Charfoos v Charfoos-- Name of firm at stake in case of competing identities

By John Minnis Legal News Who is the "Charfoos" in the law firm of Charfoos & Christensen? That is the question. In December, Grosse Pointe Woods attorney Lawrence S. Charfoos, 74, formed a new firm, Charfoos, Giovan and Birach, LLP. Previously he had worked for 50 years for the firm founded by his father, Samuel Charfoos, in 1929. That may have been the end of the story except that Charfoos wanted his former employer, Charfoos & Christensen PC, to stop using his name. When Charfoos & Christensen refused to relinquish the founding half of its name, Mr. Charfoos filed suit in January in Oakland County Circuit Court seeking a permanent injunctive order directing Charfoos & Christensen to stop using the name Charfoos and, in effect, change its name. The suit also seeks monetary damages and some $500,000 in settled and pending "referral fees" that Charfoos alleges are owed him. "By continuing to use his last name in their law firm title, the defendants have caused confusion for Mr. Charfoos's present and future clients," said Marvin Shwedel, the attorney representing Lawrence "Larry" Charfoos, in a press release. "It's very flattering that my client's old firm wants to continue to associate themselves with the Charfoos name and its stellar reputation in the legal community, but it is wrong. David Christensen has a fine name in the legal community, and it can stand on its own without the necessity of using the Charfoos name." Charfoos & Christensen managing shareholder J. Douglas Peter declined to comment on the advice of the firm's attorney, Coleman E. Klein of West Bloomfield. Charfoos began working for his father in 1959. In 1972 Charfoos & Charfoos was incorporated. Samuel and Larry Charfoos -- father and son -- were the sole shareholders. In 1978, Larry Charfoos assumed management of the firm. The son says his father retired to Florida and ceased practicing law in 1980. The defendants, Charfoos & Christensen, agree that the founder retired at some point to Florida but do not know when the elder Charfoos stopped actively practicing law. Samuel Charfoos died in September 1995. Other shareholders were added over time, including David W. Christensen and Dennis Archer, and the firm's name was later changed in 1980 to Charfoos, Christensen, Gilbert & Archer. The firm was subsequently renamed Charfoos, Christensen & Archer, and in 1985, prior to Archer's appointment to the Michigan Supreme Court in 1986, the firm received its current moniker, Charfoos & Christensen. The plaintiff claims the "Charfoos" in all those entities was Larry Charfoos. The defendants maintain the "Charfoos" in the firm's name reverted to the founder's when the firm redeemed Larry Charfoos's stock in November 1991, thus ending his shareholder status in Charfoos & Christensen. According to Charfoos's attorney, Shwedel, it was "with the best interest of C&C and his clients in mind, because of his financial difficulties, Plaintiff Larry Charfoos gave up his stock in and resigned his office as President of C&C." Defendants Peters and Christensen, in their answer to the complaint, deny that Charfoos had the best interest of the firm and its clients in mind when he "gave up" his shares and resigned his office as president of Charfoos & Christensen. Rather, the defendants allege it was under a consent order of the court that Charfoos exercised his option to redeem his shares in the firm. At the time, Charfoos & Christensen petitioned the court receiver for the right to foreclose its lien on Charfoos's 354 shares of common capital stock as settlement of the $693,000 in loans Charfoos reportedly owed the firm. Charfoos & Christensen maintains that once Larry Charfoos was no longer a shareholder, it could not ethically include his name in the name of the firm under Michigan Rules of Professional Conduct 7.5(d) and State Bar of Michigan Ethics Opinions RI-45 and RI-59. "Defendant C&C continued to use the name 'Charfoos & Christensen PC,'" defense attorney Klein wrote, "but reference to 'Charfoos' therein was not to Plaintiff but rather to Samuel Charfoos, a shareholder of Defendant C&C until the time of his death in 1995." When Samuel Charfoos died in September 1995, the firm kept his name, which is often done and is legal and ethical under MRC 7.5(d). Mr. Charfoos alleges that Charfoos & Christensen have refused to pay him 25 percent of "referral fees" to which he is entitled on all cases "referred" to defendants on which they either have received or will receive legal fees. Charfoos sets the amount owed him at $500,000. Christensen & Charfoos respond that Charfoos's employment ended Sept. 25, 2009, and that all percentage compensation owed him has been paid. They further claim that no "referral fees" were ever agreed to with Charfoos or anyone else at the firm. "Defendant C&C further denies that Plaintiff is entitled to receive any additional compensation, however characterized, from Defendant C&C after Plaintiff's employment with Defendant C&C terminated on Sept. 25, 2009," Klein wrote. "Defendants Peters and Christensen do not have, and never had, any obligation to pay anything to the Plaintiff." For the last 18 years, Charfoos worked as an "employee at will" at the firm founded by his father. Prior to his resignation, Charfoos "established his own practice of law, unrelated to and in competition with C&C" and "actively practiced law at an office in the Penobscot Building in the City of Detroit in competition with C&C without C&C's knowledge," Charfoos & Christensen allege in a counter-complaint filed with the court. Charfoos & Christensen admits that it has attempted to resolve an attorney's lien in excess of $100,000 with Charfoos, "but its efforts thus far have been unsuccessful." While Charfoos's attorney is demanding an accounting of all legal fees received or to be received for cases Charfoos was involved in while with Charfoos & Christensen, Charfoos's former employer is demanding an accounting of all fees Charfoos received from clients before and after his employment with the firm. "Defendants may claim," Klein wrote, "that Plaintiff engaged in fraud by diverting to his new law firm Defendant C&C's potential clients who first contacted Plaintiff while he was still employed by Defendant C&C, and to which Plaintiff did not open files for Defendant C&C." The defendants are calling for a jury trial and that all costs and attorney's fees be paid by Charfoos. Oakland County Circuit Court Judge Wendy L. Potts is to hear the case. Published: Thu, Mar 18, 2010

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