Douglas Levy, The Daily Record Newswire
A Kent County jury has awarded $1,559,000 to a restaurant operator who sued his lawyer for malpractice after he did not obtain a liquor license transfer.
Grand Rapids attorney John B. Kempski previously admitted that he breached five duties owed to plaintiff Rakann Karadsheh and his restaurant in connection with purchasing the restaurant and pursuing the license transfer.
In Karadsheh v. Kempski (MiLW No. 13-85867, 10 pages), Kent County Circuit Judge Christopher P. Yates granted Karadsheh partial summary disposition based on Kempski’s admissions.
Yates denied the plaintiffs’ summary disposition of their claim that “Kempski had a duty to refrain from making knowing misrepresentations” to the Michigan Liquor Control Commission.
The judge ordered a jury trial to determine whether the breached duties caused damages, and if so, in what amount.
The jury’s verdict included a determination that Kempski was 85 percent at fault.
John D. Tallman, who represented the plaintiffs, said that Karadsheh v. Kempski was an “indefensible” case.
“The way this deal was set up, it was so complex and such bad decisions were made time and time again,” Tallman said. “Then when the defendant found he had made a mistake because he didn’t understand the basic rules — and this was three or four months into the transaction when he attempted to get the liquor license — he didn’t tell anybody about it, and that’s when he went ahead and made the misrepresentation to [the MLCC] in an attempt to fix the problem, and everything blew up.
“This was a bad case to try.”
Explaining it to jury
In November 2009, the plaintiffs and the then-owner of the restaurant entered into a purchase agreement. To use the existing liquor license, the MLCC required the plaintiff to have lease and management agreements with the seller.
Kempski assisted with the lease and management agreements. A year later, the plaintiffs and sellers had a falling out. The seller wanted to terminate the management agreement. The MLCC granted the seller’s request to cancel the liquor license transfer.
“[B]ecause of how this deal was set up, [the sellers] were in a position to try to do that,” Tallman said. “And when that happened and there was sure to be litigation, [Kempski] called my client [Karadsheh] on a cellphone and said, ‘I can’t represent you anymore.’”
Tallman said that two of his trial witnesses — attorneys Kenneth C. Hoogeboom of Grand Rapids and Lawrence W. Wilson of Ada — had stepped in to help the plaintiffs save their restaurant, which closed for nine months, and to obtain a new liquor license.
“I was able to present them not as hired guns who helped me prove the case after the fact but as lawyers who tried to help the client before there was a legal malpractice lawsuit,” Tallman said. “Both of them felt very strongly that this was malpractice and that there was causation, so they were effective witnesses.”
Tallman said that in preparing for the trial, he conducted a jury focus group, and added that the group was able to understand the case without having to review the hundreds of documents from discovery.
He said the group confirmed that the approach he took was correct — “to focus more on testimony and to keep it simple, and as far as the explanation for what happened in this transaction and how it went wrong, I could explain that in the opening and it’d be OK.”
In addition, Tallman said he needed only a few demonstrative aids, including a poster display that listed the five areas where Yates found Kempski to be negligent.
Tallman also said he had an outline of who the involved parties were — lawyers, real estate agents, etc. — so that the jury would be able to associate a name with a role in the matter.
“And I went back to the basic malpractice here, explaining how that malpractice was the cause of this deal falling apart, and the cause of the damages.”
Arguing proximate cause
Kristen E. Guinn, co-counsel for the defendants, said that the defendants chose to take matter to trial because, “although there were admissions that had been made, that [Kempski] had stepped forward and admitted to some mistakes he had made, that ultimately wasn’t the proximate cause of the plaintiff’s damages.”
She added that the defense contended that plaintiffs’ damages were caused by the seller’s breach of the buy-and-sell agreement.
“We felt strongly about our defenses, and we had a client attorney who was very experienced, a good person who became entangled in a business transaction that didn’t conclude because of what the seller did,” said Guinn, who tried the case with fellow Smith Haughey Rice & Roegge attorney Craig S. Neckers
“But unfortunately, the jury believed that the attorney should have given business advice to his client right from day one and should have made business decisions for the client instead of the client making those decisions himself.”
Guinn said that other defense attorneys who are representing clients in similar situations should encourage them to keep as much in writing as possible.
“One of the problems we had here was … the file wasn’t papered with letters and correspondence because of the nature of the relationship between the parties,” she said. “They were very much verbal communicators; they’d meet at the restaurant, they’d meet at the office.
“Just from a practical perspective, it’s important to advise your clients to write that memo to the file, send a confirming letter to the client, even if they don’t have email, because that would have been very helpful for us to have some of that documentation.”
Tallman said that suing a fellow State Bar of Michigan member can seem daunting, but sometimes it is necessary.
“I’m a solo practice and [Kempski is] a solo practice, and sure I feel a certain amount of sympathy for him,” Tallman said. “On the other hand, this was not just malpractice. This was clear malpractice and a lot of malpractice. … It was a pretty egregious case.”
Guinn said that she could not say whether the verdict would be appealed.
