Free Proposed Findings of Fact - District Court of Arizona - Arizona

1
2 3

RICHARD J. MCDANIEL, P.C. ATTORNEY AT LAW 11811 N. TATUM BLVD., SUITE 1051 PHOENIX, ARIZONA 85028 Telephone (602) 953-8721 FAX (602) 953-8731 Richard J. McDaniel #013329 Attorney for Defendants Woodcock IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Case No. CIV 04-78-FJM SHIMKO & PISCITELLI, Plaintiff, v. PAUL and BOBBI WOODCOCK, et. al. Defendants. DEFENDANT WOODCOCKS' PROPOSED FINDINGS OF FACTS AND LAW AND JOINDER IN ROSS DEFENDANTS' PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW; AND JOINDER IN ROSS DEFENDANTS' TRIAL MEMORANDUM OF LAW

4
5 6 7 8 9

10 11 12 13
14

15

Defendants Paul and Bobbi Woodcock supplement Defendants
16

Pretrial Statement with Proposed Findings of Fact and Law.
17

Defendants attempted to coordinate a joint pretrial by sending
18

Plaintiff a preliminary statement one week before the original
19

due date; however, Plaintiff did not respond in at timely matter
20

and Defendants filed a preliminary pretrial statement last week.
21

A. Defendant Woodcocks' Proposed Findings of Fact
22

1. In December 2000 some of the', individual defendants asked
23

Shimko, who they knew from a previous representation, to come to
24

Phoenix to review a new comprehensive outpatient rehabilitation
25

facility (CORF) consulting business they were starting.

Case 2:04-cv-00078-FJM

Document 236

Filed 08/12/2008

Page 1 of 13

1
2 3

2. Shimko and his partner, Frank Piscitelli, knew almost nothing about Medicare or other laws and regulations concerning comprehensive outpatient rehab facilities. 3. Shimko & Piscitelli never sent a letter to their clients explaining that they had little knowledge of business formation, Medicare, and regulatory law. Shimko and Piscitelli did nothing. They did not call their clients after the visit. They

4
5 6

8 9

never issued an opinion letter, advisory, or any guidance. Shimko did not speak to any of the clients until almost one year later, when they called him. 4. Nevertheless, Shimko billed the CORF entities almost $8,000 in fees for the visit. 5. Shimko admitted that he and Piscitelli had almost no experience representing defendants, particularly multiple defendants, at the time in November 2001, when they undertook the CORF related representations. 6. Shimko did not enter into a written fee agreement with the individual defendants. 7. At no time did any of the officers, general partner, or limited partners or their wives (collectively, individual defendants) agree to be personally liable for any legal bills. 8. All of S&P's legal bills were sent to CORF's offices and were paid by CORF checks. 9. S&P's never met with any of the individual defendants' spouses regarding any kind of legal representation nor did S&P

10 11
12 13

14
15

16 17 18
19

20
21 22 23

24
25

2

Case 2:04-cv-00078-FJM

Document 236

Filed 08/12/2008

Page 2 of 13

1 2 3
4

ever receive the assent of any spouse to be personally liable for fees. 10. At no time did S&P's representatives ever indicate

that they believed Woodcock, Ross, Goldfarb, and Guenther to each be general partners. 11. At no time did S&P's representatives indicate to or

5 6 7 8 9
10 11 12 13 14 15 16 17 18

explain to Woodcock, Ross, Goldfarb, or Woodcock that S&P would consider each of them jointly and severally liable for hundreds or thousands or millions of dollars in fees if CORF was unable to pay fees. 12. Paul Woodcock and the other individual defendants

specifically rejected S&P's request to provide personal guarantees. 13. Shimko never explained to the Woodcocks or his other

clients the dangers and risks involved in his representing multiple clients, including the business entities, officers and employees, and limited and general partners. 14. Shimko never explained that he couldn't offer the

19
20 21

testimony of one against the others in settlement because this would conflict with his duty to the other defendants. 15. Since Shimko did not inform his clients of the

22 23
24

conflict, he never received Paul and Bobbi Woodcock's consent to waive the conflicts involved in representing multiple clients. 16. Shimko entered into business transactions with his

25

CORF clients. He loaned about $250,000 to the CORF entities.

Case 2:04-cv-00078-FJM

Document 236

3

Filed 08/12/2008

Page 3 of 13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

17.

Shimko did not inform Paul Woodcock that he had made

the loan until after the fact. 18. Shimko did not prepare a promissory note or disclose

details of the transaction to the Woodcocks. 19. Shimko did not advise Woodcock to have independent

counsel review the loan transaction. 20. Shimko never explained to any of his clients how he

would allocate monies he received from CORF between his legal bills and loan repayment. 21. On August 19, 2002, Shimko entered into another

business transaction, acquiring an ownership interest in a tissue bank business, Aztec Medical Group Partners, LLC, with Guenther, Woodcock, Ross, Goldfarb at the same time that he was representing them in the CORF litigations. Shimko agreed to provide legal services to the business in exchange for an interest. 22. Shimko did not advise his clients to have outside

counsel review the business transactions. 23. He did not get their written consent waive conflicts

that might be created. 24. Shimko testified that he advised Ross, Goldfarb,

Woodcock and Guenther to discontinue participating in seminars promoting the CORF consulting services, but Goldfarb did not follow his advice.

Case 2:04-cv-00078-FJM

Document 236

4

Filed 08/12/2008

Page 4 of 13

Shimko never advised the Woodcocks of the risks and 25.
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

potential conflict involved in his continuing joint representation of multiple clients with different levels of ongoing involvement and potential culpability. 26. Shimko had dinner with the lead attorney prosecuting

the underlying fraud lawsuits against the CORF entities and individuals. The attorney was offering to drop lawsuits against Brill and Richie, CORF employees and officers, in return for their testimony. 27. Shimko could not make a deal offering the testimony of

Woodcock, Ross, Guenther, or Goldfarb because since he represented them all. He did not explain this conflict of he Woodcocks or obtain their informed consent to waive it. Thus he could not fully and effectively represent the Woodcocks. 28. Jeff Finley, an attorney at Beus Gilbert, representing

some of the underlying plaintiffs suing the CORF entities and individual defendants, sent Shimko a letter on March 3, 2003, stating his belief that Shimko was CEO of Aztec Medical and that Shimko & Piscitelli were using Aztec Medical to fraudulently convey monies from the CORF entities to Mexico. 29. Shimko did not advised his clients nor get their

written consent regarding conflicts his business transactions might create. 30. In April 2003, with the CORF entities facing

bankruptcy, Shimko demanded that the Woodcocks and other

Case 2:04-cv-00078-FJM

Document 236

5

Filed 08/12/2008

Page 5 of 13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

individual defendants pledge their homes as collateral to pay attorneys fees. 31. Shimko never explained to the individual defendants

that doing so might deny them the homestead protection. Shimko did not warn his clients to seek advice of independent counsel. 32. Shimko and Welling had a duty under Rule 11 to make

certain their claims, pleadings, and representations to the federal courts were reasonably grounded in fact and adequately investigated. 33. Shimko has known since April or May 2003 that his

firm's billing statements contain excessive fees for David Welling, who was a law clerk at the time, but had been billed at $350 per hour. 34. Shimko billed 347.1 hours for David Welling @ $350 per

hour for a total of $121,485. 35. Shimko acknowledges Welling should have been billed at

the rate of $125 per hour, which would have given a total charge of $43,387.50. 36. 37. Thus, Shimko over billed $78,097.50. Despite the fact that Shimko knows he overbilled

approximately $78,000 of the $359,000 he claims he was owed, he has never subtracted out the excess billings and has continued to misrepresent in numerous pleadings and affidavits that he is owed $359,000.

Case 2:04-cv-00078-FJM

Document 236

6

Filed 08/12/2008

Page 6 of 13

38.
2 3
4

Shimko's own records of payments received, which were

not disclosed to defendants until April 7, 2008, show his firm was paid $603,816.80 39. Shimko misrepresented amounts owed his firm in his

5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21

original complaint. 40. Shimko misrepresented the amount paid to and owed to

his firm in his affidavit and Plaintiff's Controverting Statement of Facts in Support of Plaintiff's Motion for Summary Judgment 7/7/04: "The reasonable value of my legal services rendered to each and all of the Defendants is $359,668.00." (Shimko Affidavit 5/17/04, submitted to this Court with Shimko's Motion for Summary Judgment on 5/17/04.) 41. Shimko falsely testified at Guenther's trial on

5/17/05 that his firm was paid only approximately $135,000 in fees and that his firm was still owed the balance of $359,000. 42. Shimko misrepresented amounts owed to and paid to his

firm in Plaintiffs' Response in Opposition to Defendants' Motion for Reconsideration and/or New Trial 6/21/05. 43. Shimko has continued to maintain and aver in

pleadings, affidavits, and testimony before the federal courts that his firm is still owed the full $359,000. Before Judge Sedgwick: "I provided legal services which were accepted and up to a point paid for; however, my firm and I are still owed $354,949 for the services provided."

22 23
24

25

Case 2:04-cv-00078-FJM

Document 236

7

Filed 08/12/2008

Page 7 of 13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

(Shimko Affidavit, 11/8/06, Shimko's Motion for Summary Judgment filed in 2:05-CV-01387-JWS on 11/9/06.) 44. Shimko again misrepresented amounts paid to and owed

his firm before Judge Sedgwick in Plaintiff's Response to the Defendant' Motion to Strike the Plaintiff's Motion for Summary Judgment 12/18/06 and Plaintiff's Reply to Defendants Opposition to Plaintiff's Motion for Summary Judgment 3/22/07. 45. Shimko and Welling falsely claimed entitlement to the

$78,000 they knew had been overbilled for Welling's time before the Ninth Circuit Court of Appeals: "Plaintiff Shimko and his firm provided $359,668 in services to Appellant and his partners for which he and his firm have not been paid." "Appellant and his partners received the benefit of those service and have been unjustly enriched to the amount of $359,668 plus interest." (Appellees' Response Brief, 3/28/06) 46. Shimko falsely represented to this Court in March 2008

that his firm was entitled to the $359,668 which included the $78,000 in excess billings: "Plaintiff Shimko and his firm are still owed $359,668 for services provided to Dr. Guenther and his partners." "Dr. Guenther and his partners received the benefit of those services and have been unjustly enriched in the amount of $359,668 plus interest." (Plaintiffs' Post-Trial Memorandum on the Issue on Remand,

24

3/3/08, p. 12, 14; Judgment of Court against Guenther)
25

Case 2:04-cv-00078-FJM

Document 236

8

Filed 08/12/2008

Page 8 of 13

1
2 3

47.

Shimko falsely testified at his deposition on 3/24/08

that his firm was paid only approximately $135,000 in fees and that his firm is still owed the balance of $359,000. 48. Shimko again falsely represented to this court amounts

4
5 6 7 8 9

paid and owed in Plaintiff's Reply to Defendant Woodcocks' Response In Opposition to Plaintiff's Motion to Strike Defendant Woodcocks' Amended Motion to Dismiss Claims and Motion for Summary Judgment 5/5/08; Plaintiff's Response in Opposition to Defendant Woodcock and Ross' Motions for Summary Judgment 5/12/08; his affidavit dated 5/12/08; and Plaintiff's Separate Statement of Facts Corresponding to Defendant Woodcocks' Amended Statement of Facts 5/12/08. 49. Shimko has repeatedly misrepresented the amount of

10 11 12
13 14

CORF checks that he claims were returned for insufficient funds. 50. Piscitelli billed approximately $314,868.42.

15 16 17 18 19
20

B. Woodcocks' Proposed Finds of Law 1. Defendants Woodcock are entitled to judgment. 2. Defendants Woodcock did not enter into a contract to be personally responsible for Shimko's fees. 3. Defendant Woodcock was a limited partner and protected under the safe harbor provisions for limited partners. 4. Shimko was in actuality or effectively general counsel for the CORF entities and knew or should have known that Woodcock was a limited partner.

21
22 23

24
25

Case 2:04-cv-00078-FJM

Document 236

9

Filed 08/12/2008

Page 9 of 13

1

5. Moreover, one of the primary reasons the CORF entities engaged Shimko was to help limited personal exposure by the limited partners and officers and employees. 6. The CORF business entities and Shimko had an agreement for fees. 7. The Woodcocks cannot be liable in quantum meruit because Shimko agreed to and entered into agreement with the CORP' entities for his fees. 8. Shimko's repeated violations of ER 1.7 fatally compromised his representation of the Woodcocks. 9. Shimko never received the Woodcocks' informed consent to the risks inherent in the multiple representations. 10. Shimko was unable to provide effective representation

2 3
4

5 6 7 8 9
10 11 12 13 14

of the Woodcocks given his conflicting loyalties to the other defendants. 11. Shimko's repeated violations of ER 1.8 fatally

15
16 17 18 19 20 21

compromised his representation of the Woodcocks. 12. Shimko failed to advise the Woodcocks' in writing of

p roposed business transactions with his clients; failed to advise them of the terms; failed to warn them of possible risks; failed to advise them that they might want to have independent counsel review the proposed transactions; and failed to get the woodcocks' informed consent to the business transactions.

22 23
24

25

Case 2:04-cv-00078-FJM

10 Document 236

Filed 08/12/2008

Page 10 of 13

1
2 3 4 5 6 7 8 9

13.

Shimko was unable to provide effective representation

of the Woodcocks given his business transactions with some of his clients. Thus, Shimko is not entitled to fees. 14. Shimko is not entitled to fees because he has

repeatedly violated Rule 11 and ER 3.3 in numerous pleadings in front of this court, Judge Sedgwick's court, and the Ninth Circuit Court of Appeals. 15. Shimko is not entitled to legal fees because he

deliberately misrepresented and misled this Court and defendants oy giving false testimony about amounts his firm had been paid and amounts it was owed at the Guenther trial on May 17, 2005. 16. Shimko is not entitled to legal fees because he

10
11

12 13 14 15 16 17 18 19
20

deliberately misrepresented and misled this Court and defendants oy giving false testimony about amounts his firm had been paid and amounts it was owed at his deposition on March 24, 2008. 17. Shimko is not entitled to fees because he failed to

disclose until April 7, 2008, amounts his firm was paid. 18. Shimko's late disclosure of his firm's records show

that he has repeatedly misrepresented the amounts paid to his firm. 19. Shimko is not entitled to the $78,000 he overcharged

21
22 23

for David Welling's time as a law clerk. 20. Pursuant to this Court's prior order based upon the inability of Defendants to compel Piscitelli's deposition

24
25

Case 2:04-cv-00078-FJM

11 Document 236

Filed 08/12/2008

Page 11 of 13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

testimony, Shimko is not entitled to the amounts billed for Piscitelli's time. 21. Shimko is not entitled to fees because he has engaged in a systematic effort to mislead the courts, defendants, and their attorneys about the amount his firm was paid and amounts he claims were still owed. 22. At a minimum, Shimko is not entitled to fees due to

ais repeated failures under Rule 11 to do an adequate inquiry and investigation (of his own firm's records and billings, which ae has controlled at all times) before asserting facts in testimony, affidavits, and pleadings that are, at best, inaccurate and misleading. Dated this 12th day of August 2008. RICHARD J. MCDANIEL ATTORNEY AT LAW By /s/ Rich McDaniel Richard J. McDaniel 11811 N. Tatum, #1051 Phoenix, AZ 85028 Attorney for Defendants Woodcock Electronically filed and copy sent electronically this 12th day of August 2008 to: Timothy Shimko & Associates 2010 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 Roger Cohen JABURG & WILK 3200 N. Central, 20 th Floor Phoenix, AZ 85012-2440 Attorney for Ross
12

Case 2:04-cv-00078-FJM

Document 236

Filed 08/12/2008

Page 12 of 13

Copy mailed to:
2 3

4
5

David and Rhona Goldfarb 11437 N. 53 rd Place Scottsdale, AZ 85254 Pro Per /s/ Rich McDaniel

6 7 8 9

10 11 12 13 14
15

16
17

18 19 20 21
22 23

24
25

Case 2:04-cv-00078-FJM

Document 236

13

Filed 08/12/2008

Page 13 of 13