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Duane Morris Must Face California Legal Malpractice Lawsuit

July 25, 2022, 11:17 PM

Duane Morris LLP must face a legal malpractice lawsuit brought by a freight forwarding company accusing the law firm of wrongly backing the corporate client’s founder in embezzlement allegations, a California appeals court ruled on Monday.

Intelligent SCM LLC sued Duane Morris and partner, Russell Roten, alleging they breached their fiduciary and loyalty duties in connection with litigation accusing ISCM’s founder, Andrew Scott, of embezzling company funds. Scott personally retained Roten, who was previously hired as ISCM’s general counsel, in response to the allegations of financial improprieties.

ISCM also sued Scott for allegedly aiding and abetting the law firm’s actions in breaching its duties.

Duane Morris and Roten sought to strike the complaint, arguing that their alleged misconduct was protected by the anti-SLAPP statute because each cause of action was based on their own conduct in defense of themselves in the malpractice suit. The Superior Court of Los Angeles County denied the motion.

The lower court was right to deny the motion as to the Duane Morris defendants, because they failed to show that the causes of action alleged against them arise out of protected activity, according to the appeals court. While the defendants were able to show the allegations overlapped with protected activity, such as ghost writing legal filings, they didn’t show the complaint resulted from that alleged conduct.

However, the superior court was wrong to find that the claim against Scott should meet the same fate, according to the California Court of Appeal, Second District. The aiding and abetting cause of action against Scott is based on communicative conduct made in connection with pending litigation, and that’s protected activity, according to the appeals court.

The appeals court affirmed the order as to the Duane Morris defendants, and reversed as to Scott. The case was remanded for further proceedings.

Justice Lamar W. Baker wrote the opinion in which Justice Laurence D. Rubin and Justice Dorothy C. Kim joined.

Duane Morris is represented by Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow PC. Scott is represented by Foley, Bezek, Behle & Curtis LLP. ISCM is represented by Howard M. Zelener.

The case is Intelligent SCM LLC vs. Roten, Cal. Ct. App., 2d Dist., No., 7/25/22.

To contact the reporter on this story: David McAfee in Los Angeles at dmcAfee@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Carmen Castro-Pagán at ccastro-pagan@bloomberglaw.com