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Commonwealth of Massachusetts

NO. BD-2002-009

IN RE: J. DOUGLAS LiBASSI1

S.J.C. Judgment of Disbarment entered by Justice Ireland on July 12, 2006.2

Judgment modified on appeal, 449 Mass. 1014 (2007)

SUMMARY3

This matter came before the Court on an information and recommendation by the Board of Bar Overseers, after contested proceedings, that the respondent be disbarred for misconduct including his conversion of client funds in one case without restitution and his intentional misappropriation of funds and continued practice of law in another case after his temporary suspension on February 27, 2002. The Board further recommended that the respondent’s disbarment be retroactive to May 14, 2002, when the Board said he had effected compliance with the terms of his temporary suspension, in order to “moot” any issues of delay in the proceedings. The proceedings at the Board are described in the following Board Memorandum.

The information was filed on June 1, 2006, and the single justice held a hearing on the information on July 20, 2006. To the Court, the respondent argued that he had not caused any deprivation in the first case and that his misconduct in that case was mitigated by his history of alcoholism and psychological impairment, by supposed delay in the proceedings, and by his “claim of right” to the converted funds as fees for his services. The respondent also offered evidence that, while the matter was pending before the Court, he made restitution in the first case while reserving his right to pursue the client on his fee claim. The respondent asked for no greater discipline than a four-year suspension retroactive to the date of his temporary suspension. Bar counsel disputed the respondent’s contentions and argued that the evidence of belated restitution after the filing of the information, even if accepted by the single justice, should not reduce the recommended sanction; that the Board had disregarded findings of the respondent’s ongoing noncompliance with the temporary suspension order; and that the Board, having rejected the respondent’s claims of mitigating delay, had no basis in the record for recommending retroactivity due to delay. Bar counsel asked the Court to disbar the respondent effective on the date of entry of the judgment.

On July 12, 2006, the Court entered a judgment for the respondent’s disbarment, effective immediately.


IN RE: J. DOUGLAS LiBASSI

S.J.C. Judgment of Disbarment entered by Justice Ireland on July 12, 2006.

BOARD MEMORANDUM

The respondent J. Douglas LiBassi appeals from the report of a hearing committee, which recommended that he be disbarred. The respondent seeks no more than a four-year suspension, retroactive to the date of his temporary suspension on February 7, 2002, or, in the alternative, a remand for a new hearing.1 Bar Counsel has not cross-appealed, but contends that the disbarment should not be retroactive due to the respondent’s failure to comply with the temporary suspension order.2 Oral argument was held before the full Board. For the reasons set forth below, we unanimously adopt and incorporate by reference the hearing committee’s findings of fact and conclusions of law, and recommend disbarment retroactive to the date of compliance with the order of temporary suspension, i.e., May 14, 2002.

Procedural Background

The petition for discipline, in essence, charged the respondent with two separate counts of intentional misuse of client or fiduciary funds and intentional misrepresentations under oath to the Supreme Judicial Court and Bar Counsel in connection with his temporary suspension.

The respondent, in his answer, denied all intentional misconduct and asserted in mitigation claims of alcoholism and psychological problems. A pre-hearing conference was held and the respondent was ordered to disclose to Bar Counsel all conditions he claimed in mitigation and to provide releases for the providers who treated each condition. In addition, the respondent was required to provide Bar Counsel with his expert disclosure. The respondent failed to timely comply with these requirements, including expert disclosure, resulting in exclusion of the expert testimony.

Findings of Fact and Conclusions of Law

Count One

The hearing committee report carefully traced and detailed the mortgage proceeds, the disbursements and the legal fee payments in connection with this count. We summarize them below, as necessary to decide this appeal.

During 1999 and most of 2000, the respondent had two Citizens Bank accounts in connection with his law practice: a client funds account, which was not an IOLTA account, and a business operating account. The respondent was the sole signatory on both accounts, and he was responsible for the deposits into and debits from these accounts.

Beginning in 1999, the respondent represented Edward Morgan in connection with his purchase of his parents’ home. The respondent and Mr. Morgan signed a fee agreement, which provided for an hourly rate of $165 and a $500 retainer, which Mr. Morgan paid. The agreement also provided that the respondent would submit interim bills to Mr. Morgan when the charges exceeded the initial retainer.

In March 1999, Mr. Morgan and his parents orally agreed that in return for the deed to his parents’ home, Mr. Morgan would get a $95,000 mortgage loan, and, from the proceeds, he would place $15,000 in trust for his parents’ benefit, pay $20,000 in back taxes, and apply the balance of the proceeds to maintain, repair and rehabilitate the property. Mr. Morgan and his parents then signed a purchase and sale agreement, which provided for a deposit of $5,000 in addition to the $95,000 mortgage proceeds, for a purchase price of $100,000. The respondent was named as escrow agent and was given the $5,000 deposit to hold in escrow.

The closing took place on May 7, 1999, and the respondent received the net mortgage proceeds of approximately $75,200 in the form of a check payable in trust for Mr. Morgan’s parents. After the closing, the respondent met with Mr. Morgan, his parents, and his sister, Lillian O’Neal. On the advice of Ms. O’Neal, the parents refused to execute the trust documents or to endorse the proceeds check.

On May 19, 1999, the respondent deposited the proceeds check without endorsement into his client funds account, where he had previously deposited the $5,000 deposit. As of that date, the respondent was holding $80,213.30 in Morgan funds, and he knew that, under the original oral agreement between Mr. Morgan and his parents, $15,000 of those funds was to be held in trust for Mr. Morgan’s parents.

Without sending Mr. Morgan a bill, at the end of May 1999, the respondent took $1,600 from the client funds account, which he claimed was for legal fees.

In June 1999, the sister filed suit against Mr. Morgan in probate court seeking to rescind the property conveyance and order conveyance to her.3 Shortly thereafter, the court issued a temporary order restraining Mr. Morgan and his agents, servants, employees and attorneys from spending, dissipating or secreting any of the mortgage proceeds. The respondent understood from this order that the mortgage proceeds (Morgan funds) were frozen and could not be disbursed, pending further court order.

From June 1999 through early February 2002, the respondent represented Mr. Morgan in the probate litigation. In mid-June 1999, Mr. Morgan paid the respondent $1,500.00 as a retainer for his representation in this litigation. They did not execute a new fee agreement, but had a tacit understanding that the rate would be the same as that for the property purchase, and that payment of fees would be deferred until completion of the lawsuit, when the fees would likely be paid from the Morgan funds.

In late October 1999, Mr. Morgan and his sister stipulated to a modification of the restraining order, which was then entered as a court order. Under this modification, a portion of the escrowed Morgan funds was to be immediately released to Mr. Morgan “for mortgage payments made between the time of sale [June 1999] and December 1, 1999.” The respondent disbursed to Mr. Morgan the money for the November and December 1999 mortgage payments from the escrowed Morgan funds, but never reimbursed him for the mortgage payments he made for June through October 1999. At about the same time, the parties orally agreed to use the Morgan funds to make future mortgage payments.

As of April 30, 2000, the respondent had disbursed $9,097.93 for mortgage payments, which should have left a balance of $71,115.37 in Morgan funds, but his client funds account showed a balance of only $41,094.25. By about June 15, 2000, the respondent had disbursed $12,381.74 for mortgage and other costs and therefore should have had $67,831.56 in Morgan funds in escrow. However, in July 2000, the balance in the client funds account was only about $27,000.

In October 2000, again without sending a bill, the respondent requested an additional payment of $2,500 for legal fees, which Mr. Morgan paid.

In early November 2000, the respondent closed his client funds account, which at that time had a total balance of $23,538.95, transferred $5,000 to his Citizens Bank business account, and deposited the remaining $18,538.95 into a non-IOLTA account at Fleet Bank. He began using the Fleet Bank account as a combined, commingled client funds account and business operating account.

At that time, the balance of Morgan funds that should have been held in escrow was about $67,000. Therefore, at the time the respondent closed his client funds account, the respondent had intentionally misappropriated a total of about $44,000 in Morgan funds. Moreover, his transfer of the $5,000 to his business account constituted an additional intentional misuse of Morgan funds.

The Fleet Bank account maintained the balance of $18,538.95, which had been deposited in November 2000, until February 28, 2001, when the respondent transferred $8,000 to Mr. Morgan for mortgage payments and the balance fell to $10,538.95. Although the respondent did not disburse any more Morgan funds for mortgage payments until September 2001, the balance in the Fleet Bank account dropped to $3,367.95 by March 30, 2001, to $2,030.85 by April 30, 2001, and was overdrawn by $871.10 by May 31, 2001. The Fleet Bank account continued to be overdrawn in June 2001.4

During the period from November 7, 2000, until May 31, 2001, the respondent deposited into the Fleet Bank account a total of $1, 258.85, but disbursed $3,676.40 in staff salaries, $2,022.10 in office rent, and $6,450.00 to himself, which amounts clearly exceeded the amounts paid into the account from which office expenses could be withdrawn, and thus he intentionally misappropriated an additional $10,500 in Morgan funds.

On September 25, 2001, the respondent sent Mr. Morgan his first itemized bills for his services in connection with the purchase of the property, the probate litigation, and a tenant eviction proceeding. These bills claimed a total balance owed of $47,197.11, but failed to credit Mr. Morgan’s previous fee payments, the rent payments collected by the respondent in the tenant eviction proceeding that were applied to fees, and the money the respondent had taken from the pooled client funds account. Two days later, the respondent sent a letter demanding payment of the bills within three days and threatening legal action.

Shortly after receiving the bills, Mr. Morgan filed a complaint with the Office of Bar Counsel, and the respondent told Mr. Morgan that he was putting collection activities on hold. In November 2001, the respondent filed an attorney’s lien in the probate litigation.

Between September 2001 and January 2002, the respondent disbursed a total of $2,543.55 in mortgage payments. After these disbursements, the escrowed Morgan funds should have had a remaining balance of $57,113.01. As of January 31, 2002, the respondent’s Fleet Bank account was again overdrawn.

On January 22, 2002, the judge dismissed the sister’s action against Mr. Morgan with prejudice, vacated the modified restraining order, and ordered the payment of $15,000 plus interest from the mortgage proceeds, which the respondent was supposed to have been holding in escrow, to Mr. Morgan as trustee of his parents. The balance of the mortgage proceeds was to remain in escrow and be used to pay certain property-related expenses. Ms. O’Neal was ordered to pay Mr. Morgan $32,630 on his counterclaim, and the respondent was granted leave to file a fee affidavit, which he did, claiming total fees and costs of $49,050.16. In his fee affidavit, the respondent did not credit any of Mr. Morgan’s prior payments and improperly included the respondent’s time spent responding to Bar Counsel’s investigation.

No appeal of the judgment was filed. In May 2002, the probate court issued an order reducing the respondent’s fees to $37,676.25 and ordering Ms. O’Neal to pay this amount to Mr. Morgan, plus his costs.5 In this order, the court, having learned that the respondent had failed to hold the Morgan funds intact, specifically required that payment first be applied to the trust fund for the parents to “bring that fund up to the amount that would have been turned over from the escrow account if the escrow account had been diminished only by authorized disbursements....”

The respondent has admitted that he never sought or received permission from Mr. Morgan, Ms. O’Neal, or the Morgan parents to use or borrow any portion of the escrowed Morgan funds for his own purposes. The respondent has admitted that, as of February 5, 2002, he was no longer holding any Morgan funds in escrow. Mr. Morgan’s parents have never received the $15,000 that was to be held in trust for them. The respondent also admitted he had no claim on them for payment of his fees.

The hearing committee concluded that the respondent violated Mass. R. Prof. C. 1.2(a), 1.15(a), (b), (d) and (e), 3.4(c), 8.4(c), (d) and (h), and S.J.C. Rule 4:01, § 17, by failing to seek the lawful objectives of his client, which included establishing a trust for the benefit of Mr. Morgan’s parents; by failing to adequately hold and account for the Morgan funds; by knowingly and intentionally misappropriating his client’s and other fiduciary funds for personal or other business use, with deprivation resulting; and by knowingly violating court orders.

Count Two

In July 2001, Kimberly Thomas retained the respondent to obtain her appointment as guardian of her disabled brother, Morris Henderson, and to assist her in selling his house. They executed a fee agreement, which provided that the respondent would receive $175 per hour, and Ms. Thomas paid him a $1,600 retainer.

The respondent filed a guardianship petition in probate court and Ms. Thomas was appointed temporary guardian on November 6, 2001. That same day, the respondent, doing business as Seven Hills Realty, entered into a listing agreement with Ms. Thomas for the exclusive right to sell Mr. Henderson’s property. At the time, the respondent was a licensed real estate broker, but he had never previously acted as a broker for the sale of property, and this was the first time he had ever used Seven Hills Realty as a business entity.

In late 2001, the respondent received offers to purchase the Henderson property, and Ms. Thomas accepted an offer from Mr. and Mrs. Mathurin in December 2001. In early January 2002, the respondent drafted a purchase and sale agreement, which was signed by the parties. In accordance with the agreement, the Mathurins paid a deposit of $14,500, which Seven Hills Realty was to hold in escrow.

In mid-January 2002, the respondent opened a new bank account for Seven Hills Realty. He was the sole signatory. The $14,500 was deposited into this account.

In January 2002, Ms. Thomas gave the respondent her power of attorney in order to execute documents on her behalf at the closing. In late January 2002, the respondent filed a petition in the probate court for a license to sell the Henderson property. On January 31, 2002, the respondent executed an extension of the purchase and sale agreement to extend the closing date to March 1, 2002.

On February 3, 2002, the respondent agreed to an order of temporary suspension, effective February 7, 2002. The order required the respondent, within fourteen days, to withdraw all appearances as an attorney; resign all fiduciary appointments; give written notice of his suspension to all clients, wards, heirs, beneficiaries, tribunals and counsel in pending matters; make available to all clients any papers or property to which they were entitled; close all trust accounts; and distribute and account for all client and fiduciary funds in his possession. The respondent was also required to file an affidavit of compliance, with specified schedules and verifications within twenty-one days after entry of the order.

On February 7, 2002, the effective day of his suspension, the respondent wrote a check for $2,500 to himself from the Seven Hills Realty account, deposited it into his law office operating account, which had a zero balance, and then paid his office rent. In the following weeks, the respondent made additional payments to himself and his wife from the Mathurin escrow funds in the Seven Hills Realty account, which he also used to pay his personal credit card bills. By March 19, 2002, the respondent had taken about $7,600 of the Mathurin escrow funds, without authorization or notice. The hearing committee rejected as not credible the respondent’s claim that his misuse of these funds was inadvertent and that he had confused the Seven Hills Realty account with his operating account. The committee found that the respondent knowingly and intentionally misappropriated these funds.

At the time of his temporary suspension, the respondent was Ms. Thomas’ attorney for both the guardianship proceeding and the sale of the Henderson property. The respondent did not notify the probate court of his temporary suspension in connection with the guardianship proceeding or the license to sell the Henderson property, nor did he notify Ms. Thomas or the Mathurins’ attorney of his temporary suspension. On February 28, 2002, the respondent filed his affidavit of compliance with the Office of Bar Counsel. In the affidavit, the respondent did not notify Bar Counsel or the Supreme Judicial Court of the existence of the Seven Hills Realty account or that he was holding the Mathurin deposit or any other escrow funds.

Moreover, despite the prohibition in the temporary suspension order, the respondent acted as attorney-in-fact on behalf of Ms. Thomas after his temporary suspension, filing motions in April 2002 in the probate court and signing them “Under Power of Attorney for Kimberly Thomas”.

On May 14, 2002, after Bar Counsel notified the respondent that he had violated his temporary suspension order, the respondent withdrew his appearance for Ms. Thomas in probate court and resigned his appointment as attorney-in-fact in connection with the guardianship. That same day, the respondent’s wife deposited $7,700 into the Seven Hills Realty account and the respondent turned those funds over to Ms. Thomas’ successor counsel.

The hearing committee concluded that the respondent violated Mass. R. Prof. C. 1.15(a), (b), (d) and (e), and 8.4(c), (d) and (h) in connection with his handling of the escrowed funds, including his intentional misappropriation, and 1.16(a), (c), (d), 5.5(a), and S.J.C. Rule 4:01, § 17(1)(a)-(e) and (g), (3), (5) and (6) by failing, after his temporary suspension, to take adequate steps to withdraw, to notify the parties and the court of his suspension, and to disburse the escrowed Mathurin funds. The committee rejected Bar Counsel’s charges that the respondent violated Mass. R. Prof. C. 1.2(a), 1.3, and 1.4.

Issues on Appeal

Addressed below are the issues raised by the respondent on appeal that warrant discussion.

Deprivation

The respondent contends that the hearing committee erred in finding that the respondent’s misuse of funds in Count One had resulted in deprivation and consequently, that he had failed to make restitution. He bases this argument on the claim that the hearing committee improperly ignored the undisputed evidence that he was entitled to be paid his legal fees from Mr. Morgan’s funds. The respondent claims that he was only obligated to hold Mr. Morgan’s funds until the deed was recorded; that there was no escrow agreement beyond a simple real estate transaction; and that this case is no more than a fee dispute between attorney and client. We find that the respondent has misstated the nature of the case and that the hearing committee did not err.

Mr. Morgan paid the respondent a $500 retainer not only to handle his purchase of his parents’ home, but also to establish a trust for the benefit of his parents, in order to allow them to continue to reside in their home. Due to the parents’ misguided refusal to execute the trust documents after the closing, the trust could not be funded with the mortgage proceeds, but it was clearly Mr. Morgan’s intent that the sum of $15,000 be earmarked for the trust.

Later, Mr. Morgan paid the respondent a retainer of $1,500, plus an additional legal fee of $2,500, to defend him in the suit brought by his sister seeking to rescind Mr. Morgan’s purchase of the parents’ home. Once the probate court issued its temporary restraining order to prevent any spending or dissipation of the mortgage proceeds, the respondent acknowledged that he understood the mortgage proceeds being held in his client funds account were “frozen”. Nonetheless, over the course of several years, the respondent intentionally disbursed all of the Morgan funds deposited into his client funds account, including the $15,000 to be held in trust for Mr. Morgan’s parents.

The disbursements for mortgage payments and utility bills totaled only $22,925.29 for the period from May 1999 through January 2002. By November 7, 2000, when the respondent closed his Citizens Bank client funds account, the balance in the account was only $23,538.95; clearly the respondent had knowingly disbursed funds from this client funds account for purposes other than Morgan expenses. To compound the respondent’s misconduct, in closing his client funds account, he admitted he transferred $5,000 into his Citizens Bank operating account, thereby intentionally misappropriating additional Morgan funds.

On January 22, 2002, the probate court dismissed Ms. O’Neal’s suit with prejudice, vacated the restraining order, and ordered the payment of $15,000 plus interest from the mortgage proceeds to Mr. Morgan as trustee for his parents. As of January 31, 2002, the respondent’s Fleet Bank account was overdrawn by $151.60, and there were no Morgan funds available to comply with the court’s judgment.

Contrary to the respondent’s claim of a superior right to the mortgage proceeds under his claim of a statutory attorney’s lien,6 it is clear that $15,000 of the mortgage proceeds was to be held in trust for Mr. Morgan’s parents and the probate court specifically ordered that this sum be paid for this purpose. But for the respondent’s serial misappropriations, in violation of the court’s restraining order, this sum would have been paid from the mortgage proceeds in compliance with the court’s order and would not have been available, in any event, to Mr. Morgan or the respondent for payment of his attorney’s fees.

Moreover, as the respondent admitted, his client was Mr. Morgan, and any legal fee owed was his debt. Therefore, even accepting the respondent’s characterization of this matter as a fee dispute, there was no basis for the respondent’s taking of the $15,000, which was to be held in trust for the parents as ordered by the court. By intentionally misappropriating the mortgage proceeds such that an overdraft existed by the time of the January 2002 judgment, the respondent actually deprived the Morgan parents of the $15,000 awarded in trust to them by the court. As of the disciplinary hearing in this matter, the respondent had not yet paid this sum on behalf of the Morgan parents, and therefore had failed to pay restitution, regardless of any alleged fee dispute.

The presumptive sanction for this misconduct, standing alone, is disbarment, Matter of Schoepfer, 426 Mass. 183, 13 Mass. Att'y Disc. R. 679 (1997), and we therefore need not reach the respondent’s other claims of error arising from the hearing committee’s findings concerning Mr. Morgan.7

Jurisdiction

The respondent claims that his conduct in the Thomas/Henderson matter occurred in his capacity as a real estate broker and therefore is not subject to the jurisdiction of the Board of Bar Overseers. We disagree.

Under the terms and provisions of the court’s order of temporary suspension, to which the respondent agreed voluntarily, the respondent was required to withdraw from every court matter and resign as attorney-in-fact or other fiduciary, within fourteen days. Matter of LiBassi, 18 Mass. Att’y Disc. R. 365, 365-366 (2002). The respondent does not deny that while acting as counsel for Ms. Thomas in the guardianship matter, he failed to withdraw or give timely notice of his temporary suspension to the probate court. The respondent also does not deny that two months after the effective date of his temporary suspension, he filed two motions in probate court in the guardianship matter as Ms. Thomas’ attorney-in-fact. Such actions clearly violated the court’s temporary suspension order and constituted violations of the charged disciplinary rules.

The respondent claims, however, that the other charged acts, such as the alleged intentional misappropriation of the Mathurin deposit and the failure to identify and close his Seven Hills Realty account, are not subject to the Board’s jurisdiction because he was acting only in his capacity as a real estate broker. Supreme Judicial Court Rule 4:01, § 3, specifically provides that “[e]ach act or omission by a lawyer, . . ., which violates any of the Massachusetts Rules of Professional Conduct (see Rule 3:07) . . ., shall constitute misconduct and shall be grounds for appropriate discipline even if the act or omission did not occur in the course of a lawyer-client relationship or in connection with proceedings in a court.” Even if we were to accept that the respondent held the Mathurin deposit only in his capacity as a broker, the respondent was found to have intentionally misused these escrowed funds for his own personal use – to pay credit card bills and law office expenses – without notice to the parties or their authorization. This conduct clearly constitutes dishonesty and deceit in violation of Mass. R. Prof. C. 8.4(c), and therefore is grounds for discipline. See S.J.C. Rule 4:01, Section 3; see also Matter of Stern, 425 Mass. 708, 711-12, 13 Mass. Att'y Disc. R. 745 (1997); Matter of Eisenhauer, 426 Mass. 448, 452-53, 14 Mass. Att'y Disc. R. 251 (1998); Matter of Leo, 17 Mass. Att'y Disc. R. 371 (2001).

Recusal

The respondent contends that he was prejudiced by the recusal of one of the attorney members of the hearing committee from consideration of his mitigation evidence, but he makes no showing of any prejudice, other than his dissatisfaction with the findings and conclusions made by the remaining two hearing committee members, a majority. As correctly pointed out by Bar Counsel, the ABA Model Rules relied on by the respondent have not been adopted by Massachusetts, and S.J.C. Rule 4:01, § 6(2) provides that a hearing committee may act with only two members, which constitutes a quorum, which was the case here. Therefore, the respondent’s claim of error in this regard is rejected.

Mitigation Evidence

The respondent claims that the hearing committee erred in requiring a direct nexus between the respondent’s mental health issues and his alleged misuse of client funds and abused its discretion in precluding his expert testimony on mitigation. There was no error or abuse of discretion by the hearing committee.

As set forth in BBO Rule 3.28, the respondent “shall have the burden of proof by a preponderance of the evidence on affirmative defenses and matters in mitigation.” Contrary to the respondent’s argument, when a disability is asserted in mitigation, the court has held that the discipline should be moderated only if the disability caused the misconduct. Matter of Schoepfer, 426 Mass. 183, 188, 13 Mass. Att’y Disc. R. 679, 685 (1997); Matter of Gonick, 15 Mass. Att’y Disc. R. 230, 234 (1999) (“Disbarment or indefinite suspension is therefore appropriate, absent clear evidence that a disability caused the respondent’s conduct.”); Matter of Johnson, 444 Mass. 1002, 1004 (2005) (“[W]hile there was evidence that the respondent increased his alcohol consumption in the years prior to the misconduct, he did not show that it was a cause of the disciplinary violations.”) Therefore, the respondent’s contention that the hearing committee erred in setting too strict a standard of causation is without merit.

The respondent also contends that by precluding his expert witness testimony, the hearing committee abused its discretion, resulting in “severe prejudice” to the respondent, who could not otherwise meet his burden of proof on mitigation. After reviewing the record, we find that the hearing committee was well within its discretion in ordering the exclusion of the respondent’s expert testimony in light of the clear deadlines established in its pre-hearing order and the notice given to the respondent of the possibility of exclusion if he failed to comply with the deadlines. See 7 of the pre-hearing order.

Moreover, even if the respondent’s expert’s proffered opinion testimony on the causal relationship between his various conditions and his misconduct had been credited, the hearing committee made clear and substantiated findings that the respondent’s misconduct continued even after his alleged recovery, and that, therefore, the respondent had failed to establish that it was unlikely his misconduct would recur. ABA Standards for Imposing Lawyer Sanctions, § 9.22(i). These findings were based on the testimony of the respondent’s own treating therapist and his medical and psychiatric records. All that was excluded was the opinion of a non-treating therapist. As a result, the exclusion of the expert testimony did not prejudice the respondent.

Retroactivity

The respondent claims that any sanction should be retroactive to the date of his temporary suspension. Bar Counsel claims that, because he failed to comply with the terms of the temporary suspension, the sanction should be effective on the date of the court’s order.

Where an attorney has been temporarily suspended, has complied with the terms of the suspension, and has cooperated in the disciplinary process, the effective date of the sanction is usually retroactive to the date of the temporary suspension. Retroactivity is a matter of fairness, however, not of right. See Matter of Cotter, 2 Mass. Att'y Disc. R. 44 (1980). Where the attorney has failed to comply with the terms of suspension or failed to cooperate with Bar Counsel, retroactivity has been denied. See, e.g., Matter of Bryan, 411 Mass. 288, 7 Mass. Att'y Disc. R. 24 (1991); Matter of Douka, 14 Mass. Att'y Disc. R. 228 (1998) (order of disbarment in connection with affidavit of resignation retroactive to date of compliance, not date of temporary suspension); Matter of Debole, 13 Mass. Att'y Disc. R. 118 (1997) (no retroactivity where attorney failed to comply with requirements of temporary suspension); Matter of Metaxas, 12 Mass. Att'y Disc. R. 306 (1996) (order retroactive to date of compliance with temporary suspension); Matter of McCauley, 6 Mass. Att'y Disc. R. 217 (1990) (order of disbarment in connection with affidavit of resignation not retroactive to date of temporary suspension where attorney failed to cooperate with Bar Counsel and failed to participate in disciplinary process). On the facts presented here, we conclude that the order should be retroactive to May 14, 2002, the date on which the respondent complied with the temporary suspension order.

Delay

The respondent claims that delay in the filing of both the petition for discipline and the issuing of the hearing committee’s report warrants a reduction in sanction because these periods of delay during his temporary suspension deprived the respondent of his constitutionally recognized right to practice law. We disagree.

In Matter of Gross, 435 Mass. 445, 450, 17 Mass. Att’y Disc. R. 271, 277 (2001), the Supreme Judicial Court held that “[m]ere delay in the commencement of disciplinary proceedings does not result in dismissal of the proceedings”, but recognized that “delay may be considered in mitigation.” In Matter of Grossman, BD-2005-059 (2005), appeal pending, the single justice, in considering the respondent’s contention that records may have been lost that could have corroborated her testimony at hearing, held that “[t]he burden is on the respondent to show substantial prejudice from the delayed investigation. Delay alone is insufficient to mitigate the sanction.” See also, Matter of Cobb, No. SJC-09333 (December 8, 2005), where the Court, in addressing the respondent’s contention that delay resulted in an unavailable witness, held that “[m]ere delay does not require dismissal of the proceedings, see Matter of London, 427 Mass. 477, 481 (1998), and the respondent has failed to establish that he was prejudiced by the delay.”

Here, the respondent contends that prejudice resulted from the fact that he was temporarily suspended during the periods of delay. What the respondent omits is that he voluntarily agreed to the temporary suspension, then failed to comply with the terms of his temporary suspension in the Thomas/Henderson matter. More importantly, at the time he filed this appeal, the hearing committee had recommended disbarment without retroactivity. In contrast, although we have adopted the hearing committee’s findings of fact and conclusions of law and also recommend disbarment, we recommend that it be retroactive to the date of compliance with the temporary suspension order. By giving him the benefit of retroactivity to his date of compliance, his contention regarding delay is rendered moot.

Conclusion

For all of the foregoing reasons, we adopt and incorporate by reference the hearing committee’s findings of fact and conclusions of law. An Information shall be filed with the Supreme Judicial Court recommending that the respondent, J. Douglas LiBassi, be disbarred, retroactive to May 14, 2002.

FOOTNOTES TO BOARD MEMORANDUM

1 The respondent also contends on appeal that because of delay in the disciplinary process his sanction should be mitigated (see discussion below). We note that any remand would result in further delay.

2 The respondent agreed to a temporary suspension, effective February 7, 2002, and has not been reinstated.

3 Also in June 1999, Mr. Morgan retained the respondent to evict a tenant from the first-floor unit in the property. They agreed that the rents collected from the tenant would be applied to the respondent’s legal fees. The respondent received $2,900 in rental payments and his bill for these services totaled $2,802.70. As a result, even assuming that the bill was correct ( the hearing committee found it was inflated), it is clear that Mr. Morgan was due a refund.

4 In January 2001, Mr. Morgan received notice that his mortgage was in default and that foreclosure proceedings had been started. He told the respondent about the foreclosure, but the respondent failed to pay the arrearage by the deadline. As a result, on January 31, 2001, Mr. Morgan paid $4,975.40 to reinstate his mortgage and terminate the foreclosure proceedings. About a month later, the respondent paid Mr. Morgan $8,000 from the Fleet Bank account to be used for mortgage payments. Again in December 2001, Mr. Morgan faced foreclosure and had to pay $2,553.55 to reinstate his mortgage and avoid foreclosure. Thus, it is evident that the respondent’s misappropriations of Morgan funds endangered Mr. Morgan’s ability to keep the property.

5 As of the date of the disciplinary hearings, Ms. O’Neal had made no payments on the judgment.

6 We agree with Bar Counsel that, under the terms of G.L. c. 221, § 50, the respondent has no viable claim to a statutory attorney’s lien on the mortgage proceeds that he held. These funds were not “the proceeds derived” from “his client’s cause of action, counterclaim or claim.” G. L. c. 221, § 50.

7 Even viewed in the light most favorable to the respondent, the calculation of the funds held, legitimately disbursed and claimed as fees shows that the respondent converted funds with actual deprivation resulting. The respondent originally held $80,213.30 in proceeds from the purchase. He legitimately disbursed $22,915.29 in house-related payments, which leaves $57,288.01 in proceeds. Deducting from that the full amount of his fee as submitted to the court of $49,050.16 (leaving aside the fee for the eviction, which was offset by the collected rents), leaves $8,237.85. To this must be added the $4,500 in fees which Mr. Morgan paid the respondent and which he did not credit in his fee schedule to the court, which leaves at least $12,737.85 in proceeds which should have been held by the respondent, but which were all spent by the respondent by May 2001.

1 See 18 Mass. Att’y Disc. R. 365 (2002) for prior proceedings.

2 The complete Order of the Court is available by contacting the Clerk of the Supreme Judicial Court for Suffolk County.

3 Compiled by the Board of Bar Overseers based on the record before the Court.



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