Pacific Rim Mining Corp -
Pacific Rim blames its lawyers in latest suit
Pacific Rim Mining Corp PFG
Shares issued 21,615,370 2000-05-09 close $4.8
Tuesday May 9 2000
by Brent Mudry
In the latest round in the three-year legal battle related to loans made by Vancouver financier Marian Plucinski to former Pacific Rim Mining president Gerald Phillips, Pacific Rim has filed suit against two Vancouver law firms, blaming the lawyers for its woes.
In a statement of claim filed May 2 in the Supreme Court of British Columbia, Pacific Rim's counsel, Morton & Company and partner Robin Blues, and the counsel of Mr. Phillips, Jefferey & Calder and associates Frederick Herbert and David Grunder, are named as defendants. The allegations have not yet been proven in court and no statements of defence have yet been filed.
The suit mirrors an action filed in March of 1999 by Mr. Plucinski, also known as Steve Polson, against his legal counsel, Rod Mackenzie, in which the financier blamed his lawyer for many of his troubles.
In the current suit, Pacific Rim notes that prior to February of 1997, Mr. Phillips engaged in a series of loans with Mr. Plucinski. Mr. Phillips pledged shares of Pacific Rim which he owned as security for the loans. Pacific Rim claims it had no interest in the loans or the pledged shares.
In the suit, Pacific Rim's current lawyer, Robert Taylor of Walsh & Co., notes that Mr. Phillips retained Jeffery & Calder in February of 1997 in connection with the repayment of the loans and the return of the pledged shares. On Feb. 24, 1997, Mr. Phillips filed suit against Mr. Plucinski, demanding the return of the pledged shares. The dispute share block was worth $1.92-million at the time.
Pacific Rim claims that at all times, Jeffery & Calder appeared as counsel for both Mr. Phillips and Pacific Rim in the action, and the law firm owed duties of care, undivided loyalties and full disclosure to the company. Mr. Taylor notes, however, that Pacific Rim did not authorize Jeffery & Calder to act on its behalf or to launch the Phillips suit in its name or on its behalf.
The suit claims that on March 8, 1997, Jeffery & Calder, under the direction of Mr. Phillips, obtained an injunction requiring Mr. Plucinski to deposit shares of Pacific Rim into court or with the plaintiff's lawyer, pending resolution of the Phillips suit.
The suit claims that in order to obtain the injunction, Mr. Phillips and Jeffery & Calder purported to give an undertaking to the court on behalf of Pacific Rim as to potential damages. "Pacific Rim did not authorize the giving of the undertaking and the board of directors of Pacific Rim was not aware of it at any material time," states Mr. Taylor in the suit.
Pacific Rim claims it subsequently retained Morton & Co., and on March 26, 1997, the company's directions first became aware of the month-old Phillips suit.
Pacific Rim claims the Morton defendants advised it negligently and in breach of contractual and fiduciary duties by failing to advise the company of its options with respect to terminating its involvement in the Phillips suit and failing to advise the company of the conflict between its interests and those of Mr. Phillips.
Morton also allegedly failed to warn Pacific Rim about the damages undertaking, which involved a substantial potential liability. In addition, Morton allegedly told Pacific Rim it could protect itself from any loss by obtaining an indemnity from Mr. Phillips.
The suit claims that relying on the advice of Morton, Pacific Rim did not terminate its involvement in the Phillips action or obtain independent representation in the case.
Pacific Rim claims that on May 8, 1997, Jeffery & Calder provided an affidavit of Mr. Phillips to the court, extending the undertaking on behalf of the company to Zbigniew Fabiszewski, an associate of Mr. Plucinski, but Pacific Rim's board neither authorized nor was aware of the extended undertaking.
In the suit, Mr. Taylor claims Jeffery & Calder failed to advise Pacific Rim that there was a conflict between its interests and those of Mr. Phillips, and that the company faced substantial potential liabilities for the sole benefit of Mr. Phillips.
The suit notes that on Oct. 27, 1998, Mr. Plucinski launched an action against Pacific Rim, Mr. Phillips and others alleging that Mr. Phillips had filed a false affidavit in the original injunction application, and seeking damages and costs he suffered as a result of the injunction.
Nine months later, on Sept. 29, 1999, Mr. Fabiszewski launched an action against Pacific Rim and Mr. Phillips alleging they wrongfully obtained the injunction, which restricted Mr. Fabiszewski's ability to sell his shares.
Pacific Rim now blames all its legal woes on both law firms, and it seeks damages, including any awards it may have to pay in the Phillips, Plucinski or Fabiszewski actions.
(Readers wishing more details on the legal battle may refer to Streetwires dated April 14, 1997, Nov. 6, 1998, March 19, 1999 and Sept. 30, 1999, and related bulletins.)
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