Dairy family settles with some law firms, attorney defendants

SANTA ANA -- Berger Khan LLP on Monday settled a civil RICO case that accused the firm of conspiring with two attorneys to defraud the heirs of a dairy fortune, postponing an Orange County Superior Court trial.

Attorney Raymond A. Novell, who is representing himself, also settled, leaving attorney Jay Wayne Allen and the law firm Buchalter APC as the remaining defendants in an 8-year-old case that seeks tens of millions of dollars in damages.

Orange County Superior Court Judge William D. Claster told the jury, which was to hear opening statements, to come back Monday after attorneys for Allen and Buchalter said they needed more time to consider the settlements and possibly adjust their strategies.

"We're only hearing about this now, so we're a little hamstrung to give opening statements," said Alan A. Greenberg of Greenberg Gross LLP, who is representing Buchalter with his partner, Wayne R. Gross, and an associate, Stephanie S. Elder. The settlements are contingent on good-faith determinations, "and there's no way to achieve that determination here in the next five minutes," he said.

Michael R. Williams and Ali Matin of Bienert, Miller & Katzman PLC represent Allen, who worked for Berger Khan and Buchalter while managing the family's estate with Novell.

Williams said the plaintiffs agreed in Novell's settlement that he acted without criminal intent, which he said has big implications for the Racketeer Influenced and Corrupt Organizations Act and other conspiracy-based claims.

"We are at a million miles an hour trying to process what we're hearing and what it means for the rest of the case," Williams said. "And, frankly, it sounds like there's some momentum here, and I'm curious if that momentum could continue in a way that's beneficial to my client."

Berger Khan is represented by Allen L. Michel of Gipson Hoffman & Pancione A.P.C., who said the confidential settlement was reached about a half hour before opening statements were to begin. It covers all claims against the firm, which stem from Allen's employment there between February 2006 and June 2007.

It covers "all claims against Allen for the 2007 loan," said Michel, who is working with Gibson Hoffman attorney Won M. Park.

The loan is one of dozens the lawsuits says Allen and Novell illegally took from the Stueve family, which founded Alta-Dena Dairy in 1945. It grew to be one of the largest dairies in the world.

Plaintiff's lawyer Robert E. Barnes of Barnes Law, LLP, represents the family, along with Barnes Law attorney Keo Keopong.

The 533-page complaint lists 17 claims, including fraud by intentional misrepresentation, negligent hiring and supervising, breach and contract and civil RICO. He said he's seeking damages of "at least $100 million." Stueve et al., v. Novell et al., 10-00411651 (Orange Super. Ct., filed Sept. 24, 2010).

Barnes Law spokesman Tim Omarzu said in an email that the trial "is shaping up as the Stueve Family v. Buchalter." He said the family "doesn't want to let Buchalter off the hook, because they named Jay Wayne Allen as their tax expert and they seemed so respectable and professional."

In response, Gross told the Daily Journal that Buchalter should not be part of the lawsuit.

"The firm conducted itself properly at all times," Gross said.

Novell has known the family since he was a boy, and he was their attorney beginning in the 1990s until 2010, when they discovered the fortune they'd hired him to manage had nearly disappeared, according to the lawsuit. Novell began working with Allen in 2001, who was experienced in estate planning and was a name partner at three firms before joining Berger Khan.

Allen currently is a sole practitioner in Fort Worth, Texas. Novell, who the State Bar suspended for 40 days in 2001 for unauthorized use of a client's funds in an unrelated matter, owns Novell & Associates in Long Beach.

According to the lawsuit, Allen and Novell persuaded the family to put their assets in charitable remainder trusts that the attorneys then liquidated without their consent and exchanged for unsecured promissory notes. The lawsuit says Novell and Allen then used the assets for themselves and associates, including Novell's three daughters.

One of Novell's daughters, Jennifer A. Miller, is an attorney in Long Beach who's representing herself in this case, and her sisters, Helen Mouat and Maggie Novell. She announced in court Monday that her father had settled.

The agreement covers all claims against Novell and his daughters. She said the fact that her father is 75 and lives on Social Security benefits should be considered when determining whether he settled in good faith.

The settlements follow three days of voir dire last week with a pool of 118 people. Before questioning began, Claster had the attorneys briefly describe their cases to give "a flavor of the case and hopefully to slightly entice them into wanting to be a juror in this case."

"So do your best to make it sound like they're going to have fun over the next three or four months," Claster said, according to a reporter's transcript.

Michel of Gibson Hoffman, lawyer for Berger Kahn, told the jury pool that "Berger Kahn should not have been in this case."

Gross said the same thing about Buchalter.

Williams told them that Allen's estate plan for the Stueves "worked exactly as it was supposed to." He said the case "comes down to very basic human issues like the interrelationship between generations of a family, particularly when you have inheritance issues in the mix. And ultimately, the core of this case are issues of personal responsibility and fairness," according to the transcript.

Miller noted the age of some of the evidence, which her father also referenced in his brief statement.

"I was manager of the companies as you've heard, and I had to exercise business judgment and perform my duties," Novell said, according to the transcript.