Bankruptcy Fee Awards and Legal Malpractice

We've written in the past on the collateral estoppel trap in legal malpractice.  While fee arbitrations in State Court proceedings probably have the greatest absolute number of applications, bankruptcy court fee awards may well cover a greater dollar figure.  Here, in In re D. A. ELIA CONSTRUCTION CORP., Debtor.  07-CV-754,08-CV-103  UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK  2009 U.S. Dist. LEXIS 20443   March 14, 2009, Decided we see a result.  Law firm handles a 10 year bankruptcy for debtor, and is awarded several interim fees.  Law firm then applies for final fee award, and for the first time, debtor raises issue of legal malpractice.  Court considers the fee application, and awards fees.
 
When debtor later sues in State Court, result is: dismissed on the basis of collateral estoppel/res judicata.

"Upon finding that no merit to Elia's claims of malpractice, this Court observed:

As is readily apparent from this Decision and Order, the Court finds Elia's arguments in favor [of] remand and against the motion for summary judgment to be completely without merit. In opposing the motion to dismiss on res judicata grounds, Elia did not even attempt to [*5] distinguish the most obviously relevant case law against it -the First, Fourth and Fifth Circuit rulings holding that a bankruptcy court's grant of fees under 11 U.S.C. § 330 bars any subsequent malpractice claims premised upon those same services. See Grausz v. Englander, 321 F.3d 467 (4th Cir. 2003); In re Iannochino, 242 F.3d 36 (1st Cir. 2001); In re Intelogic Trace, Inc., 200 F.3d 382 (5th Cir. 2000). Instead, Elia attempts to mischaracterize the record by suggesting that the bankruptcy court never considered its claims of malpractice and attorney misconduct. Both this Court and the Second Circuit have expressly rejected that argument and have found that the bankruptcy court gave adequate consideration to Elia's claims of postpetition malpractice. See In re D. A. Elia Constr. Corp., 04-CV-975, Dkt. No. 21, at 20 (this Court's Decision and Order stating that "[t]he bankruptcy court fully considered [Elia's] allegations of misconduct but found them to be without merit"); and id. at Dkt. No. 33, at 3 and 4 (Second Circuit Summary Order stating that the bankruptcy court gave Elia "more than ample opportunity to present its arguments" regarding its claims of "conflicted and negligent [*6] representation").

In light of those express findings, it is difficult to believe that the state court action was filed by Elia in good faith. Even if Elia did have some good faith basis for initially filing its state court claims, it should have been clear that its position was meritless upon reviewing the cases cited in Damon & Morey's motion to dismiss. This is particularly true where, as here, Elia's principal is also an attorney and therefore presumably understood the res judicata arguments being raised. Nevertheless, Elia chose to oppose the motion and filed its own motion to remand.

The foregoing certainly provides sufficient evidence for this Court to conclude that the instant action was brought in bad faith and for the purpose of harassment and delay."

Legal Malpractice in the Real and Cinematic Worlds

Burt Pugach and Linda Riss are a staple of the blogosphere and the Page Six world.  He was a lawyer who was convicted in 1959 for blinding Linda Riss by use of lye, went to jail ,came out of jail to marry her ,and then was disbarred.  He was determined to have practiced law through the use of a front man-lawyer in 2008.  But that is all part of the Page 6 portion of their lives.

Here, the two sold their life story to HBO for use in a film called "Crazy Love" and this is where the legal malpractice portion of their life comes in.  Was the deal fair, and did HBO owe them more money?

In Pugach v. HBO Pictures Inc., Slip Op. 2009 30489U we see that their legal malpractice action fails. Judge Kitzes of Supreme Court, Queens County writes:

"This action arises out of an agreement between plaintiffs and defendant Shoot the Moon, dated May 11, 2004, whereby, in consideration of the payment of the sum of $ 2,000, plaintiffs granted Shoot the Moon an option to purchase all rights to their life stories...."  Plaintiff's argument that Linda Pucach could not read the contract because of her blindnes was disallowed on the basis that "if the party could not read it, "not to procure it to be read was equally negligent."
The legal malpractice action was dismissed as the attorney defendants represented Shoot the Moon and not plaintiffs, thus lacking privity.
 
 
Legal Malpractice in One of Its Many Guises

Our meme on this blog is that Legal Malpractice litigation is ubiquitous and omnipresent.  All right, what exactly does that mean?  It's not just blown statutes in personal injury, and it's not just unanswered questions in matrimonial suits, and it's not even just bankruptcy trustees and ponzi schemes.  It's the basis commercial transactional world too.  Here in an article from Law.Com, by Brian Katkin, we see:
"Hogan & Hartson is being sued for malpractice by a client who alleges the firm used attorney-client information to boost a competitor.

In the complaint, filed in Washington, D.C., Superior Court last month, Prestige Brands Inc., makers of household products like Comet and Compound W, claims lawyers at Hogan & Hartson breached their retainer agreement and committed legal malpractice by helping another company get a competing product on the market.

Hogan has yet to respond to the allegations, but the firm has hired Mark Foster, a partner at Zuckerman Spaeder, to defend the action. Last year, Foster successfully battled malpractice allegations against Wiley Rein when the firm was sued by former client Blackwater Security Consulting. Foster and J. Warren Gorrell Jr., Hogan's chairman, declined to comment.

Prestige is using Marianne Roach Casserly, a partner in the D.C. office of Alston & Bird, along with lawyers from the firm's Atlanta and New York offices. Casserly did not return calls seeking comment.
Charles Jolly, Prestige's general counsel, says he found out Hogan was working for a competitor from the Food and Drug Administration's Web site. "I've been practicing for 40 years, and I can think of only one time when I've gotten in a dispute with a firm that I hired for outside counsel," Jolly says.