A state appeals court has issued a terse but clear ruling that lets stand claims that Paul Callan, a CNN legal analyst and former name partner at Callan, Koster, Brady & Nagler, attempted to secretly spirit away a potential new client, allegedly costing the firm millions.
In a lawsuit that draws battle lines between Callan, a 30-year litigator, and the Manhattan law firm he helped create, a unanimous Appellate Division, First Department, panel issued a six-paragraph decision that points to unspecified “evidence in the record” of the conduct alleged. It also largely affirms Manhattan Supreme Court Justice Ellen Coin’s denial earlier this year of an attempt by Callan and his co-defendants to dismiss the various fraud-based claims lodged against them.
“There is evidence in the record that Callan, while still a partner at plaintiff law firm [Callan, Koster, Brady & Nagler], worked with defendants to woo a prospective client, concealing from his partners the true nature and extent of his involvement in the matter as he prepared to leave the firm, after which departure he entered into a contingency fee agreement on the matter,” the panel—consisting of Justices David Friedman, Ellen Gesmer, Cynthia Kern and Peter Moulton—wrote, though it did not provide detail about the exact nature of the evidence in the record.
The suit includes allegations of breach of fiduciary duty and fraud leveled against Callan, now of counsel at the Manhattan firm of Edelman & Edelman, as well as related allegations against co-defendants Martin Edelman, of Edelman & Edelman, and the Edelman firm itself.
On Monday, Larry Hutcher, the attorney for Koster, Brady & Nagler in the suit, underscored in a phone interview that he views the appellate panel’s ruling as strongly endorsing the evidence in his client’s favor.
“We are grateful that the Appellate Division saw through any attempt by Callan to explain away his egregious behavior,” said Hutcher, co-managing partner at Davidoff Hutcher & Citron. “The court recognized [Callan’s actions] for what they were: A blatant attempt to screw his partners out of their share of this fee.”
But moments later on Monday, Clifford Robert, counsel to Callan and the Edelman defendants, cautioned in a separate phone interview against putting too much weight behind the panel’s statement. At the same time, Robert, of Robert & Robert in Uniondale, pointed out that the bulk of discovery in the suit has yet to happen.
“All he wanted was for discovery to begin,” Robert said, referring to what he claimed were Hutcher’s previous statements to the trial court.
“I’m still very confident my clients will prevail,” Robert added, “because there was no betrayal of trust [by Callan] and there was no damages.”
Late on Tuesday, Callan himself sent a statement to the Law Journal, saying that “the only fraud in this case can be found in the false claims made by my former partners.”
“This lawsuit was filed by my struggling former partners after the firm developed financial problems in an attempt to walk away from their legal obligation to pay me under our partnership agreement,” he said. “My former partners have cherry picked out of context statements in communications to support their false and misleading complaint in their attempt to damage my reputation.”
In 2015, the Koster firm sued Callan, Martin Edelman and Edelman & Edelman itself, a boutique personal injury firm, seeking at least $3 million. They said that Callan, while still a partner at Koster, had taken steps behind closed doors with Martin Edelman to woo and ultimately land Jonathan Fleming as a client.
In 2014, Fleming was exonerated of second-degree murder, after serving nearly a quarter of a century behind bars. Then, later, in June 2014, Fleming’s lawyers at the time filed a notice of claim with New York City to recover civil damages for wrongful conviction and imprisonment.
According to Koster’s suit, in September 2014, Edelman, a past president of the New York Trial Lawyers Association, contacted Callan about representing Fleming in a wrongful conviction suit against both the city and New York state.
Koster further claims that on Sept. 29, 2014, Callan, without the knowledge of his partners, met with Edelman at the Edelman firm’s offices to discuss their joint representation of Fleming, and that around the same time, Callan and Edelman agreed that Callan would withdraw from the Callan Koster partnership.
The suit said Callan began executing this plan in violation of his fiduciary duty to his partners, and in violation of the partnership agreement, by not disclosing his meeting with Edelman and his engagement and work on the Fleming matter.
By Oct. 2, 2014, Callan told his partners of his intention to withdraw, effective Jan. 1, 2015, according to the suit. The complaint cited Callan as saying he wanted to pursue his media career with CNN and possibly pursue relationships with other law firms.
Soon after informing his partners of his upcoming withdrawal, Callan and Edelman began inducing Fleming to discharge his then-lawyers and to retain Callan and Edelman, according to the suit. On Nov. 6 of that year, the suit claimed, Fleming retained Edelman and Callan in a wrongful conviction and imprisonment case.
Callan finally alerted his partners to the Fleming matter “in a fraudulent and deliberately misleading manner,” the suit said. In a Nov. 19, 2014, email, Callan advised his partners that Edelman had asked him to “consult with him and his investigators and client, Jonathan Fleming, about criminal law and procedures as it relates to homicide investigations.”
But the suit alleged Callan did not disclose that he had agreed with Edelman to jointly represent Fleming before announcing his withdrawal from the partnership. It also said Callan, who has handled numerous high-profile lawsuits in his career, never revealed that his work on the Fleming case involved details of the civil action instead of “criminal law.”
On Jan. 1, 2015, Callan’s withdrawal from the partnership became effective. Fleming’s retainer of Edelman & Edelman was amended to include Callan as co-counsel in early February 2015.
On June 25, 2015, Fleming settled his claim against the city and others for $6.25 million, generating about $2 million in fees for Callan, Edelman and Edelman & Edelman, according to the suit. The claims against the state are still pending.
According to Hutcher on Monday, while the First Department panel did not detail the evidence in the record against Callan and Edelman, a wealth of evidence does exist.
“While Callan was still a member of Koster, he sent Fleming a letter explaining to Fleming why he should take him [Callan] as counsel,” Hutcher said. “But rather than have the letter be part of the Koster firm’s documents, he created a letter on his personal computer. He didn’t put the firm’s email address on it, he used his own personal email address, and at the end, he put his personal cell number on the letter. He also left a name out of the firm’s name.”
Hutcher added, “We also have other examples where he attended meetings [aimed at obtaining Fleming as a client] and he did not log the meetings into his Koster firm Outlook diary. And there are email exchanges between an Callan and an investigator, where he told the investigator to not email Callan at his firm email address.”
But Robert said on Monday that there is no evidence showing that Callan acted inappropriately, and he maintained that Callan did not retain Fleming as a client until after he had departed the Koster firm.
He also alleged that Koster “concocted” a story in order to undercut Callan and to try to avoid paying money it owed the former partner.
“The evidence in the record shows that the Koster firm was running out of money,” Robert said. “They were just lying in wait, trying to find a reason to stop paying him, for a firm he founded.”
“And then when they found out about his success in the Fleming matter, they concocted a theory to make Callan appear disloyal, when he was 100 percent loyal,” Robert added.
Callan, in his statement to the Law Journal, contended that he was transparent with his former partners about his Fleming work.
“They were fully advised of the nature of my involvement in the Fleming matter,” he said. “In fact, they eagerly accepted a consultation fee from the Edelman firm at triple their normal hourly rate.”
“Marty Edelman and I look forward to complete vindication when all of the facts are revealed,” he said.
The panel, while largely affirming Coin’s denial of dismissal, did reverse Coin on one aspect in its recent opinion: The justices allowed a dismissal of an accounting claim against the Edelman defendants.
Robert said on Monday in a statement, “We are very pleased that the court dismissed the accounting claim against Mr. Edelman and his firm.”
But Hutcher pointed out that there is still an accounting cause of action against Callan. He added, “The accounting dismissal was utterly meaningless.”