Fraud Case : ‘Frivolous’ Appeal Leads to Court Fines

An Orange County appellate court, in a rare move, fined attorneys and their North Carolina clients Thursday for filing a “frivolous appeal” of a verdict that the clients had defrauded an elderly woman.

The 4th District Court of Appeal’s Santa Ana division fined the couple, Janet and Cliff Palm of Lincolnton, N.C., $7,500. The amount the attorneys must pay will be determined later.

An Orange County Superior Court jury last year found that the Palms must pay nearly $200,000 to Alice Connor, 86, who has been declared mentally incompetent, for defrauding her. Connor’s conservator, her niece Mona Nyman of Villa Park, claimed that her aunt had turned over much of her savings to the Palms.

Janet Palm, a longtime friend of Connor, had visited her in 1978, soon after Connor’s husband died. Court records show that Connor turned over checks totaling nearly $70,000 to Janet Palm. Palm later claimed that Connor gave her the money willingly. But the jurors found that Palm had taken advantage of her friend’s deteriorating mental condition.

The Palms appealed the jurors’ decision. They claimed the trial court had erred by allowing Connor, already declared incompetent, to appear before the jury.

But Justice Thomas Crosby, in an opinion released Thursday, said the law clearly gave Connor the right to be there because she was a party in the suit. Crosby said the appeal was filed “for an improper motive: harassment of the plaintiff (Connor) and delay in the execution of judgment.”

But Crosby was also highly critical of the Palms’ attorneys, the Fullerton law firm of Garner, Kreinces, Lichtenstein & Schindel.

“We recognize that counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win on appeal,” Crosby stated. “But it is also true an attorney has an obligation . . . to respect the legitimate interests of fellow members of the bar, the judiciary and the administration of justice.”

The appellate court ruled that the law firm, which now has a new makeup of partners, must pay Connor’s attorneys the amount that it will charge the Palms for making the appeal. The trial court will determine that charge, the court ruled.

William O’Hare, Connor’s attorney, acknowledged that courts seldom fine attorneys, but he said that in this case it seemed warranted. O’Hare said his client has not yet recovered any of the money that she gave Janet Palm or any money awarded her by the jury. The Palms have filed for bankruptcy in North Carolina, according to court records.