LOS ANGELES (CN) - Two Los Angeles-based law firms representing a hedge fund operator helped their client wage "an aggressive litigation campaign" against a film investor, using confidential information divulged by the investor's former attorney, the investor claims in Superior Court.
Ronald Tutor and his company Library Asset Acquisition Co., a United Kingdom LC, sued Stroock and Stroock and Lavan, and Levene Neale Bender Yoo & Brill, alleging intentional interference with contract, aiding and abetting breach of fiduciary duty and unjust enrichment.
Tutor claims the attorneys helped hedge fund operator David Molnar's teetering company "embark on a scheme to hide its losses on other nonperforming loans and to cover up the fact that it had inflated the value of its loans to investors," by waging a legal war against Tutor's company and associates.
Molnar is not a party to the case, nor are his companies, nor his apparent enemy; the only defendants named in this case are the two law offices, and Does 1-10.
According to the complaint: "This case arises from the flames of a wider war waged by offshore hedge fund operator David Molnar ('Molnar') against film financier David Bergstein ('Bergstein') and numerous entities formed by and/or operated by Bergstein. Molnar operates several offshore hedge funds, including Aramid Entertainment Fund Ltd., Aramid Entertainment B.V., Cayman Film Holdings Limited and Screen Capital International Corporation (collectively, 'Aramid'), which lent funds to Bergstein's various enterprises. Plaintiff Tutor, having invested in certain film related enterprises with Bergstein, both through his own company, LAAC, and as a personal guarantor of certain film related obligations, has been swept up in this larger war, as Molnar has looked for potential 'deep pockets' to loot. Defendants herein are the attorneys who provided material assistance to Molnar in this undertaking, by actively soliciting Bergstein's former lawyer and confidant Susan Tregub ('Tregub') (who at times also represented LAAC and Tutor) to commit shocking breaches of her professional, ethical and contractual fiduciary duties as a lawyer to her client(s) and who then knowingly used the very same attorney client privileged information obtained from Tregub in several lawsuits and proceedings as part of Molnar's war against Bergstein, LAAC and Tutor.
"Tregub's conceded breaches of her fiduciary obligations to plaintiffs and Bergstein are, to plaintiffs' knowledge, unmatched in jurisprudence, and they go to the very heart of the core obligations of an attorney. She violated her duty of loyalty by working against plaintiffs' and affiliated entities' interests while she continued to represent these same individuals and entities in ongoing litigation. She did not disclose that she had switched sides or obtain a waiver to bless her conflicted representation. She also violated several rules of professional conduct by: (1) disclosing confidential information of her clients (Rule 3-100); (2) representing interests adverse to her clients (Rule 3-310); and (3) suppressing and destroying evidence (Rule 5 - 220). Indeed, the suppression and destruction of evidence continued even after defendants filed litigation against plaintiffs and affiliated entities. Defendants, as attorneys themselves were perfectly aware of Tregub's professional, contractual and ethical duties to her clients, and yet, they ignored their own duties as attorneys and officers of the court to improperly advance the interests of Molnar for their own financial and professional gain." (Parentheses in complaint).
Tutor became involved in the film business in 2007, when he formed a holding company with Bergstein to acquire movie rights. Tutor and Bergstein borrowed money to finance movies and purchase film rights, often from hedge funds, according to the complaint.
