Free Response in Opposition to Motion - District Court of Arizona - Arizona

Timothy A. Shimko (PRO HAC VICE) (OSBN 0006736) David A. Welling (PRO HAC VICE) (OSBN 0075934) TIMOTHY A. SHIMKO & ASSOCIATES 2010 Huntington Building 925 Euclid Ave. Cleveland, Ohio 44115 Tel. (216) 241-8300 Fax (216) 241-2702 Attorneys for Plaintiffs

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA ) ) Case No. CV-04-00078-FJM SHIMKO & PISCITELLI, et al., ) ) Judge Frederick J. Martone Plaintiffs, ) ) PLAINTIFFS' RESPONSE IN v. ) OPPOSITION TO DEFENDANT ) WOODCOCKS AND ROSS' ) MOTIONS FOR SUMMARY PAUL WOODCOCK, et al., ) JUDGMENT ) Defendants. ) NOW COME Plaintiffs, and hereby submit their joint response in opposition to Defendant Woodcocks' Amended Motion to Dismiss Claims and Motion for Summary Judgment; and Motion for Sanctions (Doc. 198-199), and to Ross Defendants' Joinder in Woodwock Defendants' Motion to Dismiss Claims and Motion for Summary Judgment (Doc. 191). I. INTRODUCTION A plain reading of the Ninth Circuit's Judgment (Doc. 156) illustrates that the appellate court has already concluded that summary judgment is inappropriate in this case. (See the opinion attached as "Exhibit 1.") Although the Ninth Circuit noted in footnote 3 of its opinion -1Document 208

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that the Plaintiff's failure to obtain written conflicts waivers may be relevant under an equitable analysis (e.g., with respect to quantum meruit), with respect to the Plaintiff's legal claims (breach of contract and action on account), the Ninth Circuit made no such statement. The Ninth Circuit clearly held that this case should proceed to a jury trial on the Plaintiff's legal claims of breach of contract and action on account. The Defendants' instant motion ignores this controlling precedent and invites this Court into error. The Plaintiff's claims against the Woodcocks are identical to those against the Ross Defendants. I. Statement of Facts For the purposes of passing on this motion, it would be helpful if the Court had a brief understanding of the business that Defendants conducted through the Defendant, CORF Licensing Services LLC. [hereinafter "CLS"] The primary business of CLS was to create a demand for and to license the Defendants' business plan to individuals to start up, own and operate a Comprehensive Outpatient Rehabilitation Facility. (CORF) Under a consulting agreement, the customers of CLS paid approximately $125,000 for CLS to advise and assist the customer in establishing a Medicare approved CORF. Demand for CLS' services was generated by advertisements in publications with national distribution and over the internet. In the newspapers and on its website, CLS informed the investing public what a CORF was and what awaited the investor that would decide to own his or her own CORF. Potential investors were given an e-mail address and a telephone number, by which they could communicate with the Defendants, Goldfarb, Woodcock and Ross. (T. Shimko Aff. at ¶ 10.) Potential investors or customers were initially steered to David Goldfarb, who would expand upon the benefits of owning and operating a CORF and answer any questions the customer had. If the customer remained interested, he or she would be invited to a daylong

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seminar at the Troon Country Club, at which they would be addressed by Dr. Guenther, Dr. Woodcock, David Goldfarb and Richard Ross. These seminars took place approximately twice a month from 1999 to the middle of 2002, and were attended usually by six (6) to twelve (12) customers. (T. Shimko Aff. at ¶ 12.) From 1999 up until the end of 2001, Woodcock, Ross, & Goldfarb attended these seminars, and gave talks and personally made representations to the groups on the services that CLS provided and on the successful results that could be expected. Dr. Woodcock, Richard Ross, and David Goldfarb would each address the group on separate topics. Before the seminar, during lunch, and after the seminar, these same individuals spoke with each of the potential customers and answered their questions and made further representations. The

message each delivered collectively and individually was essentially the same; how easy it was to start up, how easy it was to operate, and how successful a CORF licensee would be. In making their sales pitches, the Defendants relied heavily on success stories of other customers they had previously licensed. If, after the seminar, a potential customer was still interested, he or she would be invited to visit one of these several facilities that were represented by the Defendants to be successfully operating. The Licensee would provide a tour of the facility to the potential customer and explain how it worked and represent to the potential customer how successful the facility was. Even prior to the time Plaintiff was retained, Woodcock, Ross, and Goldfarb had been making cash payments to these "successful licensees," which in many cases they did not disclose to the potential customer. Plaintiff advised Defendants to discontinue such payments or to disclose the fact of such payments. Evidence would later be disclosed that supported allegations that these supposedly "successful CORFs" were anything but, and that Ross, Goldfarb, Woodcock, and Guenther had been

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paying the owners of these facilities monthly subsidies to keep their facilities afloat, and that the representations of success were knowingly false. In other words, documents were surfaced late in Plaintiff's representation of the Defendants lending support to the claimants' allegations that Goldfarb, Ross, and Woodcock had been intentionally paying shills to misrepresent certain facts to potential customers to induce them to sign the licensing agreements and pay $125,000.00 per facility. The business of CLS grew rapidly from 1999 through the first part of 2002. Throughout most of 2000 and 2001, CLS was executing service agreements with its customers at a minimum cost of $125,000 each, at a rate of 10 to 20 new contracts per month. However, complaints from their earliest customers began to swell in the summer of 2001. The

complaining customers alleged that the patients that were promised to arrive and fill their facilities to capacity did not do so in the numbers that Woodcock, Ross, and Goldfarb had represented to them. Referrals from the local physicians did not occur anywhere near the levels the Defendants had promised. Professional staff was not as easy to hire and retain as had been represented. And the alleged success stories told to them were claimed to have been fabricated.1 (T. Shimko Aff. at ¶ 20.) With the number of complaints on the rise, in November of 2001, the Plaintiff was asked by Paul Woodcock to meet with him in Phoenix, Arizona to discuss representing his partners and him. Dr. Guenther and Dr. Woodcock had previously retained the Plaintiff's services on a number of personal matters from 1991 to 1996 pending in Ohio and in Arizona unrelated to this matter. (T. Shimko Aff. at ¶ 22.)
1

Under subpoena, one such facility, owned by Marshall and Ungaro, produced financial records indicating that the facility would not have survived without the subsidies paid by Woodcock, Goldfarb, and Ross. Yet, the allegations were that these individuals were representing to potential customers of the Defendants that their facility was very successful. -4Document 208

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The Plaintiff met with Dr. Guenther, Dr. Woodcock, David Goldfarb, and Richard Ross and was explained what the nature of the business that the Defendants were in, and the problems that they were presently facing, as described above. At this meeting, it was explained that the ownership of CLS on paper was structured in layers of limited partnerships, but that the companies were owned and operated by Drs. Guenther and Woodcock and Messrs. Ross and Goldfarb as equal partners. Each was personally active in the management of the business' operations. (T. Shimko Aff. at ¶ 23.) After explaining the nature of the operations and the extent of each of their individual involvements in the operations of the business, it was further explained that disenchanted customers started to make complaints several months back alleging that the Defendants had deliberately and intentionally misrepresented the true potential of CORFs by fabricating success stories to induce new investors, and by paying previous customers substantial sums of money to say good things about CORFs and CLS. (T. Shimko Aff. at ¶ 24.) It was in light of those issues that Defendants sought Plaintiffs' professional opinion on their personal exposure to such allegations and claims. The Plaintiff advised all of the Defendants that if such allegations were proven against them, then no corporate or limited partnership structure would shield them from personal liability. Each was advised that they would be personally responsible for their own activities, if found to be fraudulent, and for the fraudulent activities of each other, based on their cooperation in the scheme or plan. At that meeting in November 2001, attended by Dr. Guenther, Dr. Woodcock, Dick Ross, and David Goldfarb, the Plaintiff was asked to jointly represent each of them, and their wives, personally in claims that were presently being made against them and in litigation they anticipated might soon be filed across the country. The

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principal issue with which Goldfarb, Ross, and Woodcock were concerned was their own potential personal liability. (T. Shimko Aff. at ¶ 26.) The ongoing welfare of CLS was not a consideration, if it did not provide them with a defense to their own personal exposure. The Plaintiff agreed to jointly represent the Defendants and their wives, personally, in disputes that might arise nationwide. At the time of initial retention and for months thereafter, Plaintiff's instructions from Ross, Goldfarb, Guenther, and Woodcock at the time were to settle all claims in order to avoid litigation. Under the circumstances present at that time, Plaintiff did not perceive the appearance of any conflict of interest issues since the claims being leveled at the Defendants were for conduct and misrepresentations in which each of them had equally, directly, and cooperatively engaged. Each of the Defendants spoke at the seminars. Each had personal and direct contact with the customers that relied upon their individual representations of almost certain success. Each was aware of payments that they had been making for over a two year period of time to individuals that the customers were alleging were acting as shills for the Defendants.2 For purposes of convenience, the Plaintiff was requested to and did agree to submit billings for services rendered to CLS. However, at the time of the request, the Plaintiff advised each of the gentlemen that though he would submit his bills to CLS, he was looking to each of them for payment. (T. Shimko Aff. at ¶ 30.) The Defendants agreed to be personally

responsible for the fees and expenses incurred in the preparation and disposition of the claims against them. An hourly rate of $350.00 was agreed upon because the work Defendants were requesting the firm had the potential to and in fact did exhaust most of the resources of the firm for considerable periods of time, preventing it from taking on any new work.
2

It is important to keep in mind that Plaintiff was not retained to represent the Defendants in any criminal matter, but only to resolve the civil claims being made against them. -6Document 208

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Immediately upon retention, the Plaintiff's firm began to field an ever growing number of claims from customers of CLS. Everyone of the claims contained allegations of fraud and deceit directly attributable to specific representations that had allegedly been made by Dr. Guenther, Dr. Woodcock, Richard Ross, and David Goldfarb, which the customers were alleging had not turned out to be true or accurate. (T. Shimko Aff. at ¶ 32.) As previously stated, the initial instruction to Plaintiff from Defendants was to settle all claims. They did not want any lawsuits where discovery would be available. Before each case was settled, the matter was reviewed personally by each of the four partners. No settlement was paid without the partners having reviewed it and agreed to it. (T. Shimko Aff. at ¶ 33.) It was only when the money ran out in the Spring of 2002 that Plaintiff was required to commence defending Defendants in litigation that grew to approximately forty (40) lawsuits, seeking tens of millions of dollars in damages. Although various other causes of action were pled in each of these lawsuits, the principal claims against the Defendants sounded most prominently in fraud and in RICO. (T. Shimko Aff. at ¶ 34.) Prior to that, Plaintiff had successfully negotiated and obtained settlements in over forty (40) other claims against the Defendants. Throughout this entire time, there was nothing in the representation that would have made Plaintiff perceive that the interests of the Defendants were adverse to each other or that they would become so during the proceedings for which Plaintiff was engaged. To comply with local rules, the Plaintiff immediately associated with local counsel in Arizona and in the other states where litigation against the Defendants was commencing. In Arizona, the Plaintiff initially associated with Arizona attorney, Mr. Cameron Artigue, of the Phoenix firm of Gammage & Burnham. Later, in March of 2003, after the Defendants had stopped paying Plaintiff's invoices and after Plaintiff advised that he wished to withdraw from

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representation, the Defendants located and hired the Arizona law firm of Boates & Welty to ultimately take over the representation of the Defendants. (T. Shimko Aff. at ¶ 36.) When the tide of the lawsuits could not be stemmed in the spring of 2002, and no more settlements could be paid, the Defendants jointly instructed the Plaintiff to use litigation strategies that would delay consideration of the cases on their merits so that the Defendants would have additional time to gather resources to settle the lawsuits. (T. Shimko Aff. at ¶ 37.) This instruction was unnecessary as, the Claimants' counsel played into the hands of the Defendants' strategy when Claimant's counsel began to object to Plaintiff's participation as Defendants' counsel in the Arizona cases, pro hac vice. This had the desired effect of forcing the almost all of the various proceedings to a grinding halt. As a consequence, production of discovery did not occur in any earnest until February and March of 2003, within a month to a month and a half before Plaintiff was terminated. From November 2001 until October 2002, the Plaintiff firm's invoices were paid. However, commencing in October 2002, the firm's invoices went unpaid. In January 2003, the Plaintiff contacted the Defendants and informed them that due to non-payment of the firm's fees, the firm could no longer represent them and that the firm would be withdrawing as counsel. (T. Shimko Aff. at ¶ 39-40.) In January 2003, after the firm of Gammage & Burnham withdrew as Defendants' local counsel for non-payment, the Defendants asked the Plaintiff to stay on the cases until they could locate new counsel, inducing the Plaintiff to do so with promises of imminent payment. In March of 2003, the Defendants located another Phoenix firm; to-wit, Boates & Welty, to act as their new counsel. In March and April 2003, Plaintiff began and completed the process of transitioning the all of the files to attorney Boates. Upon completion of that process,

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in April of 2003, when the Plaintiff pressed the Defendants for payment on the firm's account, the Defendants refused and terminated their relationship with the Plaintiff. Shortly thereafter, the Plaintiff commenced this action to collect the outstanding fees. (T. Shimko Aff. at ¶ 4243.) The work done by the Plaintiff's law firm was documented in detail in invoices sent to the Defendants. In the invoices, the work that was done was detailed, the date on which the work was done was plainly indicated, and the amount of time spent doing the work and the individual doing the work and that person's hourly rate were clearly described. From October 2001 until October 2002, the Plaintiff was paid on the invoices submitted. The invoices reveal that the Plaintiff's firm prepared various agreements, pleadings and motions on behalf of Ross, Goldfarb, Woodcock and their wives in each of the various settled claims and lawsuits. (T. Shimko Aff. at ¶ 44-45.) Confirmatory of the individual nature of the representation, the Plaintiff was directed to research and advise the Defendants on issues that had nothing to do with the business of CLS. The firm's invoices for the months of November 2001 through January 2002 show that Plaintiff was directed to research and to generally advise the Defendants on the various laws of fraudulent conveyances and on the viability of various international trusts and offshore investments. (T. Shimko Aff. at ¶ 46.) As to any conflict with Plaintiff's representation of CLS, it is important to keep in mind that CLS had no assets of any value and the Plaintiff's representation of CLS was merely a tool in Plaintiff's joint representation of Woodcock, Goldfarb, Ross, and Guenther, who were well aware and approved of the strategy that made CLS the first line of defense against the claims being made against them.3
3

Albeit, a very weak first line of defense.

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Shortly before Plaintiff's services were terminated by Defendants, the Plaintiff had a meeting with attorney representing the plaintiffs in the underlying cases against the Defendants, Mr. Cheifitz. The purpose of the meeting was to see where the Plaintiffs were on the issue of settlement. Ross, Woodcock and Goldfarb were aware of the meeting and its purpose in advance of it. Plaintiff received no instructions from Goldfarb, Ross, Guenther, or Woodcock to offer anything in settlement from these Defendants, only to find out from the Plaintiff's counsel what it would take to settle the case. At that meeting, Plaintiff never made an offer to Mr. Cheifitz on behalf of Woodcock, Goldfarb, or Ross or on behalf of any of the other the Defendants, collectively or singly. However, at that meeting, Mr. Cheifitz did inform Plaintiff for the first time that he was prepared to offer a different deal to Dr. Brill and Mr. Ritchie, who were officers of CMS / CLS, but not owners. Mr. Cheifitz indicated that he would be willing to drop these two gentlemen from the suits, if they would agree to cooperate and give him information and statements. When that offer was made, the Plaintiff shortly thereafter notified Brill and Ritchie that they should seek independent counsel, as there did appear to be a conflict that arose caused by Mr. Cheifitz' offer. No such deal was ever offered with respect to the Defendants. (T. Shimko Aff. at ¶ 52.) Ross, Goldfarb, Woodcock, and Guenther were advised of the results of the meeting. Mr. Cheifitz never made any offer creating any conflict in the Plaintiff's joint representation of the Defendants; nor did he indicate that he would do so in the future. (T. Shimko Aff. at ¶ 54.) More importantly, Plaintiff made no offer on behalf of any his clients that created a conflict.

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Defendants now claim that a loan that Plaintiff's counsel made to them at a point during the litigation, somehow created a conflict of interest of which they were unaware until recently. The fact is that in October of 2002, Defendant Ross called Plaintiff in Cleveland and informed him that he had a short term cash problem and that he could not make payroll that week, and would I loan $250,000 to them. If I would wire the funds, he would and did write out five checks totaling $250,000 and backdated them several weeks.4 Plaintiff was informed that all of the owners were aware of the request and how it would be paid back. This loan was more in line with a favor than it was a business transaction, as Defendants would now have the Court believe. Plaintiff charged no interest, and acted in the belief that he was helping a client out of a short term bind. Undoubtedly, each of the Defendants knew about the loan, which was to serve a short-term cash flow issue for CLS. There was never any dispute between the parties about the purpose of the loan or as to the terms or as to how the Defendants were to repay it. It was a simple transaction and did not create any conflict. The Defendants now suggest in this

litigation for the first time that the favor that Plaintiff did for them when they were in a bind somehow created a conflict. It did not. (T. Shimko Aff. at ¶ 58.) Regarding Defendants' allegation of a conflict of interest caused by Plaintiff's joint investment with the Defendants and several other individuals in a project called Aztec Medical, is another re herring. True, Plaintiff along with 12 other individuals invested money and time in the Aztec Medical venture that ultimately came to grief. However, as far as Plaintiff is aware, even up to today, Aztec Medical had absolutely no connection or relationship to the Defendants' CORF business or the litigation that grew out of that business. These were two totally separate ventures; one having nothing to do with the other. And, Plaintiff's investment

4

Ironically of the five checks totaling $225,000, only one of the checks was ever made good.

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in Aztec had no connection with or relationship to or impact upon the firm's representation of the Defendants in the underlying fraud cases. The Defendants' argument now that there was a conflict is an argument of recent fabrication. Certainly, Defendants have presented no evidence to show that there was any impact on Plaintiff's representation of Defendants caused by Plaintiff's investment along with Defendants in Aztec. (T. Shimko Aff. at ¶ 62.) Though Defendants, on the suggestion of the 9th Circuit, are raising an alleged conflict of interest defense to Plaintiff's equitable claims, Defendants have presented no evidence that any potential conflict ever became a reality. There is no evidence that any conflict ever actually occurred. That these are contrived potential conflicts is underscored by the fact that Gammage and Burnham represented Defendant jointly for almost as long as Plaintiff without complaint from the defendants. Additionally, Attorney Craig Boates continued to represent these Defendants jointly in these cases against them for years afterwards without complaint. The only basis for Defendants raising the issue of alleged conflicts, here, is that Plaintiff is seeking payment for services rendered. II. Law & Analysis a. Standard of Review Rule 56(c) provides that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Plaintiff is entitled to have the facts and all reasonable inferences to be drawn there from viewed in a light most favorable to the Plaintiff. The plain language of Rule 56 mandates the entry of summary judgment against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the

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burden of proof at trial. Celotex Corp. v. Catrett (1986), 477 U.S. 317, 324. To survive a movant's motion for summary judgment, a non-movant must establish that there is a genuine issue of material fact for trial. Liberty Mut. Fire Ins. Co. v. Massarone (6th Cir. 2003), 326 F.3d 813, 815. An issue of fact is genuine if the evidence is such that a reasonable trier of fact could return a verdict for the non-movant. Rodgers v. Monumental Life Ins. Co. (6th Cir. 2002), 289 F.3d 442, 448. b. Breach of Contract, and Action on Account The appellate history in this case mandates that summary judgment is inappropriate in this case with respect to the Plaintiff's legal claims for breach of contract and action on account. The Ninth Circuit clearly reversed this Court's prior granting of summary judgment. Although the Ninth Circuit opined in footnote 3 of their opinion that this Court may take into account the Plaintiff's failure to obtain a written conflicts waiver with respect to this Court's analysis of the Plaintiff's equitable claim for quantum meruit / unjust enrichment, the Ninth Circuit did not state that this had any relevance at all with respect to the Plaintiff's legal claims. A plain reading of the Ninth Circuit's opinion (Doc. 156), clearly instructs this Court that summary judgment is improper on the Plaintiff's legal claims for breach of contract and action on account. This Court would commit reversible error if it were to grant summary judgment again on the Plaintiff's legal claims. The Ninth Circuit has already held told this Court that summary judgment is improper on the Plaintiff's breach of contract and action on account claims. c. Quantum Meruit / Unjust Enrichment Admittedly, in the Ninth Circuit's opinion, at footnote 3, the Ninth Circuit stated: "During oral argument, Shimko admitted that he failed to get signed conflict waivers from his clients. We note, without deciding, that the

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relevant state bar rules of ethics may preclude recovery where an attorney fails to adequately disclose a conflict of interest between clients. The district court may wish to take these ethical rules into consideration when determining whether Shimko is entitled to an equitable remedy." (Doc. 156, page 6) (Emphasis added.) As pointed out in the statement of facts, the Defendants' claims of an alleged conflict are merely made up. There never was any conflict. (T. Shimko Aff. at ¶ 58.) (See also Plaintiff's Separate Statement of Facts Corresponding to Defendant Woodcocks' Statement of Facts, and Plaintiff's Separate Statement of Facts Corresponding to Defendant Ross' Statement of Facts.) Plaintiff initially perceived that the Defendants' interests were not in any way adverse to each other or that they would become so in the future. The claims against them were the same, their exposure was the same, and their defenses were the same. Their goals were identical. The Defendants' claim now that there was a conflict is a fabrication. And, there was never any real conflict that actually arose during Plaintiff's representation of the Defendants and no evidence of any harm that ever resulted to any of the Defendants from the Plaintiff's representation of them. (T. Shimko Aff. at ¶ 63.) In their motions, the Defendants allege that the Plaintiff violated Rules 1.7 and 1.8 of the Arizona Rules of Professional Conduct. Nothing could be farther from the truth. Rule 1.7 provides that a "concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer." If a conflict of interest exists, a lawyer may only represent the clients if the clients provide informed consent confirmed in writing. The first step in analyzing whether an attorney violated

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Rule 1.7 is to determine whether the attorney's representation of client A was materially limited by his responsibilities to client B. If the attorney's representation of client A was not limited by his responsibility to client B, then there is no conflict. In re Shannon (1994), 179 Ariz. 52, at 60. Concurrent representation does not become a problem unless the interests of the clients are adverse or become adverse during the proceedings. Alexander v. Superior Court ex rel. Maricopa (1984), 141 Ariz. 157, at 163. Though the Defendants' interests might be diverse now that they have been criminally indicted for their conduct in this venture, there was never anything to indicate that their interests were adverse in these civil matters, on which Plaintiff represented them. The Plaintiff's representation of the Defendants was never directly adverse to any of the other Defendants. Therefore, there was no conflict under Rule 1.7(1). Further, there was never a significant risk that the Plaintiff's representation of any of the Defendants would be materially limited by the Plaintiff's responsibilities to any of the other Defendants, or to a former client or a third person or by a personal interest of the Plaintiff. The positions of the Defendants were too unified to allow for such a potential, and Plaintiff had no personal interest in the outcomes of the litigation or claims against the Defendants. The Defendants' suggestion that the Plaintiff violated Rule 1.8 by loaning the Defendants money to cover payroll and by investing with them in a totally unrelated business venture in Mexico is also misplaced. In the Defendants' motion, the Defendants attempt to characterize the Plaintiff's loan to the Defendants and the Plaintiff's involvement in Aztec Medical as a violation of Rule 1.8. In response, the Defendants' argument is a stretch of the facts and is just an attempt to find a way out of paying for the services they agreed to pay for.

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With respect to the loan, the Plaintiff simply once leant the Defendants money so that they could make payroll. The Plaintiff gave the Defendants a check and in exchange the Defendants gave the Plaintiff a series of post-dated checks to repay it. The loan was interest fee. It was just a favor. Clearly, nothing about the loan created any violation of Rule 1.8. The Defendants' argument to the contrary is just that ­ mere argument designed to create an issue to try to get out of paying a debt they owe. Turning to Aztec Medical, it was a start up business of a tissue recovery center in Mexico City. It was basically going to harvest tissue and import that tissue to the United States to make it available to tissue banks, blood banks, and organ banks. (T. Shimko Aff. at ¶ 70.) The Plaintiff Shimko was a private investor in Aztec along with the Defendants and four other people. As each of the Defendants were also investors, each of the Defendants knew about the Plaintiff's investment in that company and had no objection to it. (T. Shimko Aff. at ¶ 71.) There was no conflict arising out of Aztec Medical. (Id.) As far as Plaintiff knew, there were absolutely no connections between Aztec Medical and the CORF businesses. There was also no connection between Aztec and Plaintiff's defense of the Defendants relating to their conduct with the CORF business. d. Calculation of fees still owed. Defendants claim that Plaintiff Shimko has perjured himself for years representing that Defendants have paid Plaintiff only $129,000 in fees. As proof of Plaintiff's alleged perjury, Defendant submits check registers and banking records which counsel claims to show that Plaintiff received wire transfers and checks from Defendants in the amount of $593,826.80. Plaintiff has never perjured himself in this case or in any other and resents the unfounded allegation. Attached to the Complaint in this case are Plaintiff's invoices, which unequivocally

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disclose that Plaintiff provided Defendants with legal services for which Plaintiff billed Defendants in the amount of $675,886.50. Of that amount, the Plaintiff's invoices clearly show that Plaintiff received only $320,937.50 in total payments from Defendants, leaving a balance of $354,949.00 owed to Plaintiff. Although the records of wire transfers and the checks produced in this case indicate total payments to Plaintiff in the amount of $593,826.80, what Defendants fail to understand or appreciate is that of the $593,826.80 in recorded payments, Plaintiff was presented with $272,500.00 in bad checks that were never made good. Deducting the $272,500 in bad checks from the total record of payments leaves a balance of $321,326.80, which is just about what Plaintiff's invoices show Plaintiff was paid. Plaintiff has not perjured himself. The invoices of the firm have from day one shown that Defendants were provided a total of $675,886.50 in legal services, for which they have paid $320,937.50 leaving a balance owed of $ 354,949.00 less an adjustment for Mr. Welling's fees. As for the deduction in the fees for Mr. Piscitelli's work, it is now clear that Mr. Piscitelli was not avoiding service. Defendants simply never served him at a location where he was likely to be found. The location at which Defendants attempted service one time was neither Mr. Piscitelli's home nor his office. There is absolutely no evidence in the record that Mr. Piscitelli ever evaded service or even knew Defendants wanted to depose him. When Mr. Piscitelli left the partnership, for valuable consideration, he assigned his interests in whatever fees he had coming in this matter to Plaintiff. (See Exhibit 2 attached to Affidavit of Timothy A. Shimko in Opposition to Defendants' Motion for Summary Judgment.) Since there is no

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evidence that Mr. Piscitelli did anything to avoid service, not even these fees should be deducted from Plaintiff's claims against the Defendants III. Conclusion In light of the foregoing, Plaintiff requests that Defendants' motion for summary judgment be denied. The Plaintiff is entitled to a day in Court to prove the debt. This was the mandate of the Ninth Circuit, and this Court ought to overrule the Defendants' motions for summary judgment, in light thereof. Plaintiff did not perceive any conflict of interest that arose or would arise while he represented Defendants, and Defendants have not pointed out one that did arise or identified any damage or harm they sustained as a result of any now such alleged conflict of interest. RESPECTFULLY SUBMITTED on this 12th day of May, 2008. TIMOTHY A. SHIMKO & ASSOCIATES

By:

/s/ Timothy A. Shimko Timothy A. Shimko (OSBN 0006736) David A. Welling (OSBN 0075934) 2010 Huntington Building 925 Euclid Ave. Cleveland, Ohio 44115 Tel. (216) 241-8300 Fax (216) 241-2702 Attorneys for Plaintiffs

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COPY of the foregoing electronically filed and served this 12th day of May, 2008 upon: Roger L. Cohen, Esq. Jaburg & Wilk, P.C. 3200 North Central Avenue, Ste. 2000 Phoenix, Arizona 85012 [email protected] Counsel for Defendant Ross Richard J. McDaniel, Esq. 11811 N. Tatum Blvd., Ste. 1051 Phoenix, Arizona 84208 Counsel for Defendants Woodcock Served via regular U.S. Mail upon the following: Mr. and Mrs. David Goldfarb 11437 N. 53rd Place Phoenix, Arizona 85254 Defendants Milton and Kathi Guenther 3642 E. Rockwood Phoenix, Arizona 84032 Defendants in pro per

/s/ Mildred Pacheco

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