Bobby N. Harmon, CPCU, ARM
September 21, 2002
VIA fax @ (406) 728-7416 & U.S. Postal Service
Robert S. Tameler
Attorney Liability Protection Society
P.O. Box 9169
Missoula, MT 59807-9169
RE: ALPS Claim No. B023134 - Harmon adv. Tamm
Dear Mr. Tameler:
Thank you for your letter dated September 17, 2002, in which you state that, based upon the information you have available to you at this time, you must deny the claim. This letter is to respond to your arguments for denial.
You state that I hired Mr. Tamm and Mr. Dunn to provide limited services of assisting me through Bankruptcy proceedings at a time when I was represented by other competent legal counsel regarding the then-ongoing litigation. You then state that the litigation was concluded with the assistance and advice of my separate counsel and a settlement was reached. You further state that I participated in the negotiations and that the judge discussed with me the terms of the settlement to make sure I understood the nature and extent of the agreement. These statements are all accurate, but fail to address my assertions that FRAUD was committed DURING the settlement negotiations, and that this was not DISCOVERED until AFTER we had signed the Settlement Agreement. Addressing your point that I was represented by other competent legal counsel, I believe this in no way absolves your insureds for their actions or inactions. My other attorneys, at least, did not withdraw from the case.
Next you state, “After the settlement was reached, you raised concerns about the settlement and indicated a desire to pursue an action against various parties involved in those settlement negotiations. Mr. Tamm and Mr. Dunn indicated that in their professional judgment there was no basis for your concerns and also advised you to seek the advice and assistance of other counsel if you were intent to proceed.” My response is that their “PROFESSIONAL JUDGMENT” was apparently in ERROR, and that there were adequate reasons for them to pursue my request for information regarding certain representations of opposing attorneys. In fact, as my attorneys I believe it was their DUTY to question if the Trustee or opposing attorneys had any conflicts-of-interest or if any parties were not bargaining in good faith – even if I had not brought the matter to their attention.
You then state that Mr. Tamm and Mr. Dunn made it clear to me that they would not be able to represent me on a matter beyond that for which they were originally hired to perform. My response is that they DID NOT properly handle the bankruptcy proceedings PRIOR TO my signing the Settlement Agreement. Had they CORRECTLY handled our case from the BEGINNING, none of the resultant problems should have arisen. Your records will show that I NEVER asked them at any time to represent me in bringing a fraud case against these other law firms. I only asked them to do a proper job in representing our legal interests in the BANKRUPTCY proceedings. If I had decided that I needed to bring another RICO lawsuit or a malpractice case against any of these parties, it certainly was never my intent to use Mr. Tamm or Mr. Dunn for these classes of lawsuits. After all, these would fall into Mr. Phillips’ area of expertise as he was already my attorney in my wrongful termination and RICO cases.
As to your point regarding the complaint about Mr. Tamm sending me the wrong date for the hearing, you are correct that I also received notice of the hearing directly from the Court. This does not diminish, however, the fact that Mr. Tamm made yet another error in his handling of this case, and that this error was the proximate cause of my missing the court appearance.
You further state, “It is highly unlikely the Court would have ruled any other way than allowing the withdrawal of Mr. Tamm and Mr. Dunn given the facts at issue at the time and the disagreement between you regarding the merits of your proposed course of action. Courts are well aware that an attorney is prevented from advancing a case the attorney does not believe has merit in law or fact. Mr. Tamm advised you of their concerns regarding the lack of merit of your claim and correctly noted that you should seek the advice of new counsel to confirm or refute their opinions since another attorney may disagree with their analysis. Consequently, you were not harmed by Mr. Tamm and Mr. Dunn withdrawing.” My response to this statement is that this is your subjective opinion in how the Court would have ruled. I believe I was entitled to the OPPORTUNITY to present my OBJECTION TO THE WITHDRAWAL OF ATTORNEYS in person to the Court, regardless of whether it was likely or unlikely that the Court would have ruled any differently. I point out, again, that I NEVER asked Mr. Tamm to pursue any legal course of action outside of their BANKRUPTCY field of expertise. The HARM arose from the fact that their premature withdrawal left me without legal representation in unresolved BANKRUPTCY issues such as the tax levies and the failure of Kamehameha Schools to properly treat the settlement as wage income.
You state that you disagree with my complaint that Mr. Tamm and Mr. Dunn erred in their advice regarding their handling of my Bankruptcy. You state, “It is our understanding that once a Bankruptcy is filed the Trustee appointed by the Court is in charge of the Bankruptcy Estate and the Debtors have little or no say in what happens. From the information we have available, it appears to us that your financial situation would not have supported a Chapter 13 plan as you claim.”
As I am not aware of full extent of the information that has been provided to you by Mr. Tamm and Mr. Dunn, I can only state that from the information I was provided by Mr. Tamm, our “financial situation” certainly would have supported a Chapter 13 plan. I quote to you again from Mr. Tamm’s draft letter dated January 2, 2000, in which he states, in part: “As I feared, my ‘overnight’ financial analysis was subject to error (emphasis added). . . . As shown above, even if no more creditors file a proof of claim, Debtors will be $10,444.81 short of reaching their desire to pay off the mortgage on their home. . . . Thus, no matter how we cut it, the Debtors would not be able to retain their home in a chapter 7 liquidation. . . . The only option that I see from the foregoing analysis, is for the Debtors to convert their case to a chapter 13. A chapter 13 would enable them to keep their home, pay off the trustees, attorneys, priority and secured creditors out of the settlement fund, and pay off the general unsecured creditors through monthly payments into the plan. I have calculated that their payments could be as low as $300 per month (emphasis added)” . . .
I maintain that this $300 per month would have been well within our financial means at the time, so I do not understand why it would appear otherwise to you. The $300 per month was hardly significant when compared with our costs involved with going through the eviction process from our home and paying rent at a new location. In any event, if our “financial situation” was truly the reason that Mr. Tamm did not to proceed with the conversion to a Chapter 13 as he had proposed, then he should have clearly explained this to us before we signed the Settlement Agreement. He did not.
You then state, “The result obtained whereby you received approximately $84,190.00 was an excellent result.” I feel that this is simply stating an opinion from your viewpoint. If you were to look at it from the viewpoint of my wife and I, the total settlement was less than one-fourth of the amount we were seeking in my RICO lawsuit, and my wife and I lost our home of over thirty-five years. We were subjected to further embarrassment and financial losses from being evicted from our home, and from having my bank account levied for thousands of dollars for taxes which I believe should have come from the bankruptcy estate. Had Tamm and Dunn properly handled our case from the beginning – prior to their withdrawal– these consequential financial and emotional losses would have never occurred.
You also state that you do not understand my complaint about not receiving “Forms W-2 and 1099-R” for purposes of income tax, and that neither of these would necessarily be required in order for me to properly report the settlement to the IRS since I could produce a copy of the settlement agreement for that purpose. Please permit me to further explain my position in this regard. In any settlement where the payments are to be considered as “wage income,” it is my understanding that the EMPLOYER is REQUIRED to WITHHOLD the proper Social Security and income taxes and that, under IRS regulations, these amounts must be reported by the Employer (in this case Kamehameha Schools Bishop Estate) by way of Forms W-2 and 1099-R. To the best of my knowledge, my providing a copy of the Settlement Agreement to the IRS would not be an acceptable substitute for the employers’ proper withholding and reporting of these wages.
Finally, regarding the Forms W-2 and 1099-R, you state, “Additionally, you do not indicate in your letter that this caused you some additional tax that you would not otherwise have incurred.” You are correct in this statement. My point, however, is that without the issuance of the required Forms W-2 and 1099-R, I have no way of correctly reporting my true income to the IRS. Of more importance, our greater financial losses arise from the fact that my Social Security and Pension Plan benefits do not take into account the wage income from the Settlement. Although I am unable to calculate the exact dollar amount of these benefits, I believe that they would be significant. These amounts, whatever they might be, can only be growing due to the delay in resolving these issues and the incurrence of further legal costs if we are forced to litigate this matter.
I do appreciate the fact that you responded to my letter. As you suggested in your letter, I will be seeking the advice of my liability attorney, Arnold Phillips, to determine if we need to take any legal action soon in order to preserve any claims that we might have.
In the meantime, if any of the information I have provided herein would cause you to re-evaluate my claims as respects your insureds, I am still open to further discussion and negotiation.
Sincerely,
Bobby N. Harmon, CPCU, ARM
cc (w/copy of your letter):
Roy Hughes, Esq.
Hughes & Taosaka
1001 Bishop Street, Suite 900
Honolulu, HI 96813
Arnold T. Phillips, Esq.
1188 Bishop Street, Suite 3003
Honolulu, HI 96813
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