'Unclean hands' doesn't bar medical pot biz from recovering $25K taken by lawyer, 9th Circuit says
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‘The doctrine of “unclean hands” doesn’t bar a medical marijuana dispensary from recovering $25,000 taken by its lawyer, a federal appeals court has ruled.
The San Francisco-based 9th U.S. Circuit Court of Appeals ruled on Friday, citing two reasons why the $25,000 was not dischargeable in the lawyer’s bankruptcy. The court said the wrongdoing by the now disbarred lawyer outweighs that of the marijuana business, the Northbay Wellness Group, which is illegal under federal law. And applying the doctrine of unclean hands to absolve a lawyer of responsibility for stealing from his client would be contrary to the public interest, according to the court. How Appealing links to the opinion (PDF) and to stories by the San Francisco Chronicle and Courthouse News Service.
The now disbarred lawyer, Michael Beyries, sat on the board of the Northbay Wellness Group until he resigned in June 2006 and failed to return $25,000 in cash given to him to establish a legal-defense trust fund, according to the opinion. The trust fund was intended to cover legal costs for any charges against employees of the business, its board members or its patients.
Northbay Wellness Group sued and was awarded $25,000 for conversion, $319,000 for breach of contract and $5,000 in punitive damages. Beyries filed for bankruptcy in September 2010. A bankruptcy judge and federal district court had found that the doctrine of unclean hands barred recovery of the $25,000. The 9th Circuit reversed.
The doctrine of unclean hands requires a balancing of wrongdoing by the plaintiff and defendant, the appeals court said. “Had the bankruptcy court weighed the parties’ respective wrongdoing,” the 9th Circuit said, “it necessarily would have concluded that Beyries’ wrongdoing outweighed Northbay’s, both as to harm caused to each other and as to harm caused to the public.”
