Justia Professional Malpractice & Ethics Opinion Summaries

Plaintiffs sought to enjoin enforcement of Senate Bill 1172, which banned state-licensed mental health providers from engaging in "sexual orientation change efforts" ("SOCE") with patients under 18 years of age, because it violated the First Amendment and infringed on several other constitutional rights. Undertaking plenary review, the court held that SB 1172 was a regulation of professional conduct and, therefore, did not violate the free speech rights of SOCE practitioners or minor patients under rational basis review. The court also held that the statute was neither vague nor overbroad and did not violate parents' fundamental rights. Accordingly, the court reversed the order granting preliminary relief in Case No. 13-15023 and affirmed the denial of preliminary relief in Case No. 12-17681. View "Pickup, et al. v. Brown, Jr., et al." on Justia Law

Lamesa filed suit against Liberty Mutual alleging that Liberty Mutual was liable under a federally-required surety bond for the alleged misconduct of its principal, a trustee in a Chapter 7 bankruptcy proceeding. On appeal, Liberty Mutual appealed the district court's decision to affirm the bankruptcy court's judgment that the trustee had committed gross negligence and Liberty Mutual, as the trustee's surety, was liable for damages under the terms of the bond. The court held that the controlling limitations period in this case was provided by 11 U.S.C. 322(d). Because Liberty Mutual did not contest that Lamesa's claim was timely under that provision, the court affirmed the bankruptcy court's conclusion that Lamesa's suit was not time-barred. On the merits, the court concluded that the bankruptcy court's finding that the trustee was grossly negligent in performing her duties was not clearly erroneous; expert testimony was not necessary to establish that the trustee failed to meet her standard of care; and Liberty Mutual failed to demonstrate that the district court's damage award was clearly erroneous. Accordingly, the court affirmed the judgment of the district court. View "Liberty Mutual Ins. Co. v. USA by Lamesa National Bank" on Justia Law

Bank of America lost approximately $34 million when the Knight companies went bankrupt. BOA sued, claiming that Knight’s directors and managers looted the firm and that its accountants failed to detect the embezzlement. The district court dismissed. The accountants invoked the protection of Illinois law, 225 ILCS 450/30.1, which provides that an accountant is liable only to its clients unless the accountant itself committed fraud (not alleged in this case) or “was aware that a primary intent of the client was for the professional services to benefit or influence the particular person bringing the action” The court found that BOA did not plausibly allege that the accountants knew that Knight’s “primary intent” was to benefit the Bank in alleging that the accountants knew that Knight would furnish copies of the financial statements to lenders. The Seventh Circuit affirmed, noting BOA’s choice not to pursue its claims in the bankruptcy process. View "Bank of America, N.A. v. Knight" on Justia Law

The Kivers retained C&T, an Illinois law firm, to prepare trusts to benefit their daughters, Diane and Maureen, among others. Maureen and Diane each served as trustee of various trusts. Maureen died in 2007. Her husband, Minor, represents Maureen’s estate, which filed suit against C&T, alleging that C&T failed to disclose the existence and terms of certain trusts to Maureen, to her detriment, and failed to make distributions to her. The estate filed a separate state court suit against Diane, alleging that Diane breached her duties as trustee by failing to disclose the existence of certain trusts to Maureen or make distributions to her. Diane was a client of C&T during the relevant period. The district court entered an agreed protective order governing discovery disclosure to deal with privilege issues and denied the estate’s motion to compel production. The estate violated the protective order. The district court imposed sanctions and dismissed several of the estate’s claims. The Seventh Circuit affirmed, stating that “The complexity of the multiple trusts … the untimely death of Maureen, the pursuit of concurrent state and federal suits … the length of this litigation, and the disorderly nature of the estate’s presentation… evoke a middle installment of Bleak House." View "Scott v. Chuhak & Tecson, PC" on Justia Law

These appeals arose out of LJL's exercise of its contractual option to purchase Pitcairn's ownership stake in a jointly owned high-rise luxury residential building in New York City, after which the parties pursued an arbitration to determine the value of the property. Both parties subsequently appealed from the district court's judgment. In LJL's appeal, the court agreed with its contention that the arbitrator's exclusion of Pitcairn's hearsay exhibits was within the arbitrator's authorized discretion and, therefore, vacated the district court's order overturning the arbitrator's determination of the Stated Value. The court agreed with the district court's conclusion that the arbitrator acted in accordance with the terms of the arbitration agreement in refusing to determine the Purchase Price and, therefore, remanded with instructions to confirm the arbitration award in its entirety. In Pitcairn's appeal, the court found no error in the district court's dismissal of Pitcairn's claims for breach of fiduciary duties and breach of the covenant of good faith and fair dealing. Accordingly, the court affirmed the judgment. View "LJL 33rd Street Associates, LLC v. Pitcairn Properties Inc." on Justia Law

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