2.2 Civil Conspiracy and Other Cases
The creditor in Pak filed suit against the attorney alleging conspiracy for her involvement in the fraudulent transfers. Because of the family relationship between the lawyer and clients, and the deep involvement by the attorney, it was reasonably clear that the lawyer crossed the line from permissible advocacy to active participant.
The lawyer acting as active participant was the basis of the complaint in Morganroth& Morganroth v. Norris, McLaughlin & Marcus P.C., 331 F.3d 406 (3d Cir. 2003). The Plaintiff, Morganroth & Morganroth, was a Michigan law firm that sought to collect a judgment it had against its former client, John DeLorean. The Defendant was a New Jersey law firm representing Mr. DeLorean. The complaint alleged that the New Jersey firm actively, knowingly and intentionally participated in Mr. DeLorean’s unlawful efforts to shield his farm from execution. According to the complaint, the New Jersey lawyers prepared a memorandum of lease after the Michigan judgment was rendered purporting to set out the terms of a pre-existing life lease on the property running in favor of Mr. DeLorean’s children. These allegations were sufficient to return the case to the federal district court for a trial on civil conspiracy and aiding and abetting a fraud on creditors. See Miller Avenue Professional & Promotional Services, Inc. v. Koss, 2005 WL 2787455 (Cal. App. 2005) (Unreported) (“An attorney may not, with impunity, engage in intentionally tortious conduct towards third persons, or conspire with a client to defraud or injure a third person.”). Maryland recognizes a civil cause of action for aiding and abetting as being culpable as principals. Alleco, Inc. v. Harry & Jeanette Weinberg Foundation, Inc., 340 Md. 176, 199, 665 A.2d 1038, 1049 (1995).
In Florida, no cause of action exists for aiding and abetting a fraudulent transfer. Freeman v. First Union Bank, 865 So. 2d 1272 (Fla. 2004). Essentially, this holding is based on the view that the Uniform Fraudulent Transfer Act “is not a source of liability; rather it only allows creditors to set aside fraudulent transfers made to transferees under a theory of cancellation.” [This is how the issue was framed in the federal suit which referred the issue to the Florida Supreme Court. See Freeman, 329 F.3d 1231 (11th Cir. 2003).] See also Nastro v. D’Onofrio, 263 F. Supp. 2d 446, 459 (D. Conn. 2003) (The lawyer creating the offshore trust is not liable “in light of the strong public policy in the State of Connecticut against imposing liability upon a lawyer to third parties for the performance of legal services to a client.”)
The Freeman case, of course, addressed the narrow issue of whether the UFTA creates tort liability or whether it is merely a remedial statute. Not addressed are the other theories of liability that may involve others, beyond that of the debtor – including liability of the lawyer. See generally Siegel, Attorney Liability: Is This the New Twilight Zone?, 27 U. Mem. L. Rev. 13 (1996); Richmond, Lamberth and LeLawalla, Lawyer Liability and the Vortex of Deepening Insolvency, 51 St. Louis U. L.J. 127 (2006); Schiltz, Civil Liability for Aiding and Abetting: Should Lawyers be ‘Privileged’ to Assist Their Clients’ Wrongdoing?, 29 Pace L. Rev. 75 (2008).
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