Friday, April 29, 2016

California Earthquake

Andrew Strickler at Law360 reports

California’s top disciplinary trial counsel, Jayne Kim, announced her pending resignation Thursday following a tumultuous five-year tour.

The resignation of the bar’s chief prosecutor comes despite a trustee vote in December approving Kim’s appointment for a second term. The bar said in a statement that she had previously voiced a desire to leave the Office of Chief Trial Counsel.

“Jayne has only stayed on as chief trial counsel this long because the board asked her to see us through a period of tremendous evolution and transformation,” said bar president David Pasternak. “Our new leadership team is now solidly in place and has profited tremendously from her steady hand at the helm of the OCTC.”

Kim, who was a state bar prosecutor before leaving to be an Assistant U.S. Attorney in Los Angeles, took the top counsel spot in 2011 under then-director Joseph Dunn.

Facing a disciplinary system with large case backlogs and pledges by Dunn to right the course, Kim promised a “zero/zero” goal of no backlogged disciplinary cases and a zero-tolerance approach to attorney disciplinary breaches.

But by the fall of 2014, Dunn had been fired and filed suit against executive director Craig Holden and the bar, alleging he was terminated for exposing a “massive cover-up” of ethics breaches and the removal of backlogged disciplinary cases from public records. The suit pointed to Kim as a central player in the alleged purge.

The bar later argued that an investigation and report prepared by Munger Tolles & Olson LLP found serious misconduct justifying Dunn's firing, including misleading the board about travel expenditures.

Last summer, Dunn lost his bid to keep his state court action out of arbitration. That led to a decision by a JAMS arbitrator earlier this month thatgutted Dunn’s claims.

While Dunn’s Labor Code claim against the bar was tossed with leave to amend, arbitrator Hon. Edward A. Infante found a breach of fiduciary duty claim related to the firing was futile.

Infante also tossed with prejudice Dunn’s allegations that Holden and the board of trustees breached their fiduciary duty to not leak information from a confidential report to the press. He granted Dunn leave to amend the same claim against the bar.

Dunn’s attorney, Mark J. Geragos of Geragos & Geragos PLC, said then that his client would take advantage of the leave to amend and said the defendants would be at a scheduled arbitration in August.

Assistant Chief Trial Counsel Gregory Dresser will serve as acting chief trial counsel during the search for a new chief.

“This is the right time for me to move on,” Kim said. “In declining to seek reappointment I leave with a strong sense of accomplishment and confidence that the bar is on the right track to become an exemplary model of a mission-driven agency.”

— Additional reporting by Dani Meyer and Michael Lipkin. Editing by Ben Guilfoy.

Casey Sullivan at Findlaw's California Case File had a story on January 2016 reappointment of Ms. Kim. (Mike Frisch)

April 29, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Consecutive Suspension For Neglect Of Court-Appointed Clients

The Wisconsin Supreme Court has suspended  for an additional year an attorney already suspended for two years

Attorney Hicks focused his practice primarily on representing indigent defendants in criminal cases through appointments either by the Office of the State Public Defender (SPD) or the court in which the case was pending. After acknowledging the appointment, Attorney Hicks often ignored his clients' requests for information for substantial periods of time and often failed to follow through on necessary actions for the clients' defense. When a grievance was subsequently filed with the OLR, Attorney Hicks either failed to provide any initial response to the OLR or he failed to respond to the OLR's requests for further information.

The referee considered his explanation

he had alleged that during 2012 and early 2013, he had been suffering from significant health problems. Attorney Hicks asserted that those medical conditions had prevented him from working as many hours as he needed to represent his clients properly. The referee found, however, that aside from his personal testimony at the sanction hearing, Attorney Hicks had not offered any evidence to support his claims that he had suffered severe medical problems and that those conditions had been a cause of his failures to serve his clients properly.

The referee rejected Attorney Hicks' claim that his medical conditions had prevented him from meeting his ethical obligations to his clients. The referee noted that there was no testimony that Attorney Hicks had been forced to take a leave of absence or had been unavailable in his practice for extended periods of time. On the other hand, there were extended periods of time during these representations when Attorney Hicks had little or no contact with his clients. Further, Attorney Hicks also again claimed in his plea of no contest that he had an overwhelming caseload during the relevant time period. The referee noted that Attorney Hicks had been able to handle many other criminal cases in which there were court hearings. Given that fact, the referee could not accept that Attorney Hicks' medical conditions had actually caused the lapses in diligence and communication for the four clients whose cases were the subjects of this proceeding.


we conclude that an additional one-year suspension is an appropriate level of discipline to impose in this case. We make that one-year suspension consecutive to the two-year suspension imposed in Hicks II.

(Mike Frisch)

April 29, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Thursday, April 28, 2016

Trojan War

A tri-county panel of the Michigan Bar Discipline Board has imposed a suspension of an attorney

Respondent did not appear at the hearing and was found to be in default for her failure to file an answer to the formal complaint. Based on respondent's default, the hearing panel found that respondent engaged in undignified or discourteous conduct toward the tribunal, in violation of MRPC 3.5(d); failed to treat others in the legal process with courtesy and respect, in violation of MRPC 6.5(a); engaged in conduct that is a violation of the criminal law, where such conduct reflects adversely on the lawyer's fitness to practice law, in violation of MRPC 8.4(b); and, engaged in conduct that violates the criminal law of a state, in violation of MCR 9.105(5). The panel also found that respondent violated MRPC 8.4(a) and (c) and MCR 9.104(1)-(4).

 Troy Patch had a story

An attorney in Troy faces felony charges, accused of assaulting Macomb County Sheriff's deputies at the county courthouse last fall stemming from a bitter dispute with her ex-husband.

Cynthia Lardner, 53, formerly of Sterling Heights, was arraigned last week on on one count of assault on a police officer causing injury, five counts of assaulting a police officer and/or resisting arrest and one count of disturbing the peace, according to court documents. Lardner pleaded not guilty through her attorney, Elias Muawad. She is free on a $5,000 personal bond.

Macomb County Sheriff's Department Lt. John Michalke said that Lardner became disorderly during an Oct. 10 hearing for her custody case with a Friend of the Court referee. One deputy was treated for minor injuries, Michalke said.

The charge of assault causing injury is punishable by up to four years in prison while the five additional resisting/assault counts are punishable by up to two years in prison.

Lardner will return to court for pretrial on Sept. 4. According to the State Bar of Michigan website, Lardner is a therapist, counselor and educational consultant who was licensed as an attorney in 1984.

Court records show she and Michael Lardner married in 1994 and that Michael Lardner filed for divorce in 2002. A personal protection order sought in 2004 by Cynthia Lardner against her ex-husband was denied by a judge. 

Court records show that the couple have three children together; a 17-year-old daughter, a 15-year-old son, and a 14-year-old daughter.

(Mike Frisch)

April 28, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Stayed Suspension For Attorney Who Cooperated In Bribery Investigation

Dan Trevas has a summary of a disciplinary case on the web page of the Ohio Supreme Court

Willoughby Attorney Hector G. Martinez Jr., who admitted to participating in an attempted bribery scheme connected with Cleveland Attorney Anthony O. Calabrese III, received a six-month stayed suspension from the practice of law from the Ohio Supreme Court today.

The Supreme Court voted 4-3 to suspend Martinez for six months, and stayed the suspension on the condition he engage in no further misconduct.  In a dissenting opinion, Justice Terrence O’Donnell stated he would have suspended Martinez’s license for one year.

Participated in Bribery Scheme
In its per curiam decision, the Court found that Martinez, the Office of Disciplinary Counsel, and the Board of Professional Conduct stipulated to the facts that led to charging Martinez with four counts of violating the rules governing attorneys, and they agreed to the mitigating circumstances presented on Martinez’s behalf.

In November 2011, a woman referred to in court documents as “L.A.” retained Martinez to obtain a civil protection order against Thomas Castro who had sexually assaulted and stalked her. Castro consented to the order, and Martinez and L.A. met with a detective to discuss the criminal assault. Castro was later indicted on several counts of rape and sexual battery involving L.A. and several other women.

With L.A.’s authorization, Martinez informed the prosecutor that L.A. did not want to pursue charges against Castro, and his representation came to an end.  He later contacted L.A. to inform her that Castro had pleaded guilty in his criminal case.

Before Castro was sentenced, his attorney, Calabrese, spoke to Martinez about L.A. Calabrese at the time was under federal indictment for crimes of racketeering, conspiracy, bribery, and fraud. He told Martinez that Castro was willing to settle any civil claims that L.A. might bring if she would write a favorable letter to the sentencing judge.

 At the time, L.A. had not discussed a civil lawsuit against Castro with Martinez. But based on his conversation with Calabrese, Martinez believed that Castro would pay L.A. a monetary settlement if she would request that the sentencing judge not send Castro to jail.  After he informed L.A. that another Castro victim had received a settlement, she authorized him to pursue one on her behalf.

L.A. rejected the initial settlement offer indicating she intended to write “a bad letter” to the sentencing judge.  After Martinez informed her that Castro was increasing his offer, L.A. asked Martinez if it was illegal for Castro to offer her money before his sentencing.  He told her that it was not illegal as long as it was an offer to settle civil claims, but that it would be illegal if it was in exchange for dismissing criminal charges.

L.A. informed Martinez that the prosecutor thought the offer was illegal, and that she and law enforcement authorities wanted to go through with it so that Castro could be charged with bribery. Martinez then sent L.A. a letter terminating his representation and stated reasons for doing it that were not true.

Martinez was criminally charged for the bribery attempt and agreed to testify against Calabrese, and others involved before a grand jury in exchange for a misdemeanor charge.

Calabrese subsequently pleaded guilty in federal court to engaging in corrupt activity with respect to L.A. and other Castro victims. He was sentenced to nine years in prison, and disbarred by the Ohio Supreme Court. Two other Castro attorneys that Martinez testified against, Marc Doumbas and Tim Marshall, were also convicted in the bribery attempts and indefinitely suspended by the Court.

Martinez pleaded no contest to obstructing official business, and was sentenced to 10 days in jail, which were suspended, three months of probation, 25 hours of community service, and was fined $750. Based on the charges, the board found Martinez violated four rules including committing an illegal act that reflects adversely on a lawyer’s honesty and trustworthiness, and engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.

When considering sanctions for Martinez, the Court found relevant mitigating factors included the absence of a prior disciplinary record, his cooperative attitude, his good character and reputation apart from this episode, and the criminal sanctions imposed on him.

“The board found him to be a very impressive witness who was contrite and truly remorseful for his misconduct and that his demeanor and testimony demonstrated that he has learned the necessary lessons from this experience,” the opinion stated.

The Court ordered a stayed suspension, but stated that if Martinez engages in further misconduct, he will be forced to serve the entire six-month suspension.

Justices Paul E. Pfeifer, Judith Ann Lanzinger, Sharon L. Kennedy and William M. O’Neill joined the majority opinion.

Dissent Wanted More Severe Sanction
In his dissent, Justice O’Donnell wrote that Martinez knowingly participated in a scheme to bribe a crime victim, and after the victim contacted the prosecutor about it, he abruptly terminated his representation while making untrue statements to her.

Justice O’Donnell noted other cases where an attorney has attempted to “thwart the administration of justice,” disbarment has been an accepted sanction, and the Court has indefinitely suspended attorneys who attempted bribery. He maintained that the six-month stayed suspension was insufficient for conduct involving bribery because Martinez’s conduct not only corrupts the judicial process, but also had the potential of presenting false information to a sentencing judge.

“Any actions that subvert the adversarial process call for a sanction stronger than a stayed suspension from the practice of law,” he wrote.

Chief Justice Maureen O’Connor and Justice Judith L. French joined his dissent.

2015-1633. Disciplinary Counsel v Martinez, Slip Opinion No. 2016-Ohio-2709.

(Mike Frisch)

April 28, 2016 in Bar Discipline & Process | Permalink | Comments (1)

What We Had Here Was A Failure To Communicate

The District of Columbia Court of Appeals has ordered a stayed suspension of 30 days and probation in a case involving intentional failure to seek the client's lawful objectives and failure to communicate.

Notably, the court refers to the prosecutor's office as both Disciplinary and Bar Counsel in its opinion.

I have attended several oral arguments at the court since the name change where all participants - judges and counsel- stumble over the proper name of the office. The name change - purportedly done to avoid confusion - has led to (at least in the short term) the precisely opposite result.

The court rejected the attorney's claimed due process violation of inadequate notice

We think it implausible that a member of the Bar would be confused as to which facts in the specification, for example, "Respondent did not communicate to Ms. Norris that her case was in danger of being dismissed or what steps she may have undertaken to avoid the dismissal of her case," were being alleged as a basis for showing violations of the Rules. That is especially so in light of the fact that Francis, if he were actually confused about which facts constituted violations, did not ask Bar Counsel for a Bill of Particulars.

Also rejected was the asserted inadequate proof of a failure to communicate

we reject Francis’ argument that the Board erred in finding that he violated the rules on client communication. We note that he never communicated with Norris during his representation of her. Instead, Francis insists it was [co-counsel] Stewart’s duty, not his, to communicate with the client, see Rules 1.4 (a) and (b), arguing that communication by local counsel with lead counsel satisfies the client communication requirement. In support of that claim he argues that in cases where there is both local counsel and lead counsel, communications from local counsel to lead counsel satisfy the requirements of client communication because lead counsel, in turn, is tasked with relaying local counsel’s messages to the client. However, he cites no authority in support of this proposition. Instead, Francis poses to the court hypotheticals such as: 1) Does local counsel have a duty to duplicate all communications from lead counsel to the client?; and 2) In large firms, where there are multiple attorneys on a single case, must each attorney directly communicate with the client to avoid being in violation of the Rules? But neither of those questions are before us, nor do they have any applicability to this case. We think it sufficient that here Francis was the only counsel of record—he was the only person receiving notice of filings from the court, and no other attorney possessed that information. In short, Francis had exclusive possession of the information needed by Norris in order for her to make informed decisions about her case, and therefore Francis had the obligation to take steps to keep Norris informed, either by directly informing her or by communicating the information to Stewart to be communicated to Norris. Francis did not take such steps in this case.

 When the lawyer asks the hypotheticals, the court is not required to answer. (Mike Frisch)

April 28, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Wednesday, April 27, 2016

A Short Career At The Bar

An attorney admitted in April 2010 has consented to disbarment by the Pennsylvania Supreme Court.

The issues as set forth in charges

This matter concerns Respondent's neglect of client matters , unauthorized practice of law while suspended, failure to respond to ODC's numerous DB-7 Requests for Respondent's Position, and failure to appear pursuant to a Pennsylvania Supreme Court Subpoena to produce documentation.

In addition to the client-related misconduct, he failed to report a conviction

On September 26, 2014, Respondent pled guilty to driving under the influence and was sentenced to six months Intermediate Punishment Plan.

 Finally, he had practiced while on administrative suspension. (Mike Frisch)

April 27, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Lawyer Suspended For Felony Conviction In Death of His Mother

An attorney convicted of a felony in connection with the death of his 88-year-old mother has been suspended by the Virginia State Bar.

On April 21, 2016, the Virginia State Bar Disciplinary Board summarily suspended William Henry Yongue IV’s license to practice law based on his January 7, 2016, conviction of a felony in North Carolina. Yongue was ordered to appear before the board on May 20, 2016, to show cause why his license should not be further suspended or revoked.

The Roanoke Times reported on the December 2014 crime and charges of first degree murder as did the in this post

Relatives say for a week they tried to contact Imogene Yongue but her son always had a reason why she wasn't available. Monday afternoon, after her grandson called police to do a welfare check, officers found Jean Yongue dead. 

"The body is so decomposed that they won't be able to show the body," her cousin, Juanita Yongue-Eison said. "And they say she was shot in the head."

Now, relatives are thinking about the days when they tried to talk to Jean Yongue.

Her cousin, Juanita, said she called the house last Tuesday but Jean Yongue's son answered the phone and said his mother was sleeping. He reportedly told other relatives she was away. At the end of the week, Jean Yongue's grandson went to the house to check on his grandmother. 

"When he got in, he spoke with his dad and said where is Mama Jean? And he said I don't know. He said his daddy looked real strange so he left," Juanita said.

The family would later request police do a welfare check. No one expected what officers discovered. Questions are mounting in their heads about how and when she actually died.

"Where was she? How did she survive. Oh my God... I just..." Juanita said, as her voice trailed off. 

Imogene Yongue blazed such a trail in life that Duke University called upon her and her late husband to tell their stories of living in the Jim Crow South. The 88-year-old mother and educator who lived a life of distinction, died, police say, at the hands of her son.

The motive, police sources say, was one of the oldest in the books – money.

Monday afternoon, Charlotte-Mecklenburg Police arrested and charged William Henry Yongue with the murder of his mother, who was also known as Jean.

Police sources say William Yongue, a practicing attorney in Virginia, stole money from his mother. According to sources, he allegedly shot and killed her to cover up the thefts.

"I never saw that side of my cousin, Billy. I've never thought anything about him. I just - he's very quiet," Juanita Yongue-Eison said.

Officers were called to do a welfare check on a person at home in the 6100 block of Vernedale Road, off of N. Sharon Amity Road. When police arrived, they say they found Imogene Yongue inside the home. Medics pronounced her dead at the scene.

Yongue saw a lot in her life.

A Spelman graduate, Imogene Yongue would go on to to become an educator. She and her late husband were some of the first African American graduates of Virginia Tech to earn doctorates.

Duke University would call on the Yongues to become part of a documentary that told the story of life in the Jim Crow South. Dr Yongue offered reflections of growing up during the segregated era.

Friends told WBTV that Jean Yongue will be remembered for sharing her knowledge and wisdom.

“Understanding her responsibilities as a member of the community,” long-time friend Natalie Beard said. “Understanding the importance of interacting with others, and always making sure that she is responsible for making sure that someone understands the importance of interacting of others.”

For members of Charlotte's First United Presbyterian Church where Yongue worshipped, her death - especially the way she died - stings.

“You mourn as a sense of loss, but you mourn in a sense of faith,” a friend said.

The accused killer, her son, is sitting in the Mecklenburg County jail and is scheduled to go before a judge on Friday.

"She didn't deserve that," Juanita Yongue-Eison said of her cousin's murder. For relatives, the holiday week has been especially difficult. Juanita Yongue-Eison said Jean Yongue always had a Christmas celebration, and most likely would have had one again this year. 

Christmas paused Monday afternoon for the Yongue family when Jean Yongue's body was found. By Christmas, they were still struggling to grasp what happened to their beloved Jean.

"Her god daughter called me and said let's get together and try to make this a happy Christmas and rejoice her but I don't.. I'm not going over there. I don't think."

Juanita said she and Jean had become like one - always in and out of each other's homes. "We were so close, it's unreal." 

Now, reality has left her only memories. 

"Think about the good times," Juanita said. "Every time I would go to the beach - Jean and I would be right together." 

I have not found a link to any report on the conviction. (Mike Frisch) 

April 27, 2016 in Bar Discipline & Process | Permalink | Comments (1)

Tuesday, April 26, 2016

Sins of Husband Lead To Suspension Of Trusting Wife

The Georgia Supreme Court has imposed a three-month suspension in a matter where the attorney had sought a public reprimand but agreed to discipline up to a six-month suspension.

In Georgia, the State Bar and an accused attorney can submit a voluntary petition for discipline with a proposed range of sanctions. The court can choose within the range or reject the petition. That process for streamlining bar discipline worked here. 

The violations related to misconduct on the part of her lawyer-spouse.

In her petition, Franklin, who has been a member of the Bar since 1987, asserts that she worked most of her career as an in-house bank lawyer, but resigned in 2005 to care for her children, one of whom has serious health issues. Afterward, she occasionally did some part-time legal work from home, operating her law practice under the name “The Law Offices of Mary Ellen Franklin” and primarily negotiating loan modifications. In January 2009, this Court ordered that Franklin’s now-deceased husband, Bradley J. Taylor, who was also an attorney, receive a Review Panel Reprimand and a six-month suspension for various violations of the Rules of Professional Conduct arising from his 2005 misappropriation of a client’s funds to his own use, see In the Matter of Taylor, 284 Ga. 867 (672 SE2d 653) (2009). Franklin asserts that Taylor told her that he had been reinstated to practice law in July 2009, but she admits that she never checked the status of his license for herself. In the fall of 2009, Taylor and Franklin decided to share office space and Taylor registered the Franklin Taylor Law Group with the Georgia Secretary of State.

In March 2011, Franklin apparently signed a complaint which was filed on behalf of a client, who had been a long-time client and friend of Taylor. Although Franklin recalls the client, she does not recall signing the complaint or agreeing to represent the client, who had apparently hired Taylor to represent his interests with regard to certain construction and remodeling work. Although Franklin’s signature was on the original complaint, she contends that her signature was forged on other documents associated with the lawsuit. Ultimately, Taylor settled the client’s claims for $80,000, with the client’s knowledge and consent, but Taylor apparently misappropriated the settlement funds to his own use, arranging to have them wired into his separate, non-law firm, real estate company escrow account. Franklin states that she was unaware of Taylor’s deceit until November 2012, at which point an attorney representing the client summoned her and Taylor to a meeting where he allegedly threatened them with criminal prosecution. She has since learned that Taylor remained suspended after July 2009, and that he had repaid to the client approximately $25,000 of the money he misappropriated. Taylor passed away in January 2014, and Franklin asserts that she has been seeing doctors and therapists who have diagnosed her with clinical depression.

The conduct violated Rule 5.3(b). 

In an unrelated matter involving neglect, the court rejected a petition for voluntary discipline.  (Mike Frisch)

April 26, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Hawai'ian Punch

An attorney who engaged in multiple ethics violations has been disbarred by the Hawai'i Supreme Court.

Respondent Castroverde engaged in prohibited conflicts of interest with multiple clients, representing three separate violations of HRPC Rule 1.7(a), by representing both the sellers and the buyers of the home at 722 Lalani Circle, in Wailuku, Maui, including by drafting and overseeing the execution of the Agreement of Sale, where the interests of the parties were directly adverse to each other...

We conclude Respondent Castroverde misappropriated client funds, in violation of HRPC Rule 1.15(c), by removing from his client trust account, between November 30, 2007 and December 18, 2007, at least $6,258.91 of the buyers’ funds to which he was not entitled, removing between December 18, 2007 and January 25, 2008 at least $12,912.91 of the buyers’ funds to which he was not entitled...

We conclude Respondent Castroverde violated HRPC Rule 1.5(a) by charging an unreasonable fee as follows: Pursuant to HRS § 449-3 (1996), Respondent Castroverde, as an attorney, was exempt from the regulation of escrow deposits if he did not charge an escrow fee. However, we find Respondent Castroverde did charge an escrow fee, as the buyers paid Respondent Castroverde $10,625.00 to arrange the transaction and escrow, and paid monthly charges of $104.17 and $5.00 to administer the escrow. By charging said fee, Respondent Castroverde was obligated to comply with the requirements of HRS Ch. 449 and, as he did not comply with those requirements and therefore could not justify the escrow fees he charged, those fees were unreasonable, in violation of HRPC Rule 1.5(a)...

With regard to a loan from the sellers to Respondent Castroverde of the $50,000.00 down payment held in Respondent Castroverde’s client trust account, Respondent Castroverde violated HRPC Rule 1.8(a) by engaging in a business transaction with the sellers where the transaction and terms on which Respondent Castroverde acquired an interest were not fair or reasonable to the sellers, where the loan was made without giving the sellers a reasonable opportunity to seek the advice of independent counsel regarding the transaction, and where Respondent Castroverde did not obtain from his clients, the sellers, written consent to the inherent conflicts.

By misappropriating all but, at most, $5.17 of the $50,000.00 for his use and benefit, Castroverde violated HRPC Rule 1.15(c). With regard to a separate $61,000.00 loan made by one of the sellers to Respondent Castroverde, Respondent Castroverde violated HRPC Rule 1.8(a) by entering into the $61,000.00 loan transaction with his client, the seller, where the transaction and its terms were not fair and reasonable to the seller, where Respondent Castroverde did not fully disclose in writing to the client the transaction or its terms, and did not provide the client with a reasonable opportunity to consult independent counsel concerning the transaction.

By misappropriating all but, at most, $5.17 of the borrowed $61,000.00, Respondent Castroverde violated HRPC Rule 1.15(c).

He also failed to cooperate in the bar investigation. (Mike Frisch)

April 26, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Monday, April 25, 2016

No Retroactive Suspension For Cheating Business Partners

The Wisconsin Supreme Court has accepted a referee's finding of misconduct by a previously-disciplined attorney but declined to grant retroactive credit.

The court imposed a prospective one-year suspension.

We conclude that the referee's findings of fact are supported by satisfactory and convincing evidence. We also agree with the referee's conclusions of law that Attorney Schoenecker engaged in professional misconduct, and that the seriousness of this misconduct warrants a one-year suspension of Attorney Schoenecker's law license. We part ways with the referee in holding that, given the timing and seriousness of Attorney Schoenecker's misconduct, the suspension of his law license should not be retroactive, but rather should be made effective as of the date of this order.

The attorney was suspended in 2011 and has not been reinstated.

The OLR's amended complaint alleged, and the parties ultimately stipulated, that the misconduct in this case concerns Attorney Schoenecker's involvement in a business partnership that he entered into in 2012 with two other individuals, M.M. and T.H. Attorney Schoenecker, on behalf of himself and his partners, established a limited liability company named GameMaster, LLC. Attorney Schoenecker drafted and filed the organizing documents, including the Articles of Organization and the Limited Liability Company Operating Agreement.

He admitted the violation

 In so doing, Attorney Schoenecker agreed not to dispute the OLR's charge that, as Chief Executive Manager of GameMaster, LLC, he failed to account clearly or timely for capital contributions made by other members, withdrew excessive funds from GameMaster, LLC, and charged personal expenses to GameMaster, LLC, all without preapproval from his business partners, in violation of SCR 20:8.4(c). Attorney Schoenecker and the OLR jointly recommended that the court order a one-year license suspension imposed retroactively to the date he became eligible for reinstatement from his earlier disciplinary suspension, August 15, 2014, so that his earliest reinstatement date would be in August 2015. The stipulation did not explain the basis for the retroactive nature of the suspension.

No retroactive suspension

we have previously held that a retroactive suspension is generally not favored in the absence of some "compelling circumstance," and we find no such compelling circumstance here...

Attorney Schoenecker dishonestly handled business funds well after his 2011 suspension for what we described as "a disturbing series of illegal and dishonest actions, which were designed to benefit him financially to the injury of his client, his law firm employer, and his creditors."

The court split costs between the parties. (Mike Frisch) 

April 25, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Resumed Romantic Relationship No Basis For Interlocutory Suspension

The Upper Canada Law Society Tribunal denied the Law Society's motion for an interlocutory suspension to replace interim conditions imposed on the attorney by an earlier order.

The Law Society brings this motion for an order varying the Order of the Law Society Tribunal – Hearing Division (“the first hearing panel”) dated June 1, 2015. The Law Society asks for a full interlocutory suspension of the licence of the Respondent Lawyer, Maria Marusic, to replace the interlocutory licence restrictions imposed by the June 1, 2015 Order. 

The alleged changed circumstances involve the attorney's conduct in relation to a longtime romantic partner who was suspended 

The Respondent was a partner with the Windsor firm Shulgan Martini Marusic LLP (“SMM”) until it dissolved in early January 2015. Claudio Martini was a partner of SMM. After SMM dissolved the Respondent continued practising law under Marusic Law LLP, in the same premises previously occupied by SMM. 

Mr. Martini was found to have engaged in professional misconduct in failing to serve two clients. It was found that Mr. Martini deceived two clients regarding steps taken in their legal proceedings. The October 8, 2014 reasons describe the deceit as it pertains to one of the clients as “sophisticated and elaborate”, involving a “conscious and deliberate attempt by the Lawyer to lead the client to believe that certain steps had taken place”. Mr. Martini was suspended for seven months.

Then, there were new allegations about Martini

The  Law Society’s investigation into the alleged misappropriation of trust funds held by the now-defunct law firm of SMM are described in the first hearing panel’s reasons of May 6, 2015. The investigation started in December 2014 when Mr. Martini admitted that he used $50,000 of trust funds held for one client, Company B, to pay another client pursuant to a fake settlement. The investigation then revealed that over a two-year period from November 2012 to December 2014, monies were withdrawn from trust funds held for Company B on 12 occasions, contrary to unfulfilled trust conditions. Most of the withdrawals went to SMM as fees.

The Respondent and Mr. Martini were involved in a romantic relationship from 2001 until March 2015.

The Respondent co-signed three trust cheques with Mr. Martini through which SMM paid itself fees totaling $1,264,108.87 when the conditions for release of the funds had not been met. The Respondent admitted to co-signing the trust cheques but said that she assumed that the trust conditions for the release of the settlement funds had been met. In describing her evidence, the first hearing panel indicated (at para. 37):

The Respondent says that she, like many others, was a victim of Mr. Martini’s deceitful ways. She described him as being able to win and maintain the trust of many intelligent and otherwise highly careful and perceptive people. She makes the point that the misconduct established in Mr. Martini’s previous discipline proceeding did not include any suggestion that he had misused trust funds. She deposed that she is “shocked and appalled” that she may have been asked to sign cheques transferring amounts from trust when there remained unfulfilled trust conditions, and that her personal relationship with Mr. Martini has ended.

 After that

  In December 2015 the Law Society filed a Notice of Motion for an order varying the June 1, 2015 Order. The grounds for the motion are that there is fresh evidence or a material change in circumstances that warrants the requested variation. In particular, Law Society alleges that the Respondent has associated with and/or facilitated the practice of law by Mr. Martini, whose licence is suspended.

The fresh evidence involves allegations that the attorney facilitated Martini's unauthorized representation of one Client X.

In cross-examination the Respondent answered questions about her relationship with Mr. Martini.  At the time of the hearing in May, she had recently ended her romantic involvement with him. That relationship resumed on August 20, 2015.

Her practice is located in premises that Mr. Martini helped her find. He works in the same building with an office one floor above her. She testified that she had experienced difficulties in securing a new office given the impending Law Society investigation and that this was the only practical alternative for her.

She received many, if not all, of Mr. Martini’s files when his licence was suspended. All of those files have been fully transferred.

We learned that the Respondent is the lawyer for the company Mr. Martini works for, although this was not part of the evidence given under oath.

The majority

The first issue to consider is whether or not there has been a material change in circumstances since the first Order. We find that the fact that the Respondent has resumed her romantic relationship with Mr. Martini, which is not in dispute, is a material change in circumstances. It is material because the fact that they were not in a romantic relationship was specifically noted in the reasons on the first interlocutory motion. 

The Applicant submits that this resumption of relationship has resulted in the Respondent facilitating the practice of law by Mr. Martini whose licence is suspended.  The Applicant submits that this provides reasonable grounds to believe that there is a significant risk of harm to members of the public and to the public interest in the administration of justice if her licence is not suspended pending the outcome of her discipline matters...

We find that hearing from the respondent reduces our concerns about the effect of the resumption of her relationship with Mr. Martini. We do not believe, based on the evidence presented, that the Respondent presents a significant risk to the public or public confidence in the legal profession which cannot be addressed through the restrictions on her practice already in place and the one further restriction we will impose.

The evidence is that the Respondent is a competent and capable lawyer. Although she maintains she was tricked by him into improperly co-signing the trust cheques in the original matter, there was no evidence presented that she is a psychological pawn of Mr. Martini.

A significant factor in considering whether or not a full suspension is appropriate is that the new investigation is at a very early stage and the estimate of when it will be completed is unknown. Ms. Marusic’s many clients are also members of the public.

We do have a concern arising out of the location of the Respondent’s new offices.  The Rules specify that a lawyer shall not occupy or share office space with a suspended lawyer or paralegal. Mr. Martini should not be in the office of Marusic Law under any circumstances, whether professional or social. This promotes public confidence. Any meetings in his role as a client should not be held in the offices of Marusic Law.

Chair Sophie Martel dissented

I am satisfied that had the first hearing panel been aware of the new allegations – involving not just the Respondent’s integrity regarding trust monies but her integrity in respect of a suspended lawyer she acknowledged was a “liar and a fraudster” – it would have ordered a full interlocutory suspension rather than an Order imposing restrictions on the Respondent’s trust and general accounts. I agree with the Law Society’s submissions that the integrity concerns are so significant that additional restrictions on the Respondent’s practice, such as the one imposed by the Majority, will not address the risk to the public and the public administration of justice. The integrity concerns are now multi-fold. They include the integrity concerns raised before the first hearing panel where there were reasonable grounds to believe that the Respondent was directly involved in the misuse of trust funds totaling well over one million dollars. They also include the new integrity concerns related to Mr. Martini’s involvement in the Client X matter.  An interlocutory suspension is the only order likely to reduce the risk to members of the public.

The Windsor Star had this report.

Update: Law Times had a story today with some information about Client X

The current proceedings arise with regards to “Client X,” a self-described “very successful lawyer” and “vulture,” whom Martini represented since 2010 in litigation dating back to 1984.

After Martini was suspended, Marusic took carriage of the file, which they discussed on several occasions.

A multi-week trial was scheduled to start in May 2015 in Ottawa, but a settlement was reached in July.

Martini met with Client X and Marusic at an Ottawa condominium building where both she and Client X rented units.

At a meeting in Client X’s unit, Martini hand-wrote an authorization to settle the lawsuit, including the fees Marusic’s law firm would receive. The fees amounted to 54 per cent of the settlement.

Client X subsequently hired new lawyers and is disputing the fees.

Law Society prosecutors submitted the Client X case provides compelling evidence Marusic has been facilitating the practice of law by Martini, in contravention of Law Society regulations.

 I never have seen the phrase "took carriage" of a client file. (Mike Frisch)

April 25, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Sunday, April 24, 2016

Domestic Violence Conviction Leads To Suspension

A Massachusetts attorney has been suspended pending final discipline as a result of a conviction.

The Eagle-Tribune reported

A North Andover-based attorney will spend the next six months in jail after pleading guilty Tuesday to domestic assault and battery for choking his girlfriend, a former client, in her apartment last month.

Saba Hashem, 44, of 6 Beechwood Drive, Methuen, was arrested on Oct. 11 in North Andover and charged with strangulation and domestic assault and battery for an incident that took place Oct. 8, according to court documents. The strangulation charge was continued without a finding Tuesday.

Hashem, who has been in jail since his arraignment and dangerousness hearing Oct. 14, was sentenced to 2-1/2 years in jail, with six months to serve. The remaining two years will be spent on supervised probation.

Hashem was served a restraining order Oct. 14, which requires him to stay away from the victim, her children and her workplace. It remains in effect until October 2016.

The victim, in an impact statement read Tuesday in court by the judge, said the abuse on Oct. 8 changed her life, leaving her frightened and unable to sleep.

Hashem's attorney, David K. Gelb of the Boston firm Gelb & Gelb, called the incident an "aberration" and emphasized Hashem's history of community volunteerism.

Gelb and prosecutors negotiated for the plea and punishment that the judge accepted Tuesday.

The victim said in court she had been dating Hashem for between two and three years. She said she met him in 2010 when he was her attorney following a car crash.

The dating relationship started after the attorney relationship ended, she said in court records. His behavior became more obsessive and frightening after she left her husband and moved to North Andover last year, she stated.

According to court documents, Hashem had been stalking her and became violent. The abuse related to the court case took place Oct. 8, but she did not call police. An anonymous caller asked North Andover police to check on her Oct. 11. A warrant for Hashem's arrest was issued shortly after.

The victim filed for the restraining order days later.

Hashem was a founding partner of the North Andover firm D'Angelo & Hashem, which according to its now defunct webpage specialized in personal injury, disability, and car crash and workplace claims cases.

(Mike Frisch) 

April 24, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Friday, April 22, 2016

Readmitted Over Dissents

A majority of the Louisiana Supreme Court has rejected the unfavorable recommendation of its Attorney Disciplinary Board and readmitted an attorney who

In 2009, petitioner and his law partner, Thomas R. Pittenger, were disbarred for engaging in conflicts of interest, failing to supervise their non-lawyer staff, engaging in impermissible fee-sharing with non-lawyers, and facilitating the unauthorized practice of law by non-lawyers.

The terse bottom line is that he 

be immediately readmitted to the practice of law in Louisiana, subject to a two-year period of supervised probation.

Justice Crichton dissented joined by two colleagues.

Supreme Court Rule XIX, § 24(E)(4) demands that applicants seeking readmission to the Louisiana Bar recognize the wrongfulness and seriousness of the conduct resulting in disbarment. After his disbarment, Mr. Guirard complained that his punishment was “Draconian,” dismissed his transgressions as “technical violations,” and claimed the mantle of “poster boy” for “[victims] of government injustice.” Even at his readmission hearing, he characterized the harm to his clients as merely “theoretical.” Clearly, Mr. Guirard, even at this late date, fails to recognize the seriousness and wrongfulness of his misconduct. More importantly, he fails to recognize that the actual victims of injustice were his clients. As United States Supreme Court Justice Benjamin Cardozo noted nearly a century ago while sitting as a judge on the Court of Appeals of New York: “Membership in the bar is a privilege burdened with conditions.” In re Rouss, 221 N.Y. 81, 116 N.E. 782, 783 (1917). The most solemn condition of bar membership must certainly be an unwavering commitment to competent representation.

The disbarment order is linked here.

Law360 reported on the board recommendation. (Mike Frisch)

April 22, 2016 in Bar Discipline & Process | Permalink | Comments (0)

"It May Be Soon, Or it May Be Never" Maryland Sanctions "Representational Paralysis"

An opinion issued today by the Maryland Court of Appeals

To his credit, Mr. Moore has, as before, largely admitted the violations. We also recognize what appears to be his sincere remorse and the relationship of these violations to his difficulty in coping with long-standing personal issues. The hearing judge aptly characterized the source of Mr. Moore’s misconduct as “representational paralysis in the face of a difficult case rather than … dishonesty.” Nevertheless, as the regulator of the legal profession in Maryland, we are obligated to protect the public as best we can from attorneys who fail, for whatever reason, to conform to professional norms. Accordingly, we suspend Mr. Moore from the practice of law indefinitely until such time as he can satisfy the Court that the misconduct will not recur.

The case involved misconduct in two client matters and an initial failure to respond to the investigation.

The stressors

Mr. Moore testified credibly, according to the hearing judge that his personal or emotional problems are in part related to his being a survivor of domestic violence and abuse committed by his second wife. They were divorced six years before the Pasqualucci representation began, but she continued to engage in verbal abuse until 2014, when she pled guilty to a criminal charge in relation to the abuse.

 The court found that he was remorseful

We agree with Bar Counsel that the appropriate sanction is something less than disbarment. Although Mr. Moore occasionally said things to his clients that proved to be untrue, such as his inaccurate statement to [client] Mr. Custodio that the September 27, 2013, interview was canceled because of “staffing issues,” the hearing judge did not find the sort of intentional dishonesty that would ordinarily warrant disbarment. See Attorney Grievance Comm’n v. Vanderlinde, 364 Md. 376, 418, 773 A.2d 463 (2001).

Mr. Moore’s misconduct is of a different character. Mr. Moore’s violations are in the nature of serious neglect for which the Court has typically imposed an indefinite suspension.

As to what the future may hold

we decline to set a minimum length for this indefinite suspension, because we cannot say with any certainty how long it will take for Mr. Moore to make the necessary progress toward being able to handle intimidating or confrontational situations with techniques other than avoidance. It may be soon, or it may be never. Mr. Moore may apply for reinstatement whenever he has made genuine and demonstrable progress that convincingly shows that he will not violate the MLRPC again

  (Mike Frisch)

April 22, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Partner Blows Whistle; Lawyer Convicted And Disbarred

A convicted attorney was deemed disbarred as a consequence of his conviction by the New York Appellate Division for the Second Judicial Department.

The Mortgage Fraud Blog had the story

In or about April 2014, Weinstock’s former law partner received a package from Weinstock that included a handwritten statement written by Weinstock that there was escrow money missing in the amount of $720,000, and that Weinstock sold an East Hills property without satisfying an outstanding mortgage loan.

All of these activities were done without the ex-law partner’s knowledge.

The former law partner then referred the matter to DA investigators, who revealed that Weinstock had taken the $720,000 placed in an escrow account that constituted separate down payments for two sales of commercial condominium units in New York City.

In addition to the escrow thefts, evidence revealed that Weinstock’s law firm purchased a property in East Hills in 2008, took out a mortgage on the property in 2010, and then Weinstock on behalf of the law firm sold the property in 2013 without paying off the outstanding mortgage.

The buyers’ lender paid approximately $608,000 directly to Weinstock’s law firm. At the closing, the buyers paid Weinstock approximately $117,000, in addition to the $50,000 down payment paid by the purchasers at the time of contract – for a total of approximately $775,000 in proceeds from the sale.

A forged Satisfaction of Mortgage was filed in the Nassau County Clerk’s office to conceal an outstanding mortgage loan amount of approximately $485,000 on the property.

Even after the closing, Weinstock continued to make payments on the outstanding mortgage loan without notifying the lender or the buyers that a lien for the property had not been satisfied. The balance of the loan at the time the scheme was revealed was approximately $483,000. The outstanding loan is not included in the total amount stolen by Weinstock as part of the scheme.

Nassau County District Attorney Kathleen Rice announced the arrest.

Assistant District Attorney Marshall Trager, chief of DA Rice’s Government and Consumer Frauds Bureau, is prosecuting the case. Weinstock is represented by Kenneth Keith, Esq.

“Attorneys shouldn’t steal from their clients, much less their law partner, mortgage company, and real estate buyers who had no idea there was an unpaid mortgage on their property,” DA Rice said. “Those who are sworn to follow the law should know better.”

(Mike Frisch)

April 22, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Useless Buffers: Take Michael Corleone's Advice

A consent five-year suspension was approved by the Pennsylvania Supreme Court of an attorney for misconduct described in the report of the Disciplinary Board

Respondent has been engaged in misconduct since at least 2011, he has employed non-lawyers to not only solicit clients to hire Respondent in their attempt to refinance their residential realty, but he has abandoned many of those clients by a lack of communication, diligence, and advice for which they paid in advance. Often, Respondent's non-lawyer employees served as a useless buffer between Respondent and his clients, who were not in a financial position to risk losing the $3,000 advance payment of fee to Respondent while they were having difficulty making their mortgage payments...Respondent circumvented [FTC MARS Rules] protection for no reason other than his own financial benefit.

 The only mitigating factor was a lack of prior discipline. The attorney was admitted in 2006.

He also violated unauthorized practice rules by representing clients in jurisdictions where he was not admitted to practice.

Title reference linked here. (Mike Frisch)

April 22, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Convicted Attorney Suspended

The Ohio Supreme Court has suspended an attorney as a result of a felony conviction.

The Troy News reported

 Former Miami County attorney Joshua Albright entered a plea of guilty to one count of fourth-degree felony unauthorized use of property in Miami County Common Pleas Court on Tuesday.

Albright, 29, who now resides in Cadiz, Ohio, formerly practiced law with Roberts, Kelly and Bucio law firm, which states he failed to turn over approximately $60,000 worth of contracts to the firm. Albright appeared with his attorney Jeremy Tomb and entered a plea of guilty and waived his right to a grand jury on Tuesday.

Special prosecutor John Arnold from the Warren County Prosecutor’s Office represented the state during the hearing.

According to court documents from Oct. 1, 2013, to about Sept. 11, 2014, Albright was paid for his services by his clients and allegedly never turned the funds over to the firm.

Judge Christopher Gee ordered Albright to complete a pre-sentence investigation and set his sentencing date for May 31.

Last week, Albright entered into a plea agreement to one count of forgery, a felony of the fifth degree in Shelby County Common Pleas Court.

According to that agreement, Albright agreed to sign an affidavit of retirement or resignation, in which he will discontinue his practice of law. In that case, Albright was originally charged with five counts of forgery, but the prosecution dropped the other four counts as a part of the agreement. According to the grand jury indictment that was handed down in February 2015, on Aug. 15, 2014, Albright knowingly uttered falsified paperwork for custody on behalf of Christopher M. Strunk, which bore a fraudulent file stamp from the Juvenile Court of Shelby County.

On Dec. 17, 2015, The Ohio State Bar Association filed a motion with the Supreme Court of Ohio for immediate interim remedial suspension of Albright. The next week, the supreme court ruled in favor, suspending his practice of law for an interim period. In that case, he is set to appear for sentencing on June 10.

(Mike Frisch)

April 22, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Thursday, April 21, 2016

Default In D.C.

The District of Columbia Court of Appeals has issued a per curiam decision disbarring an attorney

The Board [on Professional Responsibility] recommended disbarment as a sanction for Mr. Green’s misconduct. We conclude that Mr. Green has forfeited his substantive exceptions to the Board’s assessment of his misconduct and that his procedural attack on his disciplinary proceeding has no merit. Accordingly, we have no reason to question the Board’s determination that Mr. Green committed multiple serious rule violations, and we agree with the Board that disbarment is the appropriate sanction.

Mr. Green argues to this court that he violated no Rules of Professional Conduct. But he failed to avail himself of the opportunity to make these arguments to the Board in the first instance. Indeed, even though the Board granted Mr. Green’s motion for additional time to file exceptions to the Ad Hoc Hearing Committee’s Report and Recommendation, he ultimately failed to present any arguments to the Board to persuade it that he had done no wrong.

One argument was preserved but rejected

 Mr. Green did make one procedural challenge before the Board to his disciplinary proceedings. In his motion to the Board for extra time to file exceptions, Mr. Green argued that his disciplinary case should be dismissed because the Ad Hoc Hearing Committee issued its report well outside of the 120-day timeframe envisioned by D.C. Bar R. XI, § 9 (a)... Mr. Green never identified any prejudice in his motion to the Board (nor has he done so in his brief to this court). Thus the Board properly denied Mr. Green’s motion to dismiss.

 The court acted promptly here, imposing discipline 16 days after the matter was submitted.

Any petition for reinstatement must be preceded by payment of restitution to several clients.

As to delay, it appears that the hearing committee took a bit over a year to issue the report.

The case has a 2012 docket number, so the process of disbarment for multiple and largely uncontested misconduct took four years.  The charges were approved in March 2013.

Sad to say but that actually is this disciplinary system at its most efficient. (Mike Frisch)

April 21, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Illinois Board Rejects Unreasonable Fee Allegations

The Illinois Review Board has found no misconduct and recommended dismissal of ethics charges against an attorney, one of two reports issued on Wednesday that overturn hearing committee findings of misconduct

Respondent's two-attorney law firm represented Alzine Davis in a lawsuit against her fellow shareholders in a corporation. The lawsuit alleged the shareholders misused corporate assets and engaged in other wrongdoing that deprived Ms. Davis of her corporate interests. Ms. Davis won a verdict and judgment against the defendants, which they appealed. While the appeal was pending, the corporation sold real estate, and Respondent's law firm took 40 percent of Ms. Davis' portion of the sale proceeds pursuant to a contingent-fee agreement between Respondent's firm and Ms. Davis that covered the firm's work on the appeal. The case ultimately settled, and, per the contingent-fee agreement, Respondent's firm received 40 percent of the settlement proceeds.

Sometime after the litigation settled, Ms. Davis complained to the ARDC that Respondent's firm was not entitled to receive 40 percent of the real estate sale proceeds. The ARDC investigated and charged Respondent in a one-count complaint with violating various Rules of Professional Conduct, arising out of the fees Respondent's firm charged Ms. Davis. The Hearing Board found only one rule violation, holding that Respondent's taking 40 percent of the real estate sale proceeds constituted an unreasonable fee, in violation of Rule 1.5(a). It recommended that Respondent be suspended from the practice of law for four months and until she makes restitution of $102,563.26 to Ms. Davis. Respondent filed exceptions challenging the Hearing Board's finding that she collected an unreasonable fee from Ms. Davis and recommendation of suspension and restitution.

For the reasons explained below, we reverse the Hearing Board's finding of misconduct and conclude that Respondent did not collect an unreasonable fee and therefore did not violate Rule 1.5(a). Because that was the only misconduct found by the Hearing Board, we recommend the case be dismissed.

The key issue involves interpretation of fee agreements

We find persuasive Respondent's arguments that the 2005 and 2008 fee agreements allowed fees based on proceeds from the sale of corporate properties, and therefore that the fee that Ms. Davis paid based on the proceeds from 5850 South King Drive was not unreasonable.

Respondent argues that the sale proceeds were "recovered" by Cook Revak because, but for Cook Revak's representation, Ms. Davis would not have received the sale proceeds that she did. Therefore, the firm was entitled to 40 percent of the sale proceeds under the 2008 fee agreement. She further contends that the fee agreements required Cook Revak to pursue two separate recoveries: (1) monies or properties due her as a shareholder, and (2) damages for corporate mismanagement and wrongful taking of corporate funds. Because both the sale proceeds and damages were elements of Davis' recovery, Respondent argues, her firm was entitled to fees based on both amounts.

We find that the evidence produced by the parties before the Hearing Board supports Respondent's reading of the 2008 fee agreement...

Cumulatively, th[e] evidence supports our determination that CCC's properties, and Ms. Davis' rights with respect to the properties, formed the crux of her claims against her co-shareholders; that the term "monies or property due her as a shareholder" in the fee agreement necessarily envisioned and included the recovery of income from corporate real estate to which Ms. Davis was entitled; and therefore that, as a matter of law, the fee agreements permitted fees to be based upon the proceeds of the sale of corporate real estate, as long as those proceeds were recovered or obtained by Respondent's firm.

On this last point, we are persuaded by Respondent's argument in her briefs and at oral argument that, but for her firm's efforts and advocacy on behalf of Ms. Davis, there would be no proceeds from the sale of corporate real estate on which to base fees, because until she succeeded in her litigation against her co-shareholders, Ms. Davis was utterly deprived of any rights or interests she had in the corporate properties.

The board rejected two prior cases that the Administrator argued support a finding of an excessive fee

we find, as a matter of law, that the 2008 fee agreement permitted Respondent's firm to collect a fee based on the sale proceeds of 5850 South King Drive, and therefore that she did not collect an unreasonable fee from Ms. Davis in violation of Rule 1.5(a). Because that was the only misconduct found by the Hearing Board, we recommend the case be dismissed.

(Mike Frisch)

April 21, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Wednesday, April 20, 2016

Claims In "Murky" Area Of Law Not Frivolous

The Illinois Review Board has recommended dismissal of ethics charges

Within a few weeks after Malaysia Airlines Flight 370 disappeared mid-flight, Respondent was retained by the estate of one of Flight 370's passengers. On behalf of the estate, Respondent filed a Rule 224 petition in Cook County Circuit Court, naming the Boeing Company and Malaysia Airlines as respondents and seeking information to determine the identity of other possible defendants. Judge Kathy Flanagan dismissed the petition based on her view that Rule 224 petitions cannot be used in cases where at least one potential defendant is known.

The Administrator filed a one-count complaint against Respondent, alleging that she had filed a frivolous pleading and that her conduct in doing so was prejudicial to the administration of justice, in violation of Rules 3.1 and 8.4(d), respectively, of the Illinois Rules of Professional Conduct (2010). The Hearing Board concluded that Respondent had violated both rules and recommended a 60-day suspension. Respondent filed exceptions to the Hearing Board's findings and sanction recommendation. For the reasons set forth below, we reverse the Hearing Board's findings of misconduct and recommend the case be dismissed.

The board rejected Rule 3.1 and 8.4(d) allegations

We agree with Respondent's argument that, based on Illinois law at the time she filed her Rule 224 petition, she had an objectively reasonable basis for filing the petition. In reaching its conclusion that Respondent's petition was frivolous, the Hearing Board took note of decisions that had ruled that a Rule 224 petition is inappropriate where the identity of a potentially responsible party is already known. Maxon v. Ottawa Publ. Co., 402 Ill. App. 3d 704, 710-11, 929 N.E.2d 666(3rd Dist. 2010); Roth v. St. Elizabeth's Hospital, 241 Ill. App. 3d 407, 413, 607 N.E.2d 1356 (5th Dist. 1993); Guertin v. Guertin, 204 Ill. App. 3d 527, 531, 561 N.E.2d 1339 (3rd Dist. 1990). It reasoned that Respondent impermissibly filed a Rule 224 petition when she already knew the names of potentially liable parties - Malaysia Airlines and Boeing.

But, as Respondent points out, a First District case reached a seemingly different conclusion. She contends that Beale v. Edgemark Financial Corp., 279 Ill. App. 3d 242, 664 N.E.2d 302 (1st Dist. 1996), in which that court analyzes and distinguishes the appellate court decisions relied upon by the Hearing Board, contradicts the Hearing Board's as well as Judge Flanagan's view of Rule 224. Thus, she argues, at the time she filed her petition in Cook County Circuit Court, the First District had expressly upheld her use of Rule 224, and no other on-point cases instructed that it was wrong of her to file it...

The Hearing Board based its finding that Respondent violated Rule 8.4(d) on its belief that she blatantly disregarded legal precedent as well as Judge Flanagan's warning not to file Rule 224 petitions in air crash cases, and thereby caused the unnecessary expenditure of judicial resources. As discussed above, however, there was no clear legal precedent that instructed Respondent not to file her petition. Rather, the controlling law either permitted her to do so, as Beale would indicate, or was murky enough that her filing of the petition constituted a good-faith argument for extending, modifying, or reversing existing law - neither of which would constitute conduct prejudicial to the administration of justice.

As for Judge Flanagan's warning to Respondent, we, like Judge Maddux, decline to question her ruling. We do note, however, that Judge Flanagan did not sanction Respondent for filing the Fatt and Siregar petitions, nor did the appellate court for the Fatt appeal. The appellate court, moreover, reversed Judge Flanagan's order denying the petition in the Fatt case, finding Respondent's client had a right to a hearing on the petition. We find persuasive Respondent's argument that it should not be considered an abuse of process or prejudicial to the administration of justice to file a petition that she is entitled to a hearing on, particularly where the courts did not sanction her for her conduct.

(Mike Frisch)

April 20, 2016 in Bar Discipline & Process | Permalink | Comments (0)