ILNews

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. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

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