Free Statement - District Court of Arizona - Arizona

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

Roger L. Cohen, #004409 Kathi Mann Sandweiss, #011078 JABURG & WILK, P.C. 3200 North Central Avenue, Suite 2000 Phoenix, Arizona 85012 (602) 248-1000 Attorneys for Defendants Ross

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA SHIMKO & PISCITELLI, et al., Case No: CIV-04-78-PHX-FJM Plaintiffs, v. DAVID GOLDFARB; RICHARD ROSS, et al. Defendants. ROSS DEFENDANTS' SEPARATE STATEMENT OF FACTS IN SUPPORT OF JOINDER IN WOODCOCK DEFENDANTS' MOTION TO DISMISS CLAIMS AND MOTION FOR SUMMARY JUDGMENT

15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to LRCiv 56.1, Defendants Richard and Marcia Ross (the "Ross Defendants") submit the following Separate Statement of Facts in Support of Joinder in Woodcock Defendants' Motion to Dismiss Claims and Motion for Summary Judgment filed by the Woodcock Defendants. 1. In or about 2000, Plaintiffs Shimko & Piscitelli, an Ohio law firm,

and attorney Timothy Shimko (collectively, "Shimko") began representing a group of limited liability companies (the "CORF Entities") in connection with their business operations. In or about Fall, 2001, the CORF Entities retained Shimko as counsel in a series of filed or threatened lawsuits. The CORF Entities requested that Shimko also defend the Ross Defendants, and the other officers, employees and their spouses named in any such lawsuits, at the expense of the CORF Entities. There was no written fee agreement. (See Declaration of Richard Ross, attached hereto as Ex. 1).
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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

2.

Shimko failed to advise the Ross Defendants of the potential conflicts

involved in his simultaneous, joint representation of the CORF business entities, its officers and employees, the general partner and limited partners. (Id.). 3. Shimko failed to advise the Ross Defendants that they might have

different interests and conflicts with the general partner and officers and employees. (Id.). 4. Shimko failed to advise the Ross Defendants that they might have

conflicts with the other defendants and different interests than the other defendants, depending upon their personal assets and financial situations, how the assets were held, their level of involvement in CORF activities and promotions, and their knowledge of activities at CORF. (Id.). 5. Shimko failed to explain to the Ross Defendants that he could not

make a separate settlement on behalf of the Ross Defendants, because doing so would conflict with his duty of loyalty to his other clients. (Id.). The Ross Defendants never waived this and other potential conflicts because they were never advised of them. (Id.). 6. As set forth in the Woodcock Defendants' Motion, Shimko testified

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that he had advised the individual defendants that they should no longer participate in seminars promoting the CORF consulting services. However Shimko failed to advise the Ross Defendants of the risks and potential conflict involved in his representation of multiple clients with different levels of involvement and potential culpability. Shimko failed to advise the Ross Defendants that they might have conflicting interests and should seek independent counsel even though some of the other clients Shimko represented continued to engage in activity that Shimko had warned them against. (Id.). 7. As further set forth in the Woodcock Defendants' Motion, Shimko

testified that he attended dinner with the lead attorney for plaintiffs in the underlying CORF-related lawsuits, and that the attorney was offering to drop lawsuits against Brill and Ritchie, who had been CORF officers and employees. Shimko did not offer to enter into a separate agreement on behalf of the Ross Defendants because that would have 2
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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

conflicted with his duty to the other individual defendants. (Id.) By failing to disclose these conflicts to the Ross Defendants, and to obtain their waiver, Shimko violated his ethical obligations to the Ross Defendants. 8. With respect to the loan Shimko made to the CORF business entities,

as described in the Woodcock Defendants' Motion, Shimko failed to explain to the Ross Defendants that some debts to him were corporate, and some were purportedly personal; and he failed to explain how he would allocate monies he received from CORF between his legal bills and loan repayment. By applying monies received from CORF

preferentially to repayment of the loan, Shimko increased the risk that CORF would be unable to pay legal bills, thus increasing the risks that the Ross Defendants would be charged with payment. The loan transaction and risks were not explained to the Ross Defendants, and their interests were materially affected. (Id.). Shimko failed to obtain the Ross Defendants' written consent to the transaction. (Id.) 9. With respect to the August, 2002 transaction between Shimko and the

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tissue bank business, as described in the Woodcock Defendants' Motion, Shimko failed to advise the Ross Defendants to have independent counsel review the transaction and operating agreement, even though Shimko provided legal services to Aztec Medical Group Partners, LLC, in exchange for an interest in the company. Shimko failed to obtain the Ross Defendants' written consent to the transaction. (Id.). 10. With respect to the demand that defendants pledge their homes as

collateral in April, 2003, as set forth in the Woodcock Defendants' Motion, Shimko failed to warn the Ross Defendants that if they knowingly and willingly pledged their homes they potentially waived their homestead exemption. Shimko failed to advise the Ross Defendants to seek the advice of outside counsel. (Id.). 11. Even though, as set forth in the Woodcock Defendants' Motion,

Shimko testified that from the beginning of his representation, his clients' greatest concern was their exposure to personal liability, Shimko never made any effort to learn 3
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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

about the assets of the Ross Defendants, how they were held, and their vulnerability to a judgment. (Id.). DATED this 31st day of March, 2008. JABURG & WILK, P.C.

/s/ Roger L. Cohen, 004409 Roger L. Cohen Kathi Mann Sandweiss Attorneys for Defendants

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JABURG & WILK, P.C. ATTORNEYS AT LAW 3200 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012

CERTIFICATE OF SERVICE I hereby certify that on March 31st, 2008, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF system for filing, and for transmittal of a Notice of Electronic filing to the following CM/ECF registrants: David A. Welling TIMOTHY SHIMKO & ASSOCIATES 2010 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 Attorneys for Plaintiffs David and Rhona Goldfarb 11437 N. 53rd Place Scottsdale, Arizona 8525 Pro Per Defendants Goldfarb Richard J. McDaniel 11811 N. Tatum Blvd., Suite 1051 Phoenix, Arizona 85208 Attorney for Woodcock Defendants

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By: /s/ Rima M. LaMont Rima M. LaMont

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