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Appeals court gives Cellino major win in lawsuit against Barnes

A long-awaited appeals court decision in the Cellino vs. Barnes case favors Ross M. Cellino Jr., who has been trying for more than two years to break up the nationally known law firm.

The decision will help Cellino to eventually prevail in his effort to break up the Cellino and Barnes law firm, Cellino’s attorney, Terrence M. Connors, predicted on Friday.

“Yesterday, the Appellate Division issued a decision which is a major appellate victory and another step closer to dissolution for Ross Cellino,” Connors said in a statement he sent to The Buffalo News. “Ross is gratified that the Appellate Court accepted his position that he submitted ample evidence of dissension and deadlock requiring the dissolution proceeding to move forward. More importantly, the Appellate Court pointed out that dissolution is not to be denied simply because the firm operates at a profit. For Ross, it has never been about the money.”

Stephen E. Barnes, who has been fighting Cellino’s efforts to break up the financially successful law firm, did not immediately respond to a message from a reporter seeking his comment.

Christopher M. Berloth, an attorney representing Barnes, said, "The Fourth Department’s decision indicates the Court’s belief that factual issues exist to warrant a hearing. Even proceeding to a hearing, we remain confident that the facts of this case do not warrant dissolution. The hearing will demonstrate that the alleged dissension and deadlock have not prevented C&B from continuing to function, by any metric, and these circumstances do not present the “last resort,” which is necessary to dissolve C&B."

A personal injury law firm with a national reputation, Cellino & Barnes has racked up huge profits in recent years, and the firm’s two stockholders – Cellino and Barnes – each earn well in excess of $1 million a month.

But Cellino shocked the Buffalo legal community in May 2017 when he filed a lawsuit saying that, due to many disagreements, he could no longer stand working with Barnes and asking for permission to dissolve the law firm.

Barnes has opposed that effort, saying the breakup would be unfair to him and the firm’s clients and employees. Despite rancorous disagreements about finances, hiring and other issues, Barnes said he would have no trouble continuing to work with Cellino.

The Fourth Department of the State Appellate Court said it agreed with a ruling made in February 2018 by Supreme Court Judge Deborah A. Chimes. At that time, Chimes refused Barnes' request to dismiss Cellino’s lawsuit.

Chimes also appointed a temporary receiver, Buffalo attorney John Schmidt, to oversee the law firm’s finances.

In a decision issued Thursday, a panel of appeals court judges said it “unanimously affirmed” Chimes’ rulings.

Cellino’s efforts to dissolve the firm should not be dismissed simply because the law firm is making huge profits, the appeals court wrote.

“When a point is reached at which the shareholders who are actively conducting the business … cannot agree, dissolution may be in the best interest of those shareholders,” the appeals court wrote.

The appeals court ruling was anxiously awaited for more than a year.

“Both sides are waiting for this appeals court decision, and the appeals case goes right to the heart of this case,” Berloth, an attorney for Barnes, told The News last month.

While the ruling is a big win for Cellino, it is not a total victory. The case still has to go to trial before Chimes. She has delayed the trial date several times. It is now scheduled to begin next Jan. 14.

Judge dismisses Barnes' suit against Cellino & Cellino law firm

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