Justia Professional Malpractice & Ethics Opinion Summaries

Spehar, hired by CMGT to assist in finding financing for its business, sued CMGT over a dispute related to this agreement and obtained a $17 million default judgment against CMGT, which had no assets. Spehar Capital devised a plan to: force CMGT into bankruptcy; convince the bankruptcy trustee to bring a malpractice action against CMGT’s law firm on the theory that but for the firm’s negligence, Spehar would not have obtained the default judgment; win the malpractice action or force a settlement; obtain a share of the payment to the bankruptcy estate. The bankruptcy trustee sued CMGT’s law firm, Mayer Brown. The district court granted Mayer Brown summary judgment, reasoning that the doctrine of judicial estoppel barred the inconsistencies in the suit, based on undisputed facts. The Seventh Circuit affirmed. If the trustee were to prevail, there would be a clear impression that a court was misled. It would be “absurd” for Spehar to recover when proving the causation element of malpractice would require the trustee to prove that Spehar was not entitled to prevail in the earlier suit. View "Grochocinski v. Mayer, Brown, Rowe & Maw, LLP" on Justia Law

Plaintiff appealed from the district court's dismissal of his amended complaint, which alleged that FXDD engaged in dishonest and deceptive practices in managing its online foreign exchange trading platform in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c), and New York General Business Law 349(h), and 350. Plaintiff also alleged breach of contract and of the implied covenant of good faith and fair dealing. The court concluded that, at this stage, some part of the underlying transaction occurred in New York State, giving plaintiff statutory standing to sue for deceptive practices and false advertising under sections 349 and 350; because the complaint alleged that FXDD failed to act in good faith and intentionally delayed trades or caused them to fail in order to enrich itself at the expense of its customers, these practices were incompatible with a promise to execute orders on a best-efforts basis and, therefore, the court vacated the dismissal of the breach of contract claim; and the court affirmed the judgment of the district court as to the RICO claim and the claim for breach of the implied covenant of good faith and fair dealing. View "Cruz v. FXDirectDealer, LLC" on Justia Law

Defendant appealed the district court's denial of his 28 U.S.C. 2255 federal habeas corpus petition based upon the Supreme Court's decision in Skilling v. United States, which narrowed the scope of the honest services fraud theory. Defendant,a former attorney and trustee of private trusts, pleaded guilty to honest services fraud. The government conceded that defendant was actually innocent of honest services fraud in light of Skilling, which confined the reach of the offense to cases of bribes and kickbacks. The court vacated the district court's dismissal of defendant's honest services fraud claim where no evidence suggested that defendant either engaged in bribery or received kickbacks. View "United States v. Avery" on Justia Law

FINRA filed a complaint against petitioner, charging that he violated FINRA rules by submitting false expense reports for reimbursement of nonexistent business travel and for a fraudulently purchased cellular telephone. In his petition for review, petitioner argued that the SEC abused its discretion in upholding a lifetime bar based on his violation of the National Association of Securities Dealers (NASD) Conduct Rule 2110. The court remanded to the SEC for further consideration, agreeing with petitioner that the SEC abused its discretion in failing to adequately address all of the potentially mitigating factors that the agency should have considered when it determined the appropriate sanction. View "Saad v. SEC" on Justia Law

In 2010, Plaintiff was negotiating the sale of three limited liability companies of which he was the sole shareholder. The companies were S Corporations. Plaintiff retained an Accounting Firm to advise him on his tax liability from the contemplated sale. Altaview Concrete, one of the companies, was named as the client. Jeffrey Bickel, a partner at the Accounting Firm, advised Plaintiff that he could restructure the deal to reduce his tax liability to $663,000. The buyer agreed to the restructuring proposals, and the sale closed. Later Bickel and the Accounting Firm (collectively, Defendants) discovered they had greatly underestimated Plaintiff's tax liability. Plaintiff filed a professional negligence claim in district court. The district court granted Defendants' motion for summary judgment, finding that Plaintiff's claim failed to satisfy the writing requirement of Utah Code 58-26-602, which provides that accountants are not liable to third parties unless the accountant identified in writing to the client that the professional services were intended to be relief upon by the third party. The Supreme Court reversed, holding that Defendants were liable to Plaintiff as a third party under section 602 because Defendants identified in writing that the professional services were intended to be relied upon by Plaintiff. View "Reynolds v. Bickel" on Justia Law

Plaintiffs, current and former employees of Amgen and AML, participated in two employer-sponsored pension plans, the Amgen Plan and the AML Plan. The Plans were employee stock-ownership plans that qualified as "eligible individual account plans" (EIAPs) under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1107(d)(3)(A). Plaintiffs filed an ERISA class action against Amgen, AML, and others after the value of Amgen common stock fell, alleging that defendants breached their fiduciary duties under ERISA. The court concluded that defendants were not entitled to a presumption of prudence under Quan v. Computer Sciences Corp., that plaintiffs have stated claims under ERISA in Counts II through VI, and that Amgen was a properly named fiduciary under the Amgen Plan. Therefore, the court reversed the decision of the district court and remanded for further proceedings. View "Harris v. Amgen" on Justia Law

Gomberg briefly represented Goyal in 2004 settlement negotiations with a former employer over his claims of retaliation for whistle-blowing and gave Goyal’s employer notice of an attorney lien on any settlement or judgment. The negotiations did not produce an agreement; Goyal later retained new counsel to pursue litigation. In 2009, without the aid of any counsel, Goyal settled with his former employer. After Goyal settled, Gomberg reappeared and demanded a share. The employer paid a portion of the settlement to Gomberg. The district court granted Goyal’s motion to quash the lien, effectively ordering Gomberg to pay Goyal. The Seventh Circuit affirmed, stating that Gomberg is not entitled to any part of the settlement funds Goyal secured and that “Gomberg’s professional conduct is questionable.” His position that he “secured” funds for Goyal when the opposing party made an unacceptable and unaccepted settlement offer is unreasonable to the point of being frivolous and possibly warranting sanctions. Gomberg’s assertion of a lien for $70,000 was far greater than 10 percent of even the employer’s unaccepted (and not yet made) offer of $375,000 and was without basis. View "Goyal v. Gas Tech. Inst." on Justia Law

Tommy Hand sued the Prattville law firm of Howell, Sarto & Howell and William P. Roberts II, an attorney formerly employed by the Howell firm, asserting a claim under the Alabama Legal Services Liability Act based on their alleged negligent representation of him in an action seeking damages for personal injuries he suffered as a result of an automobile accident. The trial court entered a summary judgment in favor of the Howell firm and Roberts; Hand appealed. On appeal, Hand argued that Roberts and the Howell firm committed legal malpractice when they failed to name the Montgomery Advertiser, which Hand labeled "the critical deep-pocket defendant" as a party in Hand's personal injury action. Hand argues that the failure devalued his case to the extent that he had to settle for approximately half of what the case was worth and for an amount significantly less than his actual economic damage, not to mention his pain and suffering. Because there was no evidence indicating, only speculation, that Hand would have been able to settle his injury claim for a higher amount if Roberts and the Howell firm had also named the Montgomery Advertiser as a defendant, the Supreme Court affirmed the grant of summary judgment in favor of Roberts and the firm. View "Hand v. Howell, Sarto & Howell " on Justia Law

The issue before the Supreme Court in this case centered on a jury award of emotional distress and economic damages in a legal malpractice action. Defendant challenged the damages award on the grounds that emotional distress damages were not available in a legal malpractice case and that the award of economic damages equal to the amount plaintiff paid to settle the underlying case was improper because plaintiff failed to establish that the underlying settlement was reasonable. Upon review, the Supreme Court reversed as to the award of emotional distress damages and affirmed as to the economic damages award. View "Vincent v. DeVries" on Justia Law

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