OLR Compendium > Public Reprimand of Leah Poulos Mueller

Public Reprimand of Leah Poulos Mueller

2021-OLR 6

Leah Poulos Mueller is a Wisconsin-licensed attorney admitted to practice on January 11, 1994, State Bar number: 1022710. Mueller maintains a solo private practice in New Berlin, Wisconsin. This reprimand is based upon Mueller’s conduct in two matters.

FIRST MATTER

Mueller in 2010 began representing a man on a claim that he was defrauded of his investment in a business he helped found and in which he was a minority shareholder. The company was sold in 2010 to address its financial problems and keep the business viable. The buyer was a new company formed and owned by three other shareholders who owned a majority of the original company. The man and the five Class B members from the original company lost their investment. Mueller filed both a direct action and a derivative action on the man’s behalf. First, the derivative action was dismissed on summary judgment. The decision on the derivative claim left open the possibility that the man could pursue a derivative claim if he obtained sufficient votes from the Class B members authorizing the action. Later, the direct action was also dismissed on summary judgment on the basis that the facts did not support any individual claims by the man. The decision was not appealed.

Several years later, the man filed three separate pro se lawsuits regarding the same transaction, two in state court—a direct, individual action and a derivative action with the company named as the plaintiff—and one in federal district court. The defendants filed motions to dismiss in each of the matters on the basis of claim preclusion. The man, in response to the motions, filed amended complaints in the individual state court action and in the federal action dismissing all but one individual defendant and identifying the defendant purchasing company as “new company” instead of by its name. Soon thereafter, Mueller agreed to represent the man in the three pending cases. Mueller then filed an amended complaint in the state court derivative action.

In the federal case, the court granted the defendant’s motion to dismiss on the basis that the suit was barred by the doctrine of claim preclusion as the man’s claim had already been litigated in state court. The man appealed the decision, pro se, to the United States Court of Appeals for the Seventh Circuit. The Seventh Circuit affirmed the decision with respect to the man’s state law claims as it determined that claim preclusion did apply because all the elements for claim preclusion were present and the claims all “arose from a common nucleus of operative facts.” The court, however, remanded the case to the district court to address the man’s claims under federal securities law, which the district court had not addressed in its decision. The Seventh Circuit, discussing the defendant’s motion for sanctions, described the man’s arguments and attempts to evade claim preclusion by using different names for the old and new companies as “bold and transparent misrepresentations” and directed the district court to consider investigating the man’s conduct. On remand, Mueller continued her representation of the man. The district court determined that the securities claims were barred by the statute of limitations and the statute of repose. The district court directed the defendant to file a motion detailing the sanction request and directed the man to file a current and accurate financial statement. The defendant filed a motion for sanctions, but Mueller made no response to it and did not file the man’s financial statement. Instead, Mueller in letters to the court, which the court determined were “unauthorized,” continued to argue against the court’s dismissal of the securities claim, an issue that had already been decided. The court issued a written decision of its ruling and granted the defendant’s motion for sanctions finding that the man’s “intransigence in pursuing time-barred and already adjudicated claims cannot be justified.” The man was ordered to pay a sanction of $15,000, with Mueller jointly liable for $5,000 of the sanction, “due to her active, though later, participation in this action and due to her failure to respond in any way to the sanctions motion.” Finally, the judge barred the man from filing further federal claims related to the 2010 transaction. The man again pursued a pro se appeal. The Seventh Circuit affirmed the decision and also sanctioned the man for pursuing a frivolous appeal. Mueller paid the $5,000 portion of the sanction for which she was responsible.

By maintaining the man’s federal lawsuit when she knew that all the claims asserted therein were either barred by claim preclusion or by the statutes of limitation and repose, conduct for which she was sanctioned by the court, Mueller violated SCR 20:3.1(a)(1). By failing to respond as directed by the federal court to the motion for sanctions and instead filing letters presenting further argument on issues already decided by the court and deemed “unauthorized” by the court, Mueller violated SCR 20:3.4(c).

In the state court cases, which remained separate but were assigned to the same judge, the man’s individual claim was dismissed on the basis of claim preclusion. The court allowed the derivative claim to continue and permitted limited discovery on the issue of whether the man had authorization from the other shareholders to bring the derivative claim. The defendants in the direct claim moved for sanctions. Mueller filed motions for reconsideration and for a stay of the proceedings pending the outcome of the Seventh Circuit appeal in the federal case. Mueller also filed another derivative lawsuit in state circuit court even though the court allowed the existing derivative action to continue. By the time the court held a hearing on the sanction motion as well as on Mueller’s motions for a stay and reconsideration, the Seventh Circuit had issued its decision affirming the dismissal of the man’s claims and remanding the case for a ruling on the federal securities claims without any ruling as to the viability of the claims. Mueller in the state court hearing mischaracterized the Seventh Circuit’s decision as vacating and remanding the case and upholding the man’s securities claims. The state court granted the sanction motion, finding that Mueller and her client had pursued actions for the improper purpose of harassing the defendants and that the proceeding was frivolous. The court ordered that Mueller pay a monetary sanction and that the man be prohibited from filing any additional direct state law claims arising out of the 2010 transaction, unless he had permission from the trial court. Mueller paid the monetary sanction of $5,923.50 for which she was responsible.

By maintaining the direct action lawsuit filed by her client, when she knew or should have known her client's direct claims were barred by claim preclusion, having already been adjudicated in the client’s 2012 lawsuit, resulting in the court’s finding that the action was frivolous and ordering the client and Mueller sanctioned on that basis, Mueller violated SCR 20:3.1(a)(1).

Mueller filed an appeal of the dismissal of the client’s individual case. In the course of the appeal, Mueller repeatedly failed to follow appellate briefing rules after multiple extensions. The Court of Appeals therefore dismissed the appeal as a sanction for that “egregious” conduct, noting that “Mueller’s violations of this court’s orders and rules have been persistent and substantial, and have impeded this court’s orderly and expeditious processing of this appeal, squandering judicial resources.” By this conduct Mueller violated SCR 20:3.4(c).

Mueller, as required by case law, filed a separate appeal of the sanction order against her.

In the course of the appeal, the Court of Appeals declined to accept Mueller’s reply brief as a sanction for her non-compliance with several appellate court rules, including greatly exceeding the word limit, inserting images of documents in her brief without reference to where they could be found in the appellate record, failing to sign the brief, and certifying that the brief was sent on via first-class mail when the postmark showed it was sent on a different date via priority mail. This conduct in failing to abide by court rules violated SCR 20:3.4(c).

The defendants in the second derivative action moved for dismissal of that action on the basis that proper service had not occurred and that the claim was barred by the statute of limitations. The court agreed that proper service had not been achieved and found that the affidavits of service were not trustworthy. The court dismissed the case on that basis. Mueller moved for reconsideration of the dismissal. At the hearing denying the motion for reconsideration, the court found that authenticated copies of the summons and complaint were not served and evidence submitted by Mueller asserting that authenticated copies were served was not possible, given the time of service versus the time the authenticated copies were obtained. By presenting evidence that was not possible, Mueller violated SCR 20:3.3(a) (3).

The litigation of the pending derivative claim continued. The defendants filed another motion for summary judgment. Days before that motion was scheduled to be heard, Mueller filed another derivative action, the seventh lawsuit arising out of the same transaction, adding as defendants the attorneys representing the defendants in the pending case. The court expressed concern that the new filing was an attempt to circumvent the court and create ethical problems for the defendants’ attorneys. The court granted summary judgment, finding that Mueller’s client lacked the authority of the other shareholders to bring a shareholder derivative action. Mueller moved for reconsideration. The court denied the motion.

By filing another derivative lawsuit, the seventh based upon the same common nucleus of operative facts, when the claims were already the subject of a pending suit about to be heard in a summary judgment motion, and by including the attorneys for the prior defendants as defendants in the seventh lawsuit, Mueller violated SCR 20:3.1(a)(3).

In the seventh lawsuit, the defendants filed a motion to dismiss. Mueller failed to timely file a responsive brief in accordance with the local court rules. The court allowed a brief extension of the deadline. In the meantime, Mueller filed an amended complaint adding the judge in the dismissed derivative action as a defendant. Mueller failed to meet the extended deadline given for responding to the motion to dismiss. Her request for an additional extension was denied and the court dismissed the action with prejudice based upon the finding that Mueller’s repeated failure to comply with the court’s orders and with Local Rules was egregious. Mueller filed an untimely appeal of the decision, but eventually dismissed it voluntarily after the defendants moved for dismissal. Mueller’s failure to abide by Local Rules violated SCR 20:3.4(c).

SECOND MATTER

In a second litigation matter, Mueller brought a lawsuit on behalf of a woman alleging injury as a result of her ex- husband’s failure to resolve their post- judgment divorce disputes via a collaborative divorce process. The woman and her ex-husband had agreed to resolve their divorce via a collaborative divorce process, a voluntary form of alternative dispute resolution intended to avoid litigation. They signed an agreement setting forth the parameters of the process, which included the withdrawal of their respective attorneys from representing them further if the collaborative process failed or if either party no longer wanted to use the collaborative process. They also filed a stipulation with the court acknowledging that each was represented in the divorce by his or her own counsel, and that the collaborative process was voluntary and could be terminated unilaterally by either party with or without cause. Wisconsin has not enacted any statutes providing for the use of the collaborative law process instead of Chapter 767, which governs divorce in Wisconsin.

The parties reached a stipulation setting forth the terms of their divorce. The Marital Settlement Agreement (MSA) called for the woman to make payments to her ex- husband to equalize the property division. In addition, a Parenting Plan established a placement schedule for the parties’ two minor children. The woman did not make the equalization payments as specified under the MSA nor was she, in the ex-husband’s view, following the agreed upon placement schedule. Efforts by the ex-husband’s divorce counsel to resolve the disputes were not successful and the ex-husband thus hired new counsel who filed a contempt motion on his behalf. The motion included the ex- husband’s affidavit setting forth the factual basis for the motion. The property division issue was resolved when the woman made the remaining payments she owed; a guardian ad litem was appointed to investigate the placement issues, which were eventually resolved via a stipulation.

As the post-judgment dispute was concluding, Mueller filed a lawsuit alleging that the ex-husband’s pursuit of a contempt motion to enforce the MSA violated the collaborative process and Wisconsin law and that his affidavit in support of the motion was a “sham affidavit.” Mueller filed the lawsuit against the woman’s ex-husband, the ex- husband’s collaborative divorce counsel, and the ex-husband’s post-judgment counsel. Each of the defendants hired counsel for the lawsuit filed by Mueller. Two of the defendants filed motions to dismiss arguing the suit had no legal basis and the third defendant pursued summary judgment after answering the complaint.

The court held a hearing on the motions to dismiss and conducted an extensive, detailed colloquy with Mueller as to the basis for the assertion that the parties had entered a contract by seeking to use collaborative law principles to resolve their divorce and that the defendants were prohibited by the collaborative process from pursuing enforcement of the terms of the marital settlement agreement via a contempt motion or order to show cause. The court found that a breakdown of the collaborative process did not entitle one to bring a breach of contract claim and that the allegation that the affidavit in support of the contempt motion was a “sham” was a delusional pleading. The court set a second hearing to address the defendants’ request for attorney’s fees/sanctions.

Mueller then filed a motion for a stay pending a ruling by the court on oral motions she claimed to have brought in the dismissal hearing or, alternatively, recusal. Mueller asserted recusal was appropriate because the court was not familiar with the plaintiff’s pleadings, being too tired to thoroughly review them, had minimal experience or knowledge of collaborative divorce, and “did not just demonstrate bias, but demonstrated a level of emotional investment toward defendant(s).” The transcript of the prior hearing did not support Mueller’s motion for a stay or recusal.

Mueller also filed an amended complaint, two days before the scheduled hearing. The amended complaint added the woman’s own counsel in the divorce as a defendant. The amended complaint again sought damages for the failure of the collaborative process and cited slightly different theories of liability.

The court conducted the sanction hearing as scheduled. The court denied Mueller’s motion for recusal. The court deemed Mueller’s other motions and the filing of the amended complaint as a motion for reconsideration of the court’s decision dismissing the complaint. The court affirmed its prior dismissal and clarified that it was a dismissal with prejudice. The court ruled that the lawsuit was frivolous, granted costs and fees to the defendants, enjoined the plaintiff from filing any further lawsuits regarding the divorce and required that if the plaintiff pursued an appeal she would be required to deposit with the Clerk of Circuit Court in trust the total fees awarded.

Following the court’s ruling, Mueller filed a motion for reconsideration, objected to the proposed order submitted by the defendants and submitted her own proposed order to effectuate the court’s decision. The court denied the motion for reconsideration without further hearing and rejected Mueller’s proposed order noting it did not accurately reflect the court’s ruling. Judgment for the defendants’ attorneys’ fees was entered against Mueller and her client, jointly and severally. Mueller objected to the judgment, filed motions to strike the defendants’ letters and invoices and for discovery, and filed a proposed judgment stating that the court’s dismissal was inconsistent with the law. Mueller’s proposed judgment also erroneously stated that the dismissal was without prejudice. The judgment entered against Mueller and her client remains unpaid.

Mueller’s conduct in pursuing the frivolous lawsuit violated SCR 3.1(a)(1). By filing a motion and affidavit that misquoted the court and mischaracterized the court’s knowledge and experience, Mueller violated SCR 20:3.3(a)(1). By filing a motion for recusal that was not supported by the record and contained erroneous statements about the judge’s preparation and impartiality, Mueller failed to maintain the respect due courts of justice and judicial officers as required by SCR 40.15, the Attorneys Oath, and thereby violated SCR 20:8.4(g), and made statements known to be false or with reckless disregard as to their truth or falsity concerning the integrity of a judge, in violation of SCR 20:8.2(a). Finally, by filing proposed orders that she knew did not accurately reflect the court’s rulings, Atty. Mueller violated SCR 20:8.4(c).

Mueller has no prior discipline.

In accordance with SCR 22.09(3), Attorney Leah Poulos Mueller is hereby publicly reprimanded.

Dated this 19th day of May, 2021.