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Commonwealth of Massachusetts

Public Reprimand No. 2007-24



Joel Jay Rogge

Order (public reprimand) entered by the Board September 28, 2007.

SUMMARY1


The respondent represented a client over the course of several years in personal matters and as the managing partner of a partnership that owned a horse stable. In June 1990, the respondent filed a lawsuit on behalf of the partnership against a couple to recover costs of boarding the couple’s horse. Over the course of the ensuing litigation, the defendants engaged in several acts that the partnership considered dishonest.

In September 1991, the defendants filed a petition for bankruptcy pursuant to Chapter 13 of the United States Bankruptcy Code without listing the partnership as a creditor. In December 1991, the respondent filed an adversary proceeding and notice of removal of the state action to the United States Bankruptcy Court. In March 1992, the defendants and the partnership reached a settlement. In return for dismissal of the adversary proceeding, the defendants gave the partnership a promissory note for $14,862.65 with monthly payments of $290 and an annual interest rate of 12% to be paid over a six-year period. The promissory note was secured by a second mortgage on the defendants’ residence. The defendants failed to make any payments on the promissory note.

In September 1997 the defendants were in default on their first mortgage and facing foreclosure. With interest, the total amount of the loan was approximately $175,000. The defendants obtained approval for mortgage loans totaling approximately $180,000, but approval for the loans was contingent on mortgage companies’ obtaining first and second mortgages on the defendants’ residence. The defendants’ mortgage broker contacted the respondent and offered the partnership $1500 in return for a discharge of the partnership’s mortgage.

The respondent understood that the proposed refinancing was necessary to prevent foreclosure and that there would likely be insufficient funds from a foreclosure to make any payment to the partnership. The respondent mistakenly believed that the partnership would consent to settling the claim rather than risk not collecting anything on the second mortgage. The respondent, however, did not consult with the managing partner or any partner concerning the offer of settlement. Without authority, the respondent notified the mortgage broker that the partnership agreed to accept $1500 as full payment for the partnership’s mortgage in return for a discharge.

In November 1997, the defendants closed on the refinancing loans. The closing attorney disbursed a check in the amount of $1500 to the respondent and requested the mortgage discharge. The respondent deposited the $1500 into his IOLTA account, but did not tell the closing attorney that he had not yet secured the discharge.

In December 1997, the respondent contacted the managing partner and advised him that the couple had offered $1500 in return for a discharge of the second mortgage. The managing partner notified the respondent that the partnership rejected the offer and preferred not to assist the couple in the refinancing, regardless of the financial consequences. The respondent did not advise the managing partner or anyone in the partnership that he had actually effected the settlement and was holding $1500. The respondent also failed to promptly notify the closing attorney that he would not be able to provide the mortgage discharge.

In January 1998, the respondent told the managing partner that he had effected the settlement of the mortgage in November 1997 and that he was holding $1500 in his trust account. The managing partner informed the respondent that he did not consent to the settlement and would not accept the funds. The respondent simply retained the $1500 in his IOLTA account without taking any action to notify the closing attorney or the couple.

In November 2002, the couple attempted to refinance their residence. They discovered that the partnership mortgage had not been discharged and contacted the respondent. In response, the respondent returned the $1500 to the couple. The couple refused to negotiate the check. The partnership’s mortgage remained in first position on the couple’s residence.

The respondent violated Canon Six, DR 6-101(A)(2), and Canon Seven, DR 7-101(A)(1) and (2), by settling the couple’s obligation to the partnership without his client’s consent. By failing to inform the managing partner in December 1997 that he had accepted the offer of settlement and that he was holding $1500 received on behalf of the partnership, the respondent violated Canon One, DR 1-102(A)(4) and (6), Canon Six, DR 6-102(A), and Canon Nine, DR 9-102(B)(1). By failing to promptly inform the closing attorney or the couple that his client had rejected the settlement and refused to provide the mortgage discharge, the respondent violated Canon One, DR 1-102(A)(4) and (6).

In mitigation, the respondent reasonably believed that the partnership would accept the settlement as the only means to obtain any payment. The respondent acted in good faith, had no financial interest in settling the claim, and expected and received no personal benefit from it.

The matter came before the Board of Bar Overseers on the parties’ stipulation of facts and rule violations and an agreed recommendation for discipline by public reprimand. On September 10, 2007, the Board voted to accept the parties’ stipulation and impose a public reprimand.


1 Compiled by the Board of Bar Overseers based on the record of proceedings before the Board.



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