By edhat staff

Two former clients of attorney Michael Avenatti filed a lawsuit Monday against him, his law firms, and lawyers associated with him in Santa Barbara Superior Court.

The lawsuit alleges professional negligence and breach of fiduciary duty over the mishandling of a settlement, misuse of settlement funds, and conflicts of interest. It was filed by Cappello & Noël LLP on behalf of William Parrish and Timothy Fitzgibbons.

Michael Avenatti (Photo: wikimedia )

In 2006, Parrish and Fitzgibbons (plaintiffs) left their employment at the Goleta-based FLIR Systems to start a new business venture and were subsequently sued by FLIR. The former employees won the trial against FLIR and retained three law firms, including Eagan Avenatti LLP and Stoll, Nussbaum & Polakov (SNP) to sue their former employer for malicious prosecution.

The case settled and the parties and lawyers all agreed that the settlement funds would be wired directly into the Eagan Avenatti (EA) trust account. Robert Stoll of SNP objected to the deposit of settlement funds, including the attorney fee portion, into EA's trust account, and EA did not advise the plaintiffs that they faced potential legal exposure from Stoll and SNP. The complaint alleges that without the plaintiff's knowledge, Avenatti and EA transferred the settlement funds from the EA trust account into the EA operating account, refused to pay Stoll any attorney fees, and, instead, spent the money.

In a very layered and complicated case, the plaintiffs were then represented by Avenatti and his firm over the mishandling of the settlement after Stoll sued to collect his fees. The lawsuit alleges that Avenatti and his firm failed to give competent advice, failed to disclose numerous conflicts of interest, failed to keep the clients informed of significant developments, failed to account for the missing funds, and failed to return the plaintiffs' complete files after being terminated in late summer 2018.

The plaintiffs are seeking compensatory and punitive damages and attorneys' fees.

The full complaint is available below: