Judge denies summary judgment for law firm

Jennifer Nelson
January 1, 2010
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A federal judge has denied summary judgment for an Indianapolis law firm accused of failing to comply with court-ordered fee processes and charging more than necessary for its work as a receiver.

U.S. District Judge Larry J. McKinney denied Riley Bennett Egloff's motion for summary judgment Friday in Neil Lucas, individually and on behalf of Phonebillit, Inc., as shareholder v. Riley Bennett Egloff, No. 1:07-CV-534. Neil Lucas filed his suit in 2007 accusing the firm of having a conflict of interest in its role as custodian and then receiver of Phonebillit Inc. Lucas and another owner of the company were in a dispute with the third owner of Phonebillit, Steven Sann, about whether Sann owned 50 percent of the company or 41 percent. RBE took over as custodian of Phonebillit when former RBE attorney Timothy Freeman was removed in 2005.

A court later that year determined that Sann owned only 41 percent of stock.

In his suit, Lucas accused Freeman and RBE of having undisclosed conflicts of interest because Freeman had made personal cash payments to Sann's attorney in Montana for possible purchase of an undisclosed ownership interest in Sann's new entity. The suit also alleged RBE used its authority as receiver to defend Phonebillit's ability to recover damages against the firm for alleged malpractice and breach of fiduciary duties.

The suit claimed RBE sold most of the assets of Phonebillit to Sann for $5,000 after telling the other shareholders nothing would be sold to Sann. It also alleged the company lost around $135,000 in six weeks after another company took over call-center operations; RBE made unauthorized cash payments to Sann; and the law firm sold Lucas' stock in Brightpoint that was held in escrow at the suggestion of Sann, resulting in a loss of more than $75,000 because the proceeds were placed in a low-interest savings account.

Lucas also said RBE's attorney fees were excessive and undocumented, and the firm repeatedly failed to comply with a court-ordered fee submission and approval process.

RBE moved for summary judgment, arguing that Lucas asserted a claim for legal malpractice which entitled the firm to an affirmative defense based on the business judgment rule. Lucas argued that RBE's liability stemmed from its duty as an escrow agent. Judge McKinney wrote the parties' arguments based on those theories are misplaced.

"This case presents a claim against a receiver for the alleged breach of the duties it owed to one of the receivership's creditors or one with whom the receiver was in privity," wrote the judge.

Lucas didn't assert a claim for legal malpractice, nor did he present a claim against an escrow agent. Also, the business judgment rule has no place in the litigation, the judge continued, because RBE was an arm of the court as the receiver.

Judge McKinney also denied Lucas' motion to strike the firm's affirmative defenses and RBE's motion for summary judgment on those defenses because there are triable issues of fact. He also denied the firm's motion for judgment as a matter of law/involuntary dismissal.

At the Feb. 26 pre-trial hearing, the court will address whether RBE's motion in limine and request for a protective order is moot, and RBE's motion to exclude expert testimony, including specific testimony from Lucas. A jury trial has been set for March 8.

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  1. I think the cops are doing a great job locking up criminals. The Murder rates in the inner cities are skyrocketing and you think that too any people are being incarcerated. Maybe we need to lock up more of them. We have the ACLU, BLM, NAACP, Civil right Division of the DOJ, the innocent Project etc. We have court system with an appeal process that can go on for years, with attorneys supplied by the government. I'm confused as to how that translates into the idea that the defendants are not being represented properly. Maybe the attorneys need to do more Pro-Bono work

  2. We do not have 10% of our population (which would mean about 32 million) incarcerated. It's closer to 2%.

  3. If a class action suit or other manner of retribution is possible, count me in. I have email and voicemail from the man. He colluded with opposing counsel, I am certain. My case was damaged so severely it nearly lost me everything and I am still paying dearly.

  4. There's probably a lot of blame that can be cast around for Indiana Tech's abysmal bar passage rate this last February. The folks who decided that Indiana, a state with roughly 16,000 to 18,000 attorneys, needs a fifth law school need to question the motives that drove their support of this project. Others, who have been "strong supporters" of the law school, should likewise ask themselves why they believe this institution should be supported. Is it because it fills some real need in the state? Or is it, instead, nothing more than a resume builder for those who teach there part-time? And others who make excuses for the students' poor performance, especially those who offer nothing more than conspiracy theories to back up their claims--who are they helping? What evidence do they have to support their posturing? Ultimately, though, like most everything in life, whether one succeeds or fails is entirely within one's own hands. At least one student from Indiana Tech proved this when he/she took and passed the February bar. A second Indiana Tech student proved this when they took the bar in another state and passed. As for the remaining 9 who took the bar and didn't pass (apparently, one of the students successfully appealed his/her original score), it's now up to them (and nobody else) to ensure that they pass on their second attempt. These folks should feel no shame; many currently successful practicing attorneys failed the bar exam on their first try. These same attorneys picked themselves up, dusted themselves off, and got back to the rigorous study needed to ensure they would pass on their second go 'round. This is what the Indiana Tech students who didn't pass the first time need to do. Of course, none of this answers such questions as whether Indiana Tech should be accredited by the ABA, whether the school should keep its doors open, or, most importantly, whether it should have even opened its doors in the first place. Those who promoted the idea of a fifth law school in Indiana need to do a lot of soul-searching regarding their decisions. These same people should never be allowed, again, to have a say about the future of legal education in this state or anywhere else. Indiana already has four law schools. That's probably one more than it really needs. But it's more than enough.

  5. This man Steve Hubbard goes on any online post or forum he can find and tries to push his company. He said court reporters would be obsolete a few years ago, yet here we are. How does he have time to search out every single post about court reporters and even spy in private court reporting forums if his company is so successful???? Dude, get a life. And back to what this post was about, I agree that some national firms cause a huge problem.