At the January 26, 1996 meeting, Lucas received forms to open an American Express account and also wrote a check in the amount of $ 1,300,000 payable to American Express. Plaintiff's check was forwarded to co-defendant John Kadow, who was to serve as the escrow agent to hold plaintiff's funds. Grossman, Hawk, Fried and Kadow all represented to plaintiff that John Kadow was affiliated with American Express (Lucas Deposition, p. 47). However, an account was not opened for the benefit of plaintiffs at that time, and plaintiffs' check was returned.
Although the parties disagree as to the circumstances surrounding the returned check, they do agree that Fried subsequently proposed that defendant Lalime be used as an escrow agent. Fried had obtained Lalime's name from co-defendant Miller, a trustee of JADA. All parties agreed to the use of Lalime, and on February 14, 1996, plaintiff Dr. Lucas signed an escrow agreement. The agreement was also signed by Miller, as representative of the JADA Trust, Wayne Hawk, on behalf of Hale Associates, defendant Lalime, as the trust escrow agent, and plaintiffs' attorney, Alex Murland, Esq., as the participant escrow agent. The agreement provides that Lalime would receive plaintiff's funds by wire transfer from Murland. Lalime was to provide a written receipt of funds and simultaneously cause the trust to have issued a negotiable bill of exchange maturing in 21 days (Lalime Exhibit Book, Ex. N).
The following day, on February 15, 1997, Murland wired $ 1,300,000 of Dr. Lucas's funds to an account in defendant Lalime's name at a Marine Midland Bank in Buffalo, New York, using bank coordinates supplied by Lalime. Those moneys were received by the James L. Lalime Esq. Attorneys Escrow Account # 741-78018-6 on February 15, 1996 (Item 27, Berrigan Affidavit, Ex. C). There was $ 7,241.04 on deposit in Lalime's escrow account prior to receipt of the Lucas funds (Id.).
On February 16, 1996, one day after receiving the funds, Lalime wire transferred $ 42,500 to a Merrill Lynch trust account established in Pennsylvania for the benefit of Bobbie Packard, defendant Miller's fiancee (Id.).
On February 20, 1996, Lalime wired $ 1,235,000 to the Western Corporate Federal Credit Union in San Dimas, California, to a Smith Barney account in his own name. These funds were then transferred to the South Bay Credit Union in Redondo Beach, California, to account # 130420 in the name of defendant Judith A. Kadow (Id. at Ex. D, p. 2).
On February 21, 1996, Lalime wire transferred $ 10,000 to First Union National Bank in Virginia, which was deposited to the credit of Bobbie Packard (Id. at Ex. C). On this same date. $ 850,000 of the California funds were wire transferred to the trust account of the House Law Firm in North Carolina (Id. at Ex. D, p. 3). The funds were used by Don R. House, attorney for David Miller, to purchase real property in the name of The Obbie'B - R.E. Trust in a transaction which closed on February 21, 1996.
A facsimile of a document purporting to be an American Express Bill of Exchange was received by Grossman or Hawk on or about February 22, 1996 (Lalime Exhibit Book, Ex. G). The document, dated February 22, 1996 and showing a maturity date of March 14, 1996, was later determined to be fraudulent. On the date the bill of exchange was purportedly issued, only $ 8,781 remained on deposit in Lalime's attorney escrow account.
On March 4, 1996, $ 25,000 was transferred from the South Bay Credit Union back to Lalime's account at Marine Midland Bank in Buffalo.
On April 18, 1997, plaintiffs moved for partial summary judgment with respect to their third cause of action as alleged against defendant Lalime. Their complaint states in pertinent part as follows:
61. For good and valuable consideration, Lalime, acting as an attorney and counsellor at law for and on behalf of plaintiffs, entered into the Escrow Agreement, . . . as the Trust Escrow Agent, and thereby assumed the obligation of rendering professional services to plaintiffs and received from plaintiffs the sum of $ 1,300,000 [Dr. Lucas' funds].