The Nevada Supreme Court was asked Monday to reinstate the lawsuit accusing lawyer Steve Hartman of violating ethical rules in business dealings with Silver Oak development partner and longtime Carson City builder Garth Richards.
The suit was tossed out by a Carson District Judge on grounds the suit was filed five years after the statute of limitations expired on the allegations.
Mark Sarnowski, representing Richards, said that decision is wrong because there was no way Richards should have known about Hartman's potential conflicts in both representing the development and being a partner in it.
"He doesn't know the Supreme Court rule and the ethical duty to be advised of conflicts," said Sarnowski.
He said therefore the statute of limitations shouldn't start running until Richards discovered the problems in 2003 - the year the suit was filed.
The suit filed Dec. 15, 2003 accuses Hartman and the Allison/Mackenzie law firm where he worked at the time of violating rules governing how lawyers are supposed to operate. It says under the deal Hartman wrote for himself, he received $3.3 million when the partnership dissolved in 1998. His law firm got another $903,000.
But Hartman's lawyer Jeff Olster said the case should be dismissed because Richards was fully aware of everything in the dealings between the two men when he and Hartman dissolved the partnership.
Dan Hayward, representing the law firm, backed Olster, saying there were no facts about the relationship concealed from Richards at any point in the dealings.
"This case was properly dismissed," he told the high court.
"As long as you're not given the information you're required to be given, fraudulent concealment does apply," said Sarnowski on rebuttal.
He said the defense is arguing that lawyers don't have to be held to the same standard that accountants and other fiduciary professionals must meet, which he said would send a bad message to the public.
The question before the court is whether to reinstate the lawsuit and send it back to district court for hearings on the merits of the case. Justices took the case under submission.