The Law Tribune previews an important or interesting case most weeks when the state Appellate Court or state Supreme Court is in session.
Case: Lawrence Adler v. Edward Rosenthal
Court: Connecticut Appellate Court
Date: Monday, Oct. 19
Time: 10 a.m.
Attorneys: William Wynne; Hugh Hughes
Summary: The state Appellate Court will review an award of damages in a breach of contract case involving two lawyers who agreed to start a law firm. One of the attorneys backed out of the agreement before the firm ever opened its doors, leading to litigation and a trial court damages award.
Background: Lawrence Adler and Edward Rosenthal met in July 2008 and soon discussed working together. Adler had just left a partner position at Danaher Lagnese and wanted to open his own practice with a junior level partner.
On July 29, 2008, Adler and Rosenthal went to the Secretary of the State’s office and formed Adler and Rosenthal LLC. The two lawyers agreed that the new firm would open Sept. 1, 2008.
Initially, Adler would hold an 80 percent interest in the firm and Rosenthal would hold 20 percent interest. Thereafter, profit shares would be based on the ratio of originated receipts each partner brought in during the prior year, with some adjustments.
Both attorneys agreed to bring all of their clients to the firm and those clients would continue to belong to the partner who brought them in. Only new business brought in after the firm’s launch would be shared by the partners.
Rosenthal expressed concerns and reticence about the partnership throughout the process, according to court documents.
Meanwhile Adler’s wife, who acted as his business manager, took steps to establish the new firm, including meeting with landlords and prospective staff. There were plans to hire four paralegals and one associate attorney. The partners negotiated with telephone, payroll and insurance companies and put an advertisement in the Yellow Pages. They also set up a computer system with email accounts in the new partnership name.
The office was to be in East Hartford. Rosenthal was moving from Avon. On Aug. 30, Adler called Rosenthal to see if he could assist with the move. He reportedly called three times and got no response. Finally, Rosenthal picked up the phone and, according to court documents, said to Adler: “I’ve been sitting in the dark thinking and I’ve just decided not to come.”
Rosenthal expressed concern with being able to handle his current caseload along with the new cases assigned to him by Adler.
Adler told Rosenthal he had breached their contract and later sued him in 2009. The claims were for breach of contract, detrimental reliance, negligent misrepresentation and intentional misrepresentation.
Adler hired an associate and proceeded with his own practice, called the Adler Law Group.
Rosenthal, who has his own law practice in West Hartford, represented himself in the breach of contract cliam and filed a motion to dismiss. The trial court heard oral arguments and the judge recommended that they attempt to settle their difference at mediation. The judge later denied the motion to dismiss. The case remained on hold for a period of years, and Rosenthal eventually defaulted. A hearing in damages took place in the fall of 2013 over a period of days. Both men testified at the hearing.
In a written ruling following the hearing in damages, Judge Robert Vacchelli awarded Adler $42,447. Rosenthal appealed.
“The enterprise never commenced. The parties never shared clients, and the plaintiff never lost any clients,” Rosenthal’s appellate attorney, Hugh Hughes of New Haven, wrote in court documents. “The plaintiff lost no good will. The plaintiff instead started his own law firm without the defendant, hired an associate, and made over $670,000 in profit for himself over the next 16 months.”
The trial judge had opined that a good faith effort would have resulted in at least a six-month partnership. Hughes disagrees with the logic used in coming to the decision for damages. “In the absence of a public policy against lawyers failing to join partnerships that they have promised to join, the court should not have awarded lost profits,” wrote Hughes. “An intent not to join a partnership cannot give rise to lost profits pursuant to a hypothetical in which the defendant actually joined. The trial court’s conclusion of a six-month partnership was pure speculation.”
Adler is being represented by William Wynne on the appeal. Wynne works at the Adler Law Group. Wynne argues that the trial judge applied the correct legal standards in coming to his damages award. “The trial court was presented with ample evidence and testimony to conclude that a partnership agreement was entered into by the parties,” wrote Wynne. “This agreement was memorialized by various emails, bills, records and other documents.”
Adler also filed a cross-appeal. Those claims include that the judge should have awarded $80,000 for the cost of an associate that had to be hired to replace Rosenthal when he backed out of the partnership. Vacchelli had denied that claim, pointing out the expense was actually a savings since he had intended to pay approximately $110,000 to Rosenthal.•