13-year battle over attorney’s relationship with tribe continues

LOS ANGELES -- A 13-year battle over an attorney's duties in trying to win casino gaming rights for a Native American tribe continues after a judge denied a motion for new trial Tuesday.

The case between the Gabrielino-Tongva Tribe and attorney Jonathan A. Stein is now likely be appealed. A judge tentatively denied the motion but displayed skepticism about underlying damages since no rights were ever won and no casino ever opened.

Stein parted ways with the tribe acrimoniously in 2006 after the tribe said he poorly advised them in pursuit of federal recognition and gaming rights in California, a process that can take up to 30 years.

Meanwhile, Stein said the tribe cast him away after he secured them millions in investment, and he never was their attorney but had duties akin to a developer.

In a scathing ruling this summer, Los Angeles County Superior Court Judge Yvette M. Palazuelos said Stein defrauded the tribe and provided bad legal advice to gain control over its affairs. She delivered $7 million in punitive damages on top of about $20 million in general damages, finding Stein disrupted millions of dollars in funding for the tribe. Gabrielino-Tongva Tribe v. St. Monica Development (L.A. Super. Ct., filed Nov. 2, 2006).

After his relationship with the tribe ended, Stein used tribe membership records without permission and registered a competing group under the same name to develop a casino, the judge said. Stein said he was free to compete with the tribe after ties were severed.

"Stein is a recidivist in targeting Native Americans for exploitation," wrote Palazuelos in her ruling. "Stein used his status as a lawyer, a position of trust, as a weapon against a less sophisticated client," she ruled, finding "evidence of fraud is extensive and at the center of this case."

The judge found Stein violated California Rules of Professional Conduct Section 3-300, regarding avoiding interests adverse to the client; Section 3-310, avoiding representation of adverse interests; and Section 3-1000, on confidential information of a client.

Stein sued the tribe, seeking payment under the contract, but the judge dismissed the claims. His attorneys claimed he was never in fact the tribe's lawyer, pointing to an agreement stating they were not in an attorney-client relationship. However, Palazuelos said he took on the duties of a lawyer, drafting agreements and resolutions, and hiring and firing staff, including lobbyists in Sacramento.

The judge also said Stein was guilty of malpractice, ignoring an opinion by the state Legislature saying the tribe was not recognized by the state.

Further, Stein was obstructive in handing over documents and didn't appear at the hearing for punitive damages, according to the judge.

Stein said a health condition prevented him from attending the hearing. His attorneys said the tribe was suspended in 2016 for not registering with the state and therefore couldn't use the courts as a venue for its claims.

The judge said Stein did not tell the tribe until trial investors were not interested in funding federal recognition for the tribe. Stein has argued the agreement said all along the funder would not invest in federal recognition.

"Thus, for this court to find fraud makes no sense, as the agreement was specifically to fund the state approach to gaming permissions," said Stein's counsel, John K. Rubiner of Barton, Klugman & Oetting LLP, in Stein's motion for new trial.

In court, Stein's lawyer said the investment money could not be a basis for damages because a casino was never built and profit was never made.

The funder, Libra Securities,paid $2.15 million out of a planned $20 million, according to Rubiner.

"The court only showed lost investments. You have to prove profits" under California law, Rubiner told Judge David S. Cunningham, who was sitting in for Palazuelos.

Cunningham tentatively denied Stein's motion for new trial but a discussion ensued about damages. "The damage question does give me pause," said Cunningham.

Los Angeles attorney Delia Ibarra represented the tribe at trial.

Jamie E. Wright, a sole practitioner now representing the tribe, agreed with the judge's ruling. "Stein's gross ethical violations in providing deeply flawed legal advice to the tribe were so serious and presented such deep conflicts of interest that they justified extinguishing any claim that Stein may have had for quantum meruit for the work he alleged to have done for the tribe," said Wright in the opposing a motion for new trial.

She said Stein still holds all of the tribe's records though the contract between them is now voidable.

The state of California has not recognized a tribe that has not been federally recognized.