Breach of Fiduciary Duty; Conflicts of Interest; Legal Malpractice
Lee H. Schlesinger vs. The Home Insurance Company, et. al.
Civil District Court for the Parish of Orleans, State of Louisiana; Docket No 91-13444
Counsel for Plaintiff: DeRussy, Bezou & Matthews; Henry L. Klein
Expert for Plaintiff: Marc S. Margulis, C.F.A., A.S.A., M.B.A
Counsel for Defendants: Hulse, Nelson & Wanek
Expert for Defendants: Charles E. Allen III, C.P.A.
Home, an insurer, issued a professional liability policy in favor of the law firm of Shushan, Meyer, Jackson, McPherson & Herzog. The Shushan firm represented petitioner while simultaneously representing Sidney Lassen and Sizeler Properties, Inc. (SPI). Petitioner and his family owned numerous properties in the New Orleans CBD which were heavily leveraged.
In 1989, Mitchell Herzog, a partner in the Shushan firm and petitioners personal attorney, brought to petitioner and petitioner’s family the prospect of a needed capital infusion by Sidney Lassen and SPI referred to as the Asset Deal. As part of the Asset Deal, Lassen told the family that he had to control the management of any property in which SPI makes an investment. The suggestion was to merge Petitioners property management firm, WMC, with SPI for reasonable economic consideration subject to the Asset Deal. Said merger was executed without consideration in advance of the pending Asset Deal in order to give Lassen standing to negotiate a loan workout with the Equitable Assurance Company on behalf of the family. The firm, through Herzog, assured petitioner that the merger would be unwound in the event that the Asset Deal failed to materialize. On September 9, 1990, Lassen and the family agreed that the Asset Deal could not be consummated, whereupon Petitioner requested that Lassen unwind the merger. Lassen refused. The merger was upheld by a Federal Court.
Because of the conflicts of interest, divided loyalties, errors and omissions of the Shushan firm, petitioner sustained the loss of his company which Mr. Margulis testified had a value of $5.5 million.
The jury found for the Plaintiff on all counts and awarded Plaintiff the sum of $5.5 million.