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Prime Rate Premium Finance Corp. v. Larson

United States District Court, E.D. Michigan, Southern Division

March 28, 2018

KAREN E. LARSON, Individually and as Personal Representative of the Estate of KEITH A. LARSON, Deceased, Defendants.


          DAVID M. LAWSON United States District Judge.

         Karen Larson, the sole remaining individual defendant in this fraud case, has been represented by a No. of different lawyers in this litigation. All have withdrawn, and now she is representing herself. Her last attorneys, Martin Leaf and Samuel Gun, were allowed to withdraw after alleging in a motion that their relationship with their client had broken down. They made a point of stating that the disagreements did not focus on fee payments. At a hearing on April 24, 2017, the Court found that Leaf and Gun sustained their position and entered an order discharging them. Larson has moved for relief from that order.

         I. The Motion

         Larson's motion papers are incoherent and do not set forth any legal argument, other than broadly alleging that Gun and Leaf violated their ethical duties. Her position can be summarized as follows: (1) Gun and Leaf lied to the Court in order to withdraw as her attorneys; (2) while they were retained, they did no work for her and even colluded with opposing counsel; and (3) Gun and Leaf's aggressive efforts to recover fees from Larson led to Keith Larson's health issues and ultimately his death. Keith Larson, Karen's deceased husband, formerly was a defendant in this case. Larson asks the Court to recognize Ken Landini as an expert witness and order Gun and Leaf to pay Landini's outstanding fee of $57, 958.75. She also asked the Court, before her husband's death, to order Gun and Leaf to set up a fund in the amount of $250, 000 for the long-term care of Keith Larson.

         II. Supporting Allegations

         Larson supplemented her 53-page motion with a No. of ancillary papers and audio tapes, which have been reviewed. Martin and Leaf have responded, three times. Larson's factual assertions are shambolic, but the assertions can be sorted into four categories: 1) money and billing issues (which includes allegations regarding Keith Larson's health); 2) the report of Ken Landini, an expert retained on the defendant's behalf; 3) the “Tape”; and 4) the adequacy of Gun's and Leaf's representation.

         A. Money and Billing Issues

         The main thrust of Larson's complaint is that on several occasions Gun and Leaf dishonored their fee arrangements and demanded exorbitant sums from Larson, even when they knew she was financially (and emotionally) unstable. She alleges that Gun's and Leaf's reason for withdrawing - that Larson gave them falsified evidence - was pretext for unresolved fee disputes, and that she paid them several thousands of dollars for work they either did not do in a timely fashion or never completed. Larson insists that Gun's and Leaf's aggressive efforts to recover payments placed tremendous stress on the Larsons and ultimately caused Keith Larson's death. Gun and Leaf vehemently deny Larson's allegations and assert that Larson repeatedly failed to make good on her payments, even after they let some payments slide.

         The terms of Gun's and Leaf's fee arrangement with Larson changed several times over the course of their representation. In an email dated May 14, 2016, Gun noted that he and Leaf would be representing Larson in three cases and that Larson had paid them $15, 200 up to that point. They all apparently agreed that Larson would pay Gun and Leaf $40, 000 before they filed their initial appearances on June 1, 2016. Larson replied on May 16, 2016, accepting their engagement (“Absolutely I want you to represent me”) and “totally Agree[ing] with the $40, 000” as she knew they would “totally take care of [her].”

         Sometime thereafter, issues arose regarding Larson's ability to make good on her payments. In an email dated December 11, 2016, Larson expressed that she understood their fee arrangement to be $10, 000 per month, as was explained to her in August and October of that year. She attached a “retainer” agreement, which appears to be a memorialization of her understanding of their fee arrangement. On January 31, 2017, Gun emailed Larson regarding outstanding payments and complained that he and Leaf should be spending their time working on her case, not “chasing” after her for their fees. He noted that she was late on her payments for December and January, which, according to Gun, were due on the first and fifteenth day of each month. Gun followed up on February 5, 2017, explaining that as of that date, Larson owed them $21, 000, and that they knew she was good for it. (“We both know you ALWAYS have at least $10-$20, 000 on hand at all times . . . I know you have the money or can get it right away, I'm not waiting next 7 audits to complete . . . OK? We both know you have it.”).

         Larson saw things differently. In an email dated February 9, 2017 (an apparent response to Gun's emails), Larson asserted that she was working hard to make money to pay them, but their demands were unreasonable and unfounded. She noted that they initially had agreed on $25, 000, which was increased to $40, 000 to cover their work on the third case. Larson believed that because the case against Joanna Dellin - one of Larson's former employees implicated in the case before the Insurance Commissioner - had been dropped, she expected a third of Gun's and Leaf's fee ($13, 333) to be returned to her. Gun had informed Larson on at least one earlier occasion that she was billed for the work they performed, not on the No. of cases. Larson also insisted that her monthly obligation be lowered to $7, 500 per month, effective January 1, 2017. She stated she was willing to pay the maximum fee for two cases seen all the way through to trial, even though she had already paid Gun and Leaf $80, 000. On February 11, Larson sent another email, this time insisting that she was current on her payments except for $3, 000.

         In her motion, Larson accuses Gun and Leaf of embezzlement based on their requests for cash payments and overcharging her credit card. Gun and Leaf assert that there was nothing inappropriate about their fee demands. They submitted an invoice for April 8, 2016 through January 31, 2017, which notes a total bill of $161, 412.99 for all three cases and an outstanding balance of $126, 412.99. More than half of that balance is for emails, billed at $300 per hour. Gun and Leaf represent that they only insisted that she pay them in cash because of her circumstances and that Larson made it a habit of giving them postdated checks. Gun and Leaf submitted to the Court a check for $1, 300 dated June 25, 2016 that includes instructions to deposit the check on a later date. Another check for $3, 600 includes the following handwritten note, presumably by Gun: “Went to Bank 2 times plus called twice, check was no good! No. funds.”

         Larson denies that any of her checks to them bounced. Instead, she says that Leaf insisted on cash, while Gun accepted credit card payments. She cites at least one instance where she authorized a credit card payment on April 4, 2016 for $1, 100, but Gun charged her for $1, 400. Ronald Kaplovitz, an attorney with a credit card processing system in his office sometimes used by Gun's and Leaf's clients, attested that his staff processed a debit/credit card payment from Karen Larson to Leaf and Gun on that date for $1, 400. Despite her current concerns regarding that payment, in an email dated June 9, 2016, Larson acknowledged the charge for $1, 400, but referred to it as “no big deal.”

         To make matters stranger, one of the recordings reveals that Larson attempted to pay Leaf with a “winning” lottery ticket. Sometime in January 2017, Leaf demanded $3, 000 from Larson. She tried to give Leaf a lottery ticket worth $175, which she told him to “cash” at a gas station. Leaf apparently rejected her offering and informed Gun that Larson yet again failed to make good on her obligations. Larson later represented to Gun that she expected to make over $3, 000 doing “safety programs” to cover her fees and could bring in as much as $30, 000 per month.

         As their relationship deteriorated, Larson decided to attribute her husband's health condition (and ultimately his death) to Gun's and Leaf's aggressive collection practices. Keith Larson was admitted to the hospital on December 22, 2016. That same day, Gun sent Larson a text message asking if they could meet and how much Larson would be paying. Larson responded that she would call him around six o'clock that evening to arrange their meeting. However, according to Larson, Gun's and Leaf's demands for payments somehow prevented her from performing CPR on Keith that day. She claims that she is a licensed physician's assistant and therapist and “specialized in heart and lung issues no matter what Sam Gun says.” In an apparent attempt to further discredit Larson, Gun and Leaf performed a search of the department of Licensing and Regulatory Affairs and found no current licenses or registrations for Larson - only an expired registration for EMS paramedic “Karen Ann Larson.”

          Larson submitted an “affidavit” of her friend, John Roberts, who apparently received a frantic call that evening from Larson, saying that Gun would not let her get out of meeting him to settle her debts. Roberts said he saw Gun at the hospital later that evening and observed Larson ...

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