Law firm named in development suit Weinberg & Green charged with failing to carry out duties

June 28, 1996|By Dennis O'Brien and Timothy J. Mullaney | Dennis O'Brien and Timothy J. Mullaney,SUN STAFF

Clarification

An article in yesterday's Business section may have left a misleading impression about which attorney at the Baltimore firm of Weinberg & Green is accused in an Anne Arundel County lawsuit of improperly siding with one alleged client in a dispute with another.

The story accurately reported that then-Weinberg attorney Stanford Hess was retained in 1992 in connection with an Anne Arundel County land development deal and that the lawsuit turns in part on a dispute over Weinberg's conduct when that venture collapsed last year.

However, by late 1995 Hess had left Weinberg for another firm and was no longer involved with the disputed venture. While the article did not say that he was, it failed to make clear that his involvement in the deal had ended.

Pub Date: 6/29/96

Weinberg & Green, the Baltimore law firm that settled a case last month after losing a $25 million judgment, has been slapped with another lawsuit over how it handled a dispute involving a group of developers of an Anne Arundel County project.

The firm was named as a defendant in papers filed in Anne Arundel Circuit Court Tuesday, as part of an amended complaint in a suit brought last fall by Irvin and Barbara Polashuk against Crofton Lending Corp. and its two principals, Jack Stollof and Harvey Nusbaum.

The Polashuks allege that the four business people formed a partnership to develop a 78-acre tract in Crofton and that lawyers for Weinberg & Green breached their fiduciary duty to them when the partners became embroiled in an internal dispute.

The Polashuk suit seeks no specific amount of damages, but claims $7 million in lost earnings and other expenses.

L It is the second public blow for the firm in as many months.

Last month, the firm agreed to settle a case for an undisclosed sum after a Baltimore County jury ordered the firm to pay a $25 million judgment.

Jurors awarded the sum to GeneSys Data Technologies Inc. after hearing evidence that formerWeinberg & Green attorney Mark Tomaino had a conflict of interest in an investment deal the firm arranged for the company.

The Polashuks' suit said the four developers worked on several projects together before 1992, when Nusbaum and Stollof retained Stanford Hess, then a top lawyer at Weinberg, to help the partners buy the Crofton tract for residential development.

"It was understood by the Polashuks that Weinberg was to represent the individual partners as well as the Nusbaum-Stollof-Polashuk partnership throughout this process. Neverthless, Weinberg failed to advise the Polashuks of any potential conflicts that could arise from this dual representation," the suit alleges.

According to legal papers, Weinberg's position is that the arrangement was never a partnership. Weinberg contends the firm represented Nusbaum and Stollof in the financing of Polashuk's project, and not the Polashuks. "The principal issue in this case is whether a transaction in which defendant Crofton Lending provided funds to plaintiffs constituted a loan or was in furtherance of a partnership," Weinberg's lawyers wrote.

Normally, a loan arrangement would not be enough under the law to make the four business people partners who have the legal duty to put the interests of their partners ahead of their own financial interests.

If Crofton Lending were no more than a lender to the company controlled by the Polashuks, Weinberg could also represent the lending company and not the Polashuks without owing any special duties to the couple.

However, the suit alleges that the four developers were partners who worked together on a regular basis.

"Stollof, Nusbaum and Polashuk normally consulted on major issues and made joint decisions," the suit says.

Pub Date: 6/28/96

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