Did the Marcus Law Firm turn around and sue Branford too quickly?
That was the question before a state judge in Superior Court in New Haven Monday.
The hearing was the latest chapter in an ongoing legal feud between the Town of Branford and its former outside legal counsel, the Marcus Law Firm.
The town sued the firm for allegedly doing a negligent job of representing it in the long-running Tabor eminent domain case. It has filed three claims against the law firm, charging malpractice, negligence, and breach of fiduciary duty in its complaint.
The first two charges remain before the court. But last month a judge entered judgment for the law firm on the third claim. Right away, the Marcus Law Firm turned around and counter-sued the town for “vexatious” litigation.
The question before Judge Linda Lager Monday was whether Marcus filed that counterclaim too quickly — whether, as the town argued, it should have waited until the original lawsuit is over or “terminated,” as the law says.
The Tabor case began in 2003 when First Selectman Unk DaRos moved to take by eminent domain 77 acres of open space on Tabor Drive because of its proximity to the town’s contaminated town dump. New England Estates, (NEE) a developer hoping to build condos there, sued the town after the town seized the land. It won a $12.4 million judgment at the trial level. The Connecticut Supreme Court unanimously overturned that judgment in what was a major victory for the town.
Superior Court Judge Linda Lager did not rule Monday on the town’s motion to strike or to dismiss the Marcus Law Firm’s counterclaim asserting vexatious litigation. She did engage attorneys in a series of questions on the probable scenarios that could result if she decided one way or the other.
At one point the judge said to Fred Murolo, who represents the Marcus Law Firm, “You moved too quickly to give yourself a bit of a boost.” She observed that dismissing one count in a complaint is not unusual. She also said the violation of fiduciary duty count can be overturned on appeal but at this point the town is barred from appealing the count’s dismissal.
Kevin Shea, who represented the town in court, told the judge that in order to file a vexatious litigation action, the law requires that the lawsuit be terminated. He said this case has not been terminated and that his right to appeal dismissal of the breach of fiduciary count “still has life.” He said rules need to make sense. “I like to look at the words and ‘terminated’ means ‘done.’ This case is not done.”
After the breach of fiduciary duty count was formally dismissed last month, Murolo filed a counterclaim asserting vexatious litigation. The counterclaim seeks double and treble damages and attorneys’ fees.
One week later, William H. Clendenen, Jr., the town’s current counsel, filed a motion to strike, saying that at this juncture in the case the counterclaim is improper. Clendenen asked for oral argument and told the court the Marcus Law Firm’s response is premature, untimely and wrong. “It has been brought improperly and prematurely in this action,” he said in court papers.
The oral argument he asked for was held Monday. It is one of a series of recent legal developments in the town’s case against its former counsel. The case was filed in the summer of 2008. These developments include:
• A decision by the town’s outside counsel, R. Bartley Halloran, to take the case on contingency, meaning if the town loses he does not get paid. If the town wins, he stands to gain one-third of the monetary damages award. Typically attorneys take cases on contingency when they believe they have a solid case and will win. What this action does is to stop the mounting legal fees in the case. Halloran will return the fees he previously received.
• A filing by Murolo putting the town on notice that he plans to put on 38 special defenses, a number other attorneys not affiliated with this case, call extraordinary. The special defenses allege that First Selectman Unk DaRos and others and not the Marcus Law Firm are responsible for the legal fiasco that ensued in the Tabor case. The special defense entitles the law firm to seek discovery and to depose witnesses with a trial in mind. The town is likely to deny these defenses in subsequent filings with the court.
• An “offer of compromise” that the Board of Selectman unanimously agreed to last December in an attempt at a $3 million settlement with the Marcus Law Firm and a $4.5 million settlement with the town’s insurance carriers has failed. The Marcus Law firm and the insurance companies had 60 days to answer or the offer lapsed. The deadline came and went.
Back in court Judge Lager asked the attorneys a number of questions during their 40- minute exchange. She made several observations.
“Let’s say the plaintiffs (the town) move for a bifurcated trial,” the result of the “quite prejudicial vexatious litigation” counterclaim, she said. She did like that prospect.
Murolo said again that his reason for bringing the counterclaim is that he won a judgment in “our favor.”
At one point the judge asked Murolo about the other two counts. He told the judge they may be more problematic to dismiss because an expert had reviewed them.
The judgment Murolo spoke of came from Superior Court Judge Richard E. Burke. He found the town “has only pleaded facts that implicate the defendants’ competence as attorneys.” The town alleges that the law firm “failed to consult with experts; failed to disclose experts pursuant to court orders; failed to notify the plaintiffs or the plaintiffs replacement trial attorneys of the court-ordered deadlines regarding disclosure of experts; failed to timely obtain expert reports and failed to address legal issues and organize factual issues necessary to represent” the town. But it hadn’t taken the steps to show the other factors necessary for a breach of fiduciary duty count, specifically that the firm failed in its duty of “loyalty and honesty” to the town.
There was then discussion among the judge and the attorneys about various judicial holdings. At one point the judge went online to quickly check a case.
Shea said that as long as the right of appeal exists as to the breach of fiduciary duty count, it is not terminated. He repeated that the word terminated is a word “that we all know.”
Murolo told the judge that “there is no case that says you can’t do it. You can.”
At this juncture in the case, Judge Lager observed that “they can’t appeal the judgment. They can’t.”
“But I have a judgment,” Murolo said.
As the lively arguments drew to a close, Judge Lager summed up. “I don’t know yet where I am going with this,” she said. She said she will read various cases as she took the case under advisement.
###