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Shotgun Pleading Dooms Plea for Attorneys Fees

(CN) - A company that provided investment banking services to a Florida's one-time "Foreclosure King" is not entitled to collect attorney fees from its one client over a dismissed lawsuit, a federal judge ruled.

David Stern built his multimillion dollar Plantation, Fla.-based law firm on the wreckage of the mortgage crisis, and at one point he was reportedly handling more than 200,000 foreclosure cases across the state.

But controversy dogged his practice. Mother Jones was among the first media outlets to shine a light on the dubious practices of the firm, and in 2014, Stern was disbarred by the Florida Supreme Court.

The action addressed by the federal judge stems from a June 11, 2007, agreement between Stern's law firm and P&M Corporate Finance, a Michigan-based firm that agreed to provide it with investment banking services related to the sale of the huge law firm's "non-legal operations."

The services included identifying opportunities for the sale of the law firm's non-legal operations business, advising it about those opportunities and participating in the negotiation of the sale.

The agreement included an indemnity provision in which the firm agreed to hold P&M harmless from any claims stemming from its engagement.

In January 2010, the law firm, with P&M's help, closed a transaction with an entity known as Chardan 2008 China Acquisition Corp. Shortly thereafter, however, Stern's law firm became the subject of an investigation by the Florida Attorney General's Office and was ultimately forced to wind down its operations, according to court documents.

Two years later, Chardan sued a number of parties, including P&M, for losses allegedly sustained in connection with the transaction. Ultimately, all of the defendants in the case, except P&M, settled with Chardan.

P&M, however, persevered, and was granted a full summary judgment against Chardan. It then invoked the indemnification clause in its agreement with Stern's law firm and sought to recover all attorney fee and other court costs in incurred in defending the Chardan lawsuit.

It sued Stern, Stern's now defunct law firm and several entities Stern controlled.

The defendants moved to dismiss P&M's complaint in its entirety as an impermissible shotgun pleading.

In doing so, they argued that the pleading failed to give them adequate notice of P&M's claims, and forced them and the court, to sift through the material presented to determine which allegations are relevant to the claims.

Chief U.S. District Judge K. Michael Moore agreed.

After explaining in his opinion that the Federal Rules for Civil Procedure require the allegations in a complaint to be "simple, concise and direct" and organized so that claims appear "in numbered paragraphs, each limited as far as practicable to a single set of circumstances," Moore said the P&M complaint, even in its third amended form, was far from that.

"The Third Amended Complaint is a quintessential shotgun pleading that runs afoul of Rules 8(a0 and 10(b)," he wrote. "... each count of the Third Amended Complaint adopts the allegations of all preceding accounts, 'causing each successive cont to carry all that came before and the last count to be a combination of the entire complaint.'"

Moore continued: "By incorporating every preceding count by reference, the Third Amended Complaint incorporates factual allegations concerning preceding counts that are irrelevant to subsequent counts.

"This is not a mere technicality, as PMCF contends," the judge wrote. "In evaluating the sufficiency of each count, the defendants and this Court are forced to sift through the facts presented to determine which allegations are relevant to a particular claim.

"Such shotgun pleading fails to give the defendants adequate notice of the claims asserted, and 'divert[s] already stretched judicial resources into disputes that are not structurally prepared to use those resources efficiently," Moore wrote. "Accordingly ... the Court will dismiss the pleading in its entirety."

Representatives of the parties could not be reached for comment.

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