Am Law 200 Firm Faces 3rd Legal Malpractice Suit in 4 Years—This Time Over Alleged Unlawful Distribution

Eckert Seamans Cherin & Mellott, a Pennsylvania-based AmLaw200 firm, faces yet another legal challenge, this time in Monmouth County Superior Court, where the firm, a disbarred attorney, and others are facing a lawsuit alleging legal malpractice, conversion, and breach of fiduciary duty, among other things.

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Eckert Seamans, disbarred attorney Gary Mason, formerly of Garland & Mason in Manalapan, and other defendants are facing a lawsuit filed by Keyport Towers & Marina over alleged unlawful distributions from marina operations without applying the funds toward unpaid loans and other obligations, according to the complaint. Mason was disbarred by the New Jersey Supreme Court after the court found that he knowingly misappropriated $690,000 that investors paid to support the work of a fledgling filmmaker in an unrelated case.

The complaint, Keyport Towers & Marina v. Tennyson, also accused the defendants of entering an easement purchase option agreement with PSEG Services in violation of a 2022 consent order. Keyport Towers is a limited liability company that owns property at 165 W. Front St. in Keyport and operates a marina. The company has sought approval for the development and construction of 177 residential units and the refurbishing and expansion of the adjacent marina, according to the complaint.

Keyport Towers has made improvements and repairs to the marina, including environmental remediation, and paid debts to lenders. However, the complaint alleged that individual defendants, including Mason, Michael G. Tennyson and Eckert Seamans, received funds from Keyport Towers while unpaid obligations were due, which was a violation of the company’s operating agreement.

The seven-count complaint, filed by Keith A. McKenna of the McKenna Law Firm in Spring Lake, alleged counts of breach of contract, ultra vires, breach of fiduciary duty common law, breach of the implied covenant of good faith and fair dealing, tortious interference, conversion, and professional malpractice.

Counsel has yet to enter an appearance for the law firm or the other defendants.

This is not the only legal challenge Eckert Seamans has faced in recent years. Another suit, Pace-O-Matic v. Eckert Seamans Cherin & Mellott, was filed against the firm by an ex-client, gaming company Pace-O-Matic. That suit concerns an alleged conflict for representing a casino just outside Philadelphia in an ongoing fight over the legality of Pace-O-Matic games in Pennsylvania.

Pace-O-Matic alleged, in its February 2020 complaint filed in the U.S. District Court for the Middle District of Pennsylvania, that even as its lawyers at Eckert Seamans defended the company’s devices on the grounds that they are legal games of skill, the firm was simultaneously arguing on behalf of Parx Casino that the same games should be outlawed as illegal gambling devices.

In June 2023, U.S. District Judge Jennifer P. Wilson granted in part and denied in part Eckert Seamans’ motion to dismiss Pace-O-Matic’s breach-of-fiduciary complaint against the firm, with the court determining some of the plaintiff’s claims had standing.

In a separate case, Eckert Seamans proposed a $45 million settlement for the benefit of investors defrauded by cash advance company Par Funding. The attempted settlement and its surrounding litigation stem from a complaint filed by the U.S. Securities and Exchange Commission in the Southern District of Florida in 2020, which accused Par Funding, investment group A Better Financial Plan, and its founders and sales agents of defrauding investors out of hundreds of millions in the wake of the COVID-19 pandemic.

The firm was looking to settle with the Par Funding receivership by providing $45 million from its insurer under the condition that further litigation on the matter would be barred from those seeking to sue Eckert Seamans for malpractice and failure to supervise its former partner. However, that settlement may be in danger after a recent U.S. Supreme Court ruling that blew up the massive bankruptcy deal negotiated by opioid manufacturer Purdue Pharma in Harrington v. Purdue Pharma.