Philly law firm Schnader Harrison, lawyer sued in Middleton brother-sister feud over billions

Anna Nupson, the estranged sister of billionaire Phillies co-owner John Middleton, has sued lawyer Bruce Rosenfield and his law firm, Schnader Harrison Segal & Lewis, claiming they failed to represent her fairly for decades and cost her hundreds of millions of dollars in inheritance.

Nupson, who lives on a 40-acre ranch in New Mexico, said she believes she was cheated out of her share of the Middleton family's cigar company after patriarch Herbert Middleton died of a heart attack at a Rotary Club meeting in June 1998.

Schnader Harrison and Rosenfield on Monday said the claims in the federal court suit in Philadelphia were misleading and inaccurate. Middleton's lawyer, James Smith, of Blank Rome, said the allegations in the suit "completely contradict [Nupson's] prior sworn admissions."

Nupson's suit, filed June 15, claims that the Schnader firm and Rosenfield favored John Middleton in their dealings because of the potential for future legal work. Rosenfield also concealed information from Nupson over who paid her legal fees, the suit said. Rosenfield is the former head of Schnader's tax and wealth management department and was the Middleton family's lead attorney for years.

The suit also claims that Rosenfield "back-dated and fraudulently witnessed" the signing of a trust to unlawfully preserve a tax shelter for John Middleton, exposing Nupson to civil and potential criminal liability.

Nupson seeks "exemplary damages" for legal malpractice "to deter Rosenfield and the Schnader firm, and any similarly situated Pennsylvania attorneys from reducing the practice of law to a cynical game of privilege and patronage," her suit says. Nupson's New Mexico attorney did not respond to a request for comment.

Schnader managing partner Nicholas LePore said in a statement that the suit "involves an old family dispute from many years ago. The allegations in the complaint are inaccurate and misleading." He added that "we are confident Mr. Rosenfield and the firm provided representation that was professional, competent, and ethical."

Blank Rome's Smith said John Middleton was "outraged" by the claims in the suit and "we hope that the court will take appropriate action to hold Ms Nupson and her counsel accountable for this spiteful, reckless conduct."

Court documents show that the Middleton family struggled with its estate planning after Herbert's sudden death. John Middleton, the family's only son and a Harvard Business School graduate, eventually bought Anna, another sister, Lucia Hughes, and their mother out of the family cigar company, John Middleton Co., and other assets for about $200 million in 2003.

Under Herbert, the suburban Philadelphia company innovated by developing a process to roll pipe tobacco into small cigars that were branded and sold in convenience stores.

John Middleton sold the cigar company in 2007 for $2.9 billion — at an exponential profit.

Middleton has said his sisters wanted to liquidate their ownership stakes in the cigar company because of the threat of lawsuits or new regulations that could bankrupt the company, leaving him to take the risk of owning it alone.

The federal suit rehashes claims that Nupson made in Montgomery County Orphans' Court. John Middleton paid her $22 million in February to settle the case, a fraction of the $1 billion that Nupson had claimed.

As part of that settlement, Nupson agreed that her brother did not engage in a conspiracy or fraud related to the 2003 family agreement and that other family agreements were legal and valid.

Middleton and Nupson did not acknowledge each other during a tense, 20-minute hearing formalizing the settlement before Judge Lois Murphy in Norristown. Middleton and Nupson separately testified in Murphy's court that they had reached a "compromise of disputed claims."

Middleton said after the hearing: "Thankfully, this misguided venture by my sister came to a merciful conclusion." With the settlement, Middleton said that he wanted to get on with his life and focus on what was important to him, such as "returning the Phillies to the glory years" and his philanthropy.

Middleton holds a 48 percent stake in the ball club. The Phillies ownership group operated in silence for decades before Middleton was named the team's control person in 2016, and took on a much more public role.

Murphy had expressed frustration with both sides in the lengthy orphans' court action that run up legal bills of well over $1 million.