Lawsuit Brought Against Law Firm Based on State Bar Ethics Rules Dismissed

Highlights:

The plaintiffs stopped making payments on their home and, to avoid foreclosure, brought an enormous lawsuit against the entities representing the lender, including CSH client law firm.  CSH attorney Melody Jolly’s arguments to the court brought about the dismissal of the entire suit against her clients.

Summary:

A couple borrowed money from a lender and put their house up as collateral.  When they failed to make payments, the lender began foreclosure proceedings on the house.  The couple then filed for bankruptcy, and a judge told them that as long as they made certain payments to the lender they could keep their house.  When they failed to make those payments, the lender proceeded with foreclosure.

The couple then attempted to file an $11 million class action suit against the law firm that represented the lender in foreclosure, and various other companies associated with the lender, on the basis that the law firm and its attorneys breached various duties to the plaintiffs, and committed fraud and unfair trade practices.  The defendant companies came to CSH defense attorney Melody Jolly, who realized that many of the “state laws” that the plaintiffs said had been violated were actually the North Carolina Rules of Professional Conduct, which are the rules that govern the ethical practice of law for lawyers.  Ms. Jolly pointed out to the court that these rules do not create causes of action on which people can bring lawsuits, and the court agreed.  The suit was completely dismissed.  Plaintiffs filed an appeal with the Fourth Circuit, but the appellate court also agreed with Ms. Jolly, upholding the dismissal.

Result/Implications:

Thorough knowledge of standards applicable to attorneys and law firms and a careful examination of the plaintiffs’ accusations, Ms. Jolly helped her clients avoid a very costly lawsuit.

Disclaimer: The outcome of a particular case cannot be predicated upon a lawyer’s or a law firm’s past results.