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After Failed Takeover, Can Corporation Sue Lawyer Who Represented Unsuccessful Dissidents for Malpractice?
Case Questions Whether Corporate Attorney-Client Relationship Existed
New Destiny Treatment Center, Inc., et al. v. E. Marie Wheeler et al., Case no. 2010-0298
9th District Court of Appeals (Summit County)
ISSUE: When a group of dissident trustees of a nonprofit corporation retain the services of an attorney to help them in an attempt to unseat the organization's current leadership and establish a new corporate board, if the dissident faction assumes temporary control of corporate assets and operations, even though the dissidents' purported takeover is later voided by a court as a legal nullity, do the actions of the dissidents' attorney during the takeover attempt establish an attorney-client relationship with the corporation sufficient to support a subsequent malpractice lawsuit by the corporation against the dissidents' attorney?
BACKGROUND: Barberton Rescue Mission (BRM), which has since been renamed New Destiny Treatment Center, was established as a religious and charitable organization for the purpose of operating a treatment center in Barberton to assist individuals with substance abuse problems. BRM subsequently began a new program called the Christian Brotherhood Newsletter (CBN) through which subscribers to a Christian newsletter provided mutual assistance to each other to help pay for uninsured medical bills. Both BRM and CBN, as a division of BRM, were founded by members of the Hawthorn family. Bruce Hawthorn became the president of BRM and he and members of his family sat on the organization's board of trustees.