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Buffalo firm finds itself on the defense

BY JODI SOKOLOWSKI
BuffaloLaw Journal ©

A former client of Damon & Morey LLP is publicly airing complaints about the law firm. The charges can be found on a Web site, in e-mails, on a since-removed Niagara Falls Boulevard billboard and in flyers being passed out around town.

Daniel Elia alleges that the Buffalo-based law firm is guilty of legal malpractice because it did not disclose a conflict of interest when it represented both him, as a debtor, and one of his creditors in a Chapter 11 bankruptcy case. The former owner of the now-defunct D.A. Elia Construction Corp. in Niagara Falls also claims that the firm charged him “unreasonable” legal fees.

Elia has outlined his grievances on the Web site www.damon-moreymisconduct.com.

He claims that the firm disguised its conflict of interest by hiring two outside attorneys to represent a creditor, Construction Pace Setters Inc., and established the creditor’s file under a different name, Cozad. He says an original fee estimate of $250,000 ballooned to more than $900,000 in actual charges.

Damon & Morey’s managing partner, Peter Marlette, said the conflict stemmed from the actions of Mark Hopkins, a one-time Damon lawyer who has since been disbarred for reasons not related to the Elia case. The firm learned of the conflict at the same time the Elias did, he said, and U.S. Bankruptcy Court Judge Hon. Michael Kaplan concluded that it “didn’t affect anyone in the whole corporate bankruptcy.”

“They are looking for a way to relitigate this matter that’s been relitigated a million times,” Marlette said of Elia and his brother, attorney David Elia, also a principal in the family construction company. “They’re grasping at straws.”

The history

Damon & Morey represented D.A. Elia in its Chapter 11 case in 1994 after the construction company’s bonding for public-works projects with USF&G, a predecessor company to Travelers Property Casualty Corp., was canceled.

Elia says Damon & Morey partner William Savino encouraged Elia to file for bankruptcy because the company was also involved in costly litigation with the New York State Thruway Authority. In retrospect, Elia believes it was poor legal advice.

Inquiries to Savino were directed to Marlette, who said the firm successfully resolved the bankruptcy case. All creditors were paid in full, he said, and a surplus from the USF&G settlement went to the Elias.

“This massive bankruptcy was by all measures a great success,” Hon. Richard Arcara wrote in an appeal decision that upheld Damon & Morey’s claims for fees, dated June 19, 2006. Arcara wrote that the appeal was meritless and that Elia should not have continued to retain Damon & Morey if he felt the firm “committed pre-petition malpractice.”

Marlette said courts including the U.S. Bankruptcy Court for the Western District of New York and U.S. Court of Appeals for the Second Circuit have held that the firm’s legal actions and fees were appropriate.

“Every single court that has ever looked at this case has completely absolved Damon & Morey of any wrongdoing,” he said.

In a response posted on his Web site Thursday, Elia said, “The Bankruptcy Court was (the) only court that could have looked at the wrongdoing, but it ruled that malpractice claims are to be decided by the State Court.”

A war of words

On Oct. 16, the law firm obtained a court order directing the Erie County Sheriff to collect $342,000 in legal fees from Elia. That money has since been collected, but Marlette was not sure whether previous outstanding legal fees from the firm’s 14 years of representing Elia have been paid.

“They’re now trying to only cut out snippets of information (on their Web site) and take it out to the public and present a misleading story,” Marlette said, noting that the firm is considering legal recourse.

Elia said the firm didn’t “fully” disclose the conflict. He said Savino’s handling of the case ended a 40-year friendship between the two, and that he feels “betrayed.”

He’s seeking a jury trial in state Supreme Court to try the firm for legal malpractice, he said, because he doesn’t “want this to happen to anyone else.”

Marlette countered by saying the Elias have demonstrated “ridiculous, childish behavior.”

“It’s just another one of their claims, and it will be shot down and thrown out of court exactly the same way every other single claim they’ve filed against us has been,” he said. “As far as we’re concerned, the courts have said this is over.”

University at Buffalo Assistant Professor of Communication Michael Stefanone said the advent of the Internet makes it easier for citizens to participate in a worldwide conversation, but that still doesn’t mean that someone who airs grievances on the Web will be widely heard.

“It’s no different than somebody yelling on a street corner, (but) what are the chances that someone will find this Web site?” he asked.

Stefanone said crisis communication should be standard in the age of corporate corruption à la Enron and Adelphia.

“What I’ve seen is this really strong push for transparency at the corporate level,” he said.