Justia Professional Malpractice & Ethics Opinion Summaries

First National Keystone Bank retained an independent accounting firm to audit its records at a time that members of the bank's management were fraudulently concealing the bank's financial condition. The accounting firm issued a clean audit concerning the bank. It was later discovered that the bank had overstated its assets by over $500 million. Upon investigation, the FDIC concluded that the law firm that represented the bank had engaged in legal malpractice. The FDIC settled its claims against the law firm. The accounting firm was later found liable to the FDIC in federal district court for a negligent bank audit. The accounting firm subsequently sued the law firm, alleging fraud, negligent misrepresentation, and tortious interference with the accounting firm's contract to perform the audit. The circuit court granted summary judgment in favor of the law firm. The Supreme Court affirmed, holding that the claims of the accounting firm against the law firm were, in reality, contribution claims rather than direct or independent claims and were, therefore, barred by the settlement agreement between the law firm and the FDIC. View "Grant Thornton, LLP v. Kutak Rock, LLP" on Justia Law

On Monday afternoon, a sentencing hearing scheduled for Wednesday afternoon was rescheduled to Wednesday morning. The court sent electronic notice; prior notices and filings had been electronic. The attorney failed to appear and, on the same day, the court imposed a fine of $1,500. The First Circuit reduced the fine to $500, noting that the attorney was unwise in his criticism of the lower court when he requested reconsideration and rejecting the attorney's characterization of the fine as criminal contempt. The court noted that it would be better policy to hear from the attorney before imposing the sanction. View "United States v. Romero-Lopez" on Justia Law

Ernie and Karen Cline sued M. Jay Carter for breach of contract after Carter signed a real estate contract with the intent to purchase residential property from the Clines but was unable to do so because he failed to obtain financing approval. Carter filed a third-party complaint against the real estate agent and company that represented him in the transaction (Jones Defendants). The circuit court consolidated the two lawsuits for trial. The jury returned a verdict (1) against Carter and in favor of the Clines on their breach of contract claim, and (2) against the Jones Defendants and in favor of Carter on Carter's negligence claims. The Supreme Court reversed, holding that the circuit court erred by denying Carter's motion for a directed verdict and his subsequent motion for judgment notwithstanding the verdict because there was a condition precedent included in the real estate contract that required Carter to obtain financing for the purchase, which he was unable to do, and as a result, there was no contract. Remanded. View "Carter v. Cline" on Justia Law

Plaintiff Darrell Kasberg farmed piece of property leased from the Wheelers. The Wheelers agreed to loan Plaintiff money, using farmland he owned as collateral. When disagreements arose, the Wheelers threatened to evict Plaintiff from both his land and the leased land. On the day of the eviction trial, Plaintiff told his lawyer from Defendant firm Davis Wright Tremaine, LLP that he would be willing to give up his right to repurchase the leased farmland if the Wheelers would remove a crop lien placed on the land in time for him to meet a planting deadline. Plaintiff's lawyer met with the Wheelers' lawyer and they negotiated an oral settlement agreement. Plaintiff was not present at that meeting. The agreement required (amongst other things) that Plaintiff relinquish any interest or claim of interest in, and surrender possession of his collateral farmland. In exchange, the Wheelers agreed to dismiss their breach of contract action and to remove the lien. Plaintiff would later learn and inform his lawyer that the Wheelers had not removed the lien. This resulted in Plaintiff missing the planting deadline, and he lost an opportunity to receive both money from the sale of the crop and related government subsidies. Plaintiff wished to file an suit against the Wheelers for their handling of the crop lien, and approached his lawyer to handle the case. Though his lawyer lead Plaintiff to believe he would be successful in pursuit of the Wheelers, the lawyer had in reality given bad advice with regard to the statute of limitations that governed Plaintiff's suit. Plaintiff then initiated suit against his former lawyer and Defendant firm, alleging legal malpractice in handling the Wheeler lien dispute. The trial court decided that the facts did not present a genuine issue as to whether Plaintiff knew or should have known before he filed his action, that Defendant had negligently negotiated the oral settlement agreement. The court concluded that Plaintiff's action was thus time-barred. Upon review, the Supreme Court concluded Plaintiff proffered evidence from which a jury could reasonably find that he did not have actual knowledge that his attorney's acts or omissions were a cause of his damages. As such, the Court reversed the trial court's holding and remanded the case for further proceedings. View "Kaseberg v. Davis Wright Tremaine, LLP" on Justia Law

The Board on Judicial Standards charged Judge Gregory Galler with creating an appearance of impropriety during an omnibus hearing in a DWI case, asserting, among other claims, that Judge Galler ordered a criminal defense attorney to write a letter of apology for allegedly impugning the integrity of a police officer during the attorney's oral argument at the omnibus hearing. A hearing panel appointed by the chief justice (1) dismissed the complaint against Judge Galler, finding that the Board failed to prove the allegations by clear and convincing evidence, and (2) denied Judge Galler's motion for attorney fees and costs under Minn. R. Civ. P. 11. The Supreme Court affirmed, holding (1) the panel had the authority to dismiss the case after the Board rested, and the panel did not err in dismissing the complaint; and (2) the panel did not err when it denied Judge Galler's motion for attorney fees and costs. View "In re Judge Galler" on Justia Law

At issue before the Supreme Court was an order of the district court which held that the statute making peer review records privileged applied to a lawsuit brought by a doctor who claimed that a hospital acted in bad faith by refusing to renew a his attending privileges. After a series of reviews of Physician Petitioner Joseph Verska, M.D.'s (Physician) practice initiated in 2004 by St. Alphonsus Regional Medical Center (Hospital) and again in 2006 and 2007, Physician requested a hearing before a Fair Hearing Panel in 2008. In 2009, Physician and the Spine Institute of Idaho (a professional corporation he created) sued the Hospital and two of its doctors (Defendants) alleging that Defendants conspired to wrongfully harm them, intentionally and/or negligently interfered with their economic advantage, interfered with Physician’s prospective contractual relations and business expectations, defamed them, and intentionally and/or negligently inflicted emotional distress upon Physician. In addition to damages, Plaintiffs sought an injunction requiring Hospital to restore Physician’s privileges. During this litigation, Plaintiffs initiated discovery related to the process, activities, and decisions that led to Hospital’s decision to deny Physician’s application to be reappointed to the medical staff and to have his privileges renewed. Hospital objected on the ground that such information was protected by the peer review privilege. Plaintiffs filed a motion seeking to compel discovery, and Defendants sought a motion for a protective order. The district court denied the motion to compel and granted the protective order. The Supreme Court found the peer review statute unambiguous: "the statute states that 'all peer review records shall be confidential and privileged'" not subject to subpoena or discovery proceedings or be admitted as evidence. Accordingly, the Court affirmed the district court's denial of Physician's motion to compel the records' discovery. View "Verska v. St. Alphonsus Regional Med. Ctr." on Justia Law

A real estate agent served as the seller's agent for two sales of the same house. The initial purchaser submitted a bid for the house and, the same day, hired the initial seller's agent to serve as seller's agent for the second sale. A few days later, the agent convinced the initial seller to accept the initial purchaser's bid without disclosing his conflict of interest or the purchaser's interest in flipping the house. After one day of trial concerning the initial seller's complaint against the agent alleging, inter alia, breach of fiduciary duties, the trial judge granted defendant's motion for a directed verdict. The court held that because plaintiff raised issues of material fact concerning whether defendant breached his fiduciary duties to the seller, the court remanded the case for a new trial. View "Estate of Eller v. Bartron" on Justia Law

Plaintiff filed a charge with the EEOC accusing her employer, the Department of the Navy, of discriminating on account of race, sex, national origin, age, and disability. The EEOC found the charge unsupported. In the district court, neither party conducted discovery. Plaintiff sought judgment on the pleadings. The district judge denied the motion. After more than a year of inaction, the district judge dismissed the case for want of prosecution. Plaintiff's lawyer then filed an ex parte motion for relief from judgment, but did not serve the motion on his adversary or explain why a secret motion was authorized. The district judge denied the motion. Seventh Circuit affirmed, rejecting an argument that Local Rule 41.1 (the basis for dismissal for want of prosecution) violates the due process clause as "almost unintelligible." The court characterized the appeal as frivolous, stating that It bypassed the only possible argument:that the district judge abused his discretion by dismissing the suit without first warning about the risks of procrastination. The court gave plaintiff's attorney 21 days to show cause why he should not be subject to monetary sanctions for filing a frivolous appeal and violating Circuit Rule 30, and why he should not be censured, suspended, or disbarred on account of his apparent inability to practice competently and diligently in the federal courts. View "Sambrano v. Mabu" on Justia Law

The Mississippi Commission on Judicial Performance filed a formal complaint against Judge Teresa Brown Dearman for violating Canons 1 (charging judges to establish, maintain, and enforce high standards of conduct to uphold the integrity of the judiciary), 2A (charging judges to act at all times in a manner that promotes public confidence in the integrity and impartiality of the judiciary), 2B (charging judges to avoid lending the prestige of their office to advance the private interests of others), and 3B(2) (charging judges to be faithful to the law and not to be swayed by partisan interests), when she initiated a telephone call to a circuit court judge in Florida. The Commission averred that Judge Dearman reached the voice mailbox of the Florida judge's judicial assistant, identified herself as a judge in Mississippi, and recommended that bond be set for a longtime friend and criminal defendant. It further averred that Judge Dearman personally guaranteed the defendant’s appearance if bond was granted. The Commission recommended that Judge Dearman be publicly reprimanded and ordered to pay $100 in costs, but the Supreme Court found the recommendation insufficient. The Court ordered that Judge Dearman be suspended from office for thirty days without pay in addition to a public reprimand and costs of $100. View "Mississippi Comm'm on Judicial Performance v. Dearman" on Justia Law

Appellants brought various claims before Financial Industry Regulatory Authority (FINRA) arbitrators against Ameriprise, a financial-services company, for, inter alia, breach of fiduciary duty, breach of contract, fraud, and negligent misrepresentation related to the decline in value of various financial assets owned by appellants and managed by Ameriprise. Ameriprise answered appellants' FINRA complaint by asserting, principally, that appellants released their claims by operation of a settlement agreement in a class-action agreement suit that had proceeded between 2004 and 2007 in the United States District Court for the Southern District of New York. After FINRA arbitrators denied Ameriprise's motion to stay appellants' arbitration, Ameriprise moved in the district court, in which the class action had been litigated and settled, for an order to enforce the settlement agreement that would enjoin appellants from pressing any of their claims before FINRA arbitrators. The district court concluded that the class settlement barred all of appellants' arbitration claims and therefore granted Ameriprise's motion and ordered appellants to dismiss their FINRA complaint with prejudice. The court held that the district court had the power to enter such an order and that several of appellants' arbitration claims were barred by the 2007 class-action settlement. Therefore, the court affirmed in part. But because the court concluded that appellants' arbitration complaint plead claims that were not, and could not have been, released by the class settlement, the court vacated in part the district court's judgment, and remanded the case for the entry of an order permitting the non-Released claims to proceed in FINRA arbitration. The court dismissed as moot appellants' appeal from the district court's denial of their motion for reconsideration. View "In Re: American Express Finance Advisors Securities Litigation" on Justia Law