The attorney had allegedly missed the statute of limitations in a claim brought by a surviving husband against tobacco companies, after his wife, a cigarette smoker since the age of thirteen (13), died of lung cancer. The husband sued the attorney, and ultimately settled with him, but only after the insurer maintained that he had no insurance for the claims under any of three (3) different potential policies of insurance, which named him as an insured.

The settlement included assignment of the attorney’s claims against his insurer and broker, based on the denial of coverage. The case against AON came on for summary judgment before a judge of the Suffolk Superior Court. After hearing, the judge granted summary judgment to the insurance agency. The husband appealed from the summary judgment against him.

In August, 2018, the appeals court affirmed in Perreault v. AIS Affinity Ins. Agency of New England, Inc., No. 17-P-1139 (Mass. App. Ct. Aug. 2, 2018). The Appeals Court considered the obligations of a broker with respect to a professional negligence policy.

Although the thrust of the decision focused on the issue of whether the broker had a “special relationship” with the attorney, ruling in the negative in this case, the Plaintiff/Appellant made two other arguments, which were seemingly overlooked by the Appeals Court.

First, the husband argued that the broker, by its representative, had made a binding promise that Liberty, through AON, would provide prior acts coverage under the attorney’s new policy if he made an installment payment on his existing policy, which he had communicated to the broker that he intended to cancel in less than two (2) weeks, upon his departure from his prior firm.

The broker advised the defendant to make the AGM policy payment in December 2009, “so that [it] does not cancel so we can offer you prior acts.” The defendant made the payment, and as planned, instructed the broker to cancel the AGM policy effective December 31, 2009. The attorney had the option of buying extended reporting coverage, but did not, thinking he would have prior acts coverage under the new policy. He did not.

The attorney made the payment, but did not get the promised prior acts coverage under the new policy. The husband argued that this was a breach of contract, or at a minimum, warranted application of promissory estoppel, meaning that the attorney, even in the absence of a binding contract, had relied to his detriment on the promise of the broker. The Superior Court judge, and the appeals court, never really reached the estoppel issue.

Second, the husband claimed that his demand letter to the attorney fell within a sixty (60) day “automatic extended reporting period” provided in each of the Liberty policies, which went into effect after a policy had cancelled. The husband argued that the policy, which was supposed to cancel on December 31, 2009, did not in fact cancel on that date, but on January 19, 2010. This meant that the cancelling policy was in force on January 4, 2010, when the new policy issued, and therefore there was no gap in coverage, which was one of the grounds for Liberty not to provide prior acts on the new policy.

Furthermore, using the January 19, 2010 cancellation date, and applying the sixty (60) day automatic extended reporting period, the claim would have been timely. The Appeals Court, however, retroactively applied the December 31, 2009 cancellation date, relying on language in the policy rather than the facts as occurred.

Because the broker’s representative with whom the attorney had always worked was out for vacation, he was moved to another AON broker, when he called to inquire about the status of his new policy. On January 4, 2010, that broker completed another application over the telephone, checking a box indicating that it was a policy with a January 4, 2010 prior acts date. The attorney admitted that he never reviewed the new policy and believed on January 4, 2010 and thereafter that he had been given prior acts as promised.

When the husband sent a demand letter to the attorney in March, 2010, Liberty took the position that there was no coverage under the new policy due to the January 4, 2010 prior acts date, and under the expiring policy because the claim was outside of the sixty (60) day automatic extended reporting period and denied the claim. Liberty did, however, agree to provide a defense under the AG policy with a full reservation of rights.

The entry of judgment was a disappointment for the husband, but likely the result of a lower court judge, and an appeals court, which was not pleased with the underlying conduct of the attorney, and his cavalier approach to his insurance coverage issues. Given the prior settlement with Liberty, the husband elected not to seek further appellate review from the Supreme Judicial Court.

The client proceeded with the acquisition and invested millions of dollars into the company to boost revenue.  As a result, the pension liability increased to $4.86 million within three years, all of which was determined to be the buyer’s obligation.

The buyer then sued the firm, claiming its negligent opinion caused the company damages. There was a trial, resulting in a jury award of over $5 million in damages.  It is unclear whether the firm will appeal the verdict and judgment.

Cohen et al. v. Jaffe, Raitt, Heuer & Weiss, P.C. et al.

Prior to the sale, the firm had furnished the client with an engagement letter, which broadly described the scope of its representation as “lead transaction counsel.”  Further, the parties to the transaction had signed a letter of intent, which recited that each party could have their counsel conduct due diligence prior to the sale.

The suit claimed that the firm failed to perform a due diligence review of the potential buyer.  When the sale closed approximately six months later, one of the buyer’s board members was charged with securities fraud and conspiracy, resulting in a class-action lawsuit seeking to delist the company from public trading.

The SEC did suspend all public trading of the buyer’s shares, rendering the sale worthless.  The seller re-purchased the company for $900,000, less than the $7.5 million price negotiated with the original buyer.

The suit claims that Seward & Kissel negligently advised the client in the sale and failed to perform due diligence about the buyer, which would have revealed the securities fraud and conspiracy issues.  The court denied Seward & Kissel’s motion to dismiss, noting that the firm’s letter of engagement was “facially broad” and lacked language to indicate that the firm would not perform a due diligence inquiry.  The Court further stated that the firm had a duty at least to discuss whether a due diligence inquiry would be performed.

http://Mitchell Barack v. Seward & Kissel, LLP

On August 24, 2010, Henan Airlines flight 8387 crashed while attempting to land at Yichun Lindu airport in China. There were 96 passengers on board the flight, 52 persons survived the crash, including two of the Plaintiffs. The attorney, Monica Ribbeck, offered to represent the Plaintiffs in an action against Embraer, S.A., the manufacturer of the plane, and General Electric Company (“GE”), who manufactured the jet engines.

The Plaintiffs contend that they had signed an agreement for legal services with Ribbeck, who assured them that they had a viable cause of action against Embraer and GE.  They allege that Ribbeck, through her agent, advised the Plaintiffs that their case was proceeding through the courts, even though no action had in fact been filed.

In December, 2015, the Plaintiffs finally discovered that Ribbeck had never filed the action, and that it was now time barred. Plaintiffs allege that Ribbeck breached her duty of care owed to them and that they lost their claims against Embraer and General Electric because of her negligence.

The suit involved the alleged mishandling of a $10 million lawsuit. Plaintiffs claim that Lithman failed to timely appear and respond to a motion to dismiss filed by the defendants in the underlying action.  The Appeals Court agreed that dismissal of the action against Mizrahis was appropriate, concluding that there was no claim for malpractice because final judgment had not entered in the underling suit. Conversely, the Court permitted plaintiff, R.S.B. Ventures’ case to proceed because a final ruling in a related foreclosure action had entered.

Writing for the Appellate Court, Judge Carole Taylor wrote: “[e]ven though collateral issues have not been resolved in the underlying litigation, a foreclosure judgment adverse to RSB has reached the point of finality, so RSB’s legal malpractice claim has accrued with respect to the foreclosure judgment”. The case was remanded for further proceedings.

The case involved an employee who hired a firm to negotiate a separation agreement with his former employer.  After consulting with lawyers at the firm, the employee initiated a lawsuit in federal court and instituted arbitration proceedings against the employer. Just prior to the arbitration, the employer advised that they intended to call one of the employer’s attorneys to testify. The attorney had met with in-house counsel regarding his ethical obligations. The employee lost his arbitration and then settled the federal court case for a nominal amount.

Two years later, the employee initiated a legal malpractice action against the firm. During discovery, a firm attorney claimed that discussions in emails between him and in-house counsel were protected under attorney-client privilege. The employee moved to compel production of the emails, which the lower court granted.

The legal malpractice case arose from a 1992 suit in which several parties had sued the Plaintiff, seeking a declaration of rights regarding a water well. The Defendants in the present legal malpractice action had represented the Plaintiff. Plaintiff lost the case and appealed. During the pendency of his appeal, the Plaintiff filed for bankruptcy. In January, 1998, the Texas Court of Appeals reversed, in part, and remanded.

On July 31, 2002, the Plaintiff filed his legal malpractice action against the Defendants. That suit was subsequently dismissed in July, 2011 for lack of prosecution and final judgment entered on July, 2013. On June 24, 2015, Plaintiff re-filed his legal malpractice claim. The trial court dismissed, assessed sanctions of $8,500 and awarded attorneys’ fees to Defendants, designating the Plaintiff as a “vexatious litigant”.

In the summer of 2008, the debtors signed an engagement letter with a non-bankruptcy attorney (“Appellant”), assigning their interest in $20,000, then held by a Circuit Court, as payment for his representation in another action. The attorney then referred the debtors to a bankruptcy lawyer. The bankruptcy lawyer filed a chapter 7 bankruptcy petition, which failed to disclose several trusts and the pre-petition $20,000 assignment to the Appellant.

In April, 2010, creditors in the bankruptcy proceedings moved for partial summary judgment, which the debtors opposed. In February, 2011, the bankruptcy court granted in part and denied in part the summary judgment motion. The Debtors then filed a Motion to Alter or Amend the Judgment, supported by affidavits of the Appellant and the bankruptcy lawyer.

In January, 2012, the bankruptcy court issued an Order, granting a motion for derivative standing to permit the Creditors to file a legal malpractice action against the Appellant and the bankruptcy attorney. The Creditors filed their action and a motion for sanctions. The lower court granted the motion for sanctions, determining that Appellant had acted as lead counsel, even though his name was not on all the filings. The Appellant, but not the bankruptcy lawyer appealed.

The Appellate Panel reversed because the motion had not been served on the opposing party within twenty-one (21) days of being filed with the court. Here, it was not the Appellant, but the bankruptcy lawyer who had signed and filed the debtors’ bankruptcy petition.

The Sixth Circuit Panel also found that sanctions under 28 U.S.C. § 1927 were not appropriate because there was no indication that Appellant had “stepped beyond the role of a zealous, if misguided, advocate”, or prolonged the litigation by his filings. Therefore, the Order granting the Creditors’ motion for sanctions entered by the Bankruptcy Judge was vacated to the extent that it imposed sanctions against Appellant.

This case is: In re Earl Benard Blasingame; Margaret Gooch Blasingame

Creditors of a bankrupt conglomerate had sued Skadden, in New York state court, after allegations that Skadden acted unethically in failing to disclose or obtain waivers for multiple conflicts.

The plaintiffs, lenders and private equity funds owners, forced a company, Evergreen International Aviation Inc., to file for Chapter 7 protection in Delaware state court in late 2013. The head of Skadden’s corporate restructuring group, Jay Goffman, Esq., had also been named as a Defendant.

The complaint detailed two “likely fraudulent transfers” in 2013, diverting cash and other assets, which would have been part of the bankrupt estate. First, there was a transfer of two aircrafts, valued at $10.6 million, to Evergreen Vintage Aircraft, a non-profit controlled by Smith, apparently without consideration.

Second, in May, 2013, Evergreen International agreed to sell stock in its helicopter subsidiary to Erickson Air-Crane Inc. for $250 million in cash and other consideration. The complaint alleged that Skadden represented five different companies in the sale, including Evergreen International, its helicopter subsidiary, a separate holding company, and Smith.

In dismissing the case, the Court relied on a New York borrowing statute that applies Oregon’s two year statute of limitations instead of New York’s three year statute of limitations. The Court applied the borrowing statute because all claims and transactions involved in this case occurred in Oregon.

The Court further relied on a recent decision by the Appellate Division, First Department, which emphasized that the purpose of the borrowing statute is to prevent plaintiffs from forum shopping and filing in New York to take advantage of the more favorable statute of limitations. 

Centre Lane v. Skadden

HSM also sued its lawyers in the underlying case for legal malpractice and also for gross negligence. HSM asserted that the lawyers were grossly negligence for failing to name the truck driver in the underlying action. The trial judge in the legal malpractice action granted a direct verdict for the lawyers on the gross negligence claim, but permitted the legal malpractice claim to go forward. At trial, a jury found in favor of HSM in the amount of $4.6 million. The judge issued a final judgment with no monetary award, after applying the $6 million paid by the insurer. Both parties appealed.

The Fifth Circuit Court of Appeals reversed the directed verdict for the lawyers on gross negligence, and remanded the case for a new trial rejecting all other appellate issues. The Appeals Court found that the truck driver was a person the jury could have considered to be responsible for the unsuccessful real estate transactions, and that the lawyers’ failure to name him may have shifted additional liability on HSM. The court found that it was a factual question whether the lawyers were grossly negligence in failing to bring the truck driver into the case.