Too many attorneys and their clients defend against cases that have no defense.
You took out a loan, your financial circumstances went south, and you were not able to repay the loan. Now you have been served with a complaint from the lender, so you take it to an attorney to see what can be done. So far so good, but consider your options very carefully. Some attorneys are more than happy to take your money and pursue a defense, but what is the point if you have no defense? Delaying the action for a year while you try to get your finances back in shape might have some appeal, but a defense can sometimes leave you in much worse circumstances. Here are two cases from my practice that illustrate what I am talking about.
The case of the defaming doctor.
In the first case, we brought an action against a doctor who had defamed our client. When the doctor’s contract at a hospital was not renewed, she decided our client was to blame. She took to the Internet and posted false comments about his job performance, in some cases assuming the false identity of a nurse and in others a patient. When we presented irrefutable proof that she had published the anonymous comments, she admitted what she had done. If ever there was a case that should have settled, this was one, but her insurer picked up coverage and for unknown reasons decided to fight the case right through trial, despite our very reasonable settlement demand.
The result was disastrous for the doctor. The case went to a jury verdict, and since the verdict was now a matter of public record, I was free to write about it, as were other attorneys and news organizations who found the story interesting. An Internet search of her name now brings up news of her bizarre behavior in multiple places on the first page of the search results, including the top position on Google.
A complaint contains only allegations, and anybody can allege anything about anyone. It might be frustrating to have those allegations in the public domain, but at that point the claim can still be made that they are only allegations, and a settlement can keep the entire matter confidential. Once the matter goes to verdict, the claims are no longer allegations, they are proven facts, and can be reported as such. I am the first to suggest fighting the good fight, but this doctor admitted she posted the false, defamatory comments. Where did her counsel think he was going to go with that? Taking the matter to trial only made a bad situation far worse. I can’t imagine anyone hiring this doctor after reading about what she did. The information posted about this case will undoubtedly be a source of embarrassment for this doctor for years to come, and that could have been easily avoided.
The case of the unpaid loan.
But if the doctor’s fate was bad, it pales in comparison to the unfortunate defendant who failed to repay a loan to our client. The defendant in this case is a wheeler-dealer who as far as I can tell has never held a day job, but promotes various business ventures and raises money for those ventures. Our client loaned over $200,000 to the defendant, and in pursuing the case we learned that he obtained the loan under false pretenses. I decided to add a cause of action under the criminal code for theft, which if successful would entitle our client to treble damages and all attorney fees.
Again, this was a case where there was no other version of the facts or a basis for any defense. The defendant admitted he had borrowed the money and had failed to pay it back. We offered to accept payment of only the amount owed, affording him the opportunity to avoid the specter of my novel theory for treble damages and attorney fees. In case he didn’t have that much money stuffed under his mattress, we even offered to take a stipulated judgment.
With no conceivable defense, the defendant nonetheless decided to take the matter to trial. In the end, the judge stated that he did not like doing what I was asking him to do, but could not find any basis to hold that this was not a theft, nor to deny the treble damages and attorney fees. The judgment for an unpaid loan of $200,000 became $700,000.
Bad decision number one (taking the matter to trial) then led directly to bad decision number two (appealing the verdict). There remained no basis to challenge the breach of contract action, but the treble damages for theft really stuck in the craw of defendant, and he appealed those damages.
Let’s freeze right there and ponder for a moment what is going to happen if this decision is appealed and the Court of Appeal decides that my crazy theory that an unpaid loan is a theft is upheld. Think that might generate some buzz in the legal press?
I think you saw this coming. The Court of Appeal also stated that it also did not like my application of the Criminal Code, but could not find any flaw in my logic and upheld the verdict. That published opinion was discussed all over the blogosphere, and in the press. Making matters far worse for defendant, the OC Weekly newspaper published an article entitled “[Defendant’s Name] Called a Scam Artist by California Appellate Justices”. The article shot to the number one position on Google when you search for defendant’s name, and if that were not bad enough, the article was picked up and reprinted by dozens of other sites.
How is defendant going to do business in the future when he is called a scam artist in innumerable places on the Internet? I can tell he has retained one of those reputation services, because the Internet has suddenly become flooded with websites and articles about how wonderful he is, in an effort to push down the information about our case, but thus far the efforts have not been fruitful.
In a twist I had not imagined, an attorney unrelated to the case filed a motion with the California Supreme Court, seeking to have the opinion depublished, and in denying that motion the Supremes stated that they also would not consider the case for review. This turn of events led to another round of discussion of the case, and more negative publicity for the defendant.
I have several such examples that have arisen in my practice, but I think these two amply illustrate the point. Again, fight the good fight if have a righteous defense, but consider whether the blowback from an ill-conceived defense or appeal will far exceed your initial exposure.
