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A federal judge has dismissed all but a few claims in attorney Marvin Lundy’s RICO and fraud suit against his former partners — a pair of Connecticut lawyers — for allegedly tricking him into taking on a partner who was under indictment and about to lose his license. Senior U.S. District Judge Norma L. Shapiro ruled that Lundy has no valid fraud or racketeering claims against attorney John Haymond or disbarred attorney Robert Hochberg because no reasonable person would have believed that Hochberg’s indictment was a minor matter that was sure to result in a “slap on the wrist” and was no threat to his ability to continue practicing. Shapiro also found that Lundy’s lawyer, Robert Fiebach of Philadelphia, Pa.’s Cozen & O’Connor, was aware of Hochberg’s indictment and that any knowledge Fiebach gained can be attributed to Lundy. Since information about Hochberg’s indictment, sentencing and disbarment was available in the Wall Street Journal, the PR Wire Service, and the Boston Herald, Shapiro found that Lundy, through Fiebach, “could have and should have known about these occurrences.” As a result, Shapiro wrote in, Lundy cannot meet the legal requirements for proving fraud. “Whether or not Lundy ever knew personally of Hochberg’s indictment and eventual disbarment and suspension, a person (and of course, a lawyer) of ordinary prudence and comprehension such as Lundy or Fiebach could not rely on Hochberg’s representations that ‘it would be speedily resolved, and with no consequence to Mr. Hochberg of any substance.’ “… Haymond and Hochberg’s alleged scheme could not have been reasonably calculated to deceive persons of ordinary prudence and comprehension; no person of ordinary prudence would have relied on assurances that a pending indictment would have no effect on Hochberg’s future ability to practice law,” Shapiro wrote. Lundy’s lawyer, Paul Rosen of Spector Gadon & Rosen, said he was disappointed in the ruling and that he believes that Shapiro substituted her own judgment for Lundy’s — and for the jury’s. The decision, Rosen said, “takes fraud and turns it on its head. If you have to investigate everything you’re told, there would be no such thing as fraud.” Rosen said Hochberg set out to conceal from Lundy the fact that he was losing his law license and that he took numerous steps — many involving official documents — to do so. Among the documents, he said, were falsified tax returns in which Hochberg claimed to be a 10 percent partner in a law firm when he had actually sold his interest back to Haymond; and lease and loan documents for the Philadelphia office of Haymond & Lundy in which Hochberg claimed to be a partner. All the while, Rosen said, Haymond, “who, let’s remember, is an officer of the court and someone we trusted,” was aware of Hochberg’s lies but did nothing to notify Lundy. But Rosen said that Shapiro’s ruling is not nearly as damaging to Lundy’s case as it first appears. Although Shapiro tossed out Lundy’s RICO and fraud claims, he said, she ruled that he can pursue a claim for breach of contract and for “unauthorized practice of law.” Since both of those claims are state law claims, Rosen said, the federal court no longer has subject matter jurisdiction over them. As a result, he said, Lundy has withdrawn them and filed an immediate appeal of Shapiro’s RICO and fraud rulings. But since Haymond is also suing Lundy over alleged inequities in the dissolution of the partnership, and since that case includes federal Lanham Act claims, Rosen said Lundy will simply file his state law claims as counterclaims in that suit. By doing so, Rosen said, Lundy will be allowed to do two things at once — continue discovery on everything related to the alleged fraud under the claim for unauthorized practice of law; and pursue the appeal in the hopes of winning reinstatement of the RICO claim. Attorney Judah Labovitz of Philadelphia firm Mann Ungar Spector & Labovitz, who represents Haymond, said he was “obviously very pleased” with Shapiro’s ruling. The case continues, he said, because Haymond is pursuing claims that Lundy violated the partnership agreement in the way he dissolved the firm. Ultimately, he said, Haymond will be seeking both equitable relief and possibly an award of damages if Lundy is found to have taken cases he was not entitled to. Shapiro’s 36-page opinion is interesting reading if only because it offers the first truly disinterested and objective account of the Lundy-Haymond-Hochberg debacle. Beginning in 1992, Haymond and Hochberg were practicing attorneys and sole shareholders in the law offices of John Haymond P.C. in Hartford, Conn. Hochberg had licenses to practice law in both Massachusetts and Connecticut, but was indicted by a federal grand jury in May 1996 in the District of Massachusetts and charged with felony criminal offenses involving schemes to defraud financial institutions. In August 1997, Hochberg pleaded guilty to the charges in the indictment; and sentencing was scheduled for Nov. 17, 1997. Haymond had full knowledge of Hochberg’s criminal proceedings. In seeking leniency for Hochberg, and to prevent Hochberg’s incarceration, Haymond told the judge that his firm had recently merged with a Philadelphia firm and that any sentence jeopardizing Hochberg’s Connecticut license would seriously impair the ability of the new Pennsylvania partnership to operate. Hochberg avoided prison but was fined, required to make restitution and sentenced to three years probation. The other shoe dropped in April 1998, however, when Hochberg was suspended from the practice of law by the Connecticut Supreme Court at least until the expiration of his criminal sentence. Meanwhile, in the summer of 1997, Lundy’s former law firm, Manchel Lundy & Lessin, had dissolved. When he began negotiating to merge with Haymond, Lundy claims that neither Haymond nor Hochberg ever informed him personally of Hochberg’s felony conviction, sentencing or disbarment in Massachusetts and suspension in Connecticut. Lundy’s counsel, Fiebach, had discovered the pending Massachusetts indictment against Hochberg and confronted Hochberg about it. Fiebach said Hochberg and Haymond later assured him that the indictment was technical, that Hochberg’s counsel had assured them it would be speedily resolved with no consequence to Hochberg of any substance, and that there would be no effect upon Hochberg’s Massachusetts or Connecticut licenses to practice law. Meanwhile, Lundy claims that Haymond and Hochberg used attorney Scott E. Diamond, a lawyer who was already working with Lundy and in whom Lundy placed great trust, to act as their confidant and agent in their attempt to take over Haymond and Lundy. Lundy claims Hochberg told Diamond the facts of his indictment and, as they occurred, his guilty plea, sentence, Massachusetts disbarment and Connecticut suspension, with requests that he not disclose that knowledge to any other person. Haymond and Hochberg also allegedly told Diamond of their plan to take over Lundy’s practice, the income generated by his cases and his good name and reputation and to obtain “cover” for Hochberg’s unlawful practice of law. In return for his complicity and silence, they allegedly promised Diamond a partnership interest in the firm they would create. Haymond & Lundy opened offices at 1600 Market St., and the firm moved to 1635 Market St. in 1999. Hochberg was listed on the door as a practicing attorney and saw clients despite his disbarment and suspension from every jurisdiction in which he was formerly licensed to practice law. In dismissing the fraud claims, Shapiro said that “to prove the predicate offenses of mail and wire fraud, the scheme must be ‘reasonably calculated to deceive persons of ordinary prudence and comprehension.”‘ Fraud occurs, she said, “only when a person of ordinary prudence and comprehension would rely on the misrepresentations.” Lundy’s claims fail, she said, for the very basic reason that “there could be no reasonable reliance on the Hochberg parties’ relevant assertions.” And Lundy’s fraud in the inducement claim also failed because of the parol evidence rule, Shapiro said, since the agreement speaks for itself and the claim would depend on alleged assurances before it was signed. “If Lundy (through Fiebach) relied on what he now contends was a centrally important representation conveyed by Haymond and Hochberg in the course of their partnership negotiations, Lundy should have insisted that the representation be set forth in their integrated written agreement,” Shapiro wrote. For similar reasons, she said, Lundy has no claim for negligent misrepresentation. “Though negligent misrepresentation is distinct from fraud, Lundy cannot state a claim for either because he could not have reasonably relied on the Hochberg parties’ assertions,” she wrote.

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