In response to Buffalo
News Article:
Brothers attack law firm as corrupt
Charges ‘ridiculous, childish,’ says Damon & Morey
By Jonathan Epstein
Updated: 12/06/07 6:53 AM
A disgruntled former (1) client of one of Buffalo’s
largest law firms has gone public with a vicious spat over $342,000
in legal fees, attacking the firm’s credibility in the
community using a Web site, a billboard, fliers at area law schools
and e-mails to rival firms.
The battle between the principals of D.A. Elia Construction
Co. in Niagara Falls and Damon & Morey LLP represents a highly
unusual and very visible split between lawyer and client over
the cost of services.
The law firm, which worked for D.A. Elia for 14 years, represented
the company in Chapter 11 federal bankruptcy proceedings from
1994 to 2004 (2) , in a $7 million case that
at the time was one of the biggest pending in the Buffalo court.
The fight also illustrates the ease with which unhappy customers
can now use technology to damage reputations, and the need for
a business to fight back quickly when such attacks escalate — in
this case, targeting peers and potential recruits.(3)
“We are not going to just sit back and take this from
them,” said Peter S. Marlette, managing partner of Damon & Morey,
which unleashed its response on Wednesday. “We have built
a business, and they’re trying to hit us on our character
and integrity, which we have built our business on. I owe it
to the attorneys in this office.”
Damon is exploring legal options, but has not made any decisions,
Marlette said. (4)
“There’s nothing more I’d like than to see
their ridiculous, childish behavior end,” he said. “We’re
examining everything now, but our primary goal is to put a stop
to this nonsense.” (5)
David and Daniel Elia, brothers who owned the now-defunct construction
firm, are accusing Buffalo’s No. 3 law firm of “corruption
that is undermining the very integrity of our legal system,” according
to a Web site — www.damon-moreymisconduct.com — the
Elias created. The brothers could not be reached for comment
Wednesday.
The Elias accuse the firm of dishonesty, fraud, deceit and misrepresentation.
The brothers claim to have evidence that Damon & Morey hid
a secret contingency fee agreement, lied to several courts about
a conflict-of-interest by several attorneys, and secretly worked
against its own client in bankruptcy proceedings by also representing
one of its creditors.
The Web site said the law firm ignored the legal Code of Professional
Responsibility and its retainer agreement with D.A. Elia. And
it said the firm told D.A. Elia and the court it would handle
the case for about $225,000, and then “surprised” Elia
with $904,000 in added costs later.
“Our mission is to inform the public of Damon & Morey’s
deceptive, unethical and illegal business practices,” the
site said. “We can prove that Damon and Morey has placed
its interests before that of its clients for its own unjust enrichment.”
This is the second Web site the brothers have put up, after
the first one was taken down by the host server when Damon pointed
out that it had copyrighted material on it. In addition, though,
the duo put up a billboard on Niagara Falls Boulevard that has
since been removed by Lamar Outdoor at Damon’s request.(6) They have also been handing out fliers at the University at Buffalo
Law School and e-mailed area law firms in a bid to damage Damon’s
reputation.
But Damon dismisses the Elias’ arguments, noting its $342,518.49
legal fee was upheld by three federal courts in eight decisions.
That fee, which was on top of smaller amounts collected earlier,
was based on “thousands and thousands” of hours of
legal work over 10 years, Marlette said.
“These guys have sued us and filed grievances and taken
it to court after court after court and never won a decision,” he
said. “The courts looked at everything and found these
allegations were totally meritless.” (7)
In fact, the judges praised Damon & Morey’s representation
of D.A. Elia, which resulted in a rare outcome of all creditors
being paid in full. There was even money left over for the brothers,
after Damon won a $7 million settlement with D.A. Elia’s
bonding company over wrongful termination of coverage. (8)
The law firm also pointed out, as did the courts, that D.A.
Elia first retained the lawyers in 1988 for construction litigation
cases and continued using them until 2004 — even though
the brothers now say Damon & Morey was being dishonest and
corrupt during that time.(9)
The Web site even includes a 1994 court document identifying
Damon as D.A. Elia’s general counsel, praising the firm’s
experience, and crediting it with winning $300,000 for the construction
firm.
“It’s a crock of baloney. Can I be any more honest
than that?” said U.S. Bankruptcy Court Judge Michael J.
Kaplan, according to a transcript of a hearing on Nov. 3, 2004,
in which Kaplan rejected Elia’s claims and approved the
fees. (10)
Marlette cites the Elias’ past behavior. The brothers
had previously pulled out of mediation efforts without offering
any settlement, and were now seeking a return of any money paid
earlier to Damon. (11) They’ve had similar disputes with
at least eight other law firms. (12)
They quietly filed a motion to close the bankruptcy case without
telling Damon, claiming that there were no outstanding fees to
be paid, but the judge refused. (13)
And they still refused to obey the court’s directive, until
the county sheriff seized the money under court order. (14)
Marlette confirmed that a conflict-of-interest had arisen when
one of its attorneys in the late 1990s started doing some work
for a creditor of Elia. The file was opened up under the wrong
name, so the firm’s internal “conflict system” didn’t
catch it, he said. However, the attorneys working with Elia did,
so the work stopped. (15)
Also, the Elias’ Web site refers to findings by the U.S.
Bankruptcy Trustee that questioned Damon’s billing practices
and “billing judgment,” citing “fees that cannot
be determined reasonable and necessary.” (16)
However, all of those citations come from the trustee’s
objections to interim fee applications filed in 1994 and 1995.
(17)
jepstein@buffnews.com |
