Case Title: IMO Patrick DiMartini

Citation: 

Docket Number: d-19-98

State: new-jersey

Court: New Jersey Supreme Court

Date: 1999-06-11T00:00:00Z

Document:
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). PER CURIAM This is an attorney disciplinary case. Respondent, Patrick DiMartini, who was admitted to practice in 1958, was charged with misconduct in two separate matters. The first matter arises out of the purchase and sale of a two-family dwelling in Jersey City. In 1972, respondent represented Carol Perretta Pollack in the purchase of the dwelling for approximately $75,000. Although Pollack was the title owner, she was to hold title in trust for her brother, John Perretta. No documents, however, indicated that John Perretta held any ownership interest in the property. In 1973, John Perretta married Krystine Kuty, who was then working as a temporary secretary for respondent. In March 1988, Perretta and Pollack decided to sell the property to Grace and Zutico Dy. Pollack and her husband transferred title to Kuty, consistent with the original arrangement with Perretta. Respondent maintained that he structured the transfer of the property from the Pollacks to the Dys in such a manner as to transfer responsibility for any capital gains taxes from the Pollacks to Perretta, the true owner of the property. Thus, the transaction was structured so that the Pollacks would realize no profit from the sale of the property and so that Perretta and Kuty would incur any capital gains responsibility. Because of Perretta's poor credit rating, due in part to outstanding judgments against him, title was placed in Kuty alone, rather than in Kuty and Perretta jointly. Kuty claimed that she was unaware of that transaction. Respondent acknowledged that Kuty was not present at the closing. The closing documents stated that Kuty paid $73,000 for the property. No money actually changed hands. Respondent represented all of the parties in that transaction. He neither prepared a written disclosure of the inherent conflict of interest, nor obtained written waivers from any of the parties. On March 31, 1988, Perretta and Kuty signed a contract to sell the property to the Dys for $170,000. Although Kuty denied that she had signed the contract, her signature was witnessed by her father and no expert testimony corroborated her doubts. In June 1988, Kuty transferred title to the Dys. She claimed that she was unaware of that transaction; that she was not present at the closing; and that respondent did not discuss the transaction with her. Respondent acknowledged that he spoke only with Perretta, assuming that as the husband in an apparently happy marriage, Perretta had implied authority to act for Kuty. The first major issue at the District Ethics Committee (DEC) hearing concerned the validity of Kuty's signature on the contract, deed, and affidavit of title in the Dy transaction. Respondent, who acknowledged the signatures, testified that he never would have done so unless the document was signed in his presence by Kuty. Both respondent and the DEC retained experts, who confirmed that Kuty's signatures were genuine. Although Kuty claimed at the DEC hearing to have been in Florida at the time of this closing, her son's school records indicated that he was in New Jersey on that day. Kuty also maintained that she had not signed the settlement and closing agreements generated at the Dy closing. Respondent admitted that Perretta signed Kuty's name to the settlement agreement. He testified that he believed that Perretta, as Kuty's husband, could do so. Respondent further admitted that he signed Kuty's name to the closing statement and added his own initials by the signature. Although neither he nor Perretta had Kuty's written authorization to sign her name, respondent believed that as Kuty's attorney, he had implied authorization to do so. In addition, he testified that Perretta called Kuty from the closing to obtain her social security number to place on the federal tax form, suggesting that Kuty was aware of the transaction and approved it. The second major issue at the DEC hearing concerned the tax consequences of the profit generated by the Dy transaction. To disburse the proceeds of the sale, respondent drafted four checks from his trust account, payable jointly to Kuty and Perretta, in spite of the absence of Perretta's name on any of the closing documents. Respondent then gave those checks to Perretta, without independently informing Kuty. Perretta apparently endorsed the checks in Kuty's name. Respondent assisted Perretta in cashing the checks by writing OK to cash on the back and adding his initials. However, there was no indication that respondent knew Perretta had signed Kuty's name on the checks. In 1988, Perretta and Kuty filed separate tax returns in which either one of them claimed any gain from the sale of the property. They separated in 1991 and engaged in a bitter divorce that ended the marriage in 1993. Kuty maintained that she learned of the sale to the Dys in 1993, when the IRS contacted her seeking payment of the capital gains taxes on the sale. After investigation, the IRS determined that Perretta and not Kuty was responsible for the taxes. There was no assertion by the IRS of fraud on anyone's part. Kuty filed a grievance against respondent at the suggestion of the IRS and her attorney in the divorce proceeding. In the second matter, respondent was charged with a violation of RPC 1.15, failure to safekeep property, for issuing three trust account checks against uncertified funds. In that matter, respondent's client in an unrelated matter gave respondent an uncertified check that she had received from someone as a down payment on the sale of her property. The client asked respondent to issue her three checks from his attorney trust account against the uncertified check. After verifying with the buyer's bank that he had sufficient funds on deposit to cover the uncertified check, respondent agreed to issue the requested checks from his trust account. The uncertified check cleared without incident. Respondent testified that his actions in the matter were taken solely to assist his client. In its review of the record, in the first matter, the Disciplinary Review Board ( DRB or Board ) found that the transactions were designed to defraud the IRS and Perretta's creditors. The Board further found that Kuty's signatures on the closing documents as well as other documents relative to the transaction were forgeries. In the second matter, the Board found that respondent's actions had put his other clients' funds at risk. The DRB recommended that respondent be suspended for a period of two years for his misconduct in both matters. The Supreme Court granted respondent's petition for certification. HELD: Respondent's misconduct, consisting of engaging in a conflict of interest, of using his client as a strawman in two transactions, of signing his client's name to closing documents, and of failing to safekeep his client's interest in the proceeds of the sale of property, was the result of excessive negligence and poor judgment and warrants a suspension of a period of three months. 1. Kuty's signatures on the contract, affidavit of title, and deed were genuine. (pp. 5-6) 2. A lawyer who structures a transaction to protect a client from his judgment creditors runs the risk of adversely affecting third parties. (p. 9) 3. Respondent did not intend to defraud the IRS. (pp. 8-11) 4. Respondent's representation of both the Pollacks and Kuty in the first 1988 sale constituted a conflict of interest, in violation of RPC 1.7. (p. 11) 5. Respondent's issuance of trust account checks against uncollected funds put client funds at risk, in violation of RPC 1.15. (p. 12) 6. Respondent's violations, although serious, involve excessive negligence and poor judgment, rather than malice, and warrant a three-month suspension. (pp. 11-12) CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, POLLOCK, STEIN and COLEMAN join in this PER CURIAM opinion. JUSTICE GARIBALDI did not participate. IN THE MATTER OF PATRICK DI MARTINI, An Attorney at Law. Argued March 2, 1999 -- Decided June 11, 1999 On an Order to show cause why respondent should not be disbarred or otherwise disciplined. Nitza I. Blasini, Deputy Ethics Counsel, argued the cause on behalf of the Office of Attorney Ethics. John J. Curley argued the cause for respondent (Curley & Sciarra, attorneys). PER CURIAM This disciplinary action concerns two matters. The first arises out of the purchase and sale of a two-family house in Jersey City. In connection with those transactions, respondent, Patrick DiMartini, is charged with violating the Rules of Professional Conduct (RPC), sections 1.2 (scope of representation), 1.4 (communication with client), 1.7 (conflict of interest), 1.15 (safekeeping property), and 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation). The second matter concerns an incident in which respondent is charged with failing to safeguard client funds, in violation of RPC 1.15. Finding ethics infractions in both matters, the District Ethics Committee (DEC) recommended disbarment. The Disciplinary Review Board (DRB) recommended a two-year suspension. Our responsibility in attorney disciplinary matters is to conduct an independent review of the record, R. 1:20-16(c), and to determine whether the charges have been proved by clear and convincing evidence. On two critical issues, our independent review of this record leads us to different factual conclusions from those of the DRB. Although we find respondent guilty of ethical infractions, we conclude that the appropriate discipline is a three-month suspension. CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, STEIN, and COLEMAN in this PER CURIAM opinion. JUSTICE GARIBALDI's did not participate. IN THE MATTER OF : O R D E R PATRICK DI MARTINI, : AN ATTORNEY AT LAW : It is ORDERED that PATRICK DI MARTINI of JERSEY CITY, who was admitted to the bar of this State in 1958, is hereby suspended from the practice of law for a period of three months, effective July 5, 1999, and until the further Order of the Court; and it is further ORDERED that respondent be restrained and enjoined from practicing law during the period of his suspension and that he comply with Rule 1:20-20 governing suspended attorneys; and it is further ORDERED that respondent reimburse the Disciplinary Oversight Committee for appropriate administrative costs incurred in the prosecution of this matter. WITNESS, the Honorable Deborah T. Poritz, Chief Justice, at Trenton, this 11th day of June, 1999. /s/ Gail G. Haney ACTING CLERK OF THE SUPREME COURT NO. D-19 Decided June 11, 1999 Order returnable Opinion by PER CURIAM