Law360, Los Angeles (April 17, 2014, 8:48 PM ET) -- A Los Angeles surgeon suingProskauer Rose LLP for more than $20 million for allegedly advising him to sink large sums of money into illegal tax shelters urged a California judge on Thursday to reconsider his dismissal order, saying legal opinion letters from Proskauer are admissible evidence against the firm.
During a hearing of plaintiff Gary Michelson's motion for reconsideration, Dale Kinsella ofKinsella Weitzman Iser Kump & Aldisert LLP, representing Michelson, told Los Angeles Superior Court Judge Mark Mooney that his tentative ruling that Michelson didn't have enough evidence for his malpractice claims should be overturned.
Kinsella said that if eight opinion letters sent by Proskauer, which allegedly induced Michaelson to invest in illegal tax shelters, were sent directly to Michaelson, and not his longtime advisers Jeffer Mangels Butler & Mitchell LLP, they are admissible as evidence. Kinsella said that on a motion for summary judgment, the evidence at least shows a factual dispute over whether that is the case.
“Why has Proskauer remained silent for years about evidence in their own records that would settle whether these letters were sent directly to Dr. Michelson or to the Century City office of Jeffer Mangels?” he said.
Michelson, a spinal surgeon and medical device inventor, had sued Proskauer Rose in Los Angeles Superior Court for malpractice over eight opinion letters the firm had issued in 2001. The letters said two Ernst & Young LLP tax reduction vehicles should hold up to Internal Revenue Service scrutiny, causing Michelson to lose tens of millions of dollars when the IRS disallowed the deductions generated by those investment, according to the surgeon's complaint.
Michelson's complaint says that in 2001, he was approached by Ernst & Young about investing in two “generic tax products,” that would lower his tax liability. Michelson invested $121 million in these tax products.
As part of his investment, Michelson paid $150,000 to Proskauer for independent opinion letters stating these transactions “should” survive IRS scrutiny and provide their anticipated tax benefits.
The surgeon contends that at the time Proskauer sent him the opinion letters, the IRS already had made clear that tax products like those Michelson was investing in were considered “abusive” and potentially illegal tax shelters, according to the complaint.
The IRS assessed roughly $48 million in additional tax liability for 2001 and 2002 on Michelson's investments in the tax products, and after he entered into a closing agreement the IRS in 2007, Michelson sued Proskauer for at least $20 million in damages on claims of malpractice and breach of fiduciary duty.
Proskauer had argued in a July motion for summary judgment that the opinion letters were not admissible, and that without them, Michelson's case had no legs. It also claimed that Michelson had never spoken with any representative at Proskauer before making his investments.
In October 2013, Judge Mooney tentatively granted the motion for summary judgment, but in January he said he would hear Michelson's motion for reconsideration, saying that although it was too late for Michelson to waive his attorney-client privilege or introduce new evidence, he would re-evaluate the existing evidence before granting Proskauer's motion for summary judgment.
On Thursday, Paul Spagnoletti of Davis Polk & Wardwell LLP, representing Proskauer, told Judge Mooney that even if Proskauer had sent some letters directly to Michelson's house, that fact wasn't enough to over come the doctor's own testimony that the information he relied upon when making the tax investments came from his attorneys at Jeffer Mangels.
“Even if Proskauer Rose sent something to Dr. Michelson's house it doesn't matter, because that's not what he read and what he relied upon,” he said. “Dr. Michelson said that what he read, what he relied upon, was sent through Jeffer Mangels.”
Judge Mooney took the arguments under submission and said he would issue a formal written opinion on the matter.
Michelson is represented by Dale F. Kinsella and Patricia A. Millett of Kinsella Weitzman Iser Kump & Aldisert LLP.
Proskauer is represented by Paul Spagnoletti, Heather M. Ward and Jillian Rennie Stillman of Davis Polk & Wardwell LLP and David M. Lederkramer, Elise A. Yablonski, Gerald W. Sawczyn, Lary Alan Rappaport and Michael H. Weiss of Proskauer Rose LLP.
The case is Michelson et al. v. Proskauer Rose LLP et al., case number BC384760, in the Superior Court of the State of California, County of Los Angeles.
--Editing by Richard McVay.
http://www.law360.com/articles/529481/20m-proskauer-malpractice-bid-merits-2nd-shot-judge-told
More articles about this case linked below. If Gary invested in the tax shelter based on what his lawyer told him, then how is Proskauer liable? Proskauer stated no one from Proskauer spoke to Gary ever. More Gary lies about these opinion letters? I noticed Gary sued a lawyer for malpractice who went bankrupt. Maybe that's the one who gave him the advice? Gary's involved in a lot more lawsuits mainly for his spinal products being defective. I bet he's "happy" that he forced Medtronic to put his name all over those products now ;-) Sorry but Gary Michelson is his own worst enemy. You want money, fame, attention, okay but that'll come with a lot of bad press, lawsuits and stress. I bet Gary thought he could get away with tax evasion. I think the Judge is just trying to appear overly fair by reconsidering the dismissal and writing an opinion. I look forward to reading the opinion. Based on Gary's history of filing suits with no merit, I think he'll lose this suit. He filed a ridiculous suit against a real estate person for overpaying for property. He created his own loss by buying the property in foreclosure. Judge ruled against him.
I just realized that if Gary Michelson had funded his non-profits and awarded his prize he wouldn't have needed the tax breaks. Here Gary rants that everyone is cheating him when it's really Gary cheating himself... and the IRS.During a hearing of plaintiff Gary Michelson's motion for reconsideration, Dale Kinsella ofKinsella Weitzman Iser Kump & Aldisert LLP, representing Michelson, told Los Angeles Superior Court Judge Mark Mooney that his tentative ruling that Michelson didn't have enough evidence for his malpractice claims should be overturned.
Kinsella said that if eight opinion letters sent by Proskauer, which allegedly induced Michaelson to invest in illegal tax shelters, were sent directly to Michaelson, and not his longtime advisers Jeffer Mangels Butler & Mitchell LLP, they are admissible as evidence. Kinsella said that on a motion for summary judgment, the evidence at least shows a factual dispute over whether that is the case.
“Why has Proskauer remained silent for years about evidence in their own records that would settle whether these letters were sent directly to Dr. Michelson or to the Century City office of Jeffer Mangels?” he said.
Michelson, a spinal surgeon and medical device inventor, had sued Proskauer Rose in Los Angeles Superior Court for malpractice over eight opinion letters the firm had issued in 2001. The letters said two Ernst & Young LLP tax reduction vehicles should hold up to Internal Revenue Service scrutiny, causing Michelson to lose tens of millions of dollars when the IRS disallowed the deductions generated by those investment, according to the surgeon's complaint.
Michelson's complaint says that in 2001, he was approached by Ernst & Young about investing in two “generic tax products,” that would lower his tax liability. Michelson invested $121 million in these tax products.
As part of his investment, Michelson paid $150,000 to Proskauer for independent opinion letters stating these transactions “should” survive IRS scrutiny and provide their anticipated tax benefits.
The surgeon contends that at the time Proskauer sent him the opinion letters, the IRS already had made clear that tax products like those Michelson was investing in were considered “abusive” and potentially illegal tax shelters, according to the complaint.
The IRS assessed roughly $48 million in additional tax liability for 2001 and 2002 on Michelson's investments in the tax products, and after he entered into a closing agreement the IRS in 2007, Michelson sued Proskauer for at least $20 million in damages on claims of malpractice and breach of fiduciary duty.
Proskauer had argued in a July motion for summary judgment that the opinion letters were not admissible, and that without them, Michelson's case had no legs. It also claimed that Michelson had never spoken with any representative at Proskauer before making his investments.
In October 2013, Judge Mooney tentatively granted the motion for summary judgment, but in January he said he would hear Michelson's motion for reconsideration, saying that although it was too late for Michelson to waive his attorney-client privilege or introduce new evidence, he would re-evaluate the existing evidence before granting Proskauer's motion for summary judgment.
On Thursday, Paul Spagnoletti of Davis Polk & Wardwell LLP, representing Proskauer, told Judge Mooney that even if Proskauer had sent some letters directly to Michelson's house, that fact wasn't enough to over come the doctor's own testimony that the information he relied upon when making the tax investments came from his attorneys at Jeffer Mangels.
“Even if Proskauer Rose sent something to Dr. Michelson's house it doesn't matter, because that's not what he read and what he relied upon,” he said. “Dr. Michelson said that what he read, what he relied upon, was sent through Jeffer Mangels.”
Judge Mooney took the arguments under submission and said he would issue a formal written opinion on the matter.
Michelson is represented by Dale F. Kinsella and Patricia A. Millett of Kinsella Weitzman Iser Kump & Aldisert LLP.
Proskauer is represented by Paul Spagnoletti, Heather M. Ward and Jillian Rennie Stillman of Davis Polk & Wardwell LLP and David M. Lederkramer, Elise A. Yablonski, Gerald W. Sawczyn, Lary Alan Rappaport and Michael H. Weiss of Proskauer Rose LLP.
The case is Michelson et al. v. Proskauer Rose LLP et al., case number BC384760, in the Superior Court of the State of California, County of Los Angeles.
--Editing by Richard McVay.
http://www.law360.com/articles/529481/20m-proskauer-malpractice-bid-merits-2nd-shot-judge-told
More articles about this case linked below. If Gary invested in the tax shelter based on what his lawyer told him, then how is Proskauer liable? Proskauer stated no one from Proskauer spoke to Gary ever. More Gary lies about these opinion letters? I noticed Gary sued a lawyer for malpractice who went bankrupt. Maybe that's the one who gave him the advice? Gary's involved in a lot more lawsuits mainly for his spinal products being defective. I bet he's "happy" that he forced Medtronic to put his name all over those products now ;-) Sorry but Gary Michelson is his own worst enemy. You want money, fame, attention, okay but that'll come with a lot of bad press, lawsuits and stress. I bet Gary thought he could get away with tax evasion. I think the Judge is just trying to appear overly fair by reconsidering the dismissal and writing an opinion. I look forward to reading the opinion. Based on Gary's history of filing suits with no merit, I think he'll lose this suit. He filed a ridiculous suit against a real estate person for overpaying for property. He created his own loss by buying the property in foreclosure. Judge ruled against him.
I just read this from one of those articles. Serial litigant Gary Michelson is going to lose this case.
"In a demurrer filed in April, Proskauer asserted that it issued the opinion letters long after Michelson completed the transactions, and says that the letters only stated that if Michelson contested an adverse IRS determination, a reviewing court should uphold his position.
“Each letter cautions that ‘there can be no guarantee that following an audit, the [IRS] will not take a position contrary to the opinion set forth herein, which ultimately may be sustained by the courts,’” the demurrer said.
Proskauer claimed that when the IRS did make an adverse determination, Michelson chose not to litigate. Instead, Michelson settled with the government and went after Proskauer, the firm said."
Gary Michelson has now sued many people for "cheating" him and he lost most of the cases. (1) He sued a real estate person for appraising a property for more than what it ultimately sold for. He lost, appealed and lost again. He created his own loss in that situation. (2) He sued Proskauer for cheating him on tax free investments and will soon lose again. (3) He claimed Loftus cheated him and stole. Loftus sued him and won for defamation. (4) He claimed Richard cheated him in Costa Rica yet the DA said there was no crime, no evidence of any crime. Something is obviously very wrong with Gary Michelson.
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| Gary Michelson, Proskauer, lawsuit, tax cheat, irs, fines, tax shelter |
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