A federal appeals court has reinstated a fraud lawsuit against K&L Gates and two of its former partners alleging that the attorneys exploited their past representation of a publishing executive to undermine his efforts to acquire assets from a bankruptcy sale, the <em>New York Law Journal</em> reported today. Roy Brown, CEO of Brown Publishing Co., retained K&L while making a bid to take control of the company's assets by chapter 11 through another company, Brown Media. Edward Fox and Eric Moser, then partners at K&L, represented Brown in the lead up to the bankruptcy, but the firm told Brown to obtain new counsel before the sale, according to court papers. Brown Media submitted a stalking-horse bid for Brown Publishing's assets, but the bid was beat out by PNC Bank Group, which included a bank that provided financing to Brown Publishing that was also a "sometimes" client of K&L. In 2013, Brown filed a suit against K&L and the partners alleging breach of fiduciary duty, tortious interference and common law fraud. Eastern District Judge Arthur D. Spatt granted K&L's motion to dismiss based on <em>res judicata</em> grounds, writing that the suit was a "thinly disguised collateral attack" on the bankruptcy orders. But a panel of the U.S. Court of Appeals for the Second Circuit disagreed with Spatt and remanded <em>Brown v. K&L Gates</em>, 15-4185-cv, for further proceedings. Writing for the court, Judge Peter Hall said the panel disagreed with Spatt's view that the plaintiffs should have addressed their claims in the bankruptcy proceedings.
