Owner says $1M spent to defend frivolous suit against estate-planning companies

Marilyn Tennissen Aug. 24, 2012, 7:10am

Charles A. Loper Jr.

For almost 30 years, Charles Loper Jr. has worked hard to build his financial planning service in Frisco, Texas, into an enterprise serving 40,000 customers in 38 states. But a lawsuit he calls "frivolous" filed five years ago has threatened Loper's success and the livelihood of his 350 employees.

In December 2007, three Texarkana residents filed a class action against a number of estate planning companies, alleging they were duped into buying useless living trusts. Among the companies named in the litigation were CLA USA and its affiliated CLA Estate Services and insurance services, even though the plaintiffs later admitted they had no idea why the CLA companies were even named in the suit.

After five years, Loper and CLA were voluntarily dismissed from the litigation, but damage had been done.

"This case has been a nightmare," Loper told the Southeast Texas Record in a recent interview. "We spend a lot of money to do things right, but this suit threw us in with those companies that don't."

Loper, who started CLA USA in 1984, said defending the suit has cost his companies $1 million, and "untold millions in loss of customers" from bad publicity.

Olaf Turek, general counsel for CLA, said the company has been battling what he calls the "attorney driven" litigation since 2007.

"Finally, after extensive discovery and being unable to find any facts to support the unfounded and malicious allegations, the plaintiffs dismissed their lawsuit on March 5, 2012," Turek wrote in a letter submitted to the Record regarding the suit.

"In fact, it was acknowledged in depositions and admissions by certain class representatives that they never had any business dealings with any of the CLA entities and had no idea who CLA was or why they were included in the lawsuit. In fact, all class representatives had no idea why the attorneys were suing the CLA entities."

The nightmare for Loper and his companies started on Dec. 19, 2007, when James Birts, Nate Orben and Darlene Orben filed a class action suit in the circuit court of Miller County, Ark., against several estate planning companies, like The Estate Plan. CLA companies, including CLA USA Inc. and CLA Estate Services Inc. were also named in the suit.

The original suit was filed by the Patton Roberts Law Firm, which Turek claims was known as a "class action mill" in the Texarkana area. In addition, Turek said, Miller County is considered a "very friendly" class action venue.

Turek said that because of the unfriendly venue and because the class included clients in both Arkansas and Texas, he was successful in moving the case to federal court, to the U.S. District Court for the Western District of Arkansas-Texarkana Division.

But after the transfer, Turek claims the plaintiffs were "very slow" to initiate discovery, and turned the case over to its youngest and least experienced associates.

"Basically, this case became a training ground for the recently graduated associates," he wrote.

According to Turek, the lawsuit included allegations regarding certain business practices that were identical to those of a company named The Estate Plan, based in Reno, Nev.

In 2005, the Supreme Court of Ohio found that The Estate Plan engaged in unauthorized practice of law by providing legal advice to customers without the use of a licensed, independent, legal professional.

The Estate Plan is in no way associated with any CLA entity and does not reflect the business practices of CLA, Turek said. Ultimately, the case against The Estate Plan was severed into a separate lawsuit.

During depositions, Turek said it became even more evident that "this was purely an attorney-driven action."

For example, in his deposition, when plaintiff Birts was asked whether he was aware of the complaints, he stated that he had no idea about them and had never seen the complaints.

"He provided no facts to support the allegations, and in fact, in September 2009, nearly two years after the lawsuit was filed, Birts signed a review form stating that he was satisfied with the services being provided by CLA," according to Turek.

Turek states that more compelling evidence that this was an attorney-driven class action comes from the Orben plaintiffs.

"The Orbens were also not aware of the allegations about the CLA defendants," he said. "They said they had no idea why CLA was in the lawsuit and that they were unaware of any harm that CLA had caused them. The Orbens acknowledged in their depositions that they never had any business dealings with any of the CLA entities.

"Since Birts was satisfied with our services and since the Orbens never had any dealings with any CLA entities, CLA demanded that the plaintiffs' attorneys dismiss the class claims against the CLA defendants. After threatening them with sanctions, the plaintiffs' attorneys finally dismissed the claims against all CLA entities."

Turek said the entire case was based on "unfounded and unconfirmed facts."

"This was purely a scheme to create a frivolous class action in order for the plaintiff firm to blackmail a settlement," he said. "We vigorously defended the case and in the end we were victorious in defending our practice."

For Loper, the whole process has been a learning experience.

"It was eye-opening that anyone can say anything in a complaint based solely on assumptions and without any proof," he said.

"But in the end, justice did prevail. We pride ourselves on providing excellent service to our clients and feel vindicated that this case was voluntarily dismissed without any finding of fault or settlement."

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