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Divorcing husband can't sue wife's lawyers for alleged overzealous representation, court says

A divorcing husband who claimed his wife’s law firm ran up its legal bills with excessive discovery and unreasonable legal claims won’t be able to pursue his lawsuit alleging fraud and breach of fiduciary duty.

The Vermont Supreme Court upheld dismissal of the suit in an Oct. 16 opinion (PDF), the Legal Profession Blog reports.

The husband, Kenneth Felis, alleged the litigation strategy of his wife’s law firm was to “build its fees and harass and injure” him by “pursuing unreasonable legal positions, demanding extensive and unnecessary discovery, promoting and claiming outrageous asset valuations, raising claims without proper foundation … and billing excessive time.”

The law firm, Downs Rachlin Martin of Burlington, Vermont, had billed $800,000 in legal fees in a contentious, multi-year divorce involving a marital estate worth up to $15 million, though the family court awarded a substantially lower sum from the marital estate, according to the opinion. Felis alleged the law firm required his wife to agree to use divorce proceeds to make up the difference. The agreement, he contended, demonstrated that the law firm had an improper motive to engage in protracted and vexatious litigation to build fees that would be paid through the marital estate.

The supreme court said Felis failed to establish two required elements of a fraud claim. One was the requirement that the alleged fraud not be open to the defrauded party. Felis’ allegation that “the red fee-building flag went up early” in the case showed he was aware of discovery practices he targeted in his suit, the court said.

Felis also failed to establish that he acted in reliance on a misrepresentation of material fact. Felis had argued his reliance could be inferred from participation in the legal process. But that wasn’t alleged in his complaint, the court said. Even if it had been included, “we would have difficulty finding it consistent with plaintiff’s description of defendants’ actions as outrageous, harassing, exorbitant, unnecessary, unreasonable, overzealous, false and egregious,” the state supreme court said.

Felis’ breach-of-fiduciary-duty claim failed because a lawyer owes no duty to an adverse party, the court said. Felis argued that the law firm owed a duty to the marital estate, but the argument had no merit, the court said.

Jennifer Colin of Stackpole & French in Stowe, Vermont, represented Felis in the appeal. In an email to the ABA Journal, she said Downs Rachlin Martin had sought more than $1 million in fees and costs, a “shocking” amount.

The suit, she said, “brought important issues to the forefront of our legal community, including how law firm practices and policies that result in exorbitant billing impact both parties to divorces, deplete resources from marital estates, and compromise the integrity of the judicial process in this area of family law, critical to so many. While we are disappointed by the court’s decision, we believe the case brought light to a serious problem facing litigants, attorneys, and courts.”

Downs Rachlin Martin managing partner Paul Ode Jr. also commented on the decision. “We applaud the supreme court’s decision to affirm the trial court’s dismissal of Mr. Felis’ meritless claims against our firm,” he said in an email to the ABA Journal. “As we continue to represent Mr. Felis’ ex-wife in his third supreme court appeal of trial court orders in the underlying divorce proceedings, we cannot comment further on this decision at this time.”