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. Someone off their meds? C'mon John, it is called the politics of Empire. Get with the program, will ya? How can we build one world under secularist ideals without breaking a few eggs? Of course, once it is fully built, is the American public who will feel the deadly grip of the velvet glove. One cannot lay down with dogs without getting fleas. The cup of wrath is nearly full, John Smith, nearly full. Oops, there I go, almost sounding as alarmist as Smith. Guess he and I both need to listen to this again: https://www.youtube.com/watch?v=CRnQ65J02XA

  2. Charles Rice was one of the greatest of the so-called great generation in America. I was privileged to count him among my mentors. He stood firm for Christ and Christ's Church in the Spirit of Thomas More, always quick to be a good servant of the King, but always God's first. I had Rice come speak to 700 in Fort Wayne as Obama took office. Rice was concerned that this rise of aggressive secularism and militant Islam were dual threats to Christendom,er, please forgive, I meant to say "Western Civilization". RIP Charlie. You are safe at home.

  3. It's a big fat black mark against the US that they radicalized a lot of these Afghan jihadis in the 80s to fight the soviets and then when they predictably got around to biting the hand that fed them, the US had to invade their homelands, install a bunch of corrupt drug kingpins and kleptocrats, take these guys and torture the hell out of them. Why for example did the US have to sodomize them? Dubya said "they hate us for our freedoms!" Here, try some of that freedom whether you like it or not!!! Now they got even more reasons to hate us-- lets just keep bombing the crap out of their populations, installing more puppet regimes, arming one faction against another, etc etc etc.... the US is becoming a monster. No wonder they hate us. Here's my modest recommendation. How about we follow "Just War" theory in the future. St Augustine had it right. How about we treat these obvious prisoners of war according to the Geneva convention instead of torturing them in sadistic and perverted ways.

  4. As usual, John is "spot-on." The subtle but poignant points he makes are numerous and warrant reflection by mediators and users. Oh but were it so simple.

  5. ACLU. Way to step up against the police state. I see a lot of things from the ACLU I don't like but this one is a gold star in its column.... instead of fighting it the authorities should apologize and back off.

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