Three men who say their lawyers’ mishandling of business deals cost them more than $8 million have sued the former firm of Ungaretti & Harris, in hope of recouping nearly half their losses.
Paul Gremillion, of Covington, La., Glen Gremillion, of Locust Valley, N.Y., and Derek Lancaster, of Madisonville, La., were officers and owners of Intra-Op Monitoring Services. Their complaint, filed Sept. 2 in Cook County Circuit Court, targets the former Chicago firm of Ungaretti & Harris, as well as Nixon Peabody, a global firm based in Rochester, N.Y., that acquired Ungaretti & Harris in January 2015.
The Gremillions and Lancaster sold their majority interest in Intra-Op on Sept. 18, 2008, to a Florida purchasing group. Up to and during the sale, the men used what now is a Nixon Peabody subsidiary for legal services. As part of that contract, the Intra-Op owners said they relied on their lawyers to prepare financial statements for the buyers in accordance with generally accepted accounting principles.
However, on April 26, 2012, the buyers filed claims in arbitration against the sellers, alleging breach of purchase agreement because a licensed accountant determined the financial statements prepared for the sale were not GAAP compliant, the lawsuit said. The sellers retained Ungaretti & Harris for its defense in this matter.
On March 26, 2015, the arbitrator ruled in favor of the buyers and dinged the sellers for $4.79 million in compensatory damages, $1.48 million in legal fees and costs, plus interest of $1.79 million , a figure they say is still accumulating. On Aug. 24, 2015, the arbitration award was recorded in Georgia’s Fulton County Superior Court for almost $8.1 million, with post-judgment interest accruing at $1,386 per day.
In the Cook County complaint, the Gremillions and Lancaster alleged Ungaretti & Harris breached the standard of care during the arbitration process, including failing to get an expert to testify the statements were GAAP compliant, or to at least tell the men that wouldn’t be possible; failing to conduct proper discovery; falsely advising the statements were GAAP compliant; and failing to say they didn’t have evidence to prove the statements were compliant, which would have allowed the men to “make informed legal decisions and to mitigate their exposure to damages.”
According to the complaint, because the men relied on information from their attorneys, they rejected settlement offers as low as $3.1 million.
Official allegations are negligent misrepresentation and omission, negligence and breach of contract. In addition to a jury trial, the men want the court to award damages of at least $3.5 million as well as to force disgorgement of the legal fees they paid to Nixon Peabody as well as pre-judgment interest, costs and any other applicable relief.
Representing the Gremillions and Lancaster in the matter are attorney Peter Ordower, of Chicago; and the Costello Law Group, of Towson, Md.