THIS WEEKS CASES IN LEGAL MALPRACTICE

A World Wide Conspiracy and Legal Malpractice

Reading this case, in which there is an ancillary legal malpractice case, reminded us of the ubiquitous nature of legal malpractice.  This case, ELIOT I. BERNSTEIN, et al., Plaintiffs, - against - STATE OF NEW YORK, et al., Defendants.07 Civ. 11196 (SAS);  UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK  2008 U.S. Dist. LEXIS 61269August 8, 2008, Decided   August 8, 2008, Filed  makes for fascinating reading.  Just look how it starts:
 
Plaintiff: "This action presents a dramatic story of intrigue, car bombing, conspiracy, video technology, and murder. In short, plaintiffs allege that hundreds of defendants engaged in a massive conspiracy to violate their civil rights and, in the process, contributed to the Enron bankruptcy and the presidency of George W. Bush. In plaintiffs' words:
Plaintiffs depict a conspiratorial pattern of fraud, deceit, and misrepresentation, that runs so wide and so deep, that it tears at the very fabric, and becomes the litmus test, of what has come to be known as free commerce through inventors' rights and due process in this country, and in that the circumstances involve inventors' rights tears at the very fabric of the Democracy protected under the Constitution of the United States."

Defendants: " For many years, pro se Plaintiffs Eliot I. Bernstein and Plaintiff Stephen Lamont have engaged in a defamatory and harassing campaign . . . alleging an immense global conspiracy . . . . Although largely unintelligible, the  [*3] [Amended Complaint] purports to describe a fantastic conspiracy among members of the legal profession, judges and government officials and private individuals and businesses to deprive plaintiffs of what they describe as their "holy grail" technologies"

Whistleblower Legal Malpractice?

We often remark that legal malpractice may be found everywhere, and in many an unusual circumstance.  The "Big Dig?"  Sure.  Here is a story from NY Lawyer about a whistle blower whose case was overlooked:

"A would-be whistle blower is suing Washington-based firm Phillips & Cohen in the U.S. Court for the District of Massachusetts for allegedly failing to pursue his false claims case against a contractor to the state's massive "Big Dig" highway project.

According to the lawsuit for legal malpractice and breach of contract, the plaintiff claimed that he entered into a contract with Phillips & Cohen and attorney Peter W. Chatfield around June 2000. The plaintiff alleged that the firm failed to pursue his case for several years, also that he "did not discover that he had suffered any damages or losses resulting" from Phillips & Cohen's lack of action until September 2006. Johnston v. Chatfield, No. 1:08-cv-11219-WGY (D. Mass.)
The plaintiff is a former employee of asphalt and concrete supply company Aggregate Industries Northeast Region Inc.

In July 2007, the company pleaded guilty and agreed to pay $50 million to settle criminal and civil charges related to a fraudulent scheme involving concrete. Aggregate agreed to provide up to $75 million in insurance coverage for maintenance problems related to the scheme. "
 
Legal Malpractice and Compelled Settlements

Matrimonial law is rife with questions of legal malpractice.  As in most spheres of the law, settlements take place in the majority of cases.  The general rule in legal malpractice is that one may sue the attorney after a settlement if the settlement was "effectively compelled" by the actions of the attorney.  Here is a case which seem to have arisen after the attorney sued for fees.Steven L. Levitt & Assoc., P.C. v Balkin ;2008 NY Slip Op 06640 Decided on August 19, 2008 Appellate Division, Second Department .
 
"The Supreme Court should have denied that branch of the motion of the plaintiff/counterclaim defendant and the additional counterclaim defendant (hereinafter together the respondents) which was for summary judgment dismissing the appellants' first counterclaim alleging legal malpractice, based upon allegations that the respondents misrepresented the scope of the oral stipulation of settlement in the related civil action, and that the settlement of the related civil action was not knowingly and voluntarily made. The respondents made a prima facie showing of entitlement to judgment as a matter of law by submitting evidentiary proof, in the form of the transcript of the aforementioned oral stipulation (see Pacella v Whiteman Osterman & Hanna, 14 AD3d 545; Malarkey v Piel, 7 AD3d 681; Laruccia v Forchelli, Curto, Schwartz, Mineo, Carlino & Cohn, 295 AD2d 321). In response, the appellants raised a triable issue of fact as to whether or not they in fact voluntarily and knowingly entered into the terms of the stipulation, specifically with respect to Ronald's receipt of a credit in the sum of only $500,000, rather than in the sum of $937,000, from Karen's share of her equitable distribution award. The appellants raised a triable issue of fact by showing that Ronald, in response to a question posed by the court during the proceeding in which the stipulation was placed on the record, changed his response from "no" to "yes," when asked by the court if he understood that it would "not entertain any setting aside of the [settlement] without a showing of extreme circumstances." Ronald explained, in an affidavit, that he changed his answer at the explicit instruction of his attorney, Steven L. Levitt, the plaintiff's principal. This change in his answer was allegedly based upon statements in the record that the settlement of the related civil action would "be effective as of the date of execution of the documents," and not the date of the court appearance. Ronald averred that he understood that "[t]he formal stipulation of settlement" would reflect his attorney's representation to him that the misstated sum of $500,000 was to be corrected to $937,000, that the correction would be worked out when the stipulation was put on paper, and that "[i]t would all be fixed' later."

You can’t say enough about the usefulness of a good CLE lecture.  A course that provides interesting and up to date information will not only help you prepare for the future, but give you the basic information that you need to grow your practice right now.  It allows you to help new clients, and also service current clients in new ways.

This article from the Star Tribune in Minneapolis, MN talks about a Continuing Legal Education program that is based on a very targeted on a specific, relevant theme.  The program will cover the basics of defending people arrested in demonstration and protest situations.  Why is this so important in Minnesota right now?  With the GOP National Convention happening in St. Paul this year, there are sure to be hundreds of those types of arrests to defend.

The last two conventions, in Philadelphia and New York, led to a combined 2400 arrested protestors.  The police can only do so much to prevent having to make such arrests, so it is a good idea for lawyers in the area to familiarize themselves with the laws regarding such situations.  CLE can help you in the long term, that much we knew.  But this type of CLE course can help a very niche market of lawyers in the very short term.  Sounds like it is worth every penny.

The Alter Ego in Legal Malpractice

Single stockholder corporations are quite common.  Entrepreneurs know that they must start a corporation, and they often equate the corporation's activities with their own, for they, of course, are the CEO, CFO, COO, and sole shareholder.  Here is an example of what can go wrong.

Baccash v. Sayegh is the story of a sole shareholder who probably has done well with her bridal gown business.  She hears that a competitor is going to retire, and hires attorney to prepare sale/purchase documents.  Here is where things go awry.  Defendant prepares a stock purchase agreement rather than an asset purchase agreement, and plaintiff finds herself [or is it the corporation] indebted to a creditor for $ 50,000.

Plaintiff pays off, and sues attorney.  She wins at trial, only to have the verdict reversed and dismissed.  "Here, the plaintiff's theory of the case was that she sustained damages because the stock purchase agreement which the defendant negotiated without her knowledge required her to assume responsibility for Peggy Peters' liabilities, consisting of trade debt and an outstanding bank loan. However, the proof presented at trial revealed that all payments of Peggy Peters' debts after the February 2001 purchase were made by Bridal Couture rather than the plaintiff, and that Bridal Couture also paid $6,000 in settlement of the creditor's suit brought against both Bridal Couture and Peggy Peters. Although it is undisputed that the plaintiff is Bridal Couture's sole officer and shareholder, a corporation has a separate legal existence from its shareholders even where the corporation is wholly owned by a single individual (see Harris v Stony Clove Lake Acres, 202 AD2d 745, 747; see also Rohmer Assoc., Inc. v Rohmer, 36 AD3d 990; Winkler v Allvend Indus., 186 AD2d 732, 734; New Castle Siding Co. v Wolfson, 97 AD2d 501, 502, affd 63 NY2d 782). Moreover, "the courts are loathe to disregard the corporate form for the benefit of those who have chosen that form to conduct business" (Harris v Stony Clove Lake Acres, 202 AD2d 745, 747).

Furthermore, while the doctrine of piercing the corporate veil allows a corporation's separate legal existence to be disregarded to prevent fraud and achieve equity (see Matter of Morris v New York State Dept. Taxation & Fin., 82 NY2d 135, 141; Millennium Constr., LLC. v Loupolover, 44 AD3d 1016; Rohmer Assoc., Inc. v Rohmer, 36 AD3d 990), the doctrine is typically employed by third parties seeking to circumvent the limited liability of the owners, and requires a showing of a wrongful or unjust act toward the plaintiff (see Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135, 141-142). Even assuming that the doctrine of piercing the corporate veil would be available to allow the plaintiff to disregard the corporate form in which she chose to do business, no evidence was presented to support the trial court's conclusion that Bridal Couture is, in fact, the plaintiff's alter ego. Under these circumstances, the plaintiff's proof was insufficient to establish that she sustained actual damages as a result of the defendant's conduct (see Rogers v Ciprian, 26 AD3d 1, 6; Winkler v Allvend Indus., 186 AD2d 732, 734). Thus, the plaintiff failed to establish a prima facie case of legal malpractice (see Carrasco v Pena & Kahn, 48 AD3d 395; Edwards v Haas, Greenstein, Samson, Cohen & Gerstein, P.C., 17 AD3d 517), and that branch of the defendant's motion which was to set aside the verdict and for judgment as a matter of law dismissing the complaint should have been granted. "

More Patent Law Legal Malpractice News

Yesterday we reported on a Nebraska case in which it was found that simply because a legal malpractice case came from a patent matter, it was not a federal question, sufficient for US District Court jurisdiction.
Now, hot on the heels, is this case: Singh v. Duane Morris, No. 07-20321.  We'll get the decision, but for now, here is the article in which a state court action was removed to Federal District Court, and then dismissed under summary judgment.  Now the Circuit has reversed, remanded and remanded to state court. 

"The 5th U.S. Circuit Court of Appeals has thrown out a summary judgment win for Duane Morris in a lawsuit alleging that one of the law firm's partners bungled a trademark infringement case involving an LSAT test-prep company.

The three-judge panel found on July 30 that the federal district court lacked subject-matter jurisdiction in granting summary judgment to the law firm, after deciding that the state law malpractice claim did not arise from the federal trademark law and therefore was not properly in federal court.

The decision means that the plaintiff could revive the case in state court "

Is Patent Law Legal Malpractice always a Federal Question?

Jurisdiction in Federal District Court...harks back to the first few weeks of law school.  Well, there's diversity...and...and federal question.  So, a legal malpractice case arising from a patent transaction...state court or federal district court?

Many the removed case has been found to have federal jurisdiction, but this Nebraska Case says that it may be brought in State Court.  Here is the case.  Can someone explain why this decision was not written by a Federal District or Circuit Court? 

Rogue Associate or Legal Malpractice in Thelen Reid Case
Here is a convoluted intelectual property - patent legal malpractice case. Thelen Reid answers, and with its answer, raises more questions.  Here, from Law.Com:

"Thelen argued that the company "and/or" third parties contributed to the IP losses and that IVI waived the alleged conflicts of interest. The firm also said the claims are barred by the statute of limitations.

Thelen acknowledged that an associate reassigned an IVI patent to a Gardiner company and that an alleged Gardiner company replaced an IVI subsidiary as a party to a research agreement with Johns Hopkins University. However, Thelen's lawyers wrote, the latter change was made "pursuant to instructions from e-Smart," another IVI subsidiary.
IVI alleged that Thelen withdrew from representing it in a suit against Gardiner when his counsel demanded the firm do so because of its alleged concurrent representation of both parties. Thelen only confirmed receiving the letter from Gardiner's counsel and later withdrawing. "