Updated 2:45 p.m.
A federal appeals court in Washington on Tuesday upheld a trial judge's injunction freezing a solo practitioner’s assets pending the outcome of a legal malpractice suit.
The U.S. Court of Appeals for the D.C. Circuit, in a four-page per curiam judgment (PDF), said the trial judge did not overstep authority in freezing the lawyer’s assets and ordering the money placed in the registry of the U.S. District Court for the District of Columbia.
U.S. District Judge Ellen Segal Huvelle issued the injunction in litigation between attorney Wade A. Robertson and a former business partner named William Cartinhour Jr., described in court papers as an “elderly physician."
A jury in February found in favor of Cartinhour, who won (PDF) $7 million in compensatory and punitive damages. Robertson is challenging the jury’s verdict. He was not immediately reached for comment this afternoon.
An attorney for Robertson in the D.C. Circuit, Ty Clevenger of Youngkin & Burns, in Bryan, Texas, said this afternoon the appeals court ruling was a disappointment. "It’s a setback but this is by no means over,” Clevenger said.
Robertson and Cartinhour formed a business partnership in 2004 in Washington called W.A.R. LLP, which the D.C. Circuit called an “investment vehicle for certain litigation in which Robertson was involved.” Cartinhour contributed $3.5 million to the partnership, according to court records.
Robertson, according to court records, borrowed $3.4 million from the partnership in two interest-free loans and deposited the money into a trading account in his name. Cartinhour, the D.C. Circuit said, demanded an accounting of the partnership’s assets several times in 2009.
Robertson sued Cartinhour in August 2009 in Washington federal district court. Click here for the six-page complaint. Cartinhour, represented by Bethesda, Md.’s Selzer Gurvitch Rabin Wertheimer Polott Obecny & Strickland, filed a counterclaim that alleged, among other things, breach of fiduciary duty and malpractice.
Huvelle ordered an accounting of the partnership’s assets, and Robertson reported that about $4,541 remained in the account. Personal bank records revealed the balance in Robertson’s trading account was $522,000, according to court papers. Cartinhour asked Huvelle for a preliminary injunction to freeze Robertson’s assets. Huvelle granted the request and also ordered the money transferred into the federal court’s registry.
In the appeals court, Robertson said Cartinhour failed to prove he had an equitable interest in the frozen money and that Huvelle stepped beyond her authority when she ordered the money moved into the custody of the federal court.
“None of these arguments has merit,” D.C. Circuit Judges Merrick Garland and Douglas Ginsburg, sitting with Senior Judge Harry Edwards, said yesterday in ruling against Robertson.
The D.C. Circuit judges said Huvelle found that the money in Robertson’s trading account was traceable to Cartinhour’s investment. The appeals court said it had “no difficulty” in concluding that Cartinhour has established an equitable trust in the frozen assets.
Robertson's appeal of the February jury verdict, finding him liable for malpractice, is pending in the D.C. Circuit. The appeals court has not set an argument date.