Top Lawyers File Suit Against Governor

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by Thomas B. Scheffey
Connecticut Law Tribune

March 30, 2009

HARTFORD — A dozen leading Connecticut lawyers and the Connecticut Bar Association filed suit Monday to prevent Gov. M. Jodi Rell, the state treasurer and comptroller, from seizing $2 million from the legal profession’s Client Security Fund.

The plaintiffs charge that it would violate the constitutional separation of powers between the branches of government if the cash-strapped state took money that’s supposed to compensate clients victimized by dishonest lawyers.

The suit states that the fund transfer is expected on April 1. The would-be class action is supported with legal opinions from former acting Supreme Court Chief Justice David M. Borden and Peter Costas, a former president of the Connecticut Bar Association.

The legal relief is needed, according to a complaint filed today in Hartford Superior Court, “to prevent the Illegal Expropriation by Defendants,” Republican Rell and two Democrats, state Treasurer Denise L. Nappier and Comptroller Nancy Wyman.

The Client Security Fund is administered by a volunteer group of judges, lawyers and lay people, and money for the fund comes from a fee paid by each licensed Connecticut attorney and judge. More than $13 million has been paid out since the Judicial Branch took over administration of the fund in 1999.

At the end of 2008, the fund had a balance of about $7.8 million available, but also faced $5.8 million in pending claims. “The transfer will leave the fund with no cushion against pending claims,” state Supreme Court Justice Joette Katz wrote in a recent opinion piece in the Law Tribune. “The actions of the governor and legislature place the fund at risk of being unable to fully pay claims if there is a large scale defalcation or an appreciable number of defalcations in the future.”

Costas, a partner at Pepe & Hazard, also objected in a recent issue of the Law Tribune to the potential state use of Client Security Fund money.

“This action violates the trust of the approximately 30,000 lawyers in Connecticut and ultimately Connecticut citizens who may become claimants,” Costas wrote in his op-ed piece. “Clearly, the Client Security Fund is the creation of, and controlled by, the Judicial Branch, and the legislature and governor have no constitutional basis for the invasion.”

The purported class bringing the action consists of about 30,000 lawyers and judges, magistrates and trial referees who have paid into the fund, which has a $110 annual assessment for all those admitted to practice in the state.

The four-count complaint alleges the budget “mitigation” move is a violation of separation of powers. The fund is entirely under the control of the Judicial Branch, and any attempt to confiscate it is unconstitutional as an intrusion of the Executive Branch that would cause irreparable harm, according to the lawsuit.

The process is also a violation of due process, and, as to the state treasurer, a breach of trust and a breach of a bailment, according to the suit.

The complaint was drafted by Stamford lawyer Ernest Teitell, of Silver, Golub & Teitell. The plaintiffs are a veritable who’s who of top Connecticut practitioners: Jacob D. Zeldes, William R. Davis, Charles A. Deluca, William F. Dow III, Kathryn Emmett, William F. Gallagher, Hugh F. Keefe, Kathleen L. Nastri, Hubert J. Santos, Hope C. Seeley, Matthew Shafner and Frederic S. Ury.