Free Other Notice - District Court of Arizona - Arizona

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

Roger L. Cohen, #004409 Kathi Mann Sandweiss, #011078 JABURG & WILK, P.C. 3200 North Central Avenue, Suite 2000 Phoenix, Arizona 85012 (602) 248-1000 Attorneys for Defendants Ross

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA SHIMKO & PISCITELLI, et al., Case No: CIV-04-78-PHX-FJM Plaintiffs, v. DAVID GOLDFARB; RICHARD ROSS, et al. Defendants. ROSS DEFENDANTS' TRIAL MEMORANDUM OF LAW

15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants Richard and Marcia Ross submit their Trial Memorandum of Law. It is anticipated that the following legal issues will arise in the course of trial: I. LIABILITY OF LIMITED PARTNER IN A LIMITED PARTNERSHIP A limited partner may be held liable for the obligations of a limited partnership only upon the concurrence of two factors: (1) if the limited partner participates in the control of the business, and (2) only to persons who transact business with the limited partnership "reasonably believing" that the limited partner is a general partner. A.R.S. §29-319(A). Actions taken as an employee of the limited partnership do not constitute "control of the business." A.R.S. §29-319(B). The evidence at trial will show that

Defendant Ross did not direct the business operations of the CORF Entities, did not make any business decisions, and did not take any actions other than as an employee of the CORF Entities. More importantly, the evidence presented at trial will demonstrate that Shimko, as attorney for the companies as well as the individual defendants, had actual
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knowledge that Ross was not a general partner, and not therefore liable for the CORF Entities' debts. II. ACTION ON AN ACCOUNT ­ COUNT ONE Count One of the Complaint alleges that the Attorneys and "defendants" generally "conducted a series of transactions, for which a balance remains to be paid." (ER 219). Count One further alleges that Shimko provided legal services for which they "billed on account," and that Exhibit 1 to the Complaint illustrates a beginning balance, representing charges and credits and "summates a running balance." It is unclear from the Complaint whether Shimko seeks to recover under an open account or an account stated. An open account is a connected series of transactions; the account is kept open and subject to a shifting balance as additional related entries of debits and credits are made, until either party decides to settle and close the account. Continental Cas. Co. v. Grabe Brick Co., 1 Ariz.App. 214, 217, 401 P.2d 168, 171 (App. 1965). The term 'stated account' signifies an agreed balance between the parties to a settlement. Chittenden & Eastman Co. v. Leader Furniture Co., 23 Ariz. 93, 95, 201 P. 843, 844 (1921. But there is nothing in the billing statements or other evidence to suggest a debtor/creditor relationship between Ross and Shimko, Moran v. Babbitt Bros. Trading Co., 58 Ariz. 162, 167, 118 P.2d 448, 449 (1941), and no evidence of an agreed balance between Ross and Shimko. See Monte Produce, Inc. v. Delgado, 126 Ariz. 320, 321, 614 P.2d 862, 863 (App. 1980). III. AGREEMENT ­ COUNT TWO Count Two of the Complaint alleges that the Attorneys and "defendants" generally entered into an agreement whereby the Attorneys would perform legal services in exchange for payment. Count Two further alleges that the Attorneys performed services "for each and every defendant. . . as illustrated in Exhibit 1." in an action based on breach of contract, the plaintiff has the burden of proving the existence of a contract, breach of the contract, and resulting damages. Chartone, Inc. v. Bernini, 207 Ariz. 162, 170, 83 P.3d 1103, 1111 (App. 2004). Moreover, for an

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enforceable contract to exist, there must be an offer, an acceptance, consideration, and 2
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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

sufficient specification of terms so that the obligations involved can be ascertained. Rogus v. Lords, 166 Ariz. 600, 602, 804 P.2d 133, 135 (App. 1991). It is anticipated that Shimko will fail to come forward with sufficient, competent evidence to prove the existence of a contract between Ross and themselves. IV. ALTERNATIVE CLAIM FOR QUANTUM MERUIT Shimko must demonstrate that (1) defendants received a benefit, (2) by receipt of that benefit defendants were unjustly enriched at plaintiff's expense, and (3) the

circumstances were such that in good conscience defendant should make compensation. Murdock-Bryant Const., Inc. v. Pearson, 146 Ariz. 48, 53, 703 P.2d 1197, 1202 (1985). As emphasized in Murdock, restitution relief is allowable only when it would be inequitable or unjust for defendant to retain the benefit without compensating plaintiff. 146 Ariz. at 54, 703 P.2d at 1203. The Arizona Supreme Court expressly holds that "mere receipt of a benefit is insufficient." Id. The evidence at trial is expected to demonstrate that Shimko was well aware that only the CORF Entities would pay fees, even if services were provided to all defendants. The evidence will clearly show that Shimko knew this, because he only sent the bills to the CORF Entities. Shimko had no expectation of payment from the individual

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defendants. If he expected payment, he would have sent bills to the individual defendants. As corporate counsel and as the ultimate insider, Shimko had actual knowledge of who controlled the companies, and actual knowledge that only the CORF Entities received the bills, and only the CORF Entities paid the bills. Given the absence of any anticipated evidence that he expected payment from Ross, Shimko cannot make the required showing of unjust enrichment. V. CONFLICTS OF INTEREST AND ETHICAL VIOLATIONS AS A BAR TO RECOVERY A. ER 1.7

The Arizona Ethical Rules provide that a lawyer shall not represent a client if the representation will be directly adverse to another client or there is a significant risk that 3
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the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, unless (1) each affected client gives informed consent, confirmed in writing, (2) the lawyer reasonably believes that he will be able to provide competent and diligent representation to each affected client, and (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation. ER 1.7. B. ER 1.8

The Ethical Rules prohibit a lawyer from entering into a business transaction with a client unless the terms are fully disclosed, the client is given a reasonable opportunity to seek advice of outside counsel, and the client consents in writing. ER 1.8 (a). C. Forfeiture of Fees

Restatement (Third) of the Law Governing Lawyers, §37 (2000) provides "[a] lawyer engaging in clear and serious violation of duty to a client may be required to forfeit some or all of the lawyer's compensation for the matter." As this Court previously noted "[c]onsiderations relevant to the question of forfeiture include the gravity and timing of the violation, its willfulness, its effect on the value of the lawyer's work for the client, any other threatened or actual harm to the client, and the adequacy of other remedies." The evidence at trial is expected to show both that Shimko violated ERs 1.7 and 1.8 and that these ethical violations affected the value of Shimko's legal representation or caused injury to the Ross Defendants. DATED this day of August, 2008. JABURG & WILK, P.C. s/ Roger L. Cohen Roger L. Cohen Kathi Mann Sandweiss Attorneys for Ross Defendants

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

CERTIFICATE OF SERVICE I hereby certify that on August 11, 2008, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF system for filing, and for transmittal of a Notice of Electronic filing to the following CM/ECF registrants: Timothy Shimko, Esq. TIMOTHY SHIMKO & ASSOCIATES 2010 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 Attorneys for Plaintiffs David and Rhona Goldfarb 11437 N. 53rd Place Scottsdale, Arizona 8525 Pro Per Defendants Goldfarb Richard J. McDaniel, Esq. 11811 N. Tatum Blvd., Suite 1051 Phoenix, Arizona 85208 Attorney for Woodcock Defendants

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s/ Julie Sullivan

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