Attorneys at Kaye Scholer were berated by a bankruptcy judge for including potentially defamatory claims in a pleading without sufficient basis for doing so, according to the Wall Street Journal.The firm represents Bank of America in a bitter dispute over the blowup of one of the worst condo deals in Miami.
In the pleading, the firm (although technically, it’s the Bank that’s the actual party) claimed the debtor developer had leased nine apartments to convicted felons, including a sexual predator.
Turns out it was only two, and neither was a sex offender.
Plenty of bickering, after the jump.
It seems the judge’s real problem was that the firm was either grandstanding or lacked common sense.
“If you truly believed there were dangerous individuals living in that building,” the judge wrote of the Kaye Scholer claims, “then that is something you should have brought to the debtor’s attention immediately, unless it’s more important to score a litigation point than it is to protect the safety of the people living in your collateral.”
Faced with the criticism, the firm stepped up and volunteered to pay the debtor’s counsel’s expenses – although that was probably a foregone conclusion anyway.
Bank of America’s attorneys apologized in open court for not conferring with Cabi first before including the accusations in their pleadings. “I regret and apologize on my behalf and on behalf of the bank for the mistakes,” said H. Peter Haveles Jr., a Kaye Scholer attorney.
Haveles (Harvard AB ’76, BU JD ’80) is Co-Chair of the firm’s Complex Commercial Litigation Department and Chair of the Financial Services Litigation group.
Despite the apology, the issue of fault is still simmering.
Outside the courtroom, however, attorneys for both sides continue to argue over the cause of the mistake. A Kaye Scholer attorney blamed Cabi for the false information. “The motion contained data that the bank believed to be true based on the records that the debtor produced from its own lease files for review by the bank’s advisors,” said Ana M. Alfonso, of Kaye Scholer in an email message. “Unfortunately, some of the information contained in the debtor’s lease files was not totally accurate.”
Alfonso (Vanderbilt BS ’94, NYU JD ’97) doesn’t seem to want to let it go. Nor does the debtor’s counsel.
“That’s completely wrong,” said Cabi attorney Andrew Glenn, of Kasowitz, Benson & Torres, in response. “And had they picked up the phone and asked us about it we could have confirmed that in 15 minutes for them.”
So Kaye Scholer is picking up part of the Kasowitz bill, but will they pass it through to B of A? Will they even bill B of A for the time spent arguing about the pleading defects?
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