Judge Smacks Law Firms & Partner With $150K Sanctions, But Spares 2 Associates

Legal Ethics

Judge Smacks Law Firms & Partner With $150K Sanctions, But Spares 2 Associates

Posted Apr 29, 2008, 03:14 pm CDT
By Martha Neil

A federal bankruptcy judge in Massachusetts has sanctioned two law firms and a name partner a total of $150,000 for incorrectly claiming that their client owned a mortgage that had in fact been reassigned at least twice.

Finding that one law firm had information in a client file that contradicted this claim, Judge Joel Rosenthal imposed fines Friday of $100,000 and $25,000, respectively, on Buchalter Nemer, the national counsel, and Ablitt & Charlton, the local counsel in the case, according to the Wall Street Journal Law Blog. He also fined name partner Robert Charlton $25,000—and imposed another $500,000 in sanctions against two lenders, according to a court order (PDF provided by Law Blog) concerning a rule to show cause.

Although two associates also signed documents that said Ameriquest held the mortgage, when it didn't, Rosenthal let them off with a scolding:

"The court is mindful that young associates are often not in a position to question the assignments given to them," the judge says in a written opinion (PDF provided by Law Blog). "Because the affidavits are unclear as to what each associate was told when given the assignment, the court will not impose monetary sanctions on [the two associates] but will let this decision serve as a warning that in the future the court expects associates will be cognizant of and fulfill their responsibilities."

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Posted by Seth Rosner - 5 months, 1 week, 5 days, 16 hours, 28 minutes ago

If all judges, federal and state, regularly exercised their sanction powers when faced with unethical and unprofessional lawyer conduct as Judge Rosenthal has in this case, lawyer misconduct would evaporate, clogged court calendars would thin, incivility would be limited to the barroom and litigation costs to clients would shrink. In other words,. the justice system would deliver justice rather than heartache and heartburn.
Posted by Jim Cossitt - 5 months, 1 week, 5 days, 14 hours, 34 minutes ago

Amen to Mr. Rosner’s comment !

I’ve been practicing 22 years and concluded that self regulation olf this profession is a sick joke foisted upon the public. Both the judiciary and orgainzied bar tolerate far too much bad conduct by lawyers.
Posted by Kevin Keeler - 5 months, 1 week, 5 days, 10 hours, 9 minutes ago

If you read the judge’s decision, this case has nothing to do with incivility. The lawyers mistakently represented to the court that Ameriquest was the holder of a note and mortgage when in fact it was only the servicer. While this clearly irritated the judge, I couldn’t tell from a quick reading of the decision that the misrepresentation harmed anybody in the case. The assignee of the note didn’t complain, but was in fact sanctioned $250,000 for not keeping tabs on its servicer, who was also fined $250,000. It’s an intereting opinion and sends a strong signal to lender’s counsel in bankruptcy cases to do some due diligence on their own and not rely on what their institutional clients tell them as to who holds the note.
Posted by Mark Kafantaris - 5 months, 1 week, 5 days, 9 hours, 21 minutes ago

I agree with Kevin’s remarks and believe that out profession does a decent job ferreting out the bad apples. Though we all know instances of abuse, the Courts I’ve practiced in have done well in fostering civility amongst the profession.
Posted by Betty Groner - 5 months, 1 week, 4 days, 2 hours, 8 minutes ago

This decision is an important one; it is reminiscent of the recent decision of federal district Judge Boyko in Cleveland, Oh, who dismissed several foreclosure lawsuits based on the fact that the Plaintiffs could not show that they owned the mortgages, and had standing to sue.
Posted by Rob Garretson - 5 months, 1 week, 2 days, 7 hours, 41 minutes ago

The problem that I have with the case is the $650,000 of sanctions for what appears to be a stupid oversight [albeit, extremely stupid]. Taken literally, every attorney in every case needs to verify every material fact for himself or herself or risk devastating sanctions. This rule, if implemented, would cost litigants billions of dollars while producing little real benefit to the courts and parties. While increasing the amount of required lawyer time on every case may have a direct financial benefit to litigation attorneys, it is poor public policy.
Posted by David Baker - 5 months, 1 week, 1 day, 23 hours, 42 minutes ago

While I know the Ablitt & Charlton lawyers well and take no pleasure in their dismay, nonetheless I am glad to see that creditor’s lawyers are at last being subjected to the same scrutiny that debtor’s lawyers have always been. For much too long, anything a creditor’s lawyer said was taken as true, and the burdens of persuasion and proof were all to often shifted inappropriately. This decision is a big step towards rebalancing the standards.

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