4-4 In Pari Delicto and Fraud

• Jurisdiction: United States

4-4 In Pari Delicto and Fraud

In Turner v. Anderson,⁶¹ a case of first impression in Florida, the Fourth District Court of Appeal was faced with "[t]he question of whether a client who does an illegal act on advice of counsel can sue counsel for damages resulting therefrom."⁶² After examining cases from other jurisdictions, the court held that "no public policy should allow appellant to recover damages as a result of engaging in criminal conduct such as occurred in this case."⁶³

In reaching its decision, the court considered the appellant's sophisticated background and his deposition testimony in which he admitted committing perjury with full knowledge of his conduct. Unfortunately, as the court acknowledged, it stopped short of answering several related questions: "We need not decide whether the doctrine of in pari delicto is a bar where the client's misconduct is far less in degree than counsel's . . . nor need we decide whether the client can recover fees paid to counsel, because this is not part of appellant's claim."⁶⁴

In re Gosman⁶⁵ involved a client whose guilt was at least as great as the law firm's. Because the client was found to have committed actual fraud to shelter his assets from his creditors, and the claim against his lawyers was for negligence, the district court affirmed a bankruptcy court's dismissal of the legal malpractice action.⁶⁶

Another bankruptcy case involving the in pari delicto doctrine is Kapila v. Davis, Graham & Stubbs LLP.⁶⁷ A law firm provided incorrect advice regarding the legality of a fuel provider's billing method. A bankruptcy trustee sued the debtor's accounting firm and law firm. A summary judgment based on in pari delicto was entered in favor of the accounting firm due to the trustee's admission that the debtor's responsibility in the overbilling scheme was at least equal to, if not greater than, the accounting firm's responsibility. This admission was held to similarly bar the trustee's legal malpractice claim.⁶⁸

False and inconsistent information provided during discovery resulted in a legal malpractice case being dismissed with prejudice in Cox v. Burke.⁶⁹ The former client sued her attorneys after being informed the day after the statute of limitations had expired that they were not going to handle her medical malpractice case. During the course of the legal malpractice litigation, and after a year's worth of discovery, the attorneys were able to prove that the former client had misled them about her identity...