A Bankruptcy Court Order Permitting Creditors to Pursue Legal Malpractice Claims in State Court in the Name of a Debtor’s was an Impermissible Assignment and Violates Public Policy

Joe Garin and Jessica Green 2016By Joseph P. Garin, Esq. and Jessica A. Green, Esq., of Lipson, Neilson, Cole, Seltzer & Garin, P.C., Las Vegas, Nevada; as published in the March 2017 issue of the eAdvisory published by the American Bar Association’s Standing Committee on Lawyers’ Professional Liability

In Tower Homes, LLC v. William H. Heaton, the Nevada Supreme Court concluded a bankruptcy court order permitting a group of creditors to pursue a legal malpractice claim in the debtor’s name constituted an impermissible assignment of the claim which, as a matter of public policy, is prohibited under Nevada law.

Tower Homes, LLC (“Tower”) retained attorney William Heaton to assist with a residential common ownership project. Various individual investors (hereinafter the “Purchasers”) made earnest money deposits before the project was complete and entered into contracts with Tower to reserve condominiums. The project failed and Tower entered Chapter 11 bankruptcy protection.

The Purchasers were among the many creditors in the bankruptcy proceedings. In 2008, the bankruptcy trustee created a plan of reorganization and the bankruptcy court entered a confirmation order. Per the order, the trustee and bankruptcy estate retained all legal claims. In 2010, the bankruptcy trustee entered into a stipulation and order with the Purchasers recognizing the trustee did not have sufficient funds to pursue any legal malpractice claims related to the Purchasers’ lost earnest money deposits, and instead allowed the Purchasers to pursue the claim in Tower’s name.

Pursuant to the 2010 order, in 2012, the Purchasers filed a legal malpractice lawsuit against Heaton, naming Tower as plaintiff. Dissatisfied with the Purchasers’ standing to pursue the legal malpractice claim, the state trial court allowed the Purchasers to seek an amended order from the bankruptcy court. In 2013, the bankruptcy court entered an additional order authorizing the Purchasers to pursue any and all claims on behalf of Tower (specifically including the malpractice case against Heaton) and noted that the recovery “shall be for the benefit of the [P]urchasers.”

Heaton moved for summary judgment in the district court arguing the 2013 bankruptcy stipulation and order constituted an impermissible assignment of a legal malpractice claim. The Purchasers argued federal law permits a Chapter 11 bankruptcy plan to allow named representatives of the estate to bring legal malpractice claims on behalf of the estate, with or without an assignment. The Purchasers also contended that they were assigned only the proceeds, not the entire malpractice claim. The Nevada Supreme Court previously determined that in a personal injury context, the difference between an assignment of an entire claim and an assignment of proceeds was the retention of control; reasoning that when only proceeds are assigned, the original party maintains control over the claim, but when an entire claim is assigned, a new party gains control over it. Despite these arguments, the trial court granted summary judgment in Heaton’s favor on the basis that there was an assignment of the legal malpractice claim contrary to Nevada law. The Purchasers appealed.

The Nevada Supreme Court affirmed summary judgment in favor of the attorney. In its decision, the Nevada Supreme Court reinforced the traditional notion that the assignment of legal malpractice claims is generally prohibited and “[a]s a matter of public policy, [Nevada] cannot permit enforcement of a legal malpractice action which has been transferred by assignment…but which was never pursued by the original client” as “[t]he decision to bring a malpractice action against an attorney is one peculiarly vested in the client.” The Nevada Supreme Court agreed that while a bankruptcy plan may allow an estate representative to pursue the estate’s claim without an assignment so long as the representative is prosecuting the claim “on behalf of the estate,” “[i]f a party seeks to prosecute the action on its own behalf, it must do as an assignee, not a special representative.” The Court reasoned that because the bankruptcy court’s order transferred control and proceeds of the legal malpractice claim to the Purchasers, the Purchasers were not pursuing claim on behalf of the estate as permitted by federal law, but rather pursuing it for their own benefit.

Practice Note: This decision runs contrary to recent decisions in other jurisdictions that seem to relax the standard privity requirements in legal malpractice claims and permit assignments of legal malpractice claims to non-clients in a business context.

Phillip E. Seltzer on Panel of Experts for ICLE Webinar Titled “Identify and Pursue Legal Malpractice Claims”

Phillip E. Seltzer, a Principal and Shareholder of Lipson, Neilson, Cole, Seltzer, Garin, P.C., was selected by the prestigious Institute for Continuing Legal Education (ICLE) to be on a panel of experts for a webinar titled “Identify and Pursue Legal Malpractice Claims.” Posted on ICLE.org, this webinar is available for member viewing and provides continuing legal education credits.

The overall theme of this webinar addresses identifying legal malpractice as a claim, the elements necessary to sustain such a claim, and the available defenses that may bar or defeat such an action. Topics discussed include: strategies for identifying the required elements for a potential malpractice action; the evaluation of the defenses that might bar recovery or defeat a claim; establishing or refuting the applicable standard of care with expert testimony; identifying when a conflict of interest results in divided loyalties, when such a conflict may form the basis of a claim, and the defenses to such conflict of interest claims; and distinguishing malpractice liability from a violation of professional ethical standards and if or when such standards are relevant to litigating a malpractice claim.

Phillip E. Seltzer is an AV-Preeminent® rated attorney that is recognized nationwide for his work in defending legal malpractice claims. He focuses his practice on the litigation of business torts and the defense of professional liability claims, primarily dealing with lawsuits against attorneys. Mr. Seltzer also defends professionals in other fields, including architecture and design professionals, accountants, real estate agents, insurance agencies and insurers, and E&O claims against directors, officers, and employers.

He has served as a hearing officer for the Character and Fitness Committee of the State Bar of Michigan, has published numerous articles and has publicly presented on a variety of topics regarding the defense of legal malpractice claims. He is actively involved in organizations focusing on the law governing lawyers, professional liability, and lawyers’ ethical responsibilities.

Contact: Phillip E. Seltzer
Phone: 248-593-5000
Email: PSeltzer@lipsonneilson.com

Sandra Glazier Selected to Speak at the 29th Annual Spring Symposia for the American Bar Association’s Section of Real Property, Trust and Estate Law

SG001_SQ_eLipson Neilson Shareholder Sandra Glazier has been selected by the American Bar Association (ABA) to co-present “Disputes Over Estate or Trust Administration” during the community outreach program of the 29th Annual Spring Symposia for the Section of Real Property, Trust and Estate Law. This presentation will address disputes that arise during the course of administration of an estate or trust, including: accounting proceedings, breach of fiduciary duty/surcharge litigation, and removal of fiduciary proceedings. Ms. Glazier will co-present along with Laura Lattman, Principal of The Lattman Law Firm in New York City.

Ms. Glazier is one of only two Michigan attorneys selected by the ABA to present in the Estate Planning and Trust Administration portion of the Symposia that will be held in Denver, Colorado during April 19 – 21.

An attorney for more than 34 years, Ms. Glazier is known for her expertise and successful track record in probate litigation, estate planning, trust and estate administration, and family law matters.  The cases she works on tend to be very complex and require technical as well as legal expertise.  Ms. Glazier has represented contestants and proponents of estate planning documents, as well as fiduciaries, in significant trust litigation proceedings.  An AV-Rated attorney, she has also been recognized as a “Top Lawyer” by DBusiness, in the areas of probate, estate and family law.

Ms. Glazier has had numerous articles published by some of the legal industry’s leading publications. In addition, she has presented on estate planning and probate litigation related topics for the ABA, Notre Dame Tax and Estate Planning Institute, Kansas City Estate Planning Symposium, ICLE, the OCBA, Wilmington Trust’s New York Trust Symposium and the Bloomberg BNA Estate and Gift Tax Advisory Board.

Contact: Sandra Glazier
Phone: 248-593-5000
Email: sglazier@lipsonneilson.com

Dax Watson Presents “Branding Dos & Don’ts” at Keller Williams National Training Event

Dax Watson at Keller Williams in Las VegasDax Watson, Managing Partner of the firm’s Phoenix office, was featured on a panel of real estate industry experts at the Keller Williams “Family Reunion” national training conference. Moderated by Kathleen Manchin, the Corporate Counsel at Keller Williams Realty Inc., joining Dax on the panel were the Kathie Connelly, Executive Director of the Maryland Real Estate Commission and Gary Pickren, a real estate attorney from South Carolina. Real estate agents and brokers attended this discussion to learn how to build a brand that complies with their local laws and regulations.

Stacked with top speakers from across the country, and described on the Keller Williams website as “the real estate industry’s most powerful training event”, this conference was held on February 13-17, at the Mandalay Bay Convention Center in Las Vegas.

Dax Watson focuses his law practice in commercial litigation with an emphasis in real estate matters and professional liability defense. His clients include professionals in the fields of real estate, law, accounting, architecture, and engineering. Dax is also an experienced mediator that conducts private mediations and settlement conferences for all types of civil disputes, with a focus on real estate and commercial litigation disputes. He regularly appears and represents clients in regulatory matters before the Arizona Department of Real Estate and other state and federal agencies.

About Lipson Neilson
Founded in 1985, Lipson, Neilson, Cole, Seltzer, Garin, P.C. has offices in Arizona, Nevada, and Michigan. The firm is widely known for its excellence in the professional liability lines, offering invaluable insight and experience to its clients across all industries. You can learn more at www.lipsonneilson.com.

Contact: Dax Watson
Phone: 602-382-1500
Email: DWatson@lipsonneilson.com

Attorney Julie A. Funai Joins Lipson Neilson’s Las Vegas Office

Julie FunaiAttorney Julie A. Funai has joined the firm’s Las Vegas office as an associate. Ms. Funai has a wide range of experience in civil litigation, transactions, mediation and arbitration. She served as general counsel as well as with prestigious law firms in the Las Vegas area.

Ms. Funai received a B.S. in Business Administration with a specialization in Marketing from Marquette University in Milwaukee, Wisconsin, and a J.D. from St. Mary’s University, School of Law in San Antonio, Texas.

About Lipson Neilson
Founded in 1985, Lipson, Neilson, Cole, Seltzer, Garin, P.C. has offices in Las Vegas, Phoenix, and Bloomfield Hills. The firm is widely known for its excellence in the professional liability lines, offering invaluable insight and experience to its clients across all industries. The firm represents clients in Nevada, across the USA and around the world.

Contact: Joe Garin – Managing Partner of the Lipson Neilson Las Vegas office.
Phone: 702-382-1500
Email: JGarin@lipsonneilson.com

Attorney Amber Williams Joins Lipson Neilson Las Vegas Office

Amber WilliamsAttorney Amber Williams has joined the firm’s Las Vegas office as an associate. Ms. Williams’ practice focuses primarily in the areas of insurance defense, commercial litigation, and construction law. She also has experience in the areas of family law, trusts, estate and probate law, and personal injury law.

Ms. Williams graduated cum laude from the University of Nevada, Las Vegas with a B.S. in Economics and a B.S. in Business Management. She received a J.D. from the Arizona Summit School of Law in Phoenix, Arizona. While in law school, Ms. Williams was a member of Arizona Summit moot court team and participated in three national moot court competitions, winning a best brief award in two of the competitions. Admitted to practice law in Nevada, Ms. Williams previously worked for several civil litigation firms in Nevada.

About Lipson Neilson
Founded in 1985, Lipson, Neilson, Cole, Seltzer, Garin, P.C. has offices in Las Vegas, Phoenix, and Bloomfield Hills. The firm is widely known for its excellence in the professional liability lines, offering invaluable insight and experience to its clients across all industries. The firm represents clients in Nevada, across the USA and around the world.

Karen A. Smyth Selected for Panel of Industry Professionals to Discuss the Rise in Compensation Discrimination Claims and the Impact on Employment Practices Liability Insurance

_DSC9496-8_0x10_0-03A-Q01Karen A. Smyth, a Partner at the firm, will be on a panel of legal and insurance industry professionals at the 25th Employment Practices Liability Insurance Forum. The theme of this panel discussion is, “Spotlight on Pay Equity: Examining the Rise in Compensation Discrimination Claims and the Impact on EPLI.”

Held on January 26-27, 2017 in New York City, this forum is stacked with top speakers from across the country; attendees include claims professionals, underwriters, risk managers, in-house counsel and outside counsel.

Topics to be discussed by Ms. Smyth and her co-panelists include:

  • The recent equal pay movement and an overview of the latest key legislative and regulatory developments that employers should familiarize themselves with to stay ahead of the curve.
  • The recent ramped up pay equity laws enacted in New York and California.
  • New pay equity rules issued for federal contractors.
  • Industries demonstrating the most dramatic wage gaps between men and women.
  • Evaluating exposure to claims of compensation discrimination and tips for equal pay compliance.
  • The latest claims arising from pay discrimination or “glass ceiling” failure to promote cases.
  • How new state laws are making it easier for employees to succeed on pay discrimination claims.

Ms. Smyth regularly provides counsel to clients in their efforts to develop, conduct or enforce compliance programs. These include customizing employee manuals, employment agreements, non-compete agreements, anti-harassment and anti-discrimination policies, internal investigations of reported harassment, discrimination, or retaliation and general HR policies.

Additionally, Ms. Smyth regularly keeps her clients abreast of evolving employment laws, regulations and ordinances governing protected classes and activities, and wage and hour issues. Ms. Smyth represents employers in a variety of claims, both at the administrative level (EEOC/MDCR) as well as civil complaints filed in state and federal courts.

On a national level, Ms. Smyth is routinely invited to participate as a panel speaker on employment law for various national organizations. She also provides internal training to employers, supervisors, and employees about various employment law topics. She is a licensed attorney in Michigan and New York, and admitted to practice in Michigan’s state trial and appellate courts, federal district courts, and Sixth Circuit Court of Appeals.

About Lipson Neilson
Lipson, Neilson, Cole, Seltzer & Garin, P.C. is an AV rated firm that recently celebrated its 31st anniversary. The firm has offices in Michigan, Nevada and Arizona. The firm is widely known for its employment defense and all other professional liability lines, offering invaluable insight and experience to its clients across all industries. It also provides litigation management services and represents insurers on coverage matters as a local representative. Lipson Neilson is committed to identifying and pursuing the most cost-effective options available for claim resolution. You can learn more at www.lipsonneilson.com.

Contact: Karen Smyth
Phone: 248-593-5000
Email: ksmyth@lipsonneilson.com

Attorney David Markman Joins Lipson Neilson’s Las Vegas Office

markman-001-web-resAttorney David Markman has joined the firm’s Las Vegas office. David’s practice focuses primarily in the areas of insurance defense, real estate litigation, construction law, and general liability defense. He is admitted to practice in the State of Nevada, and the United States District Court for the District of Nevada.

David received a degree in finance from Michigan State University, and a J.D. from William S. Boyd School of Law. During law school, David externed for the Honorable Douglas E. Smith, Eighth Judicial District Court and for the Las Vegas City Attorney’s Office.

About Lipson Neilson
Founded in 1985, Lipson, Neilson, Cole, Seltzer, Garin, P.C. has offices in Las Vegas, Phoenix, and Bloomfield Hills. The firm is widely known for its excellence in the professional liability lines, offering invaluable insight and experience to its clients across all industries. The firm represents clients in Nevada, across the USA and around the world

Independent Insurance Agents: Order Takers or Fiduciaries?

Independent Insurance Agents: Order Takers or Fiduciaries?
Article co-written by C. Thomas Ludden, litigation Partner at the Lipson Neilson law firm, and James R. Redeker, claims manager in the Insurance Agent’s E&O Program at SwissRe Corporate Solutions.

An insured has a significant loss, but discovers that the insurance company will not cover the loss under the insurance policy that had been purchased. One of the potential options that an insured may consider pursuing is a claim against the insurance agent who was involved. Whether that claim is ultimately successful may depend upon whether the agent is considered a fiduciary of the insured or the agent has assumed duties in addition to the duty of ordinary care.

The answer to these questions depends upon:

1. Whether the agent is an independent or captive agent;

2. What duties are normally imposed by the applicable jurisdiction;

3. Whether the agent and the customer have agreed that the agent would perform additional duties;

4. Whether the agent has performed acts or omissions that trigger additional duties; and

5. Whether unique circumstances exist that will impose additional duties upon the agent…Click here for full article.

Featured Attorney Kaleb Anderson

Kaleb D. Anderson is a Partner in Lipson Neilson’s Las Vegas office, practicing in the areas of homeowner/community associations, directors & officers, professional liability, insurance defense, and real estate. Mr. Anderson has been practicing law in Nevada since 2001, and his experience includes the representation of large corporations and insurance companies as well as individuals and small businesses.

He has successfully defended hundreds of directors & officers, HOAs and community associations in actions relating to NRS Chapter 116 and alleged breaches of governing documents. This experience includes actions before state and federal courts as well as administrative agencies. Mr. Anderson is regularly involved in litigation that shapes the landscape of community association law in Nevada.

In addition, Kaleb has extensive experience representing financial institutions in creditor’s rights actions. This includes defense of FDCPA claims as well as actions to collect consumer and commercial debt.

Prior to joining Lipson Neilson, Kaleb worked at the Las Vegas office of a large insurer where he defended and tried general liability and insurance defense cases.

HONORS

In addition to his membership in the Nevada and Clark County bar associations, Mr. Anderson is also involved with the local chapter of the University of Utah alumni association, and does volunteer legal work through his local church.  He speaks fluent Portuguese, having lived for two years in Brazil doing humanitarian work.