Firm can sue its former general counsel, judge rules

A Sparks-based support-services firm can move forward with its lawsuit against the company’s former general counsel, a federal judge in Baltimore has ruled.

In the lawsuit, Fundamental Administrative Services LLC claims its former attorney, Kristi Anderson, cut a deal with a bankruptcy trustee who was suing both of them and that, in doing so, she breached FAS’ confidences, violated their joint defense agreements and agreed to disclose company documents.

FAS seeks injunctive relief, $400,000 in restitution — money the company has already paid an attorney to represent Anderson in the Florida bankruptcy action — and a declaratory judgment that it is not obligated to reimburse her for further legal fees in the bankruptcy proceeding.

Judge James K. Bredar denied Anderson’s motion to dismiss the case on April 15 in U.S. District Court.

Neither Anderson’s local counsel, Stacey A. Moffet of Eccleston and Wolf P.C. in Hanover, nor FAS’ attorney, Linda S. Woolf of Goodell, DeVries, Leech & Dann LLP in Baltimore, responded to requests for comment for this story.

Anderson is represented in the Florida case by Steven Leitess of Leitess Friedberg PC in Baltimore, who declined to comment.

The heart of this case is being fought in U.S. Bankruptcy Court in Tampa, Fla., where an involuntary Chapter 7 case was filed in Dec. 2011 against Fundamental Long Term Care Inc., identified in court documents as the sole member of FAS LLC.

The bankruptcy was filed by the estate of Juanita Jackson following a $110 million judgment in June 2010 against Fundamental Long Term Care Inc. and Trans Healthcare Inc., also based in Sparks, in a lawsuit alleging negligent care at a Trans Healthcare nursing home in Florida.

FAS was not related to Trans Healthcare, but provided administrative services to the company, including coordination of its defense litigation starting in 2006, after the lawsuit was filed by Jackson’s estate in 2004.

The trustee in the Chapter 7 proceeding filed two lawsuits against FAS and Anderson — one claiming legal malpractice, breach of fiduciary duty and one claiming unauthorized practice of law.

Anderson and FAS entered into joint defense agreements, under which FAS agreed to advance Anderson’s legal costs, in April 2012.

Anderson’s employment “was terminated” by FAS on April 12, 2013, according to FAS’ complaint. Anderson then withdrew from the joint defense agreements and entered into the settlement agreement with the trustee, under which the claims against her would be dismissed and she would agree not to object to production of any company documents.

The agreement also called for the bankruptcy court to bar any parties, including FAS, from filing claims against Anderson for complying with the settlement agreement.

FAS filed its lawsuit against Anderson in Maryland on June 12, 2013, in the midst of the Florida case.

Anderson filed a motion to dismiss the case, saying FAS’ claims for injunctive relief were moot and its request for a declaratory judgment and restitution failed to state a claim on which relief could be granted.

Anderson claimed her executive agreement with FAS required it to continue to pay her legal fees.

“Her assertion flies in the face of a well-accepted tenet of contract interpretation, and that is that all parts of a contract should be read so that all have meaning in harmony with one another if possible,” Bredar wrote.

As for the restitution claims, Anderson argued that FAS could not make a claim of unjust enrichment under her employment agreement.

“No express contract defines the rights and remedies of FAS to recover money allegedly wrongfully advanced to Anderson’s attorney,” Bredar wrote.

In filings in the Tampa bankruptcy proceeding, Anderson claimed FAS has engaged in a routine of “threats and intimidation” by insisting it will file disciplinary complaints against both Anderson and Leitess, her attorney in the bankruptcy matter.

A week after the Maryland lawsuit was filed, the bankruptcy judge issued an order barring FAS from suing Anderson or her Florida attorney.

“To put it plainly, there was no reason for Fundamental Administrative Services to go to Maryland to resolve privilege concerns that this Court has spent the better part of a year dealing with,” Judge Michael G. Williamson wrote.

The judge in Florida also ruled last week that Anderson would be entitled to collect over $55,000 in legal fees and costs from FAS stemming from the lawsuit in Maryland.

Anderson has no record of being sanctioned as an attorney according to the Attorney Grievance Commission of Maryland.