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A Philadelphia common pleas judge has green-lighted a breach of contract claim against Morgan Lewis & Bockius alleging that the law firm provided faulty advice to a client doing business in Cuba. In their lawsuit, the plaintiffs claimed their reliance on Morgan Lewis’ advice led to a federal criminal prosecution for violating the U.S. embargo on trade with Cuba. In an opinion dated Jan. 20, the judge rejected Morgan Lewis’ contention that the claims described in Brodie v. Morgan Lewis & Bockius were barred by the allegedly willful and illegal conduct of the plaintiffs as well as the guilty pleas entered by two of the three plaintiffs, Donald Brodie and Purolite Corp. Allegations of legal malpractice and breach of fiduciary duties against the law firm were dismissed because the judge found a two-year statute of limitations barred the tort claims. The lawyer for the plaintiffs, Clifford E. Haines of Haines & Associates, praised the judge’s finding that the guilty pleas didn’t bar the plaintiffs’ lawsuit. But he disagreed with the ruling on the statute of limitations. “The probability is that we’ll ask the judge to reconsider his ruling or allow us to pursue this on appeal,” Haines said. The lawsuit stems from Morgan Lewis’ representation of the corporation, Bro-Tech Corp., and advice the company relied on when deciding not to stop trade between its foreign subsidiaries and Cuba during the 1990s — allegedly against its own judgment, according to court documents. A third plaintiff, Stephan Brodie, co-owns the corporation with his brother Donald Brodie. Last year, Donald Brodie and the corporation pleaded guilty to charges of violating federal law and trade regulations by authorizing expenses and reimbursements related to a company employee’s 1996 travel involving transactions with Cuba, according to the opinion. In a motion for judgment on the pleadings, lawyers for Morgan Lewis had argued that the plaintiffs’ claims were barred in part by the plaintiffs’ guilty pleas and criminal conduct. “As a result of pleading guilty and admitting they knew about the law prohibiting transactions with Cuba and violated it anyway, plaintiffs Don Brodie and Purolite cannot state a claim against [Morgan Lewis] for allegedly giving them incorrect legal advice about trading with Cuba,” the lawyers wrote in their motion. Also, public policy “prevents a person who committed a crime from recovering from his attorney, even where the attorney advised or assisted the person in the criminal activity.” Common Pleas Court Judge Albert W. Sheppard Jr. disagreed. Sheppard found “it would be inappropriate and unfair under the facts here to hold that the guilty pleas entered by Don Brodie and Purolite barred them from claiming that [Morgan Lewis'] conduct caused their injuries,” he wrote. Sheppard explained that the plaintiffs went to Morgan Lewis for counsel concerning trade with Cuba because allegedly they wanted to avoid breaking the law. The crux of their case is that the plaintiffs established their Cuba trade policy because of the advice they received from the law firm’s attorneys, Sheppard said. “As to defendant’s public policy argument, this court finds that the public interest is served where attorneys are held accountable for providing their clients with bad legal advice when those clients suffer harm as a result of that advice,” Sheppard wrote. Morgan Lewis had argued that the statute of limitations barred the plaintiffs’ claims, requiring Sheppard to determine when the clock began to run. The plaintiffs claimed they had no reason to question Morgan Lewis’ advice until March 2002, at the beginning of their criminal trial. At that time, the plaintiffs severed their relationship with the firm and learned of research memoranda circulated among firm attorneys that allegedly contradicted advice they gave Purolite, according to the opinion. Morgan Lewis attorneys had advised Purolite that it couldn’t discontinue trade with Cuba because the United Kingdom and Canada had “blocking statutes” that barred terminating trade with the Caribbean nation because of another country’s embargo, according to the opinion. But the plaintiffs alleged that the memoranda suggested otherwise — that the so-called Foreign Sovereign Compulsion Doctrine had been narrowly applied by courts in the United States and applied only when a foreign government forced a company to take a specific action that put the company in the position of violating U.S. law, according to the opinion. The plaintiffs had asked the federal court to dismiss their indictment in 2001, citing the doctrine, but U.S District Judge Mary McLaughlin precluded the defense, finding it had no place in a criminal matter. It was then, Sheppard concluded, that the plaintiffs should have discovered Morgan Lewis’ alleged malpractice. Oct. 23, 2001, was the date “the plaintiffs were reasonably on notice that the advice they had been given by [Morgan Lewis] was questionable,” Sheppard wrote. “At that point, plaintiffs had a duty to exercise reasonable diligence with respect to the assurances given to them by [Morgan Lewis] that the Foreign Sovereign Compulsion Doctrine was a complete defense to the charges they faced in the criminal action.” Therefore, Sheppard dismissed the plaintiffs’ tort claims of malpractice and breach of fiduciary duties because the two-year time period had run. The contract claim, which has a four-year statute of limitations, was permitted to proceed. Nancy Gellman, William J. O’Brien and James Rohn at Conrad O’Brien Gellman & Rohn represented Morgan Lewis. “We are pleased that Judge Sheppard dismissed two of the three counts of the complaint,” Gellman said Monday. “We are proceeding to defend what remains of the claim, which Morgan’s answer and new matter demonstrates is without merit.” Gellman declined to comment further. In its answer to the complaint, Morgan Lewis contended that the plaintiffs didn’t follow the trade policy advice that Morgan Lewis attorneys had provided in a 1993 memo or their advice that there should be no U.S. involvement in transactions with Cuba. “Any harm to plaintiffs was the result of their own conduct, as acknowledged by the company and plaintiff Don Brodie in pleading guilty to knowingly and willfully violating” federal law and regulations, the document states. The Brodie brothers and their corporation were indicted in 2000 on conspiracy charges related to violations of the Trading with the Enemy Act and the Cuban Assets Control Regulations, according to the opinion. After a jury trial, the trial court acquitted Stephan Brodie and granted Purolite and Donald Brodie’s motions for a new trial because of misconduct on behalf of the federal prosecutor. Stephan Brodie’s acquittal is on appeal to the 3rd U.S. Circuit Court of Appeals.

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