O'Melveny & Myers offices. Photo: Diego M. Radzinschi/National Law Journal.O'Melveny Seeks Dismissal of Remaining $54M Legal Malpractice Suit
The law firm, after beating back a trustee's legal malpractice claims, is now seeking to dismiss allegations it fraudulently transferred money from a client just before its bankruptcy.
December 31, 2019 at 02:04 PM
3 minute read
After beating back legal malpractice claims, O'Melveny & Myers is now looking to dismiss the rest of a $54 million lawsuit brought by a bankruptcy trustee.
The law firm on Monday petitioned a California federal judge to dismiss the remaining claims of trustee Jeffrey Golden, who has alleged the firm fraudulently transferred millions of dollars out of client Aletheia Research and Management for legal fees just before it filed Chapter 7 liquidation papers.
In a 33-page motion for summary judgment, lawyers representing the Los Angeles-based law firm argued that Golden's bankruptcy-related fraudulent transfer claims against O'Melveny and two of its lawyers, Steven Olson and Jorge deNeve, should be dismissed in part because his legal malpractice claims were already rejected by U.S. District Judge Christina Snyder of the Central District of California.
Snyder is set to hear arguments over O'Melveny's summary judgment motion on March 30.
Snyder in November approved an arbitration award that absolved O'Melveny of claims that it bungled its representation of Aletheia Research and Management.
Neither the arbitration award nor Snyder's ruling touched the fraudulent transfer allegations and other bankruptcy-related claims filed by Golden, a partner at Weiland Golden Goodrich serving as Aletheia's Chapter 7 trustee.
Golden claimed O'Melveny and its lawyers were conflicted in their representation of both Aletheia and its principal founder and majority shareholder, Peter Eichler. Golden accused Eichler of looting his own company as Aletheia stared down a lawsuit from Proctor Investment Managers.
O'Melveny represented Aletheia for part of its fight with Proctor; it withdrew from representing Aletheia, and another firm took over in early 2012 after multiple attempts to settle the litigation.
Golden alleges that from 2009 to 2011, O'Melveny and its lawyers fraudulently transferred at least $9.7 million out of Aletheia for legal fees. Aletheia filed for bankruptcy in 2012.
In its motion for summary judgment, O'Melveny said Golden's fraudulent transfer claims must fail because an arbitrator found "there was no conflict of interest and no malpractice" on its part.
Golden also accused O'Melveny of using its "insider" influence with Aletheia to persuade Aletheia's insurance carrier to make two payments to O'Melveny totaling $38,000 in the fall of 2012. O'Melveny argued in its summary judgment motion that Golden cannot prove the law firm met the statutory or non-statutory definition of an insider at the time.
Golden is expected to respond to O'Melveny's motion by Feb. 3. His appeal of Snyder's approval of the arbitration award is pending before the U.S. Court of Appeals for the Ninth Circuit.
Snyder rejected Golden's arguments that arbitrator Gary Feess was biased because Feess allegedly 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.
O'Melveny's attorneys at Gibson Dunn and Golden's lawyers at the law firm Brutzkus Gubner did not immediately respond to requests for comment.
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O'Melveny Duels With Bankrupt Ex-Client in $54M Malpractice Fight
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