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. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  2. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

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  5. He has refused his Assent to Laws, the most wholesome and necessary for the public good. He has forbidden his Governors to pass Laws of immediate and pressing importance, He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: For imposing Taxes on us without our Consent: He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.. He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless [ ] Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions. GOD BLESS THE GOVERNORS RESISTING! Count on the gutless judiciary to tie our children down and facilitate the swords being drawn across their throats. Wake Up America ...