The Law & You: Nasty Business

Four Charlottesville, Va., practitioners learned the hard way that getting sued is a hellish experience.

January 1, 1996

Presumed guilty.

By the plaintiff. By opposing counsel. Even, subtly, by some colleagues.

That was the ordeal suffered by four Charlottesville, Va., real estate professionals for 15 months until civil charges of antitrust violations were dismissed.

"All of a sudden, it seemed as if a cloud had come over my whole life," says Charley Armstrong, one of the defendants and the principal broker at Real Estate III.

The experience of the four defendants illustrates a truth about the litigious 1990s: Getting sued is a nightmare. Even when you win, you lose.

Lawyers, depositions, meetings, court appearances, media coverage, and fund-raising efforts dominated their lives from the moment they were named in a lawsuit in November 1993. Their personal lives were consumed by fear, anguish, insomnia, isolation, and insecurity.

The practitioners--Armstrong; Carol Clarke, CRB,managing partner, Montague, Miller & Co.; Phyllis "Punkie" Feil, CRB, president, Colonnade Realty; and Percy Montague IV, CCIM,president, Montague, Miller & Co.--describe the lawsuit as their most stressful experience. They were not prepared for nor were they expecting the pain and distress it caused.

Another practitioner, Robert Ramsey, CRB, managing broker of Charlotte Ramsey Inc., REALTORS®, was not personally named in the suit, but his company was. "You grow up believing you're innocent until proved guilty," says Ramsey, who experienced much of the same lawsuit shock as the other four. That's not the reality in civil law, he adds.

Sued by Their Local Newspaper

The defendants thought they had taken legal precautions to protect themselves against antitrust allegations. The allegations were brought by the owners of the local daily newspaper in Charlottesville because of the defendants' involvement in the planning of a REALTOR® association newspaper, the Charlottesville Area Real Estate Weekly, containing real estate advertising. The association publication became a business competitor of the Charlottesville paper, the Daily Progress.

The attorney for the Charlottesville Area Association of REALTORS® (CAAR) and an experienced consultant reviewed the plans for possible antitrust problems, says Montague. The defendants participated in launching the real estate weekly, along with other CAAR members.

The weekly was announced months before its February 1992 debut, and bids were taken from several printers, including the Daily Progress, Montague says.

One morning in November 1993, Feil removed her daily newspaper from its box, glanced at a headline about a lawsuit against real estate practitioners, and thought, "Gee, I wonder who that is," she recalls. "Then I saw my name!"

Other defendants were stunned when a Progress reporter telephoned as they were preparing for the Thanksgiving holiday and asked how they felt about being sued for $52 million. Legal papers hadn't yet been served.

Within 45 minutes of learning of the lawsuit, Feil was in her attorney's office. So were some of the other defendants. But it quickly became clear that each would need a separate lawyer to avoid further charges of collusion.

Suing individual practitioners and corporations, rather than CAAR, was considered an attempt by Worrell Enterprises Inc., the owner of the Daily Progress, to divide the defendants, says Edward Lowry, coordinating defense counsel and Feil's attorney, who's with the firm of Michie, Hamlett, Lowry, Rasmussen & Tweel, P.C.

The tactic forced maximum defense costs, paved the way for colleagues to testify against the defendants, and made insurance protection less likely, he says.

Feil's legal expenses came to $25,000 for the first six weeks. During one busy month, legal fees for all the defendants were $235,000, says Montague. "I asked myself again and again, What am I going to do if I lose this case?" Feil says. "If I have to file for bankruptcy, how am I going to deal with that?"

Legal bills ultimately ran more than $1.3 million, defendants say.

"The other side followed a scorched earth policy," Lowry says. But the defendants displayed remarkable fortitude, he adds.

If any of the defendants had settled or testified against the others, it would have destroyed the defense, paving the way for other community newspapers to challenge association-run newspapers. If the newspaper hoped for such dissension, it misjudged the individuals solidarity and the commitment of supporting REALTOR® associations, Lowry says.

Partners, associates, employees, and colleagues offered tremendous support, say the four practitioners, who relied on others at their companies to take over.

"My partner had to take complete charge of the business, though we had normally split the duties, and I took over the managing of the lawsuit," says Feil.

Armstrong received a standing ovation after the company's owner announced to employees that the company would fight the lawsuit to the end.

Tainted by Suspicion of Guilt

But not everyone was supportive.

Ramsey was disappointed that some local practitioners expressed doubts about the defendants complete innocence. Some practitioners told Feil the Progress wouldn't have sued if she and the others had been fully innocent, she recalls. Even clients retreated, believing she wouldn't have time for them because of her preoccupation with her defense.

The defendants avoided social events and casual encounters. Armstrong arrived at movies after the lights were off to avoid feeling that people were talking about him or, worse, pitying him.

"We were victims," he says. There wasn't a damn thing we could do about it. Clarke noticed that the pressure caused personality changes, making her grumpy and short-tempered. After the lawsuit was over, a couple of her sales associates commented that they were glad she was back. "I didn't go anywhere," she observes. "It's just that the person who was here wasn't me."

Feil, who describes herself as normally highly sociable, started staying home. "My reaction was to insulate myself, keep to myself, and not go out," she says.

Powerlessness was particularly frustrating for the practitioners, who by nature are self-starters and leaders. All they could do was endure. "As a male, there's no way I could understand the feelings of a female victimized by rape," says Armstrong. "But I have greater empathy now. I was a victim. There wasn't anything I could do about it."

"There was a complete feeling of helplessness," Feil says. "You had no control. You simply showed up when the lawyers told you to. You were just caught in this tidal wave."

Depositions were grueling. "You're face-to-face with the opposition attorney, who's trying to trip you up," Clarke says. Few questions are taboo, she adds.

Still grieving after his father's death when the lawsuit hit, Ramsey couldn't remember some details demanded by opposing counsel, because the year in question was devoted to his dying father.

Presumed guilty.

"When it was over," he says, "I just jumped out of the chair and ran out of the building, breathing the fresh air."

Once home, he showered to cleanse himself, he says. Later that night, he panicked at the thought that he had said something wrong. "I was crying," he says. After calling a defense attorney, he calmed down.

Like a Prisoner of War

Punkie Feil trained for her two-day, 17-hour deposition like an athlete, following a strict nutrition and exercise regimen she began after developing some stress-related physical problems. Like all the defendants, she gave her deposition with a video camera stuck in her face. The opposition lawyer at times pounded his hand on the table and shouted, she says. "I felt like a prisoner of war undergoing an interrogation."

Stress among the defendants was compounded by a number of other factors:

  • Opposition law clerks were allowed to enter the defendants offices and search their business and personal files. One clerk spent five weeks searching files in a defendant's office.
  • The defendants were forbidden to discuss the lawsuit with anyone but a spouse or an attorney, despite daily questions from friends and colleagues.
  • Vacations and special events were disrupted, overshadowed by the lawsuit.

"You could be watching your favorite TV show, and suddenly your mind would click on the case--'Oh, my God,'" Armstrong says.

"I finished my deposition on my 26th wedding anniversary," Clarke recalls. "Knowing that you had this to deal with diminished some of the joy you'd normally feel on happy occasions."

In December 1994, a judge's summary judgment dismissed the case, and in January 1995, with the appeal period past, the dark cloud lifted. The defendants were free.

For some, the cloud blew away quickly. For others, it lingered awhile before gradually drifting off. Innocent.

The Suit in a Nutshell

Plaintiff: Worrell Enterprises Inc., publisher of the Daily Progress in Charlottesville, Va.

Defendants: Charley Armstrong, principal broker, Real Estate III
Carol Clarke, CRB, managing partner, Montague, Miller & Co.
Phyllis "Punkie" Feil, CRB,president, Colonnade Realty
Percy Montague IV, CCIM, president, Montague, Miller & Co.

All the defendants companies were also named as defendants, as was Charlotte Ramsey Inc., REALTORS®.

Allegations: Defendants engaged in group boycott of plaintiff's business or participated in horizontal agreement to limit and restrict services in the market for advertising and disseminating information about real estate, violating federal and state antitrust laws. Additional counts alleged a conspiracy to injure plaintiff's trade or business and intentional interference with contractual rights or business expectations.

Response: Defendants actions were either legitimate activities of a trade association or legitimate independent business conducted in their own economic or financial interest.

Dates: Lawsuit filed Nov. 22, 1993.
Summary judgment, December 1994.
Appeals period expired January 1995.

Decision: All charges dismissed by U.S. district judge.

Aftermath: Daily Progress sold to Media General. The Charlottesville Area Real Estate Weekly enters its third year of publication. Daily Progress lowered its ad rates.

Who Footed the Bill?

Bankruptcy would have been likely for the defendants if not for financial assistance from the Charlottesville Area Association of REALTORS® (CAAR), the Virginia Association of REALTORS® (VAR), the National Association ofREALTORS®, more than 100 local associations across the country, and numerous individuals, says Edward Lowry, coordinating defense counsel for the four Charlottesville defendants.

NAR contributed $715,000; VAR, $320,000; CAAR, $50,000; NAR insurance, $75,000; one defendant's insurance, $100,000; and voluntary contributions, $100,000, says Deborah Van Eersel, CAAR executive vice president.

Grateful for the associations' support, the defendants say it sustained them not only financially but also emotionally, diminishing their fear of financial ruin and strengthening their resolve to fight. Even more than before, they tout the benefits of association membership. "There was a real value, both monetary and emotional, in the support we received," says Percy Montague.

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