Order: PANJIKARAN, ROSAMMA vs. STATE FARM FLORIDA INSURANCE COMPANY

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                                Filing # 138814541 E-Filed 11/18/2021 02:26:42 PM

IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT
IN AND FOR CHARLOTTE COUNTY, FLORIDA
CIVIL DIVISION
ROSAMMA PANJIKARAN
Plaintiff,
ve Case No. 18-000327CA

STATE FARM FLORIDA INSURANCE
COMPANY

Defendant.
/

PLAINTIFF’S MOTION FOR PROTECTIVE ORDER

COMES NOW, the Plaintiff, ROSAMMA PANJIKARAN (“Plaintiff”), by and
through the undersigned counsel, and pursuant to Fla. R. Civ. P. 1.280(c), moves for a
protective order regarding the depositions of (i) Kelly Kubiak; (ii) Donna Alvarez; (iii)
Sandra Baldinelli; (iv) Lisa Lieberher; (v) Farana Bradley and (vi) Rosamma Panjikaran;
against Merlin Law Group, PA (“Merlin”). As grounds of support thereof, Plaintiff states
the following:
Relevant Facts

1. This matter was filed as an extra-contractual claim by Plaintiff against her
property insurer, State Farm Florida Insurance Company (“Defendant”). Plaintiff retained
the Merlin law firm via a contingency fee agreement.

2. On or about late January, 2021, plaintiffs counsel notified Merlin that she
was leaving Merlin’s employ and starting her own law firm.

3. On February 2, 2021, Plaintiff discharged the Merlin law firm and elected

to have Kelly Kubiak, Esq. continue to represent her at her new firm?

| and/or Kubiak Law Group, PLLC
? Attached hereto as Exhibit A.4. On or about March 18, 2021, Merlin filed a Notice of Charging Lien in
this matter®.

5. On or about April 30, 2021, this matter settled through Mediation with
mediator, the Terrence White.

6. By email/correspondence dated September 14, 2021, Merlin’s attorney(s)
requested the depositions of the aforementioned former employees of Merlin as well as
the Plaintiff.

Introduction

What would normally be a simple, straight-forward charging lien matter between
a law firm and one of its former attorneys/employees appears to have devolved into a”
delay at all costs” as well as an attempt to obtain discovery of facts of its personal case
against Plaintiff's counsel tactics by Merlin®. Because of the foregoing, and pursuant to
Fla. R. Civ. P. 1.280(c), Plaintiff respectfully requests that this Honorable Court grant its
Motion for Protective Order as referenced below’.

Memorandum of Law

Plaintiff requests a protective order regarding these discovery and depositions

pursuant to Fla. R. Civ. P. 1.280(c) which states in pertinent part, as follows:

Upon motion by a party or by the person from whom the
discovery is sought, and for good cause shown, the Court in

> A copy of the Charging Lien is attached hereto as Exhibit B.

+ A copy of the email/correspondence is attached hereto as Exhibit C.

> One federal court judge specifically stated that Merlin litigated in bad faith. In Auto Owners v. Summit
Park, (Order attached as Exhibit D), Merlin’s litigation tactics were so outrageous that a federal district
court judge personally sanctioned two of Merlin’s Florida-based attorneys $354,350,65 in fees and
expenses.

The judge noted that “it is proper to attribute (the individual MLG attorney’s) bad faith to the Merlin
Firm given that the lawyers’ actions were indistinguishable from those of [the] firm and in opposing [the]
sanctions, the firm consistently accepted responsibility for conducting the underlying litigation.” p.10.
Notably, a United States Court of Appeals affirmed the court’s ruling (Order attached as Exhibit E). While
reference to such other matters is not normally relevant, given the nature of Merlin’s litigation tactics here,
it is pertinent for the Court to have a clear understanding and context of how, and what, Merlin is doing in
this matter.

In the Wherefore paragraph.1.

firm for legal services to be provided by attorney Kelly Kubiak, her associates, and legal
staff. Plaintiff and Merlin entered into a written contingency fee agreement. After
attorney Kubiak left Merlin’s employ, Plaintiff discharged Merlin as Plaintiffs attorney.
Plaintiff then elected to retain attorney Kubiak at her new firm to continue representing

Plaintiff in the underlying case. Merlin subsequently filed a charging lien for fees and

which the action is pending may make any order to protect a
party or person from annoyance, embarrassment, oppression, or
undue burden or expense that justice requires, including one or
more of the following (1) that the discovery not be had; (2) that
discovery be had only on specified terms and conditions,
including a designation of the time or place; (3) that discovery
may be had only by a method of discovery other than that
selected by the parties seeking discovery; (4) that certain
matters not be inquired into, or that the scope of the discovery
be limited to certain matters; (5) that discovery be conducted
with no one present except persons designated by the Court; (6)
that a deposition after being sealed be opened only by order of
the Court; (7) that a trade secret or other confidential research,
development, or commercial information not be disclosed or be
disclosed only in a designated way; and (8) that the parties
simultaneously file specified documents or information
enclosed in sealed envelopes to be opened as directed by the
Court.

THE VALUE OF MERLIN’S CHARGING LIEN IS THE ONLY ISSUE
BEFORE THE COURT; NOT THE VALUE OF ATTORNEY KUBIAK
AND/OR KUBIAK LAW GROUP, PLLC’S LEGAL SERVICES.

Stated in its simplest terms, Plaintiff originally contracted with the Merlin law

costs. These facts are undisputed.

1995), holds that when a discharged law firm files a charging lien to recover fees and

costs, the Court’s role is to determine the ‘value’ of the discharged law firm’s charging

Searcy, Denney, Scarola, Barnhardt & Shipley, P.A. v. Polet, 652 So.2d 366 (Fla.

lien (emphasis added).To briefly synopsize the pertinent facts of Searcy, Taylor was a Florida licensed
attorney at the Searcy law firm and was assigned to work on the Poletz case’. He
eventually left the firm for other employment opportunities. Shortly thereafter, the
parents of Poletz discharged the Searcy law firm and retained Taylor at his new firm.
The Searcy law firm ultimately filed a charging lien for fees and costs; and litigation
ensued over the value of Searcy’s charging lien.

Searcy appealed the Court’s decision that their fee “should be determined by
using the Rowe factors but no contingency risk multiplier should be applied”. Searcy at
367. The Florida Supreme Court stated that “we are now asked to decide whether the
lodestar method of computing reasonable attorneys fees . . . should be applied . . .”

Searcy at 368. The Court held that it should not; and reasoned as follows:

“ while the time reasonably devoted to the
representation and a reasonable hourly rate are factors to be
considered in determining a proper quantum meruit award,
the court must consider all relevant factors surrounding the
professional relationship to ensure that the award is fair to
both the attorney and client. See Reid, Johnson, Downes,
Andrachik & Webster v. Lansberry, 68 Ohio St.3d 570, 629
N.E.2d 431, 436-437 (1994) (totality of circumstances
surrounding each situation should be considered in
determining reasonable value of discharged contingent-fee
attorney's services in quantum meruit). Application of the

factors set forth in Rule Regulating The Florida Bar 4—
1.5(b),4° may provide a good starting point. However,

7 Taylor spent approx. 340 hours working on Poletz. The case involved a traumatic brain injury.

® Rule regulating the Florida Bar 4-1.5 provides the following factors to be considered in determining a
reasonable fee:

(1) the time and labor required, the novelty, complexity, and difficulty of the questions involved, and the
skill requisite to perform the legal service properly:

(2) the likelihood that the acceptance of the particular employment will preclude other employment by the
lawyer:

(3) the fee, or rate of fee, customarily charged in the locality for the legal services of a comparable or
similar nature;

(4) the significance of, or amount involved in, the subject matter of the representation, the responsibility
involved in the representation, and the results obtained;

(5) the time limitations imposed by the client or by the circumstances and, as between attorney and client,
any additional or special time demands or requests of the attorney by the client;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, diligence, and ability of the lawyer or lawyers performing the service and the
skill, expertise, or efficiency of effort reflected in the actual providing of such services; and

4because the factors relevant to the determination of the
reasonable value of services rendered will vary from case
to case, the court is not limited to consideration of
the Rowe factors. The court must consider any other factors
surrounding the professional relationship that would assist
the court in fashioning an award that is fair to both the
attorney and client. For example, the fee agreement itself,
the reason the attorney was discharged, actions taken by the
attorney or client before or after discharge, and the benefit
actually conferred_on the client_may be relevant to_that
determination. The determination as to which factors are
relevant in a given case, the weight to be given each factor
and the ultimate determination as to the amount to be
awarded are matters within the sound discretion of the trial
court”. Searcy at 369.

Importantly, neither Searcy nor any of its progeny hold that a necessary step in
determining the value of the discharged law firm’s charging lien is also determining the
value of the successor law firm’s legal services. Searcy was clear that the Court’s focus
is on ‘valuing’ the legal services of the discharged law firm when it said:

In determining attorney fee to award to law firm that was discharged by client

from contingency fee contract, trial court should have considered totality of

factors present in case, instead of only considering time reasonably expended and

reasonable hourly rate for services. Searcy, Headnote [2]’.

II) MERLIN’S ASSERTION THAT THIS COURT MUST ALLOW
DISCOVERY AND MUST DETERMINE THE VALUE OF ATTORNEY
KUBIAK AND/OR KUBIAK LAW GROUP’S LEGAL SERVICES PRIOR
TO ITS DETERMINATION OF THE VALUE OF MERLIN’S CHARGING
LIEN IS A LEGAL FICTION BASED IN NEITHER LAW NOR FACT.

Defendant’s Motion to Compel Depositions falsely asserts that this Honorable

Court, in essence, is compelled to (i) allow Defendant to conduct discovery into the legal

 

(8) whether the fee is fixed or contingent, and, if fixed as to amount or rate, then whether the client's ability
to pay rested to any significant degree on the outcome of the representation.

° One noteworthy case that reiterates what Searcy stands for is Scherer v. Austin Roe Basquill, P.A., 2021
WL 2446947, (21 DCA). While the case involved a partner of a law firm leaving to start his own law firm
(as opposed to the instant matter where the departing attorney was neither a partner nor had any equity in
the firm), Scherer is an example of the Searcy progeny that looked to the Fla. Bar Rule 4-1.5 factors.
Additionally, the Scherer court also looked at the identical factors that the Florida Supreme Court looked to
when deciding the ‘value’ of the discharged firms legal services using a modified quantum meruit
application. Notably, nowhere does it suggest that the Court must, and/or even should, look at the
departing lawyer’s legal services (post-departure) nor the ‘value’ of the departing lawyer’s legal services.

1° Regarding legal services provided by the successor law firm and the ‘value’ of said services.

5services provided to Plaintiff by attorney Kubiak and/or Kubiak Law Group, and (ii) must
factor in the ‘value’ of attorney Kubiak and/or Kubiak Law Group’s legal services
provided to Plaintiff after Merlin was discharged as its attorney, to wit:

46. Thus, for example, to determine the value of the services that should be
awarded to MLG, the case law is clear (emphasis added) that one must consider
the value of the services that MLG provided (as against the value of the services
provided by KLG") (emphasis added). Thus, if KLG settled the case one day or
very soon after the case was transferred to them, and little or no work of “value”
was performed, KLG is not entitled to a windfall of the entire contingency minus
the hourly fee determination. Instead, the Court would award MLG the entire fee
of that fee to the former counsel (MLG), since KLG did not provide sufficient
value to the client to warrant any fee (emphasis added).

Seemingly the one, and only, point that Plaintiff and Defendant can agree on in
this matter is that Searcy does speak to charging lien issues in Florida such as this.
Searcy says the “totality of circumstances surrounding each situation should be
considered in determining reasonable value of discharged contingent-fee attorney’s
services in quantum meruit” Id. at 369. After that, the parties differ greatly as to what
Searcy stands for.

Searcy addresses a specific issue — [H]ow courts throughout the state of Florida
should ‘value’ a discharged law firm’s (emphasis added) legal services in the context of
a charging lien that is based on a contingency fee contract.

Merlin asserts that it is entitled to conduct discovery into the successor law firm’s
legal services provided to its ex-client. Further, Merlin asserts that this Court is
necessarily compelled to ‘value’ the successor law firm’s legal services before it can
determine the ‘value’ of the discharged law firm’s legal services. Neither Searcy nor the

Florida Bar Rule 4-1.5 stand for such an absurd proposition. Stated another way,

allowing such discovery opens up a Pandora’s box of discovery that is irrelevant and

1 Kubiak Law Group, PLLCviolative of, among other things, Plaintiff's attorney/client privileged communications

with Plaintiff's chosen lawyer(s).

As noted above, Plaintiff/Panjikaran and Merlin are the two parties who entered
into a contractual relationship. The Panjikaran/Merlin fee agreement serves as the basis
of the charging lien. Merlin’s charging lien is at issue. That is the only charging lien at
issue. What the successor law firm has done since Merlin was discharged is wholly
irrelevant. Proof is in the fact that even a cursory review of all the factors referenced by
Florida Bar Rule 4-1.5, as well as the factors set forth by the Florida Supreme Court in
Searcy, makes it apparent that the Court’s sole focus is on the discharged law firm as
opposed to the successor law firm. There is no suggestion, much less an assertion, by
either the Florida Supreme Court and/or the Florida Bar that a successor law firm’s legal
services somehow are relevant to a discharged law firms charging lien. Such claims are
simply a legal fiction created by Merlin.

II). THE ‘VALUE’ OF EITHER ATTORNEY KUBIAK AND/OR KUBIAK
LAW GROUP’S LEGAL SERVICES PROVIDED TO PLAINTIFF AFTER
MERLIN’S DISCHARGE IS IRRELEVANT TO THE ‘VALUE’ OF
MERLIN’S CHARGING LIEN.

Neither Searcy, its progeny, nor Florida Bar Rule 4-1.5 contemplate that in a
charging lien case!” a Court must (i) allow discovery related to the successor law firm’s
legal services, or (ii) place a ‘value’ on the successor law firms legal services. Such a
request by Defendant is wholly irrelevant.

Relevant evidence is evidence that tends to prove or disprove a material fact. Fla.
Stat. §90.401. Analogous to a Motion in Limine when one party to a lawsuit is

attempting to introduce irrelevant evidence to a jury, evidence on a purely collateral issue

that would only serve to confuse and mislead the jury is too remote and should be

12 Where a discharged law firm had a contingency fee agreement with a client such as this case.

7excluded. Donahue v. Albertson's Inc., 472 So.2d 482, 483 (Fla. 4th DCA 1985). To the
extent that evidence is relevant, it will nevertheless be ruled inadmissible if its probative
value is substantially outweighed by the danger of unfair prejudice toward Plaintiffs and
would likely mislead or confuse the jury. Fla. Stat. §90.403.

Whatever legal services attorney Kubiak and/or Kubiak Law Group, PLLC
provided after Plaintiff discharged the Merlin law firm and retained Kubiak Law Group is
irrelevant to ‘valuing’ Merlin’s legal services while they represented Plaintiff.

IV). MERLIN’S DISCOVERY REQUESTS RUN AFOUL OF THE LAW,
ATTORNEY/CLIENT PRIVILEGE, AND WORK-PRODUCT.

Merlin’s attempt(s) to overreach in the discovery process and obtain irrelevant,
attorney/client privileged communications, and/or work-product is objectionable.
Further, Merlin’s request(s) are obvious attempts to utilize the discovery process in this
matter in order to hopefully generate discovery related to the Hillsborough County
lawsuit it has filed that involves Merlin and attorney Kubiak; to wit §8 of its Motion:

This Court cannot possibly make that determination without discovery from KLG
and Attorney Kubiak, as well as the Plaintiff and several others to learn: 1) the
circumstances of the transfer of the case; 2) when the contingency was “realized”
as that term is defined in the law; and 3) what value, if any, did KLG provide to
the client, 4) among other relevant information absolutely needed to properly
prepare for the hearing. That includes obvious things such as production on and
depositions regarding KLG’s time sheets, the communications exchanged
between plaintiff and defense, the correspondence with the client before and after
KLG took over, among many other obvious things that go to providing this Court
with sufficient and critical evidence to also be considered when evaluating the
totality of the circumstances. If the KLG will not be challenging or otherwise
contesting MLG’s claim that it provided all the value to the client (thus entitling it
to the entire fee), then most of the discovery may not be necessary (except as it
relates to the circumstances of the transfer of the case and the date of “realization”
of the contingency).

Any inquiry into the ‘value’ of legal services provided by a successor law firm is

irrelevant to Merlin’s charging lien; and as such, is an overreach.Most illustrative, however, of Merlin’s offensive overreaching discovery
request(s) is/are that Merlin insists that it is entitled to, among other things,
“correspondence with the client before and after KLG took over”. In other words,
Merlin asserts that even after it was discharged as Plaintiffs attorney, it is entitled to the
attorney/client privileged communication(s) between Plaintiff and Kubiak Law Group.

Certiorari review “is appropriate in cases that allow discovery of privileged
information. This is because once privileged information DCA 2005) is disclosed, there
is no remedy for the destruction of the privilege available on direct appeal.” Estate of
Stephens v. Galen Health Care, Inc., 911 So.2d 277, 279 (Fla. gnd DCA). “Waiver of the
attorney-client and work-product privileges is not favored in Florida”, Coates v.
Akerman, Senterfitt & Eidson, P.A., 940 So.2d 504 (2°4 DCA 2006) citing 77G Ins. Corp
of Am. V. Johnson, 799 SO.2d 339, 341 (4° DCA 2001). “A party does not waive the
attorney-client privilege merely by bringing or defending a lawsuit”, Coates at 508 citing
to Lee v. Progressive Express Ins. Co., 909 So.2d 475 (4 DCA 2005). The mere fact
that two attorneys may be representing a single client on the same matter does not waive
the privilege that the client has to prevent his or her confidential communications to one
of his or her lawyers from being revealed to the other lawyer”. Coates at 510 citing to
Volpe v. Conroy, Simberg, & Ganon,P.A., 720 So.2d 537, 539 (4 DCA 1998). Merlin’s
attempts to use this Court’s time and resources to generate discovery in other cases is
improper.

WHEREFORE, the Plaintiff, ROSAMMA PANJIKARAN, respectfully requests
this Honorable Court to enter an Order limiting the scope of any discovery and/or the
depositions of Kelly Kubiak, Donna Alvarez, Sandra Baldinelli, Farana Bradley, Lisa

Lieberher and Rosamma Panjikaran as such:1. Defendant is prohibited in discovery and/or in deposition(s) from
inquiring as to the ‘value’ of legal services provided by attorney Kelly Kubiak and/or
Kubiak Law Group, PLLC subsequent to Merlin’s discharge as Plaintiff's counsel.

2. Defendant is prohibited in discovery and/or in deposition(s) from
inquiring into the scope, extent, manner, and/or type of legal services provided by
attorney Kelly Kubiak and/or Kubiak Law Group, PLLC subsequent to Merlin’s
discharge as Plaintiff's counsel.

3. Defendant is prohibited in discovery and/or in deposition(s) from
inquiring as to attorney/client privileged communications between Plaintiff and attorney
Kubiak and/or any member of Kubiak Law Group, PLLC.

4, Defendant is prohibited in discovery and/or in deposition(s) from
inquiring as to attorney Kubiak and/or Kubiak Law Group’s work-product.

5. Defendant’s discovery request(s) and/or inquiry during deposition(s) is

limited to the instant matter only.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been filed
with the court through the Florida Court’s E-Filing Portal to: Scott Mager, Esquire,
Mager, Paruas, LLC, 2719 Hollywood Blvd., 2 Floor, Hollywood, FL 33020;
Service@MPIustice.com; Scott@MPlJustice.com; Cecile@MPJustice.com on this 18"
day of November, 2021.

/S/ Kelly L. Kubiak

KELLY L. KUBIAK, ESQ.
Florida Bar No. 108952
KUBIAK LAW GROUP, PLLC
4904 W. Cypress Street

Tampa, Florida 33607
TELEPHONE: (813) 542-0800
FACSIMILE: (813) 542-7899
Attorneys for Plaintiff
kkubiak@kubiaklawgroup.com
kubiakpleadings@kubiaklawgroup.com

10Donna Alvarez

 

From: Kelly Kubiak

Sent: Tuesday, February 2, 2021 5:03 PM
To: Keona Williams; Donna Alvarez
Subject: FW: Panjikaran vs State Farm

From: Rosamma Panjikaran <777scaria@gmail.com>
Sent: Tuesday, February 2, 2021 5:02 PM

To: Kelly Kubiak 
Subject: Panjikaran vs State Farm

| like to continue my case with your law firm in case you are not with Merrilin law firm.
Rosamma Panjikaran
February 2nd 2021

Sent from Gmail Mobile

EXHIBIT "A"

 

This email has been scanned for spam and viruses by Proofpoint Essentials. Click here to report this email as spam.

1
DRPOOO1Filing # 123377806 E-Filed 03/18/2021 11:03:42 PM

IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT
IN AND FOR CHARLOTTE COUNTY, FLORIDA

CIVIL DIVISION

ROSAMMA PANJIKARAN,

Plaintiff,
vs. CASE NO.:  18000327CA
STATE FARM FLORDA INSURANCE CASE TYPE: CONTRACTS
COMPANY,

Defendant.
/

 

NOTICE OF CHARGING LIEN OF MERLIN LAW GROUP, P.A.

NOTICE IS HEREBY GIVEN THAT Merlin Law Group, P.A., as former counsel for the
Plaintiff, ROSAMMA PAJIKARAN, hereby gives notice of its intention to enforce a charging lien for
attorney’s fees and costs against any property or funds received or receivable by Plaintiff in this action
whether by settlement, judgment, or otherwise or which was an issue in this instant action, and in support
thereof states as follows:

1. This charging lien results by operation of law.

2. Merlin Law Group, P.A. acted as counsel of record for Plaintiff until being substituted as
counsel of record by another law firm pursuant to the received confirmation of the Plaintiff.

3. This notice is being filed to protect the rights and interest of Merlin Law Group, P.A. and
remains in effect until released or withdrawn.

CERTIFICATE OF SERVICE

1 HEREBY CERTIFY that on March 18, 2021, the foregoing has been electronically filed with

the Clerk of Court by using the Florida Courts e-Filing Portal system which will send a Notice of Electronic

EXHIBIT "B"

DRPO002Filing to all counsel of record as follows: Carlton Fields, Gregory Gidus, Esq., Douglas Chumbley, Esq.,
2 Miami Central, 700 NW Ist Avenue, Suite 1200, Miami, FL 33136 ggidus@carltonfields.comL
dchumbley@carltonfields.com and Kubiak Law Group, PLLC, Kelly Kubiak, Esq., 4904 W. Cypress

Street, Tampa, FL 33607, kkubiak@kubiaklawgroup.com, kubiakpleadings@kubiaklawgroup.com.

MERLIN LAW GROUP, P.A.

/s/ William F. Merlin, Jr.. Esg.
William F. Merlin, Jr., Esquire

Florida Bar No. 0364721

Merlin Law Group, P.A.

777 S. Harbour Island Blvd., Suite 950
Tampa, FL 33602

Tel: (813) 229-1000

Fax: (813) 229-3692

Prior Counsel for Plaintiff

emerlin@merlinlawgroup.com
smerriett@merlinlawgroup.com
trodriguez@merlinlawgroup.com

DRP0003Complex/Business Litigation * Personal Injury/PIP
Crime Victim Rights * Property Damage Claims
Corporate/Contract Work * State and Federal Appeals
Insurance Claims and Referrals for Criminal Defense,
Real Estate and All Other Areas of Law

South Florida Location:
Service@MPJustice.com 2719 Hollywood Blvd. = Second Floor
Se Habla Espafiol Hollywood, FL 33020 « (954) 763- 2800

      

September 14, 2021

Via E-Mail: kkubiak@kubiaklawgroup.com
dalvarez@kubiaklawgroup.com

Kelly L. Kubiak, Esq.
Kubiak Law Group
4904 W. Cypress Street
Tampa, FL 33607-3802

Re: Rosamma Panjikaran y. State Farm Florida Insurance Company
Case No. 18-000327CA

Dear Kelly,

As we have now agreed upon a date for Mr. Duffy to be deposed in his capacity as managing
attomey and corporate representative, we would like to go ahead and follow-up on our previous
request for dates of availability for the following individuals’ deposition:

Kelly Kubiak

Donna Alvarez

Sandra Baldinelli

Farana Bradley

Lisa Lieberher

Rosamma Panjikaran with limited topic list of communications and knowledge relating to
the termination of MLG, the retention of KLG, the process and resolution of the case, as
well as charges, services, billing statements of MLG and KLG, the actions/knowledge
telating to the time and amount of settlement and any closing/distribution statement created
or to be created.

AwsY NE

We are available to take these depositions on any of the following dates:

September 20-24, 27-30, 2021
October 1, 4-8, 11-15, 18-22, 25-29, 2021

November 1-5, and 8-12, 2021
EXHIBIT "C"Kelly L. Kubiak, Esq.
September 14, 2021
Page 2 of 2

Please let us know which of the dates provided above can be scheduled for the deposition of the
individuals listed above. If you would like to coordinate a dedicated day to depose each of those
listed above, so that we can try and eliminate the need to schedule multiple dates, we are happy to
do so. Thank you in advance for your cooperation in this matter.

Very truly yours,
jesse fulton

Jesse Fulton, Esq.
For the Firm

 

2719 Hollywood Blvd. * Second Floor * Hollywood, FL 33020 « (954) 763-2800Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 1 of 17

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
LEWIS T. BABCOCK, JUDGE
Civil Case No. 14-cv-03417-LTB
AUTO-OWNERS INSURANCE COMPANY, a Michigan corporation,
Plaintiff/Counter-Defendant,
v.

SUMMIT PARK TOWNHOME ASSOCIATION, a Colorado corporation,

Defendant/Counter-Plaintiff.

 

MEMORANDUM OPINION AND ORDER

 

Babcock, J.

This insurance coverage dispute is before me on Auto-Owners Insurance Company’s
(“Auto-Owners”) Motion for Sanctions [Doc. #71]. [ have reviewed the motion; the response of
Summit Park Townhome Association (“Summit Park”) [Doc. # 94]; the response of Summit
Park’s former counsel of record, Merlin Law Group P.A., and Merlin attorneys William C.
Harris and David J. Pettinato individually [Doc. # 92]; Auto-Owners’ reply [Doc. # 99]; Auto-
Owners’ notice withdrawing certain statements in its reply [Doc. #100}; and all attachments to
those filings. I previously took oral argument on issues relevant to deciding the motion and have
determined that further oral argument would not be of material assistance.

For the following reasons, | GRANT the motion and DISMISS WITH PREJUDICE
Summit Park’s counterclaims in this matter pursuant to the Court’s inherent authority. | also

assess an award of attorney’s fees and expenses against Harris and Pettinato individually

EXHIBIT "D"Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 2 of 17

pursuant to 28 U.S.C. § 1927. Finally, 1 award interest to Auto-Owners for the period Summit
Park wrongfully withheld the appraisal funds pursuant to Colo. Rev. Stat. § 5-12-102(1)(b).

I. Facts
A. Background

Much of the background to the instant dispute has been set forth in a prior order, but I
summarize it here for the reader’s convenience. See Auto-Owners Ins. Co. v. Summit Park
Townhome Ass'n, No. 14-CV-03417-LTB, 2016 WL 1321507, at *1 (D. Colo. Apr. 5, 2016)
[Doc. # 69]. Auto-Owners brought this declaratory judgment action to determine the extent of
coverage for damage caused by a 2013 hailstorm under a property insurance policy it issued to
Summit Park. Summit Park has since asserted counterclaims alleging breach of contract, bad
faith breach of insurance contract, and unreasonable delay or denial of benefits under Colo. Rev.
Stat. §§ 10-3-1115,-1116. See Doc. #45 at 19-23. From the outset of this case until May 2016,
when they withdrew, Summit Park’s counsel of record was Merlin Law Group, P.A., and Merlin
attorneys William “Corey” Harris and David J. Pettinato (collectively, “Merlin”).

Shortly after this case was filed, Summit Park invoked the appraisal provision of the
policy, under which “each party will select a competent and impartial appraiser,” the court
selects an umpire if the appraisers cannot agree on a selection, and a “decision agreed to by any
two” of the three as to the “value of the property and amount of loss” “will be binding.” Doc.

# 6-1 at 78. In April 2015, I ordered the appraisal process to proceed. Doc. # 17. Summit Park
selected George Keys as its appraiser and Auto-Owners selected Jim Koontz as its appraiser.

Does. # 24, 29. In September 2015, upon the parties’ failure to reach agreement on variousCase 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 3 of 17

aspects of the process, I imposed several guidelines. Doc. #25. One of the guidelines I

imposed stated:

An individual who has a known, direct, and material interest in the
outcome of the appraisal proceeding or a known, existing, and
substantial relationship with a party may not serve as an appraiser.
Each appraiser must, after making a reasonable inquiry, disclose to
all parties and any other appraiser any known facts that a
reasonable person would consider likely to affect his or her
impartiality, including (a) a financial or personal interest in the
outcome of the appraisal; and (b) a current or previous relationship
with any of the parties (including their counsel or representatives)
or with any of the participants in the appraisal proceeding,
including licensed public adjusters, witnesses, another appraiser, or
the umpire. Each appraiser shall have a continuing obligation to
disclose to the parties and to any other appraiser any facts that he
or she learns after accepting appointment that a reasonable person
would consider likely to affect his or her impartiality. Ifan
appraiser discloses a fact required to be disclosed pursuant to this
paragraph and a party files an objection in this Court to the
appointment or continued services of the appraiser no later than 15
days after becoming aware of such fact (or from the date of this
order, whichever comes later), the objection may be a ground for
vacating an award made by the appraiser. The same objection
procedure shall apply in the event a party becomes aware of
information bearing on an appraiser’s competency.

dd, at 12-13. T explained that this guideline “will minimize the risk that the appraisal award will
need to be vacated” pursuant to the policy language requiring that the appraisers be impartial.
Id, at 9. 1 also directed that “[t]he parties and their counsel shall make every reasonable effort to
ensure that the appraisal process proceeds in accordance with this order.” Jd, at 14-15. At the

end of the order, | provided the following notice:

NOTICE IS GIVEN THAT, IF THE COURT FINDS THAT THE
PARTIES AND/OR THEIR COUNSEL HAVE NOT COMPLIED
WITH THIS ORDER, THE COURT WILL IMPOSE
SANCTIONS AGAINST THE PARTIES AND/OR THEIR
COUNSEL PURSUANT TO THE COURT’S INHERENT
AUTHORITY.Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 4 of 17

Jd. at 15. I will refer to this as the “disclosure order.” Upon the appraisers’ failure to reach an
agreement regarding the selection of an umpire, I appointed Robert J. Norton to serve in this
role. Doc. #31.
B. Summit Park’s Disclosures

On June 15, 2015, Harris disclosed in a letter to counsel for Auto-Owners that Keys
“does not have any significant prior business relationship with the Merlin Law Group.” Doc.
# 60-7, Harris added that Keys “has acted as a public adjuster and/or appraiser on behalf of
policyholders that the Merlin Law Group has represented in the past, however, this obviously
does not affect his ability to act as an appraiser in this matter.” Jd, On June 19, 2015, Auto-
Owners’ counsel responded that “[t]he apparently numerous relationships that Keys had with
Merlin Group and its clients raise a serious concern of Keys’ impartiality” and requested “that
Keys provide a disclosure of his relationships with policyholders represented by the Merlin Law
Group, how he and his firm were compensated, the number of times he served in the
policyholders’ roles [sic] as a public adjuster and/or appraiser . . . and the details of any services
Keys has provided as an expert (as a retained or non-retained expert) through the Merlin Law
Group.” Doc. # 60-8.

Neither Keys nor Merlin ever made the more detailed disclosures requested in this letter.
On November 24, 2015, following the Court’s disclosure order, Keys disclosed in an email to
Auto-Owners’ counsel as follows: “I do not have any substantial business relationship or
financial interest in Merlin Law Group. There have been cases where both Merlin Law Group

and Keys Claims Consultants [Keys’ business] acted for the same insured but under separateCase 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 5 of 17

contracts.” Doc. # 60-12. Ata hearing, Harris acknowledged that “we” (presumably one or
more Merlin attorneys) assisted Keys in making this disclosure. Doc. # 69 at 13-14.
C. The Appraisal Award

In December 2015, the appraisal panel issued its award. Doc. #35. The award was
signed by Norton (the umpire) and Keys, but not by Koontz (Auto-Owners’ chosen appraiser).
On January 20, 2016, Auto-Owners paid Summit Park $9,700,025,71, the “actual cash value”
(“ACV”) of the appraisal award (less certain adjustments not relevant here) under a reservation
of rights in accordance with the policy’s requirement that Auto-Owners “pay for covered loss or
damage within 30 days after we receive the sworn proof of loss . . . if [a]n appraisal award has
been made.” Doc. # 6-1 at 78; Doc. # 59-23, The ACV is the replacement cost value (“RCV”)
less depreciation; the policy provides that the RCV will not be paid “until the lost or damaged
property is actually repaired or replaced.” Doc. # 6-1 at 84. Before this lawsuit was filed,
Summit Park’s public adjuster estimated an RCV of $7,140,117.82 for the damaged buildings,
including replacement of undamaged vinyl] siding to achieve matching, a disputed issue.. See 2d
Am. Compl. §.28 [Doc. # 6]. The corresponding figure in the appraisal award in which Keys
participated, by contrast, was $10,870,090.96, an increase of $3.47. million; or 47%. Doc. #35.
DB. Vacatur of Appraisal Award

On January 14, 2016, Auto-Owners objected to Keys’ involvement in the appraisal
process and moved to vacate the appraisal award on the grounds that it had discovered facts
showing that Keys was not impartial as required by the appraisal provision. Docs. # 41, 55. 1
heard two hours of oral argument on March 31, 2016, at the end of which I sustained the

objection and vacated the appraisal award. Doc. # 68, In a written order dated April 5, 2016, ICase 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 6 of 17

explained that Keys cannot be considered impartial because, “[i]n addition to working on dozens
of prior cases in which Keys was retained by the policyholder, Merlin and/or Merlin attorneys
have served as Keys’ personal counsel, served as incorporator and registered agent for Keys’
companies, taught with Keys, and donated to a Keys-led group involved in pro-policyholder
lobbying.” Doc. # 69 at 10. I also noted that Summit Park initially had retained Keys under a
contract that fixed his compensation at “$350 per hour as well as expenses not to exceed 10% of
the amounts paid to” Summit Park in this case. Jd. at 11. While the contingent-cap fee
agreement was replaced three to four months into Keys’ engagement, | explained that, because
“the higher his appraisal, the higher the cap on his fee,” Keys could not be considered impartial,
even if he only worked under this agreement for a short period. /d. (quoting Colorado Hosp.
Servs. Inc. v. Owners Ins. Co., No. 14-CV-001859-RBJ, 2015 WL 4245821, at *2 (D. Colo. July
14, 2015).

I noted that my disclosure order required a reasonable inquiry into.and disclosure of any «..
facts a reasonable person would consider likely to affect the appraiser’s impartiality: Doc.# 69
at 13-14. [ concluded that Summit Park’s disclosures did not-.meet this stafidard. Jd. I noted that
Pettinato had provided more detail about Merlin’s extensive relationship with Keys in-a brochure
for-Keys’ business—a brochure-in which he is quoted as saying'that “[b]oth Keys and his staff
have assisted me as well as my firm in resolving an untold number of large multi-million dollar
losses to an amicable resolution and settlement to the policyholders’ benefit and
satisfaction’”—than he did in his disclosures to Auto-Owners before this Court. Jd. I also noted
that Merlin assisted Keys in making the disclosure in which Keys stated that he did “not have

any substantial business relationship . . . [with] Merlin Law Group.” Jd. I found that “counsel’sCase 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 7 of 17

conduct has impugned the integrity of not only the appraisal process but also the Court” and
invited the instant motion for sanctions. Jd. at 14-15.

Il. Analysis
A. Dismissal of Counterclaims

Federal courts have the inherent “ability to fashion an appropriate sanction for conduct
which abuses the judicial process.” Farmer v. Banco Popular of N. Am., 791 F.3d 1246, 1255
(10th Cir. 2015) (internal citation omitted). This includes “the power to enter a default
judgment.” Klein v. Harper, 777 F.3d 1144, 1147 (10th Cir. 2015) (internal citation and
quotations omitted). Federal Rule of Civil Procedure 41(b) recognizes that the Court may

dismiss a claim or action where a “plaintiff fails to... comply with these rules or a court order.”
“Default judgment is a harsh sanction that should be used only if the failure to comply
with court. orders is the result of willfulness, bad faith, or any fault of the disobedient party rather
than inability to comply.” Klein, 777 €.3¢ at 1147-48 (internal citation and quotations omitted).
A district court.must ordinarily consider the following “Ehrenheus” factors in determining,
whether 4 dismissal under Rule 41(b) is appropriate: (1) the ‘degree of'actual prejudice to the
oppesing party; (2) the amount of interference with the judicial process; (3) the culpability ofthe ,
litigant; a ) whether. the court warned the party in advance that dismissal of the action would be a
likely sanction for noncompliance; and (5) the efficacy of lesser sanctions. Gripe v. City of Enid,
OKL, 312 F.3d 1184, 1188 (10th Cir, 2002) (citing Ehrenhaus v. Reynolds, 965 F.2d 916, 921 :
(10th Cir. 1992)). “The factors do not create a rigid test but are simply criteria for the court to

consider.” /d. For the following reasons, I conclude that it is appropriate to dismiss Summit

Park’s counterclaims with prejudice.Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 8 of 17

1. Bad Faith

Before reaching the Ehrenhaus factors, | begin with the threshold issue of bad faith. I
find that Merlin—including Pettinato and Harris individually—acted in bad faith. I begin with
Merlin’s failure to disclose key facts about the Merlin-Keys relationship, namely that Merlin and
Keys had worked on behalf of the same insured in dozens of prior cases and that Merlin
attorneys served as personal counsel to Keys and Keys’ companies on multiple occasions.
Despite these facts, neither Pettinato, nor Harris, nor anyone else from the Merlin firm ever
corrected Harris’ disclosure that Keys “does not have any significant prior business relationship
with the Merlin Law Group” or Keys’ own, nearly identical disclosure.

No reasonable attorney could have believed that the withheld information was not called
for by my disclosure order. My disclosure order was clear that counsel were responsible for
ensuring compliance with the order and that the order’s obligations were continuing. Pettinato’s

testimonial in Keys’ brochure boasting of an “untold number of large multi-million dollar ,

- losses” that Keys and Merlin had jointly handied suggests that Pettinato,had.actual knowledge, of

the undisclosed facts bui opted not to disclose them. And Harris’ acknowledgment that Merlin
assisted Keysiwith his disclosures dispels any doubt that Merlin played an active role in crafting
the disclosures. These facts suggest a deliberateness with regard to Merlin’s.conduct that I find:
rises to bad faith.

But that is not all. It appears that Merlin and Summit Park took steps to conceal the
existence of the contingent-cap fee agreement under which Keys was originally retained in April
2015. As noted, under this agreement, the limit of Keys’ compensation and expenses would

increase as the amounts recovered by Summit Park in this litigation increased. This agreementCase 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 9 of 17

was replaced by one removing the contingent cap around July 2015. Ina December 4, 2015
examination under oath, however, Summit Park’s representative, David Malucky, denied that
any agreements other than the uncapped one had existed. Doc. # 55-17 at 2. And before the
examination, Merlin failed to produce the agreement in response to Auto-Owners* request for all
contracts with Keys. Further, on December 21, 2015, in a letter to Auto-Owners’ counsel, Harris
disclosed the agreement but mischaracterized it as merely a “proposed” agreement that “would
have” imposed a contingent cap. Doc. # 59-41. It was not until January 2016 that Malucky, via
Merlin, submitted an errata sheet which revealed that an actual (not merely proposed)
contingent-cap agreement had existed; his corrected testimony disclosed that “Mr. Keys initially
was to receive $350 per hour as well as expenses not to exceed 10% of the amounts paid to the
association.” Doc, # 55-19, Perhaps unsurprisingly, this was after the appraisal award was filed
with the Court on December 23, 2015. The failure to disclose the original agreement in response
to my disclosure order and the apparent efforts to conceal the original agreement further support

a finding of bad faith on the part.of Merlin, I note that there can be little doubt that, Merlin wa:

 

-saware of the initial agresment with Keys, es a pleading signed by Harris stated that Merlin
‘handled the discussions with Mr. Keys regarding the agreement and “obtained” the initial re
agreement on Summit Park’s behalf. Doc. #59 at 47. I acknowledge Malucky’s affidavit, in wad
which he avers that his actions were “not the product of bad faith or improper motive on my
part,” but I do not find it entirely credible. Doc. # 94-1 at 2. In addition, it does nothing to

mitigate Merlin’s bad faith.

Harris and Pettinato have submitted affidavits averring that they must have

misunderstood what I meant in my disclosure order when I required the appraisers to discloseCase 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 10 of 17

“any known facts that a reasonable person would consider likely to affect his or her
impartiality.” Docs. # 92-1, 92-2. The disclosure order, however, stated that such facts
“includfe] . . . a current or previous relationship with any of the parties (including their counsel
or representatives).” Doc. #25 at 12-13. And I ordered that “{t]he parties and their counsel shall
make every reasonable effort to ensure that the appraisal process proceeds in accordance with
this order.” Jd. at 14-15. Accordingly, I do not find Harris’ and Pettinato’s statements credible
in the least. The disclosure order was clear that current and prior relationships between
appraisers and counsel had to be disclosed and that the appraisers, the parties, and counsel were
all jointly responsible for ensuring that this happened. While Merlin’s and Keys’ disclosures
acknowledged that Merlin and Keys had been retained by the same insured in the past, they said
nothing about the number of such engagements or the millions of dollars Merlin and Keys
apparently earned from those engagements, They certainly said nothing about the prior work
‘done for Keys and Keys’ companies by Merlin attorneys. And, of course, they said.nothing,
about the contingent-cap fee agreement. feitig ot Pont lakh
‘+ Bad faith oi the part of Harvis and Pettinatc has certainly béeh'established. Thote that it. °
‘is'proper toattribute Harris’ and Pettinato’s bad faith to the Merlin fitm given-thatthe' lawyers’
nactions “wele indistinguishab!e from those of [the] firm” and “in Opposing Ythe] ‘saivtions’
motion, the firm consistently accepted responsibility for conducting the underlying Hitigation?”
£Enmon v. Prospect Capital Corp., 675 F.3d 138, 148 (2d Cir. 2012). Summit Park is also
responsible for Harris’ and Pettinato’s actions, Clients are routinely subjected to “inherent
power” sanctions for their lawyers’ misconduct, particularly where the conduct was designed to

benefit the client. See Gripe, 312 F.3d at 1188-89 (affirming sanction of dismissal of claimsCase 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 11 of 17

based on attorney’s misconduct and noting that “[a] litigant is bound by the actions of its
attorney, and the relative innocence of the litigant . . . does not constitute grounds for relief”);
Haeger v. Goodyear Tire & Rubber Co., 813 F.3d 1233, 1246 (9th Cir. 2016) (sanctioning client
because client was “deemed bound by the acts of [its lawyers] and is considered to have notice of
all facts, notice of which can be charged upon the attorney”) (internal citation and quotations
omitted); Smith v. United States, 834 F.2d 166, 171 (10th Cir. 2016) (holding that “the lawyer
represents his client and the client is bound by that representation” where the “lawyer (or the
client) makes a tactical decision and [the lawyer’s] noncompliance with the court’s directive is
not a product of inadvertence”). In any event, Malucky’s incorrect testimony suggests bad faith
on the part of Summit Park. Further, Harris (then Summit Park’s counsel) stated in open court
that Summit Park made an “independent” “examination” of various appraisers and, after a

meeting in “executive session,” “made the decision” that Keys “is who we would like to-use.”

~ Doe. #:99-3 at 42-43- Thus, Summit Park was aware of Keys’;background and:bears at-least.:

some degree of responsibility for his selection and his inadequate disciosures. © ey ee 28 he
Finally, | reject Merlin’s.and Summit Park’s argument that Pdid net have authority to:

enter-the disclosure order and-find.their continued defiance ofthat ordemto be further evidence of

 

» bad faith: “Phe disclosure order was a proper exercise of the;Couit’s authorit). under:Redesal

Rule of Civil Procedure 16(c)(2)(L), the common law of appraisal,.and the-Court’s inherent «i:
supervisory power, In any event, this is not relevant to the instant sanctions issue., Even if the
order had been entered in error, the parties were still required to comply with it. See,-e.g.,

L’Ggrke v. Asset Plus Corp., No. 15-5059, 2016 WL 231150, at *2 (10th Cir. Jan. 20, 2016)

(But to be clear, even assuming purely for the sake of argument that the district court hadCase 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 12 of 17

lacked jurisdiction, it still had jurisdiction to sanction Plaintiff for failure to comply with its
orders.”); Coando v. Westport Res., 85 F. App’x 59, 62 (10th Cir. 2003) (“An order issued by a
court with jurisdiction must be obeyed by the parties until it is reversed.”) (alterations and
citation omitted). The proper means of contesting the Court’s authority to enter the disclosure

order was a motion for reconsideration or an appeal—not to violate the order.

2. Ehrenhaus Factors
I now turn to the Ehrenhaus factors. First, Auto-Owners has been significantly
prejudiced by Summit Park’s and Merlin’s conduct, most obviously by the last six months of
litigation over Keys’ partiality and the instant sanctions issue. The eight months of litigation
before that—regarding whether and under what terms the appraisal process would
proceed—-were also wasted because Summit Park’s and Merlin’s conduct led to the vacatur of
the appraisal award. Summit Park'and Merlin have thus impeded Auto-Owners from achieving”
resolution of its claims in this declaratory judgment case. This factor merits significant weight. “a
Turning to the second factor, there has been massive interferelice with the judicial process! (°°
Summit Park's and Merlin’s conduct has disrespected the Court’s atithorlty! increased thé °°! ~
Court’sworlload, and penérally inte*fered with the administiation'ofjustive! See Sieckel'v’ Doe,’
» ‘No? 08-cv-01652-LTBsCBS, 2009 WL 1174479, at #2 (D. Colo Alpr. 29, 2000) (diidiaiar or sp.
resources have been expended on setting, resetting, monitoring, ahd issuing orders‘in this civil. >

action.”). This factor thus merits great weight.

In regard to the third factor, Summit Park bears some degree of