Cause No ORIGINAL ANSWER OF DEFENDANT ARNOLD & ITKIN

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1 NICHELLE LEDOUX VS. ARNOLD & ITKIN, LLP Cause No IN THE DISTRICT COURT OF HARRIS COUNTY, TEXAS 270 th JUDICIAL DISTRICT Filed 11 March 24 A10:23 Chris Daniel - District Clerk Harris County ED101J By: Sandra Talbert ORIGINAL ANSWER OF DEFENDANT ARNOLD & ITKIN TO THE HONORABLE JUDGE OF SAID COURT: Defendant Arnold & Itkin, in the above-numbered and entitled cause, files this Original Answer to Plaintiff s Original Petition filed herein by the Plaintiff, Nichelle Ledoux, and, in support of which, would show as follows: I. Arnold & Itkin requests that this action be transferred to the 151 st Judicial District of the District Court of Harris County. Plaintiff Nichelle Ledoux sought leave to take a pre-suit deposition in this matter pursuant to Rule 202, and that proceeding was assigned to the 151 st District. (The docket number is ) Ledoux s Rule 202 petition was filed in anticipation of this lawsuit, which should be assigned to the same Court. II. Defendant Arnold & Itkin (hereinafter Arnold & Itkin or the firm ) hereby generally denies all the material allegations of Plaintiff s Original Petition and demands that the Plaintiff, Nichelle Ledoux, be required to prove her charges by a preponderance of the evidence. Arnold & Itkin reserves its rights to amend this Answer to raise applicable affirmative defenses or demand other relief from the Plaintiff or her counsel.

2 III. The law firm of Arnold & Itkin represented Ms. Nichelle Ledoux for two-and-a-half years in a personal-injury action arising from a car accident. In April 2009, the firm obtained a very favorable settlement in the amount of $325, Ms. Ledoux approved the settlement at the time, though she now claims to be dissatisfied with the net proceeds she is entitled to receive. Ms. Ledoux s petition leaves out the most important facts: Over the two-and-a-half years she was represented by Arnold & Itkin, Ms. Ledoux took out more than $65, in loans that would have to be repaid if Arnold & Itkin obtained a recovery for her. These were loans, not handouts. It was not free money. And Ms. Ledoux knew these were loans. For two-and-a-half years, she paid many of her routine expenses rent, traffic tickets, car-impound fees, prison bail, legal fees in a custody case, her daughter s legal fees in another case all by borrowing money against a potential future recovery. Ms. Ledoux s petition also neglects to mention the more than $60, in medical costs which were paid by Arnold & Itkin. Nor does she mention the liens, including more than $30, in liens filed by health-care providers. Nor does she take into account the nearly $15, in litigation expenses that the firm incurred while representing her. Because of the paucity of detail in Ms. Ledoux s petition, a more complete statement of the facts is warranted. In the first thirteen months that it represented her, Arnold & Itkin LLP loaned Ms. Ledoux more than $ (These amounts are all reflected in the case expenses report that the firm made available to Ms. Ledoux s new lawyer long before he filed this lawsuit.) The onetime loans between June 2007 and July 2008 included loans for rent and car payments. 2

3 On August 20, 2008, Ms. Ledoux sent an to the firm wanting to know the status of the Montclair loan. (All s quoted in this Answer were provided to Ms. Ledoux s new lawyer before he filed this lawsuit.) An assistant at the firm forwarded the to an attorney and advised him that Ms. Ledoux had already borrowed $12, between April 2008 and August 2008, and that she now wanted another $ That loan did not work out. On August 26, 2008, Ms. Ledoux called the firm and was, as a secretary put it in an , freaking out because the loan company s representative told her she was maxed out and could not borrow any more money from them. But this was only the beginning. Ms. Ledoux turned to another loan company. On September 4, 2008, an assistant at the firm notified the Ledoux litigation team that a New York-based company named Plaintiff Support Services had agreed to loan her the $ and had assumed the entire LawMax lien of $23, In October 2008, while reviewing Ms. Ledoux s driving record, the firm noticed that Ms. Ledoux s driver s license had been suspended for non-payment of traffic tickets. An assistant called Ms. Ledoux, who confirmed that she had not been able to pay [the tickets] as of yet. Ms. Ledoux assured them that she was working on it and will try to get a loan to pay them off. A week later, Ms. Ledoux asked for another loan. She needed $ to tide her over until she received her paycheck in November. She obtained the $ loan from Plaintiff Support Services the same company that loaned her $ the month before. Shortly after receiving that loan, Ms. Ledoux s car was impounded. For whatever reason, she then asked to borrow $ directly from Arnold & Itkin to retrieve her car. The firm loaned her the money. 3

4 About a month later, on November 19, 2008, Ms. Ledoux called the firm to ask for more money this time, $ The legal assistant sent an to Michael Pierce, an attorney at Arnold & Itkin, and asked whether the firm should recommend another loan. The assistant said that she was concerned that [Ms. Ledoux] won t get another one since we just got her approved about 3 weeks ago for a 5k loan. Almost a month passed before Ms. Ledoux s next loan request. On Monday, December 15, 2008, a paralegal at Arnold & Itkin received a telephone call from a loan representative at Plaintiff Support Services. The paralegal wrote: Ms. Ledoux requested a $7000 loan directly from them today. [The loan representative] stated that Ms. Ledoux is well over her limit for loans and he doesn t think she ll be able to get one at this time. But she did. Ms. Ledoux was ready for yet another loan by the end of that week. On the morning of Friday, December 19, 2008, she called a secretary at the firm to let her know that two policeman had come to her door. The secretary conveyed the message to Michael Pierce, letting him know that Ms. Ledoux said she was getting some of her stuff together and taking off. Mr. Pierce s secretary received another telephone call not long afterwards. In an sent at 10:56 A.M., the secretary wrote: She [Nichelle Ledoux] just called again. She said she hasn t left her apartment because her friend called her and told her that the officers have been to the bar where she drinks to look for her.... She knows they are there to arrest her. What do you want us to do? She s freaking out. Ms. Ledoux was arrested later in the day, apparently for assault. The next was sent on the afternoon of December 19, 2008: Heads up... She [Ms. Ledoux] said she is going to use up all of the money she just got on this bond and will most likely need another loan. 4

5 The following Monday, Ms. Ledoux asked the firm to help her get another loan from Plaintiff Support Services. She wrote: Let s just say Or whatever they will allow. In January 2009, Ms. Ledoux sought more loans to cover legal fees, both for herself and for her daughter. On January 22, 2009, she went directly to Plaintiff Support Services to request more money.... She is requesting $4000 up front and wants to continue to get a monthly loan in the amount of $1500 for the next 3 months. As a paralegal explained in an to Michael Pierce, the representative from Plaintiff Support Services wanted to know exactly where the case stands before they grant her these loans. The firm recommended that the request be denied, and it was. The very next day, after the latest loan request was denied, Ms. Ledoux called the paralegal and asked if they would recommend a smaller loan in the amount of $ Within a few hours of asking for the lesser amount, Ms. Ledoux sent another via her BlackBerry from T-Mobile demanding to know [w]hat is the status of this loan? In March 2009, as the mediation date was approaching, Ms. Ledoux asked to borrow more money and began sending more s with subject lines such as Do you have a status update on the loan? The paralegal notified her on March 13 that Plaintiff Support Services could no longer lend her any money because they had exceeded their underwriting guidelines. That did not sit well with Ms. Ledoux. She replied, Have mike [sic] call me. There are other places you could have tried and you know it. In telephone calls, Ms. Ledoux insisted that the firm keep sending applications to different loan companies until she gets approved. By that point, however, no one would lend her any more money. On March 19, 2009, Ms. Ledoux asked Arnold & Itkin to contact one of the attorneys who was representing her in one of her other legal matters. Ms. Ledoux had never paid the 5

6 attorney despite taking out thousands of dollars in loans in late 2008 for the express purpose of paying her legal fees. Because the attorney doubted he ever would be paid, he had decided to file a motion to withdraw as her counsel. He also informed Arnold & Itkin, though, that he did not want to take out a lien against her PI case. The car-accident case was set for mediation on March 30, and a scheduling coordinator at Arnold & Itkin sent a reminder to Ms. Ledoux about the time and place. She replied by I don t have time for this right now. I have too many personal problems going on. Please tell Mike [Pierce] to settle it the best way that he can. Ultimately, Ms. Ledoux did show up for the mediation on March 30, and she happily agreed to the $325, settlement offer. Less than a week later, she asked to borrow more money. Ms. Ledoux sent a one-line e- mail to Mike Pierce on Monday, April 6, 2009: Did you approve that loan? When she learned that the loan-company representatives were not inclined to advance any more money, she wrote back: I need Mike to approve the loan today. I know he is in trial but I need it. When the loans stopped, Ms. Ledoux found new lawyers who would sue the lawyers who had spent two-and-a-half years pursuing her case and had obtained a $325, settlement in a routine car-wreck case. Her new lawyer Ross Sears of the firm Sears Crawford holds himself out as a lawyer who sues lawyers for malpractice. The Sears Crawford We Sue Lawyers billboards do attract attention. A recent law-review article began as follows: If you drive East on Interstate I-10 approximately 60 miles outside of Houston, Texas, you will see a huge billboard on the road stating: WE SUE LAWYERS... (the sign then provides the law firm s name and contact information). Shocking as it may seem, this sign represents a recent trend of going after lawyers using every possible legal theory that exists. Katerina Lewinbuk, Let s Sue All the Lawyers: 6

7 The Rise of Claims Against Lawyers for Aiding and Abetting a Client s Breach of Fiduciary Duty, 40 Ariz. St. L.J. 135, 135 (2008). The billboards were also mentioned during the recent debates on an insurance-disclosure rule for attorneys. See, e.g., Mary Alice Robbins, Texas Bar Considers Insurance Disclosure Rule for Lawyers, Texas Lawyer (Nov. 16, 2009). It is unclear which Sears Crawford billboard or other We Sue Lawyers marketing material that caught Ms. Ledoux s attention. At any rate, Ross Sears contacted Arnold & Itkin in May 2010, and the firm produced copies of its files. Arnold & Itkin provided Mr. Sears with their complete file in the Ledoux case three boxes of material including Bates-labeled copies of: The settlement disbursement statement, signed by the petitioner; An expense summary, signed by the petitioner; An itemized list of expenses; Medical bills and invoices from accident investigators, accountants, doctors, and pharmacists; Checks representing loans to the petitioner, along with claims-purchase agreements, signed by the petitioner; and The settlement agreement, release, and judgment. The expense report, which was accepted and approved in writing by Ms. Ledoux, showed that Arnold & Itkin LLP was responsible for paying $60, in Ms. Ledoux s medical costs; that the firm had loaned her $ with accrued interest of $830.47; that the firm had paid $11, to experts and outside consultants; that the firm had paid more than $ in court costs, mediation costs, and related expenses; that medical providers had liens of more than 7

8 $30,000.00; that MCF Funding had a lien of $ for money it had loaned to Ms. Ledoux; and that Plaintiff Support Services had a lien of $55, for its loans. After sitting on the documents from May 2010 to September 2010, Ms. Ledoux s new lawyer filed an unsuccessful petition to take a pre-suit deposition under Rule 202 of the Texas Rules of Civil Procedure. Her new lawyers even sought to subpoena all the documents that had already been provided to them. The whole point of the Rule 202 petition was to harass Arnold & Itkin and put them on notice that they were in the cross-hairs of Sears Crawford LLP, the selfappointed guardians of legal professionalism. A few days after filing the Rule 202 petition, Ross Sears sent a letter to Arnold & Itkin s attorneys. The billboard-leasing lawyer whose mission is to sue lawyers did offer something of a compliment: he said he believed the lawyers at Arnold & Itkin LLP are smart and successful attorneys who have been successful to date in their practice. The little phrase to date was a clue to what came next: If Arnold & Itkin did not settle the cases quickly, then Ross Sears would be forced to try these cases, [and] an adverse judgment would not be helpful to [Arnold & Itkin s] reputation. Sears believed there may be many other cases of disgruntled Arnold & Itkin clients, and all the negative publicity would harm the firm s reputation and may cause other similarly situated clients to question their settlements as well. For Arnold & Itkin s sake, Sears hoped they would not force him to litigate. Indeed, he said, it is in the best interest of all parties to resolve this matter quickly and amicably in order to avoid a bad outcome. Sears s letter emphasized several interrelated points: (1) Arnold & Itkin is a successful firm at least to date and has a good reputation; (2) Sears Crawford would ruin Arnold & Itkin s reputation if they did not settle quickly; (3) Sears Crawford would be on the lookout for 8

9 other Arnold & Itkin clients who are persuaded by We Sue Lawyers billboards; and (4) if Arnold & Itkin would just settle, they could avoid all the negative publicity that Sears Crawford would try to gin up. Lest anyone misunderstand the nature of his missive, Mr. Ross Sears stated reassuringly that [t]his is in no way meant to be a threat. That is not my style. Questions of Mr. Sears s style aside, the lawsuit that he filed on Ms. Ledoux s behalf is completely devoid of substance. As explained above, Sears has known since May 2010 about all the medical expenses that Arnold & Itkin had paid and about the tens of thousands of dollars that Ms. Ledoux had borrowed against any future recovery that Arnold & Itkin could obtain for her. Yet Sears filed this lawsuit anyway, and his October 2010 letter (which is in no way meant to be a threat ) reveals why it was filed. In this case, the lawyers who sue lawyers are nothing more than lawyers who threaten to ruin lawyers good reputations if they don t settle. In fact, the only course of action that would tarnish Arnold & Itkin s reputation would be to capitulate to Sears Crawford s bush-league harassment. IV. WHEREFORE, PREMISES CONSIDERED, Defendant Arnold & Itkin, requests that Plaintiff take nothing by way of this lawsuit and that Defendant recover its costs and be granted such other and further relief, general or special, legal or equitable, to which it may show itself entitled. 9

10 Respectfully submitted, REYNOLDS, FRIZZELL, BLACK, DOYLE, ALLEN & OLDHAM, L.L.P. By: /s/ John S. Black John S. Black State Bar No Jeremy L. Doyle State Bar No Billy Berryhill State Bar No Louisiana, Suite 3500 Houston, TX Phone: (713) Fax: (713) ATTORNEYS FOR DEFENDANT ARNOLD & ITKIN CERTIFICATE OF SERVICE On this 24 th day of March 2011, the above document was served on all counsel listed below by e-filing, certified mail, return receipt requested and/or regular mail in accordance with the Texas Rules of Civil Procedure: Ross A. Sears, II Sears * Crawford 1200 Rothwell Street Houston, TX /s/ John S. Black John S. Black 10

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