FKB’s Izabell Lemkhen prevailed in a pre-discovery motion to dismiss claims for legal malpractice, breach of fiduciary duty, and common law indemnity asserted against a law firm and its partner arising out of legal representation provided to a film production company with respect to various corporate matters.
FKB represented a reputable law firm and one of its partners in two (2) Third-Party Actions asserted by a high-profile film production company (“Company”), members of its Board of Directors, and individual investors alleging that the law firm was negligent in drafting a Separation Agreement between the Company and its former Chief Financial Officer (“CFO”) in which the Company was to return investments in excess of $1.5 million to the Chief Financial Officer after his termination. The Third-Party Plaintiffs claimed that the law firm failed to obtain approval from the Board of Directors to authorize the payment of the investments to the CFO, and furthermore, that the language of the Separation Agreement improperly bound the Company’s affiliate entities and individual Board members as personal obligors to the CFO for the payment of the investments. The Third Party Plaintiffs sought damages in excess of $2 million against the law firm and its partner.
FKB’s Izabell Lemkhen demonstrated that: (1) the law firm and its partner properly relied on the instruction and direction of the Company’s Chief Executive Officer (“CEO”) with respect to the terms, conditions, and obligations set forth in the Separation Agreement, (2) that the Separation Agreement was within the scope of presumptive authority of the CEO of the Company pursuant to New York law; (3) that the Bylaws of the Company did not require approval from the Board of Directors to pay the investments to the CFO, and (4) that the language in the Separation Agreement that allegedly bound the individual Board members as obligors was standard-form language the inclusion of which was not a deviation from the standard of care. The Court granted FKB’s motion in its entirety and dismissed both of the Third-Party Actions with prejudice.
If you have any questions about this decision, or the defense of attorneys in general, please contact Izabell Lemkhen.