PITTSBURGH – A Pittsburgh law firm has denied allegedly engaging in dual-representation of a pair of Latrobe plaintiffs and an opposing party, and positioning themselves to receive legal fees and proceeds from the sale transfer of the plaintiffs’ liquor license.
PKN Enterprises, LLC and Patrick Murphy of Latrobe filed suit in the Allegheny County Court of Common Pleas on Sept. 25 versus Gregory Nichols, Esq., individually, Chatham Bar Associates, LP and Baxter & Rothschild, LLC (doing business as “The Nichols Law Group”), all of Pittsburgh.
“This is an action that has come about because the defendants’ lawyer and law firm represented two opposing parties at the same time without consent, overpromised legal services verbally, took legal fees without any written fee agreement or written waiver of conflict, and as also recently discovered, upon information and belief, failed to disclose that the defendant lawyer and law firm also built themselves into an undisclosed brokering deal for transferring plaintiffs’ liquor license, that plaintiffs paid the defendants to acquire for plaintiff,” the suit said.
“Plaintiffs have recently discovered the actions set forth herein, and that defendants represented plaintiffs and other party (or parties) adverse to plaintiff at the same time. Defendants executed an affidavit before a Notary of the Public on Sept. 27, 2021 disclosing they ‘dually-represented’ parties, which later was released to third-parties. Defendants have knowledge plaintiffs came into possession and learned of said affidavit after the Sept. 27, 2021 date, whereby plaintiffs have repeatedly asked defendants and allowed defendants time for providing any prior files, waivers, representation agreements and other information regarding said transactions and actions to no avail. Defendants represented plaintiffs and adverse parties to plaintiff without written consent. Defendants verbally promised legal services to plaintiffs without using a written fee agreement. Defendants accepted legal fees for the promise of legal services to plaintiffs. Defendants breached the agreements verbally promised to plaintiffs.”
The suit added the defendants, among other services promised, accepted legal fees to obtain a liquor license for the plaintiffs, but without providing notice to the plaintiff, collected fees from other parties and or non-parties, for the transfer of plaintiff’s liquor license – and furthermore, collected fees in relation to or for document preparation, and upon information and belief, the documents have been created for the financial benefit of the defendants without notice to the plaintiffs.
“Defendants failed to disclose their own self-interest regarding collecting fees from or for transferring and or brokering a liquor license that defendants transferred pertaining to ownership rights of or regarding the plaintiffs. While being paid by plaintiffs for services, which included creating documents protecting plaintiffs’ best financial interest, defendants instead created documents preserving defendants’ own self-interest for brokering liquor licenses and or providing services for defendants or defendants’ other clients and or others, conflicting with the best interest of the plaintiffs. As a result of the defendants’ breach of agreement, breach of duty of loyalty to the plaintiffs, failure to act within the reasonable standard of care, the plaintiffs suffered damages. Defendants promised services for plaintiffs, verbally and collected legal fees from plaintiffs in exchange for the promises of legal services. Defendants acted disloyal to the plaintiffs. Defendants were acting in a fiduciary duty to the plaintiffs,” the suit stated.
“Defendants collected money fees from plaintiffs whereby plaintiffs paid for and relied upon defendants to protect plaintiffs’ best interest and financial well-being only for plaintiffs to lose their business, lose their rights to real property and as surprisingly discovered recently by plaintiffs, the wrongdoings, and or the losses were caused by the defendants putting their own self-interest over that of the plaintiffs. Among other licenses brokered, the Pennsylvania Liquor Control Board disclosed to plaintiffs that defendants were facilitating the sale of the plaintiffs’ Liquor License registered to plaintiff at PKN at R-15437/LID #94571 without proper correspondence, with and or from plaintiffs and or without disclosing defendants’ financial interest, and or where defendants were again collecting an undisclosed brokering fee. When plaintiffs contacted the Pennsylvania Liquor Control Board to learn what was transpiring regarding the transfer of their liquor license without plaintiffs’ knowledge and or consent, the PA LCB informed plaintiffs to call the State Police regarding this matter.”
The suit continued that “pursuant to defendants’ actions to sell and or facilitate the transfer of the plaintiffs’ liquor license, and defendants representing two parties at the same time with competing interest, a separate firm of Flaherty & O’Hara, P.C., has now been required to escrow funds due to a conflict in the ownership rights of plaintiffs and another client of defendant, yet, upon information and belief, the defendants did in fact collect their brokerage and or fees for facilitating a transfer of the plaintiffs’ liquor license.”
“Yet, defendants were specifically retained by plaintiffs to protect these very own property rights to their liquor license and business acquisition, and real property acquisition rights. Defendants never disclosed, and or, obtained consent from plaintiffs for defendants to conduct their dual-representation, double-dealing and or triple-dealing activities whereby not only were the defendants representing the other side without written or verbal approval of plaintiff, defendants were also building themselves financially into the transaction for transfer and or brokering fees again without the consent and or disclosure to plaintiffs. Defendants informed plaintiffs verbally that they would render legal services protecting the interest of the plaintiffs for the purchase of a business, purchase of a liquor license, purchase of a restaurant, purchase of two real properties, and create an LLC for the plaintiffs, among other services. Defendants have acted in a negligent, and or wanton, egregious, reckless manner and or with intentional actions or failures to act caused, and continue to cause, tremendous losses to PKN,” the suit said.
“Upon information and belief, defendants have knowingly concealed from plaintiffs their financial interest in the transfer of the liquor license, and or other property and or financial interests. Defendants conducted fiduciary duties of safe keeping of liquor licenses; and repeatedly has been listed on the Pennsylvania Liquor Control Board website under the ‘SAFEKEEPING INFORMATION’ section regarding establishments registered with liquor licenses. Plaintiffs retained defendants for the formation of a legal businesses, search for a liquor license, purchase and transfer of a liquor license, search of a restaurant, as well as to represent plaintiffs for a formed company with the negotiations, document preparation, acquisition of the restaurant business and the real property and building acquisitions, and also represent plaintiffs’ formed company in all matters pertaining to the document creation, preparation, and transfer of the liquor license and properties to his newly formed company, and create a document titled Agreement for Transfer of Pennsylvania Restaurant Liquor License, and right to purchase agreements, leases, along with other services. Defendants created multiple company names for plaintiffs, along with named plaintiff in the action, along with including creation of two companies for the purpose of operating the business for the liquor license.”
UPDATE
In a March 13 stipulation reached among the parties, Paragraphs 37(H) and 38 were stricken from the complaint. These paragraphs concerned the defendants allegedly breaching standards of care with respect to their level of legal representation provided to the plaintiffs.
Furthermore, the defendants each filed separate answers denying the plaintiffs’ allegations on March 21.
“To the extent plaintiffs have sustained any damages at all, the damages were caused by the failure of the restaurant/tavern in terms of its profitability, PKN’s breach of its commercial lease, PKN’s failure to pay rent and PKN’s abandonment of the premises and equipment, for which defendants were not responsible. Defendants never represented plaintiff Patrick Murphy, as an individual. Prior to 2018, defendants never represented PKN. In 2018, Zimlr and plaintiff Murphy negotiated the terms of a commercial lease and option to purchase. Defendants did not negotiate the terms of the commercial lease or option to purchase,” per the answer from defendants Nichols and Chatham Bar Associates, LP, in part.
“Plaintiffs were familiar with the terms of the commercial lease with Zimlr’s prior tenant. The terms negotiated between PKN and Zimlr were similar to the terms of the commercial lease with Zimlr’s prior tenant and both leases included an obligation to pay monthly rent, an option to purchase and an obligation by the tenant to re-convey the liquor license in the event of tenant’s default. In 2018, Attorney Nichols assisted both Zimlr and PKN by memorializing their already negotiated key terms in a written lease dated Aug. 18, 2018 and assisted with the Pennsylvania Liquor Control Board (PLCB) transfer application, which was approved in November 2018. During the 2018 Zimlr Transaction, Zimlr and PKN were not adversarial. Defendants did not search for a liquor license or restaurant for plaintiffs and never undertook an obligation to do so, as a lawyer or in any other capacity.”
Their answer added that the plaintiffs’ claims are barred by the statute of limitations, the plaintiffs’ contract-based claim is barred by the gist of the action, the defendants plead contributory and comparative negligence and further, that the plaintiffs failed to mitigate their damages, failed to purchase another liquor license to mitigate their damages and failed to open another establishment to mitigate their damages, among other defenses.
In their separate answer, Baxter & Rothschild, LLC also denied being liable for the complained-of conduct.
“Baxter incorporates the new matter of Gregory Nichols, Esq., Chatham Bar Associates, LP (doing business as “The Nichols Law Group”) by reference as if set forth in full. Baxter & Rothschild, LLC does not do business as The Nichols Law Group. Baxter & Rothschild, LLC did not engage in any of the actions at issue in plaintiffs’ complaint. Plaintiffs’ complaint states no claim upon which relief may be based,”
For counts of breach of contract, breach of fiduciary duties and negligence, the plaintiffs are seeking damages individually, jointly and or severally, and or under the doctrine of respondeat superior, and or such other and further relief as this Honorable Court deems necessary and just, as the plaintiffs have suffered and are entitled by law to that of statutory, punitive, compensatory and other damages including expectation damages, restitution damages, reliance damages, among other damages the Court deems appropriate.
The plaintiffs are represented by Richard Thiele and George Miller Jr. of Goldleaf Law, in Pittsburgh.
The defendants are represented by Bethann R. Lloyd of DiBella Weinheimer in Pittsburgh and Richard C. Thiele of Goldleaf Law, in Greensburg.
Allegheny County Court of Common Pleas case GD-23-011193
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com