SAN DIEGO (CN) – A real estate developer accused one of the world’s largest law firms of legal malpractice involving a gated golf project in one of the world’s richest communities, Rancho Santa Fe.
Nicolas Marsch and Briarwood Capital sued DLA Piper US LLP and law firm partner Brian Foster, in Superior Court. Marsch claims the defendants represented both Briarwood and Lennar Corp. during the development The Bridges at Rancho Santa Fe.
Lennar sued DLA Piper, Foster and Nicolas Marsch in May 2010, claiming that Foster and DLA Piper helped Marsch get the better of Miami-based Lennar, causing it millions of dollars in losses. That case was settled for $37.5 million, according to an April 2011 reportin the Bradenton (Fla.) Herald.
The disputes surrounding the real estate project also have ties to convicted fraudster Barry Minkow, who is serving a second prison sentence for fraud after pleading guilty to conspiring to damage Lennar by falsely accusing it of deceptive accounting. After Minkow’s comments on YouTube and the Internet, Lennar’s market value declined by more than $500 million, according to the Los Angeles Times.
As part of his plea deal, Minkow agreed to help federal prosecutors investigate Marsch, which hired Minkow after his partnership with Lennar soured. Marsch has denied any wrongdoing, the Times reported.
In his new complaint, Marsch claims that since 1997, DLA Piper represented Marsch’s Briarwood, and Lennar Corp., Lennar San Jose Holdings Inc., Lennar Land Partners II LLP II, HCC Holdings LLC and Lennar Bridges LLC in connection with The Bridges golf project.
HHC Investors was founded by Lennar and Briarwood Capital to develop the project, according to the previously cited Bradenton Herald report.
Marsch and Briarwood now claim that DLA Piper’s “appalling and irreconcilable” negligence “caused continuous disputes between the parties,” leading to a judgment against Briarwood and “various bankruptcies filed by the plaintiff.”
Marsch claims that DLA Piper never revealed the conflict of interest while it represented Briarwood in Superior Court litigation against Lennar, though the law firm “informed Lennar of said conflict of interest and withdrew from representing the Lennar entities.”
“Furthermore, defendants were representing Lennar and related entities unrelated to The Bridges at Rancho Santa Fe and failed to disclose said information to plaintiffs,” the complaint states.
It adds: “Put simply, defendants represented the Lennar entities in other litigation as their counsel of record simply because it presented an economic opportunity defendants could not pass up. Defendants placed its own interest in profiting from the Lennar entities ahead of the interest of the plaintiffs. Defendants’ failure to disclose the conflicts of such representation is not only a breach of defendants’ undivided loyalty owed to plaintiffs but a conflict of interest which must be adequately disclosed, explained and waived. Failure to do so was a breach of the duties owed to the plaintiffs.”
According to the 20-page complaint: “The HCC Operating Agreement failed to have adequate language to protect Briarwood, Marsch, HCC and Lennar Bridges from Lennar making contributions to HCC and Lennar Bridges without the knowledge, consent or permission of Briarwood, Marsch, HCC or Lennar Bridges. Defendants failed to adequately and properly define how Marsch and Briarwood would be paid back their investment of $37 million in HCC. Additionally, as a result of the negligence of the defendants, Lennar and Pacific Greystone unilaterally were allowed to take these funds because said agreements failed to protect Briarwood, Marsch and HCC from Lennar and related entities.”
Marsch claims that DLA Piper also persuaded Brairwood to enter into inadequate tolling agreements. Those agreements were ruled invalid when Briarwood sued Lennar, and barred Marsch from pursuing further claims against the Miami home builder for fraud and accounting, according to the complaint.
Marsch seeks damages for legal malpractice, breach of fiduciary duties, breach of contract, and fraud/concealment in connection with the law firm’s “breaches of their duties of trust and undivided loyalty”.
Marsch is represented by Todd Macaluso with Macaluso & Associates of Carlsbad.
Neither Foster nor DLA Piper immediately responded to requests for comment.
Rancho Santa Fe is a gated community in the wooded hills of unincorporated North San Diego County.