CLARKSBURG – A federal judge has ruled in favor of a regional law firm and four of its attorneys who had been accused of scheming against a prominent attorney, tricking him and damaging his reputation.
U.S. District Judge Thomas Kleeh issued a Memorandum Order and Opinion on March 31 granting summary judgment to Dinsmore & Shohl and attorneys David S. Thomas, Jeremy S. Rogers, Robert Palumbi and John J. Berry.
‘It’s the correct ruling given the circumstances,” Scott Segal, the plaintiff in the case, told The West Virginia Record.
Segal sued Dinsmore and the attorneys in 2020, saying the firm secretly stripped him of more than $20 million in collateral as well as a $3 million loan guarantee. He says the firm carried out the move to benefit the Puskar Trust, another client, which had paid Dinsmore larger fees than Segal had. Segal also claimed Dinsmore tricked him into letting the firm represent the Puskar Trust in a lawsuit against him.
In his opinion, Kleeh says Segal’s claims against the defendants were tort claims that were subject to a two-year statute of limitations that his lawsuit didn’t meet.
“There is no suggestion in either the complaint, the parties’ summary judgment briefing or the record before the court that plaintiff’s malpractice claim is anything but a tort claim,” Kleeh wrote. “The other claims, in particular the fraud claim, further establish this fact and the court has not been provided any document purporting to be an acknowledgement or contract of representation, fee schedule or the like between Segal and the Dinsmore firm.”
In short, Kleeh essentially says the clock on the two-year statute of limitations for Segal began when Dinsmore (representing PITA LLC the Puskar Trust) sued Segal on September 4, 2018, “at the absolute latest.” Segal’s suit against the Dinsmore defendants was filed December 7, 2020, a little more than three months after the two-year statute of limitations ended.
In his complaint, Segal says he only learned of significant underlying facts in support of his causes of action through discovery in the 2018 case. But Kleeh says Segal’s complaint and the response to Dinsmore’s request for summary judgment doesn’t address what that information was.
Kleeh also notes Segal’s lack of responses to the defendants’ Rule 36 Requests for Admission, which legally means he admitted to the facts presented by the defendants and the court had to rely on those facts in the case. Those included specific dates certain communications occurred.
Segal’s original complaint detailed his history with Dinsmore and a biotechnology company called Protea Biosciences Inc., in which he was an investor and a member of its board of directors. In 2005, Milan Puskar invested in the company and joined the board as well.
In 2009, Protea needed working capital. Puskar suggested taking a loan from Centra Bank, which was based in Morgantown. Puskar, the late drug magnate, had an ownership interest in the bank and could help provide flexibility for Protea to pay the loan.
The company took out a $3 million loan from Centra. Segal and Puskar – as well as other investors – executed guaranty agreements with the bank on the loan. Segal guaranteed $750,000 of the loan.
In 2010, Centra was purchased by United Bank, thus reducing Puskar’s ability to ensure that flexibility on loan payments. Around the same time, Puskar was diagnosed with cancer. And soon after, Puskar – as trustee of The Milan Puskar Amended and Restated Trust, executed a guaranty agreement for the entire amount of the loan. The guaranty was secured by 500,000 shares of Mylan Laboratories stock. At the time it was posted, the value of the collateral was worth more than $10 million.
Segal sad Dinsmore has provided legal service for the Puskar Trust since its inception. Puskar died in October 2011.
In 2017, Segal said now-defunct Protea began having financial difficulties. The Puskar Trust authorized the bank to liquidate a portion of the stock that served as collateral.
But, Segal said the Puskar Trust consulted with Dinsmore and attorneys Thomas and Rogers “to devise a strategy to avoid the loss of any of the collateral that Mr. Puskar had posted for the loan ... a scheme for the Puskar Trust to escape the Puskar Guaranty and evade the protections that Mr. Puskar put in place for his friends and business partners, including Mr. Segal.”
He claimed Dinsmore, Thomas and Rogers advised the Puskar Trust to form a special-interest limited liability company to buy the note from the bank, thus transferring the guaranties on the loan and control of the loan collateral stock to that LLC.
PITA LLC was formed November 21, 2017. PITA’s manager is Kyle Pratt, Puskar’s grandson and a trustee of the Puskar Trust. Rogers is the organizer. The Puskar Trust is the only member of PITA.
“PITA was created for the sole purpose of acquiring the assignment of the note and transferring the collateral, including the stock, to the Puskar Trust,” the complaint states. On November 21, 2017, PITA paid the bank more than $3 million to buy the note. The Puskar Trust provided PITA with the money. Dinsmore, Thomas and Rogers represented PITA and the Puskar Trust, according to Segal’s original complaint.
The next day, PITA released the collateral to the Puskar Trust and has made no demand to the trust to pay any amount.
“PITA’s release of the collateral and effective waiver of the Puskar Guaranty contradicted Mr. Puskar’s wishes and exposed Mr. Segal to liability that would not have existed had the Puskar Trust and PITA acted in accordance with Mr. Puskar’s wishes,” the complaint stated.
On December 1, 2017, Protea filed for Chapter 11 bankruptcy protection. As of that filing, PITA still claimed Protea and the loan guarantors owed more than $3 million on the loan.
Soon thereafter, PITA and the Puskar Trust hired Dinsmore to represent them in a lawsuit to recover the outstanding loan balance. They asked Segal’s personal attorney for a waiver from Segal to allow Dinsmore to represent PITA and the Puskar Trust in the lawsuit.
Segal said none of the communications from Dinsmore about the lawsuit revealed PITA had released the loan collateral to the Puskar Trust with no attempt to collect it. He also said none of the communications revealed the defendants planned to file a civil lawsuit against Segal to collect more than his share of the outstanding balance of the loan, accuse him of fraud or seek punitive damages.
The lawsuit was filed in September 2018 against Segal and others in Monongalia Circuit Court. The case still is pending. Palumbi and Berry represented PITA and the Puskar Trust in the state court case.
Segal is being represented by Steve Ruby and Raymond Franks II of Carey Douglas Kessler & Ruby in Charleston. The defendants are being represented by Tom Hurney, Alexandra Kitts, Blair Elizabeth Wessels and Robby Aliff of Jackson Kelly in Charleston.
U.S. District Court for the Northern District of West Virginia case number 1:20-cv-00267