ILNews

Judge denies summary judgment for law firm

Jennifer Nelson
February 15, 2010
Keywords
Back to TopE-mailPrintBookmark and Share

Note: This is a corrected version of the original Feb. 15, 2010, story. 

A federal judge has denied summary judgment for an Indianapolis law firm accused of selling stock held in escrow while the firm acted as a receiver of a company.

U.S. District Judge Larry J. McKinney denied Riley Bennett Egloff's motion for summary judgment Feb. 12 in Neil Lucas, individually and on behalf of Phonebillit, Inc., as shareholder v. Riley Bennett Egloff, No. 1:07-CV-534. Neil Lucas, a shareholder of Phonebillit, 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.

There was a dispute among Phonebillit's owners as to how much stock each owned. Lucas' suit accused the firm of unreasonably liquidating Phonebillit's assets, making unauthorized payments to another owner, Steven Sann, and selling Lucas' stock in Brightpoint that was held in escrow at Sann's suggestion. Lucas claimed the sale caused him to lose more than $75,000 because the proceeds were placed in a low-interest savings account.

A settlement was reached in September 2008 on all of the issues except the stock sale, which the court found to be personal to Lucas. RBE moved for summary judgment on that issue, 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 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 or involuntary dismissal.

At the Feb. 26 pre-trial conference, 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.

ADVERTISEMENT

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  2. If the end result is to simply record the spoke word, then perhaps some day digital recording may eventually be the status quo. However, it is a shallow view to believe the professional court reporter's function is to simply report the spoken word and nothing else. There are many aspects to being a professional court reporter, and many aspects involved in producing a professional and accurate transcript. A properly trained professional steno court reporter has achieved a skill set in a field where the average dropout rate in court reporting schools across the nation is 80% due to the difficulty of mastering the necessary skills. To name just a few "extras" that a court reporter with proper training brings into a courtroom or a deposition suite; an understanding of legal procedure, technology specific to the legal profession, and an understanding of what is being said by the attorneys and litigants (which makes a huge difference in the quality of the transcript). As to contracting, or anti-contracting the argument is simple. The court reporter as governed by our ethical standards is to be the independent, unbiased individual in a deposition or courtroom setting. When one has entered into a contract with any party, insurance carrier, etc., then that reporter is no longer unbiased. I have been a court reporter for over 30 years and I echo Mr. Richardson's remarks that I too am here to serve.

  3. A competitive bid process is ethical and appropriate especially when dealing with government agencies and large corporations, but an ethical line is crossed when court reporters in Pittsburgh start charging exorbitant fees on opposing counsel. This fee shifting isn't just financially biased, it undermines the entire justice system, giving advantages to those that can afford litigation the most. It makes no sense.

  4. "a ttention to detail is an asset for all lawyers." Well played, Indiana Lawyer. Well played.

  5. I have a appeals hearing for the renewal of my LPN licenses and I need an attorney, the ones I have spoke to so far want the money up front and I cant afford that. I was wondering if you could help me find one that takes payments or even a pro bono one. I live in Indiana just north of Indianapolis.

ADVERTISEMENT