Tuesday, January 25, 2022

Tan Lines

The New Jersey Supreme Court has entered an order dismissing an ethics complaint.

A majority of the Disciplinary Review Board has found that the attorney engaged in dishonest conduct and Rule 1.15 violations and has proposed a public censure.

The representation

In late 2014, Blanche Ryder retained the grievant, Keith N. Biebelberg, Esq., in connection with contemplated divorce proceedings against her husband, Christopher Ryder.  Christopher was the sole member of Beach Bum Tanning, LLC, which he had acquired during the marriage. On December 1, 2014, Biebelberg wrote to Christopher, identified himself as counsel for Blanche, and remarked that “the tanning salon in East Hanover which the two of you own as members of [BBT] is for sale.” Biebelberg informed Christopher that Blanche was in favor of the sale, but lacked details to which she had a right, and stated that there was a “substantial amount of money at stake.” Biebelberg further asked Christopher to provide contact information for any attorney representing BBT. He closed his letter by informing Christopher that, if Blanche’s efforts to ascertain information were “delayed or thwarted,” he would be forced to seek restraints in New Jersey Superior Court via an Order to Show Cause. On December 4, 2014, Christopher called Biebelberg and informed him that the sale had fallen through and that he had not yet retained an attorney to represent BBT. That same date, Biebelberg memorialized the telephone conversation in a letter to Christopher.

The sale later occurred

Respondent argued that, at this point, he was “confronted with a fundamental problem. My client disclosed something he wanted kept confidential. Under the law he had a right to sell that business, to receive the money, and to pay legitimate debts.” Respondent maintained that, if he had informed Biebelberg of the impending sale, he “would have violated the attorney-client privilege.”

Respondent then advised Christopher to open a new bank account for the purpose of depositing the net proceeds of the BBT sale. Respondent denied that he gave that advice to assist Christopher in concealing the sale of BBT or its sale proceeds from Blanche. Rather, he contended that a separate bank account would simplify the accounting for the disbursement of the sale proceeds. Moreover, respondent maintained that a client with financial problems, such as Christopher, may be unaware of liens or lawsuits that could interfere with the disbursement of funds. When asked whether the family court had mechanisms available, on an emergent basis, for Christopher to receive and disburse such sale proceeds, respondent answered in the negative.

The adverse findings

Nevertheless, despite knowing that BBT was a marital asset subject to equitable distribution, and despite knowing that Biebelberg had requested to be informed about the status of the business, respondent deliberately failed to disclose his firm’s representation of Christopher in the sale of BBT; the impending sale of the business; the deposit of the net sale proceeds into his firm’s trust account; and the disbursement of the entirety of those proceeds to Christopher. As an aside, respondent’s deposit of Christopher’s funds in his business account, rather than his trust account, raises concerns about his intent to conceal those funds.

A DRB dissent would dismiss as had been recommended by a Special Master

Because the business was solely owned by Christopher at the time of the sale, Blanche had no interest in the business and no interest in the proceeds of its sale. At best, she had a potential, unlitigated claim of right to equitable distribution of a portion of the proceeds.

The error in applying Rule 1.15

The critical mistake made by the majority here in deciding that respondent violated RPC 1.15(b) is its confusing the concept of a marital asset that may be subject to eventual distribution by a court in a divorce proceeding with an actual present interest in property.

And dishonesty

we agree with the Special Master that respondent made no promises to grievant and did not falsely misrepresent any fact to grievant. The fact that grievant asked to be updated regarding the sale of the business does not, in and of itself, create a legal or ethical duty on the part of respondent to do so. To hold otherwise would be to invite attorneys to write self-serving letters making requests and demands and argue, later, that the failure to respond specifically to each and every one constitutes an enforceable agreement. That is not the law, nor should it be the law, and the Rules of Professional Conduct do not support a violation under such circumstances.

Interesting case. (Mike Frisch)


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