When it comes to episodes of over-zealous lawyering, this story has to rank right up there with the best…or the worst…depending on how you look at it.
Attorney Gregg Trautmann is representing Legasus of North Carolina (East Fork Investment Group, LLC and High Grove Development, LLC) in their lawsuit against the lender Kennedy Funding, Inc. (KFI).
Trautmann has represented numerous plaintiffs in suits filed against KFI, and while working such a case two years ago, Trautmann got more than he bargained for from the lawyers defending KFI.
Trautmann’s adversaries came up with a brilliant strategy – exploring whether or not Kennedy Funding could purchase Trautmann’s personal mortgages. Henry Gottlieb reported on the incident in the July 6, 2007 edition of the New Jersey Law Journal:
When Hackensack, N.J.'s Cole, Schotz, Meisel, Forman & Leonard admitted that an attempt to meddle in an opposing lawyer's finances was a terrible mistake, it apologized to the target and offered a package of self-sanctions to appease the angry judge.
It withdrew from the case and three companion matters. It said the offending lawyers would be sent to ethics classes. It pledged to reimburse the targeted opponent for fees and expenses.
But the judge isn't ready to say the firm did enough.
During a hearing on Monday, U.S. District Judge Harold Ackerman reserved decision on sanctions. He said he would refer the matter to the state Office of Attorney Ethics. And without saying what struck him as criminal behavior, he said he would send the case to the U.S. Attorney's Office.
The firm had admitted days earlier that an associate -- with two partners' knowledge -- asked a bank representative whether a client, Kennedy Funding Inc. of Hackensack, could purchase the personal mortgages of the attorney suing Kennedy Funding in four federal fraud cases.
Such a purchase would have made Kennedy Funding, a commercial lender, the holder of the home and office mortgages of adversary Gregg Trautmann, who has a firm in Rockaway, N.J.
A bank lawyer alerted Trautmann, who complained to Ackerman, the judge in one of the Kennedy Funding cases, Royale Luau Resort v. Kennedy Funding Inc., Civil No. 07-1342. Trautmann represents borrowers who claim they were charged exorbitant and unwarranted fees.
Berated by Ackerman at a June 28 hearing for what appeared to be a "back alley" tactic, Cole Schotz admitted that the inquiry to the bank was improper and said the firm was dropping out of Kennedy Funding cases in which Trautmann was the adversary.
As you might expect, the folks at Kennedy Funding denied any prior knowledge of their counsel’s attempt to pressure Trautmann:
If the U.S. Attorney's Office does look into the matter, investigators will find that the company did no wrong, Kennedy Funding President Jeffrey Wolfer suggests.
"We knew nothing about it, and if anybody investigated they would find that out," Wolfer says. "We're very disappointed in what transpired and they are no longer representing us in these cases because of that."
"I'm not happy with what has gone on here and I am very bothered," he says. "This is not the kind of company we are."
For the entire story from the New Jersey Law Journal: