Legal Ethics

Law Firm Fined $25K for Trumpeting Reported $17M Settlement

An Arizona appeals court has upheld a $25,000 sanction against a construction law firm that trumpeted to potential clients, without mentioning the exact amount, a confidential settlement of a homeowner stucco suit reported to be around $17 million.

Kasdan Simonds Riley & Vaughan had argued that home builder Del Webb, which was a defendant in the original 2005 litigation, did more than anyone to publicize the settlement: In a lawsuit over the breach of confidentiality, Del Webb attached a copy of a newspaper article reporting the $17 million settlement, citing confidential sources, recounts Capitol Media Services.

But neither the trial court nor the Arizona Court of Appeals found this argument persuasive. Del Webb reasonably expected that the law firm “would not refer to the amount of the settlement, either by stating the exact amount or referring to its size relative to other settlements in Arizona history,” says Judge John Gemmill in a written opinion upholding the $25,000 fine.

In an effort to persuade other homeowners of a Scottsdale, Ariz., suburb to pursue similar litigation alleging defective construction work concerning the stucco installed on the exterior of their homes, the Kasdan firm wrote to these other homeowners a few months after the 2005 stucco case settled in August 2007, the article continues. In the letter, the firm said it believed the settlement was “the largest single-family home defect settlement in Arizona history.”

Del Webb was unsuccessful, however, in its effort to obtain a more draconian penalty, according to the news service. The appellate court held that the trial court did not abuse its discretion by declining to ban the Kasdan firm from representing homeowners in further stucco litigation against Del Webb, as the home builder had sought.

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