Legal Malpractice, misappropriation of funds. $40,000 award including punitives. San Bernardino County.

Summary

Attorney misappropriates client's insurance funds. $40,000 arbitration award.

The Case

Case Name: Kiowa Michaels v. Verne Craig Scholl; VS Legal Center
Court and Case Number: San Bernardino County Superior / CIV VS 1205443
Date of Arbitration Award : Sunday, January 04, 2015
Date Action was Filed: Tuesday, March 13, 2012
Type of Case: Legal Malpractice
Judge or Arbitrator(s): Tim Corcoran, Esq., Redlands Arbitration
Plaintiffs:
Kiowa Michaels
Defendants:
Verne Craig Scholl
VS Legal Center
Type of Result: Arbitration Award

The Result

Gross Verdict or Award: $40,000. $50,134 total judgment.
Award as to each Defendant:
Jointly and severally liable.
Contributory/Comparative Negligence: None
Economic Damages:
1. General Damages in the amount of $25,000 2. Punitive Damages in the amount of $15,000 3. Interest at a rate of $10.96 per day from April 3, 2013 ($10.96 per day for 684 days (to Feb 18, 2015) totaling $7,496.64 as of February 18, 2015. 4. Costs of $2,638 per costs bill. 5. Total judgment, including prejudgment interest and CCP 998 cost: $50,134.64
Punitive Damages:
$15,000
Trial or Arbitration Time: 5 hours
Jury Deliberation Time: 30 days
Post Trial Motions & Post-Verdict Settlements: None

The Attorneys

Attorney for the Plaintiff:
Law Offices of Olaf Landsgaard by Olaf Arthur Landsgaard, Rosamond.
Attorney for the Defendant:
Attorney for the Defendant:
Katherine Scholl, Encinitas.

Verne Craig Scholl, Carlsbad.

Facts and Background

Facts and Background:
On August 16, 2010, Kiowa Michaels’ home in El Mirage, San Bernardino County, California burned to the ground. Michaels, then 51, was covered by fire insurance.

Defendant Verne C. Scholl is an attorney who owns and operates VS Legal Center in Carlsbad, California. Kiowa Michaels hired defendant Scholl to administer the insurance proceeds for replacement of his mobile home in El Mirage and protect his equity in the home.

Cimarron Escrow, Inc. is a California Corporation, doing business as Cimarron Escrow in Victorville. Frank Trotman is an individual who is not an attorney but allegedly provided legal advice while working for VS Legal Center and Verne C. Scholl. On or about March 21, 2011, Cimarron Escrow, Inc., having received insurance checks issued for the replacement of Kiowa Michaels’ home, issued checks to Maple Ridge Mobile Home Sales, Inc. Maple Ridge was hired by plaintiff to help him locate a mobile home.

On March 31, 2011, Maple Ridge paid out $9,640 to VS Legal Center. On March 31, 2011, Maple Ridge paid out $8,800 to Dan Dwyer (a contractor who was not authorized by plaintiff). On April 14, 2011, Maple Ridge paid out $40,000 to VS Legal Center. On April 18, 2011, Frank Trotman paid $3,000 for installation of electricity. On November 9, 2011, Dan Dwyer returned the $8,800.

On January 16, 2012, Verne C. Scholl and VS Legal Center were asked by the Law Offices of Olaf Landsgaard, who was retained by plaintiff, to turn over plaintiff's files and records and the remaining funds. Plaintiff alleges there was no response from defendant.
Plaintiff's Contentions:
That Verne C. Scholl and VS Legal Center, having a duty to properly administer funds entrusted to them by plaintiff, have lost $50,640 belonging to plaintiff.

That defendant attorney misappropriated funds meant for rebuilding of plaintiff's destroyed home, and that defendant acted with malice and fraud.

Plaintiff contended that defendant Verne Scholl knew Kiowa Michaels was extremely sick; Kiowa had told him so in letters and on the phone.

That had it not been for the work of Kiowa’s family, reporting defendant to the State Bar, Scholl would never have paid back the portion of plaintiff's insurance funds that he did. Further, that Verne Scholl told Kiowa that he didn't have a chance at getting back a dime from him.
Defendant's Contentions:
That plaintiff did not suffer the damages that he claimed.

Injuries and Other Damages

Physical Injuries claimed by Plaintiff:
Plainitff had to live with his family in a small trailer next to the burned out site for over eighteen months, during which time his young son had to live elsewhere, which caused him to suffer emotional damages.

Plaintiff has a heart condition. Sending his son away to live with family was difficult, changing the dynamics of how a family should be when a child is growing up. While forced to live in a miserably hot motor home, plaintiff suffered a stroke from the heat. Another time, he suffered a terrible fall which caused him to break his hand in three places.

That conditions in the small trailer caused an infection around his pacemaker. The surgery to remove the pacemaker and infected wires was not only painful but caused him great suffering. Plaintiff spent eight days in the hospital fighting this systemic infection running through his body. The extensive surgery has left part of his body permanently paralyzed.
Monetary losses: Retainer fee paid to Verne Scholl of $6,000; Modification fee paid to Verne Scholl of $1,200; 12 months out of house costs of $20,000; son living out of house - $5,200; extra cost of fuel for generator - $2,544; laundry @ $20.00 per week - $1,020

Total: $35,964

Additional Notes

Neither defendant Scholl nor VS Legal Center carried legal malpractice insurance.

The order on the petition to confirm the written arbitration award was signed on February 18, 2015. The arbitrator awarded damages of $25,000 and punitive damages of $15,000 for an attorney’s “misappropriate use of Michael’s money” and malpractice.

State Bar findings: March 1, 2014 VERNE CRAIG SCHOLL [#48634], 71, of Carlsbad was suspended for three years, stayed, placed on two years’ probation with an actual one-year suspension and ordered to take the MPRE and comply with rule 9.20 of the California Rules of Court. The order took effect March 1, 2014. Scholl’s discipline arises from five acts of misconduct in this and a second client matter.