Thursday, February 20, 2003
Pasadena Immigration Lawyer Prevails in Suit Against Former Employees
By a MetNews Staff Writer
A Pasadena immigration lawyer was entitled to the $150,000 arbitration award he won from two attorneys who abruptly left his employment to start their own firm, carrying with them their old firm’s client lists, case files, secretaries, paralegals and even a car, this district’s Court of Appeal ruled yesterday.
A judgment in favor of Robert L. Reeves and his firm and against Daniel P. Hanlon and Colin T. Greene and their new firm were supported by sufficient evidence of the two separate torts of interference with contractual relations and interference with prospective economic advantage, Justice Daniel A. Curry wrote for Div. Four.
Of the 155 clients that left Reeves for Hanlon & Greene in 1999 and the subsequent two years, Curry noted in the partially published opinion, 147 failed to pay their outstanding bills to Reeves, and 144 had Hanlon as their lawyer before he split with his old boss.
“In our view, sufficient evidence supports the determination that Hanlon and Greene intended to lure away clients of the Reeves firm, and they acted in a manner reasonably certain to cause the 144 clients to breach their contracts,” Curry said. “To begin, there is direct evidence that their departure was calculated to cripple the Reeves firm’s ability to provide legal services: they left abruptly, damaged computer files, removed firm property, and failed to provide adequate guidance concerning their open cases.”
There also was evidence that Hanlon and Greene telephoned many of the clients and “exploited” their lack of knowledge of English and ignored their rights concerning the selection of counsel, Curry said.
The split came a little more than a year after Reeves agreed to give Hanlon a 15 percent interest in the firm and to rename it Reeves & Hanlon. The two lawyers entered into their contract in May 1998.
By the following February, according to Curry’s opinion, Hanlon had grown dissatisfied. Evidence showed he was unhappy with a $5,000 year-end bonus he believed should have been up to 10 times larger and was upset that Reeves reported there were no profits to share at a time when—Greene testified—Reeves bought a yacht and remodeled his home.
Hanlon also was said to believe Reeves would renege on his agreement to give him an equity interest. Evidence also showed Hanlon did not like the manner in which cases were assigned, was unhappy about the firm’s purchase of a conference table, and was upset about an end to the firm’s policy of paying for cell phone use.
Hanlon and Greene, an associate at the Reeves firm, agreed to form their own firm but did not tell Reeves about it. They printed out a list of the Reeves firm’s 2,100 clients, leased office space in Pasadena and set up an Internet site.
They resigned on the morning of June 30,1999, and immediately started their own practice. Evidence showed Hanlon kept some of the Reeves firm’s library books and retained a car that was leased by the firm.
Hanlon did not leave Reeves with a list of the 1,500 cases he had been handling, and neither Hanlon nor Greene left memos describing action that needed to be taken on their cases. They instead contacted each of the Reeves firm’s clients to let them know they had opened their own practice.
Six paralegals and support staff followed the two lawyers to their new firm, and five more left Reeves to join Hanlon & Greene within the next two years.
Reeves and his bookkeeper testified that the clients who went with Hanlon & Greene left an outstanding balance of $121,000, and that based on past practice they expected to have gotten another $100,000 from those clients in future business. They also testified as to costs for recruiting replacement employees and printing up revised stationery and brochures.
After Reeves sued, Hanlon and Greene filed cross-complaints, later settled in arbitration, alleging that Reeves improperly withheld client files and that Reeves converted the car that he alleged Hanlon had improperly kept.
Los Angeles Superior Court Judge Jan Pluim ruled that Hanlon, Greene and their firm had engaged in interference with contracts and prospective business opportunity and misappropriation of trade secrets. Damages of more than $180,000 were lowered to $150,000 pursuant to a stipulation. Pluim also stayed the award of the arbitration judgment in Hanlon’s and Greene’s favor.
The appeals court rejected Hanlon and Greene’s assertion that Pluim blurred the distinction between the contract and prospective business relationship torts.
“The trial court recognized the distinction between the torts, determining that 144 clients breached their existing contracts with the law firm, and that their departure also resulted in the loss of prospective contracts through referrals to new matters,” Curry said.
The case is Reeves v. Hanlon, B151460.
Copyright 2003, Metropolitan News Company