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Commonwealth of Massachusetts

SJC-BD-2005-063

IN THE MATTER OF AN ATTORNEY

S.J.C. Order (Admonition) entered by Justice Cowin on December 13, 2005.

This matter came before me on an information and record of proceedings and a vote and memorandum of the Board of Bar Overseers (board). Bar counsel initiated the matter with a petition for discipline alleging that the respondent, in connection with recording a copy of a mortgage discharge that he had prepared some years before, violated numerous disciplinary rules by inadequately representing a client, representing a person whose interests were in conflict with a current or former client's, engaging in conduct involving dishonesty, fraud, deceit or misrepresentation, and making misrepresentations to bar counsel. A hearing committee found that the respondent violated only the rule against representing a person whose interests are materially adverse to those of a former client in the same matter, and recommended a public reprimand. Both bar counsel and respondent appealed to the board. The board adopted the hearing committee's findings of fact and conclusions of law. However, because it disagreed with the hearing committee as to the extent of harm to the former client, it ordered an admonition. Bar counsel seeks modification of the board's order to suspension for six months. Respondent seeks an admonition or "a resolution without any discipline of any type whatsoever." For the reasons discussed below, I adopt the board's decision and order admonition.

1. Facts. I summarize the facts from the hearing committee's findings of fact, which were adopted by the board except as otherwise noted. This matter had its genesis in financial dealings between a father and his son. In 1993, the father engaged the respondent to conduct a closing on the son's purchase of an undeveloped lot. The respondent had previously represented the son in a personal injury action. After the closing, the father paid contractors $75,000 to construct a house upon the lot for the son. Using a lawyer other than the respondent, the father obtained a promissory note for $75,000 from his son, secured the note with a mortgage on the son's house, and obtained and executed a mortgage discharge. According to the father, the purpose of creating the discharge at that point was to spare himself or his estate the need to use a lawyer to draft one if the debt were paid.1

In 1995, the father and son went to the respondent's office together to arrange for a declaration of homestead for the son's house. At the father's request, the respondent reviewed the documents previously created by the other attorney and discovered that the mortgage discharge was defective. The respondent prepared a corrected discharge, which the father executed and took with him from the office. The father did not give the respondent instructions to file the discharge. The respondent retained a copy of the executed mortgage discharge in his file, and later came to believe that it was a second original. The respondent did not perform any subsequent work for the father.

Beginning in the spring of 2001, the son repeatedly asked the respondent to record the mortgage discharge from his file. The son said that his father was on his deathbed and could not be contacted directly. In fact, although the father had moved to Florida in 1999 after being hospitalized for congestive heart failure, he was not so gravely ill as to prevent direct contact. The respondent did not speak with the father, the other children (one of whom was an acquaintance of his), or anyone else to confirm the status of the father's health. In November, 2001, the respondent recorded the copy of the mortgage discharge, which he believed was a duplicate original.2 The son paid the recording fee and paid the respondent for his time.

Shortly after the mortgage discharge was recorded, the son borrowed $78,000 from a commercial lender, which debt was secured by a mortgage on the son's house. The son defaulted and the holder of the mortgage commenced foreclosure proceedings. In late 2001 or early 2002, the father learned that the discharge had been recorded and that he was no longer the first mortgagee on the property. The father called the respondent, who disclosed what he had done and then, according to the findings, unsuccessfully tried to restore the father's first mortgage position.

The hearing committee found that the respondent undertook representation of the son, whose interests were materially adverse to those of his former client, the father, in the same matter, without his former client's consent, in violation of Mass. R. Prof. C. 1.9 (a), 426 Mass. 1342 (1998).3 It explicitly found that the respondent's "actions were not motivated by any self-dealing or self-interest or an intent to harm." The hearing committee determined that the respondent's representation of the father had terminated in 1995, and therefore concluded that he had not committed any of the alleged violations of professional conduct rules related to current clients (Mass. R. Prof. C. 1.1, 1.2 [a], 1.3, and 1.4 [a]). Furthermore, it concluded that the respondent had not intentionally recorded a copy of a mortgage discharge or made intentional misrepresentations to bar counsel, as alleged (Mass. R. Prof. C. 8.1 [a], 8.1 [b] , 8.4 [c], and 8.4 [d] ).

The board adopted the factual findings of the hearing committee as summarized thus far, and adopted the conclusion that the respondent had violated only Rule 1.9 (a). However, the board disagreed about the extent to which this violation harmed the father. (Harm is a factor in aggravation when imposing discipline.) The hearing committee found that the father was harmed because his security interest in his debt was impaired when he lost his first mortgage position. It also found that this loss thwarted his estate goals for his children and that he suffered direct physical harm when he collapsed during a phone call with the respondent's malpractice carrier about the discharge. The board agreed that there was harm to the father, but characterized it as "minimal." It determined that bar counsel had not presented evidence that the loss of the first mortgage position "thwarted" the father's estate goals. It also concluded that bar counsel did not present adequate evidence of medical causation to support the finding of physical harm to the father. Finally, the board agreed that the loss of first mortgage position followed by another mortgagee's foreclosure proceeding is self-evident injury for purposes of bar discipline, but noted that bar counsel failed to establish any actual financial consequences of the subordination.4 It viewed this as a failure to present evidence by bar counsel (who has the burden to show aggravating factors), thus "weaken[ing] the aggravating force of the harm."

In light of its different conclusion about the aggravating extent of the harm, the board ordered that the respondent receive an admonition rather than a public reprimand. It considered such sanction appropriate where "the harm was minimal, and the duration of the misconduct was short, limited . . . to a single exercise of bad judgment that allowed the son to dupe the respondent into filing the discharge."

2. Standard of Review. The discipline recommendation of the board is entitled to "substantial deference." See, e.g., Matter of Kersey, 432 Mass. 1020, 1020 (2000) . Although the effect of the recommended discipline on the respondent is an important factor for consideration, the primary factor is the effect on, and perception of, the public and the bar. Matter of Alter, 389 Mass. 153, 156 (1983). In addition, "[i]n every bar discipline case one of the principal aims of the court is to ensure that the disposition imposed should not be markedly disparate from the dispositions imposed on attorneys in similar cases." Matter of the Discipline of an Attorney (and two companion cases). 392 Mass. 827, 834 (1984) .

3. Appropriate discipline. Neither party challenges the legal conclusion that the respondent violated only Mass. R. Prof. C. 1.9 (a); therefore, the only issue before me is whether imposition of an admonition is appropriate. Bar counsel argues that the respondent's conduct constituted an obvious conflict of interest resulting in substantial harm to respondent's former client, and requests a six-month suspension. He likens the instant matter to prior conflict cases that resulted in suspension, and argues that the board's reliance on Matter of Two Attorneys, No. SJC-BD-2003, slip op. (March 1, 2005), in selecting admonition was inappropriate because of crucial factual distinctions. I consider each contention in turn.5

Suspension has been imposed on lawyers who engaged in I conflicts in order to further their self-interests. Matter of Pike, 408 Mass. 740 (1990), to which bar counsel refers me, imposed a six-month suspension on an experienced real estate attorney who represented a retailer leasing property from a landlord for whom the lawyer secretly served as a broker. The attorney recommended the premises in question to his client, the tenant, with the intent of earning a commission from the landlord if the client leased the space. The attorney structured the lease so that he (the attorney) would make extra profit (as the broker) at the tenant's expense. See also Matter of Wise, 433 Mass. 80 (2000) (six-month suspension for representing two trustees seeking to obtain control of the lawyer's corporate client, primarily motivated by a desire to collect a fee from the corporate client).

Suspension has also been imposed when lawyers compound a conflict with additional, egregious misconduct, such as fraud, or engaging in unconscionable transactions. Matter of Thurston, 13 Mass. Att'y Discipline R. 776 (1997), involved an attorney who represented a close corporation and one of its shareholders individually. The attorney was suspended for six months because he assisted his individual client in defrauding the other shareholder, stripping the corporation of its assets, and concealing that action. In Matter of Tobin, 7 Mass. Att'y Discipline R. 290 (1991), an attorney who represented two companies on either side of the same transaction was suspended for one year, primarily because the attorney worked to enable the companies to defraud an elderly woman out of her home. See also Matter of Taglino, 9 Mass. Att'y Discipline R. 318 (1993) (six-month suspension for representing both parties to a property sale; the lawyer intentionally favored his long-term client -- buyer -- by knowingly securing seller's loan of the purchase price with assets that had little value, leaving seller unable to collect when buyer stopped making loan payments).

Looking to these precedents, the present case is not one for suspension. The decisions imposing suspensions for conflicts are characterized by factors not present here: self interest or additional egregious misconduct resulting in substantial harm. I proceed to consider, therefore, whether the board appropriately recommended admonition.

Contrary to bar counsel's assertion, Matter of Two Attorneys. No. SJC-BD-2003 (March 1, 2005), is an appropriate decision on which to rely for guidance in selecting a sanction here. In Two Attorneys, admonition was imposed on two attorneys who drafted a will for an elderly client that benefitted another client. The attorneys discussed whether a conflict existed and inquired of the elderly client whether she had been pressured. The attorneys decided that no conflict existed. However, there were a number of warning signs of undue influence, and the board found that the lawyers were unable to make reasonable inquiry into the subject due to their divided loyalty. The lawyers engaged in a further conflict a few years later by representing the beneficiary when the Attorney General sought to revoke the will, representation in which their personal interest in enforcing the will conflicted with the client's interest in an economically rational settlement. The representations of each client were determined to be conflicts of interest, but as they did not involve intent to engage in unethical behavior, additional violations, or concrete injury, a single justice of this court agreed with the board that admonition was an appropriate sanction.

Bar counsel argues that the instant matter requires a more severe sanction because it involves an obvious conflict, with entirely foreseeable consequences, resulting in substantial injury. I disagree that the two cases are significantly different in those ways: the conflict in both cases was obvious; the consequences of the respondent's actions were not necessarily more foreseeable here than in Two Attorneys; and the board found that the respondent's violation did not result in significant harm. In fact, both cases share the important features that the attorneys were not motivated by self-interest; the conflicts were isolated rule violations; and there was little, if any, concrete harm.

The board's recommendation is also supported by other cases imposing admonition for obvious conflicts that did not cause serious harm. See e.g. Matter of Lake, 428 Mass. 440 (1998) (attorney who represented estate admonished for also acting as broker for house owned by estate to detriment of estate); Admonition No. 02-13, 18 Mass. Att'y Discipline R. 640 (2002) (attorney admonished for representing another attorney in an action to remain as executor of an estate, then acting as successor executor for the estate when a primary task of that position was seeking an accounting from his former client).6

4. Disposition. A judgment shall enter admonishing the respondent.

ENDNOTES

1 There is nothing in the record explaining why a mortgage discharge, a simple document, needed to be executed in advance.

2 The record does not disclose why a copy of a mortgage discharge was accepted for recording.

3 Rule 1.9 (a) of the Massachusetts Rules of Professional Conduct, 426 Mass. 1342 (1998), reads: "Conflict of Interest: Former Client (a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation."

4 Bar counsel resists the board's findings about the extent of harm shown. Bar counsel asserts that the loss of the first mortgage position "caused substantial harm" to the father, and that there was "ample testimony" to support a finding that the father's estate goals were thwarted. I need not delve into this issue deeply. "[A]s long as there is substantial evidence, we do not disturb the board's finding." Matter of Segal, 430 Mass. 359, 364 (1999). Here there is certainly "substantial evidence" to justify the board's conclusion. First, there was no testimony as to medical causation of the father's collapse while on the telephone. Second, there was little evidence of actual estate planning, simply testimony that the mortgage was meant to secure the loan and that the discharge was created to potentially save the estate the trouble of having one drafted. In addition, there was no evidence as" to whether recording the mortgage depleted the estate. Finally, the determination that bar counsel failed to show the extent of harm from subordination was based on bar counsel's failure to establish actual financial consequences of the subordination, and failure to introduce the specifics of a settlement between the father's estate and the respondent's malpractice insurer.

5 Bar counsel did not request the intermediate sanction of public reprimand, or discuss its propriety, so I do not consider it in this decision. In any event, public reprimand is not, in my view, an appropriate sanction in this case.

6 Respondent raised a due process issue earlier in the proceedings and at oral argument, but did not brief the matter. To the extent I consider it, the respondent has not been harmed because the hearing committee provided him opportunity to reargue after he obtained the information he sought and ultimately modified its findings regarding the father's health.



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