Indiana Couple Defeat Summary Judgment in Legal Malpractice Claim Against Former Attorney in Handling of Loan to Former MLB Player

A couple who brought a legal malpractice claim against their former attorney in connection with his drafting of a promissory note executed by a former MLB player will proceed after they defeated a motion for summary judgment.  Here, in 2014, Elizabeth and Robert Bilbija lent $42,500 to their friend, former MLB player Ryan Thompson.  To document the transaction, Thompson was referred to Christopher T. Lane, who was engaged by Thompson to draft a promissory note.  Notably, he was paid $500 for his services, which was paid evenly by both Thompson and the Bilbijas

Lane drafted the promissory note which provided that Thompson would repay the $42,500 and it was secured by his MLB pension of approximately $8,000 a month.  However, Thompson failed to repay the money and later would file bankruptcy.  The Bilbijas thereafter attempted to claw Thompson’s pension payments by way of the Note to satisfy the debt; but, were informed by the pension authorities that it was only subject to execution for child support or similar debts and they would require a judgment.  This option was not available however due to Thompson’s bankruptcy.

Lane was then sued by the couple for legal malpractice for failing to protect their interests in the transaction.  He subsequently moved for summary judgment on the basis that he owed no duty to the Bilbijas because he allegedly never represented them or communicated through words or actions that he represented them in the transaction.  Arguing that the Bilbijas’ unilateral belief that they were his client does not create a duty.  Hacker v. Holland, 570 N.E.2d 951, 955 (Ind. Ct. App.).  However, the Court disagreed with this argument, concluding that the Bilbijas insisted that Lane represented them and designated evidence of conduct that would indicate as such. See In re Anonymous, 655 N.E.2d 67, 70 (Ind. 1995).  Therefore, the Court concluded a question of fact existed to defeat the motion under the principle that the formation of an attorney-client relationship does not need to be express, rather, it may be created by the implied conduct of the parties. 

The Court did grant summary judgment in favor of the attorney on the couples' allegations that Lane breached his duty owed to them due to a conflict of interest.  Indiana has previously held that violations of the rules of ethical conduct alone - including conflicts - cannot create a basis for a claim.  See Rosenbaum v. White, 692 F.3d 593, 604 (7th Cir. 2012).

Alex Passo handles legal malpractice actions throughout Illinois and Indiana.  If you have a matter that you would like to discuss with Alex, you can contact him at apasso@llflegal.com or (312) 284-6256.

Indiana Appellate Court Holds Violations of Rules of Professional Conduct Alone Cannot Form the Sole Basis of Legal Malpractice Suit

Barnes & Thornburg (“BT”) recently avoided a legal malpractice lawsuit based on representing two clients simultaneously that were conflicted.  In the case, a company called CRIT purchased a controlling interest in a nationwide staffing business, Peoplelink, from William Wilkinson.  After the sale, Wilkinson remained with Peoplelink as its CEO until 2015, when he hired BT to represent him in connection with his departure.  The agreement which Wilkinson and Peoplelink ultimately executed contained non-compete language.

After the sale, BT remained as Peoplelink’s outside counsel after Wilkinson left the company; but, continued to represent Wilkinson in other unrelated matters.  As an incidental result of this continued representation of both parties, an attorney at BT accidently sent an email intended for Wilkinson to Peoplelink relating to Wilkinon’s purchase of another staffing company only 7 months after his departure – in violation of the restrictive covenants.

Peoplelink thereafter brought a legal malpractice lawsuit against BT and used violations of Rules 1.7 and 1.8 – which govern attorney’s representation of clients with conflicts of interest – to form the basis of their claim that BT breached their duty to Peoplelink.  However, the Indiana Appellate Court held that violations of the rules alone could not establish a legal malpractice claim and that Peoplelink did not allege that the firm’s malpractice caused any actual damages.  It also reasoned that Peoplelink's argument for disgorgement of legal fees as its basis for damages was not enough to maintain the claim.

CRIT v. Wilkinson, et. al, 2018 Ind. App. LEXIS 16 (Ind. Ct. App. 2018)

Alex Passo and the Patterson Law Firm, LLC handle legal malpractice lawsuits throughout Illinois and Indiana.  If you have a matter that you would like to discuss with Alex, you can reach him at (312) 750-1820 or apasso@pattersonlawfirm.com.

No Liability Ruling in Favor of Attorney in Legal Malpractice Trial Upheld by Indiana Appellate Court

It’s fairly rare to see cases handled by a pro se plaintiff reach trial if the defendant is represented by counsel.  A plaintiff handling a legal malpractice case pro se and reaching trial is almost unheard of.  While the Plaintiff in Miletic v. O’Brien, was able to survive summary judgment, he wound up short in proving his legal malpractice case at trial.  2017 Ind. App. Unpub. LEXIS 1606 (Ind. App. Ct. 2017).

In this case, Miletic was represented by O’Brien in her divorce to Dragan Miletic (“Dragan”).  While the divorce was pending, Miletic was diagnosed with cancer, went on disability, and had no other income.  When completing his financial declaration forms, Dragan indicated that he was also unemployed.  But, he was maintaining health insurance for Miletic through COBRA.

Prior to the parties’ dissolution, Dragan moved to California for employment.  O’Brien filed a Verified Petition for Maintenance Due to Spousal Incapacity requesting that Dragan pay Miletic “a reasonable monthly maintenance, in addition to continuation of the COBRA.”  Thereafter, the court held a final hearing on the dissolution. During the proceedings Miletic and Dragan informed the court that they had reached an agreement on all of the issues.  The parties represented that everything had already been divided and Dragan agreed to continue provide health insurance for Miletic until she was healthy or obtained her own.  However, she would not receive any other form of spousal maintenance.  Miletic represented to the court that she understood the terms of this agreement and would abide by it.

Thereafter, the court requested that O’Brien memorialize the terms of the agreement.  A few months later, the court was informed that O’Brien was subsequently terminated by Miletic and refused to sign an agreement with the terms agreed upon before the trial court earlier.  The trial court would eventually enter an order consistent with those terms.  Miletic subsequently filed a legal malpractice claim against O’Brien where she claimed that he breached his duty of care by failing to obtain monthly spousal support payments from Dragan.  Additionally, Miletic alleged that O’Brien failed to properly conduct discovery and if he had he would have learned that Dragan was “earning over $164,00 per year” and she therefore would have obtained maintenance.

O’Brien filed a motion for summary judgment which the trial court denied and the case proceeded to a bench trial.  After Miletic’s case-in-chief, O’Brien moved for directed verdict which the court granted because Miletic failed to meet her burden of proof by not providing any expert testimony to establish that O’Brien deviated from the standard of care.

An appeal followed where Miletic argued that the common knowledge exception applied in her case and she therefore did not require expert testimony to prove her claim.  The common knowledge exception applies when the attorney’s negligence is so grossly apparent that a non-attorney would have no difficulty in understanding a breach occurred.  Storey v. Leonas, 904 N.E.2d 229, 238 (Ind. App. 2009).  Typically, the exception arises in cases where an attorney fails to file a case within the applicable statute of limitations period and the claim is then barred.  The appellate court was not persuaded by this argument, indicating that the common knowledge exception only applies to obvious cases.  However, at trial and in her briefs Miletic failed to address the fact that she represented to the court that she understood the terms of the settlement and approved it.  Therefore, the common knowledge exception could not apply and an expert was required to explain how O’Brien breached his duty of care.

Alex and the Patterson Law Firm, LLC handle legal malpractice cases throughout Illinois and Indiana.  If you have a matter you would like to discuss with Alex, you can reach him at (312) 750-1820 or apasso@pattersonlawfirm.com.

Indiana Attorney Suspended for Lying to Client about Filing Appeal

A Northern Indiana attorney was suspended for 90 days for lying to one of his clients.  The attorney was retained by the client to seek an appeal of the denial of a petition for expungement of a misdemeanor theft conviction.  During the course of representation, the client requested updates on the status of the appeal and the attorney made statements which implied that he had filed the appellate brief.  However, no brief was ever filed by the attorney and the appellate court eventually dismissed the appeal with prejudice.  The attorney never explained to the client of the dismissal or any of the available options, which led to the client filing a grievance.  The Indiana Supreme Court Disciplinary Commission found that the attorney violated several Indiana Professional Conduct Rules – 1.1, 1.3, 1.4(a)(3), 1.4(b), 3.3(a)(1), 8.1(a), and 8.4(c).

Alex Passo and Patterson Law Firm, LLC handle legal malpractice claims throughout Illinois and Indiana.  If you have a matter that you would like to discuss with Alex you can reach him at (312) 750-1820 or apasso@pattersonlawfirm.com.

Reformation of Settlement Agreement Terms Improper Equitable Remedy Regardless of Breach

It is well established in Indiana that the reformation of terms of a contract as an equitable remedy for a breach is an extreme remedy.  Courts may only reform a written contract if (1) there has been a mutual mistake by the parties in the formation; or (2) one party makes a mistake while the other party commits fraud or inequitable conduct.  See Meyer v. Marine Builders, Inc., 797 N.E. 760, 722 (Ind. Ct. App. 2003); see also New Life Cmty. Church of God v. Admomatis, 672 N.E.2d 433, 438 (Ind. Ct. App. 1996).  Misconduct by a party that amounts to a breach does trigger a court’s ability to reform a contract.

For example, in Wagner v. Wagner, a court attempted to modify a settlement agreement provision that was in breach by one of the parties, but was reversed because the facts did not trigger the availability of the equitable remedy of reformation.  Here, a father and son were general partners of numerous partnerships that owned apartment buildings.  A business dispute arose between them which resulted in litigation.  The father alleged during this litigation that funds had been misappropriated from the business.  Ultimately the matter was settled, and one provision that was incorporated in the settlement agreement was that the father would prepare all partnership tax returns.

A subsequent suit was filed by the son because the father failed to prepare partnership tax returns as required by the settlement agreement.  After a bench trial, the court concluded that the father breached the agreement because he refused to prepare the tax returns, which was an obligation he agreed to undertake under the settlement agreement.  As a result of this breach, the trial court entered an order stating that the son was entitled to use a different account for future tax returns.  However, the Court reversed this equitable remedy imposed by the trial court because there was no basis to support rescission or modification of the contract as there was no fraud, illegality, mutual mistake, or a contract provision providing for rescission in the event of breach. 

Wagner v. Wagner, 02A03-1610-PL-2473 (Ind. Ct. App. 2017).

Hamilton County Adoption Attorney Receives Public Reprimand For Several Violations of Rules of Professional Conduct

A Hamilton County Indiana adoption attorney was recently publicly reprimanded by the Indiana Supreme Court for violating Professional Rules of Conduct 1.7 (Conflicts of Interest), 1.8 (Conflicts of Interest), and 8.4 (General Misconduct).  Here, the attorney was hired by a couple to represent them in the adoption of a child.  Before the attorney’s retention, the couple had previously already reached an agreement with the birth mother to allow them to adopt the child.

However, when the attorney contacted the birth mother, she expressed concerns with his current clients and asked the attorney for profiles of other prospective adoptive parents.  Despite representing the couple, the attorney nevertheless showed the birth mother the profiles of other potential adoptive parents.  Eventually the birth mother selected a different couple than the attorney’s original clients. 

The attorney never informed his original clients that the adoptive mother had concerns with them or that he showed her different options until after the decision was made.  Thereafter, the attorney sat down with them to discuss reimbursement of fees the couple advanced to him.  The couple and the attorney appeared to have resolved the issue at this meeting, however, at the conclusion of the meeting, the attorney presented them with a release purporting to bar them from filing a “claim” to the Indiana Supreme Court disciplinary commission.

The attorney erred in this circumstance by failing to disclose to his clients that the birth mother had concerns with selecting them as adoptive parents.  But, the most critical error was then representing the birth mother in her selection of an alternative set of adoptive parents without obtaining consent from the original clients.

Alex Passo and the Patterson Law Firm, LLC handle legal malpractice actions throughout Illinois and Indiana.  If you have a matter that you would like to discuss with Alex, you may reach him at (312) 750-1820 or apasso@pattersonlawfirm.com.

Indianapolis Attorney Suspended for Practicing without a License and Renegotiating Fees

In the Matter of Douglas Krasnoff, Krasnoff was automatically suspended for noncompliance with CLE requirements in Indiana and reciprocal discipline was imposed by the U.S. District Court for the Southern District of Indiana. In 2002, Krasnoff agreed to represent an individual in a claim against their employer.  In exchange, the client agreed to pay Krasnoff a $5,000 retainer fee and would also provide him between 33 to 40 percent of any recovery in the matter as a contingency fee.  The following month after retention, Krasnoff was suspended for noncompliance with CLE requirements.  However, he nevertheless then proceeded to file the lawsuit in the U.S. District Court for the Southern District of Indiana on the behalf of the client.

During the litigation, Krasnoff subsequently charged the client an additional $10,000 “appeal fee” and also charged him $8,000 to add claims to the lawsuit (which were never added).  The lawsuit ultimately settled for $30,000 and the settlement agreement stipulated that Krasnoff receive $20,000 in attorney fees, but the $5,000 retainer was not applied as a credit.  The client never received the $10,000 and subsequently filed a grievance against Krasnoff.

Krasnoff was found in violation of Rule 1.8(a) for renegotiating his fee agreement without advising his client that they should consult with independent counsel. He was also found to have violated rule 5.5(a) for practicing law with a suspended license. As a result of his actions, he was suspended for at least 180 days without automatic reinstatement.

In the Matter of:  Douglas Krasnoff, No. 49S00-1308-DI-517 (Ind. 2017).

Alex Passo and the Patterson Law Firm, LLC handle legal malpractice actions throughout Illinois and Indiana.  If you have a legal malpractice case that you would like to discuss with Alex, you can reach him at (312) 750-1820 or apasso@pattersonlawfirm.com.

Attorney Escapes Legal Malpractice Claim Due to No Actual Knowledge that his Partner Stole Funds from Client

The Court of Appeals of Indiana recently affirmed a trial court’s order granting summary judgment for a defendant attorney in a legal malpractice case. The basis for the summary judgment order was that there was no question of fact of whether the attorney deviated from the standard of care.  The case was an offshoot of a progeny of cases that arose from the theft and deceit committed by former Indianapolis attorney, William Conour (“Conour”).  In this instance, one of Conour’s clients sued his former colleague, Timothy Devereux (“Devereux”), for failing to notify her that there were potentially red flags of the handling of her personal injury settlement proceeds by Conour.

In the case, Rene DiBenedetto v. Devereux, DiBenedetto was involved in a head-on collision in 2010. 2017 Ind. App. LEXIS 274 (Ind. App. 2017).  She subsequently engaged Conour to handled the claims. Early in the following year, Conour settled DiBenedetto’s claim against the tortfeasor and their insurance company for $50,000.  However, the release preserved DiBenedetto’s right to bring a claim under her insurance policy for Underinsured Motorist (UIM) coverage.

In 2011, when Conour was out of the office, DiBenedetto and her father visited the law office on an unscheduled visit and inquired about the status of the case.  Devereux had not been handling the matter; but, checked the on the status of the case with a paralegal and reviewed the entries on firm’s case management program.  He then became aware that a check was cut for $50,000 by the tortfeasor’s insurance company and that DiBenedetto’s medical liens were just shy of $35,000.  He then explained that despite the check being over the medical liens, it was typical in cases such as this one that there not be a disbursement until all of the liens were settled.  He then instructed DiBenedetto to follow-up with Conour about the status of the case.

Later in 2011, DiBenedetto’s UIM claim was settled; but, once again, she never received any of the proceeds.  Devereux resigned from the law firm during this time period due to his concerns about Conour’s actions.  In 2012, Conour was charged with stealing millions of dollars from his clients, including DiBenedetto, and ultimately plead guilty in 2013.

DiBenedetto subsequently brought a legal malpractice claim against Devereux alleging that he breached his duty to her by not providing accurate information relating to her settlement proceeds.  Devereux argued that it was common practice for personal injury attorneys to hold money in trust while settling underinsurance claims.  Therefore, he had no reason to suspect at the time that there was any misdoing by Conour. The trial court was persuaded by this explanation and granted summary judgment.

Thereafter, DiBenedetto appealed, arguing that there was a question of fact, because she introduced an affidavit from an attorney that Devereux deviated from the standard of care.  In the affidavit, the attorney stated Devereux “should have taken some actions to protect [her] by investigating further” since he knew that the funds had not been disbursed for several months.  However, a split appellate court affirmed summary judgment, holding that Devereux had a duty to provide accurate information, and he provided it in this instance.  Therefore, there was no deviation, and summary judgment was appropriate.

Alex Passo and the Patterson Law Firm, LLC handle legal malpractice actions throughout Illinois and Indiana.  If you have a legal malpractice case that you would like to discuss with Alex, you can reach him at 312-750-1820 or apasso@pattersonlawfirm.com.

Gary Attorney Arrested for Theft of Client Funds

Attorneys are oftentimes entrusted with handling their clients’ funds.  One of the most egregious breaches of our code of professional conduct is when an attorney intentionally misappropriates client funds.  Unfortunately, it does occur.

On June 19, 2017, the Indiana State Police arrested Gary attorney Ruth Batey for allegedly stealing her clients’ funds.  The Police state that Batey settled a personal injury case on the behalf of two Gary police officers that were involved in a car crash.  However, she never notified the police offices that she settled the case and kept the proceeds.

Alex Passo and the Patterson Law Firm, LLC have experience handling legal malpractice actions throughout Illinois and Indiana.  If you have a legal malpractice matter, you may reach Alex Passo at (312) 750-1820 or apasso@pattersonlawfirm.com

Indiana Court of Appeals Recognizes Exception to Economic-Loss Doctrine in Accounting Malpractice Actions

Alex Passo recently had an article published ABA Litigation Committee Professional Liability Section's monthly newsletter on the topic of whether the economic-loss doctrine applies to accounting malpractice actions.

Alex Passo and the Patterson Law Firm, LLC handle accounting malpractice actions throughout Illinois and Indiana.  Alex can be reached at (312) 750-1820 or apasso@pattersonlawfirm.com.