Monthly Archives: August 2016

Couple, charged $5M in failed case, sue NY lawyer

Bland Richter represent the Nitsches in a legal malpractice suit filed Aug. 8 in Greenville County against Fensterstock, Kublanovsky, and their local counsel in the underlying case, Stephanie Burton of Gibbes Burton in Spartanburg for $5M in lawyers fees resulting from a failed case. The full article is below and can be found at SCLawyersWeekly.com

Lawyer’s Weekly

Couple, charged $5M in failed case, sue NY lawyer

By: Phillip Bantz August 17, 2016

Two South Carolina lawyers are trading barbs with a New York attorney over his hourly fee agreement with an elderly Greenville County couple in a case that ultimately was dismissed for being time-barred – leaving the clients with a $5 million legal bill.

Eric Bland and Ronnie Richter allege that Blair Fensterstock, managing partner of Fensterstock & Partners, which is a stone’s throw from Wall Street, wrongly urged Robert and Veronica Nitsch to pursue doomed claims in 2012 that were connected to corporate fraud allegations rooted in activities that occurred in the 1960s and 1980s.

A judge dismissed the Nitsches’ claims last fall based on a finding that the three-year statute of limitations had expired. The couple has paid nearly $4 million in legal fees to Fensterstock and his New York co-counsel, Eugene Kublanovsky. And they still have an unpaid bill for more than $1 million.

Bland and Richter of Columbia and Charleston, respectively, represent the Nitsches in a legal malpractice suit filed Aug. 8 in Greenville County against Fensterstock, Kublanovsky, and their local counsel in the underlying case, Stephanie Burton of Gibbes Burton in Spartanburg.

The complaint alleges that the defendant lawyers acted “through greed, incompetence, or both.”

“When these people [the Nitsches] were making the decision to hire the New York law firm, the New York lawyers made disparaging remarks about South Carolina lawyers,” Bland said in an interview. “They said, ‘You need real lawyers, not South Carolina lawyers, to handle this matter.’”

He added, “The problem was, irrespective of whether it was a meritorious claim or not, it was time-barred.”

Reacting to Bland’s comments, Fensterstock said: “There has never been a pejorative statement about a South Carolina firm coming out of my firm and anyone who says that is a goddamn liar.”

During an interview, Fensterstock repeatedly described the malpractice suit as “absolutely meritless, sanctionable and a fool’s errand.”

Richter wrote in an email that Fensterstock’s comment “warrants no response.”

Did couple get railroaded?

The underlying corporate fraud claims stem from stock transactions in 1964 and 1985 that involved New York-based Ellcon-National Inc., which made railroad car braking systems, according to the Nitsches’ complaint.

Mr. Nitsch, a former Ellcon shareholder and member of its board of directors, accused another shareholder, Emil Kondra, of deceiving him about his true stock ownership when Ellcon merged with another company in 2008. The Nitsches received $6.7 million for their Ellcon stock as a result of the merger.

They subsequently entered into mediation with Kondra and Ellcon, but the talks failed and the Nitsches hired Fensterstock to initiate arbitration in New York.

Mrs. Nitsch was 69 and Mr. Nitsch was 84 and in “failing health” at the time, their complaint states. The suit also says that the Nitsches were given a fee estimate of $570,000, after paying Fensterstock $10,000 to commence arbitration.

Fensterstock contends that he raised the statute of limitations issue during his first meeting with the Nitsches. But Richter said the Nitsches “were assured that it [the statute of limitations] was not an issue.”

Fensterstock also asserted that Bland and Richter have a conflict of interest because they had been approached to act as local counsel in the underlying fraud case and agreed to come on board for a “very high retainer.”

“After many discussions, sharing strategy and everything, the Nitsches decided not to hire Bland Richter,” he added. “But Bland Richter was privy to everything … and they wanted to take the lawsuit.”

Richter, though, said he and Bland knew little about the case and had only quoted an initial fee, but then heard nothing further until they were contacted about the legal malpractice action.

“We have every confidence that had we been retained, we would have quickly recognized the glaring defect in the case before the clients wasted $5 million in pursuit of claims which are likely time barred,” Richter said.

The Nitsches’ push for arbitration spurred Kondra to go after the couple in South Carolina, where he asked the court to declare that the fraud claims were time-barred. A judge granted Kondra summary judgment in September 2015 and ordered the Nitsches to pay $120,251 in attorneys’ fees as a sanction for “abusive discovery practices,” Bland and Richter wrote in the complaint.

They alleged Fensterstock, Kublanovsky and Burton had used “stacks of documents in large plastic bags” that Kondra’s wife gave to Mrs. Nitsch between 2000 and 2007. The documents, which were supposed to have been destroyed, reportedly contained privileged communications between Kondra and Ellcon and their attorneys.

The petition for attorneys’ fees included an affidavit from former 4th U.S. Circuit Court of Appeals Chief Justice William Wilkins, who said that during his “years in private practice and 27 years on the bench, I have never seen a similar situation,” referring to the discovery tactics that led to the sanction.

Legal disputes over the trash bag papers accounted for the bulk of the hours for which the Nitsches were billed, according to Richter and Bland. They said that only two depositions were taken in the underlying case.

Meanwhile, Dr. Gregory Adams, an expert on lawyer’s ethics who teaches at the University of South Carolina School of Law, stated in an affidavit attached to the Nitsches’ malpractice complaint that he believed Fensterstock, Kublanovsky and Burton had breached the applicable standard of care, committed acts of professional negligence and violated their fiduciary duties to the Nitsches.

“Starting with Mr. Fensterstock’s initial meeting with Mr. and Mrs. Nitsch in August 2012 and continuing throughout the defendants’ representation of the Nitsches, it was clear to defendants – or at least would have been obvious to any competent lawyer – that the Nitsches’ claims against Kondra were perilously subject to a statute of limitations defense,” Adams said.

‘Four years and $5,000,000 too late’

The Nitsches had to take loans against the stock they bought with their proceeds from the Ellcon merger to cover their hefty legal bills  –  and the interest on their loan payments has ballooned to more than $10,000 a month, according to their complaint.

They’re also selling their home in Greenville “to deal with the aftermath” of their ill-fated claims against Kondra and Ellcon.

And they’re paying another law firm to appeal the dismissal of their fraud claims in “an effort to mitigate the harm inflicted upon them by their failed legal representation,” their malpractice suit states.

They contend that the dismissal was procedurally flawed because the judge’s order relied on the opinion of a discovery referee, but the referee was not asked to opine on the statute of limitations issue, Richter said.

“Success on appeal would return the Nitsches to spend yet more time and money on a claim that is likely time-barred,” he added.

Earlier this year, Burton emailed the Nitsches and their new attorney and urged them to accept a settlement proposal in which Kondra would waive the $120,251 sanction if they agreed to drop the appeal, according to the malpractice complaint. Burton did not respond to an interview request.

“I believe that there is a very strong possibility that a court will conclude that the statute began to run no later than at the time of the 2008 transaction and thus expired in 2011 or earlier,” she wrote in the email.

“Defendant Burton’s advice was well-founded,” Bland and Richter wrote in the Nitsches’ complaint, “but was four years and $5,000,000 too late.”

Follow Phillip Bantz on Twitter @SCLWBantz

Full article available at SC Lawyers Weekly

In fight over legal fees, attorneys say enhanced Walter Scott video favors officer

POST AND COURIER:

If a police group hadn’t “rushed to judgment” and abandoned its legal defense of Michael Slager, it would have found evidence showing he shot Walter Scott according to how he was trained, his attorneys in a civil case said this week.

Slager’s federal lawsuit, if successful, could force the Southern States Police Benevolent Association to pay for his legal representation. But it also has revealed key elements of the defense he’s expected to mount at his criminal trial.

A bystander’s video, the key piece of evidence leading to Slager’s arrest on a murder charge, showed the North Charleston officer firing eight times as Scott ran away. But the footage also revealed Scott and Slager wrestling on the ground before the shooting.

Both the original video and a version enhanced by the FBI offer a glimpse of the two men grappling in the dirt. Scott’s green T-shirt appears to be above Slager’s striped uniform pants. To Slager’s attorneys, Scott was on top of their client at this point, but other body features are not clear from the footage.

Bland Richter contends that the video and their interpretation of the enhancement of it make the case defensible in a criminal court. Because his actions could be portrayed as reasonable, his attorneys argued, the association too quickly gave up on the case and refused to pay for his defense before it closely analyzed the video.

Read more from the Post and Courier. 

Read more from Lawyers Weekly. 

Former deputy improperly sought arrest of Spring Valley parent, lawsuit alleges

Washington Post: Deputy demands police group return dues to 40,000 officers

COLUMBIA, S.C. — A sheriff’s deputy in South Carolina is suing a police association that offered legal defense benefits for law officers but refused to help a former North Charleston police officer charged with killing an unarmed black man.

The lawsuit seeks the return of the $23.50 monthly dues that some 40,000 officers paid to the Southern States Police Benevolent Association. It also seeks an unspecified amount of punitive damages.

The lawsuit, which seeks class-action status, was filed last week in state court in Charleston by Bland Richter for Lt. Donald Stanley of the Charleston County Sheriff’s Office.

Read more from the Washington Post. 

Read more from Ktar News.

42,000 officers asked to join lawsuit after police group drops Michael Slager from legal coverage

Post and Courier: Police officers in South Carolina and eight other states could join a class-action lawsuit in hopes of getting back the money they spent to fend off allegations of misconduct.

The suit, filed last week in state court in Charleston, came after the Southern States Police Benevolent Association refused to pay an attorney to represent Michael Slager, the former North Charleston officer who shot Walter Scott to death last year. Slager, a group member who had signed up for the association’s legal defense benefit, sued.

But many others in law enforcement also grew unhappy over the association’s decision not to cover Slager in the murder case, said one of his attorneys in the civil suit, Ronnie Richter.

Richter, and partner Eric Bland, then filed the separate class action that seeks to add some of the other 42,000 officers in the association’s coverage area.

Read more from the Post and Courier. 

Federal judge blocks evidence of Michael Slager’s conversation with police group

Post and Courier – A phone conversation that former North Charleston officer Michael Slager had with a police association cannot be used against him in his lawsuit that seeks legal aid from the group, a federal judge ruled Wednesday.

In issuing the order, U.S. District Judge David Norton said the statements Slager made to the Southern States Police Benevolent Association should be sealed because they could harm the former policeman in the criminal cases in the fatal shooting of Walter Scott.

Ronnie Richter and Eric Bland, asked the judge for the protective order to seal an association representative’s testimony about what Slager said in the phone call on the day of the April 2015 shooting. They cited Slager’s attorney-client privilege and constitutional right not to incriminate himself.

Read more from the Post and Courier.

 

Attorneys for fired Clemson board secretary seek order to compel release of documents

A new legal team (Ronnie Richter and Eric Bland) for Eugene Troutman, the fired executive secretary of the Clemson University Board of Trustees, has filed a motion asking a judge to order the university’s lawyers to turn over documents related to criminal charges brought against Troutman that were later dismissed.

Read more in the Greenville News.