Articles Posted in Legal Ethics

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The three underlying legal actions, involving breach of contract, breach of fiduciary duty, stock valuation, bankruptcy, and appeals, took place in Illinois. Plaintiffs, including attorneys involved in the underlying actions, sought to indemnification in post-trial proceedings. Defendant is a Delaware corporation with offices in Illinois. The Delaware Court of Chancery awarded plaintiffs $79,540.14 for pursuing the post-trial action and $241,492.50 for the Illinois proceedings, plus 20% of the expenses they incurred enforcing their indemnification right through this proceeding. The court cited the corporations’ bylaws, under which the plaintiffs are entitled to mandatory if indemnification would be permitted under the Delaware General Corporation Law and Section 145(a) of that law. View "Dore v. Sweports Ltd." on Justia Law

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The court issued a post-trial opinion holding that the loan agreement between plaintiff and National was unconscionable and that National violated the federal Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. At issue is the court's award of attorneys' fees and costs to plaintiff. The court concluded that, because plaintiff prevailed on her TILA claims, and because plaintiff's other claims arose out of the same common core of facts as her TILA claims, the fee award extends to all of plaintiff's attorneys' fees and costs. The court also concluded that the bad faith with which National and its counsel acted throughout the litigation provides an independent basis for awarding plaintiff her attorneys' fees. Finally, the court rejected National's various procedural arguments. Therefore, plaintiff is entitled to the full amount sought and, given the seriousness of the misconduct in which National and its counsel engaged, they are jointly and severally liable for the fee award. View "James v. National Financial, LLC" on Justia Law

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After Plaintiff fell behind on her payments to Attorney in the underlying litigation, Attorney filed a motion to withdraw as counsel for Plaintiff and requested a charging lien in the amount of approximately $300,000. Plaintiff did not oppose Attorney’s withdrawal but did oppose the entry of a charging lien. The Court of Chancery found that a charging lien was appropriate and granted a charging lien in the amount of $200,000 against any judgment in this action, holding (1) a fee agreement between the parties did not preclude the entry of a charging lien; (2) the total amount of the charging lien that was appropriate in this case should not exceed Plaintiff’s lowest-possible net recovery of $263,872; and (3) Attorney was not liable to the experts for their fees, so there was no basis for include those fees in the charging lien. View "In re Zutrau v. Jansing & ICE Sys., Inc." on Justia Law

Posted in: Contracts, Legal Ethics

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After the court concluded that respondent litigated in bad faith and that this matter was unnecessarily prolonged due to petitioners' ambiguously-drafted Petition to Quiet Title, the court directed petitioners to submit a statement of reasonable attorney fees which they believed reflected the cost imposed on them by respondent's purely vexatious legal maneuvers. Petitioners submitted an affidavit for attorney fees but respondent failed to respond. Thus, respondent waived any objection to the statement of fees. The court awarded petitioners $1,250.00 in attorneys' fees under the bad faith exception to the American Rule, to be paid by respondent within thirty days from the date this matter becomes final. View "Branson, et al. v. Branson" on Justia Law

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Trusts that owned fifty percent of the common stock of nominal defendant IMS alleged that two of the company's three most senior officers mismanaged the company in breach of their fiduciary duties. Trusts moved to compel IMS to produce the senior officers' work email accounts. The senior officers asserted the attorney-client privilege but did not invoke the work product doctrine. The court concluded that the In re Asia Global Crossing, Ltd. factors weighed in favor of production, absent a statutory override that could alter the common law result. Because IMS conducted its business in Maryland, the federal government and the State of Maryland were the sovereigns whose laws IMS must follow when dealing with its employees' email. The Federal Wiretap Act, 18 U.S.C. 2510 et seq.; the Federal Store Communications Act, 18 U.S.C. 2701; the Maryland Wiretap Act, Md. Code, Cts. & Jud. Proc. 10-401 to 10-414; and the Maryland Stored Communications Act, Md. Code, Cts. & Jud. Proc. 10-4A-01 to 10-4A-08, did not change the common law privilege analysis. Accordingly, the court granted the motion to compel. View "In re Info. Mgmt. Servs., Inc. Derivative Litigation" on Justia Law

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Plaintiff, a former shareholder of XTO, moved for an award of attorneys' fees and expenses following the stipulated dismissal of her derivative action, which was largely mooted by measures taken by XTO's Board shortly after plaintiff's complaint was served. In addition to XTO, the former members of XTO's Board were named as defendants. Plaintiff objected to the fact that the cash bonuses paid to XTO's CEO and four other officers were not tax-deductible because they did not meet the requirements of section 162(m) of the Internal Revenue Code. The court denied the motion because an arguably poor business judgment, without more, did not excuse demand on the Board in a derivative action. View "Freedman v. Adams, et al." on Justia Law

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The parties disputed the amount that defendant, Fitracks, must advance to Noam Danenberg in connection with his defense of claims asserted against him by Aetrix, Fitracks' parent, in litigation pending before the district court (Underlying Action). They also disputed the amount that Fitracks must pay Danenberg as indemnification for this proceeding. Judgment was entered in favor of Danenberg for advancements in the amount of $292,019.91 and indemnification in the amount of $276,332.13. Interest on these amounts, compounded quarterly, shall accrue at the legal rate beginning February 27, 2012 through the date of payment. Going forward, unless modified by stipulation, the parties shall follow the procedures set forth in this opinion. View "Danenberg v. Fitracks, Inc." on Justia Law

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Plaintiffs, David and Barbara Smith, asserted various claims arising out of the construction of their home against Defendants, Donald L. Mattia, Inc. (DLM), Donald Mattia, and Barbara Joseph (Barbara). The Chancery Court (1) granted Defendants' motion for summary judgment on (i) Plaintiffs' breach of contract claim and (ii) Plaintiffs' civil conspiracy claim; (2) denied Defendant's motion for summary judgment on (i) Plaintiffs' claim for misappropriation of Plaintiffs' backfill and money paid to DLM that was not applied to their project and (ii) Plaintiffs' claim that Defendants fraudulently induced Plaintiffs to purchase excess lumber and misappropriated $8,836 in connection with the purchase of excess lumber; (2) granted Plaintiffs' motion for summary judgment, as Defendants did not articulate a viable cause of action in their counterclaim; and (3) denied Barbara's motion for Chan. Ct. R. 11 sanctions where there was no evidence that Plaintiffs' attorney did not have a good faith belief in the legitimacy of the claims asserted against Barbara. View "Smith v. Donald L. Mattia, Inc." on Justia Law

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Petitioner, former CEO of Fitracks, sought advancements from Fitracks for attorneys' fees and expenses incurred defending claims in litigation in the underlying action. Aetrex sued petitioner in the underlying action and Aetrex is currently the parent corporation of Fitracks, having acquired Fitracks by triangular merger in 2008. Because Aetrex's claims in the underlying action arose out of representations made by petitioner in his capacity as CEO of Fitracks, petitioner was entitled to advancements for the underlying action. Therefore, summary judgment was granted in favor of petitioner and against Fitracks on the issues of liability for advancements in the underlying action and indemnification for this proceeding. View "Danenberg v. Fitracks, Inc." on Justia Law

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Petitioner, an attorney, brought this action pro se seeking reformation of a mortgage. Petitioner was not a party to the mortgage or the loan it secured; he had no interest in the underlying party; sued on his own name and not on behalf of either the borrower or the lender; and there were no defendants. Petitioner sought an order reforming a mortgage by substituting the correct legal description for the property, asserting that his potential exposure for negligence gave him a sufficient interest to bring the action. The court held that petitioner was a non-party to the contract and therefore, he lacked standing to seek reformation. View "In re Mortgage between Pamela S. Pantalone, as Borrower, and Wells Fargo Bank, N.A., as Lender" on Justia Law