Alioto Scoots, for Now, in $28 Million Battle

SAN FRANCISCO (CN) - Joseph Alioto and his law firm need not pay a disputed $28 million debt, for lack of federal jurisdiction, but a federal judge refused Alioto's request for attorney's fees and sanctions.

Delaware-based LFG National Capital sued Alioto in April. Alioto is a prominent San Francisco attorney and the son of a former mayor.

The lender claimed that in 2004 Alioto and The Alioto Law Firm borrowed $18.3 from LawFinance Group, an affiliate of LFG National, but failed to pay off the loan.

LFG National asked the court to pull the money from Alioto's projected fee award in antitrust litigation over price fixing of TFT-LCD panels, used in televisions.

Alioto denied that he owed the debt, "or anywhere near that sum," U.S. District Judge Susan Illston wrote in her order granting Alioto's motion to dismiss.

Alioto claimed the court lacked subject matter jurisdiction, because LFG could not assert any basis for original federal jurisdiction, and lacked supplemental jurisdiction because LFG's claim was unrelated to the antitrust action.

LFG claimed that its complaint presented a federal question, as resolution of the dispute would "require the interpretation and application of" the court's order approving settlement, awarding attorneys' fees and setting aside a portion of Alioto's award fee.

Illston sided with Alioto, dismissing LFG National's complaint for lack of federal jurisdiction without hearing oral arguments.

"This court concludes that it lacks both federal question jurisdiction and supplemental jurisdiction to hear this dispute, and thus that there is no subject matter jurisdiction over this matter," Illston wrote. "Although the court retains jurisdiction over the settlement fund from which LFG seeks payment, this jurisdiction does not extend to the contract dispute between LFG and Alioto. ...

"LFG's breach of contract lawsuit is entirely unrelated to the substance of the underlying antitrust litigation."

But Illston rejected Alioto's claim that LFG sued in bad faith.

"Alioto's assertions mischaracterize this court's prior orders, speculate as to disputed facts, and assert legal conclusions as the basis for LFG's bad faith intent," Illston wrote.

Illston also declined Alioto's request for $31,250 in legal fees, ruling that a prevailing party had not been named.

"(T)he court has merely determined that it lacks jurisdiction to resolve this dispute," Alioto wrote. "Accordingly, the court declines to award attorneys' fees to Alioto."

Alioto's father, also named Joseph Alioto, a Sicilian immigrant, represented Walt Disney and Samuel Goldwyn during his time as an antitrust lawyer. He was mayor of San Francisco from 1968 to 1976, and died in 1998.

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