Kern County Judge rules Michael Lampe’s role as both attorney for the plaintiff and key witness for the defense creates “danger” of jury confusion
BAKERSFIELD– A judge has disqualified the attorney representing the Tulare hospital district in its civil suit against its former legal counsel.
On Feb. 9, Kern County Superior Court Judge Thomas Clark ruled Visalia attorney Michael Lampe could no longer represent the Tulare Local Hospital District in its lawsuit against Bruce Greene, his law firm and two former hospital board members, because of his dual role as attorney for the plaintiff and key witness for both the plaintiffs and defendants.
“There is a very real danger that the jury will be confused and have difficulty distinguishing between evidentiary statements of witness Lampe and advocacy statements of attorney Lampe,” Clark stated on the record. “Even without a conscious desire to exploit this dual role as Defendants suggested, the danger exists and it would be very difficult for the Court to undo and untangle these issues at the time of final argument.”
Lampe filed the lawsuit on behalf of the hospital district on April 24, 2019, suing Greene, legal counsel for Healthcare Conglomerates Associations (HCCA) whose executives are being charged criminally for using hospital district funds to enrich themselves, and his law firm, BakerHostetler LLP, for breach of fiduciary duty, fraud, professional negligence and breach of contract. The case was originally filed in Tulare County but was moved to Kern County Superior Court after Baker-Hostetler argued it would be difficult to find an impartial jury in Tulare County.
In his response, Lampe argued the motion to disqualify him was filed for tactical reasons and that the issues of him being both an attorney and a witness would be resolved during the trial. In his decision, Clark ruled that would be, “too late to then address the situation without a great deal of prejudice” and that any advantage for the defense was already known because Lampe had already been deposed as a witness. The judge said they also made it clear “they intend to elicit the referenced testimony at trial.”
The hospital district can still appeal the ruling but no dates have been set to hear an appeal as of press time.
Greene was hired by HCCA to act as general counsel for the hospital district in May 2015 but was retained as Benzeevi’s attorney as well as the attorney for his Benzeevi Group of firms including HCCA. Greene’s alleged misconduct began a year after he was hired on May 4, 2016, when he filed a lawsuit against Dr. Abraham Betre on behalf of the district, but for the benefit of Benzeevi, even though the district was not mentioned in the lawsuit. The lawsuit was dismissed by the court on Sept. 26, 2016, which Greene appealed on Nov. 23, 2016 and which Benzeevi paid the $78,000 appellate bond with district funds, which the district lawsuit says constitutes a breach of fiduciary duty.
In June 2017, when the hospital district could not pay its bills, which included $500,000 in delinquent legal fees owed to BakerHostetler for Greene’s time, Greene drafted board Resolution 852 giving HCCA “absolute” authority to borrow up to $22 million on behalf of the district. This was also considered a breach of fiduciary duty.
Claims of fraud refer to Greene’s emails to board members in an attempt to prevent the seating of an elected official to prevent the board from undoing two actions firing his law firm from representing the hospital district and damaging the district in deals costing $4.8 million.
The lawsuit also contends “Greene failed to use reasonable skill and care in the representation of the district in that he continuously acted in a manner that placed the interests of Greene, BakerHostetler, Benzeevi, and HCCA above the interests of the District.” The claim of negligence includes lying to the board, delaying the seating of an elected official, executing a loan the board had rescinded, all under the umbrella of his inherent conflict of interest serving as both legal counsel for the public district and the private company it hired to manage the district. The conflict of interest is also at the heart of the breach of contract argument as Greene never got consent from the district to simultaneously represent it and HCCA, which the lawsuit lays out as a violation of rules of professional conduct.
The lawsuit also names former Tulare hospital district board members Parmod Kumar, Linda Wilbourne and Richard Torrez, the former hospital board members who supported HCCA’s management of the hospital. Each plaintiff is being represented by their own attorneys in the case. The lead attorney for Greene and Baker & Hostetler is Harlan Watkins of Murphy, Pearson, Bradley & Feeney in San Francisco who specializes in litigation and professional liability.
Witness not attorney
Watkins’ motion to disqualify Lampe as counsel for the district laid out three factors for the court to weigh in deciding if Lampe should be disqualified under the advocate-witness rule: 1. Lampe’s testimony is needed on a number of key issues; 2. Disqualifying him does not give the defendant’s a tactical advantage; and 3. His arguments as an advocate for the plaintiff could be confused as evidence by the jury since he is also a witness.
“In other words, a court retains discretion to disqualify a likely advocate-witness as counsel, notwithstanding client consent, where there is a convincing demonstration of detriment to the opponent or injury to the integrity of the judicial process,” Watkins wrote.
Watkins contends Lampe has been serving both sides of a “longstanding political feud between current and former board members” of the hospital district. He points out Lampe represented Parmod Kumar, one of the former board members he is now suing, in 2012 but then represented the political group Citizens for Hospital Accountability in their effort to recall Kumar from the board in 2017. In fact, Lampe filed three lawsuits against the district, all of which were “settled without damages other than payments to Lampe for his attorneys’ fees.”
“Not only will Lampe’s actions be the subject of testimony from numerous witnesses and displayed in physical evidence, but Lampe himself will be a central witness to critical aspects of the case
narrative, much of which he either instigated or prevented, with fateful consequences,” Watkins argued.
Watkins claims Lampe caused the cancellation of the July 26, 2017 board meeting where Sonovia Gutierrez could have been sworn in after being selected to replace Parmod Kumar in the recall election. Watkins says Lampe instructed board member Mike Jamaica to leave the meeting room so the board would not have a quorum of three board members and be forced to cancel the meeting and says there is evidence Lampe told others in the audience he was “going to have Mike [Jamaica] go out of the room, and they won’t have a quorum.”
Video of the meeting shows board member Mike Jamaica walk up to the dais, pick up his binder, talk with board member Richard Torrez, and then walk off camera away from the table. Then Linda Wilbourn and Sonovia Gutierrez walk up and take their seats next to Torrez. Since then board member Kevin Northcraft did not attend the meeting and Gutierrez had yet to be formally seated at a board meeting, the only official board members left at the meeting were Wilbourn and Torrez, giving those supporting HCCA a 2-1 majority if Jamaica were to stay. In other words, HCCA could have argued against seating Gutierrez and passed other items prior to seating Sonovia who represented the tying vote with Jamaica to kill any motions without a tie-breaking fifth member.
Gutierrez was sworn into the board during a ceremony on July 25, 2017, the day before the meeting, but still had to be officially “seated” by the board at a regular meeting.
Greene was not in attendance at the meeting, but did call into the meeting via HHCA CEO Benny Benzeevi’s phone. Wilbourn says the election was not certified by the county until earlier that day, so there was a question about whether the hospital board had to certify the election prior to swearing in Gutierrez. From the back of the room, Lampe can be seen asking if the board has a quorum. Wilbourne asks if Jamaica and Northcraft were present in the crowd. “If anybody knows where they are at, get them here right away.”
Lampe replies, “They’re not going to give you a quorum, Linda.” Greene can then be heard on the phone saying the only choice was to adjourn the meeting. On the video, Lampe contends the board does not need to certify the election and could have seated Gutierrez. People started chanting “Seat Sonovia now!”
During his deposition, Jamaica admitted at the end of his testimony Lampe is the person who asked him to leave the meeting, leaving the board without a quorum.
“This is precisely the result the [district] accuses Mr. Greene of engineering,” Watkins wrote.
Rescinding Resolution 852
When the board’s regularly scheduled meeting agenda for Aug. 23, 2017 was published, it included an item declaring that Gutierrez was a sitting board member, to reaffirm the board’s votes at a special meeting a month earlier. In an email less than an hour before the meeting, Green notified the other board members that Wilbourne had resigned from the board, effective noon that day, and that Torrez was unable to attend the meeting, leaving the board without a quorum and effectively canceled the meeting. In his declaration, Northcraft countered the board only needed two board members to have a quorum if there were only three acting board members under the hospital district’s bylaws.
Seven minutes before the meeting was set to begin, Greene sent another email to Northcraft saying Wilbourne had intended her resignation to be effective at 8 a.m. the next day, meaning she was still a board member but would be unable to make the meeting. Having four active board members meant the amount needed for a quorum reverted to three present board members. Greene’s attempt to illegitamize the Aug. 23 meeting gave him time to deliver an “opinion of counsel” letter to Celtic Leasing on Aug. 28, 2017 reaffirming the district’s sale-leaseback option of $3 million in district equipment was “valid and binding.”
Teresa Jacques, the hospital district’s interim controller, filed a declaration claiming the district paid BakerHostetler $3.3 million for legal services between Dec. 2, 2014 and Sept. 26, 2017, when the firm issued a notice that it was resigning as counsel, but no payments were made between April 14 and Sept. 9, 2017. According to court documents, that amounted to $814,000. On Sept. 10, 2017, a check from HCCA was issued to BakerHostetler for $500,000 with a memo stating that this was for an “HCCA loan to TRMC to cover TRMC invoice dues.”
The district civil suit alleges, “The efforts by Greene and Baker to obstruct the seating of a duly elected public official was clearly motivated by the fact that Baker was coordinating with Benzeevi to sell District assets in an effort to, in part, pay Baker’s delinquent legal fees. This could only be accomplished if Benzeevi retained authority under Resolution 852 to sell District assets without seeking Board approval. Although Northcraft, Jamaica and Gutierrez had already voted to rescind Resolution 852, Greene and Baker engaged in a dishonest scheme to make it appear as though Gutierrez was not a legitimate board member so that Benzeevi could sell district assets without board approval and pay a portion of the proceeds to Baker.”
In a Sept. 5, 2017 email exchange, CFO Alan Germany let Greene know Celtic Leasing’s leaseback loan has been funded but a possible loan with Leasing Innovations has not, to which Greene replies, “If Celtic has funded I need to be paid today. I am not waiting for [Leasing Innovations] to fund. This is critical and I[sic] have been promised.”