Justia Professional Malpractice & Ethics Opinion Summaries

Stern represented Allen in a discrimination suit, after which they became romantically involved. Allen and her husband had separated and had executed a settlement agreement awarding Allen $95,000, to be paid in installments. A month later, Allen visited a bankruptcy attorney, Losey, giving Stern’s name as “friend/referral” on an intake form. In filing for bankruptcy, Allen did not disclose the marital settlement. While her bankruptcy was pending, Allen received the money. A month after her bankruptcy discharge, Allen transferred the settlement proceeds to Stern, who opened a CD in his name. The attorney for Allen’s ex-husband informed the bankruptcy trustee that Allen failed to disclose the settlementand the discharge was revoked. Allen pleaded guilty to making a false declaration in a bankruptcy proceeding, 18 U.S.C. 152(3). She told a grand jury that Stern had not referred her to Losey and was convicted of making a material false statement in a grand jury proceeding, 18 U.S.C. 1623. The court admitted Losey’s client-intake form as evidence of perjury. Stern was convicted of conspiring to commit money laundering, 18 U.S.C. 1956(h). The Seventh Circuit affirmed Allen’s conviction, holding that the intake form was not a communication in furtherance of legal representation and was not subject to attorney-client privilege. Reversing Stern’s conviction, the court held that the judge erred in excluding Stern’s testimony about why he purchased the CDs. View "United States v. Stern" on Justia Law

Plaintiff sought to open a Victoria's Secret franchise and sought assistance from Richard Domingo, an employee of Rekomdiv International. At the recommendation of Domingo, Plaintiff retained the law firm of Venable, LLP to assist him in establishing a business relationship with Victoria's Secret. Plaintiff paid Venable a $400,000 retainer fee, and paid $225,000 to Rekomdiv. Plaintiff later discovered Victoria's Secret franchise was not available. Plaintiff sued Rekomdiv and Domingo for breach of contract and dolo. The jury found in favor of Plaintiff and assessed damages in the amount of $625,000. In the meantime, Plaintiff sued Venable, and the parties settled. The court later found that it could not offset the damages award in the Rekomdiv suit by the Venable settlement amount. While their appeal was pending in this matter, Rekomdiv and Domingo filed a legal malpractice suit against Lamboy, their trial counsel. The district court dismissed the complaint against Lamboy. The First Circuit Court of Appeals (1) affirmed the district court's denial of offset of the damages award, as offset was not required; and (2) affirmed the court's dismissal of the legal malpractice suit, holding that the allegations in the complaint failed to establish the causation element necessary to make out a plausible legal malpractice claim. View "Portugues-Santana v. Rekomdiv Int'l, Inc." on Justia Law

Carpenter sued Flint, a councilwoman and the mayor, based on Carpenter’s termination from his position as Director of Transportation, asserting age and political discrimination, breach of contract, wrongful discharge, gross negligence, defamation, and invasion of privacy. Defendants argued that the complaint failed to identify which claims were alleged against which defendants, and that the allegations were “excessively esoteric, compound and argumentative.” Carpenter did not respond by the court’s deadline, and about five weeks later, a stipulated order entered, permitting Carpenter to file an amended complaint by April 21, 2011. Counsel manually filed an amended complaint on May 20, 2011, violating a local rule requiring electronic filing. The clerk accepted the filing, but issued a warning. Carpenter failed to timely respond to a renewed motion to strike. Carpenter responded to a resulting show-cause order, but failed to abide by local rules. Another warning issued. Carpenter’s response to a second show-cause order was noncompliant. The court warned that “future failure to comply … will not be tolerated.” After more than five months without docket activity, the court dismissed. The Sixth Circuit reversed. Defendants bore some responsibility for delays and the length of delay does not establish the kind of conduct or clear record warranting dismissal; lesser sanctions were appropriate. View "Carpenter v. City of Flint" on Justia Law

Petitioner, an energy trader, challenged FERC's order to pay a $50,000 civil penalty because petitioner had made false statements and material omissions in forms he filed with the Commission and a market operator the Commission regulates. The court agreed with FERC that petitioner's admissions supported summary disposition without a hearing; because petitioner's actions were worse than careless, FERC reasonably concluded that he violated Market Behavior Rule 3; petitioner's arguments under the Administrative Procedure Act (APA), 5 U.S.C. 500 et seq., were without merit; and petitioner failed to show that FERC increased his penalty to promote general deterrence. Accordingly, the court denied the petition for review. View "Kourouma v. FERC" on Justia Law

Plaintiff, an attorney, filed suit against the Judge Advocate General (JAG) of the Navy and others, alleging violation of his constitutional rights in an administrative decision which suspended him from practice before naval courts. The disciplinary proceedings stemmed from plaintiff's filing of an appellate brief containing statements he knew were false and misleading. The court concluded that the district court did not err in holding that the Navy JAG had authority to discipline plaintiff; plaintiff received ample due process and his Fifth Amendment rights were not violated during the proceedings against him; and the record did not support plaintiff's Administrative Procedure Act (APA), 5 U.S.C. 551, 701, and 706, claim. Accordingly, the court affirmed the district court's dismissal of plaintiff's claims and denied his request for mandamus review. View "Partington v. Houck, et al." on Justia Law

In 1998, Hedstrom married Kotter, a real estate agent. The marriage lasted two years, but the two were on good terms when Hedstrom died. There is no evidence that Hedstrom lacked mental capacity. In 2006 Hedstrom purchased two Chicago condominiums. Kotter acted as his real estate agent and Geldes acted as his real estate attorney. Kotter told Geldes that Hedstrom would take title in another name and that Hedstrom could not hear over a phone so she would answer questions for him. Hedstrom died in 2007. Hedstrom’s children from a prior marriage were appointed administrators. Title to one condominium vested fully in Kotter, the other was titled to the Kotter Family Trust. The administrators sued, alleging breach of fiduciary duty by a real estate agent and legal malpractice. Because the administrators failed to timely identify experts, the magistrate barred them from presenting expert testimony encompassing Kotter’s position as a real estate agent and Geldes’ position as an attorney. The district judge affirmed and the administrators did not appeal. The district court granted summary judgment because expert testimony was needed on the standard of care and because undisputed evidence demonstrated the units were titled in accordance with Hedstrom’s intent. The Seventh Circuit affirmed. View "Ball v. Kotter" on Justia Law

Plaintiffs filed a putative class action seeking to hold ProShares liable for material omissions and misrepresentations in the prospectuses for certain exchange-traded funds (ETFs) under the Securities Act of 1933, 15 U.S.C. 77k and 77o. Plaintiffs alleged that registration of statements omitted the risk that the ETFs, when held for a period of greater than one day, could lose substantial value in a relatively brief period of time, particularly in periods of high volatility. The district court concluded that the disclosures at issue accurately conveyed the specific risk that plaintiffs asserted materialized. The court agreed with the district court's conclusion that the relevant prospectuses adequately warned the reasonable investor of the allegedly omitted risks. View "In Re: ProShares Trust Sec. Litig." on Justia Law

In 1968 French founded a successful manufacturing firm that he sold, in 1996, for about $200 million. French executed interlocking irrevocable trusts to benefit his four children upon his death. In 2004 he moved the trust accounts to Wachovia Bank. The trusts held two whole life insurance policies. Wachovia replaced the policies with new ones, providing the same benefit for a significantly lower premium, after months of evaluation and consultation with French and his lawyers. Wachovia received a hefty but industry-standard commission for its insurance-brokerage affiliate. French’s adult children sued Wachovia for breach of fiduciary duty by self-dealing. The district court rejected the claim, based on the trust document’s express conflict-of-interest waiver, and held that the transaction was neither imprudent nor undertaken in bad faith. The court ordered the Frenches to pay the bank’s costs and attorney’s fees. The Seventh Circuit affirmed. The trust documents gave Wachovia broad discretion to invest trust property without regard to risk, conflicts of interest, lack of diversification, or unproductivity. The trust instrument overrides the common-law prohibition against self-dealing and displaces the prudent-investor rule. While there is always a duty to administer the trust in good faith, there was no evidence that the bank acted in bad faith. View "French v. Wachovia Bank, N.A." on Justia Law

Plaintiffs, former Lehman employees, filed suit alleging that defendants, members of the Benefits Committee, and the company's Directors, breached their duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. In regards to plaintiffs' claims that the Benefits Committee Defendants breached their duty of prudence in managing the company's employee stock ownership plan (ESOP), the court concluded that plaintiffs have not rebutted the Moench v. Robertson presumption because they failed to allege facts sufficient to show that the Benefits Committee Defendants knew or should have known that Lehman was in a "dire situation" based on information that was publicly available during the class period. In regards to plaintiffs' claims that the Benefits Committee Defendants breached their duty of disclosure, the publicly-known information available to defendants did not give rise to an independent duty to investigate Lehman's SEC filings prior to incorporating their content into a summary plan description issued to plan-participants. The court affirmed the district court's dismissal of plaintiffs' remaining claims. View "In Re: Lehman Bros. ERISA Litig." on Justia Law

Plaintiff brought a class action suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., alleging various breaches of fiduciary duty to plan participants. The district court dismissed the complaint for failure to state a claim. The court concluded that the district court correctly dismissed Counts I and IV of the amended complaint which alleged that Idearc Defendants breached their fiduciary duties by allowing plan participants to buy and hold Idearc stock when it was no longer prudent to do so where the amended complaint failed to allege sufficient facts to overcome the "presumption of prudence" the court adopted in Kirschbaum v. Reliant Energy Inc. The court also concluded that the district court correctly dismissed plaintiff's claim for inaccurate disclosures and nondisclosures (Count II) where plaintiff alleged no specific circumstance or specific injury mandating the Idearc Defendants disclose non-public information to plan participants and no general duty to disclose non-public information existed under ERISA or under the court's precedents. The court affirmed the district court's dismissal of plaintiff's remaining claims. View "Kopp v. Klein, et al." on Justia Law