Opinion ID: 511708
Heading Depth: 2
Heading Rank: 3

Heading: The Attorneys' Liability

Text: 41 Sun Savings' attorneys, Ernest Leff and John Grosvenor, and their law firm, Leff & Mason, contend that the complaint fails to allege a RICO claim against them with the particularity required by Rule 9(b). 42 The complaint alleges Leff and Grosvenor, both partners at Leff & Mason, served as legal counsel to Sun Savings. It alleges Leff helped to organize Sun Savings in 1979 and secure the required approvals from bank regulators and that since its organization, Leff has been intimately involved with Sun Savings' affairs. One year after Sun Savings opened, the complaint alleges Leff heralded it as the pre-eminent savings and loan in the state. 43 The complaint alleges, in addition, that Leff served as Dierdorff's personal attorney, in conflict with his duties to Sun Savings and its shareholders. It also alleges that as of September 1983, Leff owned 5000 shares of Sun Savings guarantee stock and that on or about October 2, 1984, Leff represented that Greenfield Partners was expected to add a couple of hundred million dollars to Sun Savings' deposit base. 44 The complaint also alleges generally that Leff, Grosvenor, and Leff & Mason held positions of influence in Sun Savings and had access to Sun Savings' confidential records, which disclosed its true financial condition and its violations of state and federal laws. It alleges Leff & Mason reviewed Sun Savings' reports and releases to its shareholders, thus participating in the making of false statements regarding Sun Savings' financial condition. 45 While some of these allegations do not deal specifically with mail or wire fraud, they do link Leff & Mason and Ernest Leff closely to Sun Savings' management. Leff was involved on a continuing basis with Sun Savings from its inception and had a stake in its success. He made statements promoting it. RICO, at 18 U.S.C. Sec. 1962(c), provides: 46 It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.... 47 The allegations against Leff and Leff & Mason are sufficiently particular to show they may have conducted or participated, either directly or indirectly, in the issuance of false financial statements, press releases, and reports by Sun Savings. Grosvenor 48 The complaint alleges with respect to Grosvenor individually only that he participated in the wrongs complained of herein and later joined Sun as its in-house counsel. Complaint at 9 (emphasis added). His acts as an attorney for Sun Savings as a partner at Leff & Mason are unspecified, unlike those allegations against Leff. The allegations provide Grosvenor with no information on what, if anything, he did wrong as in-house counsel for Sun Savings. There are no specific allegations about his individual knowledge of or participation in any fraudulent scheme. 49 The allegations against Grosvenor are not pled with the particularity Rule 9(b) requires. The complaint fails to state a RICO claim against him.