Lender Sues Joseph Alioto|& Office for $28 Million

SAN FRANCISCO (CN) - Attorney Joseph Alioto and his law office owe a lender $28 million, despite their "convoluted attempts to avoid their obligations," LFG National Capital claims in court.

Alioto is a prominent San Francisco attorney and the son of the city's former mayor.

Delaware-based LFG National Capital claims that Alioto and The Alioto Law Firm borrowed $18.3 from LawFinance Group, an affiliate of LFG National, in 2004.

Alioto refinanced the loan in 2005, according to the complaint.

Apparently, it hasn't worked out.

"This action arises out of defendants' flagrant, sustained breaches of their obligations under an $18.3 million secured loan facility with a current balance sued of approximately $28.2 million," the complaint states. "Defendants, a California law firm and its principal partner, have consistently failed to make required loan payments, diverted revenues that, under the relevant loan agreement, must be utilized to pay defendant's obligations to plaintiff, and manufactured alleged issues in a convoluted attempt to avoid their obligations. Because plaintiff holds a lien over (inter alia) substantially all of the Firm's fee and cost receivable, including a legal fee which has been placed in escrow by order of the United States District Court for the Northern District of California, the effect of defendants' breaches under the loan agreement is that plaintiff is entitled to payment of the escrowed fee, as well as other sums which are or may become due to the Firm."

LFG claims rights to just about everything the law office has: "LFG National holds liens over substantially all of the firm's property and assets, including its cash, general intangibles, rights to attorneys' fees and costs ... equipment, and general accounts receivable," the complaint states.

It claims that Alioto "has been in continuous default of its obligation under the loan agreement since at least Oct. 13, 2010, when the firm failed to apply an attorney's fee payment to pay down the loan, as required."

U.S. District Judge Susan Illston, on April 1, ordered $28.2 million of $47 million in fees to be placed in an escrow account, pending determination of LFG National's lien, according to the complaint.

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.

LFG National is represented by Joseph Woodring with Cooley LLP, of San Diego.

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