7. Championing the Defenseless and Oppressed, Protecting Widows and Children

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1 I. Respect for the Judicial Process 7. Championing the Defenseless and Oppressed, Protecting Widows and Children Lawyers play many essential roles in the administration of justice. One of the most sensitive is mediating between their clients passions and the integrity of the judicial process. A lawyer must obey an order of the court requiring him to do or forbear an act connected with or in the course of his profession, as well as the attorney s oath. 1 Lawyers may be tempted to violate these obligations by identifying too closely with clients and causes or becoming personally hostile to opposing counsel or court. Some defense lawyers cross the boundary between representing clients charged with past crimes and facilitating further crime. Robert Lahodny, son of the Coronado city manager, referred many clients to Phillip DeMassa and then persuaded the lawyer to invest in a Santa Barbara house, which Lahodny would renovate, living rent free and sharing in the resale profit. 2 DeMassa, representing targets of a grand jury investigation into the Coronado Company for international drug dealing, claimed not to know at the time that Lahodny was a Company runner. After the indictment revealed this, Lahodny left for a long vacation in Mexico and Tahiti and returned under an alias, resuming the renovation and giving contractors large cash tips. After a DUI arrest, in which Lahodny gave another alias, he spent two days at the Santa Barbara house with DeMassa, who referred him to a lawyer who pleaded Lahodny under the alias without ever meeting him. Lahodny ultimately surrendered to face the drug charges. Charged as a co-conspirator with the Coronado Company, DeMassa pleaded to harboring a fugitive and three currency offenses. Some lawyers simply tamper with the judicial process. Waldo A. Brown paid a municipal court clerk to dismiss DUI charges on a plea to the lesser offense of reckless driving, without notifying the judge or prosecutor. 3 After Respondent A lost a personal injury case for a friend s permanently disabled 18-year-old son, the lawyer wrote all the jurors explaining the unavailability of workers compensation, the employer s obligation to protect employee safety, and the inadequacy of the defendant s $50,000 settlement offer. 4 He also complimented three named jurors who voted for liability and noted that his office had paid all the jurors per diem and a third of their lunch expenses. Donald J. Loftus concealed from a doctor the fact that he planned to sue for malpractice, secretly recorded their conversation, and then lied about doing so. 5 After losing the case, he telephoned a juror at work, asked about the judge s decision to suspend deliberations for a day and, when the juror refused to provide an affidavit about this, threatened to tell the juror s employer. Representing the father in a child support dispute, Henry D. Fandey gave his client two books on how to change his identity, advised him how to avoid leaving a paper trail, arranged to sell his California house, helped him move to El Paso, 1 Business & Professions Code Matter of DeMassa, 1 Calif. State Bar Ct. Rptr. 737 (1991) (60-day suspension, one-year probation). 3 Matter of Brown, 2 Calif. State Bar Ct. Rptr. 309 (1993) (resigned with disciplinary charges pending). 4 Matter of Respondent A, 1 Calif. State Bar Ct. Rptr. 255 (1990) (acquitted). 5 Matter of Loftus, 5 Calif. State Bar Ct. Rptr. 80 (2007) (90-day suspension, 18 months probation). 1

2 and found him a place there. 6 After Daisy Palella was sued for divorce in Texas, Daniel M. Chesnut sought to avoid that court s jurisdiction by falsely claiming he had personally served her husband in California. 7 Defending an unlawful detainer, John F. Farrell falsely claimed that another tenant of the landlord had been subpoenaed, substituted that name on another subpoena, and served it when the tenant voluntarily appeared in court. 8 Representing the temporary conservator of a defendant and cross-complainant in a personal injury action, Thomas J. Jeffers repeatedly sought continuances and failed to appear at hearings, responding evasively when the judge asked about the defendant s to communicate before ultimately admitting that the defendant was dead; Jeffers had also concealed the defendant s assets. 9 Representing himself and his mother in bitter property disputes with his ex-wife, Walter A. Varakin sued her and her lawyer for slander and infliction of emotional distress. 10 Over the course of ten years he filed numerous frivolous motions and appeals, for which he was sanctioned 14 times (more than $80,000). Courts found that he had mischaracterized the record, failed to support factual assertions, misrepresented legal authorities, ignored the most elementary rules of appellate review and presented an incoherent mélange of half-formed arguments and hints of error, appealed on grounds that had already been rejected or never raised at trial, and unnecessarily wasted the time and resources of the parties and the court in order to delay satisfying the judgment. He failed to report the judicial sanctions, even in response to State Bar questions, or to cooperate with its investigation. Lawyers can become so invested in cases that they will not let their clients quit. Elodie McKee and Don Porco retained James C. Regan (under a contingency fee agreement authorizing $200/hour for any appeal) to sue the City of Burbank and its employees for slander. 11 The individual defendants successfully moved to strike this as a strategic lawsuit against public participation (obtaining a $15,000 attorneys fee award); and the action against Burbank was dismissed. Four days before this, McKee and Porco each gave Regan a $250 check with appeal on the memo line. Within a month, however, McKee phoned to say that neither wanted to appeal. Regan immediately hung up, did so two more times that day, and filed the notice of appeal the next day without informing them because I don t know that it s wise to put so many things in writing. Learning this a week later, Porco phoned Regan: I told him to get my name off of it. I didn t want that appeal. McKee filed a pro per substitution of attorney, but the court continued to recognize Regan as attorney of record, because he said McKee had failed to return the substitution of attorney form. Porco asked for his case file but never got it. After the trial court entered a $63,000 judgment against the three, Regan filed a supplemental notice of appeal for all of them. He never replied to their registered letter declaring that he did not have their authority to appeal. They reasserted this six months later, moving to dismiss both Regan as their attorney and the appeal. Instead of replying, he filed an appeal brief on behalf of all three. After the court dismissed the clients appeals, Regan moved to vacate that order, strike their motion, and reinstate the appeals, 6 Matter of Fandey, 2 Calif. State Bar Ct. Rptr. 767 (1994) (year s suspension, three years probation). 7 Matter of Chesnut, 4 Calif. State Bar Ct. Rptr. 166 (2000) (six months suspension, two years probation). 8 Matter of Farrell, 1 Calif. State Bar Ct. Rptr. 490 (1991) (six months suspension, three years probation). 9 Matter of Jeffers, 3 Calif State Bar Ct. Rptr. 211 (1994) (two years probation). 10 Matter of Varakin, 3 Calif. State Bar Ct. Rptr. 179 (1994) (disbarred). 11 Matter of Regan, 4 Calif. State Bar Ct. Rptr. 844 (2005) (75-day suspension, two years probation) (emphasis in original). 2

3 declaring that the mentally ill McKee imagines that she is a lawyer and the senile Porco, has no idea of what is happening [and] is under Ms. McKee s influence. Neither Mr. Porco nor Ms. McKee actually want the appeal dismissed, and they specifically requested that counsel undertake these appeals. They filed a letter of opposition to Regan s motion. In response, Regan phoned Porco his first communication in nine months urging continuation of the appeal and warning Porco to have no more contact with McKee, who was not acting in his interest. Porco denied he was under anyone s influence. Both wrote Regan that they did not want to appeal and asked him to sign the substitution of attorney form. Instead of replying, he filed a declaration on behalf of all three, asking that the Letter of Opposition be stricken and declaring that Mr. Porco has never requested that his appeal be dismissed. Regan claimed he had only recently learned about McKee s opposition to the appeal. Porco and McKee asked the court to honor its earlier dismissal of their appeals, which it did. McKee again wrote Regan that both had fired him and asking for signed substitution of attorney forms. Instead, Regan filed a motion reiterating that neither wanted their appeals dismissed and disparaging McKee s mental capacity. He repeatedly tried to collect fees for his legal work from Porco s insurer but failed to answer its request for a letter of representation. The Round Valley Nation (RVN) retained Patrick J. Maloney, Jr. and his associate Thomas S. Virsik (who was 30 years younger) to advise about an effort to depose Round Valley Indian Tribes (RVIT) as the tribal government. 12 Although RVN overwhelmingly won an election it organized in April 2000, neither the Bureau of Indian Affairs (BIA) nor the U.S. Department of Interior s Office of Self-Government (OSG) recognized RVN. A bank refused Maloney s instruction to transfer the tribe s assets to RVN. After RVIT sued RVN leader Carlino Bettega for employment harassment, Maloney submitted a Request for Dismissal (RFD) on behalf of Janice Freeman, who purported to act pro per for RVIT. Maloney failed to notify Stephen Quesenberry of California Indian Legal Services, who had represented RVIT for nearly 30 years, or disclose to the court that Freeman and RVN were his clients. After the court refused to file the RFD, Virsik prepared another, which Maloney signed as attorney for RVIT, even though he was attorney of record for Bettega and knew Quesenberry represented RVIT. In support, he filed a declaration describing the Constitutional election as a conclusive victory for RVN and falsely stating that no Tribal member (or anyone else) has to date challenged the election. The respondents also misrepresented that RVN had terminated Quesenberry and directed him to dismiss the lawsuit against Bettega. Maloney filed an opposition to RVIT s motion for sanctions because the governing body has since dismissed the action. Virsik prepared a third RFD, describing the respondents as attorneys for Round Valley Nation f/k/a Round Valley Indian Tribes and a Notice of Change of Name of RVIT to RVN so the latter could dismiss the action. Quesenberry strongly resisted all these actions, which were taken without any authorization of [RVIT], with full knowledge that [Maloney s] client [RVN] has no lawful authority to act on [RVIT s] behalf, and without informing the Court that the United States government has reaffirmed that the duly authorized and governing body of the Tribes is the Tribal Council [of RVIT]. 12 Matter of Maloney and Virsik, 4 Calif. State Bar Ct. Rptr. 774 (2005) (Maloney suspended for 90 days, Virsik 60; both given two years probation). 3

4 The court sua sponte directed the clerk not to file either RFD and found that Maloney is not the attorney for the plaintiff named in this action. Interim Tribal Council is not a party to this action. The same day the respondents filed a Supplemental Declaration in Support of Dismissal, attaching a letter from an unidentified employee of BIA stating that it did not recognize the political faction known as the [RVN], which Maloney claimed he had received only after filing the original declaration. In fact, Maloney knew that the unidentified employee was the Superintendent of California BIA. Although he also knew the BIA rejected RVN s victory, he insisted that the effect of the Constitutional election was to divorce the Tribes from the BIA and instead proceed under a self-governance program of the Department of the Interior. But he failed to disclose that the OSG Director had excluded RVN from the program because it did not meet the criteria and was not the tribal governing body recognized by the BIA. The court awarded $2,000 sanctions against the respondents for their surreptitious attempt to dismiss the action and perpetrate a fraud upon the court and opposing counsel. They filed an opposition to this, continuing to maintain that RVN had properly dismissed Quesenberry. Six months later he reported their failure to pay sanctions to the court, which ordered them to show cause why further sanctions should not be imposed. Even at the disciplinary proceeding two years later Maloney insisted I don t know of any BIA disapproval of the constitution, and Virsik maintained the BIA had approved RVN s constitution because as a matter of the administrative law standard, failing to act, they approved it. James Cooke retained Carey B. Scott to bring workers compensation and tort claims for severe injuries. 13 Allen Jones (business manager of Cooke s union) became concerned about Scott s performance, consulting Krissman, a lawyer at the Silver firm, which had hosted a dinner seminar Jones attended. Responding that neither Martindale- Hubbell nor O Brien s Evaluator rated Scott, whom none of Krissman s partners knew, he offered to give Cooke a second opinion. In an extended phone call, Krissman claimed he could do a better job than Scott, who had never handled a case that big, and arranged to meet Cooke. Cooke reported this to Scott but insisted he was totally and completely satisfied with the lawyer and had no intention of meeting Krissman or switching lawyers. Scott blew up at Jones the same day and unsuccessfully tried to reach Krissman. Before the meeting date Scott sued Krissman and the Silver firm for intentional interference with contract, disparagement, and defamation (lawsuit #1), arranging for the complaint to be served during the scheduled meeting (which was never held). Scott and his wife began socializing with the Cookes, including a trip to Hawaii and camping vacations; and Scott encouraged Cooke to observe Scott s other trials and participate in his own case. Scott settled Cooke s personal injury claim for $5.2 million, earning more than $1.6 million in contingent fees. After the Silver firm won a nonsuit in Scott s case Judge Ross sua sponte held a sanctions hearing and ordered Scott to pay the firm $218,299. Before that was reduced to a written order, Scott moved to disqualify Ross on the grounds that he knew several members of the Silver firm, one of whom (Stolpman) had helped him win appointment to the bench, and that his demeanor, comments and questions during the trial and his rulings showed bias. After this was denied Scott petitioned for a writ of mandamus and unsuccessfully appealed its denial to the California Supreme Court; unsuccessfully 13 Matter of Scott, 4 Calif. State Bar Ct. Rptr. 446 (2002) (60-day suspension, two years probation). 4

5 appealed the nonsuit, sanctions, and denial of a rehearing to the California Court of Appeal and California and U.S. Supreme Court; unsuccessfully sought another writ of mandate, claiming new evidence that Ross had telephoned the Silver firm six times close to the trial and had participated with firm members in the Los Angeles Trial Lawyers Association for 15 years; and unsuccessfully appealed this to the California Supreme Court. Scott then sued Ross, Krissman, Stolpman, and Robert Baker (defense counsel in lawsuit #1) for violation of his civil rights (lawsuit #2), reiterating his earlier allegations and adding that Ross had been Baker s friend, attended Baker s parties, and telephoned Baker s law office around the time of the trial. After granting Ross s motion for summary judgment, the court sua sponte dismissed the entire lawsuit for lack of subject matter jurisdiction. The same month (reiterating earlier allegations), Scott filed lawsuit #3 to set aside the judgment and sanctions in lawsuit #1 on the ground that the defendants had concealed material facts and procured the judgment by extrinsic fraud. The judge decided for all defendants: I really sincerely feel that anyone who heard [lawsuit #1] would have granted the non-suit. A week later Scott sued Baker and Ross for civil rights violations and defamation and Baker for fraudulent billing (lawsuit #4), repeating the earlier allegations. Scott claimed that after retiring from the bench, Ross told several other judges: I ve got another lawsuit by C. Brent Scott, to which they replied, Oh, my god, no. Him again. Ross responded: Yeah, He ll never quit; same allegations. Scott claimed that Ross blamed him for the cost of defending himself before the Commission on Judicial Performance. The court granted the defendants demurrers. Scott paid half of the sanctions before declaring bankruptcy. Perhaps the most notorious controversy concerns Stephen Yagman, who moved to disqualify Chief Judge Manuel L. Real of the Central District of California in a pro per lawsuit Yagman brought against several insurance companies. 14 Judge William D. Keller (randomly assigned) denied the motion 15 and ordered Yagman to show cause why he should not be sanctioned for failing to disclose that another court had already rejected a similar motion. Finding that Yagman had violated FRCP 11 and the court s inherent authority but concluding that his professional history suggests that neither monetary sanctions nor suspension appear to be effective in deterring [his] pestiferous conduct, Keller recommended that the State Bar discipline him. 16 Yagman responded that Judge Keller has a penchant for sanctioning Jewish lawyers: me, David Kenner, and Hugh Manes. I take this to be evidence of anti-semitism This account is taken from Standing Committee on Discipline v. Yagman, 856 F.Supp (C.D. Calif. 1994). 15 Yagman v. Republic Ins., 136 F.R.D. 652 (C.D. Cal. 1991). 16 Yagman v. Republic Ins., 137 F.R.D. 310 (C.D. Cal. 1991); Susan Seager, Judge Sanctions Yagman, Refers Case to State Bar, LADJ 1 (6.6.91) Two years later the Ninth Circuit affirmed Kellers denial of the motion to disqualify Judge Real but vacated the sanctions and remanded for assignment to another judge. In re Yagman, 796 F.2d 1165 (9 th Cir. 1986). Judge Real challenged the reassignment, but Yagman successfully petitioned for writ of mandamus, Brown v. Baden, 815 F.2d. 575 (9 th Cir. 1987), and the U.S. Supreme Court denied Judge Real s petition for certiorari, Real v. Yagman, 484 U.S. 963 (1987). 17 Susan Seager, Judge Sanctions Yagman, Refers Case to State Bar, Los Angeles Daily Journal 1 (6.6.91). 5

6 Contemporaneously, Yagman submitted an entry to Prentice Hall s Almanac of the Federal Judiciary, alleging that Keller mistreated two criminal defense and two civil rights lawyers, three of them Jewish. It is an understatement to characterize the judge as the worst judge in the central district. It would be fairer to say that he is ignorant, dishonest, ill-tempered, and a bully, and probably is one of the worst judges in the United States. If television cameras ever were permitted in his courtroom, the other federal judges in the Country would be so embarrassed by this buffoon that they would run for cover. One might believe that some of the reason for this sub-standard human is the recent acrimonious divorce through which he recently went: but talking to attorneys who knew him years ago indicates that, if anything, he has mellowed. One other comment: his girlfriend is, or was, the newly-appointed U.S. Attorney in Los Angeles, Lourdes Baird, who, like the Judge, is a right wing fanatic. The judge hearing the sanctions motion (not Keller) disbelieved Yagman s claim he had not intended that the entry be mailed and also found that he had sent Keller a copy anonymously. Yagman s firm bought a half-page Daily Journal advertisement asking to hear from any lawyer sanctioned or threatened by Keller. Yagman also wrote Keller, asking if there were reasonable grounds to file an action against [him] for, inter alia, furnishing to the Daily Journal a copy of his sanctions order. About the same time Yagman told attorney Robert Steinberg there are certain judges I want to be in front of for my Civil rights cases who are favorable to my point of view. And I d like to recuse out the ones who are extremely unfavorable. When Steinberg suggested this was unethical, Yagman retorted that he could practice law the way he wants to. Steinberg reported this to the Central District s Standing Committee on Discipline, and Keller formally complained to it. When Keller recused himself in another of Yagman s cases, 18 the lawyer called it remarkable that Keller admits his bias against me, and recuses himself, which is great for my client. The Standing Committee initiated a disciplinary proceeding, which Judge Real referred to Ninth Circuit Chief Judge Wallace, who assigned Circuit Judges Reed, King and Conti, who referred it back to Judge Real, who appointed Judges Rafeedie, Davis and Williams, who found a prior history of judge shopping. In 1981 Yagman simultaneously filed five similar complaints in this district, and dismissed four of them within 73 minutes after they had been assigned to various judges. He admitted the violation, paid a fine, and performed pro bono service. After an adverse jury verdict in a civil rights case, Yagman filed a new action, charging the same defendants and now their lawyers with depriving his client of civil rights and engaging in racketeering, mail fraud and obstruction of justice and alleging that Judge Hupp had conspired with the defendants and with their legal counsel to obstruct justice in the federal courts. Although the dismissal was affirmed on appeal, Judge Hupp had since recused himself in every case involving Yagman. When Reginald Ronell Ron Settles died in jail after being forcibly subdued by two police officers, Yagman represented them in suing the forensic pathologists for defamation. After Judge Real directed a verdict for the defendants and imposed $250,000 in sanctions, Yagman appealed, charging that Real displayed patent hostility to his clients and exhibited a strong personal bias and prejudice against Stephen Yagman of unmistakable longstanding [sic], and a partiality for the defendants. He also alleged that 18 Marshall v. Gates, 812 F.Supp (C.D. Calif. 1993). 6

7 Real had taken the case away from Judge Lydick six days before trial to prevent Yagman from testifying against the nomination of Real s colleague, Lucas, to the California Supreme Court. Real consistently has been held in the lowest regard by virtually the entire community since he took the bench and had mental disorders. While rejecting these charges, the Ninth Circuit disqualified Real because the massive sanction award and the numerous allegations of bias and overreaching have combined with this poor lawyering to reach an entirely unfortunate end result: the fragile appearance of justice has taken a beating. 19 The Standing Committee ordered a two year suspension. 20 Rather than acknowledging error, Yagman had attacked the impartiality of both the Standing Committee and the members of this Panel, just as he accused Judges Real, Hupp and Keller of bias, incompetence and/or lack of integrity. He had written in the Los Angeles Times: I am a Jew who believes a federal judge is an anti-semite. And if friends of that judge who were appointed to the bench by the proven anti-semite Nixon and the odious Reagan attempt to harm me based on trumped-up charges for holding my belief, I cannot let that deter me. I m a realist who holds a correct but unpopular opinion and who expects and who will bear the wrath of opponents whose righteousness is only surpassed by their lack of integrity. 21 The Court of Appeals reversed, holding that Yagman s statements were opinions based on facts not proven false and hence protected by the First Amendment because they did not present a clear and present danger to the administration of justice. 22 Lawyers are strongly motivated toward zealous advocacy by the fees they earn, the recognition they receive, identification with clients and causes, antipathies to adversaries, opposing counsel, and judges, and simple delight in practicing their craft. For litigation to produce justice, however, lawyers must play by the rules. The above cases reveal many of the ways lawyers violate those rules: facilitating or covering up criminal behavior, attacking judges, corrupting the judicial process, improperly influencing juries, making frivolous arguments or repeating rejected arguments, concealing or misrepresenting the facts (that your client is dead!) or the law, disregarding procedures, persisting in representing an unwilling client, and refusing to accept defeat. The following case illustrates many of those temptations. II. The Alleged Legal Malpractice in Representing Maria Seward Maria Seward was badly injured on November 16, 1980 when the car in which she was a passenger was struck head-on (in its proper lane). 23 She lost her spleen, could 19 In re Yagman, 796 F.2d 1165, 1188 (9 th Cir. 1986). 20 Standing Committee v. Yagman, 856 F.Supp (C.D. Calif. 1994). 21 Exhibit A to Petitioner s Supplemental Trial Brief Re Sanctions. 22 Standing Committee v. Yagman, 55 F.3d 1430 (9 th Cir. 1995). See also Matter of Anderson, 3 Calif State Bar Ct. Rptr. 775 (1997) (100 unprivileged derogatory statements about the Orange County Superior Court, but the OTC had not proved their falsity). Yagman was suspended for a year in 1998 for collecting an illegal or unconscionable fee. Thom Mrozek, State Bar Rules Yagman Violated Conduct Rules, LADJ 1 ( ); Martin Berg, Yagman Faces Bar Suspension For One Year, LADJ 1 (1.7.98). He was suspended again in 2007 following a conviction for tax evasion. 7

8 no longer have children, and suffered spinal and dental damage. Fresh empty beer bottles were found in the oncoming car, which had been seen swerving and passing on blind curves for several miles. It was driven by Thomas Peters, the successful motivational author of In Search of Excellence, who had $3 million in liability insurance. Seward sued both her driver, Charles Higgins, and Peters; she was represented by John C. Elstead of The Law Office of Gerald Sterns, which was in turmoil at the time. On September 1, 1982, partner Thomas G. Smith wrote eponym Gerald Jerry Sterns, condemning Elstead s incompetence and jealousy. Smith also warned that the biggest crisis we have is money, which the firm was spending like a bunch of drunken sailors. 24 [W]e will be out of business before too long. Now that they were engaged in the demanding Johns Manville asbestos litigation, money management was an even more pressing problem. Smith called it a farce to pretend he was office manager because he never had either total authority or responsibility. [C]ountless dollars were wasted and not an insignificant amount stolen under the previous manager, Clapper, who had told Sterns he charged for roundtrip from the airport to his own home because that was the way it was done at the Walkup office. That was an outright lie. Adding a few hundred dollars of phony case costs for ICI [Investigative Consultants International] is not going to cure the problem. It is tacky, unethical and is causing concern among the lawyers. We would be in a hell of a fix if, for example, we get involved in litigation or arbitration over the fees in the Kelly Parks case with the Paden office if they start to question why we have a $500 fee for ICI on the cost statement. Smith also accused Elstead of neglecting valuable clients. Another firm lawyer was embarrassed to be working on one of Elstead s cases because it has been so poorly handled. Elstead works a great many three- and four-hour days and lies about where he is going and why he is going to be there. In my view the whole office would be better off if John were not here. You tried to control him by means that are demeaning to you, to the office and to the entire staff it is like paying ransom to Idi Amin so he will not destroy the office. John saying that Kitty [Catherine Singels, who was both Smith s wife and his secretary] is using her relationship with me to the detriment of the office is untrue. Elstead had billed the Nairobi air crash clients for a $129 personal trip from Seattle to Boise. If he had taken $120 from petty cash to spend on himself with no intention of repaying it you would have been outraged. Sterns was aware of the problems. In response to Elstead s August 22 memo on claimed personal cases, Sterns had replied on August 30 that Elstead s position was in conflict with the long settled policies of this office. 25 Sterns had reiterated many times 23 This narrative is taken from the respondent s offer of proof regarding witnesses disallowed by the State Bar Court ( ) and Dee Ziegler, Legal Malpractice Case: Settlement Confidentiality Challenged, San Francisco Daily Journal ( ), Exhibit J of Answer to Notice to Show Cause ( ); State Bar s Exhibit 4. Unless otherwise noted all information is taken from the transcripts of the legal malpractice trial or the disciplinary proceeding. 24 Respondent s Exhibit C. Damer obtained this memo from Smith s widow, Catherine Singels, who had been a secretary in Sterns Smith Elstead & Walker from September 1977 to 1982 and in the Law Offices of Gerald C. Sterns until 1985 and had typed the memo for Smith. 25 Respondent s Exhibit D. 8

9 that any fee or bonus an attorney receives on any bona fide personal referral depends on the circumstances and will be dealt with on a case by case basis. [T]o obtain a complete picture of the financial relationship between you and this office, after we receive[d] your claim of personal cases, we did some analysis of expense[s] on your cases and activities, and have come up with a number of items which tend to be offsetting, or at least require some further explanation. After discussing four other cases, he turned to Elstead s representation of Seward. Even if Seward is personal to you I would have some serious problems with paying you anything near 1/3 rd of the fee or a bonus. The case was one of absolute liability and was filed in a county with a fairly current calendar, yet took 32 months to resolve. No 998 or similar tactic was employed in all this time which probably would have made a substantial difference in the defense approach. This case was not worked up adequately nor properly prepared and I question whether the realistic value of the case was obtained in settlement. It surprised me to hear you had settled it for $100,000 total as I understood you to say it was worth $150,000 a least, and probably much more. He attached an October 8, 1981 memo in which Elstead had valued the case at $175,000 to $225,000, asked $195,000, and said the carrier is anxious to settle. Instead, Elstead settled for $90,000 compensatory and $10,000 punitive damages on May 16, III. The Malpractice Claim In 1984 Seward retained Nicholas Raymond Damer to bring a malpractice action against the Sterns firm, its lawyers, and its insurer, Lawyers Mutual Insurance Company. 26 She offered to settle for $11.95 million. Elstead was represented by Robert Gebhardt of Bronson, Bronson & McKinnon. At the April 19, 1988 mandatory settlement conference the lawyers offered $150,000 and the insurers $50,000, contingent on sealing the settlement. Damer responded the next day. [M]y client did reject and continues to reject these proposals however they might be modified or clarified because the amounts offered are inadequate under the circumstances, and because an integral condition (namely, confidentiality) is unacceptable regardless of the amounts. I admire her highly principled stand in this matter, and I am sure that her remote ancestor, President Lincoln s Secretary of State, William Seward a highly regarded lawyer during his time and career, would be quite proud of Maria at this moment. There is simply no reason why Maria and I should join in any pact whereby other persons harmed by the defendants, would be unable to gain information regarding the circumstances of Maria s case, directly from the source. He cited a 60 Minutes episode in which the State Bar s Ethics Monitor was quoted as recommending that the interests of society, in assuring honest, competent lawyering, would be best served if dissatisfied clients proceed simultaneously with private complaints to the State Bar and publicly filed malpractice suits. In other words, Maria Seward does not wish to engage in a conspiracy of silence for the benefit of the defendant 26 Seward had since married and taken the last name of her husband, John Sargent, but I will use the name in which the lawsuits were filed. 9

10 attorneys. to the extent the potential for discovery, of the facts underlying her case, might motivate the attorney defendants to treat their clients better in the future, then Ms. Seward will have accomplished one of her major objectives in this litigation. Damer wrote Seward the day after rejecting the offer, seeking her written authorization to file a class action suit, against Sterns and Elstead, to compel an accounting and a refund of all funds properly owed you even if your malpractice case should result in no recovery. The pendency of this suit will greatly increase the pressure for a settlement. I need your authorization immediately, before Sterns attorneys send you a refund in an attempt to moot your claims. She signed and returned a statement authorizing the filing of a class action suit of the sort mentioned above. I agree to serve as class representative. Damer asked Judge Frank (who was trying the case) to compel the defendants to undertake good faith settlement negotiations under local rule 2.6E, without seeking a confidentiality agreement, which violated the public s right to know about legal malpractice as well as Business and Professions Code 6068, requiring lawyers to report misconduct to the State Bar. 27 He cited a San Francisco Superior Court opinion ordering a legal malpractice settlement unsealed. 28 At the May 13 hearing defense lawyers ridiculed his motion. Frankly, plaintiff s attorney s eagerness to publicize his allegations and any settlement in this case ignores the best interests of the plaintiff, his client. Elstead s lawyer said the case Damer cited did not prevent parties from negotiating a settlement and not filing it with the court. An unpublished 1985 Court of Appeal decision criticized Damer for insulting and threatening the court. 29 The insurance company lawyer called Damer an inexhaustible source of gibberish. Defense lawyers sought sanctions against him for making the motion. In support, Elstead s lawyer wrote: As any reasonable attorney would have understood, defendant s confidentiality requirement only would have barred plaintiff from publicizing the terms of any settlement. Defendants have never required as a condition to settlement [that] the court file be sealed or that plaintiff refrain from making a complaint to the State Bar. On May 20 the court denied Damer s motion. Judge Frank s June 8 order declared that the legal authority cited by plaintiff provides absolutely no support for the relief sought by her. Damer remained defiant, telling the San Francisco Banner/Daily Journal: 30 They could throw $3 million and she wouldn t take it under these conditions. Her attitude is that if Sterns and Elstead don t have anything to be ashamed of, then there is no need for confidentiality. If they do, then their clients have a right to know. 27 SB 1498, subsequently signed into law, requires courts to report to the Bar any claims or judgments against an attorney for fraud, breach of fiduciary duty, misrepresentation, or gross negligence. It gave the Bar access to sealed malpractice files. 28 GHD Associates Inc. v. Furth Coastside Publishers and Printers v. Bauer, A Hereafter Daily Journal. 10

11 On July 2 Damer asked for a rehearing. But on July 14 Judge Hart ordered him to pay the defendants sanctions of nearly $5,000. Damer wrote Seward on November 15, complaining about a Daily Journal article very slanted in favor of Sterns, which might be expected. 31 My partner, Lance Stryker, suspects that Sterns may have prompted the article but even if the newspaper initiated the idea of publishing the article opposing counsel may have threatened a libel suit, to insure a spin in their favor. [W]e suspected that [reporter Dolores Dee Ziegler] was simply a `tool of the opposition lawyers, who were attempting to get a copy of our Trial Brief and other `confidential and `sensitive material shortly before trial. Sterns behavior has been bizarre on other occasions. The article included defense pot shots at Damer and background facts about Sterns which would appear to imply that he could do no wrong even if he tried. Still, it may be read by persons who are in a position to influence the attention and importance given to the issues in the pending appeal. On November 18 Seward replied that she was disturbed that an individual or persons from the opposition were able to approach this reporter in such a way that a biased article was published. I am growing weary of constant delaying and I wish to have this matter brought to a timely and appropriate conclusion. Throughout this whole ugly business, I have come to really appreciate, more and more, your awesome and prodigious skills, which are being utilized on my behalf and, perhaps, ultimately for many others who have been abused by some members of the San Francisco legal community. John and I are both very grateful to you and your office for bringing to bear so much talent and experience. Keep on truckin!! With warmest regards. On November 28 Damer gave Daily Journal publisher Guy P. Everingham written notice of libelous statements and demanded corrections. He asked why Ziegler requested a copy of my typically confidential trial brief the very week before the trial was scheduled to begin and relied on defense lawyers characterizations rather than checking with Damer or waiting for the transcript. Why did the article not mention relatively recent, embarrassing and equally irrelevant items about the defense lawyers? Although the legal malpractice trial was due to begin at the end of January 1990, some 90 in limine motions delayed opening argument to February 21. The previous December Damer had learned that the Sterns firm was representing most of the plaintiffs in a $50 million lawsuit in Contra Costa Superior Court arising out of an airplane crash into a Sun Valley shopping mall on December 23, 1985, killing seven, injuring 75, and causing property damage to 40. But Damer heard about of overcharging by the Sterns firm in that case only on Monday, February 5, 1990, when the clerk of Judge Alfred Chiantelli (who was hearing Seward s case) brought to everyone s attention a television report of allegations about Sterns s billing abuse raised by two other firms representing plaintiffs in the Sun Valley case (Lazzarini & Frazier, and Nelson, Warnlof & Vencill). Damer later remembered hearing that the TV story apparently was devastating, showing the bloody bodies of the victims being dragged out of the Sun Valley Mall, and then the next thing on the screen would be a picture of Sterns ten thousand dollar bill for a dinner at Star s Restaurant, 31 Respondent s Exhibit J of Answer to Notice to Show Cause ( ). 11

12 which he was trying to charge to the clients. Then they would show more bloody bodies and then they showed the invoice for his trip to London on the Concorde, which he was trying to charge to clients. Damer got an anonymous phone call soon afterwards, leading him in mid-february to meet Catherine Singels and obtain Thomas Smith s damning memorandum to Stearns about Elstead (discussed above). 32 Damer associated Gerson B. Mehlman, a Baltimore lawyer, to help in Seward s case. But Mehlman did not arrive on January 31, as promised. Because the trial was about to begin, Damer had been denied a continuance, and his partner was involved in other litigation concerning the Sterns firm, 33 Damer also associated Robert Denebeim at the suggestion of Denebeim s Redwood City landlord. Denebeim wrote Damer on February 2 to confirm the previous day s telephone conversation agreeing to be associate counsel for a fixed fee of $15,000 and assist you in a secondary capacity, and under your instruction. 34 Denebeim had explained this to Seward by phone. Researching the Sun Valley case in the Contra Costa clerk s office at Damer s direction, Denebeim reported finding objections 35 that Sterns didn t do the work for which he is seeking compensation.that he lost about $120,000 in interest while he was the custodian of settlement funds. They are demanding that he account for his time (which will be interesting since in our case we know that he does not keep time records). Some $250,000 of Sterns s expenses were challenged on the ground that he was billing clients at four times what he was paying outsiders and billing for secretarial work, which would normally be part of overhead. On February 23 Damer sent Gebhardt a Confidential privileged settlement proposal open to the end of the day: Lawyers Mutual would pay $1 million (the malpractice policy limit), and Elstead would agree to entry of a judgment against him for $3 million and waive any rights under Judge Hart s [sanctions] rulings, and any demand for confidentiality. On March 6, while the trial was proceeding, the defendants offered $500,000. Damer testified that this proposal contained certain bizarre provisions : the jury would be under a perpetual gag order and all my files and copies of my files would be purchased. It was immediately rejected as unacceptable to Ms. Seward. But the following day the jury was temporarily excused and Mr. Denebeim read into the record the settlement, which was essentially the same thing that had been proposed the day before, except the figure was now $750,000 and it was specifically provided that all my files and all copies of my files would be turned over to Robert Gebhardt as the designated agent for their perusal and destruction by the defendants Declaration of Catherine E. Singels, Custodian of Records of Thomas G. Smith, Respondent s Exhibit II. 33 Damer explained that this was his case concerning alleged embezzlement from the Alameda County employee pension fund, in which Gebhardt s firm represented one of the principal defendants. Stryker took over the trial, fearing that Gebhardt, in collusion with Chiantelli, would arrange to have me arrested in front of the jurors. ( ). 34 Respondent s Exhibit FF. 35 Respondent s Exhibit GG. 36 Damer elaborated in a January 20, to me. Denebeim had been suggested by Gerald Schneider, an attorney specializing in drunk driving, whom Damer planned to use as an expert witness. A few days after Damer hired Denebeim, he and Schneider suddenly appeared, in the evening, at my office, 12

13 Damer immediately attempted to withdraw as counsel, indicating that I could not ethically participate in such a settlement. His request was denied, even though Seward was being represented by Denebeim and Mehlman. Defendants motion for a non-suit was unopposed, thereby excusing the judge from any duty to report whatever he learned in the trial to the State Bar. After the judge entered the non-suit he recalled the jury, basically threatened [them] with contempt proceedings if they ever discussed the case publicly, and discharged them. Gebhardt said on the record: [O]ne of the moving forces of this settlement is for the defendants hopefully to rid themselves as much as possible of any involvement with Mr. Damer and so the agreement that he not use directly or indirectly any information gained in this case in any other litigation. But when Damer was told I was to come back to court on a certain day, bring my files and turn them over to Gebhardt, I told the court, very respectfully, I would not do that. I was then taken into custody. I repeatedly asked for the right, under Rule 3-700, to keep a copy of my files and to not disclose any secret portions of my file which would reflect materials or information entrusted to me by informants to whom I had made promises of anonymity, with Maria Seward s knowledge and consent. That day Damer telephoned the State Bar, asking them to send a representative to the next day s hearing so as to be able to verify my complaints about [Chiantelli s], shall we say, `unusual behavior because there was a scheme going on to destroy evidence. 37 He was directed to Jeanette Shipman, who had worked for the Sterns firm when it represented Seward and was a named defendant in her lawsuit. Refusing to discuss it with her, Damer then called the Los Angeles office and talked to William Davis. He assured me an independent and special prosecutor would be immediately appointed, he would let me know if they could get someone up to the court the next day. Damer also contacted the Court of Appeal and the Commission on Judicial Performance. The same day Damer gave Seward three full large storage boxes of materials she had maintained as a `parallel file to mine. On March 8 Damer appeared, represented by Cynthia M. Frazier (who also represented plaintiffs in the Sun Valley Mall case and had publicly accused Sterns of overbilling expenses). Chiantelli now granted Damer s motion to withdraw, substituting Denebeim. 38 They then had this colloquy: 39 saying they wanted to `discuss a `proposal to take over the case and be the lead trial attorneys for Seward. Indeed, they had even prepared a lengthy fee contract. When Damer refused, Schneider insisted he had to go to Hawaii to interview another expert witness, retired Judge Melvin Cohn. At the subsequent fee arbitration before Judge Lanam (see below), Schneider and Denebeim denied under oath ever seeking to take over the case. Damer produced their draft fee contract and a letter from Schneider stating that one of the consequences of his Hawaii meeting with Cohn is that I may become chief trial counsel. 37 Damer wrote me that during the first three weeks of the trial he repeatedly asked the judge to remove the names of Sterns and Bridgman as pro tem judges on a sign the jurors passed every morning, creating bias. Only after I said I was going to the Presiding Judge, to effect the removal, did Chiantelli finally take action in that regard. ( ). 38 Respondent s Exhibit B of Separate Statement detailing insufficiency of State Bar responses to Respondent s first set of interrogatories ( ). 39 Exhibit B, p.223, to Respondent s Trial Brief. 13

14 Damer: Your Honor, I need a written order because I can t seek a writ on a transcript that isn t prepared. Court: I understand. Damer: Okay? Court: I understand. Damer: I ask for that, I beg for that in due process. Court: That is correct. And you will get one. Friday, March 9, when the hearing concluded, Chiantelli denied Frazier s request for a 30-day stay of his order so they could seek a writ before the documents were to be delivered on Monday, March 12. This provoked Sterns s lawyer, Glenn Allen. Allen: [T]hey are going to take a writ or go to the Appeals Court to try to eliminate confidentiality in this matter. To me that makes a joke of this whole settlement. What was purchased was confidentiality. The quid pro quo is gone. Court: Let me tell you this, you settled with Maria Seward, that is the end of the case. All right. Have a nice weekend. Damer: Your Honor, am I to understand that I would be held in contempt if I don t turn these files over by 9:00 AM Monday? The clerk s minutes declared: Records sealed by Order of the Court. That evening, at Gebhardt s request, Judge James B. Scott agreed to become custodian of the documents. On March 11 Chiantelli told him he was appointed and directed him to collect the documents from Damer on March 12. On Saturday, March 10, Seward left a message on Damer s answering machine: 40 I think there s something that you need to hear from my mouth, and so that s why I m calling. First of all, I made a deal with the defendants and I want you to go along with it. I want you to turn over the files to Judge Scott, and I don t want you to do anything to violate the court orders I don t want you to interfere with my position, and basically, I just want to get on with my life. I do not want to rehire you. I agree that any of the sensitive material that s in your files shouldn t be given to Gebhardt, but I would like you to turn it over to Judge Scott. I hope this clears up any misconception that you have about me being coerced. I have not been coerced. I m not hungry. I made this decision on my own. When Damer sought help in segregating the files over the weekend, Denebeim refused because he had not been paid enough and Mehlman had abandoned him and gone off to Disneyland. If Chiantelli ordered a mistrial on Monday, Denebeim would have to conduct a jury trial, something he had never done. Judge Scott went to Damer s office on March 12 but was given just four of the 12 boxes, containing only Seward s medical records. IV. Damer s Alleged Defiance of a Court Order On March 13 Frazier went to the bailiff for Contra Costa Superior Court Judge Richard Patsey, who was hearing the Sun Valley Mall case, and tried to file Smith s memo to Sterns about expense overcharges. 41 Frazier believed it had not been included in 40 Respondent s Exhibit OO. 41 Respondent s Exhibit BB. 14

15 Chiantelli s confidentiality order since it had not been filed in Seward s case nor obtained through discovery. However, in the spirit of providing Mr. Sterns with an opportunity to review the matter prior to its public dissemination, while providing this court with the opportunity to review evidence appropriate to the case as required by my duty as an attorney, I requested that the matter be kept under seal. The bailiff told her the judge refused to accept it under seal, which Patsey reiterated when Frazier telephoned him at 2 P.M. Damer said I reprimanded [Frazier] for taking that action without my knowledge, and told her there were other legitimate ways to get it before Judge Patsey without putting herself at risk. On March 16 Damer hand-delivered a nine-page letter to Patsey, giving Sterns a copy and attaching under seal material from the sealed hearing. 42 He wrote as a potential lienholder in the Sun Valley cases, as a friend of your court, as a citizen of our great state and nation, and as one who wishes to avoid the perpetration of a fraud. He understood that a substantial portion of the contested expenses in the Sun Valley cases concerned ICI charges. The material under seal demonstrates that the Sterns firm, since 1982, systematically, deliberately and persistently generated false invoices for charges from I.C.I., which had business dealings with Sterns about which every Sterns client and your court should have been fully and candidly informed long, long ago. ICI was the firm s tenant in San Francisco and also may have been in Hawaii and London. Sterns deducted all the ICI invoices from Seward s settlement, even though he could document less than a third of the $3,000. He billed Seward $42.50/hour for ICI but paid it only $ Sterns had charged Seward for knowingly false Travel and Entertainment expenses including a steak dinner (allegedly related to a meeting with a claims adjuster which never occurred) and a [$300] plane trip from Texas that had nothing to do with my client s case. Sterns had personally attempted, with an amazing amount of overreaching, to suppress and destroy the evidence hereby being presented to you and had tried to buy my file so he could be in a position to `shut me up with threats to sue me for abuse of process. Damer argued that the evils of `secrecy arrangements, including `stipulated gag orders, are readily apparent from the circumstances now before you. Sterns had been successful in effectively `bribing my former client to obtain her complete silence. The papers should not ever be `sealed again, no matter how much money Mr. Sterns agrees to give up. It took two court orders to produce the August 30, 1983 memo; Sterns never revealed its existence and even denied its existence, under oath, several times. Damer sent Chiantelli a copy of this letter, requesting permission to let Patsey review the documents. I do not believe that Judge Chiantelli can constitutionally or lawfully prevent me, as a private citizen who is not an attorney of record in his court, from communicating with you. If he spoke with Chiantelli, Patsey should PLEASE KEEP THIS IN MIND. Mr. Sterns a pro tempore member of the same bench was successful in persuading Judge Chiantelli to view me as some vindictive individual in pursuit of some irrational vendetta. Sterns had blocked Damer s change of venue motion on behalf of Seward, even though Mr. Sterns was (no doubt by pure coincidence, he will claim) volunteered, by his firm, and elevated to the Judge Pro-Tem panel in the San 42 Respondent s Exhibit H to Answer to NTSC ( ). 15

16 Francisco venue shortly before the trial was to begin; even though Mr. Sterns appeared again as a designated member of that panel while the trial was still ongoing; even though Sterns first attorney in Seward v. Sterns Richard Bridgman, a critical witness in the case was likewise conveniently honored on the eve of and throughout the first three weeks of trial; and even though one of the jurors was a Deputy City Attorney for the City and County of San Francisco and another juror was the Official Court Clerk to Municipal Court Judge Phillip Moscone. Chiantelli had denied Damer a two-day continuance while giving Sterns two years. On the eve of the trial Sterns hired the law firm that employed, as an attorney, the son of the very judge who would rule on the opposed motion to continue all without disclosure to me. In the past three months Chiantelli took actions to place himself squarely on the side of joining with Mr. Sterns in an effort to suppress the evidence. It seems that many judges almost automatically give the benefit of the doubt to Mr. Sterns, despite the clear requirement that every benefit of the doubt be given to Mr. Sterns clients, including widows and orphans. Damer detest[ed] what Mr. Sterns has done but did not even know Mr. Sterns well enough to nurture some deep-seated antagonism toward him of a personal nature even were I foolish enough to harbor such self-destructive sentiments towards anyone. Despite the attempts of Mr. Sterns, and his attorneys and numerous known and undisclosed allies, to poison judges minds and to intimidate me from pursuing a client s specific interests and the public s general interest, I remain unwilling to passively observe the continued erosion of faith in the judicial system and the continued crumbling of the very foundations of the ideal of liberty under law. On March 19 Judge Patsey returned Damer s papers unread and criticized him for scheduling a hearing on April 6 without asking the court. 43 Patsey would hear a motion only if properly filed, served and calendared and if it does not contain private communications to the Court. Damer received this on March 22. Frazier had an April 3 hearing on a motion to Judge Patsey to reconsider his refusal to examine the Philip Stuto- ICI billings. Damer refiled his motion on March Because there was no written order sealing any records in Seward s case he enclosed those records again, this time not under seal. Patsey allowed most of the Stuto-ICI charges, while rejecting $45,000 for meals and travel claimed by Sterns. 45 Patsey denied Sterns s motions for sanctions against Damer and to strike his filing. On April 17 Damer sought a lien and leave to intervene, declaring that Sterns believes that he lawfully purchased all of my files including evidence damaging to him to prevent me from recovering our fees, costs and expenses. On March 19 Damer also wrote Chiantelli implor[ing] him to reconsider his confidentiality order. 46 He hoped the judge would see how he may appear to have assisted in betraying [Sterns s] clients and have the grace and humility to take remedial action. For obvious reasons, I will not ever be coming before you in the future I have better things to do than be sent to jail. He was preparing a writ of prohibition to prevent 43 Respondent s Exhibit SS. 44 Respondent s Exhibit UU. 45 Respondent s Exhibit XX. 46 Respondent s Exhibit QQ. 16

17 you from having me arrested or all my files seized. He refused to surrender the remaining files. John Kennedy once said that mistakes emerge from errors only by our refusals to accept them as mere examples of our fallibility. The judge had been ill used by the defendants lawyers. At an early point in the testimony, in a sidebar conference, you realized that perjury was surely occurring in your presence. You looked at Mr. Gebhardt and Mr. Allen with a pained look on your face and exclaimed: What are you guys trying to do to me? The same day Chiantelli filed his March 8 minute order that the case file and all exhibits [be] sealed. Damer filed a notice of appeal that day, indicating that the enclosed documents are to be placed under seal per an existing court order. 47 The clerk refused to accept them on March 22 without a court order. Damer wrote the clerk the next day, petitioning for a writ of prohibition against being held in contempt, doing so this time without seal because the involved clerk for Respondent Court recently reported that there is no written order sealing that court s files. He filed the petition in a sealed envelope with only the cover page stamped and returned. The petition was denied because he had not yet been held in contempt. On March 30 Sterns filed a motion under seal to set aside the settlement and declare a mistrial, 48 complaining that Damer outright accused the defendants [specifically Elstead] of stripping the Sterns office file [of a report by chiropractor Michael Myers] to protect themselves. Those false and prejudicial accusations contributed to the defendants willingness to terminate the trial by settling the action. Opposing this on Seward s behalf, Denebeim argued that the defense did not settle because of Damer s alleged misconduct but rather have always professed that misconduct was part of Damer s modus operandi and insisted upon having recourse against him as part of the settlement. 49 They settled before Sterns testified because they doubted they had received an adequate defense under their liability insurance policy and therefore didn t know what evidence Plaintiff would be presenting at trial. During the settlement negotiations, and the voir dire of Plaintiff Defendants discovered the evidence that had previously been unavailable to them due to the sanctions against them that had precluded discovery, the bungled production of documents, and their inability to identify the mole. After acquiring this information, the Defendants concluded that they had agreed to pay too much money for what they thought the case was worth. Mehlman filed a declaration in support of Seward. The file sent by Elstead was a single 1-2 foot box, whereas Elstead had referred to a five foot file in boxes. The defendants also never sent the August 30, 1983 memorandum criticizing Elstead for settling too low and dividing the fees. But Mehlman agreed that file stripping had nothing to do with settlement. [T]he primary reason the case was settled was a desire on the part of both defendants and plaintiffs to end the litigation between them before Gerald Sterns took the stand and was cross examined on various misstatements he had made and on various financial practices. 47 Respondent s Exhibit I of Answer to NTSC ( ). 48 Respondent s Exhibit PPP. 49 Respondent s Exhibit PP: Plaintiff s Points and Authorities in Opposition ( ). 17

18 Sterns s lawyer Glenn Allen had told Mehlman that once Sterns took the stand `and blood was let, there would be no possibility of settlement. Although the insurer did not believe the case was worth anything near what the plaintiff was demanding, they offered more to protect Sterns s reputation. Sterns s reply agreed with much of this. Defendants were flying blind because they did not know what kind of documents might be shoved in front of them during trial because of the lack of discovery by the defense and the fact that the original Seward v. Peters file had been turned over to the plaintiff without a complete copy being retained. The settlement was far higher than the expected verdict because of the harassment and obsessive pursuit of defendants by Damer. The first motion to set aside the settlement was provoked by the hopeless specter of Damer s clearly unrelenting obsession with publicizing himself and his claims in this matter. The present motion dealt with Damer s fraud prior to the settlement. On April 4 Chiantelli filed his temporary and conditional Order Re: Settlement Agreement. 50 Extraordinary circumstances compelled that the file of this matter be sealed from the public. The jurors, parties and present and former lawyers were forbidden to discuss the case with anyone. Justice Scott would receive and secure Damer s files, while granting access to the State Bar and District Attorney. All others would have to seek Chiantelli s approval after a noticed motion and a showing of good cause. Chiantelli would review the situation every three months; when he determined the files were no longer needed they would be shredded. On April 27 Denebeim moved for entry of judgment and sanctions against the defendants, declaring that it is difficult to imagine more frivilous [sic] motions than the two filed on behalf of defendants 51 to set aside the settlement. At the time of the settlement it was so clear that attorney Damer intended to violate it that defendants insisted on retaining recourse against him; yet now they moved to set aside the judgment on that ground. The second motion was a bizarre concoction of spurious arguments a clumsy attempt to mislead the court into believing that the Myers report was a sine qua non of their decision to settle. Sterns wants a forum to point the finger of blame anywhere but at himself. The list of scapegoats can be expected to grow in proportion to the panic accompanying his sinking (or sunken) reputation. He was feeling buyer s remorse about what he paid after his wife attacked the settlement in open court. The Sterns defendants are hateful and vindictive towards Plaintiff. This is why they speculated that Plaintiff was behind the Mehlman revelation and suggested that he aided Damer s alleged misconduct. They were seeking to avoid interest accruing at about $6,250 a month. If media publicity of the second motion occurred as a result of their sending the moving papers to Damer, then they should be sanctioned for the same reason. 50 Respondent s Exhibit D in Separate Statement detailing insufficiency of State Bar s Responses to Respondent s First Set of Interrogatories ( ). 51 Respondent s Exhibit PPP. 18

19 On March 28 the Coalition for the First Amendment, represented by Judith Epstein, challenged the sealing order on behalf of the Daily Journal. 52 On April 20 it published a lengthy front-page article about the case, including the settlement amount, having discovered from documents recently filed in the state appeal court that the highly unusual, confidential settlement indefinitely silences all parties and jurors in the case and tolled the statute of limitations for Sterns and Elstead to sue Damer for abuse of process or malicious prosecution. 53 On May 4 it published another front-page article on the excessive expenses claimed in the Contra Costa case. 54 Although the pilot had only $5 million in insurance, Sterns had secured a $10.6 million settlement for the 100 cases by convincing the airplane manufacturer and mall owner they were liable despite the National Transportation Safety Board finding that the pilot had been disoriented by fog. Sterns was the lead attorney on a steering committee representing 40 firms. In the course of a single year he authorized payment of nearly $700,000 expenses to his firm and others. The original two protesting firms were joined by five more, representing nearly 20 clients seeking an accounting for items including $300 meals and a $2,290 trip to London on the Concorde. The paper quoted Sterns: We were flying blind during this whole thing. Someone had to do the administrative work. We re not Price Waterhouse. We are a small plaintiffs firm and we are doing the best we could. He would never again undertake this enormous, almost backbreaking burden. Bring in an MBA, a CPA, let the plaintiffs pay him a fee to do it. We re lawyers, not accountants. His bookkeeper and bookkeeper s assistant quit under the strain. One steering committee member said: Maybe there was a shortcoming there, but we shouldn t be personally critical of Sterns for that. It is difficult to personally supervise a 40-person law firm and try a case at the same time. Another committee member called Sterns a fine and capable lawyer but he could probably use some help in the accounting department. After a six-month battle over expenses Sterns reduced his request by $85,000, and Judge Patsey rejected $29,740 of the remaining $678,273 claim. He awarded the two complaining firms $1,883 each in sanctions against Sterns. But finding that Sterns and Timothy Abel (another plaintiffs lawyer) had had a dramatic impact on the cases, he awarded additional fees of $195,000 to Sterns and $40,000 to Abel. He also awarded the six steering committee members $750,000, of which Sterns would get $211,500 to $317,250. Patsey called Sterns indispensable. [W]ithout the experience that he brought to the case, without his theories of liability, without his knowledge of the witnesses on behalf of the plaintiffs that supported those theories and without the respect that the two largest defendants held in him [sic], the settlement[s], at least with Beech [Aircraft] and Taubman [the Sun Valley Mall owner] would not have come about, or would have been significantly less than they were. 52 Respondent s Exhibits WW and MMM. 53 Dee Ziegler, Judge Orders Malpractice Files Shredded, San Francisco Banner/Daily Journal 1 ( ). 54 Dee Ziegler, Sun Valley Mall Crash Settlement Marred by Allegations of Financial Mismanagement, San Francisco Banner/Daily Journal 1 (5.4.90). 19

20 On May 5 Epstein wrote Chiantelli at Damer s request asking him to issue a written minute order. 55 Chiantelli finally did so on June 19, although Damer was omitted from the service list and only got it months later from the Daily Journal. 56 Chiantelli ultimately returned all trial exhibits to the parties, vacated the gag order on the jurors, and unsealed everything except Damer s March 16 and 31 letters to him, Catherine Singels s declaration, the documents presented at the March 9 hearing, the transcript of the March 7-9 hearing, the settlement agreement, and the motions for an order to show cause and to set aside the settlement agreement and declare a mistrial. On May 23 the defendants moved for an order to show cause why Damer should not be held in contempt. He responded: 57 Taking Defendants approach to the extreme, it could be argued that Damer would be obligated to publish an apology to Defendants, or to genuflect before them in the Courthouse foyer, simply because they paid the plaintiff enough money to motivate her to formally request such conduct from Damer as a condition of settlement. He denied Denebeim s claim that he felt bitter regret over lost fees. He had told Seward that even had she been offered $2 million, I still would probably not earn my normal top hourly rate, much less the rates charged by defendants attorneys. He had also said she was free to settle for any lesser sum. The true vendettas were by Elstead and Gebhardt. Elstead had sued Damer for libel in 1985 for criticizing Elstead s handling of Seward s case (but allowed the suit to lapse). Gebhardt appears to be similarly embarrassed by having to settle a case for $750, when my client s initial demand, in 1985, was only $600, Damer accused Gebhardt s firm of attempting to use these proceedings to embarrass me at a time when Damer s firm was suing Gebhardt s client for mismanaging and embezzling the retirement funds of 1,100 Alameda County employees. Damer s repeated requests for a transcript of the March 7-9 hearing were ignored until he moved to dismiss the contempt citation. On July 28 Judge Leighton Hatch ordered dismissal unless Damer got the transcripts and minute orders on August 8, two days before the contempt hearing. 58 The court clerk s minutes were brief. 59 On March 7 the court ordered the record, clerks [sic] minutes and records, and all exhibits sealed prior to the next day s hearing. On March 8 the court heard Defendants motion for order for return of documents to Defendants and took the motion under submission. Jeanette Shipman s lawyer obtained an order enjoining Damer from contacting her in any way. The court additionally ordered all court records, exhibits, both marked and unmarked, and clerk s minutes and records sealed and continued the matter to the next day for further consideration of Defendants motion for return of documents. The March 9 minutes declared: Records sealed by Order of the Court. Page 2 was numbered the second of four pages, but there were no more. At the August 10 contempt hearing Gebhardt argued that Damer was aware of the court s orders but conceded I don t recall saying anything about a minute order. The 55 Respondent s Exhibit YYY. 56 Respondent s Exhibit DDD. 57 Exhibit B of Respondent s Trial Brief. 58 Respndent s Exhibit NNN. 59 Respondent s Exhibit JJJ. 20

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