Courtesy photoTrustee Looks to Revive $54M O'Melveny Malpractice Case
The case hinges partly on claims that an arbitrator was biased after his son failed to score summer associate positions at O'Melveny and Gibson Dunn.
November 22, 2019 at 12:49 PM
3 minute read
The Chapter 7 trustee for an ex-client of O'Melveny & Myers is turning to the U.S. Court of Appeals for the Ninth Circuit in hopes of resuscitating a $54 million legal malpractice lawsuit against the law firm.
Jeffrey Golden, a partner at Weiland Golden Goodrich who is serving as the Chapter 7 trustee of Aletheia Research and Management, filed a notice of appeal in Los Angeles federal court Thursday, 20 days after U.S. District Judge Christina Snyder of the Central District of California approved an arbitration award that absolved O'Melveny of claims that it bungled its representation of its bankrupt client.
Snyder on Nov. 1 rejected Golden's argument that the arbitrator was biased because he blamed Golden for his son's failure to secure summer associate positions at both O'Melveny and Gibson, Dunn & Crutcher, the firm representing O'Melveny and its lawyers in the malpractice dispute.
Even if they had chosen to hire arbitrator Gary Feess' son, that would not "have necessarily required the arbitrator's recusal pursuant to either of the two federal statutes governing recusal of judicial officers," Snyder wrote, pointing to prior cases where judges and arbitrators were not forced to recuse themselves simply because their children were employed by a law firm that was involved in the case.
As the Chapter 7 trustee, Golden sued O'Melveny and its two attorneys—Steven Olsen and Jorge deNeve—in November 2014, alleging that they botched their representation of Aletheia in its legal battle with Proctor Investment Managers, another investment firm, that began in late 2009. He alleged both legal malpractice and bankruptcy-related claims against O'Melveny.
The legal battle between Aletheia and Proctor was rooted in a business deal they struck in 2006 in which the latter would market and sell the former's investment products in return for an equity stake. But relations between the two firms collapsed a year later.
By early 2012, O'Melveny withdrew from representing Aletheia after multiple attempts to settle with Proctor, and another firm took over. Aletheia filed for bankruptcy in 2012. Shortly thereafter, Aletheia settled the lawsuit with Proctor by giving up its position and agreeing to give Proctor almost $21.8 million.
In his arbitration award, Feess found that O'Melveny, Olson and deNeve conducted "themselves properly and in compliance with their ethical obligations throughout their representation of Aletheia" and its founder.
Feess' arbitrator award and Snyder's ruling dealt only with the legal malpractice claims. O'Melveny previously expressed confidence that the other three bankruptcy-related claims might be dismissed if Snyder upholds Feess' award.
Attorneys for O'Melveny and Golden did not immediately respond to requests for comment.
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O'Melveny Fends Off Bankruptcy Trustee's $54M Malpractice Claim
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