Cozen O'Connor is still on the hook for the actions of one of its former lawyers while he was employed at the firm, but a federal judge has ruled that the firm can't be held liable for the lawyer's conduct after he moved to Blank Rome.

In an opinion filed Tuesday afternoon, U.S. District Senior Judge Jan DuBois of the Eastern District of Pennsylvania granted Cozen O'Connor's motion for summary judgment with respect to disbarred lawyer Charles Naselsky's actions while he was not employed at Cozen O'Connor. The judge otherwise denied summary judgment.

“This was a big win,” said William Harvey of Klehr Harrison Harvey Branzburg, who represents Cozen O'Connor. “The judge rejected the plaintiff's theory that this was a continuing conspiracy and that Cozen was responsible for actions and damages that the plaintiff suffered after Naselsky left Cozen.”

The decision stems from a case in which plaintiffs Kilbride Investments Ltd., Busystore Ltd. and Bergfeld Co. Ltd. accused Cozen O'Connor, Blank Rome and Cushman & Wakefield of fraudulently misrepresenting a development project in Philadelphia, leading the plaintiffs to invest more than $27 million.

The investors claimed Naselsky, a disbarred lawyer who once worked at both Cozen O'Connor and Blank Rome, conspired with Philadelphia real estate developers to get the investors to put millions of dollars into a project that would be barred by zoning restrictions.

The investors alleged that the law firms were part of a scheme orchestrated by Eliyahu Weinstein, who was convicted of fraud and sentenced to 22 years in prison for operating a massive Ponzi scheme that stole money from members of the Orthodox Jewish community under the guise of investing in Philadelphia real estate projects.

They alleged that Cushman & Wakefield fraudulently appraised a property in Philadelphia called River City that stretches from John F. Kennedy Boulevard to the Schuylkill River. Cushman & Wakefield denied the allegations and claimed Weinstein was the source of the investors' misfortune.

The case was originally filed in New York federal court, but was moved to the U.S. District Court for the Eastern District of Pennsylvania in 2013 at Cozen O'Connor and Blank Rome's request. Naselsky is not a defendant in the suit. He was sentenced to 70 months in prison for an unrelated tax evasion scheme.

With regard to the first count, conspiracy, DuBois said Cozen O'Connor can only be held liable for Naselsky's actions during the time he was employed at the firm, which ended in July 2006, when he moved to Blank Rome. And, the opinion said, Cozen O'Connor cannot be held liable for claims that Naselsky provided Cushman & Wakefield a false contract price of $50 million.

However, the plaintiffs did present enough evidence to create questions of material fact over whether there was underlying fraud, and whether others were involved in a conspiracy while Naselsky worked at Cozen O'Connor.

With regard to the second count, aiding and abetting fraud, DuBois said, “Based on this evidence, a jury could conclude that Naselsky, while he was employed at Cozen, provided substantial assistance to [River City promoter Ravi] Chawla in committing the fraud.” [Chawla was convicted in 2009 in an unrelated corruption case, but his conviction was vacated by a federal appeals court in 2012. Prosecutors then withdrew the charges in 2015, stating they would not be able to prove their case.]

Cozen O'Connor and Blank Rome both previously filed motions to dismiss, which were addressed in an October ruling. While some claims against the law firms survived, plaintiffs Berish Berger, Ardenlink Ltd. and Towerstates Ltd. were terminated from the case.

Mary Kay Brown of Brown McGarry Nimeroff represents the plaintiffs, and said her clients are happy with the decision and looking forward to trial.

Jayne Risk of DLA Piper in Philadelphia represents Cushman & Wakefield and could not be reached for comment. John Harkins Jr. of Harkins Cunningham in Philadelphia represents Blank Rome and declined to comment.