A California title insurance company that was suing Columbus attorney Michael Eddings has dropped its claim seeking nearly $2 million against Eddings, his law firm and three restaurants he and his ex-wife, Sonya Eddings, owned.
Last month, First American Title Insurance Co. asked the federal court to enter a default judgment against Sonya Eddings. That civil claim is still pending in front of U.S. District Court Judge Clay Land in the Middle District of Georgia.
The claim against Michael Eddings was dismissed last week in the wake of a recent settlement between First American and Columbus Bank & Trust Co., formerly a defendant in the case. Terms of the CB&T settlement with First American have not been disclosed.
Michael Eddings said Monday the action by the title company to dismiss him from the suit supports his claim that the mess created by his wife's deception was not his fault.
"I am not going to bellyache about it," he said. "A lot of people have been hurt by what Sonya has done. And it was done out of my office. I am not going to hide from it."
Eddings said that the reason First American dismissed him from the suit was "because they didn't find anything against me because there was nothing to find. And that is what I have said since this all began."
According to a Feb. 4 federal court filing by First American, the claim against Michael Eddings was dismissed "solely for purposes of judicial economy and to avoid further litigation expenses. First American seeks to dismiss its remaining claims against the Eddings Defendants without prejudice, thereby preserving its rights to refile these claims."
An Atlanta attorney representing First American did not return a phone message left Monday morning.
Michael Eddings has consistently denied any prior knowledge of the trust account issues before CB&T put a freeze on the account Oct. 27, 2011. At that point, Eddings' thriving real estate closing business ground to a halt. Since that time, he and Sonya Eddings have filed for bankruptcy and divorced and she has moved to metro Atlanta, according to court documents.
First American filed the suit asking to recover more than $1.55 million in title insurance claims and more than $425,000 in legal fees and expenses.
Michael Eddings has said his wife was responsible for all of the financial misconduct with the trust account, and she accepted blame for the misappropriations in a hand-written statement at the time CB&T shut down the account and in a 2012 deposition as part of the First American suit.
Michael Eddings remains in Columbus, where he is practicing primarily criminal defense law.
He has a disciplinary hearing scheduled in front of the State Bar of Georgia in two weeks. The bar complaint filed in November 2012 claims Michael Eddings "allowed" improper withdrawals from his trust account and failed to keep "measures giving reasonable assurance that the conduct of non-lawyers employed or retained by him were compatible with his professional obligations."
In the December 2012 deposition, Sonya Eddings said she misled CB&T bankers and her husband as she secretly moved money from the law firm trust account into an operating account for the couple's restaurant holdings, which included a downtown fish restaurant called the Uptown Fish House LLC, and two Coffee Beanery locations, one downtown and the other in Peachtree Mall. She admitted to about $2.4 million in such transactions, according to the deposition. When the account was frozen, there was about $400,000 in it against eventual claims of more than $2 million.
At the time, Sonya Eddings, who had previously worked for CB&T's parent company Synovus, was the business manager for The Law Office of Michael Eddings.
"Michael was truly just as much a victim as CB&T and any other clients that's out there," Sonya Eddings said in the deposition. "All I want to happen is for the truth to come out, and if there is a consequence, I accept responsibility for that consequence. But that's what needs to happen."
Sonya Eddings outlined in the deposition how she hid the banking issues from her husband, even when the bank was notifying her of overdrafts in the trust account. She was asked what her husband's reaction would have been if he had known of the bank overdrafts in the trust account.
"He would have hit the ceiling," she responded. "In retrospect, it might have been better for me not to have tried to hide it so well because he would have put an end to it immediately and resolved -- whatever issues would have been resolved, he would have handled it then on the spot. I knew how to get around the corners."
From 2007 through October 2011, the trust account ran a negative balance 50 times, First American claims.
"According to First American, CB&T's negligence caused unauthorized payments to be made from the trust account which ultimately caused damage to First American," Land wrote in a January ruling that declined to dismiss CB&T from the suit.
First American's claims include:
In 2007, the trust account had negative balances 17 times, including one for $120,794.80.
In 2008, the trust account ran negative balances 18 times, including one for $224,335.91.
In March 2009, CB&T learned that the Eddings Law Firm regularly attempted to "re-deposit" duplicate checks in its trust account using a special on-site deposit device. CB&T found the activity was "more than just an error" -- it sent up "Red Flags" and resulted in CB&T shutting down the on-site deposit practice.
In 2009, the trust account ran a negative balance 10 times, including one for $250,861.22.
The FBI has been investigating the shortfall in Eddings' trust account, though the Columbus FBI office has declined comment on the case. People who lost money when Eddings' account was closed have been interviewed and said they supplied documents to FBI agents. Michael Eddings was asked if he had been interviewed by the FBI in his deposition last summer.
"There has been an attempt at an interview, and at the time I invoked by Fifth Amendment (rights)," Michael Eddings said at the time.
Among the rights the Fifth Amendment allows is the right against self-incrimination.
Eddings said Monday he took the Fifth Amendment rights on the advice of his former attorney. Eddings is currently representing himself in the civil matter and the State Bar complaint.