NEW YORK (Legal Newsline) - One of the nation’s leading structured settlement companies is suing a New York law firm and its partners over necessary legal documents that were allegedly forged by one of the firm’s former paralegals.
Woodbridge Structured Funding LLC, along with Twin Pier Investments LLC, filed the lawsuit in the U.S. District Court for the Southern District of New York Dec. 8.
The named defendants include Paris & Chaikin PLLC, Jason L. Paris and Ian M. Chaikin.
The Sherman Oaks, Calif.-based company -- which offers cash for structured settlements and annuities and also purchases the rights to periodic payments awarded to lottery winners -- claims it retained the defendants to file necessary paperwork to obtain court approval in the form of required judicial orders and to deliver the signed orders to Woodbridge.
As Woodbridge explains in its 61-page complaint, in order to consummate the assignment by a payee of a right to structured payments in exchange for a lump sum, under New York’s Structured Settlement Protection Act, or SSPA, or under New York law applicable to the transfer of lottery payments, an application must be made by petition in a special proceeding to the court in which the underlying action was filed or in the county where a lottery winner resides, to obtain a court order approving the proposed assignment.
“At some point in late 2013, Defendants advised Woodbridge that they had allegedly discovered that a paralegal, Thomas Rubino, working for P&C under the direct supervision of Messrs. Chaikin and Paris, had, over the course of more than one year, created numerous court-related documents which had never been filed, and had forged more than 100 purported court-executed Judicial Orders supposedly approving numerous transactions,” the lawsuit states.
Rubino’s activities have since been admitted to by the defendants in open court and numerous court filings, and have been the subject of a 234-count indictment of the paralegal filed by the New York County District Attorney’s Office.
Woodbridge argues that as supervising members of the law firm, Paris and Chaikin had an “obligation” to the company to oversee the paralegal’s work and “should have and could have discovered his misconduct.”
The company contends the forgeries occurred in at least 19 cases in which it retained the firm.
Similar forgeries, Woodbridge argues, occurred in more than 100 cases in which P&C clients had retained the firm to perform the same or similar work.
“Even the most cursory review of a docket in a single one of these cases would have alerted Defendants to the Paralegal’s conduct,” the company wrote, adding that the attorneys failed to “ever” uncover Rubino’s conduct through their own diligence, but were instead alerted when a court “expressed concern.”
And while Woodbridge agreed to permit the firm to engage in mitigation activities, the company alleges that as a result of the defendants’ malpractice, its direct, out-of-pocket losses alone amount to roughly $1 million.
The bulk of the out-of-pocket damages were incurred in cases in which the petitioned court declined to approve the involved transaction and Woodbridge was required to reimburse investors when the assignments could not be delivered.
Woodbridge claims additional damages arose from a case involving a lottery winner.
As it explains in the lawsuit, between the time the lump sum was paid to the lottery winner by Woodbridge and the time the fraud was discovered, liens were filed by third parties against the winner’s payments in an amount in excess of the amounts paid by Woodbridge’s investor. The effort to obtain a legitimate judicial order approving the transaction was then abandoned, resulting in a loss to Woodbridge representing the principal and interest paid by it to the investor.
The remaining out-of-pocket damages represent amounts paid to payees to appear in court in support of the replacement judicial orders and periodic payments made to investors by Woodbridge.
The company contends it also has suffered, and continues to suffer, “significant consequential” damages resulting from, among other things, the loss of clients and potential clients, as well as the loss of long-time investors.
“Defendants’ malpractice has left Woodbridge in the position of having to defend claims made by annuity obligors seeking to recover the administrative costs these third parties allegedly incurred in the Transactions due to Defendants’ malpractice,” the lawsuit states. “Damages from such claims continue to accrue.”
Woodbridge is seeking at least $12 million in damages, plus prejudgment interest, costs, expenses, attorneys’ fees and punitive damages.
The company also is asking for a declaratory judgment from the court that the firm have a continuing obligation to indemnify it for all such forged judicial orders and future litigation costs.
New York law firm Novack Burnbaum Crystal LLP is representing Woodbridge and Twin Pier.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.