The Investors’ Control of Their Investment Advisers. Who Has the Final Word?

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses an emerging issue affecting financial advisers—when a client may exercise control over the actions of the adviser. Frankel relates the story of an investment adviser that did not follow the client’s orders to cease certain investments, at a cost of almost $5 million to the client. As Frankel explains, the Securities and Exchange Commission (SEC) got involved, resulting in the investment adviser’s settlement for a significant payment to the client and other conditions.

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George v. Shams-Shirazi

Court: California Courts of Appeal

Docket: A155158(First Appellate District)

Opinion Date: February 11, 2020

Judge: Sanchez

Areas of Law: Civil Procedure, Family Law, Legal Ethics

Following a child custody hearing in January 2017, the trial court entered an order giving Mother sole custody. In June 2017, Father filed an unsuccessful request to set aside that order. Weeks later, he filed a second unsuccessful request to modify the order. The trial court denied Mother’s request for section 271 sanctions. Months later, she again sought sanctions relating to the June 2017 motion. Father filed an objection but did not challenge the motion on the basis of timeliness. The court ordered Father to pay $10,000 in section 271 sanctions. Father sought reconsideration, arguing for the first time that the sanction request was untimely under California Rules of Court, rule 3.1702(b). The trial court denied the motion and awarded Mother $3,000 in attorney fee sanctions for having to defend the ex parte motion for reconsideration. The court of appeal affirmed. Rule 3.1702(b) states: “A notice of motion to claim attorney’s fees for services up to and including the rendition of judgment in the trial court—including attorney’s fees on an appeal before the rendition of judgment in the trial court—must be served and filed within the time for filing a notice of appeal.” The timing of a notice of appeal is based on the entry of judgment. The sanctions at issue were awarded for attorney fees incurred after entry of the January 2017 judgment; rule 3.1702 does not apply.

Colorado in Interest of A.R.

Court: Colorado Supreme Court

Citation: 2020 CO 10

Opinion Date: February 10, 2020

Judge: Gabriel

Areas of Law: Constitutional Law, Family Law, Legal Ethics

The issue this case presented for the Colorado Supreme Court’s review centered on the contention of ineffective assistance of counsel in the context of a dependency and neglect proceeding. In 2016, petitioner A.R.’s (the “child’s”) paternal step-grandmother took him to the emergency room to receive treatment for scabies. A physician who treated the then-six-month-old child determined that the degree of scabies on the child evinced a case of neglect, and, later that night, another doctor confirmed that the child also had a skull fracture. The Department of Human Services subsequently initiated this dependency and neglect proceeding, and the juvenile court granted the Department continued custody of the child. Later, the juvenile court held an adjudicatory hearing with respect to both parents. When mother did not appear, her counsel told the court that he had made arrangements with mother to attend the hearing, but did not know why she did not appear. Apparently in an effort to move the case forward, and after speaking with counsel for both mother and the child’s father (who also did not appear), the Department asked the court for leave to amend the Department’s dependency and neglect petition to include an allegation that the child was dependent or neglected through no fault of the child’s parents and to allow the Department to rest on the Report of Investigation filed with the petition. The child’s guardian ad litem (“GAL”) agreed with this procedure, stating that it was in the child’s best interests to “move forward,” and the court therefore entered a no-fault adjudication and approved the proposed treatment plan. Mother did not appeal this adjudication. The mother challenged the ultimate termination of her rights to A.R. The Supreme Court was asked to decide: (1) whether, in a direct appeal from a judgment terminating parental rights, an appellate court may consider a claim of ineffective assistance of counsel based on counsel’s performance at an adjudicatory hearing; (2) the correct standard for determining whether a parent in a dependency and neglect proceeding was prejudiced by counsel’s ineffective performance; and (3) whether an appellate court may vacate a juvenile court’s decision in a dependency and neglect proceeding on the ground of ineffective assistance of counsel without remanding the case for further evidentiary development. The Supreme Court held an appellate court may consider a claim of ineffective assistance of counsel based on counsel’s performance at an adjudicatory hearing only when the party claiming ineffective assistance did not have a full and fair opportunity to assert such a claim immediately after his or her child was adjudicated dependent and neglected, and outlined the standard for determining ineffective performance in a dependency and neglect context. Applying these determinations to the facts and claims presented, the Court affirmed the judgment below (on different grounds), and remanded for further proceedings.

M.A.W. v. The People in Interest of A.L.W.

Court: Colorado Supreme Court

Citation: 2020 CO 11

Opinion Date: February 10, 2020

Judge: Gabriel

Areas of Law: Constitutional Law, Family Law, Legal Ethics

In June 2016, shortly after the child’s birth, the Boulder County Department of Housing and Human Services initiated this case based on evidence that the child’s mother was using drugs and that both father and the child’s mother were missing the child’s cues, were homeless, and had previously been involved in child welfare cases. The child was placed with maternal relatives. As pertinent here, the juvenile court adjudicated the child dependent and neglected as to father based on father’s admission that he needed support and services and that the child’s environment was injurious to her welfare. At the first hearing in the juvenile court, father appeared in custody following a recent arrest. The court appointed counsel for him and approved an initial treatment plan. Two months later, the court conducted another hearing, and father again appeared in custody, this time based on new drug possession charges. The Department filed a motion to terminate father’s parental rights. In this petition, the Department alleged that (1) father did not comply with his treatment plan, and the treatment plan failed; (2) no additional period of time would allow for the successful completion of the treatment plan; (3) father was an unfit parent; (4) father’s conduct or condition was unlikely to change within a reasonable period of time; and (5) there were no less drastic alternatives to termination, which would be in the child’s best interests. The matter then proceeded to a termination hearing; father was incarcerated. When father did not appear for the hearing, father’s counsel told the court that father was “on a writ at Arapahoe County and he refused the writ so he did not want to appear today.” Father’s counsel did not seek a continuance to ensure father’s presence, and the court found that father had voluntarily absented himself from the court. Mother was denied her request for a continuance. The issue this case presented for the Colorado Supreme Court’s review was similar to that decided in its companion, Colorado in Interest of A.R., 2020 CO 10, __ P.3d __. Here, as in A.R., the Supreme Court was asked to decide (1) the correct standard for determining whether a parent in a dependency and neglect proceeding was prejudiced by counsel’s ineffective performance and (2) whether an appellate court may vacate a juvenile court’s decision in a dependency and neglect proceeding on the ground of ineffective assistance of counsel without remanding the case for further evidentiary development. Applying those principles here, the Court concluded the juvenile court correctly applied Strickland’s prejudice prong to father’s ineffective assistance of counsel claims and that the court did not abuse its discretion in rejecting those claims.

Shubert v. Ada County

Court: Idaho Supreme Court - Civil

Docket: 46403

Opinion Date: February 12, 2020

Judge: Brody

Areas of Law: Civil Procedure, Government & Administrative Law, Legal Ethics, Personal Injury, Professional Malpractice & Ethics

Natalie Shubert filed a negligence claim against her former public defender, Michael Lojek, former Ada County chief public defender Alan Trimming, and Ada County (collectively, “Ada County Defendants”). In 2008, Shubert was charged with two felonies and pleaded guilty to both charges. Her sentences were suspended in each case, and she was placed on probation. After a probation violation in 2011, the Ada County district court entered an order extending Shubert’s probation beyond the time period allowed by law, and the mistake was not caught. After Shubert’s probation should have ended in both cases, she was charged and incarcerated for a subsequent probation violation in 2014. Thereafter, in 2016, Shubert was charged with a new probation violation. Shubert was assigned a new public defender, who discovered the error that unlawfully kept Shubert on probation. Shubert’s new public defender filed a motion to correct the illegal sentence, raising the error that had improperly extended her probation. The district court granted Shubert’s motion to correct the illegal sentence and released Shubert from custody. Shubert then sued her original public defender, the Ada County Public Defender’s Officer, and other unknown Ada County employees alleging false imprisonment, intentional infliction of emotional distress, negligence per se, negligence, and state and federal constitutional violations. The district court dismissed all of Shubert’s claims except for negligence. In denying the Ada County Defendants’ motion for summary judgment on Shubert’s negligence claim, the district court held that public defenders were not entitled to common law quasi-judicial immunity from civil malpractice liability, and two provisions of the Idaho Tort Claims Act (ITCA) did not exempt public defenders from civil malpractice liability. The Ada County Defendants petitioned the Idaho Supreme Court, but the Supreme Court affirmed, finding the district court did not err in its finding that the public defenders and the County were not entitled to immunity. The case was remanded for further proceedings.

Biegel v. Gilmer

Court: Supreme Court of Mississippi

Citation: 2018-IA-01172-SCT

Opinion Date: February 13, 2020

Judge: Ishee

Areas of Law: Civil Procedure, Legal Ethics

The issue presented for the Mississippi Supreme Court’s review involved the first-to-file rule. Most of the claims were properly transferred, but all parties to this appeal agreed it was error to transfer the claims against two of the defendants, Michele Biegel and Bettie Johnson. The underlying controversy was a fee dispute between attorneys Seth Little, Barry Wade Gilmer, and Chuck McRae. McRae sued Gilmer in the Hinds County Chancery Court, claiming unjust enrichment and seeking an accounting. Gilmer later filed this suit in the Madison County Circuit Court against McRae’s attorneys in the fee dispute, Michele Biegel and Bettie Ruth Johnson. Biegel and Johnson filed a special entry of appearance and a motion to dismiss the complaint against them. McRae requested that the claims against him be transferred to Hinds Chancery Court, in which McRae previously filed suit against Gilmer. The Madison County Circuit Court ordered the entire suit, including claims against Biegel and Johnson, transferred, and denied Biegel and Johnson’s motion to reconsider. The Supreme Court concurred the transfer of the entire case was made in error, and therefore reversed transfer of claims from the Madison County Circuit Court to the Hinds County court.