Justia U.S. 10th Circuit Court of Appeals Opinion Summaries

Articles Posted in Professional Malpractice & Ethics

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Dennis Malouf held key roles at two firms. One of the firms (UASNM, Inc.) offered investment advice; the other firm (a branch of Raymond James Financial Services) served as a broker-dealer. Raymond James viewed those dual roles as a conflict, so Malouf sold the Raymond James branch. But the structure of the sale perpetuated the conflict. Because Malouf did not disclose perpetuation of the conflict, administrative officials sought sanctions against him for violating the federal securities laws. An administrative law judge found that Malouf had violated the Securities Exchange Act of 1934, the Securities Act of 1933, the Investment Advisers Act of 1940, Rule 10b–5, and Rule 206(4)–1. Given these findings, the judge imposed sanctions. The SEC affirmed these findings and imposed additional sanctions, including disgorgement of profits. Malouf appealed the SEC’s decision, but finding no reversible error, the Tenth Circuit affirmed. View "Malouf v. SEC" on Justia Law

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Plaintiffs were all former members of the Fundamentalist Church of Jesus Christ of Latter-Day Saints (“FLDS”), which illegally practiced polygamy. In 2016, plaintiffs filed suit against the FLDS Prophet, Warren Jeffs, and Jeff’s lawyers, the law firm of Snow Christensen & Martineau (“SC&M”) and one of its partners, Rodney Parker, alleging defendants: (1) directly worked with Jeffs to create a legal framework that would shield him from the legal ramifications of child rape, forced labor, extortion, and the causing of emotional distress by separating families; (2) created an illusion of legality to bring about plaintiffs’ submission to these abuses and employed various legal instruments and judicial processes to knowingly facilitate the abuse; (3) held themselves out to be the lawyers of each FLDS member individually, thus creating a duty to them to disclose this illegal scheme; and (4) intentionally misused these attorney-client relationships to enable Jeffs’ dominion and criminal enterprise. Jeffs defaulted, and the district court dismissed every cause of action against the remaining defendants under Fed. R. Civ. P. 12(b)(6). The issue before the Tenth Circuit Court of Appeals stemmed from the district court’s dismissal of all claims against SC&M and Parker (collectively “defendants”). Reviewing the facts in the light most favorable to plaintiffs, the Court affirmed in part and reversed in part. For fifteen plaintiffs who brought legal malpractice and breach of fiduciary duty claims, the Court determined they pled facts sufficient to survive a motion to dismiss: a factual question remained for each of these plaintiffs regarding whether (and how long) equitable tolling applies to their limitations periods, and whether individual implied attorney-client relationships existed. Twelve plaintiffs pled facts sufficient to survive dismissal of their fraudulent and negligent misrepresentation claims, again, there was a factual question regarding when they discovered their claims, thereby starting the running of the statutory period, and whether an implied attorney-client relationship existed. Civil RICO claims were deemed forfeited as inadequately presented in plaintiffs’ opening brief. With respect to TVPRA claims, nine plaintiffs pled facts sufficient to pass muster under the plausibility standard and thus survived dismissal. View "Bistline v. Jeffs" on Justia Law

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Belsen Getty, LLC, a registered investment adviser owned by Terry Deru, obtained a claims-made financial-services-liability policy (the Policy) from XL Specialty Insurance Company covering Belsen Getty and its advisers for the period for one year. Under the policy, XL had no duty to defend. During the policy period James, Jenalyn, and Wade Morden brought claims against Belsen Getty and Deru alleging improper and misleading investment advice. XL denied coverage, asserting the Mordens’ claims and claims brought by the Securities and Exchange Commission (SEC) before the policy period concerned “Interrelated Wrongful Acts,” as defined by the Policy, and that the Policy therefore required treating the two claims as one claim made before the policy period. Belsen Getty and Deru then settled with the Mordens, assigning their rights against XL; and the Mordens sued XL in federal district court, raising the assigned claims that XL breached its covenant of good faith and fair dealing and its fiduciary duties to Belsen Getty and Deru in denying coverage under the Policy. XL counterclaimed that the Policy’s Interrelated Wrongful Acts provision precluded coverage. The Mordens moved for partial summary judgment on the counterclaim and on several of XL's affirmative defenses. XL moved for summary judgment based on the policy and for failure to prove bad faith or breach of fiduciary duty. The district court denied XL's counterclaim, but granted summary judgment on the bad-faith and fiduciary-duty claims. The Mordens appealed summary judgment against them on their bad-faith and fiduciary-duty claims and on the denial of their motion to amend their complaint to add a breach-of-contract claim. XL cross-appealed the summary judgment against it on its counterclaim that the Policy’s Interrelated Wrongful Acts provision barred all the Mordens’ claims. The Tenth Circuit reversed the denial of XL’s motion for summary judgment on its counterclaim: this reversal undermined the Mordens’ challenges to the summary judgment against them and the denial of their motion to amend. The Court therefore affirmed summary judgment against the Mordens on their claims and the denial of their motion to amend. View "Morden v. XL Specialty Insurance" on Justia Law

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A former small-town doctor, defendant Joel Miller, was charged with multiple counts of health-care fraud, money laundering, and distributing a controlled substance outside the usual course of professional treatment, as well as one count of making a false statement on an application submitted to the Drug Enforcement Administration. A jury acquitted him on all of the financial charges as well as several of the drug distribution charges, but found him guilty on seven counts of distributing a controlled substance, and one count of making a false statement to the DEA. The district court granted Defendant’s post-judgment motion for acquittal on one of the controlled-substances counts based on an error in the indictment. The court then sentenced him to forty-one months of imprisonment on the six remaining distribution counts, plus a consecutive sentence of nineteen months on the false-statement count, for a total sentence of sixty months of imprisonment. Defendant appealed his convictions and sentence. The Tenth Circuit found no error in the imposition of defendant’s sentence on the six distribution counts; however the Court reversed and remanded on the false statement count. The Court was persuaded that trial court proceedings “broadened the possible bases for conviction beyond those found in the operative charging document. …we are persuaded that the trial proceedings in this case effected a constructive amendment.” View "United States v. Miller" on Justia Law

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This appeal involved the extent of a duty to defend under a “professional services” policy of liability insurance issued to a law firm. The issue arose when the law firm was confronted with allegations of overbilling. The insurer, Evanston Insurance Company, defended the law firm, The Law Office of Michael P. Medved, P.C., under a reservation of rights but ultimately concluded that the allegations of overbilling fell outside the law firm’s coverage for professional services. The law firm disagreed with this conclusion; the district court agreed with the insurer. The Tenth Circuit concurred with the district court and affirmed summary justment in favor of Evanston on all claims and counterclaims. View "Evanston Insurance v. Law Office Michael P. Medved" on Justia Law

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In 2010, the Kansas Disciplinary Administrator filed a formal complaint against plaintiff-appellant Phillip Kline for violations of the Kansas Rules of Professional Conduct (KRPC). A panel held a disciplinary hearing in two phases from February to July 2011. In October, it released a 185-page report finding multiple violations of the KRPC. It recommended an indefinite suspension from the practice of law. Kline filed exceptions to the report. The case went to the Kansas Supreme Court. In May 2012, Kline moved to recuse five justices based on participation in earlier cases involving him, arguing recusal would “not hinder [his] appeal from being heard” because “the Supreme Court may assign a judge of the court of the appeals or a district judge to serve temporarily on the supreme court.” The five justices voluntarily recused. In November 2012, Kline argued his case before the Kansas Supreme Court. In October 2013, the court found “clear and convincing evidence that Kline committed 11 KRPC violations.” It ordered indefinite suspension. In February 2014, Kline moved to vacate or dismiss the judgment, claiming the court was unlawfully composed because Justice Biles lacked authority to appoint replacement judges. The Clerk of the Kansas Appellate Courts did not docket the motion because the case was closed. In March, Kline petitioned for certiorari in the United States Supreme Court, alleging due process and free speech violations. The Supreme Court denied the petition. In October 2015, Kline sued in federal district court, asserting ten counts for declaratory and injunctive relief under 42 U.S.C. 1983. Counts one through nine attacked the Kansas Supreme Court’s decision. Count ten was a “prospective challenge” to the “unconstitutionally vague” Kansas Supreme Court Rule 219. The district court dismissed count three as a non-justiciable political question. It dismissed the other nine counts for lack of subject matter jurisdiction under the Rooker-Feldman doctrine. Kline appealed, but finding no reversible error in the district court's judgment, the Tenth Circuit affirmed. View "Kline v. Biles" on Justia Law

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Pro se plaintiff George Farmer, a resident of Colorado and a licensed attorney, sued defendant Banco Popular under federal and state law to challenge Banco’s demand that he pay off the full amount owed under a $150,000 Home Equity Line of Credit (HELOC) his deceased father obtained in 2001. In 2012, the parties informed the district court they had reached a settlement: Banco was to pay Farmer $30,000 and forgive some principal, unpaid interest, and attorney’s fees. Farmer would pay $137,380.94 in satisfaction of the HELOC, due later that year. Farmer “began to negotiate a number of the . . . terms of the draft agreement.” Banco “sent Farmer the completed settlement agreement, but Farmer sought changes to the exhibits.” These exhibits included a deed in lieu of foreclosure and a satisfaction of mortgage. After Farmer received the revised exhibits he still would not sign the settlement agreement, but “again sought more changes, including the amount, timing, and structure of the payment.” Banco ultimately filed a motion to enforce the settlement agreement. Notwithstanding his prior representations to the court, Farmer sought to reduce his net payment of $107,380.34 under the terms of the agreement to $100,000, but pay it by October 1 rather than by October 15. The court held another hearing on September 10 at which Farmer again told the court the settlement was fine: “‘[W]e are all in agreement to enforce the settlement,’ and ‘the only thing that remains is the date that my payment is due.’” The parties then agreed that Banco would not pay Farmer $30,000 as previously agreed, but instead, Farmer would pay Banco $107,380.34 by November 15, 2012. “Banco Popular sent Farmer an agreement reflecting the new amount and due date, but instead of signing, Farmer asked for changes and additions. Banco Popular refused most of those changes and asked Farmer to sign the revised agreement, which he never did.” A prior Tenth Circuit decision recited, in detail, Farmer’s ongoing conduct that led the district judge to “warn that he would impose the most severe sanctions and penalties if the parties did not comply with his order” enforcing the settlement. "Now here we are again:" Farmer appealed the district court order imposing fees and costs on him as a punitive sanction. The Tenth Circuit affirmed the district court's order, as modified: sanctions imposed on Farmer in the form of fees and costs due and payable to Banco totaled $50,824.53; Farmer was admonished that further prolongation of this appeal absent good cause would result in the Court imposing its own monetary sanctions on him pursuant to Fed. R. App. P. 38. The Clerk of Court was directed to initiate a formal attorney disciplinary proceeding for the Court to consider further whether additional discipline is appropriate. View "Farmer v. Banco Popular" on Justia Law

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Defendant-Appellant George David Gordon was a former securities attorney convicted of multiple criminal charges relating to his alleged participation in a "pump-and-dump" scheme where he (along with others) violated the federal securities laws by artificially inflating the value of various stocks, then turning around and selling them for a substantial profit. The government restrained some of his property before the indictment was handed down and ultimately obtained criminal forfeiture of that property. On appeal, Defendant raised multiple issues relating to the validity of his conviction and sentence, and the propriety of the government’s conduct (both before and after trial) related to the forfeiture of his assets. In the end, the Tenth Circuit found no reversible error and affirmed Defendant's conviction and sentence, as well as the district court’s forfeiture orders. View "United States v. Gordon" on Justia Law

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"By all appearances, Defendant Howard Kieffer had a successful nationwide criminal law practice." Defendant managed to gain admission to multiple federal trial and appellate courts across the country where he appeared on behalf of numerous criminal defendants. Defendant never attended law school, sat for a bar exam, nor receive a license to practice law. A North Dakota jury convicted Defendant of mail fraud and for making false statements. The jury found Defendant gained admission to the District of North Dakota by submitting a materially false application to the court, then relied on that admission to gain admission to the District of Minnesota, District of Colorado, and Western District of Missouri. The district court sentenced Defendant to 51 months' imprisonment and ordered him to pay restitution to six victims of his scheme. A jury in Colorado also convicted him of making false statements, wire fraud and contempt of court. The district court sentenced Defendant to 57 months' imprisonment to run consecutively to the 51 month sentence previously imposed on him in North Dakota. The court further ordered him to pay restitution to seven victims of his scheme unaccounted for in North Dakota, and directed him as a special condition of supervised release to obtain the probation office's preapproval of any proposed employment or business ventures. Defendant appealed his most recent convictions and sentence from Colorado, each based on his Sixth Amendment right to have the Government prove, and a jury find, all elements of the charged crimes beyond a reasonable doubt. Further, Defendant presented five challenges to his sentence, three of which bore directly upon the district court’s application of the Sentencing Guidelines. Upon review, the Tenth Circuit found that the record reflected that by the time of Defendant's actual sentencing, the district court had decided to sentence him within the advisory guideline range. The court then proceeded to calculate Defendant’s guideline range incorrectly on the basis of numerous procedural errors, both factual and legal. As a result, the court selected a sentence from the wrong guideline range. Accordingly, the Tenth Circuit vacated Defendant's sentence on Counts I and II of the superceding indictment and remanded the case for resentencing. The Court affirmed the district court in all other respects. View "United States v. Kieffer" on Justia Law

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Trinity Mortgage Companies, Inc. (Trinity) appealed the district court’s order granting summary judgment in favor of David Dryer and Dryer and Associates, P.C. (Dryer). Trinity, formerly a mortgage brokerage company owned by Shawn Cremeen, entered into a franchise agreement with 1st Class Lending, Inc., which was owned by Dennis Junker and Richard Gheisar. In April 2007, Junker sued Gheisar and Trinity in Oklahoma state court for breach of contract, fraud, defamation, and conversion, all concerning his alleged wrongful termination. Between May 2007 and April 2008, Dryer represented Trinity, without a written contract. In October 2007, while the lawsuit was pending, Trinity entered into an agreement to sell most of its assets and to stop originating loans. Meanwhile, after Trinity failed to file an answer in the pending lawsuit, Junker moved for a default judgment against Trinity. Because Dryer failed to object to entry of default judgment against Trinity, the state court granted the motion against Trinity in January 2008. The another firm replaced Dryer as Trinity’s counsel, who unsuccessfully sought to vacate the default judgment against Trinity. Cremeen and Junker eventually entered into a settlement agreement concerning the lawsuit. Trinity confessed a final judgment in favor of Junker but the only recovery of this amount would be through his ownership interest in Trinity, which was the action against Dryer. Trinity moved for partial summary judgment on its malpractice and breach of contract claims. Dryer moved for summary judgment, contending that all claims were barred as a matter of law because Trinity unlawfully assigned them to Junker. In response, Trinity argued that there had not been an assignment of tort causes of action; there was never any collusion between Trinity and Junker; and that the malpractice case was not contingent upon disproving the merits of the underlying suit against Trinity. The district court granted Dryer’s motion for summary judgment and denied Trinity’s motion for partial summary judgment. Upon review, the Tenth Circuit concluded that the district court properly granted summary judgment in favor of Dryer.