Attorney Michael Avenatti, who is accused of fraudulently obtaining bank loans and stealing funds from a client, is named in a lawsuit in Santa Barbara County.
Avenatti is known for representing adult film actress Stormy Daniels in legal battles against President Donald Trump.
Two plaintiffs filed the Santa Barbara County lawsuit, which says they hired Avenatti’s firm, as well as two other law firms, to represent them in a legal dispute with their former employer, FLIR Systems, Inc.
The plaintiffs, Santa Barbara resident William Parrish and San Clemente resident Timothy Fitzgibbons, left their jobs in 2006 to start a new business venture but were sued by FLIR, according to the lawsuit.
The plaintiffs won in court and sued FLIR for malicious prosecution in 2011. FLIR later agreed to a settlement of $39 million.
According to the lawsuit, $15.3 million of the settlement was to be paid to the attorneys who represented the plaintiffs.
The plaintiffs had hired three law firms: Eagan Avenatti LLP, Panish Shea & Boyle LLP, and Stoll, Nussbaum & Polakov, also known as SNP.
Those law firms entered into a separate attorneys’ fee sharing agreement and the money was to be distributed jointly, however, the lawsuit says the money was wired directly to the Eagan Avenatti Trust Account. Eagan Avenatti, LLP is a litigation partnership operating primarily out of Orange and Los Angeles Counties.
The lawsuit says Robert Stoll from SNP objected to the deposit. SNP then sent a letter requesting the settlement fees to be deposited into a different trust account.
The plaintiffs say they ultimately were involved in a seven-year legal battle with SNP over attorney funds that they had already paid. The plaintiffs claim Avenatti regularly told them there was “nothing to worry about” in regards to SNP’s demands.
The lawsuit says some of the funds that were sent to the Eagan Avenatti Trust Account were also used for Avenatti’s and the other defendants’ own interest.
The plaintiffs say they didn’t become aware of the misconduct until late summer of 2018 when they hired new legal counsel.
The lawsuit says Avenatti, as well as his law firms, law partners, and employees, violated the plaintiffs’ trust and that the case arises from “egregious professional misconduct.”
The lawsuit says the violation of trust was “an affront to the legal profession.”
The lawsuit was filed in Santa Barbara County because that is where the original FLIR litigation took place.
The lawsuit says the plaintiffs sustained damages in an amount to be determined at trial, which could exceed $10 million.
Avenatti just appeared in court Monday in Santa Ana for a separate bank and wire fraud case there. He waived his right to a preliminary hearing in Federal Court in Santa Ana and is scheduled to be arraigned on April 29, but his lawyer says he may seek a waiver so his attorneys can appear on his behalf.
Avenatti was arrested last week in New York for a separate case and charged with trying to extort millions of dollars from Nike.
Outside court Monday, Avenatti said he believes justice will be served.
“For nearly 20 years, I have represented Davids versus Goliaths as an attorney. Throughout that entire time period, I have relied upon the justice system and judges sitting in courthouses just like this. I will now spend the time in connection with this case and the case in New York relying on that same justice system that I have now subjected myself to,” said Avenatti. “I am highly confident that when the process places out, that justice will be done.”