So v. Suchanek

Kevin So (plaintiff) authorized Lucy Lu to serve as his investment agent. Lu signed an agreement permitting Land Base LLC to invest for So. The agreement included warranties against loss. So transferred funds to an HSBC account to be administered by a Land Base affiliate. The affiliate was running a Ponzi scheme. HSBC sued Land Base, Lu, So, and others. Leonard Suchanek (defendant) represented Land Base, Lu, and So. Suchanek prepared an opinion for Land Base, concluding that the Land Base–So agreement did not facilitate an unlawful scheme. Suchanek terminated his representation of Land Base. When So reported that Lu was acting beyond her authority, Suchanek encouraged So to maintain the status quo. After Lu falsified So’s witness statement, Suchanek advised So to cancel Lu’s authority but continued to represent Lu and So jointly for five months. Suchanek terminated his representation of So and kept $400,000 of the funds in So’s trust account. So demanded the funds and a full accounting. Suchanek refused. So sued Suchanek for breach of fiduciary duty. The district court found that Suchanek breached his fiduciary duty to So when simultaneously representing So and Land Base and when simultaneously representing Lu and So after learning of the falsified witness statement. The court ordered Suchanek to disgorge the $400,000 collected during the conflicted periods. Suchanek appealed. So cross-appealed, seeking disgorgement of all monies Suchanek paid himself during the representation.