Tuesday, May 17, 2016

Divorcing Jill St. John

A lawyer who married a CPA named Jill St. John (presumably we are not talking about the actress who married Robert Wagner) sought relief from the judgment based on the claim that his ex-wife was having an affair with her boss.

Ms. St. John "vehemently denied" the allegation.

The Tennessee Court of Appeals held that relief was properly denied

In asserting that the trial court erred, Husband states that the alleged romantic relationship between Mr. Peterson and Wife "would have created a direct conflict of interest, which goes to the overall weight that Peterson‟s testimony should have been given." It must be emphasized, as the trial court stated in denying the motion, that the court had "credibility issues" in this case. In its memorandum opinion, the trial court made specific findings regarding Husband‟s lack of credibility:

I accept the testimony and the proof that shows at a time [Husband] represented to the Tennessee Supreme Court that he had voluntarily suspended his law license, he still was earning money from practicing law, which I don‟t think they would like. He knows he needs to have an IOLTA account. He does not have one. The Supreme Court would not like that, I do not believe. . . .

The specific finding of the Court of Appeals in Maryland was under MRCP 8.4B, C and D. They did not find it to be criminal under B. . . . They found it to be C, that he had engaged in conduct involving dishonesty, fraud, deceit and misrepresentation and also D, he engaged in conduct that is prejudicial to the administration of justice.

The trial court specifically stated in its decision to deny Husband‟s motion to set aside the judgment that credibility was a factor...

Thus, even if there were a conflict of interest, the trial court could still rely upon Mr. Peterson‟s testimony, and the trial court in this case expressly found that the knowledge of a romantic relationship between Mr. Peterson and Wife would not have changed the outcome.

We have concluded that the trial court did not abuse its discretion in denying Husband‟s Rule 60 motion.

As to other issues raised

 The judgment of the trial court is affirmed in part, vacated in part, and remanded for further proceedings consistent with this opinion. In particular, the trial court is to divide the debentures in accordance with the statutory factors and recalculate the attorney fees without including work done regarding the motion for a stay. Costs of appeal are assessed against the appellant, Virgil Duane Parker, and execution may issue if necessary.

(Mike Frisch)

May 17, 2016 | Permalink | Comments (0)

Privileged Legal Bills

Dan Trevas reports a case decided today by the Ohio Supreme Court

When attorney-fee billing statements with detailed information about the tasks undertaken by a law firm representing a city are intertwined with summaries of the legal work performed, the detailed information is not a public record, the Ohio Supreme Court ruled today.

The Supreme Court voted 5-2 to affirm a Ninth District Court of Appeals decision to release redacted copies of invoices from a law firm representing Avon Lake to James E. Pietrangelo II. The records are connected to pending litigation between Avon Lake and Pietrangelo. In a per curiam decision, the Court majority reasoned that Pietrangelo may acquire information useful in his litigation strategy against the city if provided more details than what the Ninth District permitted to be released.

In a dissenting opinion, Justice Sharon L. Kennedy wrote that only the narrative summary portion of the bills describing the work the firm did can be withheld and that Pietrangelo is entitled to more information as well as damages from Avon Lake.

Detailed Information Sought

Pietrangelo requested from the city and its law director the invoices from a law firm for services it rendered concerning his lawsuit. The city provided copies of invoices with the name of the firm, the general matter for which services were provided, the date of the invoice, the total fees billed for the period, and itemized expenses.

The city redacted the remaining information on the invoices citing exemptions for attorney-client privilege and attorney-work product. The information that was redacted included narrative descriptions of the particular legal services rendered, the name of each attorney in the firm providing services along with the service provided, the time spent, the billing rate, the total number hours billed, and the total fee attributed to each attorney.

Pietrangelo filed a writ of mandamus with the Ninth District to compel the city to provide unredacted invoices and requested statutory damages and attorney fees. Pietrangelo and Avon Lake both filed for summary judgment, but the Ninth District determined it could not side with a party without more information and ordered the city to file unredacted copies of the billing statements for the judges to review under seal.

After review, in March 2015 the Ninth District concluded the city disclosed all the records not exempt from disclosure by the Ohio Public Records Act, which is R.C. 143.43, except for one portion. The Ninth District found the part of the invoice titled “professional fee summary,” that described the hours, rates, and money charged for services was not exempt. It ordered the city to provide Pietrangelo with copies of the billing statements that included the professional fee summary.

The Ninth District denied Pietrangelo’s request for the fully unredacted records plus damages and attorney fees. He appealed to the Supreme Court, which agreed to hear the case.

Extent of Attorney-Client Privilege at Issue

Citing its 2011 State ex rel. Dawson v. Bloom-Carroll Local School Dist. decision, the Court’s opinion explains that narrative portions of itemized attorney billing statements containing descriptions of legal services are protected by attorney-client privilege and are not public records.

Pietrangelo argued that based on the Court’s 2012 State ex rel. Anderson v. Vermillion decision he is entitled to all the dates legal services were performed along with the hours and rates of services, which is more than what is provided in the professional fee summary. The Court in Anderson stated that “the general title of the matter being handled, the dates services were performed, and the hours, rates and money charged for the services,” on an attorney billing statement need to be disclosed.

The Court explained that Anderson was the former mayor of Vermillion and was seeking the billing statements regarding the legal services provided to the new mayor. His entire request was denied. The Court ordered Vermillion to turn over all of the billing statements, ruling only the narrative portions were exempt from the public records act by attorney-client privilege.

Avon Lake argued the situation with Pietrangelo is similar to the Dawson case where a parent sought billing statements for legal services provided to the school district regarding pending litigation between the district, the parent and her children. The district provided summaries with the attorney’s name, invoice total, and the matter involved, but withheld the actual invoices because they contained confidential information.

The Court allowed the district to withhold the invoices because the information in the invoices was “either covered by attorney-client privilege or so inextricably intertwined with privileged materials as to also be exempt from disclosure.”

“Like Dawson, the records that Pietrangelo seeks relate to the pending litigation between the parties. If disclosed, Pietrangelo may acquire information that would be useful in his litigation strategy against the city, whereas in Anderson, any harm from disclosure of attorney-client communication was remote and speculative,” the Court stated. “To the extent that Pietrangelo requests the dates, hours, and rates not identified in the professional-fee summary, they are inextricably intertwined with the narratives of services that are privileged materials. Such information is exempt from disclosure.”

Pietrangelo also sought $1,000 in statutory damages and attorney fees because the Ninth District found the city did not fully comply with the public records law. The Court affirmed the Ninth District’s denial of Pietrangelo’s request because Avon Lake reasonably believed it was entitled to withhold the information it did.

Chief Justice Maureen O’Connor and Justices Paul E. Pfeifer, Terrence O’Donnell, Judith Ann Lanzinger, and William M. O’Neill joined the opinion.

More Disclosure Required, Dissent Maintains

In her dissent, Justice Kennedy stated she would order the redaction of only the narrative services information and release all the other information on the billing statements to Pietrangelo in accordance with the Ohio Public Records Act.

She further disagreed with the majority’s conclusion that the relevant distinction between Dawson and Anderson regarding what information is subject to disclosure is whether litigation is pending between the record requestor and the government entity. Instead, Justice Kennedy wrote that the fact the records requestor is involved in litigation against the government body should have no bearing on whether the records are public.

“Whether a public-records requestor and a government entity are engaged in litigation is irrelevant to the question of whether the information in an itemized attorney-fee billing statement is privileged and exempt from disclosure. Instead, our case law mandates the proper focus is on the information sought and whether that information is privileged,” she wrote.

The relevant distinction between the two cases was that the school board in Dawson reduced the nonexempt information to a summary and released it, whereas the city in Anderson denied the request and failed to provide an alternative record.

Justice Kennedy recognized that the narrative portions of a billing statement containing descriptions of legal service are protected by the attorney-client privilege and not subject to disclosure. She explained that the billing statements at issue contain summary information on the first two pages, and that all subsequent pages contain four independent columns divided into the categories of date, name, services, and hours. Each billing statement concluded with the total number of hours invoiced, a professional fee summary, disbursements and expenses, and a total invoice amount.

She wrote the majority’s reliance upon Dawson to conclude that the date, name, and hours information was inextricably intertwined with the narrative of the services was disingenuous. She noted that Dawson offered little discussion of how the billing statements were constituted, whereas the format used in the statements to Avon Lake separated the information about the attorneys providing the services and the hours billed so that they “are not intertwined with the narrative services column.”

Justice Kennedy reasoned that the ability to redact the narrative services column mandated all remaining portions of the billing statements be released. By affirming the appellate court's decision not to release the remaining non-exempt portions of the billing statements the majority created a new “redundancy” exemption not authorized by the General Assembly she concluded.

Justice Kennedy would have also granted Pietrangelo damages because after Anderson decision it should have been clear to Avon Lake what information in a billing statement was privileged and what must be disclosed.

“Subsequently, no well-informed public office could reasonably believe that any portion of an attorney-fee billing statement, other than the narrative description of the legal services performed, is subject to redaction,” she wrote.

Justice Judith L. French joined the dissent.

2015-0495. State ex rel. Pietrangelo v. Avon Lake, Slip Opinion No. 2016-Ohio-2974.

(Mike Frisch)

May 17, 2016 in Billable Hours, Clients, Privilege | Permalink | Comments (0)

From The Bedroom Window To Madawaska (And Then To Jail)

The Maine Supreme Judicial Court affirmed a conviction for fleeing from arrest on these facts

After the boyfriend opened the door, Dorweiler appeared in the doorway. The officer told her that he had a warrant for her arrest, and she “advised [him] she was aware.” At that point, the officer told Dorweiler that she was under arrest. The officer then asked Dorweiler “if there was anything she would like to take with her to the jail,” and she told him “that she wanted to put on a bra.” The officer and Dorweiler walked through the living room and the kitchen to the doorway of the bedroom. They “discussed some paperwork she had,” and Dorweiler asked the officer “what was going to happen.” The officer responded that they “were going to go down to the [Penobscot County Jail].”

Dorweiler went into the bedroom and closed the door behind her. After some time, the officer could not hear any noise coming from the bedroom, so he opened the door and discovered that the bedroom window was open and Dorweiler was gone. The officer learned from Dorweiler after she was apprehended that she had exited through the bedroom window, gone to a friend’s house, called her father, and had him drive her to Madawaska.

The court 

 On this record, we conclude that the trier of fact rationally could have found beyond a reasonable doubt that Dorweiler had submitted to arrest: Dorweiler acknowledged that the   heard the officer’s statement that she was under arrest, and said that she wanted to put on an item of clothing in response to the officer asking her if there was anything she would like to take with her to jail. Based on Dorweiler’s show of submission, the officer “asserted as much control over [Dorweiler] as the situation reasonably permitted or necessitated,” Donahue, 420 A.2d at 937, and did not need to accompany Dorweiler into the bedroom while she changed in order to effect the arrest.

We are not persuaded by Dorweiler’s argument that the court could not have found that she had submitted because she did not subjectively intend to submit and instead “manipulated” the officer in order to carry out her flight. To accept Dorweiler’s argument that her subjective intent controls the determination of whether she submitted to arrest would add a factor to the arrest analysis not previously considered by us or required by the escape statute and could lead to increased use of physical force by law enforcement to arrest defendants no matter their demonstrations of acquiescence

 She got 14 days in jail. (Mike Frisch)

May 17, 2016 | Permalink | Comments (0)

45 Counts

The Wisconsin Supreme Court upheld 45 counts of ethical misconduct and ordered a suspension of three years.

The attorney's contentions

Attorney Gatzke strenuously argues that the referee's recommendation for license revocation is wholly unwarranted. He points out that none of the counts asserted by the OLR allege that Attorney Gatzke's legal representation was deficient in any matter. He asserts the fact that he has not been previously disciplined, that his entire career has been an effort to benefit his community, and that he has been extremely cooperative with the OLR throughout the disciplinary process are significant mitigating factors that the referee should have weighed in determining what discipline is appropriate. He suggests that a suspension of less than five months is the maximum discipline warranted. He agrees that it would be appropriate for the court to require him to have his trust account reviewed by an accountant on a quarterly basis for a period of one year.

On the other hand

The OLR asserts there is overwhelming evidence in this case that Attorney Gatzke converted client funds systematically over a period of years and the misconduct cannot be explained away by ignorance or sloppy recordkeeping. The OLR says the referee appropriately noted that the ABA standards for imposing lawyer sanctions provide that "disbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client," and where "a lawyer engages in any other intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer's fitness to practice." ABA Standards, §§ III.C.4.11 and III.C.5.11(b). The OLR says in concluding that the multiple instances of conversion of client funds required revocation, the referee pointed to aggravating factors, including a pattern of misconduct, multiple offenses, refusal to acknowledge wrongdoing, the vulnerability of the victims, together with Attorney Gatzke's substantial experience in the practice of law and his indifference to making restitution. Thus, the OLR argues that revocation is an appropriate sanction.

The court split the baby

Much more troubling than the recordkeeping and trust account deficiencies are Attorney Gatzke's failure to obtain written conflict waivers before entering into business transactions with P.S. and his conversion of P.S.'s funds. We acknowledge that Attorney Gatzke's lack of previous disciplinary history warrants some consideration. However, the number of counts of misconduct at issue in this case requires a serious sanction... In Cooper, an attorney who was found to have committed multiple violations of SCR 20:8.4(c) as well as multiple trust account violations received a three-year suspension. We find a three-year suspension to be an appropriate sanction in this case as well.

The court also ordered restitution with a dissent on that point from Justice Gableman

I concur in the portion of the opinion suspending Attorney Gatzke's license to practice law for three years, imposing full costs, and requiring him, upon reinstatement, to submit to trust account monitoring. I dissent from the portion of the opinion ordering Attorney Gatzke to make restitution to P.S. and A.S. I believe the issue of restitution should be addressed in a separate civil proceeding.

I am authorized to state that Justice REBECCA G. BRADLEY joins this concurrence/dissent.


(Mike Frisch)


May 17, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Non-Lawyer Must Cease Advising On Health Care Issues

A decision issued today is summarized by Dan Trevas on the web page of the Ohio Supreme Court

A Toledo woman, who is not a licensed attorney, admitted she was wrongfully practicing law in Ohio when advising clients on how to reduce resources in order to qualify for Medicaid’s long-term care coverage. The Ohio Supreme Court today ordered her to stop advising individuals and marketing herself as an advisor and to return nearly $7,300 to a former client.

The Supreme Court unanimously found Raye-Lynn Abreu engaged in the unauthorized practice of law when operating under the trade names of A.I.M.S. (All Inclusive Medicaid Specialists), Personalized Long Term Consulting & Medicaid Specialists, and Medicaid Solutions. The Court accepted a consent decree Abreu entered into with the Toledo Bar Association that was approved by the Court’s Board on the Unauthorized Practice of Law.

Assisting With Medicaid Qualification Strategy

In a per curiam decision, the Court explained that Abreu contracted with Susan Heasley for $7,975 and with Howard Williamson Jr. for $8,975, representing she would “create a strategy specific to your family’s needs,” and that “the strategy will define the exact amount of resources you will be able to retain and the date Medicaid eligibility will exist.” Williamson elected to terminate his contract with Abreu, and she returned his payment.

The bar association brought a complaint against Abreu to the board. Abreu admitted to the board that when she marketed and represented to Heasley and Williamson that she was a Medicaid specialist who could create a strategy for the appropriate way to reduce resources to become Medicaid eligible, she was engaging in the unauthorized practice of law.

In the board’s report to the Court, it noted that prior to starting A.I.M.S., Abreu worked for the Ohio Department of Job and Family Services for 12 years and at an Area Office on Aging where she helped clients with Medicaid applications. She began circulating brochures at Lucas County nursing homes offering estate planning.

As part of the consent decree, Abreu agreed to immediately stop rendering advice or providing strategies to reduce resources to achieve Medicaid eligibility, including strategies for spending down and arranging assets and income to meet Medicaid requirements. She  also agreed to stop marketing or advertising in any fashion that she will provide advice or strategy for spending down and arranging assets to become Medicaid eligible. She  consented to pay Heasley $7,275 in restitution. The Court  did not to impose any civil penalties on Abreu but did assess $1,877.90 against her to pay the board’s costs for the matter.

2015-1955. Toledo Bar Assn. v. Abreu, Slip Opinion No. 2016-Ohio-2972.

(Mike Frisch)

May 17, 2016 in Bar Discipline & Process | Permalink | Comments (0)

No Sanctions For Guardianship Defense

The North Carolina Court of Appeals has held that sanctions were not justified against an attorney for her representation of a client in a proceeding alleging that the client was not competent to handle her own affairs.

The proceeding had been brought by the client's brother, with whom the client apparently had a contentious relationship. The brother sought to be appointed as the client's guardian.

Attorney Andrews could reasonably have inferred from Frank Cranor’s original and amended petitions for adjudication of Carole Cranor’s incompetence that Frank Cranor was attempting to gain control over his sister’s assets by having her declared incompetent and having himself named as her general guardian, and that the petitions were filed without a proper basis in fact. The petition was eventually dismissed for failure to state a claim. Frank Cranor represented in his petition that he had first-hand knowledge of Carole’s condition though there is evidence that he had no first-hand knowledge of her condition, in that he had had very little contact with her for many years...

we do not take a position regarding Attorney Andrews’ beliefs about the motivation of Frank Cranor and Attorney West in filing the petition or in prosecuting this matter. Indeed, Carole was suffering from dementia, and there was a concern regarding the initial DPOA which contained the self-gifting provision in favor of Ms. Hopkins. We simply conclude that the unchallenged findings and uncontroverted evidence in the record supports a conclusion that Attorney Andrews acted in good faith in filing the Rule 11 motion and the motion for attorneys’ fees. Accordingly, we hold that the superior court erred in imposing sanctions on Attorney Andrews in response to both motions.

 Nor were sanctions appropriate as an exercise of the lower court's inherent authority

In addition to the imposition of sanctions pursuant to Rule 11, the superior court imposed sanctions against Attorney Andrews in the exercise of its inherent authority. These sanctions included (1) prohibiting Attorney Andrews from collecting any fees or expenses from Carole Cranor, and (2) removing Attorney Andrews as Carole Cranor’s attorney. The proper standard of review for acts by the trial court in the exercise of its inherent authority is abuse of discretion. In re Key, 182 N.C. App. 714, 721, 643 S.E.2d 452, 457 (2007).

The superior court prohibited Attorney Andrews from collecting fees or expenses from Carole Cranor pursuant to the provisions of Indigent Defense Services (“IDS”) Rule 1.9(e), which governs the appointment of counsel to indigent clients and also applies to guardian ad litem appointments in certain situations. This was improper and constitutes an abuse of discretion. IDS Rule 1.9(e) addresses a situation where an attorney is appointed as counsel for an indigent client, withdraws, and then becomes privately retained as counsel for the same client. See Commentary to IDS Rule 1.9(e) (2014). That situation is markedly different from the facts of this case, where Ms. Andrews was appointed as Ms. Cranor’s guardian ad litem and where the record clearly shows that Ms. Cranor was not indigent. IDS Rule 1.9(e) clearly does not apply in the present situation.

Additionally, we do not believe the record supports the trial court’s removal of Attorney Andrews as counsel for Carole Cranor in this matter, or its order preventing Carole Cranor from retaining Attorney Andrews in any future matter.6 As previously discussed, many of the findings used by the trial court to support its conclusions were not supported by the evidence in the record. We do not believe that the undisturbed findings of the trial court support this sanction.

Justice Hunter concurred and dissented in part.

First, I would hold the trial court’s conclusions of law support its imposition of sanctions; the trial court’s conclusions of law are supported by its findings of fact; and the findings of fact are supported by a sufficiency of the evidence. Therefore, the trial court’s “decision to impose” Rule 11 sanctions is binding on this court. Turner, 352 N.C. at 165, 381 S.E.2d at 714.

Second, I would hold the trial court did not abuse its discretion in selecting the specific sanctions at issue. The trial court assigned the excess cost of litigation to Appellant, and prevented her from further representation in a case that she originally claimed presented a conflict of interest. Further, the trial court referred the matter to the State Bar, and in doing so, it did not abuse its discretion.

(Mike Frisch)

May 17, 2016 | Permalink | Comments (0)

Now Disbarred Twice

An attorney's felony theft conviction has resulted in his automatic disbarment by the New York Appellate Division for the Second Judicial Department.

The plea minutes reveal that, during the period from 2009 to 2012, the respondent misappropriated or stole client funds belonging to four different clients (Carmella Merola, Patricia Sherry, Farris Summers, and the Estate of Anna Duval). In each instance, the respondent invaded his clients' funds for personal use, using the funds to pay his bills, mortgage, and rent. Furthermore, when these individuals demanded their funds and the respondent failed to deliver to these individuals the funds they were entitled to receive, the respondent made false representations and promises to them at different points in time. The respondent lacked the funds to make full restitution to his victims. The Assistant District Attorney indicated that the People intended to seek confessions of judgment in the following amounts: $250,145 (Merola); $114,287.97 (Sherry); $122,129.39 (Summers); and $213,497 (Duval).

The ABA Journal reported on the crimes

A former New York prosecutor has admitted to embezzling $700,000 from four real estate clients.

Robert DePalma, 54, who has a St. George law office and formerly worked for the Staten Island district attorney, has pleaded guilty to a scheme to defraud and four counts of second-degree grand larceny, said Queens District Attorney Richard A. Brown in a news release (scroll down).

One client, who sold a home for $274,000, got nothing, reports the Staten Island Advance, as DePalma allegedly used the money for personal and business expenses.

His lawyer, Eric Nelson, declined to comment when contacted by the newspaper.

In 2012, DePalma was disbarred by consent in New Jersey due to a claimed $3,800 misappropriation from a client. However, the reciprocal discipline imposed in New York in 2013 was reduced to a suspension, reports another Staten Island Advance article published earlier this year.

An opinion by the Second Department imposing the suspension cited DePalma’s “profound remorse” and “full acceptance of responsibility,” the newspaper says.

It also noted DePalma’s “impressive” character witnesses,” including five judges, and “outstanding service to the community.”

DePalma faces up to 9 years when he is sentenced on Dec. 23 in the New York case.

(Mike Frisch)

May 17, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Monday, May 16, 2016

Compound Interest Charges Violate Rule 1.5

The Wyoming Supreme Court has adopted the report and recommendation of its Board on Professional Responsibility and imposed a public censure of an attorney who, among other things, had charged a clearly excessive fee by requiring payment of a 1 and a half percent interest on unpaid bills, compounded monthly.

Such an interest charge "was not reasonable under the circumstances."

The attorney also violated Rule 1.4 (communication) and Rule 1.15.

According to the board

Because of Respondent's lack of diligence in clearly communicating the fee arrangements, it is difficult to determine if Respondent knew or should have known he was dealing improperly with client property when he applied the $4,000 to fees and finance charges billed by Respondent several months prior to payment. However, given the timing of the transfer and the Respondent wrote "lawsuit" on the "for" line of the $4,000 check, the Board finds that Respondent knew or should have known that he was dealing improperly with the $4,000 payment when he directed his staff to apply the funds to prior billing statements.

(Mike Frisch)

May 16, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Sunday, May 15, 2016

Hedging Bets

Counsel for a hedge fund may be liable to investors for losses based on assurances provided by them, according to a recent opinion of the New York Appellate Division for the First Judicial Department

The evidence shows that plaintiffs requested a letter from defendants, who were outside counsel to a hedge fund in which plaintiffs had invested, regarding the implications of certain Security and Exchange Commission (SEC) inquiries into the fund. Defendants responded with a letter, addressed to plaintiffs, specifically answering plaintiffs' questions by characterizing the SEC inquiry as part of a new routine the SEC would be following under the newly passed Dodd-Frank legislation. Plaintiffs allege that, based upon defendants' assurances, they did not withdraw their investment in the fund. About a year after receiving the letter, the SEC instituted administrative cease and desist proceedings against the fund's managers, and the SEC ultimately prevailed in the proceedings. Plaintiffs allege that they lost their entire investment as a result of their reliance on defendants' false and misleading statements. Under the circumstances, plaintiffs adequately pleaded and showed the required "privity-like" relationship for their negligent misrepresentation claim (J.A.O. Acquisition Corp. v Stavitsky, 8 NY3d 144, 148 [2007]; see Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 382-385 [1992]).

Defendants are correct that this Court can affirm on alternative bases argued to, but not reached by, the motion court (Nickerson v Volt Delta Resources, 211 AD2d 512, 512 [1st Dept 1995], lv dismissed in part and denied in part 86 NY2d 860 [1995]), and that they cured their improper submission of the attorney defendant's affirmation by submitting the same affirmation in affidavit form on reply (see Berkman Bottger & Rodd, LLP v Moriarty, 58 AD3d 539, 539 [1st Dept 2009]). Nevertheless, they are not entitled to dismissal of the complaint. Plaintiffs adequately pleaded the other elements of their negligence claim, and defendants failed to establish as a matter of law that there were no false statements in the letter, that plaintiffs' reliance on defendants' statements was unreasonable, or that the alleged false statements did not proximately cause plaintiffs' alleged losses (see generally J.A.O. Acquisition Corp., 8 NY3d at 148).

(Mike Frisch)

May 15, 2016 in Clients | Permalink | Comments (0)

Saturday, May 14, 2016

Limited Louisiana License Granted To Disbarred Lawyer

With its trademark terseness, the Louisiana Supreme Court has granted an in-house license to an unnamed applicant.

Justice Knoll gave the as much of the story as we are likely to get in dissent

I respectfully dissent from the majority’s decision to grant petitioner a limited license to practice law in this state as in-house counsel for his employer. Petitioner was disbarred in another jurisdiction after he deliberately engaged in a pattern of improper billing practices at his former law firm. As a result of petitioner’s dishonest acts, his law firm was required to reimburse the client’s losses of more than $595,000. In my view, petitioner’s conduct demonstrates a fundamental lack of moral character. Had petitioner been a practicing attorney in Louisiana at the time of this misconduct, there is no question that he would have been permanently disbarred...

The mere fact petitioner is seeking a limited license to practice law is of no moment. Supreme Court Rule XVII, § 14(A)(1)(f)(2) provides in-house counsel are required to satisfy the same standards of character and fitness as all other applicants for admission to the Louisiana bar.

As explained in my concurrence in In re: Hinson-Lyles, 02-2578 (La. 12/3/03), 864 So. 2d 108, “… it is a mockery of our rules to allow someone to apply for admission when the undisputed conduct at issue is a recommended ground for permanent disbarment.” Considering petitioner’s egregious conduct, I see absolutely no basis for granting him admission to the bar in this state in any capacity.

Justice Crichton concurred

I join the majority in granting petitioner a limited license to practice law in the State of Louisiana as provided by La. Sup. Court. Rule XVII, § 14. I write separately to point out that while petitioner’s past conduct is egregious indeed, the application before this Court demonstrates that he has made full restitution; he has acknowledged his wrongdoing, and he has consistently sought atonement for the far-reaching consequences of his actions. Notably, he met the stringent requirements to be re-admitted to the bar in another jurisdiction, and is presently a member in good standing there. Furthermore, although petitioner previously applied for a limited license in Louisiana in 2012, which this Court denied, I believe the additional time since that decision has allowed petitioner an even greater opportunity for professional improvement and reestablishment. Petitioner has also shown sufficient rehabilitative efforts, through counseling and therapy, as well as his full disclosure with his present employer, who supports and encourages petitioner’s application. Moreover, this Court is only granting a limited ability to practice law as an in-house counsel for petitioner’s present employer, and he will not be afforded the full benefits of a standard practicing lawyer. In my view, based upon the time that has passed, and petitioner’s sufficient showing that he has made every effort to follow, and continue on, a straight and narrow path, this Court has made the correct decision to allow petitioner a limited license to practice law in Louisiana.

Chief Justice Johnson also dissented. 

I must say that I look with disfavor on Louisiana's practice of not identifying the applicant or explaining the rationale for its actions. (Mike Frisch)

May 14, 2016 in Bar Discipline & Process | Permalink | Comments (1)

Friday, May 13, 2016

Heart Of Darkness

The Louisiana Supreme Court has accepted the resignation of a former District Attorney.

The Times Picayune had the story  of his conviction on obstruction of justice charges

Harry Morel Jr., the retired St. Charles Parish district attorney, described Wednesday (April 20) by U.S. Attorney Kenneth Polite as a "predator" who for two decades demanded sexual favors from "vulnerable" women seeking his legal help. Morel hit on at least 20 women, Polite said after Morel pleaded guilty to a single count of obstruction of justice.

Polite said his office will seek the maximum prison time of three years. Sentencing is set Aug. 17.

"By title he was the embodiment of justice, the elected district attorney of St. Charles Parish for over 30 years," Polite said. "However, in the darkness of his heart he was something else entirely: a man who perverted his position of power to take sexual advantage of desperate women who needed help, and he did this over and over again."

Morel, 73, pleaded guilty as expected before U.S. District Judge Kurt Englehardt. Prosecutors said he harassed a witness before the grand jury that was investigating him.

The office of the United States Attorney posted further details.

According to court records, MOREL served as the elected prosecutor of St. Charles Parish, Louisiana from on or about January 1, 1979 until May 31, 2012. Thereafter, he became an Assistant District Attorney in the Office of the District Attorney for St. Charles Parish and remained in that position until January 11, 2013. MOREL resided in, and his office was located in, St. Charles Parish, Louisiana, in the Eastern District of Louisiana.

As District Attorney and as an Assistant District Attorney for St. Charles Parish, MOREL was responsible for prosecuting individuals charged with criminal and traffic offenses against the State of Louisiana.  As the District Attorney, MOREL had the authority and discretion to, among other things, make bail recommendations, make sentence recommendations and bring dismiss, forego or reduce charges.

MOREL freely admitted that he is guilty of Obstruction of Justice in that he harassed Individual "A" and attempted to prevent and dissuade Individual "A" from attending or testifying in an official proceeding,i.e., the federal grand jury, by telling Individual "A" to "get rid of” and to "destroy" the evidence of a meeting they had and to deny the inappropriate nature of the meeting to law enforcement officials. Furthermore, based on Individual "A"'s representations,  MOREL believed there would be a federal Grand Jury investigation, and as a result asked her to conceal information that would have likely led to her being a witness before that body.

MOREL also admitted that on other occasions, between 2007 and 2009, he solicited sex from other individuals who were defendants or who had family members who were defendants in the St. Charles Parish criminal justice system.   While soliciting sex from these individuals, MOREL likewise used the office of the District Attorney to provide benefits to these other individuals, including falsifying community service reports.

MOREL faces a maximum term of imprisonment of three years, a fine of $250,000 and one year of supervised release following any term of imprisonment.  Under the terms of his Rule 11(c)(1)(B) plea agreement, MOREL acknowledges that the Government will recommend that the Court impose the maximum sentence of three years in prison.  U.S. District Judge Kurt D. Engelhardt set sentencing for August 17, 2016.   

U.S. Attorney Polite noted that the investigation has not implicated any other former or current employees of the St. Charles Parish District Attorney's Office.

(Mike Frisch)

May 13, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Bankruptcy Court Misconduct Draws Reciprocal Disbarment

The Mississippi Supreme Court has disbarred an attorney for misconduct that had resulted in his permanent disbarment  by the United States Bankruptcy Court for the Northern District of Mississippi

The bankruptcy court concluded that “in filing the 2015 Petition and First Certificate, Mr. Labovitz has acted in bad faith and has violated a myriad of Bankruptcy Code provisions, Federal and Local Rules of Bankruptcy Procedure, and ethical rules imposed by the Mississippi Rules of Professional Conduct.” Id. On its findings, the bankruptcy court permanently disbarred Labovitz from the practice of law in the United States Bankruptcy Court for the Northern District of Mississippi...

Upon review ofthe facts gleaned from the record before this Court and the bankruptcy court’s findings, it is clear that Labovitz’s conduct constituted a violation of our ethical rules. Labovitz knowingly and willfully filed a bankruptcy petition on another individual’s behalf despite a lack of authority to do so, and then forged that individual’s signature on various documents presented to the bankruptcy court. This conduct clearly constitutes a violation of Rules 3.3(a) and 8.4 (c) and (d).2 The egregiousness of his actions combined with his history of ethical violations warrants disbarment.

The court here found no mitigation sufficient to warrant a lesser sanction.(Mike Frisch)

May 13, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Conflicts Among Clients Get Lawyer Suspended

The Iowa Supreme Court has imposed a 60-day suspension of an attorney for misconduct in two client-related matters.

One involved representation of clients in "manure easement" matters. 

There was also this

After the Board filed its complaint against Stoller, [opposing counsel] Robert sent a letter to Pat O’Brien, counsel for the Board, regarding a firearm incident with Stoller. Robert stated in his letter that there had been a pretrial conference in the small claims case in May or June 2014, during which Stoller pulled a .44 Magnum pistol out of his briefcase. Robert further stated that Stoller was waving the pistol in the air and said that he would “take care of” John Maloney, the opposing party. Robert told O’Brien that he was scared that Stoller would attack him physically and that he obtained a concealed carry permit for this reason. Stoller does not deny that he took a firearm out in Robert’s presence, but he claims that it occurred in his office and it was “a joking incident amongst men.” He further asserts that he keeps the gun in his desk because he has been attacked in his office on two separate occasions. Stoller denies that he ever threatened to harm anyone.

One of the matters involved a concurrent conflict of interest

While Stoller did obtain written consent from both Chaplin and the Martens in this case, he did not obtain the consent until well after he had undertaken the representation of both parties. As discussed above, Stoller had represented the Martens for a number of years. He began representing Chaplin in late March 2011, when he prepared the consent form and advised her to sign the consent form effectively transferring all of the assets of OCI to the Martens. Stoller then helped Chaplin establish a corporation and wrote the lease agreement between the Martens and Chaplin’s new corporation. Stoller did not obtain written consent from the parties until May 30, well after the material events had already occurred.

In consent to conflicts, timing is everything.

There was also dishonesty

Stoller perpetrated a sham transaction that demonstrated a lack of honesty. He arranged for one client, who did not have authority to do so, to purport to sell property to another client for far less than the property’s value. From the very beginning, his actions demonstrated more than a misreading of Iowa law. His actions demonstrated the intent to mislead not only OCI but also his own clients. Stoller not only assisted Chaplin in transferring the remaining assets of OCI for far less than the equipment was worth, he also assisted her in creating a new entity and allowed her entity to take possession of the equipment to operate her own bar and restaurant. Throughout, Stoller continued to represent to Chaplin and the Martens that there was legal authority to support his actions.

The other client matter also involved concurrent conflicts

First, we must clearly identify the clients. The clients involved are NuStar and the Zylstras. Second, we must determine whether a conflict of interest exists. In the companion case, we held that a conflict existed because the position of NuStar at the time Stoller undertook their representation was directly adverse to that of the Zylstras...

Stoller began his representation of NuStar in early May, knowing that the action would eventually become adverse to the Zylstras if they refused to sign the deed. Stoller began contacting the Zylstras on behalf of NuStar before the May 13 email officially terminating the attorney– client relationship. By the time Stoller sent the May 13 email, he was already contemplating taking action against the Zylstras on behalf of NuStar. His email to the Zylstras stated,

I must now put you on formal notice that if the signed deed is not received by my office by the close of business on Wednesday, May 14, 2014, that I will need to pursue the appropriate remedies for specific performance and damages on behalf of Nustar.

In this email, Stoller clearly evinces the intent to pursue a future adverse action against the Zylstras. The intent to pursue legal action unless the Zylstras complied with NuStar’s request to sign the deed arose before the email was sent. Stoller and NuStar had already discussed the possibility of taking action, which is precisely why the demand, or “formal notice” language, is included in the email. Until the Zylstras received the May 13 email, Stoller continued to represent them in their small claims action. In the same email terminating the attorney–client relationship, Stoller threatened to bring a civil suit against the Zylstras on a legal matter that he had previously discussed with Robert.

The gun incident did not merit a sanction

The commission also recommended that Stoller be prohibited from possessing a firearm while conducting any legal business as a condition of his reinstatement. The commission made this decision despite the fact that the Board never requested a firearm sanction. Robert’s letter to the Board came in the middle of these proceedings. Stoller was given no notice that the commission would consider restrictions on firearms as part of his disciplinary proceeding. The “absence of fair notice as to the reach of the grievance procedure and the precise nature of the charges deprive[s] [a] petitioner of procedural due process.” In re Ruffalo, 390 U.S. 544, 552, 88 S. Ct. 1222, 1226, 20 L. Ed. 2d 117, 123 (1968). While the allegation, if true, is disturbing, we decline to adopt the recommendation of the commission as to the possession of a firearm.

The Grievance Commission had proposed a 90-day suspension.

The court released an opinion in the Zylstra litigation holding that it was not an abuse of discretion to disqualify the the attorney. (Mike Frisch)

May 13, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Without Conscience

Two attorneys have been appointed as receivers of the practice of a Maine attorney recently imprisoned for bilking elderly clients.

BDN Maine  reported on the crimes

A Belfast lawyer was sentenced Friday to 30 months in prison for stealing nearly $500,000 from two elderly clients.

In one case, William L. Dawson Jr. placed an 85-year-old Belfast resident in a nursing home for four years while he looted her bank accounts, according to court records.

 Dawson pleaded guilty Friday in Waldo County Superior Court to two counts of felony theft and three counts of failing to pay state income taxes. Justice Robert Murray sentenced Dawson to five years in prison with all but 2½ years suspended to be followed by three years of probation.

The theft was uncovered in March 2013 when a teller at Key Bank noticed Dawson was writing large checks to himself on at least a weekly basis from the account of Veronica Pendleton. She alerted her supervisor, and a review of the account was undertaken, as well as that of another customer, 97-year-old Doris Schmidt. In that case, Dawson also was writing large checks on her account, according to Assistant Maine Attorney General Leanne Robbin.

Murray ordered Dawson to pay restitution of $385,000 to Pendleton’s estate and $98,000 to Schmidt’s estate. Both women have since died.

The prosecutor said that after an investigation began, Dawson submitted bills he said explained the checks. But Robbin said the reasons Dawson gave for the billing were “breathtaking.” Even though his office was just a one-minute drive from Pendleton’s home, Dawson would bill her $250 per hour for six to seven hours to go check on the house, pick up her mail and take care of her bills while she was in the nursing home.

A probate court in 2013 removed Dawson’s power over their finances.

Attorney Susan Thiem, who represents the Pendleton estate, said Friday that Dawson had put Pendleton in the nursing home for a temporary medical condition but kept her there for four years until his theft of her money was uncovered. Thiem read a letter from Anne Cilley, who was a friend of Pendleton, in which she said that after the theft was uncovered, Pendleton was able to return home for three months before she died.

Pendleton had told Cilley she felt like she had been incarcerated for four years and missed seeing the birds and squirrels in her yard, according to Cilley’s letter.

Schmidt suffered from dementia and was in the same nursing home as Pendleton. Dawson had given himself power of attorney over Schmidt’s finances without going to probate court, according to the prosecutor.

Sarah McPartland-Good, the director of planned giving for the University of Maine Foundation, said both women previously had given to the foundation. Pendleton donated money for scholarships for forestry and related programs while Schmidt gave to the senior college at the Hutchinson Center in Belfast. She said the theft deprived at least one student each year from receiving at least a year’s worth of tuition in scholarship.

Dawson spoke to Murray before the sentence was imposed. He said overseeing the properties and finances of the two women was a heavy burden and he wished he had done a better job. He said he checked on their homes on a daily basis because he had a prior client whose pipes burst while she was in a nursing home and significantly damaged the home. Dawson said he did not want a repeat of that incident.

Murray also ordered Dawson to repay $36,000 in back state incomes taxes for 2011, 2012 and 2013 from the unreported income he received from the victims’ accounts.

Dawson has agreed to sell his house with the proceeds of the sale — minus taxes he owes and his attorney’s fees — to go toward repaying some of the money owed. Dawson filed for bankruptcy last month, which Thiem said will make it more complicated to recover money.

The judge agreed to allow Dawson to report to jail at noon Saturday so the lawyer could complete his tax returns.

Dawson has practiced law in Maine since 1989.

Back in 2011, Dawson was reprimanded by the bar overseers after three separate clients filed complaints alleging he had not done his work in a timely or competent fashion.

Considering the sentence imposed on the Iowa attorney reported below, I'd call the sentence here to be on the light side. It is hard to imagine conduct that reflects more poorly on the profession. (Mike Frisch)

May 13, 2016 in Bar Discipline & Process | Permalink | Comments (1)

Billing For Unperformed Indigent Defense Work Leads To Conviction, Disbarment And Ten Year Prison Sentence

The Iowa Supreme Court recently accepted the consent disbarment of an attorney convicted of theft.

The Des Moines Register reported on the crimes

A former Spencer attorney who pleaded guilty to a charge that he overbilled the state nearly $178,000 was sentenced Friday to 10 years in prison.

Attorney Ney McDaniel had been improperly paid at least $177,755, mostly for hours he didn't work while being under contract to represent indigent Iowans between 2007 and 2011, a state audit released in 2013 showed.

McDaniel was subsequently arrested and pleaded guilty to a felony theft charge. Clay County District Court Judge Patrick Tott on Friday sentenced McDaniel to prison, fined him $1,000 and ordered him to repay the money he was improperly paid.

“We’re satisfied…We think the prison sentence sends a strong message,” Assistant Attorney General Robert Sand said Friday.

He had been suspended on an interim basis as a result of the guilty plea. ( Mike Frisch)

May 13, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Thursday, May 12, 2016

Case Dismissed: Abusive Husband Pressed Wife To Complain About Her Attorney

A disciplinary decision that dismissed charges was recently issued by an Arizona Hearing Panel

This single count complaint arose out of husband calling the State Bar 42 times from four phones in a single day, regarding the representation by [Respondent]  Mr. White of husband’s wife (“client”)  in divorce proceedings in 2013. The divorce case involved allegations of significant and pervasive domestic violence by husband against client. The complaint alleges three categories of unethical actions occurred during the representation of client. The first of these is Mr. White made descriptive sexual comments to client. There is no allegation he propositioned her or committed domestic violence against her, but that he made rude and inappropriate descriptive sexual comments. We find this untrue. The second category is Mr. White was inadvertently insensitive in two other comments. We believe he was insensitive and as he acknowledged, thoughtless. We find his tactless comments did not violate the ethical rules.

The third category alleged Mr. White failed to timely withdraw from representation and “filed a frivolous notice to the court.” The allegation stated that pleading revealed confidential client information to the court submitted without the informed consent of his client. We find this also untrue. As a result, we dismiss the case.

The panel found that the husband's domestic violence against the attorney 's client motivated the bar complaint

In domestic violence, the victim is often subjected to emotionally abusive and controlling behavior. At its core, domestic violence seeks control of its victim. Violence is but one tool of a methodical design to dominate, control and isolate the victim from any who might protect or rescue. While not presented, we accept domestic violence is epidemic with a wide range of victims in every community. Its reach seems limitless. Neither age, economic status, faith or its absence, race, nationality, gender identity, sexual orientation, education or intellectual prowess assure its absence. Like echoes in a canyon, the consequences of domestic violence can reverberate generationally and last multiple lifetimes. As a result, the children were also victims of the domestic violence. It is in this context the case was presented.

We do not ignore the ongoing plight of client by our dismissal. It appears likely to us she was compelled by husband, as part of his continuing control of her, to report these non-existent statements of Mr. White to the police. It was likely intended by husband to place client in a position where she believes she could not retract her statements as they would constitute a false police report. Regardless, we find her testimony before us diminished substantively the allegations. While we regret the plight of client and the seemingly ongoing domestic violence against her, we focus on the evidence before us to determine what is true regarding the allegations in the complaint.

The client was also victimized by "revenge porn."

As to the merits

We find Mr. White aggressively advocated for his client and sought to protect her. We expect no less, especially in such pervasive domestic violence. We believe the State Bar properly brought this case before us. It is our task to determine the facts and apply the law to those facts. The duty of the State Bar is clear under Supreme Court Rule 55(a). “The state bar shall evaluate all information coming to its attention, in any form, by charge or otherwise, alleging unprofessional conduct, misconduct, or incapacity.” Because we find the substantive allegations untrue or not violations of the Rules of Professional Responsibility, we dismiss this case.

An inappropriate but not unethical comment had to do with a motion to withdraw as counsel

Mr. White inquired why the motion to withdraw had not been returned. Client gave him an explanation and Mr. White, while attempting to emphasize the importance of her proceeding for the sake of her and her children, jokingly and inappropriately stated if she requested he file such a motion again he would put her over his knee and spank her and enjoy it. We, the Panel, find this statement entirely inappropriate. However, we find no sexual intent in the comment, but rather past frustration at the inability of client to follow the steps to protect her children and herself from husband.

(Mike Frisch)

May 12, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Bristol Stomp

A Virginia attorney accepted license revocation in the wake of criminal charges described by the Office of the United States Attorney for the Western District of Virginia

For the second time in as many days, a former official with the Bristol Virginia Utilities Authority pled guilty to federal conspiracy charges United States Attorney John P. Fishwick Jr. announced today.

G. Walter Bressler, 73, of Bristol, Virginia, waived his right to be indicted and pled guilty this afternoon in the United States District Court for the Western District of Virginia in Abingdon to a one count Information charging him with conspiracy to commit program fraud and having knowledge of the actual commission of felony and concealing such felony from the United States.

“Mr. Bressler had a requirement as general counsel for BVU to ensure they were following the law and he failed in that duty,” United States Attorney John P. Fishwick Jr. said today. “

“Public corruption, which includes the illegal mishandling of taxpayer funded programs, is the FBI’s highest criminal investigative priority.  The Bristol Virginia Utilities Authority mess is an example of what can happen when corruption is tolerated by government officials and employees,” said Adam S. Lee, Special Agent in Charge of the FBI’s Richmond Division.

“Today’s plea is a reminder that IRS-CI will remain vigilant in our investigation of these financial fraud schemes and will continue working with our law enforcement partners to combat this type of criminal conduct,” said Thomas Jankowski , Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office.

According to evidence presented at today’s hearing by Assistant United States Attorney Zachary T. Lee, Bressler was employed as General Counsel for BVU from January 1, 2009 to March 1, 2015. As part of his duties as General Counsel, Bressler was involved in the negotiations between Company #1 and BVU. BVU entered into an agreement with Company #1 that if BVU signed a contract for services with Company #1, then Company #1 would pay to entertain BVU executives, to include Bressler, and BVU Board Members and employee during a site visit in Dallas, Texas in November 2011. This entertainment included the payment of hotel expenses, limousine services, meals and tickets to a Dallas Cowboys football game, including access to a luxury box. In all, Company #1 paid more than $10,000 to entertain BVU executives and Board Members during the weekend of November 5, 2011 and November 8, 2011. Company #1 entered into a contract with BVU for the amount of $4,496,096.

On or about and between August 2013 and September 31, 2013, allegations of misconduct on the part of Wes Rosenbalm were brought to the attention of the BVU Board of Directors and Bressler. These allegations were discussed in multiple board meetings during executive sessions, during which Bressler was present.

On September 16, 2013 a BVU Board of Directors Meeting was held, after entering into executive session, the BVU Board of Directors, with Bressler present, discussed the implications of the alleged misconduct of Rosenbalm, specifically the BVU Board of Directors discussed the receipt of tickets by Rosenbalm from vendors and contractors engaged in business with BVU and the implications that the acceptance of those gifts violated the Virginia Procurement Act.

BVU Board Members also discussed the possibility that vendors who were not awarded contracts in favor of those who gave gifts were going to “raise all kinds of ruckus.” During the course of the executive session, board members, with Bressler present, discussed the possibility that other BVU employees, specifically, Stacy Pomrenke and David Copeland, were also mentioned as being involved in illegal activity associated with vendors of BVU.

During the September 16, 2013 executive session, BVU Board Members, with Bressler present, had specific discussions about violations of federal law, the types of violations that had occurred and the consequences of those violations. However, following those discussions neither any of the Board Members or Bressler decided to contact law enforcement with the information that state and federal law had been violated, but instead determined it was best to provide Wes Rosenbalm with a severance package in hopes that any allegations of misconduct by Rosenbalm, other BVU employees, or BVU Board Members would not be made public or become known to law enforcement.

On or about September 25, 2013, the BVU Board of Directors entered into an agreement with Rosenbalm to pay Rosenbalm a severance package of $269,420 in return for his resignation as CEO of BVU.

BVU Board Member #1, independently, and without support of the Board of Directors, brought his concerns about misconduct at BVU to the attention of law enforcement on or about October 21, 2013.

The investigation of the case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation.  Assistant United States Attorney Zachary Lee and Special Assistant United States Attorney Kevin Jayne prosecuted the case for the United States.

(Mike Frisch)

May 12, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Heroes And Villains

Sometimes (but not with any frequency) some component part of the District of Columbia disciplinary system performs in a manner that  merits effusive praise.

Today is one of those days.

The case is In re Squire Padgett and can be found at  this link.

A hearing committee chaired by attorney Robert L. Walker issued an 104 page comprehensive opinion recommending disbarment. The report was filed approximately five months after the post-hearing briefing in the matter.

The four charges relate not only to Respondent’s alleged misconduct, but also to misconduct by another attorney named Lathal Ponder, Jr. (“Ponder”), who practiced law at Respondent’s law firm during the relevant time period. Mr. Ponder was disbarred in a separate proceeding in 2012. Respondent does not dispute most of the facts established by Disciplinary Counsel at the hearing of the instant matter, some of which involved Mr. Ponder’s egregious misconduct while employed at Respondent’s law firm. Instead of disputing the underlying facts, Respondent presents a legal dispute about Mr. Ponder’s status at Respondent’s law firm. Respondent argues that at various different times, Mr. Ponder was a subordinate employee of Respondent, then became a de facto partner, and finally a mere co-tenant who shared offices with Respondent. Respondent argues that he had no duty to supervise Mr. Ponder and that he owed no duties to Mr. Ponder’s clients, from the late-1990s onward, because he had no attorney client relationship with them. The thrust of Respondent’s defense is that Disciplinary Counsel’s charges inappropriately seek to hold Respondent vicariously liable for Mr. Ponder’s misconduct, and that a failure of proof dooms Disciplinary Counsel’s remaining specifications about Respondent’s mishandling of client funds and the remaining allegations of his misconduct.

The committee found intentional misappropriation and other misconduct

Disbarment is also the appropriate sanction for Respondent’s protracted, flagrant dishonesty, and his fraudulent conduct. Respondent participated in a scheme to convince the Blounts that they would receive $15 million from a fictitious settlement, he falsely told them that rogues from the Center were engaging in criminal conduct to avoid payment, that bank and law firm computers had been hacked in an effort to delay payment, and that the Blounts were in danger from the Center’s imaginary rogues, and should stay in hiding. While this story was a complete fiction, the damage it caused was not: Ms. Blount and her husband were forced to file for bankruptcy when they were unable to pay debts they had incurred in the false belief that a large settlement payment would soon be provided to Ms. Blount. Tr. 162-63, 197 (Blount). Moreover, Respondent reiterated and reinforced this fabrication even when the Blounts confronted him with contradictory evidence and when he knew that they were taking on debt in reliance on the false payout he promised. Respondent also defrauded American Storage when he paid back rent with checks he knew to be worthless...

A license to practice law is a privilege, not a right. Overall, Respondent’s conduct reflects a continuing and pervasive indifference to his obligations to clients, the judicial system, and the public. It is clear that Respondent should no longer have the privilege of practicing law.

Obviously, kudos also extend to the disciplinary prosecutor in the case.

But this nugget reflects discredit and dishonor on the Executive office of the Board on Professional Responsibility

Between June and September 2014, Disciplinary Counsel submitted to the Board Office proposed Specifications of Charges against Mr. Padgett in four separate matters...The charges were approved by a Contact Member in April 2015 and Disciplinary Counsel filed them with the Board on April 17, 2015. 

So, charges supported by what the hearing committee characterized as overwhelming evidence meriting disbarment sat unreviewed in the BPR offices for at least seven months waiting for nothing but routine review and approval. The attorney got this time to practice and throughout that period the disciplinary system risked loss of evidence and other complications to their proof. 

When I was at Bar (now Disciplinary) Counsel, no charges ever sat waiting review for more than a few weeks. Now delays for this review routinely extend to a year.

I served under five Bar Counsel during my tenure from 1984 to 2001. Every one of them would have raised holy hell about this pointless and dangerous delay. 

Times have changed.

This is truly a scandal and no one - including the District of Columbia Court of Appeals - seems to care at all. (Mike Frisch)

May 12, 2016 in Bar Discipline & Process | Permalink | Comments (0)

Getting Paid

An attorney may be compensated for legal work done to secure fees in a guardianship matter, according to a decision issued today by the District of Columbia Court of Appeals.

Appellant, Bruce E. Gardner, Esq., asserts in this appeal that he is "entitled to compensation from the Guardianship Fund for the time he spent protecting his rights to compensation in appeals to this Court that are related to his appointment as guardian and the guardianship duties he performed." He seeks a remand to the Superior Court for that court to reconsider his fee petition and "to determine the reasonableness of the compensation" he requested for his appellate work. For the reasons discussed below, we agree that the Superior Court is authorized to approve compensation to Mr. Gardner for his fee-related appellate litigation work relating to his service as guardian — and, if the ward‟s assets are depleted, to approve payment to Mr. Gardner from the Guardianship Fund — even if (as appellee District of Columbia contends) "the fee-related litigation was of no benefit to the [particular] ward." We remand to the Superior Court the issue of Mr. Gardner‟s entitlement to compensation for his appellate work.

Associate Judge Thompson authored the unanimous opinion. (Mike Frisch)

May 12, 2016 in Billable Hours | Permalink | Comments (0)

Disgorgement Of Attorney Wages Improper

The Washington State Court of Appeals has held that a trial court exceeded its authority in reducing an award of wages to a former in-house counsel

Following a month-long jury trial, attorney Geoffrey Chism was awarded $750,000 for breach of two compensation contracts by his former employer, Tri-State Construction, Inc., and exemplary damages for unlawful wage withholding. The trial court then dramatically reduced Chism's recovery, premised on findings that Chism violated Washington's Rules of Professional Conduct (RPCs) during his time as Tri-State's in-house general counsel. By ordering disgorgement of Chism's wages based on novel interpretations of several RPCs, the trial court exceeded the disciplinary authority delegated to it by our Supreme Court. Moreover, the trial court disregarded the strong legislative policy preference in favor of payment of earned wages by failing to even acknowledge that, unsupported by precedent, it was ordering disgorgement of an attorney's wages, as opposed to an attorney's fee. Accordingly, we reverse the trial court's challenged rulings and remand the cause for entry of judgment consistent with the jury's verdict.

The court

The question presented arises at the intersection of judicial power over the practice of law and legislative power over the conditions of employment. Our Supreme Court has offered some guidance about resolving such situations, stating, "While we should jealously protect our prerogatives, if the legislative power is not limited by the constitution, it should be unrestrained." Demopolis, 103 Wn.2d at 65. As previously stated, in the area of attorney wages, the Supreme Court has taken no action, but the legislature has enacted a broad policy in favor of the payment of employee wages. Given this stark contrast, we defer to the strong legislative policy in this area.

This conclusion is consequential for how we view the application of the disgorgement sanction to attorney wages. As has been described, disgorgement does not require proof of either causation or damage, only misconduct. This is unlike other, related claims, including breach of fiduciary duty and restitution, both of which require such proof. Because there is no standard measure for a disgorgement order, nor a requirement that it be imposed as a compensatory measure, it poses a significant threat to the legislative policy in favor of the consistent payment of employee wages.

This threat is illustrated by the trial court's order in this case. Herein, Tri-State chose to pursue only disgorgement from Chism, not a separate claim for damages or restitution. Accordingly, Tri-State was never required to prove that it suffered any injury as a result of Chism's alleged misconduct. Nevertheless, the trial court ordered Chism to disgorge $550,000 in wages (plus another $550,000 in exemplary damages for wage withholding).

The trial court exceeded its disciplinary authority by ordering Chism to disgorge a significant portion of the wages otherwise owed to him without either acknowledging that itwas disgorging wages, not fees, or accounting for the strong legislative preference in favor of employers paying earned employee wages. Therefore, the trial court's order was improper as a matter of law.

Thanks to Alan Kabat for sending this opinion to us. (Mike Frisch)

May 12, 2016 in Billable Hours, Clients | Permalink | Comments (0)