MOLSKI v. MANDARIN TOUCH RESTAURANT
359 F.Supp.2d 924 (2005)
United States District Court, C.D. California.
March 8, 2005.
Based on the above, the Court believes that the Plaintiffs contrived many of their allegations of bodily injury. The only logical reason to contrive minor injuries is to implicate the personal injury provisions of the defendant's insurance policy. As discussed above, The Frankovich Group encourages defendants to seek insurance coverage under, inter alia, the personal injury provisions of their general liability policy. The allegations of physical injury, which are not an essential element of a claim of discrimination under the ADA, thus appear to be included in the complaint to improve the chances of invoking insurance coverage as a source for the payment of damages.9d. Damage Issues
In every complaint reviewed by this Court, clients of The Frankovich Group seek damages of $4,000/day for each day from the date of their visit to the date when repairs are completed. The Court's review of the complaints filed demonstrates that it is a regular practice of the Plaintiffs to wait up to one year before filing their claims, during which time the requested daily damages continue to accumulate.10 In its Order Declaring Jarek Molski a Vexatious Litigant, the Court calculated that the damages requested totaled $1,452,000 by the time the Mandarin Touch case was filed. Such a damage claim can have an intimidating and coercive effect on a small business. In response to the Order to Show Cause, Frankovich ridicules the suggestion that Molski genuinely expects to collect that amount, asking, "how could any lawyer or this Court believe that Jarek Molski is seeking anywhere near this amount in damages?" Declaration of Thomas E. Frankovich at 35: 4-5. The Court's response is simply: Is the Court not to believe a request for damages made in a verified complaint? Frankovich's argument is further undercut because he specifically advises unrepresented parties not to obtain counsel, and in the same letter, refers them to the portion of the complaint where daily damages are requested. Thus, even if the Court makes the questionable assumption that no attorney could believe that Jarek Molski was actually seeking that amount in damages, an unrepresented party certainly could. In re Marriage of Foran,67 Wn.App. 242,
254, 834 P.2d 1081 (Wash.Ct.App.1992)("That which is obvious to attorneys and judges may not be obvious to the unrepresented and economically subservient party.").11 e. Issues Involving Settlement
In its Order Declaring Jarek Molski a Vexatious Litigant, the Court noted that the vast majority of Molski's claims settle. Despite the fact that he has filed approximately 400 lawsuits, Molski has apparently tried only one case on the merits, Molski v. Cable's Restaurant, CV 03-4809 (C.D.Cal.2003).12 The Court concluded that the unusual amount of settlements was indicative of an extortion scheme. In response to the Order to Show Cause, Frankovich disputes this conclusion, arguing that the suits settle because the defendants lack any meritorious defense. While this certainly may be true in some cases, it misses several important points. First, even if a party had a meritorious defense, the cost of litigating the matter would likely exceed the cost of settling.13 In such a circumstance, it would make little sense for a party to persist in its defense, even if meritorious. Second, even if innocent, parties may prefer to avoid the rigors of litigation — especially in a matter involving an allegation of intentional discrimination — and in such a circumstance, would be willing to settle in order to "avoid litigation and buy their peace."14 Finally, in the case of unrepresented parties, it does not take into account that it is The Frankovich Group itself that is advising the parties that they have no meritorious defense. The parties may believe that they have no meritorious defense based on the contents of The Frankovich Group's letter, but, if they accepted the letter's advice, they would not independently confirm the matter.15
1. A hearing was held on these Orders to Show Cause on February 7, 2005, the Honorable Edward Rafeedie, presiding. At that hearing, the Court announced its tentative ruling, including the findings of fact and conclusions of law that form the basis of this order. Despite requesting (and receiving) a continuance, purportedly to allow counsel time to prepare for that hearing, the Plaintiffs did not challenge any of the Courts tentative findings or conclusions, and did not present any oral argument.
2. The Court has obtained and read the 223 complaints that it that it was able to recover. A handful of complaints filed in the Northern and Central Districts were unavailable for various reasons. The Court also identified, but was unable to obtain, at least 11 complaints filed in the Eastern District.
3. Those claims are 1) Violation of California Civil Code § 54, et seq., The California Disabled Persons Act ("CDPA"); 2) Violation of California Health & Safety Code § 19955, et seq., Denial of Accessible Sanitary Facilities; 3) Violation of California Civil Code § 51, et seq., The Unruh Civil Rights Act; and 4) Violation of California Business & Professions Code § 17200, et seq., Unfair Business Practices.
4. The Court has attached a copy of the letter sent to Kathy McInerney as an appendix to this order. When citing or quoting the letter, this order refers specifically to that letter. The record also contains the letters that The Frankovich Group sent to the other defendants in Mandarin Touch and Yang Chow. For all relevant purposes, the letters are identical. [Editor's Note: The Appendix is not included in this publication].
5. Pursuant to C.D. Cal. Local Rule 83-3.1.2, the Model Rules of Professional Conduct of the American Bar Association may be considered as guidance when disciplining attorneys.
6. Although this Court has focused on three specific violations of the rule, the letter itself recognizes that it has actually given advice about seven different matters. See McInerney Letter at 5 ("We find all to [sic] often that many defendants are not properly advised as to their position in the litigation, insurance coverage issues, injunctive relief sought, damages, the tactics of insurance defense attorneys, attorneys' fees, and the use of an early mediation/settlement conference to resolve the matter."). As the Model Rules and relevant case law make clear, it is not the place of adverse counsel to advise an unrepresented defendant on these matters.
7. There should be no doubt that advising a party against retaining counsel constitutes legal advice under the Rule. The Model Rules specifically state that an attorney "shall not give legal advice to an unrepresented person, other than the advice to secure counsel." ABA Model Rules of Prof'l Conduct 4.3 (emphasis added). Thus, by its very words, the Rule recognizes that a recommendation to secure counsel qualifies as advice. It necessarily follows that advising an unrepresented party against retaining counsel constitutes legal advice as well.
8. Similar contradictions occur in complaints filed on behalf of other Frankovich Group clients. For example, in Jankey v. Mister D's Liquor Market, CV 04-9112 (C.D.Cal.2004), Jankey was unable to access the sidewalk in front of a liquor store due to a lack of ramps or cut curbs. Jankey blew his horn, at which time an employee came out of the store and assisted him with his order. Complaint at ¶ 22. Jankey noted other violations before leaving without attempting to enter the store. Despite a lack of any physical contact with an architectural barrier, Jankey then makes an identical claim of bodily injury "including, but not limited to, fatigue, stress, strain and pain in wheeling and attempting to and/or transferring." Id. at ¶ 28.
9. Further proof of canned allegations comes from a letter that The Frankovich Group sends to prospective clients, which outlines its litigation philosophy. See Ex. B to Declaration of Thomas E. Frankovich. The letter informs prospective clients that "[y]ou should also know that we use the terms `emotional distress' and `negligence as we prosecute your case. Although we use those terms, we do not file a cause of action based upon negligence, the negligent infliction of emotional distress, or the intentional infliction of emotional distress." The Frankovich Group made good on its pledge. In every case filed in 2004, Frankovich Group clients allege emotional distress and negligence without bringing a cause of action for negligence, or the negligent or intentional infliction of emotional distress. But how could The Frankovich Group have known this in advance? Surely it was likely that in (at least) one of the 223 cases, a client would be injured as the result of negligence, or not suffer emotional distress. That fact that 223 separate cases unfolded exactly as described in advance suggests that the identical allegations of emotional distress were contrived.
10. The requested damages accumulate during this time despite a lack of any notice to the defendants, who presumably would have some interest in mitigating their liability by performing the repairs immediately.
11. Moreover, it is unclear whether the sort of daily damages requested are available under California law. California courts read a statute against permitting cumulative daily damages unless the statute specifically authorizes them. See Hale v. Morgan,22 Cal.3d 388, 401, 149 Cal.Rptr. 375, 584 P.2d 512 (1978)("Uniformly, we have looked with disfavor on ever-mounting penalties and have narrowly construed the statutes which either require or permit them."). Neither the Unruh Act nor the CDPA specifically authorize daily damages, and thus, it is questionable whether such damages would be permissible under California law. 12. On November 18, 2004, a jury, finding no violations of the ADA, unanimously ruled in favor of the Defendants.
13. This is implicitly pointed out in the aforementioned letter which is sent to all defendants. The letter notes that if the matter does not settle quickly, the cost of litigation will "start[] to rise, or as some may say, skyrocket."
14. Such an understanding is even reflected in some of the settlement agreements which the Plaintiffs lodged with the Court. See, e.g., Declaration of Thomas E. Frankovich, Ex. 61 (Settlement Agreement for Molski v. Valencia Lanes, Inc., CV 03-5455 (C.D.Cal.2003)) at ¶ 3("It is understood and agreed that this settlement is the compromise of a doubtful and disputed claim, and that the payment made is not to be construed as an admission of liability on the part of Releasees, and each of them, and that said Releasees deny liability therefor and make settlement reflected herein merely to avoid litigation and buy their peace.")(emphasis added).
15. There is no evidence that proves that the barriers alleged actually exist, and if they do, whether their removal would be "readily achievable." None of the 65 settlement agreements which the Plaintiffs submitted to the Court contains an admission of liability, and Molski lost the only case he ever took to trial (with the jury making a special verdict finding that no barriers existed). The Plaintiffs almost never need to prove their allegations of discrimination because considerable disincentives discourage defendants from litigating a matter on its merits.