Free Notice of Filing Proposed Pretrial Order - 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. DEFENDANTS' JOINT PROPOSED PRETRIAL ORDER

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Given that Plaintiffs requested an extension to file a proposed Joint Pretrial Statement without having contacted Defendants, who were ready, willing and able to file a timely statement, and further given that Plaintiffs waited until the day the proposed joint order is due to request such an extension, Defendants hereby file their own Joint Proposed Pretrial Order pursuant to the Scheduling Order entered December 7, 2007. Accordingly, the following is the Joint Proposed Pretrial Order to be considered at the Final Pretrial Conference set for August 15, 2008 at 3:00 p.m. before Judge Martone. //// ////

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

I.

TRIAL COUNSEL FOR THE PARTIES

Plaintiffs: Timothy Shimko, pro per TIMOTHY SHIMKO & ASSOCIATES 2010 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 Defendants: Roger L. Cohen JABURG & WILK, P.C. 3200 North Central Avenue, Suite 2000 Phoenix, Arizona 85012 (602) 248-1000 Fax (602 2480522 Attorneys for Ross Defendants Richard J. McDaniel, Esq. 11811 N. Tatum Blvd., Suite 1051 Phoenix, Arizona 85208 Attorney for Woodcock Defendants David and Rhona Goldfarb 11437 N. 53rd Place Scottsdale, Arizona 8525 Defendants Pro Per II. STATEMENT OF JURISDICTION/VENUE This Court has jurisdiction based upon diversity of citizenship; Defendants agree that the amount in controversy exceeds the statutory minimum pursuant to 28 U.S.C. §1332. III. NATURE OF ACTION This is a lawsuit for legal fees, brought by lawyers against their former clients. An Ohio law firm and its principal, attorney Timothy A. Shimko ("Shimko"), filed suit against three limited partnerships and their individual partners, for fees incurred in the joint representation of the companies and the individuals in a series of litigation matters. 2
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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

Shimko engaged in serious conflicts and ethical violations in representing the companies and the individual defendants in the underlying litigation, failing to disclose the conflicts, failing to obtain written consent, failing to discuss the advantages and risks of joint representation, and otherwise in violating ERs 1.7 and 1.8. The Ninth Circuit prohibits lawyers from recovering legal fees incurred in an unethical representation. In any event, this case involves the attempt by attorneys to collect legal fees from individual limited partners, notwithstanding that (1) the fee agreement was with only the limited partnerships; (2) the bills were sent only to the limited partnerships; (3) any payments were made only by the limited partnerships; and (4) as general counsel to the limited partnerships, the attorneys had actual knowledge of each individual's relationship and position with the limited partnerships. IV. A. STIPULATIONS AND UNDISPUTED FACTS Plaintiff's Undisputed Facts

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B.

Defendants' Undisputed Facts: 1. In or about 2000, Plaintiffs Shimko & Piscitelli, an Ohio law firm,

and attorney Timothy Shimko (collectively, "Shimko") began representing a group of limited liability companies (the "CORF Entities") in connection with their business operations. In or about Fall, 2001, the CORF Entities retained Shimko as counsel in a series of filed or threatened lawsuits. The CORF Entities requested that Shimko also defend the Ross Defendants, the Woodcock Defendants, and the other officers, employees and their spouses named in any such lawsuits, at the expense of the CORF Entities. There was no written fee agreement.

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

2.

Significantly, all bills for legal services were addressed and mailed

to the CORF Entities. From December 5, 2001 to April 23, 2003 the bills were sent to the attention of the billing department at CORF Management Services, L.P. and mailed to the company address, first at 10210 N. 2nd St. in Phoenix, and later at 7272 East Indian School Road, Scottsdale. 3. None of the bills were sent to any of the individual defendants, Even the

including Ross, and none of the individuals were copied on any of the bills.

final bill, attached as Exhibit 1 to the Complaint, and including all amounts purportedly due and owing through April 30, 2003, is addressed only to the billing department of CORF Management at its address on Indian School in Scottsdale. There is no evidence that this final billing statement was ever sent to any of the individual defendants, including Ross. 4. Shimko made no effort to isolate any particular legal service that

might have been associated with any individual defendant. 5. All checks issued to pay Shimko's fees were drawn on business

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accounts of the CORF Entities. In total, the CORF Entities paid Shimko more than $475,000.00 on behalf of the CORF Entities and the individual defendants. 6. Mr. and Mrs. Ross never paid any of the legal bills. Mr. and Mrs.

Ross never agreed to pay any of the legal bills. 7. Shimko did not request payment from any individual defendant

Shimko withdrew from representation. Specifically, there is no evidence that Shimko ever requested payment from Ross or Woodcock. 8. In or about January, 2003, the CORF Entities experienced cash flow

problems and did not have the means to pay the legal bills. In April, 2003, Shimko demanded that the individual defendants agree in writing to be personally liable for all past and future fees and to provide personal collateral to secure payment. All individual defendants, including Ross, expressly refused to sign any personal guarantees or to be responsible for fees. 4
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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

9.

Shimko failed to timely advise the individual defendants and the

CORF Entities of potential conflicts of interest in representing all of them. On April 29, 2003, the same date as the last service they provided, Shimko wrote to Mr. Brill, with copies to the other individual defendants, the following: "[t]his letter is to inform you that in light of the current litigation, potential conflicts may arise between you as an

individual and CLS and CMS and their owners." Ross and the others were not advised of the potential conflict of interest until just before the Attorneys withdrew as counsel, and just after the individuals refused to personally guarantee payment of fees. 10. At all times relevant, Shimko was counsel for the CORF Entities.

Among his other duties as partnership counsel, Shimko negotiated and drafted employment agreements on behalf of the CORF Entities. The billing statements reflect that, among his other duties as partnership counsel, Shimko handled transfer of the CORF license, made changes to the Director's agreement to create vice president agreements, and negotiated noncompete agreements with clients for new products. 11. Shimko failed to advise Defendants of the potential conflicts

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involved in his simultaneous, joint representation of the CORF business entities, its officers and employees, the general partner and limited partners. Shimko failed to advise the Defendants that they might have different interests and conflicts with the general partner and officers and employees. 12. Shimko failed to advise individual Defendants that they might have

conflicts with the other defendants and different interests than the other defendants, depending upon their personal assets and financial situations, how the assets were held, their level of involvement in CORF activities and promotions, and their knowledge of activities at CORF. 13. Shimko failed to explain to individual Defendants that he could not

make a separate settlement on their behalf because doing so would conflict with his duty of loyalty to his other clients. Individual Defendants never waived this and other

potential conflicts because they were never advised of them. 5
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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

14.

Shimko failed to advise individual Defendants of the risks and

potential conflict involved in his representation of multiple clients with different levels of involvement and potential culpability. Shimko failed to advise individual Defendants that they might have conflicting interests and should seek independent counsel even though some of the other clients Shimko represented continued to engage in activity that Shimko had warned them against. 15. Shimko testified that he attended dinner with the lead attorney for

plaintiffs in the underlying CORF-related lawsuits, and that the attorney was offering to drop lawsuits against Brill and Ritchie, who had been CORF officers and employees. Shimko did not offer to enter into a separate agreement on behalf of the Ross Defendants because that would have conflicted with his duty to the other individual defendants. 16. Shimko failed to explain to the Ross Defendants that some debts to

him were corporate, and some were purportedly personal; and he failed to explain how he would allocate monies he received from CORF between his legal bills and loan repayment. By applying monies received from CORF preferentially to repayment of the loan, Shimko increased the risk that CORF would be unable to pay legal bills, thus increasing the risks that the Ross Defendants would be charged with payment. The loan transaction and risks were not explained to the Ross Defendants, and their interests were materially affected. Shimko failed to obtain the Ross Defendants' written consent to the transaction. 17. Shimko failed to advise individual Defendants to have independent transaction and operating agreement, even though

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counsel review an August 2002

Shimko provided legal services to Aztec Medical Group Partners, LLC, in exchange for an interest in the company. Shimko failed to obtain individual Defendants' written consent to the transaction. 18. Shimko demanded that individual defendants pledge their homes as

collateral in April, 2003, but failed to warn Defendants that if they knowingly and 6
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willingly pledged their homes they potentially waived their homestead exemption. Shimko failed to advise them to seek the advice of outside counsel. 19. Shimko admitted in his deposition that he never talked to the Ross

Defendants about their personal financial situation, and had no knowledge of the individual defendant's relative financial strength to each other. 20. Shimko never talked to Woodcock Guenther, Ross or Goldfarb about

the advisability of having separate counsel to make separate agreements, and save their individual situations at the expense of the rest of the group. Shimko claimed that "these were like the four musketeers. . . in for a penny and they were in for a pound." In fact, Shimko acknowledged that he had no idea that each of the individual defendants had eventually hired separate counsel and cut separate deals. 21. Shimko did not recall, during his deposition, whether he ever even

reviewed Arizona ethical rules pertaining to representing multiple parties in litigation. Nor did he recall whether he explained to Mr. Ross the implications of common representation, as required by ER 1.7. 22. Shimko admitted during his deposition that he never discussed

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conflict issues with his former clients, because he "didn't see any conflict issues to be discussed." He never advised Mr. Ross that any confidential attorney/client

communications they had would be shared or shareable with the other Defendants. 23. At his deposition, Shimko could not recall whether there was a

writing where the former clients agreed to repay the loan or where it was explained how and when the money would be repaid. He admitted that he did not advise his former clients to seek independent counsel. 24. With respect to the investment in Aztec Medical, Shimko undertook

legal work in exchange for a percentage of interest in the venture. Shimko did not recall whether he disclosed in writing to the clients the terms of the agreement, as required by ER 1.8. Nor did Shimko advise his former clients that this was a business transaction with 7
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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

a client and that they needed to have the advice of independent counsel before they agreed to it. 25. Frank Piscitelli, a former partner of Plaintiff Timothy Shimko and an

original named Plaintiff in this lawsuit, performed a substantial portion of the services described in Shimko's billing statements. 26. Mr. Piscitelli evaded service of a subpoena in order to avoid being

deposed in this case. Based upon this Court's prior ruling, Plaintiff is not entitled to assert a claim for attorney's fees pertaining to the services performed by Mr. Piscitelli. V. A. WITNESSES Plaintiff's Witnesses:

B.

Defendants' Witnesses: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Paul Woodcock Bobbi Woodcock Richard Ross David Goldfarb Mick Guenther Craig Boates Timothy Shimko Frank Piscitelli (if available) David Welling (if available) Without waiver of objections, all witnesses listed by Plaintiff.

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EXHIBITS Plaintiff's Exhibits

Defendants' Exhibits: 8

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

1.

Exhibits #1-7, and 78-79 from Shimko's Civil Exhibit List prepared for Guenther's trial.

2. 3. 4.

Shimko deposition transcript 3/24/08 Guenther trial transcript 5/17/05 Shimko affidavits in support of motions for summary judgment or responses to summary judgment before Judge Martone and Judge Sedgwick, including Shimko Affidavit, 11/8/06, attached as Ex. H to Shimko's Motion for Summary Judgment filed in 2:05-CV-01387JWS on 11/9/06 and Shimko Affidavit 5/17/04, submitted to this Court with Shimko's Motion for Summary Judgment on 5/17/04.

5.

All pleadings with any reference to amounts paid Shimko's firm or amounts claimed owed to Shimko's firm filed by Shimko before Judge Martone, Judge Sedgwick, and the Ninth Circuit Court of Appeals, including Appellees' Response Brief, 3/28/06.

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6.

Plaintiffs' Post-Trial Memorandum on the Issue on Remand on the Guenther Matter, 3/3/08.

7. 8. 9.

Mick Guenther Deposition 2/24/03 Shimko invoice for December 2000 Operating Agreement Aztec Medical and Table of Membership Interests

10. 11.

Jeff Finley 3/3/03 letter to Shimko Defendant Woodcock's non-uniform interrogatories and requests for production and Shimko's responses.

12.

Summary list of checks and wire transfers prepared by counsel showing Shimko's firm was paid $603,816.80 (as a demonstrative exhibit).

13.

Shimko's response letters and exhibits to the Arizona State Bar regarding complaints filed against Shimko. 9

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14.

Exhibit prepared at direction of defense counsel showing Piscitelli billed approximately $314,868.42.

15.

Shimko 3/4/03 letter to Defendants re: bounced checks in the amount of $112,500.

16. 17. 18. 19. 20. 21. 22.

December 5, 2001 through April 23, 2003 Invoices April 29, 2003 Letter from Shimko to Woodcock May 2, 2003 Complaint May 17, 2004 Affidavit of Shimko June 18, 2004 Affidavit of Woodcock June 18, 2004 Affidavit of Ross September 13, 2004 Final Judgment as to claims against Defendants Brill and Ritchie

23.

Without waiver of objections, any and all exhibits listed or used by any other party

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VII.

INFORMATION FOR COURT REPORTER Defendants agree to provide the Notice to Court Reporter one week before trial. APPROVED AS TO FORM AND CONTENT JABURG & WILK, P.C. s/ Roger L. Cohen Roger L. Cohen Kathi Mann Sandweiss Attorneys for Ross Defendants s/ Richard McDaniel Richard McDaniel Attorneys for Woodcock Defendants David Goldfarb Rhona Goldfarb 10

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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 8, 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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