Buchanan Ingersoll & Rooney and a former partner at the firm have responded to the malpractice suit filed by the name partners of Alcalde & Fay in July.
The suit stems out of work done by former Buchanan partner Louis Diamond, who was hired by lobbyists Hector Alcalde and Kevin Fay to set up an employee stock ownership plan and advise on related investments designed to defer capital gains taxes. Alcalde and Fay's complaint alleges that as a result of bad advice from Diamond, the Internal Revenue Service has tried to collect $2 million in capital gains taxes, penalties and interest that they say they shouldn't have to pay.
As The National Law Journal previously reported, Alcalde and Fay's suit marks the second time Buchanan Ingersoll has been sued in the past three years as a result of ESOP-related work done by Diamond. In 2008, a jury awarded two of Diamond's former clients nearly $860,000 for a paperwork error he made in setting up an ESOP that cost them similar tax benefits. Diamond now runs Diamond ESOP Advisers in Washington.
Buchan Ingersoll and Diamond's answer in the most recent case, filed in the U.S. District Court for the District of Columbia on Monday, makes nine affirmative defenses as to why the complaint should be dismissed. The defenses include some of the claims being barred by the statute of limitations, the doctrine of contributory negligence, and the doctrine of contributory negligence. The answer also claims that the Alcalde and Fay's damages were caused by third parties over whom Buchanan Ingersoll and Diamond had no control.
Buchanan Ingersoll and Diamond are both being represented by Pamela Bresnahan and Nicholas Reuhs of Vorys, Sater, Seymour and Pease. Bresnahan said it was too early to comment on the substance of Alcalde and Fay’s complaint.
"We want to take a thorough look at the matter," Bresnahan said.
Alcalde and Fay here are being represented by Harvey Cohen and John Prominski Jr. of the McLean, Va. office of Miles & Stockbridge.