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Ellis v. Goldberg

United States District Court, N.D. Iowa, Western Division

January 15, 2019

ALAN ELLIS, Plaintiff,
v.
RONALD GOLDBERG, Defendant.

          OPINION AND ORDER REGARDING TRIAL ON THE MERITS

          MARK W. BENNETT U.S. DISTRICT COURT JUDGE.

         TABLE OF CONTENTS

         I. INTRODUCTION ........................................................................... 2

         A. Findings Of Fact .................................................................... 2 1.

         The parties' stipulated facts .............................................. 2

         2. The parties ................................................................... 3

         3. The parties' negotiations .................................................. 4

         4. The parties' agreement .................................................... 6

         5. The parties' performance ................................................. 8

         6. The defendant's interest in the Florida property ................... 11

         7. The value of Mr. Ellis's services ...................................... 12

         B. Procedural Background ......................................................... 13

         II. Legal Analysis ............................................................................. 15

         A. Choice Of Law .................................................................... 16

         B. Breach Of Contract .............................................................. 17

         1. Applicable law ............................................................ 17

         2. Analysis .................................................................... 18

         a. Existence of the contract ....................................... 18

         b. Breach .............................................................. 21

         c. Damages ........................................................... 22

         3. Summary ................................................................... 23

         C. Fraud ................................................................................ 23

         1. Applicable law ............................................................ 23

         2. Analysis .................................................................... 25

         a. Proof of fraud .................................................... 25

         b. Damages ........................................................... 27

         D. Unjust Enrichment ............................................................... 30

         III. CONCLUSION ............................................................................ 31

         In this case, a criminal defense attorney alleges that his client breached a contract to pay for his services in representing the client at his sentencing in federal district court in South Dakota and committed fraud concerning his intent to pay for those services. In the alternative, the attorney asserts that the client was unjustly enriched by his failure to pay the attorney for his services. Following a bench trial on January 10, 2019, I find in favor of the attorney on his claims of breach of contract and fraud for the reasons set forth in this opinion.

         I. INTRODUCTION

         A. Findings Of Fact

         1. The parties' stipulated facts

         The parties stipulated only to the following facts in the Final Pretrial Order:

Alan Ellis, the plaintiff in this case, is a member of the state bar of Pennsylvania, who specializes in sentencing in federal criminal court. Mr. Ellis's offices are in San Francisco and New York. Mr. Goldberg, the defendant in this case, was scheduled to be sentenced in a federal criminal case [United States v. Goldberg, No. 4:11-cr- 40111-KES, ] by the Honorable Karen Schreier on February 29, 2016, in Sioux Falls, South Dakota. Mr. Goldberg's attorney in that case, Peter Bendorf, sponsored Mr. Ellis's admission pro hac vice to Judge Schreier's court, so that Mr. Ellis could appear on Mr. Goldberg's behalf at the sentencing. Mr. Ellis did appear with Mr. Goldberg at Mr. Goldberg's sentencing hearing on February 29, 2016.

         Although this stipulation identifies the parties and some of the circumstances that give rise to their present dispute, it plainly does not address all the pertinent facts. The facts supported by the evidence presented at the bench trial fill in the rest of the story.

         2. The parties

         Mr. Goldberg is now a resident of Arnolds Park, Iowa.[1] From time to time, including in various correspondence with Mr. Ellis, Mr. Goldberg has indicated that he is the “President/CEO” of “Alliance Capital Corp.” (ACC) and that he maintains an office with ACC at an address in New York City. Plaintiff's Trial Exs. 5, 6, 7, 11, 12, 13, 14, 15. In response to interrogatories, Mr. Goldberg stated that the nature of ACC's business was “Consulting.” Plaintiff's Trial Ex. 32 (Defendant's Answers to plaintiff's First Set Of Interrogatories, Interrogatory No. 24). He also stated in response to those interrogatories, however, that he did not remember the date ACC was founded; that ACC does not currently have any officers, executives, or other company leaders; and that ACC does not have any employees. Id. Based on this evidence, and the lack of any other evidence concerning ACC, I find that ACC is simply a name under which Mr. Goldberg conducts business, not an actual business entity.

         At some point, Mr. Goldberg was indicted in the United States District Court for South Dakota on charges of bank fraud, access device fraud, wire fraud, and aggravated identity theft. See Plaintiff's Exhibit 28 (Fourth Superseding Indictment in United States v. Goldberg, No. CR11-401111-KES (S.D. Oct. 6, 2015)). The evidence at trial in this case reflects that, on October 13, 2015, Mr. Goldberg entered into a plea agreement, Plaintiff's Trial Ex. 29, to plead guilty to two counts of bank fraud and one count of wire fraud in that case, and the parties agree that Mr. Goldberg did, in fact plead guilty in the federal criminal case in South Dakota. As of February 2016, Mr. Goldberg was awaiting sentencing in that criminal case.

         Eventually, Mr. Goldberg sought out Mr. Ellis to represent him at sentencing, because he had had previous contact with Mr. Ellis. Mr. Ellis testified that he “may have” represented Mr. Ellis during the 1970s or perhaps the early 1980s, that he could not now recall whether he had ever actually represented Mr. Goldberg, but that he could not be sure without consulting records not available to him at the time of trial. On the other hand, Mr. Ellis testified that he knew for certain that he had contact by mail with Mr. Goldberg at that time. Mr. Goldberg did not clarify at trial how he knew, or knew of, Mr. Ellis or what prompted him to seek out Mr. Ellis to represent him.

         3. The parties' negotiations

         At the time that Mr. Goldberg first contacted Mr. Ellis about representing him in the federal criminal case in South Dakota, Mr. Goldberg was still in the Yankton County Jail on the charges in that case. The earliest written communications between Mr. Goldberg and Mr. Ellis that are in the trial record, here, are dated June 9, 2015, see Plaintiff's Trial Exs. 9 and 10, several months before Mr. Goldberg's sentencing in February 2016. These communications, which are from Mr. Ellis, are addressed for mailing to Mr. Goldberg at the Yankton County Jail and addressed for emailing to Mr. Goldberg at a personal gmail.com address. See id. They are a letter, which states, inter alia, “I must have a signed agreement and retainer before I can do any work on your case, ” Plaintiff's Trial Ex. 9 at 1, and a proposed Engagement Agreement, which, inter alia, required a non-refundable retainer of $75, 000, with an additional $5, 000 to be escrowed for expenses, Plaintiff's Trial Ex. 10 at 2. The rub was that Mr. Goldberg was unable to pay Mr. Ellis a retainer in advance.

         Mr. Ellis testified that, when Mr. Goldberg contacted him in February 2016, Mr. Goldberg told him that he had pleaded guilty to various fraud offenses and that he had gone through a succession of lawyers. Mr. Goldberg elicited testimony from Mr. Ellis that he does not recall whether Mr. Goldberg's prior attorneys were retained or appointed, but I find that Mr. Ellis's uncertain memory about a trivial matter has trivial impact on Mr. Ellis's credibility. By emails dated February 3 and 4, 2016, Mr. Goldberg and Mr. Ellis exchanged further correspondence and various drafts of fee agreements. See Plaintiff's Trial Exs. 11-15. In the course of the parties' negotiations, Mr. Goldberg represented that he had an interest in a Florida property that was about to be sold and that he could pay Mr. Ellis's fee from the proceeds of that sale. Mr. Ellis testified at trial that Gary Mason, Mr. Goldberg's attorney for civil matters, provided Mr. Ellis with an “Irrevocable Payoff Confirmation, ” signed by Mr. Goldberg on February 2, 2016, Plaintiff's Trial Ex. 27, which documented Mr. Goldberg's interest in $202, 000 of the proceeds from the sale of the Florida property. Mr. Ellis testified at trial that he also exchanged emails with Mr. Mason about the mechanics of being paid from the proceeds of the sale of the Florida property. Plaintiff's Trial Ex. 11. Mr. Ellis testified that, in reliance on Mr. Goldberg's and Mr. Mason's representations that his fee would be paid, by wire of funds, upon the sale of the Florida property, he agreed to represent Mr. Goldberg.

         The later communications from Mr. Ellis to Mr. Goldberg in the trial record, dated February 3 and 4, 2016, show a mailing address for Mr. Goldberg, as “President/CEO, ” at his office at ACC in New York City and/or a “corporate” email address for Mr. Goldberg, which includes alliancecapital@gmail.com. See Plaintiff's Trial Exhibits 11-15. At trial, Mr. Goldberg argued that this change in the addresses for the parties' exchanges while negotiating the Engagement Agreement from the Yankton County Jail and a personal email address, in June of 2015, to “corporate” addresses, sometimes indicating his “corporate” titles, in February of 2016, demonstrates that the parties understood that ACC was the party negotiating and entering into the Engagement Agreement. Mr. Ellis testified, however, that he simply sent materials to Mr. Goldberg at the Yankton County Jail and his “personal” addresses while Mr. Goldberg was in custody, but that he sent them to Mr. Goldberg's “corporate” addresses when he was not in custody, because those were the addresses he had for Mr. Goldberg. Mr. Ellis also testified that it was never his understanding that he was contracting with ACC for the payment of the fee to represent Mr. Goldberg. I find Mr. Ellis's ...


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