Preview
Filing# 140898103 E-Filed 12/23/2021 01:03:48 PM
IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT
IN AND FOR BROWARD COUNTY, FLORIDA
CIVIL DIVISION
CANELA RESTAURANTS INC.
D/B/A CAFE SEVILLE,
Plaintiff.
Case No. CACE 18-003623
V
CITIZENS PROPERTY
INSURANCE CORPORATION
Defendant.
i
PLAINTIFF'S MOTION FOR PROTECTIVE ORDER
COMES NOW, the Plaintiff,CANELA RESTAURANTS INC. dba CAFE
SEVILLE Ccl
(''Plaintiff'),by and through the undersigned counsel, and pursuant to Fla. R.
Civ. P. 1.280(c),moves for a protectiveorder limitingthe scope of any discovery and/or
regarding the depositions of any former employees of Merlin Law Group, PA,
particularly(i)Kelly Kubiakl;(ii)Donna Alvarez; (iii)Sandra Baldinelli;(iv)Farana
Bradley; (v) Tammara Varn; and (vi)Canela Restaurants Inc. dba Cal* Seville.
As
grounds of support thereof,Plaintiff states the following:
Relevant Facts
1.
This case arises from a property insurance claim made by Plaintiff to its
insurer, Defendant, Citizens Property Insurance Corporation ("Defendant"). Plaintiff
retained Merlin Law Group via a contingency fee agreement.
2.
On or about late January 2021, Plaintiff's counsel notified Merlin that she
was leavingMerlin's employ and startingher own law firm.
1 and/or Kubiak Law Group, PLLC
*** FILED: BROWARD COUNTY, FL BRENDA D. FORMAN, CLERK 12/23/2021 01:03:47 PM.****
3
On January 29, 2021, Plaintiff dischargedthe Merlin law firm and elected
to have Kelly Kubiak, Esq. continue to represent her at her new firm2
4.
On or about March 18, 2021, Merlin field a Notice of Charging Lien in
this matterl
5.
On or about May 5, 2021, the Plaintiff and Defendant settled the insurance
claim.
6.
By
dated September 14, 2021, Merlin's attorney(s)
requestedthe depositionsin this matter4-
Introduction
What would normally be a simple,straight-forwardcharging lien matter between
a law firm and one of its former attorneys/employeesappears to have devolved into
"delay at all costs" litigation
as well as an attempt by Merlin to obtain discoveryfor the
Hillsborough County case it filed againstPlaintiff's counsel. Tactics such as these are
not uncommon with the Merlin Firm5. Because of the foregoing,and pursuant to Fla. R.
Civ. P. 1.280(c),Plaintiff respectfullyrequests that this Honorable Court grant its Motion
for Protective Order as referenced below6.
Memorandum of Law
2 Attached hereto as Exhibit A.
3 Copies of the Charging Lien is attached hereto as Composite Exhibit B.
4 A copy of the
is attached hereto as Composite Exhibit C.
4 One federal court judge specificallystated that Merlin litigatedin 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 indistinguishablefrom those of [thel firm and in opposing [thel
sanctions, the firm consistently accepted resnonsibilitv for conducting the underlvine 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 litigationtactics here,
it is pertinentfor the Court to have a clear understanding and context of how, and what, Merlin is doing in
this matter.
6 In the Wherefore paragraph.
2
Plaintiff requests a protectiveorder regarding these discovery and depositions
pursuant to Fla. R. Civ. P. 1.280(c)which states in pertinentpart, as follows:
Upon motion by a party or by the person from whom the
discoveryis sought,and for good cause shown, the Court in
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 justicerequires,includingone or
more ofthe following(1)that the discoverynot be had; (2)that
discovery be had only on specifiedterms and conditions,
includinga designationof the time or place;(3) that discovery
may be had only by a method of discovery other than that
selected by the partiesseeking discovery; (4) that certain
matters not be inquiredinto,or that the scope of the discovery
be limited to certain matters; (5) that discoverybe conducted
with no one present except persons designatedby the Court; (6)
that a depositionafter 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 designatedway; and (8) that the parties
simultaneously file
specified documents
or
information
enclosed in sealed envelopes to be opened as directed by the
Court.
I).
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 simplestterms, Plaintiff originallycontracted with Merlin firm for
legalservices to be provided by attorney Kelly Kubiak, her associates,and legalstaff.
Plaintiff and Merlin entered into a written contingency fee agreement. After attorney
Kubiak left Merlin's employ, Plaintiff dischargedMerlin as Plaintiff's attorney. Plaintiff
then elected to retain attorney Kubiak at her new firm to continue representingPlaintiff in
the underlying case. Merlin subsequently filed a charging lien for fees and costs. These
facts are undisputed.
Searcy,Denney, Scarola, Barnhardt & Shipley,P.A. v. Polet, 651 So.ld 366 (jAa.
1995), holds that when a discharged law firm files a charging lien to recover fees and
3
costs, the Court's role is to determine the 'value' of the discharged law firm's charging
lien (emphasis added).
To brieflysynopsizethe pertinentfacts of Searcy,Taylor was a Florida licensed
attorney at the Searcy law firm and was assigned to work on the Poletz casel He
eventuallyleft the firm for other employment opportunities.Shortly thereafter,the
parents of Poletz dischargedthe Searcy law firm and retained Taylor at his new firm.
The Searcy law firm ultimatelyfiled a charging lien for fees and costs; and litigation
ensued over the value of Searcy'scharginglien.
Searcy appealed the Court's decision that their fee "should be determined by
using the Rowe factors but no contingency risk multipliershould 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 hourlyrate are factors to be
considered in determining a proper quantum meruit award,
the court must consider all relevant factors surroundingthe
professionalrelationship
to ensure that the award is fair to
both the attorney and client. See Reid, Johnson, Downes,
Andrachik & Webster v. Lansbero, 68 Ohio St.3d 570,629
N.E.2d 431, 436-437 (1994) (totalityof circumstances
surrounding each
situation
should
be
considered
in
determiningreasonable value of dischargedcontingent-fee
attorney'sservices in quantum meruit).Applicationof the
factors set forth in Rule Regulating The Florida Bar 4-
1.5(b),48
may provide a good startingpoint. However,
7 Taylor spent approx. 340 hours working on Poletz. The case involved a traumatic brain injury.
8 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 questionsinvolved, and the
skill requisiteto perform the legalservice properly;
(2) the likelihood that the acceptance of the particularemployment will preclude other employment by the
lawyeri
(3) the fee, or rate of fee, customarily charged in the localityfor the legal services of a comparable or
similar nature;
(4) the significanceof, or amount involved in, the subjectmatter of the representation,
the responsibility
involved in the representation,and the results obtained;
4
because 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
surroundingthe professional
relationship
that would assist
the court in fashioningan 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
actuallyconferred 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'slegalservices. Searcywas clear that the Court's focus
is on 'valuing'the legalservices ofthe discharged lawfirm when it said:
In determiningattorney fee to award to law firm that was discharged by client
from contingency fee contract, trial court should have considered totalityof
factors present in case, instead of only consideringtime reasonablyexpended and
reasonable hourlyrate for services. Searcy,Headnote [2]'.
II).
MERLIN'S
ASSERTION THAT THIS COURT MUST ALLOW
DISCOVERY10 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.
(5) the time limitations imposed by the client or by the circumstances and, as between attorney and client,
any additional or specialtime demands or requests of the attorney by the client;
(6) the nature and lengthof the professionalrelationship
with the client;
(7) the experience,reputation,diligence,and abilityof the lawyer or lawyers performing the service and the
skill,expertise,or efficiencyof effort reflected in the actual providing of such services; and
(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 significantdegree on the outcome of the representation.
g One noteworthy case thatreiterakswhat Searcy standsfor is Scherer v. Austin Roe Basquill,P.A., 2021
Hl 2446947, (2ndDCA). While the case involved a partner of a law firm leavingto 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
departinglawyer'slegalservices (post-departure)nor the 'value' of the departinglawyer'slegalservices.
10' Regarding legal services provided by the successor law firm and the 'value' of said services.
5
Defendant's Motion to Compel Depositions falselyasserts that this Honorable
Court, in essence, is compelled to (i)allow Defendant to conduct discoveryinto the legal
services provided to Plaintiffs by attorney Kubiak and/or Kubiak Law Group, and (ii)
must factor in the 'value' of attorney Kubiak and/or Kubiak Law Group's legalservices
providedto Plaintiff after Merlin was dischargedas its attorney, to wit:
76. 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 KLG11) (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 contingencyminus
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 "totality05 circumstances surrounding each situation should be
considered in determiningreasonable value of discharged contingent-feeattorney's
services in quantum meruit" Id. at 369. After that,the partiesdiffer greatlyas to what
Searcy stands for.
Searcy addresses a specificissue - [H]ow courts throughoutthe state of Florida
should 'value' a discharged law firm's (emphasis added) legalservices in the context of
a charginglien that is based on a contingencyfee contract.
Merlin asserts that it is entitled to conduct discoveryinto the successor law firm's
legal services provided to its ex-client.
Further, Merlin asserts that this Court is
necessarilycompelled to 'value' the successor law firm's legalservices before it can
determine the 'value' of the dischargedlaw firm's legalservices. Neither Searcy nor the
Florida Bar Rule 4-1.5 stand for such an absurd proposition. Stated another way,
11 Kubiak Law Group, PLLC
6
allowing such discovery opens up a Pandora's box of discoverythat is irrelevant and
violative of, among other things,Plaintiff's attorney/client
privilegedcommunications
with Plaintiff' s chosen lawyer(s).
As noted above, Plaintiff/Canela Restaurants dba Cafd Seville and Merlin are the
two partieswho entered into a contractual relationship.The Canela Restaurants dba Cafd
Seville/Merlin fee agreement serves as the basis of the charginglien. 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 dischargedis 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 dischargedlaw 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 legalservices somehow are relevant to
a dischargedlaw firms charginglien. Such claims are simply a legalfiction created by
Merlin.
III). THE 'VALUE' OF EITHER ATTORNEY KUBIAK AND/OR KUBIAK
LAW GROUP'S LEGAL SERVICES PROVIDED TO PLAINTIFF AFTER
MERLIN'S DISCHARGE IS IRRELEFANT 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 casel2 a Court must (i)allow discoveryrelated to the successor law firm's
legalservices,or (ii)place a 'value' on the successor law firms legalservices.
Such a
request by Defendant is wholly irrelevant.
Relevant evidence is evidence that tends to prove or disprovea material fact. Fla.
Stat.
§90.401.
Analogous to a Motion in Limine when one party to a lawsuit is
12 Where a discharged law firm had a contingency fee agreement with a client such as this case.
7
attemptingto introduce irrelevant evidence to a jury,evidence on a purelycollateral issue
that would only serve to confuse and mislead the jury is too remote and should be
excluded. Donahue v. Albertson's Inc., 471 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 prejudicetoward Plaintiffs and
would likelymislead or confuse the jury.Fla. Stat. §90.403.
Whatever legal services attorney Kubiak and/or Kubiak Law Group, PLLC
provided after Plaintiff dischargedthe Merlin law firm and retained Kubiak Law Group is
irrelevant to 'valuing'Merlin's legalservices while they representedPlaintiff.
IV).
MERLIN'S DISCOVERY REQUESTS RUN AFOUL OF THE LAW,
ATTORNEY/CLIENT PRIVILEGE, AND WORK-PRODUCT.
Merlin's attempt(s)to overreach in the discoveryprocess and obtain irrelevant,
attorney/clientprivileged communications,
and/or
work-product
is
objectionable.
Further, Merlin's request(s)are obvious attempts to utilize the discoveryprocess 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 78 of its Motion:
This Court cannot possiblymake that determination without discoveryfrom KLG
and Attorney Kubiak, as well as the Plaintiff and several others to leam: 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 absolutelyneeded to properly
prepare for the hearing.That includes obvious thingssuch as productionon and
depositions regarding KLG's time sheets, the communications exchanged
between plaintiff
and defense, the correspondencewith the client before and after
KLG took over, among many other obvious thingsthat go to providingthis Court
with sufficient and critical evidence to also be considered when evaluatingthe
totalityof the circumstances. If the KLG will not be challengingor otherwise
contestingMLG's claim that it providedall the value to the client (thusentitling
it
to the entire fee),then most of the discoverymay not be necessary (exceptas it
relates to the circumstances of the transfer of the case and the date of"realization"
ofthe contingency).
8
Any inquiryinto the 'value' of legalservices provided by a successor law firm is
irrelevant to Merlin's charginglien;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 dischargedas Plaintiff's attorney, it is entitled to the
attorney/client
privilegedcommunication(s) between Plaintiff and Kubiak Law Group.
Certiorari review "is appropriatein cases that allow discovery of privileged
information. This is because once privilegedinformation DCA 2005) is disclosed,there
is no remedy for the destruction of the privilegeavailable on direct appeal." Esmte OJ
Stephensv. Galen Health Care, Inc.,911 So.2d 277,279 (Fla.24 DCA). "Waiver of the
.,
attorney-client
and work-product privilegesis not favored in Florida", Coates v.
Akerman, Senterfitt
& Eidson, P.A.,940 Sold504 (7,nd DCA 2006) citingUG Ins. Corp
th
of Am. V. Johnson, 799 SO.2d 339, 341 (f DCA 2001). "A party does not waive the
attorney-client
privilegemerely by bringing or defending a lawsuit",Coates at 508 citing
to Lee v. Progressive Express Ins. Co., 909 So.2d 475 (4?h
DCA 2005). The mere fact
that two attorneys may be representinga singleclient on the same matter does not waive
the privilegethat 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 citingto
Volpe v. Conroy, Simberg & Ganon, P.A., 720 So.2d 537, 539 (4mDCA 1998). Merlin's
attempts to use this Court's time and resources to generate discovery in other cases is
improper.
WHEREFORE, the Plaintiff, CANELA RESTAURANTS DBA CAFE
SEVILLE, respectfully
requests this Honorable Court to enter an Order limitingthe scope
of any discoveryand/or the depositionsas such:
9
1.
Defendant is prohibited in discovery and/or in deposition(s)from
inquiringas to the 'value' of legalservices provided by attorney Kelly Kubiak and/or
Kubiak Law Group, PLLC subsequentto Merlin's dischargeas Plaintiff's counsel.
2.
Defendant is prohibited in discovery and/or in deposition(s)from
inquiringinto 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
dischargeas Plaintiff's counsel.
3
Defendant is prohibited in discovery and/or in deposition(s)from
inquiringas to attorney/client
privilegedcommunications 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
inquiringas 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 foregoinghas been filed
with the court through the Florida Court's E-Filing Portal to: Scott Mager, Esquire,
Mager,
Paruas,
LLC,
2719
Hollywood
Blvd.,
2nd
Floor,
Hollywood,
FL
33020; Service@MPJustice.com;
on
this 23rd day of December, 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
10
Donna Alvarez
From:
Donna Alvarez
Sent:
Tuesday, February2, 2021 7:25 PM
To:
Donna Alvarez
Subject:
Fwd:
---------- Forwarded message ---------
From: Kelly Kubiak
Date: Fri,Jan 29, 2021, 3:51 PM
Subject: Fwd:
To: ,
This is the Canella/Cafe Seville case
- Forwarded message ---------
From: Joseph Esposito
Date: Fri,Jan 29, 2021 at 9:45 AM
Subject:
To:
I would like to have Mrs. Kubiak represent me
Sent from my iPhone
EXHIBI : "A..
This email has been scanned for spam and viruses by Proofpoint Essentials. Click here to report this email as spam.
1
CAN0001
Filing# 123377638 E-Filed 03/18/2021 10:42:47 PM
IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT
IN AND FOR BROWARD COUNTY, FLORIDA
CIVIL DIVISION
CANELA RESTAURANTS INC. D/B/A
CAFE SEVILLE,
Plaintiff,
Case No. CACE 18-003623
CITIZENS PROPERTY INSURANCE CORPORATION,
Defendant.
i
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,CANELA RESTAURANTS INC. D/B/A CAFE SEVILLE, hereby gives notice of
its intention to enforce a charginglien for attorney'sfees and costs againstany 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 charginglien results by operationof 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 rightsand interest of Merlin Law Group,
P.A. and remains in effect until released or withdrawn.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on March 18, 2021, the foregoinghas been electronically
filed with the
Clerk of Court by usingthe Florida Courts e-FilingPortal system which will send a Notice ofElectronic
1
EXHIBI : "B..
CAN0002
Filingto all counsel of record as follows: Evan A. Zuckerman, Esq., Vernis & Bowling of Broward,
P.A., 5821 Hollywood Boulevard, Hollywood, Florida 33021; Email: ezuckerman@florida-law.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., Esq.
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
cmerlin@merlinlawgroup.com
smerriett@merlinlawgroup.com
trodriguez@merlinlawgroup.com
2
CAN0003
* Personal
-#
Complex/Business Litigation
Injury/PIP
Crime Victim
*
Rights
Property Damage Claims
l<*P'.
Corporate/Contract Work * State and Federal Appeals
Insurance Claims and Referrals for Criminal Defense,
Real Estate and All Other Areas of Law
www.MagerParuas.com
South Florida Location:
Service@MPJustice.com
2719 Hollywood Blvd. = Second Floor
Se Habla EspaAol
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
Rei
Canela Restaurants, Inc. d/b/a Ca# Seville v. Citizens Property Insurance
-
Corporation
Case No. CACE 18-003623
Dear Donna and Kelly,
As we have now agreed upon a date for Mr. Duffy to be deposed in his capacityas managing
attorney and corporate representative,
we would like to go ahead and follow-upon our previous
request for dates of availability
for the followingindividuals' deposition:
1.
Kelly Kubiak
2.
Donna Alvarez
3.
Sandra Baldinelli
4.
Farana Bradley
5.
Tammara Varn
6.
Canela Restaurants Inc. dba Cafe Seville Representative with limited topic list of
communications and knowledge relatingto the termination of MLG, the retention ofKLG,
the process and resolution of the case, as well as charges,services,billingstatements of
MLG and KLG, the actions/knowledgerelatingto the time and amount of settlement and
any
statement created or to be created.
We are available to take these depositionson any ofthe followingdates:
September 20-24, 27-30, 2021
October 1,4-8, 11-15, 18-22,25-29,2021 and
November 1-5,and 8-12, 2021
EXHIBI : "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 depositionof 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 multipledates,we are happy to
do so. Thank you in advance for your cooperationin this matter.
Very trulyyours,
#ehhecfulton
Jesse Fulton,Esq.
For the Firm
2719 Hollywood Blvd. = Second Floor = Hollywood, FL 33020 = (954) 763-2800
Case 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 disputeis before me on Auto-Owners Insurance Company's
("Auto-Owners") Motion for Sanctions [Doc. # 71]. I 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 previouslytook oral argument on issues relevant to decidingthe motion and have
determined that further oral argument would not be of material assistance.
For the followingreasons, I GRANT the motion and DISMISS WITH PREJUDICE
Summit Park's counterclaims in this matter pursuant to the Court's inherent authority.I also
assess an award of attorney's fees and expenses againstHarris 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,I award interest to Auto-Owners for the periodSummit
Park wrongfully withheld the appraisalfunds pursuant to Colo. Rev. Stat. § 5-12-102(1)(b).
L Facts
A. Background
Much ofthe background to the instant disputehas been set forth in a priororder, 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 declaratoryjudgment action to determine the extent of
coverage for damage caused by a 2013 hailstorm under a property insurance policyit issued to
Summit Park. Summit Park has since asserted counterclaims allegingbreach 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").
Shortlyafter this case was filed,Summit Park invoked the appraisalprovisionof the
policy,under which "each party will select a competent and impartialappraiser,"the court
selects an umpire ifthe appraiserscannot agree on a selection,and a "decision agreed to by any
two" of
'..,
the three as to the "value o f the property and amount of loss' 'will be binding." Doc.
# 6-1 at 78. In April 2015, I ordered the appraisalprocess to proceed. Doc. # 17. Summit Park
selected George Keys as its appraiser and Auto-Owners selected Jim Koontz as its appraiser.
Docs. # 24,29. In September 2015, upon the parties'failure to reach agreement on various
2
Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 3 of 17
aspects ofthe process, I imposed several guidelines.Doc. # 25. One ofthe guidelinesI
imposed stated:
An individual who has a known, direct,and material interest in the
outcome ofthe appraisalproceedingor a known, existing,and
substantial relationship
with a party may not serve as an appraiser.
Each appraisermust, after making a reasonable inquiry,disclose to
all partiesand any other appraiserany known facts that a
reasonable person would consider likelyto affect his or her
impartiality,
including(a)a financial or personalinterest in the
outcome of the appraisal;and (b)a current or previousrelationship
with any of the parties(includingtheir counsel or representatives)
or with any of the participants
in the appraisalproceeding,
includinglicensed public adjusters,witnesses, another appraiser,or
the umpire. Each appraisershall have a continuingobligationto
disclose to the partiesand to any other appraiserany facts that he
or she learns after acceptingappointment that a reasonable person
would consider likelyto affect his or her impartiality.If an
appraiser discloses a fact requiredto be disclosed pursuant to this
paragraph and a party files an objectionin this Court to the
appointment or continued services ofthe appraiserno later than 15
days after becoming aware of such fact (orfrom the date ofthis
order, whichever comes later),
the objectionmay 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 bearingon an appraiser'scompetency.
Id at 12-13. Iexplainedthatthisguideline"willminimizetheriskthattheappraisalawardwill
need to be vacated" pursuant to the policylanguage requiringthat the appraisersbe impartial.
Id at 9. I also directed that "[t]hepartiesand their counsel shall make every reasonable effort to
ensure that the appraisalprocess proceeds in accordance with this order." Id at 14-15. At the
end ofthe order, I provided the followingnotice:
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.
3
Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 4 of 17
Id at 15. I will refer to this as the "disclosure order." Upon the appraisers'
failure to reach an
agreement regardingthe selection of an umpire,I appointedRobert 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 significantpriorbusiness relationshipwith the Merlin Law Group." Doc.
# 60-7. Harris added that Keys "has acted as a publicadjusterand/or appraiseron behalf of
policyholdersthat the Merlin Law Group has representedin the past, however, this obviously
does not affect his abilityto act as an appraiserin this matter." Id On June 19,2015, Auto-
Owners' counsel responded that "[t]heapparentlynumerous relationships
that Keys had with
Merlin Group and its clients raise a serious concern of Keys' impartiality"and requested'Yhat
Keys provide a disclosure of his relationshipswith policyholdersrepresentedby the Merlin Law
Group, how he and his firm were compensated, the number oftimes he served in the
policyholders'roles [sic]as a public adjusterand/or appraiser... and the details ofany services
Keys has provided as an expert (asa retained or non-retained expert) through the Merlin Law
Group." Doc. # 60-8.
Neither Keys nor Merlin ever made the more detailed disclosures requestedin this letter.
On November 24,2015, followingthe Court's disclosure order,Keys disclosed in an email to
Auto-Owners' counsel as follows: "I do not have any substantial business relationshipor
financial interest in Merlin Law Group. There have been cases where both Merlin Law Group
and Keys Claims Consultants [Keys' businesslacted for the same insured but under separate
4
Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 5 of 17
contracts." Doc. # 60-12. At a 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 appraisalpanel issued its award. Doc. # 35. The award was
signed by Norton (theumpire) 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 (lesscertain adjustmentsnot relevant here)under a reservation
of rightsin accordance with the policy'srequirement that Auto-Owners "pay for covered loss or
damage within 30 days after we receive the sworn proofof loss...if [a]nappraisalaward 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 actuallyrepairedor replaced." Doc. # 6-1 at 84. Before this lawsuit was filed,
Summit Park's publicadjusterestimated an RCV of $7,140,117.82 for the damaged buildings,
includingreplacement of undamaged vinylsidingto achieve matchi,ng,a disputed issue. See 2d
IAm. Compl. 1[28 [Doc. # 6.].The corresponding figurein the appraisalaward in which Keys
participated,
by contrast, was $10,870,090.96,an increase of $3.47 mi,11ion,or 47%. Doc. # 35.
D. Vacatur of Appraisal Award
On January 14,2016, Auto-Owners objectedto Keys' involvement in the appraisal
process and moved to vacate the appraisalaward on the grounds that ithad discovered facts
showing that Keys was not impartialas requiredby the appraisalprovision. Docs. # 41,55. I
heard two hours of oral argument on March 31,2016, at the end of which I sustained the
objectionand vacated the appraisal
award. Doc. # 68. In a written order dated April 5,2016, I
5
Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 6 of 17
explained that Keys cannot be considered impartialbecause, "[ilnaddition to working on dozens
of prior cases in which Keys was retained by the policyholder,Merlin and/or Merlin attorneys
have served as Keys' personalcounsel, served as incorporator and registeredagent for Keys'
companies, taughtwith 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. Id at 11. While the contingent-capfee
agreement was replacedthree to four months into Keys' engagement, I explained that,because
"the higherhis appraisal,the higherthe cap on his fee,"Keys could not be considered impartial,
even if he only worked under this agreement for a short period.Id (quotingColorado 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 requireda reasonable inquiryinto and disclosure of any :..
facts a reasonable, person would consider likelyto affect the appraiser'simpartiality.
Docc# 69
at 13-14.
I concluded that Summit Park's disciosures did not meet this.staildard. .Id. :Inoted that
I..,-' j
Pettinato had provided more detail about Merlin's extensive relationshipwith Keys imca brochure
for Keys' business-a brochure,int' which he is quoted as saying,that"[bloth,Keysand h.isstaff
have assisted me as well as my firm in resolvingan untold number of largemulti-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. Id 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." Id I found that "counsel's
6
Case 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 appraisalprocess but also the Court" and
invited the instant motion for sanctions. Id at 14-15.
II. Analysis
A. Dismissal of Counterclaims
Federal courts have the inherent "abilityto fashion an appropriatesanction for conduct
which abuses the judicialprocess." Farmer v. Banco Popular ofN. Am., 791 F .3d 1246,1255
(10th Cir. 2015) (internalcitation omitted). This includes "the power to enter a default
judgment." Klein v. Harper, 777 F.3d 1144,1147 (10th Cir. 2015) (internalcitation and
quotations omitted). Federal Rule of Civil Procedure 41(b) recognizesthat the Court may
dismiss a claim or action where a "plaintifffails to... comply with these rules or a court order."
"Default judgment is a harsh sanction that should be used only ifthe failure to comply
with court: orders is the result of willfulness,bad faith,or any fault of the disobedient party rather
than. inabilityto comply." Klein, 777 F.3d at 1 147-48 (internal
citation and quotationsomitted).
A district courtmust ordinarilyconsider the following"Ehrenhaus" factors in determining
whether a dismissal under Rule 41(b) is appropriate:(1)the degreeof actuliprejudice
to the
opposing party; (2)'the amount of interference with the judicialprocess;(j)the culpability
of the
litigant;
(4)whether the court warned the party in advance that dismissal ofthe actionwould be a
likelysanction for noncompliance; and (5)the efficacyof 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 rigidtest but are simply criteria for the court to
consider." Id For the followingreasons, I conclude that it is appropriateto dismiss Summit
Park's counterclaims with prejudice.
7
Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 8 of 17
1. Bad Faith
Before reachingthe Ehrenhaus factors,I 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 priorcases and that Merlin
attorneys served as personalcounsel to Keys and Keys' companies on multipleoccasions.
Despitethese facts,neither Pettinato,nor Harris, nor anyone else from the Merlin firm ever
corrected Harris' disclosure that Keys "does not have any significant
priorbusiness 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 responsiblefor
ensuring compliance with the order and that the order's obligationswere continuing. Pettinato's
testimonial
-
in Keys' brochure boasting ofan "untold number of largemulti-millio.n doHar ,
.
losses" that Keys and Merlin hadjointly handled suggests that Pettinato,had #ctuaiknowledge:of
'
:
,
the undisclosed facts but opted not to disclose them. And H?rria'
Merlio
assisted Keys;with his disclosures dispelsany doubt that Merlin,p,layed,an
active,
role incrafting
1
ie;
'
the disclosures. These facts suggest a deliberateness with regard.toMerlin'.,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-capfee agreement under which Keys was originallyretained 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 agreement
8
Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 9 of 17
was replaced by one removing the contingentcap around July 2015. In a 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, ina letter to Auto-Owners' counsel, Harris
disclosed the agreement but mischaracterized itas merely a "proposed" agreement that "would
have" imposed a contingentcap. 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-capagreement 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 appraisalaward was filed
with the Court on December 23,2015. The failure to disclose the originalagreement in response
to my disclosure order and the apparent efforts to conceal the original
agreement further support
a.findingof bad faith on the bart.of
Merlin. I note that there can be littledoubt that?
Merlin was
paware df the initial agreeihebtwith Keys, es a pleadingsigned by Harris statedthat,Merlin
handled the discussions with Mr. Keys regardingthe agreement and "9btained"the initial
agreembnt on Summit Park's behalf. Doc. # 59 at 47. I acknpwledge
in
?
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 entirelycredible. Doc. # 94-1 at 2. In addition,it does nothingto
mitigateMerlin's bad faith.
Harris and Pettinato have submitted affidavits averringthat they must have
misunderstood what I meant in my disclosure order when I requiredthe appraisersto disclose
9
Case 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 likelyto affect his or her
impartiality."
Docs. # 92-1, 92-2. The disclosure order, however, stated that such facts
"includ[e]...acurrent or previous relationshipwith any ofthe parties(includingtheir counsel
or representatives)."
Doc. # 25 at 12-13. And I ordered that "[t]hepartiesand their counsel shall
make every reasonable effort to ensure that the appraisalprocess proceeds in accordance with
this order." Id 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 priorrelationshipsbetween
appraisersand counsel had to be disclosed and that the appraisers,the parties,and counsel were
all jointlyresponsiblefor ensuringthat 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
apparentlyearned from those engagements. They certainlysaid nothing about the priorwork
?
e'
'done for Keys and Keys' companies by Merlin attorneys. An*ofcourse, they.said,nothing.i ..
,
about the contingent-cap fee agreement.
-
:
Bad faith oh.the part of Harris and Pettinato has certainlybdeA?establikhed.
-?T:hota that it.0 .
'
'
'; ; f,
is
.
prbper to attributeHarris' and-Pettinato's bad faith to the Merlin: fitm *i,Venih]attltd'lawyers'
'
'
(:i !i'
1
.,
,
.
'?action-s:%'were indistinguidhabfe
from those of Ethelfirm" andr"id -6tjbbsihk'[tiiei:sh;igtions)-??
j '.
motion, the firni consistently
accepted responsibility
for conducting the underlying Ntigatidn,v
Ennion v. Prospect Capital Corp,, 675 F .3d 13%, 148 (2d Cir. 2012). Summit Park is also
responsiblefor Harris' and Pettinato's actions. Clients are routinelysubjectedto "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 (affirmingsanction of dismissal ofclaims
10
Case 1:14-cv-03417-LTB Document 105 Filed 08/01/16 USDC Colorado Page 11 of 17
based on attorney's misconduct and notingthat "[a.]litigant
is bound by the actions of its
attorney, and the relative innocence ofthe litigant...
does not constitute grounds for relief');
Haeger v. Goo*ear Tire & Rubber Co., 813 F.3d 1233, 1246 (9thCir. 2016) (sanctioningclient
because client was "deemed bound by the acts of [itslawyers.]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) (holdingthat"the lawyer
represents his client and the client is bound by that representation"where the "lawyer (orthe
client)makes a tactical decision and [thelawyer'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 (thenSummit Park's counsel)stated in open court
that Summit Park made an "independent' 'examination" of various appraisersand, after a
meeting in "executive session,""made the decision" that Keys -"is who we would like to.use."
Doc. # 99-3 at 42-43.: Thus, Summit Park was aware of Keys';background and bears at-,least
some
i
,
degrbe of'responsibility
for his selection and his inade4uate disclosures.
.
."i
Finally,.
I rejectMerlin's and Summit Park's argument that }Wid Iri@t have.authority td:p
u,
Gi:- ?
?
.'?
enter the disclosure order and,find,their continued defiance
.
ofjthatordemtn-bc:ifurther ?evidente'of,'n
,
bad:faith: ' The disclosure ordur Iwas a proper exercise of the?86.ulit's.autb.oritj<
under:Hedd't:ai-
i::,i ihi
Rule of Civil Procedure 16(c)(2)(L),the common law of appraisal,and the Court's inherent
i al :.
supervisory power. In any event, this is not relevant to the instant sanctions issue.;Even ifthe
order had been entered in error, the partieswere stillrequiredto comply with it. See, e.g.,
L 'Ggrke v. Asset Plus Corp.,No. 15-5059, 2016 WL 231150, at *2 (10thCir. Jan. 20, 2016)
("But to be clear,even assuming purely for the sake of argument that the district court had
11
Case 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 jurisdictionmust be obeyed by the partiesuntil it is reversed.")(alterations
and
citation omitted). The proper means of contestingthe Court's authorityto enter the disclosure
order was a motion for reconsideration or an appeal-not to violate the order.
1. Ehrenhaus Factors
I now turn to the Ehrenhaus factors. First,Auto-Owners has been significantly
prejudicedby 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 eightmonths of litigation
before that-regarding whether and under what terms the appraisalprocess would
proceed-were also wasted because Summit Park's and Merlin's conduct led to the vacatur of
the appraisalaward. Summit Park and l'Aerlin have thus impeded Auto-Owners from achieving-
resolution of its claims in this declaratoryjudgment case. This factor mbrits significantweight.!
'
'
Turning to the second factor,there has been massive interfdreilde'?kith
th'dejudicial
l9rocess:
B
Summit: Patk's and Merlin's.conduct has disrespectedthe Court's au'thorityj
increased the ' 011
Court's, workload, .and *end