Both sides in lawsuit scolded

September 01, 1995|By Michael James | Michael James,Sun Staff Writer

A sordid legal battle between one of Baltimore's richest businessmen and a prestigious city law firm accused of padding his bills ended yesterday when a judge issued a scathing opinion that questioned the integrity of both parties.

The judge ruled that the statute of limitations had run out and that the businessman, Malcolm C. Berman, can't go after millions in punitive damages against the law firm Weinberg and Green.

Although the firm "perpetrated an organized, systematic billing fraud," the judge said, Mr. Berman -- who she said has "employed legions of lawyers" on his way to building a financial empire worth more than $60 million -- was not candid or truthful in court.

Weinberg and Green used a computer program to inflate bills to Mr. Berman's bank, Fairfax Savings of Baltimore, but the overbillings ended in 1987 with the firm repaying $110,000. The statute of limitations for malpractice claims is three years.

"The court finds that the resolution of the overbilling matter was fair and reasonable," Montgomery County Circuit Judge Ann S. Harrington wrote in a 75-page opinion that decided the lawsuit in favor of Weinberg and Green.

"Mr. Berman and Fairfax accepted the proposals and the money related to them, thereby resolving the overbilling," Judge

Harrington wrote. "Fairfax did not bring suit until October 1992, therefore its action for . . . malpractice is time-barred."

The judge had harsh words for the law firm and for Mr. Berman and his bank. She called the overbilling scheme "utterly reprehensible. . . . Having already stolen from its client, the [firm] continued to steal and other Weinberg and Green employees entered the web."

And, in a terse last line, Judge Harrington concluded that Fairfax witnesses were "untruthful" and that the bank "does not have clean hands to pursue this relief."

The three-month trial -- punctuated with bribery, blackmail and fraud allegations -- centered on the overbilling. Mr. Berman and his attorneys claimed that the 77-year-old Charles Street law firm secretly marked up its bills by 15 percent over a three-year period in the mid-1980s.

Mr. Berman had sought $30 million in punitive damages for the billing fraud. He said the law firm that took advantage of his naivete and trust in the lawyers working for him.

But the judge concluded that Mr. Berman falsely attempted to make himself appear "uneducated and vulnerable" when he had built his financial stronghold on his wits and legal savvy.

"As a businessman, he is highly successful, clever and %o tenacious," Judge Harrington wrote. "From the record, a picture emerges of an individual who is strong-willed, aggressive and extremely comfortable in the arena of lawyers and courtrooms. Berman has described himself to others as 'the best lawyer he knows.' "

Efforts to reach Mr. Berman last night were unsuccessful. Charles Monk, a managing partner at Weinberg and Green, said yesterday, "We are very pleased with the result and believe that our position has been fully vindicated."

Mr. Berman testified that he was duped in by a Weinberg and Green lawyer, Stanford Hess, who admitted coming up with the overbilling scheme.

Mr. Hess said on the witness stand that he overcharged Fairfax because Mr. Berman was always late paying his bills and didn't )) deserve a 15 percent discount he had been given.

The judge said Mr. Berman had the option of suing in the late 1980s when he found out about the overbilling scheme, but that he chose to accept the $110,000 repayment and continued to use Weinberg and Green as his law firm.

In the years after discovering the billing fraud, Mr. Berman sent Weinberg and Green more than 100 new matters of business and presented Mr. Hess -- whom he described as one of his closest friends -- "lavish gifts having substantial monetary value," Judge Harrington wrote.

Mr. Berman said he had a reading disability and therefore didn't understand the papers he signed when he agreed to accept $110,000 in repayment from Weinberg and Green.

The judge discounted that contention, saying, "It is more believable that Berman recognized Weinberg and Green's disclosure of the billing fraud as an opportunity to put a powerful weapon in his arsenal for future use."

Although overbilling of a client is fraud, no criminal actions have been taken against any member of Weinberg and Green. Judge Harrington said in her opinion that unspecified "sanctions may be appropriate."

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