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Business Observer Friday, Aug. 27, 2004 17 years ago

Clients v. Lawyers

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The defendants stung by a $24 million jury verdict now blame their attorneys for the defeat.

Clients v. Lawyers

The defendants stung by a $24 million jury verdict now blame their attorneys for the defeat.

By David R. Corder

Associate Editor

H. William Larson Jr. and David H. McClain knew they had a problem even before the federal trial began. Their clients, Barry Handwerker and Richard Perry, acted indifferent to the patent infringement allegations filed against them and their Chicago-based companies.

Against the attorneys' advice, they say, Handwerker and Perry refused to attend pretrial strategy sessions. They arrived late one Sunday night in Tampa on a flight from Chicago. Jury selection started the next day. The defendants apparently were unprepared to counter the allegations by Alachua-based Diamond Pool Products Inc.

The nine-day trial went poorly for the defense. In late October 2002, the jury decided that Midwest Canvas Corp., Horizon Ventures Inc., Handwerker and Perry infringed on the patented ornamental alligator heads the Alachua company made for swimming pools.

During the penalty phase, the trial turned ugly. First, the jury awarded the Alachua company $1.5 million in actual damages. Then it assessed punitive damages of $10 million against Midwest Canvas, $10 million against Horizon Ventures, $1 million against Handwerker and $1.5 million against Perry for a judgment of $24 million.

Now, almost two years later, Handwerker, Perry and their companies blame Larson and McClain for the defeat.

In early August, the Chicago group sued Larson and his law firm, Largo-based Larson & Larson PA, and McClain and his law firm, Tampa-based McClain & Associates PA, on allegations of professional malpractice, breach of fiduciary duty and negligence. The Chicago group retained Tampa attorney Buddy D. Ford to litigate the matter.

None of this comes as a surprise to either Larson or McClain, they say. The Chicago-based group asserted their malpractice claims in notices of intent to sue.

"At first blush everyone takes it personal," Larson says. "But in reality it's just a part of business."

But that doesn't mean Larson accepts any responsibility for the jury verdict against the Chicago group.

"You have to ask: 'Did the jury award punitive damages because of the lawyers or the litigants?' " Larson says. "Clearly, the jury saw the defendants as doing something terribly wrong."

"They don't want to admit that they're wrong; and, instead, they want to blame the attorneys for the infringement," he adds. "That's the essence of their case."

During the trial, Larson says, the defendants acknowledged they infringed on the patented design.

"It makes you wonder where they're coming from in their case," he adds. "They admitted they copied it. There was no question they copied the plaintiff's patented design."

While Larson spoke openly about the malpractice lawsuit, McClain referred all inquires about the matter to his lawyer, Michael J. McGirney, a shareholder in the Tampa office of Marshall Dennehey Warner Coleman & Goggin. McGirney did not respond to a GCBR request for comment.

"I will be completely 100% absolved," says Larson, who plans to defend himself.

The strategy against the malpractice action is simple, Larson says.

"Basically, whenever you have a case like this you have to retry the underlying case," he says. "There's no malpractice if the defendants in the underlying case, the plaintiffs in this case, were wrong. And that's what we'll prove. This case will probably go on for five years."

It was Damon Stone, the Alachua company's product development engineer, who came up with the idea in 1997 of creating the ornamental alligator head. He reasoned such a device could be used to dispense chemical tablets and take water temperature.

In 1998, Stone applied for a patent for the product. About a year later, the U.S. Patent and Trademark Office granted him design patent No. 409,714.

Meanwhile, the Alachua company began production of the ornamental alligator head for wholesale distribution. They negotiated contracts with regional sales representatives. The company prepared for a national rollout of the product for the spring and summer of 2000.

Sometime before the rollout, the Alachua company states in the original lawsuit, the Chicago group began production on its own ornamental alligator head. Representatives from the Alachua company contacted the Chicago group about the possibility it copied Stone's patent.

In November 2000, representatives discovered that the Chicago group rolled out their ornamental alligator head at the National Pool & Spa International Expo in Orlando. Handwerker and Perry operated the Chicago group's sales booth.

The Alachua company filed a patent infringement action against the Chicago group in February 2001, when the defendants in that action ignored requests to cease production and sales of their ornamental alligator head.

The patent infringement lawsuit moved somewhat quickly through the federal court system. The Alachua company retained Frank R. Jakes of Clearwater's Johnson Pope Bokor Ruppel & Burns LLP, with Gainesville attorney Stephen A. Scott as co-counsel.

Prior to trial, the Alachua company offered a series of settlement demands that apparently fell within the policy limits of a professional liability insurance policy maintained by the Chicago group.

In the malpractice claim, the Chicago group accuses McClain and Larson of improperly advising them about settlement opportunities within the $2 million maximum coverage offered by the insurance policy.

But that's just false, Larson says.

"There was a settlement offer made," he adds. "The litigants were in the room, and they expressly declined to settle. Settlement negotiations were ongoing up until the time of the trial.

"The plaintiff in that case never closed the settlement doors," he adds. "But the defendants refused to settle despite being advised to do so by their counsel."

In the malpractice action, the Chicago group accused McClain of failing to take depositions from Stone and Teresa Holt, the Alachua company's president. The group also accused McClain, as lead counsel, of failing to properly prepare for trial.

"Defendant McClain failed to make disclosure of expert witnesses on behalf of the plaintiffs, on or before March 15, 2002, the court ordered deadline, and the plaintiffs' defense was undeniably damaged by his negligence in failure to meet the disclosure deadline," the malpractice complaint states.

In defense of his co-counsel, Larson says, "David McClain did nothing wrong in this case. He tried a good case."

Although the Chicago group planned to appeal the verdict, it ultimately offered a confidential settlement to the Alachua company. The two sides agreed to terms a little more than a month after the trial concluded.

In the malpractice action, however, the Chicago group claims out-of-pocket settlement costs of more than $5 million. It could have been much less, Larson says, if they had accepted a pre-trail settlement offer.

"One of the problems with their case, Handwerker and Perry never took it seriously," Larson says. "Trial starts on a Monday, and they arrive late night Sunday. Over objections of counsel they refused to travel to Florida to prepare, saying they were too busy. They showed up for trial totally unprepared."

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