Spector Gadon & Rosen, P.C. Wins Historic Verdict of $4.4 Million Together with Punitive Damages for Republic First Bank

Company Information Center
July 06, 2004 05:59 PM US Eastern Timezone

PHILADELPHIA—(BUSINESS WIRE)--July 6, 2004—

Judge Says Case “Goes to the Very Heart of the Banking Industry”

Rarely do legal malpractice cases go to verdict in Philadelphia. But on Friday, July 2, one such case relulted in an extraordinarily large verdict of $4,439,091.67 against the Philadelphia law firm of Abrahams, Lowenstein & Bushman, P.C. and one of its members, Howard Soloman. Common Pleas Court Judge Gene D. Cohen found the law firm liable for damages and in one of the first verdicts of its kind, also awarded punitive damages, for providing its client, Republic First Bank of Philadelphia, a false opinion letter and failing to disclose that it knew there was no mortgage protecting the bank before it funded a $7.3 million loan to American Appliance Company of Philadelphia.

Upon the bankruptcy of the borrower American Appliance Company of Philadelphia, Republic First discovered that the $4.2 million mortgage was void, and was lost during the bankruptcy. This lawsuit for malpractice resulted from the conduct of the attorneys who were retained to protect the bank in connection with the funding of the $7.3 million loan.

In his opinion, Judge Cohen found that, “…This is the same thing as a certified public accountant certifying a bank statement or a financial statement knowing, knowing that the information contained in that is false. It goes to the very heart of the banking industry because of the importance of such opinion letters…banks sell loans based in no small part with accompanying lawyer opinion letters to support the sale of the particular loan and in this case, made part of the loan agreement and created a danger not only to the bank itself, but…possible danger to others who would have participated in this particular loan.”

Judge Cohen described the conduct of Abrahams Lowenstein & Bushman, P.C. in issuing its false opinion to the bank “as an outrageous thing to do,” and in his ruling answered the verdict question, “…were defendants’ conduct sufficiently reckless, outrageous to warrant the imposition of punitive damages to deter these defendants and others from participating (in) the same conduct? And the answer to that is…yes.”

Representing the plaintiff Republic First Bank were lead attorneys Paul R. Rosen and Daniel J. Dugan of the Philadelphia law firm of Spector Gadon & Rosen, P.C. Said Rosen, “The only tragedy about this verdict is that the lawyers tried to defend their conduct on the stand. If they had just acknowledged their lack of professionalism, this case may have settled without the additional exposure to the law firm and its partners for punitive damages.”

To obtain the complete ruling, please email chris@reynoldsink.com or ddugan@lawsgr.com or prosen@lawsgr.com. FOR MORE QUOTES OR CLARIFICATION ON THIS CASE, contact Paul Rosen at 215-241-8800 or Dan Dugan at 215-241-8872.

Contacts

Spector Gadon & Rosen, P.C.
By
Reynolds Ink Public Relations & Communications
Chris Reynolds or Jennifer Reynolds, 610-566-1960
Cell: 610-547-9800

Furnished to Legal Mutual by the American Bar Association LPL Advisory.