The Matter Of The Grand Jury" on Justia Law

Respondent Timothy O’Meara appealed a superior court order granting summary judgment against him and his law firm, O’Meara Newborn, PLLC, in an action brought by petitioners James and Anita Conant for the equitable recovery of fees paid to O’Meara. Anita Conant was injured in an automobile accident. James Conant retained O’Meara to represent the Conants in a personal injury suit arising out of the accident. He executed a contingent fee agreement providing, in part, “that O’Meara would be paid 33.33% of the gross amount recovered.” Despite knowing that he did not have authority to settle for policy limits, O’Meara informed opposing counsel that he believed the suit was “a policy limits case” and had been instructed “to proceed to trial” if the policy limits were not paid. After expressing concern over O’Meara’s unauthorized demand to settle, James Conant suggested that O’Meara reduce his fee. The parties discussed what O’Meara’s fee should be if the case settled for the policy limits: O’Meara offered to reduce his potential fee from $3.67 million to $3.17 million, which angered James Conant. O'Meara “told the Conants that if they terminated his services, he would sue them for his one-third contingency fee and ‘would win.’” Eventually the parties modified the original fee agreement, initialing handwritten changes indicating that O’Meara’s fee was “to be negotiated.” The dispute over fees continued, and on the day of a scheduled mediation in federal court in Pennsylvania, O’Meara informed the Conants at the courthouse “that he would not proceed with the mediation unless he received at least a $2 million fee.” James Conant felt he had no choice but to sign a memorandum agreeing to that fee. O’Meara negotiated an $11.5 million settlement subject to certain contingencies. After the mediation, the Conants dismissed O’Meara and the case settled for $11.5 million. The Conants and O’Meara agreed that the Conants would pay O’Meara an undisputed fee of $750,000, place $1,250,000 in escrow, and arbitrate the issue of how this amount should be divided.” An arbitration panel awarded O’Meara $837,000 of the escrow. Counsel for the Conants filed a grievance with the Attorney Discipline Office (ADO) alleging ethical violations by O’Meara. The ensuing disciplinary proceeding culminated with an order disbarring him. In appealing the superior court's order disgorging O'Meara of the $837,000 in fees he received at the end of arbitration, O’Meara argued that the trial court erred in: (1) permitting petitioners to relitigate matters determined in the prior arbitration; (2) failing to find the petitioners’ action barred by the statute of limitations; and (3) ordering fee forfeiture. The Supreme Court affirmed in part and reversed in part: "we cannot say that the trial court’s order to disgorge the entire $837,000 award, as opposed to some lesser amount, constitutes an unsustainable exercise of discretion. [. . .] the fraud on the tribunal doctrine does not apply to the Conants’ claim for forfeiture of the $750,000 they paid O’Meara prior to arbitration. [. . .] the arbitrators 'were only tasked with considering whether O’Meara was entitled to a disputed portion of fees.' We fail to see how fraud on a tribunal can justify avoiding the time-bar of a claim not before that tribunal." The Court reversed the trial court’s award of the $750,000 paid prior to arbitration. The Court affirmed in all other respects. View "Conant v. O'Meara" on Justia Law

Plaintiffs and their older brother, Kenneth Stuart, Jr. (Kenneth) were the children of Kenneth Stuart, Sr. (Stuart). When Stuart died, Plaintiffs filed a complaint alleging that Kenneth, who became an estate fiduciary, unduly influenced Stuart and breached numerous fiduciary duties owed to them as estate beneficiaries. Throughout much of Plaintiffs’ litigation against Kenneth, Kenneth engaged Defendant as a certified public accountant. Ultimately, the trial judge ruled against Kenneth and awarded monetary damages to Stuart’s estate. Plaintiffs then commenced the present action against Defendant alleging that Defendant prepared inaccurate and misleading financial statements that facilitated the misappropriation of estate funds by Kenneth. The trial court granted summary judgment in favor of Defendant. The Appellate Division reversed in part and remanded. The Supreme Court reversed, holding that Plaintiffs, in objecting to summary judgment, did not present sufficient counterevidence of their reliance on Defendant’s financial statements or a casual connection between his financial statements and their alleged injuries, as was necessary to demonstrate that a genuine issue of material fact existed on the counts of fraud, negligent misrepresentation, and accounting malpractice. View "Stuart v. Freiberg" on Justia Law

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