Dairy family attorney asks for a lot less in damages in closing argument against firm

SANTA ANA -- Buchalter APC should pay $15 million to the heirs of the Alta-Dena Dairy fortune for a former attorney's work on an estate plan that "became a lawyer self-enriching scheme" protected by firm officials leery of scrutiny, a plaintiffs' lawyer told an Orange County Superior Court jury Monday.

"As soon as Wayne Allen joins big law, he sees himself as above the law," said Robert E. Barnes of Barnes Law LLP, who represents the Stueve family, heirs to the Alta-Dena Dairy fortune. The lawsuit accuses Buchalter of conspiring with the family's former lawyers, Allen and sole practitioner Raymond "Ran" Novell, to defraud the estate through years of unauthorized self-dealing and circular transactions.

Though Barnes referenced damages of at least $150 million in his Aug. 6 opening statement, he told jurors Monday the family "is not here to make a big recovery."

Rather, they want to send a message to attorneys who might conduct themselves as Allen did. Barnes also used just 30 minutes of his allotted two hours, saying he'd save the rest for rebuttal "and afford Buchalter the opportunity" to admit its mistakes. His rebuttal argument was about 20 minutes, and the case went to the jury in the afternoon.

"The family had requested to give Buchalter one last chance to admit that what Wayne Allen did here was wrong," Barnes said.

Buchalter's lawyer, Alan A. Greenberg of Greenberg Gross LLP, told jurors Barnes' argument was the strangest he'd ever heard.

"Mr. Barnes told you almost nothing for a half an hour other than putting some numbers that are totally irrelevant up on the screen," Greenberg said.

"When someone has a good case, they set it forward in a straightforward manner," he said. "The plaintiffs here do not have a good, solid case. The plaintiffs have against Buchalter no case."

Greenberg has portrayed the case as a money grab by junior Stueve family members who disagreed with the generous charitable contributions of the elder Stueves, who in turn didn't trust their children to manage their estate and feared raising spoiled children dependent on trust funds.

The junior Stueves went against their elders' long-term plans when they removed Novell as trustee and eliminated the estate's charitable contributions, despite having been informed of estate changes and transactions during the years Novell and Allen worked on the estate, he said.

Allen spent roughly 10 percent of his time on the Stueve estate, and the firm was only paid for some of the "modest amount of legal work" it did for the family, Greenberg said. Buchalter forced Allen to leave after learning he loaned himself money from the Stueves, though Greenberg emphasized Allen's actions weren't illegal.

"Buchalter doesn't think it's above the law. Buchalter wants you to apply the law," Greenberg told the jury.

Monday's arguments occurred eight years to the day after the lawsuit was filed. Novell and Allen settled the claims against them shortly before trial as did Berger Kahn LLP, where Allen worked before Novell. Novell agreed to a $200 million noncollectable judgment while Allen's insurer will pay his $1.25 million settlement. Stueve v. Novell, 10-00411651 (Orange Super. Ct., filed Sept. 24, 2010).

Greenberg noted the huge change in damages from Barnes' opening estimate of $150 million -- $50 million in lost profits and $100 million interest -- which, unbeknown to jurors, occurred after Judge William D. Claster last week granted a motion from Greenberg for a directed verdict that eliminated punitive damages.

The judge said he didn't believe Barnes established Buchalter knew of or condoned Allen's misconduct though he denied a directed verdict for claims of convergence and violating the Racketeering Influenced and Corrupt Organization Act.

Barnes then dropped a claim of negligent hiring, leaving fraud by intentional misrepresentation, fraud by concealment, negligent misrepresentation, financial elder abuse, breach of fiduciary duty and civil RICO as the bulk of the claims.

The damages figures presented by Barnes included approximately $5.5 million for Stueve Bros Farms and $3.3 million for Ruth McClamma Stueve, wife of the late Harold Stueve, who founded the dairy in 1945 with his two brothers and managed it through its 1989 sale. The figures were derived from life insurance and trust tax proceeds Barnes argues were improperly diverted by Novell and Allen.

"The only reason we're still here is because Buchalter is unwilling to recognize they're responsible for what he did, but they won't admit what he did was wrong," Barnes said, referring to a special jury instruction he and Greenberg stipulated to that says Buchalter accepts responsibility for what Allen did when he was employed at the firm between 2007 and 2010.

Barnes tried to discredit a defense expert by arguing Buchalter "was so scared of their own evidence" that firm officials didn't provide the expert with emails and other evidence that establish what Novell and Allen did.

Barnes pointed to testimony from Buchalter Chief Financial Officer Pamela K. Webster in which she said she was concerned Allen had clients who weren't paying their bills but that then-CEO Rick Cohen told her he wanted to help Allen "up, not out" because of his partnership with Buchalter shareholder Martin P. "Marty" Florman.

Cohen feared Florman would leave if Allen left, and the Orange County office would close without him, Webster testified.

Citing that testimony, Barnes argued Allen felt "such comfort and power" at Buchalter he accelerated his fraud against the Stueves by creating a new acquisition company and diverting estate assets to himself and Novell, with whom he'd worked on the Stueve estate since 2001. Novell, a sole practitioner, had been friends with the Stueves since he was a child.

However, in his closing statement, Greenberg displayed a Daily Journal article from 2006 about Allen joining Berger Kahn that quotes Florman, then co-chair of Berger Kahn's business and corporate practice group.

While Barnes argued Allen's relationship with Florman was unique to his situation at Buchalter, "they were already practicing together," Greenberg said.

Additionally, "the Stueves didn't care what firm Wayne Allen was at. Almost every Stueve testified that it made no difference to them," Greenberg said.