“The defendants’ appeal brief is a gaunt, pathetic document”

Here’s the factual summary from today’s opinion in Central States, Southeast & Southwest Areas Health & Welfare Fund (7th Cir. Mar. 12, 2014) (some paragraph breaks added):

Beverly Lewis was injured in an automobile accident in Georgia, and her health plan (the principal plaintiff in this case) paid $180,000 for the cost of her medical treatment …. Represented by the other defendant in the present suit, Georgia lawyer David T. Lashgari, Lewis brought a tort suit in Georgia state court against the driver of the car involved in the accident (her son‐in‐law), and obtained a $500,000 settlement.

The plan had — and Lashgari knew it had — a subrogation lien: that is, a right, secured by a lien, to offset the cost that the plan had incurred as a result of the accident against any money that Lewis obtained in a suit arising out of the accident…. But when Lashgari received the settlement proceeds in June 2011, instead of giving $180,000 of the $500,000 to the plan he split the proceeds between himself and his client….

In February 2012 the plan moved the district court for entry of a preliminary injunction against the defendants’ disposing of the settlement proceeds until the plan received its $180,000 share. The district judge granted the motion … and also ordered the defendants to place at least $180,000 in Lashgari’s client trust fund account pending final judgment in the case. The defendants complied with neither order…. A year later, with the defendants having neither placed any part of the $180,000 in a trust account as ordered nor produced any evidence of their inability to pay, the judge held them in civil contempt ….

And here’s part of the court’s analysis (again, some paragraph breaks added):

The defendants’ appeal brief is a gaunt, pathetic document (there is no reply brief). Minus formal matter, it is only eight and a half pages long. Brevity is the soul of wit, and all that, but still: the first seven and a half pages are simply a recitation of the history of the Georgia lawsuit, the settlement negotiations, and the present suit, along with questionable and irrelevant facts; and the tiny argument section of the brief — 118 words, including citations — states merely, without detail or elaboration, that the defendants do not possess the settlement funds and therefore can’t restore them.

The only supporting evidence cited (it is not discussed) is an affidavit by Lewis saying that she and her husband had spent her entire share of the settlement proceeds on a new house, a vehicle, and “repayment of personal loans, medical expenses, prescriptions, living expenses, and other expenses”; a pair of affidavits by Lashgari stating that neither he nor his law firm is “in possession of funds that could be used to” restore $180,000 to a client trust account; and a bank statement dated June 2011 for a trust account maintained by Lashgari’s law firm, Lashgari & Associates, P.C., www.lawyers4carwrecks.com (visited March 12, 2014).

The bank statement shows the $500,000 deposit of the settlement proceeds and a subsequent withdrawal of $202,000, representing Lashgari’s disbursement to Lewis of her share of the settlement. The share he retained — $298,000, a shade short of 60 percent of the settlement proceeds — seems too high for a contingent fee, but he argues that Lewis owed him for unspecified “advances” that he had made to her. The latest entry in the statement is for June 30, 2011 — fewer than three weeks before this lawsuit was filed — and shows a balance of $341,000.

These documents — the only evidence cited in the defendants’ brief — show that Lewis and Lashgari willfully ignored the plan’s lien against the settlement proceeds….

The defendants’ conduct has been outrageous. After resolving the merits of the underlying suit, the district court should give serious consideration to transmitting copies of this opinion and the record to the Department of Justice and to the General Counsel of the Georgia Bar. In the meantime, we direct the district court to determine whether the defendants should be jailed (a standard remedy for civil contempt), until they comply with the order to deposit the settlement proceeds in a trust account.

Thanks to How Appealing for the pointer.

Eugene Volokh teaches free speech law, religious freedom law, church-state relations law, a First Amendment Amicus Brief Clinic, and tort law, at UCLA School of Law, where he has also often taught copyright law, criminal law, and a seminar on firearms regulation policy.
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