Monday, August 27, 2018
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Ninth U.S. Circuit Reinstates Action by Man Claiming He Was Fleeced in Buying Artwork
Panel Says Judge Real Erred in Denying Him Opportunity to Amend
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has reinstated an action by a man who claims he was hoodwinked into parting with more than $2 million in purchasing artworks which were mostly forgeries—with others being genuine but overpriced—as well as a yacht with an inflated stated value.
In a memorandum opinion, a three-judge panel on Thursday held that District Court Judge Manuel Real of the Central District of California was correct in dismissing the second amended complaint by Anders Karlsson, who mines and sells fossils and gems, because the pleading prepared by Pasadena attorney Meir J. Westreich was shoddy. However, the panel said, Real abused his discretion in denying leave to amend.
The panel—comprised of Judges M. Margaret McKeown, Consuelo M. Callahan, and Jacqueline H. Nguyen—pointed out that the plaintiffs moved for dismissal of the initial complaint; before the motion was heard, Karlsson filed a first amended complaint, which Real dismissed; and his second amended complaint “was his first effort to address the deficiencies noted by the district court.”
Although the second amended complaint “fails to state a claim for relief,” Thursday’s opinion says, “it appears that Karlsson may be able to state a claim against one or more of the defendants,” noting that the U.S. Supreme Court “has counseled that leave to amend should be freely given.”
The order dismissing the action was entered on May 19, 2015, and the defendants moved for attorney fees. In the judgment of Jan. 4, 2016, Real awarded them $91,670.16.
The Ninth Circuit opinion declares:
“Because we grant Karlsson leave to amend, the defendants, at this time, are no longer the prevailing parties and the attorneys’ fee award is accordingly vacated. Should defendants again seek attorneys’ fees, they would be well advised to avoid the mathematical problems they acknowledged at oral argument and to present a further contractual basis for an award that covers all the claims in the complaint.”
Oral Argument
The matter of attorney fees came up at oral argument, which took place Aug. 7 in Pasadena. Callaghan said to the defendants’ attorney, Richard LiPuma:
“I’ve got a problem with the attorney fees part of it…I’m wondering what in the record justifies an award of over $91,000 for 9.8 hours of work.”
She added:
“I just can’t make the math work here.”
LiPuma acknowledged:
“The math doesn’t work.”
He said that, according to a declaration, the trial lawyers put in 99.8 hours, which would work out to more than $900 an hour. He said, however, that District Court judges have broad discretion in awarding attorney fees.
McKeown remarked:
“What’s bothering me here is that I’ve never seen such a poor submission of attorney fees.”
Attorney Responds
LiPuma, a Colorado practitioner, responded:
“It bothers me, too.
“I’m an appellate lawyer. I’m coming, not having been the trial lawyer.
“I take what I’m given, just like the court looks at what the record shows.”
When Westreich addressed the court, Nguyen termed the second amended complaint “very difficult to understand, very confusing…very, very tediously long.”
McKeown characterized it as a “rambling complaint.”
It emerged at oral argument that the yacht Karlsson purchased was destroyed in a hurricane and a painting by Jackson Pollock, in which he purchased a partial interest and apparently is authentic, is being held for charges in Great Britain.
Copyright 2018, Metropolitan News Company