One of three ongoing lawsuits stemming from Monroe businessman Stanley Palowsky III's claims he was cheated out of millions of dollars in an alleged kickback scheme at his environmental remediation company was dismissed last week at Fourth Judicial District Court.
The lawsuit at issue was Stanley R. Palowsky III v. Thomas M. Hayes III, Brandon Creekbaum, and Hayes, Harkey, Smith & Cascio.
Hayes and, Creekbaum, attorneys with the Monroe law firm, Hayes, Harkey, Smith & Cascio, represent Brandon Cork, who is Palowsky's former business partner.
In his lawsuit against Hayes, Creekbaum and their law firm, Palowsky accused the two attorneys of conspiring with Cork to defraud Palowsky out of millions tied to soil shredding contracts. The allegations surround a company started by Palowsky and Cork, which is called Alternative Environmental Solutions Inc. That company faces liquidation, as proposed by Cork and his counsel, in one of the three Palowsky lawsuits.
An ad hoc judge ruled Oct. 25 that Palowsky's lawsuit could not possibly reveal any wrongdoing on the parts of the attorneys, if allowed to proceed.
“I don't think the attorneys did anything wrong,” said retired Judge Dee Ann Hawthorne, of the 10th Judicial District Court in Natchitoches Parish. “I've found they did nothing but act like good lawyers.”
Hawthorne, who was appointed as an ad hoc judge over Palowsky's lawsuits, ruled in August that Palowsky could not sue Hayes and Creekbaum in the original 2013 lawsuit against Cork and others since adding the two attorneys as co-defendants, along with Cork, would deprive Cork of legal representation.
Palowsky's separate lawsuit against Hayes and Creekbaum was taken up during the Oct. 25 hearing. At that time, Hawthorne approved Hayes' and Creekbaum's special motion to strike Palowsky's claims. The defendants argued Palowsky had not established a probability he could succeed on his claims against Hayes and Creekbaum.
On that basis, the judge upheld Hayes' and Creekbaum's special motion to strike, originally filed in December 2014.
Palowsky's 181-page memorandum in opposition to the defendants' special motion to strike, filed Oct. 14, contained an affidavit from Palowsky; emails between Cork and others; emails between attorneys and Tom Hayes; and numerous invoices, including $94,000 in invoices from a company Cork admitted — during deposition — he was operating secretly in competition with AESI, the company he launched with Palowsky; as well as Cork's deposition.
All the documents attached to Palowsky's supplemental memorandum in opposition to defendant's motion to strike pursuant to La. CCP Article 971 can be found online www.ouachitacitizen.com.
Palowsky litigation a 'public issue'
The Oct. 25 hearing concerned arguments supporting the defendants' motion to strike, which were argued by Bernard Johnson, a Shreveport attorney with Cook, Yancey, King & Galloway, who represented Hayes and Creekbaum.
“The issue here is whether plaintiffs can establish...a probability of success in demonstrating that Hayes, Creekbaum had a special animus against AESI or Palowsky,” said Johnson.
Johnson said the special motion to strike was designed to “protect the courts from this kind of evil,” referring to the controversy stemming from Palowsky's original 2013 lawsuit against Cork: Stanley R. Palowsky III v. W. Brandon Cork and others. Palowsky v. Cork beget the businessman's lawsuit against Hayes and Creekbaum, who responded with a lawsuit to dissolve AESI on behalf of their client, Cork, whose claim to 50 percent ownership of AESI is disputed.
When Hawthorne provided her reasons for dismissal in open court, she said the recusal of all Fourth Judicial District Court judges in Palowsky's lawsuits — referring to Palowsky v. Cork as well as to Palowsky's lawsuit against law clerk Allyson Campbell and five judges — among other controversial issues had raised Palowsky's litigation to the level of a “public issue,” which was part of the legal criteria for a special motion to strike.
“This whole thing has been raised to the level of a public issue,” Hawthorne said.
When the defendants' special motion to strike was originally filed in December 2014, only one judge had been recused from Palowsky v. Cork, and the controversy surrounding Campbell and other judges had yet to surface.
Palowsky's affidavit struck
Before arguing the defendants' special motion to strike during last week's hearing, Johnson, attorney for the defendants, raised several objections to Palowsky's 181-page memorandum in opposition, including the businessman's Oct. 14 affidavit.
“It's simply an amalgamation of inferences they would like to draw,” Johnson said. “It really should be disregarded.”
Part of Palowsky's memorandum in opposition — and the basis for Palowsky's claim that Hayes and Creekbaum conspired with Cork to defraud him — pertained to Cork's February 2014 deposition in Palowsky v. Cork, in which Cork admitted he was secretly operating Cork Environmental Remediation Group (CERG) in competition with AESI. During that deposition, Cork was asked why he did not tell Palowsky about CERG.
“Because at that point I was under the direction of my attorneys and—,” said Cork, in a partial answer before Palowsky's attorney, Ward, cut him off.
Ward said he filed the exhibits as part of the 181-page memorandum in opposition because they contradicted defendants' affidavits.
“If a jury looked at this, I can't see how they couldn't see the harm caused was intended,” Ward said.
Johnson specifically objected to a section of Palowsky's affidavit, which claimed there were discrepancies between Hayes' Dec. 10, 2014 affidavit and Cork's deposition. In the contested section, Palowsky's affidavit challenged Hayes' affidavit as containing “inaccurate factual statements.”
“Moreover, Mr. Hayes was specifically called out and asked to explain the sworn testimony given by Cork in the presence of Mr. Hayes, without any objection or correction,” Palowsky said. “Mr. Hayes chose to remain silent and inactive and failed to controvert, deny and/or refute the sworn testimony of his client, Cork.”
In another part of Palowsky's affidavit, he said, “In paragraph 14 of Mr. Hayes' affidavit, he swears he '...never assisted Cork or other parties to conduct the alleged racketeering.' Cork swore otherwise...Again, the facts, circumstances and documented communications set forth above belie Mr. Hayes' self-serving affidavit.”
During last week's hearing, Johnson claimed Palowsky's statements in the contested section were more properly characterized as “argument” than statements based on “personal knowledge.”
“He's talking about things other people did,” Johnson said.
Hawthorne agreed with Johnson, and ordered that the entirety of Palowsky's affidavit — not just the contested section — be struck.
“It is actually impossible for him to know that as personal knowledge,” Hawthorne said.
Ward asked that Palowsky's affidavit as well as the rest of the 181-page memorandum in opposition be proffered, or preserved as evidence for when Palowsky appealed Hawthorne's ruling to the Second Circuit Court of Appeal in Shreveport. When Ward insisted the 181-page memorandum be proffered, Hawthorne frowned.