Local woman claims attorney error cost her more than $150K to IRS

By Kelly Holleran | Dec 8, 2008

A Hardin County woman has filed suit against a Beaumont lawyer and his law firm, alleging she was forced to pay $150,000 in taxes after the lawyer misled her into believing she would not have to pay the money.

Stacey R. Robinson Allison filed Chapter 7 bankruptcy on June 29, 2000, through attorney Frank J. Maida with the Maida Law Firm in order to discharge her 1996 federal income tax liability.

According to the suit filed Dec. 2 in Jefferson County District Court, the liability was created by Allison's husband at the time, and the IRS determined she was a co-debtor.

Allison claims that Maida knew one of her main reasons for filing bankruptcy was to discharge the income tax liability, the suit states. Maida is board certified in consumer bankruptcy law by the Texas Board of Legal Specialization.

However, Maida improperly filed the Chapter 7 bankruptcy petition and failed to tell Robinson, she claims.

The bankruptcy was filed in federal court in the Beaumont Division of the Eastern District of Texas on June 29, 2000.

"On Oct. 24, 2000, the plaintiff's Chapter 7 bankruptcy was finalized, and she was discharged by the Bankruptcy Court," the complaint states. "The defendants advised plaintiff that this discharge did in fact discharge her from the 1996 federal income tax liability, when in fact it did not."

After she began receiving letters from the IRS attempting to collect her 1996 federal income tax liability, Allison approached Maida who repeatedly told her she did not have to pay the bills, the suit states.

In 2006, Allison called another attorney to deal with the IRS, she claims.

Allison was told for the first time that her tax liability was not discharged because her Chapter 7 Bankruptcy Petition was filed too early, she claims.

It should have been filed after Oct. 15, 2000 --- not as early as June 29, 2000 -- for her tax liability to be discharged, according to the complaint.

"Even more incredible, the Plaintiff's then husband had his 1996 federal income tax liability discharge in bankruptcy, because his Chapter 7 bankruptcy petition was timely filed," the suit states.

Because of Maida's actions, Allison has sustained losses of at least $150,000, she claims.

Maida and his law firm breached their fiduciary duty to Allison because they did not properly advise and represent Allison and did not protect her interest in their filing of and handling of the Chapter 7 bankruptcy, Allison claims.

They also breached their contract of representation because they failed to properly file the Chapter 7 bankruptcy petition as they had agreed and because Allison has not been discharged from her tax liability, according to the complaint.

Maida and his law firm were negligent because they failed to perform as a fiduciary, failed to properly represent Allison, failed to preserve Allison's rights and assets, failed to advise Allison that the bankruptcy petition would not discharge her tax liability, failed to warn Allison of the legal consequences of Maida's actions on her behalf and misrepresented the effect of Allison's filing the Chapter 7 bankruptcy petition, the suit states.

In addition, they misrepresented Allison's available course of action and misrepresented the quality of service Allison was to be provided, she claims.

Allison is seeking pecuniary damages of $150,000, exemplary damages, a disgorgement of all fees paid by her to Maida and his law firm, plus costs, prejudgment and post-judgment interest, treble damages, attorneys' fees and other relief the court deems just.

She is represented by Michael D. West and David West of West & West LLP in Houston. According to the firm's Web site, legal malpractice is one of West& West's main practice areas. David West, a former district court judge, is listed as an expert witness in legal malpractice litigation.

The case has been assigned to Judge Gary Sanderson of the 60th District Court.

Case No. B182-796

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