Friday, August 7, 2009

Five-Year Suspension

The New York Appellate Division for the Second Judicial Department imposed a five-year suspension for the failure to promptly pay settlement proceeds in a wrongful death action and misappropriation of entrusted funds. The court considered the follwing in determining the appropriate sanction:

In determining an appropriate measure of discipline to impose, the Grievance Committee notes that the respondent has no prior disciplinary history. The respondent admitted at the hearing that he had been the subject of prior complaints which were dismissed or discontinued. Notwithstanding the respondent's arguments in defense of his conduct, it has been held that the ultimate responsibility for affixing reasonable legal fees rests with the Surrogate irrespective of the existence of a retainer agreement (see Matter of Piterniak, 38 AD3d 780, 781). In implementing his own assessments of the reasonable value of his services for that of the Surrogate, the respondent acted improperly. His argument that the stipulations signed by the Zwiebachs [the clients] constitute a novation in place of their old obligation, is unavailing. There is also in place an order finding that the respondent submitted a forged settlement agreement to his client and wrongfully withheld $75,000 from her for an extended period of time. Having failed to timely perfect an appeal from that order, the respondent is bound thereby.

This matter is complicated by the long-standing friendship between the Zwiebach and [the lawyer's] families. From December 1986 through the death of Dr. Zwiebach in 1991, the respondent's firm represented him in numerous matters involving the company created to run the X-ray business which Dr. Zwiebach had purchased. The firm's representation included matters related to the continual late payment of notes due for the purchase of the X-ray business, which led to the default notices and threats to call in the entire balance of the note due, as well as failures to pay school taxes and to provide proper insurance coverage as required under the agreement. During this same period, the respondent also represented Judith Zwiebach in various business ventures, including the sale of Gladstones Jewelry Castings, Inc., a business she had operated.

During this period, the respondent's firm received no fees from Dr. or Mrs. Zwiebach, in consideration of their financial difficulties. That situation was altered by Judith Zwiebach's receipt of more than $1.5 million in insurance proceeds and the wrongful death settlement.

Under the totality of circumstances, we find that the respondent has evinced serious misjudgment which warrants his suspension from practice for a period of five years.

(Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2009/08/the-new-york-appellate-division-for-the-second-judicial-department-imposed-a-five-year-suspension-for-the-failure-to-promptly.html

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