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. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  2. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

  3. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  4. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  5. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

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