Hogan Lovells is being sued by two Montgomery County, Md. landowners who allege the law firm’s advice led to a $36 million jury verdict against them.
The malpractice suit, filed April 1 in D.C. Superior Court, stems from the work attorneys from the legacy firm Hogan & Hartson did for the Camalier and Davis families in a real estate deal.
The plaintiffs in the malpractice suit leased two adjacent properties to the Penrose Group, which intended to construct apartment buildings. According to the complaint, the Hogan attorneys who were retained in September 2006, including commercial litigation partner David Hensler, advised the landowners not to produce an estoppel certificate, a guarantee that developers were in compliance with the lease.
Without an estoppel certificate Penrose, the developer, was unable to get financing for the project. Penrose subsequently sued the landowners for loss of profit.
In March 2010, a Montgomery County Circuit Court jury awarded damages of $36 million to Penrose, including $3.7 million in attorneys' fees. The Court of Special Appeals and the Maryland Court of Appeals both affirmed the verdict in October 2011 and November 2012, respectively.
Throughout the trial, the Davis and the Camalier families said they acted in good faith and at the direction of Hogan attorneys. The court subsequently granted discovery for communication between the landlords and their former Hogan lawyers.
"In discovery, Tenants obtained an email from Davis Camalier, one of Landlords, in which he instructed the lawyers: 'Just make sure you stop the bastards…Whichever way you choose to go. We need some leverage[.]'," Judge Sally Adkins wrote in the Maryland Court of Appeals ruling in November 2012. "Some might say this was the 'smoking gun.'"
Andrew Graham of Kramon and Graham argued for the Camalier and Davis families before the Court of Appeals. (Dale Cooter of Cooter, Mangold, Deckelbaum & Karas was on the brief.) Venable partner and vice chairman Brian Schwalb was lead trial attorney for Penrose.
Among the allegations against Hogan Lovells in the malpractice suit are that its attorneys never executed a retainer agreement with the Davis family, while continuing to provide legal advice. The plaintiffs claim this created a conflict of interest for the firm because it was concurrently representing the Camalier family. The plaintiffs also allege that Hogan's advice to not provide the estoppel certificate was based on case law that lacks precedent in Maryland.
The landowners are asking a D.C. Superior Court judge to disgorge attorney fees from Hogan Lovells, fees paid to Cooter Mangold and other compensatory damages. J. Michael Hannon of the Hannon Law Group is representing the Davis and Camalier families in the malpractice suit. Hannon did not respond to a request for comment.
Williams & Connolly partner and executive committee member John Villa represents Hogan Lovells in the malpractice suit.
"The suit is completely without merit," Villa said in a statement this afternoon. "The plaintiffs are experienced real estate developers, some of whom are also real estate lawyers. They retained Hogan & Hartson to handle brewing real estate litigation. After some initial skirmishes in the Maryland courts, the plaintiffs replaced Hogan with another law firm. The other law firm tried the case and lost, resulting in a substantial verdict against the plaintiffs.”
Villa said that “while we understand that the plaintiffs are unhappy with the result the other lawyers obtained, sophisticated businesspeople and lawyers understand that they might lose if they go to a jury trial. There is no cause to sue their lawyers, particularly the lawyers who did not even handle the jury trial."