Balto. Co. Developer loses lawsuit over law firm's fees Overbilling confirmed but case filed too late

Legal affairs JTC

December 07, 1996|By Dennis O'Brien | Dennis O'Brien,SUN STAFF

A state appeals court ruled yesterday that Weinberg and Green overbilled a Baltimore County developer by $110,000, but that the developer cannot sue because he waited too long.

The Court of Special Appeals ruled that millionaire developer Malcolm C. Berman could not sue for fraud because he waited almost six years before filing suit, three years longer than the law allows. The firm reimbursed Berman $475,000 for the overbilling and to make up funds he otherwise would have collected.

The court affirmed a 1995 Montgomery County Circuit Court ruling that held the firm breached the legal community's professional standards but that damages were barred because Berman waited too long to sue, signed waivers agreeing not to sue and lied at the trial.

"Sadly, Berman was not candid with the court on many matters," Circuit Judge Ann S. Harrington wrote in a 74-page decision handed down Aug. 30, 1995.

Berman did not return phone calls yesterday. Officials at Weinberg and Green, which has experienced its share of legal problems lately, welcomed the ruling.

"Obviously, I'm delighted about the decision but I haven't seen the opinion, so I really can't comment further on it," said Charles O. Monk II, the firm's managing general member.

A Baltimore County jury awarded two of Weinberg and Green's former clients $25 million in May amid allegations that the firm had a conflict of interest in its handling of work for GeneSys Data Technologies Inc., a now-defunct Hunt Valley firm.

It also has been sued by a former client in Anne Arundel County Circuit Court and last summer became involved in a public dispute with its landlord over nonpayment of rent on its %o downtown offices.

The 78-year-old Charles Street firm had 120 lawyers just a few years ago and last year ranked fifth in size in the Baltimore metropolitan area with 94 lawyers, according to one survey.

It has since shrunk to 62 lawyers, Monk said.

He said the firm is continuing to downsize and make administrative changes.

"We're trying to do things that people would expect us to do to make ourselves profitable and be able to offer quality legal services," Monk said.

Berman filed suit against the firm in 1992 over its handling of a $5.7 million loan from his Fairfax Savings Association of Baltimore to the developers of a Westminster shopping center who later defaulted.

Berman's suit alleged malpractice and fraud, in part because of a fraudulent billing scheme that was set up by former Weinberg partner Stanford Hess.

The overbilling scheme was disclosed to Berman in 1987 after a Weinberg trial lawyer discovered discrepancies in Berman's bills and reported them to her boss, James E. Carbine, the former head of the firm's litigation department.

Carbine met with the firm's executive committee, which sent a squad of lawyers to Berman's house on a Sunday to explain what happened, according to court records.

The firm paid Berman $475,000 and encouraged him to get different lawyers. Berman then waited six years to file suit, and the law firm retained Washington lawyer Brendan Sullivan for the trial.

Hess, the former Weinberg and Green lawyer who worked most closely with Berman, admitted during last year's 30-day trial before Judge Harrington to orchestrating the scheme.

But Special Appeals Judge James P. Salmon wrote that Berman initially found the scheme "humorous," continued to be friends with Hess and to use Weinberg and Green in more than 100 other cases. "Berman was pleased the firm had overbilled because it created an opportunity for him to recover a substantial amount of money," Salmon wrote in a 59-page opinion.

Berman, 60, of Rutherford Green in Baltimore County owned 70 percent of the stock in Fairfax, a firm with $440 million in assets and 225 employees, according to court records.

He also boasts a net worth of up to $70 million, with interests in eight fast-food franchises, 14 apartment buildings, the Kent Island Marina and Ocean City's largest hotel, the Princess Royale Hotel, which he built for $38 million.

Pub Date: 12/07/96

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