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Mondelli v. Kendel Homes Corp.

With regard to the Mondellis' appeal, we conclude that the district court abused its discretion in excluding the testimony of Drs. Pour and King. This exclusion of evidence was prejudicial error. The district court did not abuse its discretion in refusing to allow joinder of the claims of the Mondelli family.

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We Need Some Help With a Matter in the Midwest

The caller, it turned out, was the Chief Financial Officer. Before long, I would know Norm was more than that. He was chief organizer, lead decision implementer, banking relations manager, and financial whiz.

Norm worked for a major industrial state employer. His company’s extensive interests in distribution, real estate, and banking needed help in an important, but discreet area. His employer owned an offshore insurance company. It contracted for domestic licensed insurance coverage services with a firm from my state.

All hell had broken loose between Norm’s company and the insurer. Mohawk Co. and Brownville Insurance Company were at war. Big money was at stake.

Norm told me Mohawk had been involved in, and on the losing end of, a huge controversy before my state’s Insurance Department, resulting in an appeal to the State Supreme Court. The administrative law issue concerned control of the licensed insurance company. Mohawk wanted control; Brownville’s management wanted to keep it.

The Assignment

“Well, tell me about the dispute,” I asked.

“I’ll send you a packet of materials including basic pleadings. Our firm in your city, a large silk stocking firm, is now disqualified and must end its representation for us. Frankly, we are glad to have this happen.”

“I’m in a much smaller office, and we do trial work. We handle our own appeals, but we are not insurance regulation lawyers, and we don’t have an administrative law practice in a general sense.”

“We know that,” Norm said. “But, we need a trial lawyer. There are lawsuits in several states, and could be more coming.”

“Are you asking me to undertake some specific task in some specific case, now?” I asked.

“We would like for you to look at the basic materials, and then come to Detroit so we can meet you,” Norm replied. I learned when I could expect the materials. We talked about possible dates. Norm seemed eager to schedule a meeting.

“Why don’t we agree on a tentative date. May I read the materials you send, be sure the work you are asking me to perform matches your concerns and needs, and if it looks like it’s worthwhile, I will be happy to travel to Michigan to meet you.” With that, Norm and I concluded.

I returned to work on other pressing matters.

The Early Review. Defining the Work.

The next day, an overnight courier delivered an interesting package of materials. Enclosed were briefs filed with the Nebraska Supreme Court, basic pleadings in the underlying case that led to the appeal, and a short description of Mohawk’s business. Some insurance regulatory documents, which I didn’t understand, were also enclosed. The appellate briefs meant the most to me. That evening I read those first.

The briefs told me involved issues included an insurance holding company, a model “Insurance Holding Company Act” I had never heard of, and a record made at a five-day regulatory hearing. The briefs made it sound like the other side got the better of Mohawk at the hearing. In fact, the briefs painted Mohawk in a bad light. The proceedings before the Insurance Department had the ring of a suggestion the company contacting me was unsavory. Yet, I had a sense the accuser had used a self-description to attribute acts, motives, status, and circumstances to Mohawk. Doing so is an old technique.

Mohawk’s departing lawyers in my state were from the state’s biggest, and one of its best known, law firms. They have a reputation for precision, skill, accuracy, and high cost. What they lack is a reputation as trial lawyers. I suspected the record might disclose something to confirm my suspicion that Mohawk’s counsel had been chosen for business advice, but was thrust into the battle of a courtroom, and overwhelmed.

The engagement had to be defined. Mohawk would not be well-served by correcting its previous mistake through repetition of the error. I could not become general business counsel with a trial lawyer’s skills. My engagement would have to be carefully defined, or I would pass on the engagement altogether, as it seemed clear that expectations, skills, and outcome had all been mismatched in round one of the controversy. A highly professional telephone conversation followed by a face-to-face meeting with Mohawk’s departing lawyers confirmed this is so. Now, perhaps I could have a meaningful conversation with people in Detroit.

The Meeting

Though I had never heard of Mohawk, I knew a little about Detroit. Several cases earlier in my career had taken me there, and I had been through trial in Michigan’s capital city, and in court at other locations.

Detroit’s devastation following the race riots of 1967 had left the city impoverished, decaying, and in its most uninviting condition, in the mid-1990s.

The airport needed to be rebuilt. By the time my work with Mohawk was finished, this job would be largely done. The city would have new athletic stadiums, I would have attended one of the last baseball games at Tiger Stadium, and a modest revival in downtown Detroit would be on.

But, on this first trip to the city in 1996, Detroit was a tough place to visit.

The rental car agency was about as ratty as the airport terminal. I-94, connecting to I-75, through the heart of Detroit gave me an interstate glimpse of a decaying city. I exited on Eight Mile Road—famous Eight Mile Road—and found my way to Mohawk’s headquarters.

Norm was as gracious in person as he had been on the phone. Bright, clear, and blue-eyed, and ten years older than me, Norm walked on the earth. He impressed me as sincere, honest, and honorable. We talked for an hour. He gave me important details I had known only a tidbit about. The insurance controversy was highly important to Mohawk. But, it was only part of a much larger problem.

I quickly learned that Mohawk was a company that traced its roots back to the late 40s. The company had three owners—a brother and two sisters. The deceased father, once in the company, had been relatively inactive, and the brother had built the business. He married late in life, and while he was still single he gave parts of the company, which was in its infancy at the time, to his sisters. Now, they and he were locked in a complex court battle over control of Mohawk. The sisters, though they owned less than a third of the company shares, sought to oust the brother, control the board, distribute large dividends so they could get some cash out of their investment, or force their brother to buy them out. I learned the brother and the sisters had been facing off in a Michigan courtroom for more than five years but with little progress toward trial. Both sides were armed with lots of money to spend and lots of lawyers to spend it on, and both sides had struggled to a deadlock at moving toward trial. There were no settlement discussions. None were likely. This was an all-out sibling versus sibling “divorce” and the catharsis of trial would likely be necessary.

The insurance dispute, Norm said, was “just one facet.” “The sisters are looking for allies any place. They have connected up with the insurance company people. And, those are bad people,” Norm explained.

It became clear quickly that lawsuits were pending in at least four states, with at least a dozen filings. No one was coordinating the cases. The files were out of control. Norm was trying to rein in the billings. The brother, now aided by a young son, born to him late in life, was a highly capable businessman. But, he had not been able to get his arms around his litigation problems with the insurance company, or his sisters.

“We think the battle with the insurance company is a major step toward solving the problem with his sisters,” Norm explained. Soon, we were joined by Mr. Moak, the brother. He confirmed this impression.

“We need somebody to take over our litigation. Head it up and coordinate it, and also try the case against the insurance company.”

“But, that case isn’t in my state,” I observed. “We know. But, we have looked all over, and we think we need you.”

The engagement narrows.

The first meeting with Mohawk’s senior executives surprised me. The scope of engagement proposed for my firm and me was vastly different than expected. Broadly, I was being asked to undertake roles in a host of lawsuits, all pending, about which I knew little.

I would have to work with the existing lawyers, become responsible for the work, and assess strengths for those now responsible, in a slow and thoughtful way. What is more, I would have to become involved, personally, in the discovery and planning for trial as much of the specific last-round deposition taking had been postponed.

What is more, trial in the first of the many cases was expected to last up to six weeks, and occur at least 800 miles from my home, and 1,500 from the client’s office.

The other side would have a huge head start in the insurance case, as well as the other cases. Our side would require coordination, and this could prove to be difficult. Tact, combined with a forceful personality, would be necessary, and the client’s assistance at giving the matter priority, or prioritizing the change of responsibility over the litigation, would be needed. Without it, the engagement probably could not work.

“Well, will you announce the decisions, and make the appointment of the person ultimately responsible for decision-making among the lawyers in your case?” I asked. I knew without an affirmative answer and unconditional support the case that would otherwise be presentable in court against the insurance company would unravel, and Mohawk would look splintered.

Mr. Moak explained, “Well, some of our lawyers are actually witnesses in the insurance case. They will probably have to testify in the litigation with my sisters. Perhaps, we should simply let them know they have been removed because they are witnesses, we want to put control of the trial in the hands of someone else.”

I decided the proposed engagement was simply too big. “Why don’t we handle your insurance lawsuit for you? Introduce us to it. We will learn the discovery, do the document production requests, and try that case. We won’t step into the Supreme Court argument in our state since the briefs are in and the record is complex. We will make an appearance on the record for whatever you want there, but let the case go on without a new lawyer doing anything but reviewing the briefs.”

The Michigan case involving his sisters was a different matter. “Before you decide with that all important sisters’ case, why don’t you build up toward the idea of having us take over. If we do well in the insurance case, then let’s pass word to the sisters through an entry of appearance. Let’s do nothing to change how that case is proceeding now.”

February 21, 2006

Domina Law Group pc llo is a firm of trial lawyers. We specialize in complex litigation on a national basis. Our lawyers are ethical, aggressive, and committed to providing spirit and vitality to the judicial system and our client’s legal rights.

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