A state judge late Wednesday appointed a temporary receiver to oversee some of the disputed financial dealings between Buffalo attorneys Ross M. Cellino Jr. and Stephen E. Barnes.
John G. Schmidt Jr. was appointed to the temporary post and given limited powers to oversee the separation between the Buffalo-based Cellino & Barnes firm, which is owned by both men, and the California-based Barnes Firm, which is owned entirely by Barnes.
Schmidt is a well-known Buffalo attorney, a former federal court law clerk, and a partner in the Buffalo law firm Phillips Lytle.
Wednesday's ruling was made by State Supreme Court Judge Deborah A. Chimes, in response to allegations made by Cellino that financial irregularities occurred when Barnes broke the California firm away from the Buffalo law firm.
Cellino claims that the California law firm allegedly owes the Buffalo law firm more than $1 million. Barnes denies the allegation and says there were no financial irregularities of any kind.
Chimes noted that there is a "difference of opinion" between Barnes' accountants and Cellino's accountants, but the judge said she found a "genuine danger" that the interests of the Buffalo-based law firm are "not being protected" by Barnes with regard to the handling of the split between the two firms, which occurred last year.
She appointed Schmidt to serve as a temporary receiver with what she called in her decision "limited powers" to oversee the separation between the Buffalo-based law firm and the California firm.
Chimes said she finds no reason to appoint a receiver to oversee the "day-to-day" operations of Cellino & Barnes.
“We are gratified that the Court accepted our arguments and found that there was a genuine danger that Mr. Barnes is not protecting the interests of Cellino & Barnes P.C. and, therefore, appointed a Receiver to address the issues that we identified in our application to the Court,” said Terrence M. Connors, lead attorney for Ross Cellino, in an email to The Buffalo News.
"This ruling will have no effect of any kind on the daily operations of Cellino & Barnes," said Paul J. Cambria, Barnes' attorney. "The temporary receiver will oversee a very limited issue — the separation between the Buffalo and California operations."
Cellino stunned the Buffalo legal community last May when he filed papers seeking the breakup of Cellino & Barnes, one of the nation's most successful personal injury law firms. Barnes has opposed Cellino's effort, saying it would be unfair to him, thousands of clients and hundreds of law firm employees to break up Cellino & Barnes.
Chimes has not yet ruled on the key issue of litigation — Cellino's request for dissolution of the law firm.