Wednesday, August 31, 2011

Firm wins unpaid fees lawsuit: Jury awards Warner Mayoue more than $800K after client refused to pay in multimillion-dollar divorce settlement. 

By Greg Land, Staff Reporter

A jury took less than two hours to clear family law firm Warner, Mayoue, Bates & McGough and partner John C. Mayoue of allegations of intentionally breaching their financial duty to a client, allowing her to run up more than $900,000 in excessive legal fees and expenses and coercing her into signing a promissory note her current attorney described as "fraudulent." Instead, the panel awarded the firm all of the damages it sought: more than $800,000 the client refused to pay after reaching a multimillion-dollar divorce settlement in 2008.

"We are enormously gratified that a jury chose to award our firm the sum of $816,966 in the case," Warner Mayoue said in a statement after the verdict. "At its core, this was simply a case of a person who requested services, received those services at a very high quality level, and then refused to meet her payment obligations."

   Wilmer "Buddy" Parker III, stepping out of his customary role as a criminal defense attorney to represent Virginia Hammond after her previous attorney bowed out, said an appeal is unlikely. "The interest costs would just continue to run," said the Maloy Jenkins Parker partner. "I don't think I have any basis to request an appeal. The court gave her a fair trial; the jury reached its verdict, and I respect that."

   Hammond, who according to trial testimony suffers from a number of health problems, as well as post traumatic stress disorder, was not present for the verdict. Accompanied throughout the trial by a Fulton County disability coordinator, she was excused from the courtroom when the jury announced that it had a reached a decision.

   The case was rooted in a bitter divorce between Hammond and her physician husband, Dr. Ishtiaq Khan. The couple, who married in 1989, had become wealthy as the result of a string of physical therapy clinics Khan established around the metro Atlanta area in the ensuing years.

   According to court documents and Hammond's testimony, she and Khan poured millions of dollars into investments with real estate mogul M. Shi Shailendra, who is currently involved with several lawsuits filed by and against former business partners including Khan and Hammond resulting from failed investment and development projects in Georgia and Florida.

   Khan's in-laws, Muslims from India, never approved of his marriage. In 2004, Hammond underwent endocrine surgery and Khan's mother died, and the marriage began to sour.

     Hammond filed for divorce in June 2004, but she dismissed the suit a month later.

   For more than a year the couple wrangled over how to divide their properties, and in 2006    Khan filed his own divorce suit.

   Mayoue said he initially approached Khan's lawyer, McKenna Long & Aldridge partner Deborah S. Ebel, and suggested a 50-50 split of money, property and business assets estimated to be worth $50 million to $60 million. "The reaction was not favorable," said Mayoue, characterizing Khan's posture as "very, very aggressive" and describing a flood of discovery requests and subpoenas for depositions.

   Hammond responded in kind, firing off letters, faxes and phone calls to her attorneys, demanding two strategy sessions a week and depositions from an array of individuals who had little or nothing to do with her case. In response to her husband's aggressive tactics,    Hammond said, "I want you to be three times as aggressive.' ... She sent in a fax wanting us to harass her husband," said Mayoue. According to bills cited by Parker, there were on occasion as many as 10 Warner Mayoue lawyers and eight support staffers working on Hammond's case.

   Hammond testified that she repeatedly pleaded with Mayoue to take steps to prevent Ebel's "almost inhumane" tactics, demanding that he file a bar complaint against the lawyer.

Mayoue refused, and Hammond said that it was only after the eventual settlement of the divorce that she learned Mayoue had represented Ebel in her own divorce 14 years earlier.    That relationship, she said, led her to believe he had not been willing to confront his former client forcefully.

   Mayoue stoutly disagreed, saying that he had not only told his client beforehand about his previous representation of Ebel, but that Hammond was "very, very proud" that her lawyer had represented her husband's lawyer.

Ebel, who expressed disbelief when told of Hammond's allegations, agreed with Mayoue. "If anything, counsel fought tooth and nail against what Dr. Khan felt was a never ending onslaught of daily if not hourly correspondence, discovery which we felt was abusive and what we considered to be most ill-advised motions."

   The cost of Hammond's representation soared quickly. Between January 2007, when she hired Warner Mayoue, and April of that year, she paid the firm almost $96,000.

   Hammond was running out of money and in November 2007, the firm agreed to amend her contract to allow her to pay in full within 10 days of a settlement of trial verdict. But as the firm continued to lay out money and burn hours, said Mayoue, he became concerned about the amount of money Hammond owed. In February 2008, when Hammond had run up almost $380,000 more, she agreed to sign a $500,000 promissory note "for value received" and payable upon the termination of the firm's representation.

   On May 30, 2008, Khan and Hammond signed a 34-page divorce decree splitting signed a 34-page divorce decree splitting a blank chart of "property listings," with a handwritten and initialed notation that "Shi Shailendra shall complete the table to the left as soon as possible."

   Upon the case's conclusion, Warner Mayoue presented Hammond with a bill for $553,723, which she refused to pay.

   In December 2008, Warner Mayoue filed a breach of contract suit against Hammond in Fulton County Superior Court, and in 2009 Hammond, representing herself, filed an answer and counterclaim joining Mayoue as a third-party defendant, alleging breach of fiduciary duty, violation of Georgia's Fair Debt Collection Practices Act and racketeering.

   A mediation failed, said Spears and Robl partner Robert E. Spears Jr., who represented both the firm and Mayoue, and trial commenced Aug. 23 before Superior Court Judge Kimberly M. Esmond Adams.

   During opening arguments, Spears described his clients' efforts to satisfy Hammond's incessant demands for legal action from a client "who wanted top-quality legal services, all the time."

   Parker countered that the case should have been a simple matter of dividing marital assets. "The issue was to define the size of the pie, then decide how it's going to be divided," Parker said. "It's a complex accounting issue, but a simple case" involving "no children, no alimony."

   Parker's case accused Mayoue and his firm of intentionally breaching their fiduciary duty by having Hammond sign the promissory note for more than she owed at the time, but he also accused them of negligently allowing Hammond to sign the settlement agreement and of conspiring with Khan's counsel to run up the fees.

   "We contend it was a tacit agreement between these two law firms to generate a lot of money from two rich clients," he said. Ebel, who was not called to testify, was outraged at the suggestion of collusion. "I have just never heard a more patently false, ridiculous, outrageous allegation," said Ebel, "which is quite ironic as well, since I have personally never experienced a more time-consuming, draining, all-consuming battle between counsel as directed by their respective clients, as in the Khan divorce litigation."

   Several members of the firm testified as to Hammond's extensive demands for service; an expert witness, former University of Georgia School of Law professor Kirby L. Turnage Jr., testified that his review of Hammond's billings revealed that, if anything, Mayoue had underbilled for his services.

   Parker relied on Hammond's testimony as to her recollections of the tendentiousness of the divorce case and her own fear that Mayoue would drop her case altogether if she didn't sign the promissory note.

  In closing, Parker re-emphasized the number of lawyers and staff members Mayoue brought in to work on the case, putting up the names of the 10 attorneys assigned to it.

"Mr. Mayoue knew that this case was not going to settle, he knew that it was going to be raw, hard litigation, and he chose to staff the case with this many people," he said. "The result is that there ended up being excessive fees."

   Not so, countered Spears. "If this is a case of excessive billing, it's the worst one ever," he said. "We've been in the court system for nearly three years ... the idea that we had to take something unsavory and turn it into chicken salad makes no sense."

   "This was a hard-fought battle to split up a $60 million family empire," he said.

   The 13-member panel, nine men and four women, received the case Friday morning and shortly after noon agreed with Spears, awarding Mayoue and his firm $816,966 in damages and attorney fees. Parker said he only spoke to the jury to thank them for their services, but Spears said he spoke briefly to some panelists, and their consensus seemed to be that Hammond's attacks on Mayoue and another firm partner, Theodore S. Eittreim, did not sit well.

   "The jury foreman told me that, when I had [Hammond] on cross, she made comments about the lawyers and about me personally they thought her demeanor on the stand eliminated any credibility she had."

   Spears also said he had been worried about defending a law firm accused of seeking excessive fees. "There's a concern, when you go into court, because jurors are proud to serve, but they also have other things on their mind," he said. "I had to humanize a law firm."

Ebel expressed satisfaction that the jury "made short shrift of these allegations by [Hammond] and her counsel"; even so, she wrote, "I think an apology is in order from Mr. Parker."

   The case is Warner, Mayoue, Bates & McGough v. Hammond, No. 2008CV161416.

   Reprinted with permission from the August 2011  edition of the Fulton County Daily Report© 2011 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.