Saturday, June 16, 2012
The Pennsylvania Supreme Court has disbarred an attorney who served as a Superior Court judge from 1998 to 2007.
The attorney was indicted and convicted in federal court for offenses arising from an automobile accident that took place while he was a judge. He made false assertions that resulted in insurance payments of $370,000 and $50,000. He used his judicial letterhead and referred to his judicial office in the insurance matter.
Jonathan Turley had this report on the trial:
Presiding judge Senior U.S. District Judge Maurice B. Cohill Jr. agreed that the publicity surrounded the trial could taint the jury pool and moved the trial to Pittsburgh. The prosecution will focus on actions taken before and after the August 2001 slow-speed collision that Joyce said left him severely injured. The accident brought Joyce $440,000 in an insurance settlement.
The case is likely to bring out some rather bizarre elements, such as the fact that Joyce was basically living in his chambers before the accident after breaking up with his girlfriend and telling his landlord that he could only afford $100 a month in rent.
After the accident, however, the prosecution alleges that Joyce went on a spending spree buying a Harley-Davidson motorcycle, a plane, a house and a hot tub, and spending $6,000 for cosmetic surgery for his girlfriend. The prosecutors will also show that Joyce went in-line skating at Presque Isle State Park on Sept. 2, 2002, while his insurance claims claimed that he was severely injured with debilitating neck and back injuries.
Erie Insurance settled Joyce’s claim within three months and most notably never demanded an independent medical examination.
The case will also involve a claim of being an “eggshell thin skull” claimant — saying that, while the accident was at a low speed, he was susceptible to severe because he had undergone cervical-fusion surgery in 1992. It could be a stretch since the accident occurred at the not-so-break-neck speed of 5 miles an hour.
The evidence at trial and the sentencing was summarized by the FBI:
Evidence presented at trial established that Joyce falsely claimed to Erie Insurance Group and/or State Farm Insurance that the accident had adverse effects on his professional and personal life, including rendering him unable to golf, scuba dive, and exercise and preventing him from pursuing higher judicial office.
During the same time period that Joyce made these claims, he played multiple rounds of golf in Runaway Bay, Jamaica; Tampa, Florida; Findley Lake, New York; and Fairview, Pennsylvania; went scuba diving in Runaway Bay, Jamaica and renewed his diving instructor certificate with the Professional Association of Diving Instructors; went roller blading on multiple occasions; and exercised at the Nautilus Fitness and Racquet Club in Millcreek Township. Also, between April 2002, and October 2002, Joyce applied for and received a private pilot’s license from the Federal Aviation Administration and piloted an airplane on approximately 50 occasions. In addition, Joyce, in support of his claims, falsely asserted that he had received the Republican endorsement and nomination in the 2001 election for a seat on the Pennsylvania Supreme Court in 2002. In fact, he had neither the endorsement nor the nomination.
Additional evidence at trial established that Joyce received two payments totaling $440,000 from insurers: $50,000 from State Farm Insurance in settlement of his bodily injury insurance claim relative to the August 10, 2001, accident and $390,000 from Erie Insurance Group in settlement of an insurance claim under the underinsured motorist provision of his own automobile coverage relative to the accident. After receiving the Erie Insurance payment, Joyce used the fraudulently obtained funds to open an individual brokerage account, through which he purchased real property in Millcreek Township interest in a 1978 Cessna 206 airplane and a Harley‑Davidson motorcycle.
As part of his sentence, Judge Cohill ordered Joyce to surrender real property in Erie, Pennsylvania and vehicles, including a 2003 Harley-Davidson.
GoErie.com reported that the former judge has sued the insurance companies. (Mike Frisch)
Friday, June 15, 2012
An Illinois Hearing Board has recommended a censure in a matter that involved ex parte communications with a friend who was serving as a purportedly neutral arbitrator:
The Respondent's misconduct was serious. The Respondent's exchange of e-mails, on an ex parte basis, with Workers' Compensation Commission Arbitrator Jennifer Teague, was prejudicial to the administration of justice in two workers' compensation matters. Certainly, the bedrock of any legal proceeding or system of justice is a fair and impartial presiding official, either a judicial or administrative official. The ex parte communications between the Respondent and Teague made it appear that Teague was not fair and impartial. In such a situation, public confidence in the Workers Compensation Commission is jeopardized, if not destroyed.
As to sanction:
In aggravation, the Respondent did not show any recognition or understanding of her misconduct. Likewise, she showed no remorse. In In re Mason, 122 Ill. 2d 163, 173-74, 522 N.E.2d 1233 (1988), the Court stated:
An attorney's failure to recognize the wrongfulness of his conduct often necessitates a greater degree of discipline than is otherwise necessary, in order that the attorney will come to appreciate the wrongfulness of his conduct and not again victimize members of the public with such misconduct.
See also In re Lewis, 138 Ill. 2d 310, 348, 562, N.E.2d 198 (1990) (lack of remorse is an aggravating factor).
There is also mitigation in this case. The Respondent has been licensed to practice law in Illinois since May 2007, and has no prior discipline. Also, she was fully cooperative with the ARDC throughout her disciplinary proceedings. We also considered the Respondent's lack of experience as an attorney and her misguided friendship with Arbitrator Teague as factors that contributed to her lapses in sound judgment in regard to the ex parte e-mails. See In re Armentrout, 99 Ill. 2d 242, 254, 457 N.E.2d 1262 (1983). Further, a partner in the law firm where Respondent's was previously employed testified that she has a favorable reputation for being an honest and ethical attorney.
The board noted the disposition of another case involving improper communications with the same arbitrator.
ABA Journal had this earlier coverage. (Mike Frisch)
An attorney who is "no stranger" to professional discipline has been indefinitely suspended for at least two years by the Iowa Supreme Court.
The court imposed discipline based on a stipulation of the parties. The court reviewed the stipulation to determine both misconduct and sanction.
The evidence showed neglect, escrow violations and other misconduct.
Some of the client matters were active when the attorney had suffered a heart attack and underwent open heart surgery. The stipulation included allegations that he failed to withdraw due to his physical condition.
The court rejected the mandatory withdrawal charges:
...given [the attorney's] habitual neglect of client matters, the Board has failed to establish that [his] heart attack and subsequent surgery, and not his dilatory nature, caused him not to file [the client's] petition...It is possible [the attorney] would have failed to file [her] petition prior to [the petition of the client's spouse] even if he...did not have a heart attack.
The court noted that there is "very little case law" on the mandatory withdrawl provisions of Rule 1.16 based on physical condition of an attorney.
This is likely because such matters usually result in a disability suspension or voluntary retirement from practice. (Mike Frisch)
The New York Appellate Division for the First Judicial Department has imposed reciprocal discipline of a two-year suspension with reinstatement conditioned on proof of fitness in connection with matters investigated and sanctioned by the federal district and circuit courts.
The circuit court investigated neglect of appellate matters and imposed a six-month suspension. The court also ordered that the attorney not be appointed to CJA cases for a year.
The district court matter involved the following:
While the disciplinary proceeding was pending in the Second Circuit, an investigator appointed by the Southern District's Committee on Grievances (COG) was investigating allegations that respondent had been improperly soliciting inmates at certain detention facilities who were already represented by counsel, and improperly paying inmates for client referrals. The referral payments were allegedly made by respondent or his employees by making deposits into inmates' commissary accounts. Between August 2004 and February 2010, respondent allegedly made 139 deposits to 36 inmates totaling $17,905.
In July 2009, respondent admitted in a deposition that, inter alia, he did not maintain any [*3]escrow accounts for the handling of client funds in connection with his law practice. Rather, respondent used his personal checking account to handle both personal and client funds. Based on that testimony, the Southern District issued an order to show cause directing respondent to account for his apparent failures to segregate his personal funds from client funds and to maintain detailed records of transactions involving client funds. In April 2010, respondent submitted a response in which, according to the court, he failed to demonstrate compliance with DR 9-102's segregation and record keeping requirements...
In December 2010, respondent appeared for his continued deposition with counsel. During the deposition respondent testified that from 2003 to 2010, he did not maintain any detailed records for the personal checking account out of which he made deposits into inmates' commissary accounts. Respondent also testified that his bank statements for the account had been destroyed as a result of flooding in his basement in 2005 and 2007. The investigator questioned respondent in detail as to the deposits he made into the commissary accounts (which were for clients and non-clients). Respondent testified that he could not remember the details of many of the deposits, and, in some instances, he was simply making gifts of financial assistance.
Thereafter the Southern District directed respondent to demonstrate why it should not take disciplinary action against him based on admissions made during his deposition. Respondent submitted a response claiming that his bookkeeping failures were the result of a tumultuous personal life that included: a difficult divorce from his former wife, who for years suffered from personal problems; having to be the sole care provider for his three sons; and his own struggles with Attention Deficit Hyperactivity Disorder and prostate cancer. Respondent also argued that he had already suffered substantial professional hardship as a result of his interim suspension and urged the court not to censure, suspend, or disbar.
The court here found no basis to depart from the sanction imposed by the Southern District, which had found escrow and other violations. It does not appear that the Southern District found misconduct in the solicitation of clients or payment of referral fees. (Mike Frisch)
From the Ohio Supreme Court:
Law firm letterhead and websites may list the names of non-lawyer employees if their status is clearly identified, according to a Supreme Court of Ohio Board of Commissioners on Grievances & Discipline advisory opinion.
Opinion 2012-2 departs from a previous advisory opinion issued by the board, so Advisory Opinion 89-16 is withdrawn.
The board’s 1989 opinion did not discuss law firms communicating with clients and the public via their websites. The opinion did, however, find that the inclusion of non-lawyers on letterhead was prohibited, but their inclusion on business cards was proper.
In revisiting its 23-year-old advice, the board considered Rules 7.1 and 7.5(a) of the Ohio Rules of Professional Conduct and the standard that “law firm letterhead and websites cannot be false or misleading, or contain a non-verifiable communication about a lawyer or the lawyer’s services.”
The board reiterated that firm business cards may identify non-lawyer employees.
Read the complete text of the opinion.
Thursday, June 14, 2012
A recent complaint filed by the Illinois Administrator alleges some rather unusual behavior on the part of an attorney. The client was injured in a class for physical training teachers and had a claim for worker's compensation.
The complaint states that the representation began in the following manner:
In or about January 2010, [client] Klein met Respondent while visiting The Shire Public House, a bar that Respondent co-owned and which was located on Lincoln Avenue in Chicago. Respondent heard Klein speaking to a friend about her worker’s compensation claim, interrupted Klein’s conversation, introduced himself as a worker’s compensation attorney, and gave Klein his business card.
Between January 2010 and May 2010, Klein received medical care for the injuries she sustained on November 11, 2009. In or about May 2010, Klein contacted Respondent, and Respondent agreed to represent her in relation to her worker’s compensation claim arising out of the November 11, 2009 incident. Respondent and Klein agreed that Respondent would receive 20 percent of any recovery derived from the claim as his fee.
The client received compensation payments for a period of time. After the payments stopped, the attorney was able to obtain two $2,500 payments from the employer's insurer.
After September 30, 2010, Respondent stopped communicating with [insurer] Travelers. In the fall of 2010, Respondent falsely told Klein that Travelers had begun sending Klein’s temporary total disability benefits to him. Respondent knew that his statement to that effect was false, and that Travelers had not sent him any funds due to Klein. On an almost weekly basis between November 2010 and March 2011, Respondent met Klein at her residence, and he paid her $200 to $300 in cash on each occasion. Respondent falsely told Klein that the cash payments represented funds sent to him by Travelers.
The complaint goes on to allege a series of false statements to the client about the status of the claim, including:
As of March 2011, no legal proceeding was pending in connection with Klein’s worker’s compensation claim. In or about early March 2011, Respondent falsely told Klein that a trial date had been set in relation to her claim against XSport. Respondent met with Klein at a Starbucks in Lincoln Square to prepare her to testify at that purported trial date. In or about mid-March 2011, Respondent caused Klein to appear at the Thompson Center for the purported trial in her worker’s compensation matter. Respondent met Klein in the foyer of the Thompson Center and falsely told Klein that the other parties had arrived early and that her matter had been continued prior to her arrival. In fact, as Respondent knew, no proceeding was pending in relation to Klein’s claim, and no trial date had been set or continued. Shortly thereafter, Respondent stopped providing weekly cash payments to Klein.
The complaint also alleges failure to cooperate with the bar complaint process. (Mike Frisch)
The Nevada Supreme Court has remanded a matter for an evidentiary hearing on the sufficiency of screening measures. The disqualified attorney served as a settlement judge in an appeal. A partner of the settlement judge entered an appearance for one of the parties after settlement talks failed. The other party objected.
The court sets forth the facts:
Although the Nevada Rules of Professional Conduct (RPC) permit the screening of disqualified attorneys to prevent an associated law firm’s imputed disqualification in some cases, RPC 1.10(e); 1.11(b); 1.12(c), we have never considered whether screening is appropriate with regard to a settlement judge acting under this court’s settlement conference program or how to determine the sufficiency of any screening measures utilized. We take this opportunity to consider the practice of attorney screening to cure imputed disqualification.
The parties agree that supreme court settlement judge Nicholas Frey is disqualified from representing respondent Amador Stage Lines, Inc., in the present matter. Pursuant to RPC 1.12(c), Frey’s disqualification is imputed to the remaining members of his law firm, Woodburn and Wedge, but the parties disagree on whether screening may be utilized to cure the imputed disqualification. In order to resolve appellant Ryan’s Express Transportation Services, Inc.’s pending motion to disqualify Woodburn and Wedge from representing Amador in this appeal, we must consider whether screening may be used to cure imputed disqualification in this situation and whether the screening measures taken by Woodburn and Wedge are sufficient.
However, because we conclude that more facts are necessary for us to consider the sufficiency of Woodburn and Wedge’s screening measures, we defer ruling on the motion to disqualify and remand this matter to the district court for the limited purpose of conducting an evidentiary hearing and entering written findings of fact and conclusions of law regarding the adequacy of the screening.
When presented with a dispute over whether a lawyer has been properly screened, Nevada courts should conduct an evidentiary hearing to determine the adequacy and timeliness of the screening measures on a case-by-case basis. The burden of proof is upon the party seeking to cure an imputed disqualification with screening to demonstrate that the use of screening is appropriate for the situation and that the disqualified attorney is timely and properly screened.
When considering whether the screening measures implemented are adequate, courts are to be guided by the following nonexhaustive list of factors:
(1) instructions given to ban the exchange of information between the disqualified attorney and other members of the firm;
(2) restricted access to files and other information about the case;
(3) the size of the law firm and its structural divisions;
(4) the likelihood of contact between the quarantined lawyer and other members of the firm; and
(5) the timing of the screening.
As with motions to disqualify, the consideration of the adequacy of screening is within the sound discretion of the district court, LaSalle, 703 F.2d at 256; however, the district court must justify its determination as to the adequacy of the screening in a written order with specific findings of fact and conclusions of law.
The hearing on remand will address the adequacy of the screening measures. (Mike Frisch)
The Oregon Supreme Court entered an order suspending an attorney for 18 months for misconduct in four matters.
The court rejected the Bar's request for a restitution order.
As to its reasoning:
An explanation of the extensive facts related to the four matters underlying the proceedings and of the appropriateness of the sanction would not benefit the bench, bar, or public.
A recent judicial ethics opinion from Florida:
Whether a judge may accept a position on the board of directors of a private not-for-profit corporation to be organized to administer “52 million DCF dollars” by contracting with one or more third parties as part of “the privatization of the DCF funds”?
The inquiring judge has been asked to serve on the board of directors of a “managing entity,” a non-profit corporation to be organized to bid for the right to administer state moneys now or recently administered by the Florida Department of Children and Family Services. Only if the bid succeeds would the managing entity “be active.”
If the bid does succeed, the managing entity “would be in essence a governing entity that would contract with a [named] vendor.”
The inquiring judge was approached because of the judge’s “extensive experience with behavioral health needs” in the judge’s community. One of the organizers also wrote that “DCF strongly wishes to have a Board of Directors made up of viable community leaders,” and that a “judge is a very strong addition to the board demographics.”
In the present case the organizers of the managing entity are explicit about their desire to use the prestige of judicial office to advance the interests both of the managing entity and of the named vendor. After explaining that the managing entity “will compete for the contract” that the Department of Children and Family Services was expected to let, the letter soliciting the inquiring judge’s participation stated: “DCF strongly wishes to have a Board of Directors made up of viable community leaders. A judge is a very strong addition to the board demographics.”
The Ohio Supreme Court has permanently disbarred an attorney who was admitted in 2002 "based upon findings that [the attorney] had failed to answer disciplinary counsel's 30-count complaint and has committed nearly 300 violations of the [ethical and court rules]..."
The misconduct "spanned more than four and a half years and involved numerous instances of missappropriation, totalling more than $35,000."
A master commissioner had found no mitigating factors. Although the attorney had serious mental-health and addiction issues, there was no evidence of treatment or recovery.
The attorney was suspended in April 2011 based on the allegations. (Mike Frisch)
From the web page of the Ohio Supreme Court:
In an advisory opinion issued last week, the Supreme Court of Ohio Board of Commissioners on Grievances & Discipline found that a legal but secret recording of a conversation by a lawyer is not inherently unethical. A previous advisory opinion issued on the topic has been withdrawn because it found the action to be misconduct.
The board based its new approach on the American Bar Association (ABA) reversing its position on the issue in 2001, case law from Ohio and other states, and a “diminished expectation of privacy given advances in technology.”
Opinion 2012-1 centers on Rule 8.4 (c) (conduct involving dishonesty, fraud, deceit, or misrepresentation) of the Ohio Rules of Professional Conduct.
The advisory opinion includes several caveats for lawyers engaging in this activity.
“Although the Board is fashioning a new standard for surreptitious recording by Ohio lawyers, the Board is not in any way indicating that a lawyer cannot be disciplined for conduct involving such recording,” the opinion states.
“The mere act of surreptitiously or secretly recording a conversation should not be the impetus for a charge of misconduct. Instead, the totality of the circumstances surrounding the recording must be evaluated to determine whether a lawyer has engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation in violation of Prof. Cond. R. 8.4 (c).”
In addition, the board noted it “agrees with the ABA’s general admonition against surreptitious recording of client conversations.” The board found that lawyers generally should not record their conversations with clients and prospective clients without consent.
Read the complete text of the opinion.
A justice of the Massachusetts Supreme Judicial Court has denied a petition for reinstatement of an attorney who had been suspended for 18 months.
The suspension was a result of the petitioner's false representation on a HUD-1 that "buyers had made down payments when they purchased their condominiums."
The justice was "troubled" by the fact that the petitioner applied to the Bank of America for a position as a loan officer but failed disclose the suspension "for conduct that reasonably characterized as bank fraud." He also failed to disclose to BOA that Freddie Mac had put him on a list that prohibited his participation on mortgage transactions sold on the secondary market.
The peitioner is awaiting trial on federal charges for the conduct that led to the suspension. (Mike Frisch)
Convicted child molester William Jacobs agreed to disbarment yesterday, according to a press release issued by the Office of Lawyers Professional Responsibility.
Jacobs, a former teacher and one-time Minneapolis Parks Police chief, pled guilty to molesting children last month and was sentenced to 18 years in prison. Dozens of boys reported Jacobs' crimes to authorities, who discovered over 140,000 images of child pornography on his computer.
The disgraced ex-lawman was first admitted into the bar in May 1983, although he has now been disbarred due to his criminal sexual convictions.
After Jacobs' sentencing last month, Hennepin County Attorney Mike Freeman seemed to celebrate the likelihood that Jacobs would die in prison. From our coverage at the time:
"Mr. Jacobs is now gone," Hennepin County Attorney Mike Freeman said. "Eighteen years, folks, is a long time, and 10 years probation -- he's 68. You can do the math. It's what he deserves. You are responsible for what you do, with some exceptions. Mr. Jacobs doesn't fit those exceptions."
Wednesday, June 13, 2012
The West Virginia Supreme Court of Appeals affirmed the suspension without pay of a Kanawha County Magistrate pending judicial disciplinary proceedings.
The court noted that the suspension was imposed after a probable cause finding of serious violations of the Code of Judicial Conduct in five matters.
One count involves a citation for possession of Xanax that the magistrate had dismissed "without input or knowledge of any county prosecuting attorney or the State Trooper who issued the ticket."
The magistrate shortly thereafter hired the cited defendant to work at her residence. The employee used the magistrate's car and drove it in a manner that drew police attention. The officer who stopped her saw her push a prescription bottle into her purse. The purse also contained marijuana.
The magistrate contacted the court to try to get the employee released on personal recognizance.
Another count involves a defendant arrested for felony receiving stolen property. The magistrate asked the defendant to "do some concrete work at her house" during the preliminary hearing.
The magistrate was admonished twice in 2004. One admonishment involved her "issuing a protective order from her home for a neoighbor/tenant." The other involved advertising her notary services in the telephone book.
She was admonished again in 2011 "for helping a friend draft a peace bond on which the magistrate later found probable cause to issue."
She was censured in 2001 for "using a racial epithet in the courtroom."
The court observed that it was not resolving the merits of the charges and was sympathetic to the financial hardship of a suspension without pay, "but our primary duty is to defend the integrity of the judicial system." (Mike Frisch)
The New York Appellate Division for the First Judicial Department affirmed the denial a former client's motion to dismiss to suit for legal fees, other than a claim of fraudulent inducement. The court also affirmed the denial of a motion to disqualify the plaintiff law firm from representing itself in the litigation.
The majority concluded:
It is well settled that "[t]he public policy of New York which permits a
client to terminate the attorney-client relationship freely at any time,
notwithstanding the existence of a particularized retainer agreement between the
parties, would be easily undermined if an attorney could hold a client liable
for fraud on the theory that the client misrepresented his or her true intent
when the retainer was executed" (Demov, Morris, Levin & Shein v
Glantz, 53 NY2d 553, 557 ). Accordingly, the motion court erred in
failing to dismiss plaintiff's cause of action for fraudulent inducement against
both the corporate and the individual defendant (Kaplan v. Heinfling, 136
AD2d 34, 39 , lv denied 72 NY2d 810 ).
The court correctly declined to dismiss the complaint pursuant to CPLR
3211(a)(4), because "[t]he three remedies of an attorney discharged without
cause — the retaining lien, the charging lien, and the plenary action in quantum
meruit — are not exclusive but cumulative" (see Levy v Laing, 43 AD3d 713, 715 ), and the attorney "does not waive her right to commence an immediate plenary action for a
judgment against her client by commencing a proceeding to fix the amount of her
charging lien" (Butler, Fitzgerald & Potter v Gelmin, 235 AD2d 218, 219 ). Moreover, "an attorney may enforce his lien in a court other than that before which his services were rendered" (see Nickel Rim Mines Ltd. v Universal-Cyclops Steel Corp., 202 F Supp 170, 176 [D NJ 1962]).
Contrary to the dissent's contention, the court also correctly declined to
dismiss plaintiff's cause of action for quantum meruit pursuant to CPLR
3211(a)(7). Plaintiff alleges that it was terminated without cause by
defendants, and received no compensation whatsoever for the three years of work
it performed on the case and the value it brought to the case. Specifically,
within its complaint, plaintiff pleaded that it "fully and faithfully performed
legal services for BanxCorp and Mehl," that when it "performed those legal
services for BanxCorp and Mehl, it reasonably expected to be compensated for
those services," that "BanxCorp and Mehl encouraged the [plaintiff] to provide them with legal services, participated in the [plaintiff's] provision of such services, and accepted the
benefits of the legal services the [plaintiff] provided to them," and that the
services "were rendered under circumstances in which BanxCorp and Mehl knew that
the [plaintiff] expected to be compensated for those services." Since a
plaintiff pleads a cause of action for quantum meruit when he alleges that (1)
services were performed in good faith, (2) the acceptance of the services by the
person to whom they were rendered, (3) an expectation of compensation therefor,
and (4) the reasonable value of the services (Fulbright & Jaworski, LLP v Carucci, 63 AD3d 487,
489 ; Nabi v Sells, 70 AD3d 252, 252 ; Soumayah v Minnelli, 41 AD3d 390, 391 ), based on the foregoing, plaintiff has adequately pleaded a cause of action for quantum
meruit against all the defendants. Fulbright doesn't avail Mehl since
there we dismissed plaintiff's cause of action for quantum meruit against the
corporate defendant's president insofar as plaintiff in that case failed to
allege three elements critical to a cause of action for quantum meruit
(Fulbright at 489).
From the dissent in part:
Plaintiff, a law firm, seeks to recover the reasonable value of services it
rendered while representing defendant BanxCorp, the plaintiff in BanxCorp v
Bankrate, Inc., an antitrust action that was filed in the United States
District Court for the District of New Jersey (Civil Action No. 07-3398).
Plaintiff rendered its services pursuant to a written contingency fee agreement
that was executed on behalf of BanxCorp by Mehl, its principal. The motion court
declined to dismiss the complaint as against Mehl on the sole ground that "a
corporate officer who participates in the commission of a tort can be held
personally liable even if the participation is for the corporation's benefit." Although it might have applied to the now dismissed fraud cause of action, the motion court's reasoning
has no application to the quantum meruit claim, the only remaining cause of
action. This is because quantum meruit is not a theory of tort liability.
Plaintiff's rationale for piercing BanxCorp's corporate veil is equally
unavailing. "The party seeking to pierce the corporate veil must establish that
the owners, through their dominion, abused the privilege of doing business in
the corporate form to perpetrate a wrong or injustice against that party such
that a court in equity will intervene" (Matter of Morris v New York State
Dept. of Taxation & Fin., 82 NY2d 135, 142 ). An inference of
abuse, however, does not arise "where a corporation was formed for legal
purposes or is engaged in legitimate business" (Credit Suisse First Boston v Utrecht-America Fin. Co., 80 AD3d 485, 488  [citation omitted]). Here, plaintiff makes no claim of
such illegality or illegitimacy with respect to BanxCorp's formation or
business. In fact, it is alleged in the antitrust complaint, drafted by
plaintiff, that BanxCorp is in the business of providing bank rate tables
listing interest rates for financial institutions (see BanxCorp v Bankrate,
US Dist Ct, D NJ, 07 Civ 3398, Wigenton, J., 2008). Plaintiff seeks to
pierce the corporate veil on the basis of assertions that Mehl dominated
BanxCorp and used its credit lines for his personal needs. These allegations do
not amount to anything that can be construed as the use of BanxCorp's corporate
form to perpetrate a wrong against plaintiff. This case is similar to Fulbright & Jaworski, LLP v
Carucci (63 AD3d 487 ), in which this Court found that a quantum meruit claim against its corporate client's president was not stated. Here, as in Fulbright, there is no allegation of facts from which it can be inferred that Mehl, as an individual, accepted services from plaintiff or that plaintiff had a reasonable expectation of compensation by Mehl. Without doubt, Mehl himself could not collect on any judgment that might be entered in favor of BanxCorp in the antitrust action as a result of plaintiff's services.
The New Jersey Supreme Court has reprimanded an associate attorney who mishandled a matter and made misrepresentations to the client.
The Disciplinary Review Board ("DRB") described the circumstances:
Respondent, an associate attorney in a law office owned by [another attorney], was assigned a case that involved legal issues with which he was unfamiliar. Instead of seeking [the other attorney's] advice or advising the supervising attorney that he could not handle the case, in September 2006, respondent filed a complaint in the wrong court. When the complaint was dismissed for lack of jurisdiction in 2008, respondent "buried his head in the sand," taking no further action over the next eleven months to re-file the complaint in the proper forum....
The DRB noted that the attorney was not charged with misrepresentations to the client, but treated the conduct as an aggravating factor:
...on numerous occasions over the eleven months following the dismissal, respondent told his client a series of lies in order to obscure the actual status of the case. He even sent her a fabricated release for a supposed settlement, rather than tell her that the complaint had been dismissed. He also wrote two letters to third parties on behalf of [the client's] children, one to a school and the other to a landlord, falsely advising them that they could expect funds shortly out of a settlement that did not exist.
The attorney self-reported the misconduct, has undertaken to make restitution and expressed remorse. (Mike Frisch)
An attorney who engaged in negligent misappropriation and defaulted in the ensuing bar discipline proceedings has been censured by the New Jersey Supreme Court.
The court followed the recommendation of the Disciplinary Review Board, which noted that the attorney had been privately reprimanded in 1990 and admonished in 2009.
The private reprimand involved a false atatement to a third person. The admonition was for notarizing a deed signed outside his presence.
The board found that "[t]his is not a case involving compelling mitigating factors that warrant the reduction of a reprimand to an admonition" and that "the default nature of these proceedings warrants enhancement of the appropriate form of discipline (reprimand) for respondent's violations."
The attorney must submit his trust and business reconciliations to disciplinary authorities within 90 days and provide quarterly reconciliations of his attorney records for two years.
When an attorney mishandles his trust account, defaults in the bar proceedings and has a record of prior discipline, he can be considered fortunate to avoid suspension. (Mike Frisch)
Tuesday, June 12, 2012
The New Jersey Supreme Court followed the sanction recommendation of its Disciplinary Review Board and has reprimanded an attorney who engaged in negligent missappropriation and failure to supervise a non-attorney employee.
The attorney spent a lot of time abroad in Greece. The person who acted as his bookkeeper and had learned his business practices took $142,000 from his business account over the period from February to July of 2009.
The attorney admitted that he had failed to heed "telltale signs" that the bookkeeper was "up to no good." He restored the misappropriated funds and showed remorse.
Two DRB members favored the lesser sanction of admonition. (Mike Frisch)
A recent Nebraska Ethics Advisory Opinion overrules an earlier opinion regarding retention/disposal of client files. The new opinion relies on changes in the rules of conduct.
The opinion concludes that client files may be destroyed five years after the end of the representation. The attorney is obligated to make reasonable efforts to contact the client before the files are discarded, which may include Facebook and Goggle searches. If there are documents of value, it may be appropriate to hire a private investigator or attempt to contact the client by publication.
The effort required to contact the client is "proportionate with the value and importance of the file materials..." (Mike Frisch)
This blog regularly reports on charges filed by disciplinary counsel against an attorney. So far as I am aware, the web page of the North Carolina State Bar is the only place that provides online access to the attorney's response.
A recent case filed against two attorneys who practiced together alleges that they engaged in criminal conduct and conflicts of interest as closing attorneys on real estate loans.
The responsive pleading filed on behalf of the attorneys moves to dismiss the charges, raises several affirmative defenses, and admits or denies the allegations in detail. The defense contends that the State Bar failed to allege fraud with the specificity required by the rules of civil procedure.
The defense describes the attorneys as victims of fraud rather than its perpetrators. They contend that discipline is barred due to the intervening and superseding negligence or fraud on the part of the lender banks. It is also contended that discipline is barred by the doctrine of accord and satisfaction.
Attached to the pleading is a complaint filed by the Federal Deposit Insurance Corporation.
The web page also gives the time and place of the public hearing.
I applaud the practice of having bar discipline hearings conducted at a law school with students being given the opportunity (or even being required) to learn about the bar's processes up close and personal. That might be a valuable lesson.
The North Carolina State Bar is the gold standard of public access to this kind of information. Every other bar should follow its example. (Mike Frisch)