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Manion Stigger and Cooper & Elliott Sued for Fraudulent Concealment

October 11, 2016

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Pinnacle Surety, a professional surety bond agency, recently filed an amended complaint to its legal malpractice lawsuit against Manion Stigger LLP and Cooper & Elliott LLC in U.S. District Court.

In the lawsuit, Pinnacle states that the law firms secretly assisted two employees against Pinnacle while the bond firm was still represented by the same attorneys. The lawsuit seeks damages against the law firms, and attorneys G. Bruce Stigger and Rex H. Elliott, for fraudulent concealment, breaches of fiduciary duties, legal malpractice/negligence, intentional interference with an employment agreement, and civil conspiracy among other claims.

“Defendants were directly and materially adverse to Pinnacle.”

In 2013, Pinnacle hired Manion Stigger and Cooper & Elliott to represent the company in a civil lawsuit brought by a third party regarding the employment of Todd Loehnert and Brian Ayres, who had been hired to open a Pinnacle office in Louisville. That case was resolved with the third party, Loehnert and Ayres continued working for Pinnacle, and the attorneys were paid for their representation of Pinnacle.

According to the amended lawsuit, while still representing Pinnacle, attorneys Stigger and Elliott began also counseling Loehnert and Ayres against Pinnacle, as the pair started a competing surety bond company with the intention of breaching their employment agreements with Pinnacle. Stigger even assisted in creating the new entity and served as its registered agent, according to the complaint.

The lawsuit further states that “all of these adverse actions against Pinnacle occurred without disclosure to Pinnacle by Defendants, while Defendants represented Pinnacle’s legal interests and owed it the highest fiduciary duties…”

Though Stigger and Elliott have denied a conflict of interest, the lawsuit states that a federal judge ruled in 2014 that an attorney-client relationship existed between Pinnacle and Stigger and Elliott; and that the “Defendants were directly and materially adverse to Pinnacle.” Both law firms were later disqualified from representing Loehnert and Ayres.

The lawsuit seeks damages for lost business, profits and opportunities; damage to Pinnacle’s reputation; and punitive damages among other costs.

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