Free Motion to Strike - District Court of Arizona - Arizona

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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 AND GOLDFARBS' MOTION TO STRIKE PLAINTIFFS' STATEMENT AND CORRECTED STATEMENT OF CLAIM AND MOTION IN LIMINE TO PRECLUDE TESTIMONY REGARDING NEW FIGURES AND CHECKS

Defendants Woodcock and Goldfarb move to strike Plaintiffs'
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Statement of Claim and Corrected Statement of Claim. Defendants
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also move to preclude Shimko to testify about previously
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undisclosed accountings and figures. Defendants also move to
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preclude Shimko from giving testimony regarding insufficient
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funds checks.
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Defendants filed a motion to compel compliance with
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discovery requests. However rather than providing needed
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records such as missing firm bank account statements and
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evidence that dishonored checks were not subsequently honored,
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Shimko has simply invented an entirely new and different story
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about how much his firm was paid and how much he was owed. This story was not one of the ones disclosed during the last four years of litigation, but only now, less than one week before trial. Shimko now apparently wants to claim that he was paid about $400,000 in fees, but is still owed another $400,000. This Court should not and cannot excuse Shimko's repeated failures to comply with his obligations under Rule 11 and should not allow him to continue to give false and conflicting testimony under oath. 1. Shimko Has Repeatedly Lied About the Amount Paid Him. Shimko has repeatedly misrepresented the amount CORE' paid aim for his services. Although Defendants' records indicated that Shimko's firm had been paid approximately $500,000 for legal services, Shimko testified at Guenther's trial on May 17, 2005 that Defendants paid him only $135,000 of the $490,000 owed his firm:

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Q: How much was your firm paid by CORF Management and CORF Licensing Services? A: We have been paid a total amount of $135,572 .... (Guenther Trial Transcript, 5/17/08, p. 91). Shimko presented

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his billing records at trial as exhibits and averred they showed that he had been paid $129,000 and was owed $359,000, for total billings of approximately $490,000. After Guenther's trial in May 2005, Defendant Guenther moved this Court for a new trial on the grounds that Shimko had misstated the amount his firm had
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received by hundreds of thousands of dollars. Shimko vigorously denied that he had given incorrect testimony. As a result of Shimko's misrepresentations, Guenther was forced to go through considerable time, expense, and mental anguish in taking an appeal through the Ninth Circuit Court of Appeals. Over the next three years, in pleadings and affidavits,

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Shimko continued to assert that he had been paid only about
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$135,000 of the $490,000 in total billings. He said so again in
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his deposition under oath on March 24, 2008.
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Q: You do not believe they were near 850,000. A: I think they were closer to some 580 some thousand; 480 to 500 some thousand. I think we had $350,000 that remained unpaid, and we were paid 135,000. That's my recollection. (Shimko depo., 3/24/08, p. 6) Two months later, Shimko again asserted that he had been paid only $129,000 in his declaration of May 5, 2008 opposing Defendants' motions for summary judgment: I am aware of no new production revealing that I received hundreds of thousands of dollars more from defendant than I have previously testified to under oath. There has been no change in my position. My firm and I have been paid only $129,000 to date for services

provided to Defendants.
(Plaintiff's Reply to Defendant Woodcock's Response in Opposition to Plaintiffs' Motion to Strike Defendant Woodcocks Amended Motion to Strike Claims and for Summary Judgment 5/5/08;
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Plaintiff's Declaration in Support of Plaintiff's Motion to Strike 5/5/08). However, seven days later, on May 12, 2008, after years of asserting under oath that his firm had only been paid about

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$129,000-135,000, Shimko completely altered his story acknowledging, reluctantly, that his firm had been paid more than $320,000. To be able to maintain that he was still owed $359,000, he simply increased the amount of his firm's total billings to a new figure, $675,886.50: I have never perjured myself in this case or in any other. Attached to the complaint in this case are Plaintiff's invoices, which unequivocally disclose that Plaintiff provided Defendants with legal services for which Plaintiff billed Defendants in the amount of $675,886.50. Of that amount, the Plaintiff's invoices clearly show that Plaintiff received only $320,937.50 in total payments from Defendants. Leaving a balance of $354,949.00 owed to Plaintiff. (Shimko affidavit 5/12/08, p. 15 (emphasis added))

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Plaintiffs' invoices have from the very beginning evidenced thefact that Plaintiff's (sic) were paid $320,937.50 for the services the firm rendered from November 2001 through April 2003. (Plaintiff's Separate Statement of Facts 5/12/08, p.6 citing paragraph 73 of Shimko 5/12/08 affidavit (emphasis added)) Shimko also asserted these figures in his response to the Arizona State Bar Complaint. (Shimko letter to AZ Bar 6/26/08, p. 9) Now less than a week before trial, months after discovery has closed and four years into litigation, Shimko wants to
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change his story yet again. Now he wants to claim (in Plaintiffs' Statement of Claim and Corrected Statement of Claim) that while he was paid more than $400,000, he was still owed another $400,000 or more.

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The Court cannot allow Shimko to repeatedly change his testimony under oath without penalty. Shimko had an ethical obligation under Rule 11 to reasonably investigate and verify his claims before even filing a complaint. Shimko had an ethical duty each time he signed a pleading to make certain he was doing so only after a reasonable inquiry into facts and law. Shimko has at all times had access to and controlled his firm's records, bank accounts, billing software and billing procedures. He has disclosed minimal information to Defendants. Whenever defendants presented records that seemed to indicate a discrepancy in amounts, Shimko attacked defendants as unreliable and defense counsel as incompetent. Shimko repeatedly testified under oath that his firm was paid about $129,000-135,000 of the $490,000 it was owed. Then four years later, after the Guenther trial, and after remand form the Ninth Circuit, Shimko altered his testimony to asset that his records unequivocally and from the very beginning have evidenced that he was paid about $320,000 and is still owed about $355,000. Now, one week before trial, he wants the Court to allow him to alter his testimony yet again to claim he was paid about $400,000 and was/is owed about $400,000. Shimko's
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actions make a mockery of the Rules of Civil Procedure; the Ethical Rules; and any chance for Defendants to adequately and fully prepare for trial. 2. Shimko Has Misrepresented the Amount of Bounced Checks. In a similar pattern of misinformation, Shimko has variously and inconsistently represented that anywhere from $75,000 to $272,500 in CORF checks to his firm bounced. Shimko has given no fewer than five or six differing stories: (1) $75,000 in bad checks (Plaintiffs' Controverting Statement of Facts 7/7/04; Plaintiffs' Reply to Defendant Brill and Richie's Response in Opposition to Plaintiffs' Motion for Summary Judgment 7/8/04, p. 5; and Shimko letter to Defendants 3/6/03); (2) $150,000 in bad checks (Plaintiffs' Response in Opposition to Defendants Motion to Strike Plaintiffs' Motion for Summary Judgment, p. 11, 12/18/06; Shimko affidavit 11/8/06 p. 10; and Shimko letter to Woodcock 4/29/03); (3) $187,500 in bad checks (Plaintiffs' List of Trial Exhibits for Guenther Trial, Ex #3A-F 4/21/05; Response to Discovery Requests 4/7/08); $197,500 in bad checks (Plaintiffs' Response to Motion to Compel 8/13/08); (4) $200,000 in bad checks (Plaintiffs' complaint, p.10); (5) $225,000 in bad checks ("Ironically of the five checks totaling $225,000, only one of the checks was ever made good." Plaintiffs' Response In Opposition to Defendant Woodcocks and Ross' Motions for Summary Judgment, 5/12/08, p. 11); (6) $250,000 in bad checks (Plaintiffs' Separate Statement of Facts
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5/12/08, p.3); or (7) $272,500 in bad checks (same Statement of Facts 5/12/08, p. 6; Shimko Affidavit 5/12/08, p. 15; and Shimko letter to AZ Bar 6/26/08, p. 9). Normally, without a jury, the Court could weigh the credibility of Shimko's latest version with his earlier stories of anywhere from $75,000 to $272,500 in bad checks. However, Defendants are unfairly handicapped by the shifting stories and Shimko's failures to produce relevant documents. Shimko's billing statements show that only one ten thousand dollar check was returned, but do not show that other checks were returned. Shimko has never provided bank account records for the months during and after when he received the checks he now claims bounced. He was required under disclosure rules and in response to specific discovery requests to do so. He did not. The Court should not put Defendants in the position where they must rebut continuing shifting stories. Shimko had an obligation form the very beginning of this case, to get his facts and figures straight. Shimko had an obligation under Rule 11 to make a good faith inquiry (which should have been easy since they are his own records) into the amount of checks, if any, that bounced. Shimko had an obligation under Rule 11 and the Ethical Rules to correct any misleading or inaccurate pleadings or testimony. And Shimko had an obligation to produce bank and other records for defendants to adequately verify or challenge his claims. Because Shimko did not do any of these,
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the Court should preclude any testimony regarding insufficient fund checks. 3. Shimko's Repeated Demands for Amounts He Overcharged for Welling's Time Show a Similar Pattern of Deceit and Misconduct That The Court Should Not Tolerate. For four years, Shimko has, before this Court, Judge Sedgwick's Court, and the Ninth Circuit Court of Appeals, continued to assert that he is owed $359,000, even though he has known all the time that this amount includes approximately $80,000 in overcharged fees for Welling's time as a law clerk, which was billed at $350 per hour instead of $125. Now, Shimko hopes to assert that it was simply a mistake, an oversight on his part. Thus even though he has known about the amount overcharged since 2003, Shimko apparently made a mistake in 2004 before this Court when he asserted he was due the full balance: 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.) It was probably simple oversight, when two years later, Shimko continued the false claim under oath in his affidavit for the $80,000 in excess billings in Judge Sedgwick's Court: 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.

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(Shimko Affidavit, 11/8/06, 174, which was part of Shimko's Motion for Summary Judgment filed in 2:05-CV-01387-JWS on 11/9/06.) And it was mere inadvertence when Shimko claimed the $80,000 in excess billings 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, p. 20 and 22) Apparently this Court got it wrong on the Guenther remand, because, as Shimko explained in his June 26, 2008 letter to the Arizona State Bar, he thought this Court took the Welling excess billings into account in rendering its judgment. However, one can forgive the Court for not finding any indication in Shimko's Memorandum that the excess billings even existed, let alone should be subtracted out of the total. At least three times in the Memorandum, Shimko asserted he was entitled to his full bill: 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.

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Therefore to allocate the bill evenly among the four (4) partners... would simply require the Court to divide the bill by four. Under this computation, Dr. Guenther would be responsible for of the firm's bill. Which is 4 of $359,668. (Plaintiffs' Post-Trial Memorandum on the Issue on Remand, 3/3/08, p. 12-14; Judgment of Court against Guenther).

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Shimko made no efforts, despite his obligations under
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Rule 11 and ER 3.3, to correct the Court's judgment against
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Guenther. When defense counsel has pointed out
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inconsistencies in Shimko's accountings and his continuing
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claims for the excess charges, Shimko has not corrected his false or misleading statements, but has gone on the attack: Defendant Woodcock's response is filled with inflammatory and unsubstantiated rhetoric. This Court has already tried this case as to Defendant Guenther. The Defendant Woodcock testified at trial. The issues raised in Woodcock's Response were all testified to and established in the Guenther trial. To circumvent this Court's rules, Defendant Woodcock has resorted to misstating the record and creating issues that are nothing more than red herrings. (Plaintiffs' Reply to Defendant Woodcocks' Response in Opposition to Plaintiffs' Motion to Strike Woodcocks' Amended Motion for Summary Judgment 5/5/08, p. 3.) 4. Conclusion Shimko repeatedly failed to meet his obligations under Rule 11 to do a reasonable inquiry and investigation before asserting claims and signing pleadings. Shimko has made false statements to defense counsel and three federal courts. Shimko has failed
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to produce complete bank records that would help determine which, if any, checks bounced and what payments were received by his firm. Shimko has proffered several different accounts, each unequivocal and indisputable until the next one, of what his firm was paid; which checks were returned; and how much is owed his firm. And Shimko has repeatedly asserted claims for excess billings related to Welling. Similarly, in his representation of the Defendants, Shimko blinded himself to any ethical rules that might get in the way. As the Court is aware from the motions for and responses to summary judgment, Shimko had done almost all plaintiffs' contingency work and had little experience representing multiple defendants when he undertook to represent the eight CORF related defendants. Shimko failed to learn the ethical rules or associate with counsel who could bring him up to speed. Shimko failed to advise defendants of the potential conflicts inherent in his representation of eight different defendants and failed to get their informed consent to waive those conflicts. Shimko's own pleadings show that he never explained the implications and risks of multiple representation to his client: However, at that meeting, Mr. Cheifeitz did inform Plaintiff for the first time that he was prepared to offer a different deal to Dr. Brill and Mr. Richie...he would be willing to drop them from the suits, if they would agree to cooperate and give him information and statements. When that offer was made, the Plaintiff shortly thereafter notified Brill and Ritchie that they should seek independent counsel, as there did appear to be a 11
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conflict that arose caused by Mr. Cheifitz' offer. No such deal was offered with respect to the Defendants... Mr. Cheifitz never made any offer creating any conflict in the Plaintiff's joint representation of the Defendants; nor did he indicate he would do so in the future... More importantly, Plaintiff made no offer on behalfof any of his clients thatever created a conflict. (Plaintiffs' Response in Opposition to Defendant Woodcocks

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and Ross' Motions for Summary Judgment, 512/08. p. 10
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(emphasis added)) Shimko never explained to Woodcock or to
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Goldfarb that one of the major inherent risks of joint
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representation is that he would not be able to offer a deal or negotiate a favorable settlement on behalf of any one individual defendant. Shimko appears not even to have been aware of this basic potential conflict addressed by ER 1.7, until Cheifitz made him an offer regarding the CORF officers. Shimko never got Woodcock or Goldfarb's informed consent to waive the conflict because Shimko never advised them of the risks of multiple representation. Similarly, Shimko entered into substantial business transactions with some of the Defendants without any regard to the Ethical Rules. He did not inform the other defendants he represented in advance; he did not advise them of terms and conditions of the transactions; he did not advise them to seek independent review; and he failed to get their consent in writing.
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Ideally, this Court would look at Shimko's pattern of conduct; deem it unethical and completely unacceptable; and dismiss all his claims with prejudice. The Court would impose a monetary sanction in the amount of defense fees and costs. The Court would then refer Shimko's inconsistent sworn statements and testimonies to the Maricopa County Attorney's Office and his conduct to the Arizona and Ohio Bar Associations. At a minimum, this Court should not allow Shimko to alter his testimony from that which he gave at Guenther's trial on May 17, 2005 and at his deposition on March 24, 2008. He should not be allowed to introduce as exhibits checks which he claims bounced, but for which he has told inconsistent stories and failed to disclose or produce bank records that would allow defendants to address the veracity of his claims. Discovery deadlines have long passed and Shimko should not be allowed to introduce new accountings, new figures, or new records that he did not provide prior to his deposition, where they could have been examined and Shimko could have been questioned by defense counsel. Dated this 22nd 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 and Goldfarb
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Electronically filed and copied sent electronically this 22nd day of August 2008: Timothy Shimko & Associates Roger Cohen, JABURG & WILK /s/ Rich McDaniel

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