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The Florida lawyer who last year won financier Ron Perelman a $1.6 billion verdict in a suit against investment bank Morgan Stanley & Co. has set his sights on law firm Proskauer Rose. John “Jack” Scarola of West Palm Beach’s Searcy Denney Scarola Barnhart & Shipley is representing two former Proskauer clients in two separate suits against the 715-lawyer New York firm. Both plaintiffs claim Proskauer breached its fiduciary duty to them, giving faulty advice that wound up costing them millions. One of the suits involves an investor who claims he was sucked into a disastrous investment by professionals eager for more fees, a situation Scarola said broadly paralleled that of Perelman. “[Proskauer] clearly ignored warning signs that things were not going well with the transaction,” Scarola said Monday. But Robert Kafin, a Proskauer partner and the firm’s general counsel, said his firm had acted appropriately in the matters at issue in the suits, both of which were filed in Palm Beach County Circuit Court. “We didn’t do anything wrong and we’re going to defend ourselves,” he said. The firm is participating in its own defense but is also being represented by James W. Beasley of West Palm Beach’s Beasley Hauser Kramer & Leonard. In the earlier of the two suits, filed at the end of last year, investor M. Lee Pearce claims his longtime lawyer, Proskauer partner Stuart Rosow, also named individually as a defendant, deceived him into making a disastrous investment. Pearce, who is asking for $19.5 million in damages, stated in his complaint that Rosow had been his lawyer since the 1970s and he moved his business to Proskauer after Rosow joined that firm from New York’s Kaye Scholer in 1998. Pearce claims he paid Proskauer millions in fees between 1998 and 2004. According to the complaint, Rosow approached Pearce in 1998 about investing in three health maintenance organizations that were consolidating into a larger health care company. Pearce retained Proskauer to evaluate the investment and perform due diligence for the proposed transaction. He claims he also asked that any investment be structured to protect him from any personal liability and to cast him as a minority investor. Pearce, who initially invested $5 million in the new HMO group, AmCareco, claims Rosow withheld information about the constituent HMOs’ poor financial performance and dissuaded him from pulling out of the transaction on more than one occasion. Despite Rosow’s alleged assurances about the involvement of other substantial investors, Pearce says his $5 million, later buttressed by a $1.5 million loan, made him the majority investor, with only $3.5 million in capital coming from elsewhere. He claims he was identified as such in AmCareco press statements, and, when the money-losing HMOs were placed in receivership in 2003, he was sued by the receiver. Settling those claims cost him an additional $2 million, including legal fees. Scarola said Monday Proskauer risked its relationship with Pearce not only because of the fees generated by the transactions at issue but also because it wanted AmCareco to succeed and expand nationwide, generating even more business in the future. “They got so far down the line that they were unable to extricate themselves when things began to go bad,” said Scarola. In his suit against Morgan Stanley, Perelman claimed the investment bank, eager to have their client Sunbeam Corp. acquire his controlling stake in camping-goods maker Coleman, misled him about accounting fraud at Sunbeam. The company’s stock, which Perelman had received for his Coleman stake, later plummeted. The verdict, now under appeal, was returned after the Palm Beach County Circuit Court judge in the case punished the bank for discovery foul-ups by granting summary judgment on key issues to Perelman. Second suit The second suit against Proskauer, filed on March 17, stems from the firm’s representation of Boca Aviation. The company, which provides fueling and hangaring services, claims it lost its right to develop a 15-acre parcel at the Boca Raton Airport due to negligence on the part of Proskauer. According to the company, it fairly won the right to develop the parcel in a 1996 bidding process, but a competing company that bid unsuccessfully filed a meritless complaint against the local airport authority with the Federal Aviation Administration. The authority allegedly sought to settle the claim by inducing Boca Aviation to relinquish its right to develop the parcel. Boca Aviation claims Proskauer advised it to sign an agreement with the authority that allowed the latter to re-open bidding on development of the 15 acres. In 2000, another company’s bid was selected. In its suit, Boca Aviation claims Proskauer’s negligence in protecting its client’s rights was motivated by its desire to “protect and advance” the firm’s political relationships within the South Florida region, including with members of the Boca Raton airport authority and the Boca Raton City Council. “In short, Proskauer sold Boca Aviation out,” the complaint states. Scarola said Monday he could not say anything more about the alleged political relationships at the moment. He said the damages had not been calculated yet but were definitely in the “multi-millions.” Proskauer’s only Florida office is located in Boca Raton, where the firm has around 30 lawyers. Rosow and other Proskauer lawyers who worked for Pearce are based in New York, though the suit says they worked occasionally out of the Florida office.

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