Case Title: STATE ex rel. OKLAHOMA BAR ASSOCIATION v. PACENZA

Citation: 

Docket Number: SCBD-4983

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2006-04-18T00:00:00Z

Document:
STATE ex rel. OKLAHOMA BAR ASSOCIATION v. PACENZA  STATE ex rel. OKLAHOMA BAR ASSOCIATION v. PACENZA 2006 OK 23 136 P.3d 616 Case Number: SCBD-4983 Decided: 04/18/2006 THE SUPREME COURT OF THE STATE OF OKLAHOMA STATE OF OKLAHOMA ex rel. Oklahoma Bar Association, Complainant, v. FRANKLIN J. PACENZA, Respondent. Original Proceeding for Attorney Discipline ¶0 The Complainant, Oklahoma Bar Association, charged the respondent, Franklin J. Pacenza (Pacenza/attorney), with two counts of professional misconduct arising from business dealings with Eric and Christina Richards (collectively, Richards), involving a contract for deed between the parties. After making thousands of dollars in improvements to a home on the property, the Richards attempted to sell their interest discovering that: the land was the subject of an incomplete foreclosure proceeding; the attorney was not the record owner of the real property; and the property was encumbered by $300,000.00 in Internal Revenue Service (IRS) tax liens. The Richards found a buyer for the property, and the attorney assured them and their lawyers that he was working to clear the title. The title problems were not resolved and the Richards were forced to sue Pacenza to recover their losses. On the eve of trial, the Richards were told that if they did not accept a $55,000.00 settlement, the attorney would declare bankruptcy and file for divorce. When they rejected the offer, he did so and the Richards were forced to appear in the bankruptcy proceedings ultimately settling their claims for approximately $58,000.00. The trial panel recommended a six-month suspension and the imposition of costs. On de novo review, we hold that the respondent's dishonest, fraudulent, deceitful and misleading actions resulting in significant economic harm, embarrassment to the legal profession and this Court and an undermining of public confidence in the Bar Association and its members, the attorney's unwillingness to acknowledge any wrongdoing along with his disciplinary history warrants a suspension for two years and one day and the payment of costs of $4,456.41. RESPONDENT SUSPENDED FOR TWO YEARS AND ONE DAY AND ORDERED TO PAY COSTS OF THE PROCEEDING IN THE AMOUNT OF $4,456.41. Mike Speegle, Assistant General Counsel, Oklahoma Bar Association, Oklahoma City, Oklahoma, for Complainant, William Hall, Bartlesville, Oklahoma, for Respondent. WATT, C.J.: ¶1 The complainant, Oklahoma Bar Association (Bar Association), charged the respondent, Franklin J. Pacenza (Pacenza/attorney), with two counts of professional misconduct involving a contract of deed executed between Eric and Tina Richards (collectively, Richards) and the attorney covering real property in Creek County, Oklahoma. The Bar Association alleged that the attorney's actions in regard to the contractual relationship amounted to engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. ¶2 Upon a de novo review, FACTS ¶3 The gravamen of this complaint centers on real property (property) in Creek County. In 1997, Pacenza was hired by Vernon Loveless (Loveless) to foreclose the interest of Fred Monachello (Monachello) in the property for failure to meet the terms of a note and mortgage. The property consisted of approximately eight acres and an uncompleted "shell" home. Pacenza was successful in getting judgment against Monachello and the property was offered at a sheriff's sale. Loveless appeared at the sale, bidding two-thirds of the appraised price. However, the bid money was never paid and no sheriff's deed issued. ¶4 On August 25, 1988, the attorney withdrew from the foreclosure action without permission of the trial court and subsequently entered into an agreement with Loveless for purchase of the property.7 In exchange for a $2,000.00 credit on his attorney fee and payment of $8,000.00, Loveless granted the attorney a general warranty deed, signed on October 2, 1998. The deed was not filed of record until January 2, 2002 -- almost three years after Pacenza entered into the contract for deed with the Richards and subsequent to the Richards having brought suit against the attorney for damages. ¶5 In 1999, the Richards saw the property advertised for sale and contacted a local real estate agent who directed them to the property and to Pacenza's office. The Richards were accompanied by Mrs. Richards' sister, Janelle Koontz Massey (Massey/sister), when they went to the attorney's workplace. The same day, February 15, 1999, the Richards executed a contract for deed prepared by the attorney for a total purchase price of $30,000.00. The contract states that Pacenza will provide the Richards with a warranty deed upon payment of the contract price.8 ¶6 The testimony concerning the meeting with Pacenza is conflicting on several points. First, Mrs. Richards and her sister testified that they asked the attorney whether they needed independent legal representation and were told the extra expense would be unnecessary as Pacenza was a "real estate attorney."9 Initially, Pacenza testified that he didn't recall whether the Richards asked if they should seek independent legal advice. Subsequently, he stated that there may have been "some discussion" about the Richards getting an attorney but that he didn't tell them not to see another legal advisor.10 Nevertheless, the attorney did admit that he may well have made some representations that he does real estate work.11 ¶7 Mrs. Richards stated that her sister specifically asked the attorney whether the title was free and clear and that Pacenza responded affirmatively. ¶8 Before the trial panel, Pacenza admitted that he did not disclose the existence of the $300,000.00 in IRS tax liens because he did not believe the liens attached to his interest in the real property. ¶9 The couple invested countless hours of time and hard work and thousands of dollars in improvements to the real property. ¶10 A second offer was made on the property on April 20th of 2001. The Richards and Hattie Bruchfield (Burchfield) negotiated a "cash contract" in which the purchaser agreed to accept the property in "as is" condition. ¶11 After the Richards had no success in working with Pacenza to clear up the title problems, they hired a lawyer, Stephen Schuler (Schuler), to represent them in August of 2001. When Schuler contacted Pacenza on the Richards' behalf, he was told that Pacenza would remedy the title problems by filing the requisite documents to complete the foreclosure and to dispose of the IRS tax lien situation within a two week time frame. ¶12 Schuler turned over the case to one of his associates, Gerald Hilsher. On August 7, 2003, Hilsher was successful in getting a summary adjudication in favor of his clients providing that the Richards', having presented Pacenza with a real estate contract from a cash buyer who was ready, willing and able to purchase the property, placed an obligation on the attorney to produce marketable title. ¶13 When the trial date of September 8th was set, Hilscher was approached by Pacenza's attorney who advised him that his clients should take $55,000 in settlement "or else" Mr. Pacenza's wife would file for divorce and Pacenza would file for bankruptcy. The Richards were given a deadline of 4:30 p.m. on August 25th to make their decision. Hilscher construed this as a threat to place assets available to pay any judgment out of reach. ¶14 On September 2, 2003, Hilsher filed the instant complaint with the Bar Association on his and the Richards' behalf. Subsequently, the adversary bankruptcy proceeding was settled with no finding of fraud being entered. While the Richards estimated their total out of pocket expenses at $116,265.25, Hilscher estimated that the Richards could have recovered a judgment for as much as $300,000.00 to $400,000.00 plus attorney fees and costs had they gone to trial against Pacenza. ¶15 At the hearing before the trial panel on November 16, 2005, Pacenza had little recall of his prior two incidences of discipline or of his deposition testimony given during the proceedings before the trial and bankruptcy courts. He did not recall that Christina Richard's sister had been present when the contract for deed was executed. Nevertheless, he did remember that he hadn't told the Richards of the $300,000.00 IRS tax liens against the property ¶16 The trial panel report, filed on January 19, 2006, recommends that Pacenza be suspended for six months and ordered to pay the costs of the proceeding. In making this recommendation, the trial panel recognized that clear and convincing evidence existed that Pacenza: concealed material information relating to the title to the real property; misrepresented the need for curative title actions; failed to advise the Richards to seek independent legal representation; and made misrepresentations to the Richards and to their attorneys concerning his attempts to clear title to the real property. The trial panel found Pacenza's responses to questions during the proceeding to be evasive, inconsistent and misleading. ¶17 The Bar Association's application to assess costs of $4,546.41 was filed on January 24, 2006. The brief in chief, in which the Bar Association argues for a suspension in excess of six months and the imposition of costs, followed on February 13th. Pacenza filed his response on March 6th. The briefing cycle was completed on March 7, 2006, with the Bar Association's filing of a waiver. JURISDICTION AND STANDARD OF REVIEW ¶18 We stress that it is this Court's nondelegable, constitutional responsibility to regulate both the practice and the ethics, licensure, and discipline of the practitioners of the law -- the duty is vested solely in this department of government. ¶19 We review the evidence de novo ¶20 The trial panel did not determine that Pacenza's divorce, property settlement or bankruptcy filings were instigated for the purpose of fraudulently placing them outside the realm of assets which might be subject to the Richards' suit filed in the district court. The Bar Association makes no recommendation for discipline on this count in the brief in chief. The settlement reached in the bankruptcy proceeding is devoid of any mention of Pacenza having acted fraudulently. There is evidence that the divorce and the bankruptcy may well have been filed for the purpose of preserving assets. ¶21 In contrast, the evidence is overwhelming and -- in some instances unrefuted -- that from the time the Richards first walked into Pacenza's office in early 1999, through the attempts to sell their real property interest in 2001 and 2002, in the district court action instigated to protect the Richards' financial investment and before the trial panel, the attorney engaged in dishonest, fraudulent, deceitful and misleading actions resulting in significant economic harm, embarrassment to the legal profession and this Court and an undermining of public confidence in the Bar Association and its members. Furthermore, this is not a situation in which the sole testimony against the attorney is presented by dissatisfied parties. Rather, condemning evidence came in through the testimony of two attorneys who attempted to right the wrongs to which the Richards had been subjected. Such testimony is given great weight. PACENZA'S PREVIOUS MISCONDUCT ¶22 Pacenza was privately reprimanded by this Court in October of 1987, for engaging in conduct involving misrepresentations and deceit arising from his collusion in removing a client's child from the lawful custody of the minor's father and transporting the mother and child from Texas to Oklahoma.46 On February 24, 1989, the Professional Responsibility Commission administered a private reprimand for misrepresentations he made to a social worker at the Oklahoma Department of Human Services that he had filed suit on behalf of an individual and expected to settle the suit within six months -- when no lawsuit had been filed and the attorney was aware that there was no settlement forthcoming. PACENZA'S ARGUMENTS IN DEFENSE OF DISCIPLINE ¶23 Besides his assertions that there is no clear and convincing evidence of his misdeeds, the attorney relies on four theories as complete defenses to the imposition of any discipline: 1) the lack of an attorney-client relationship between himself and the Richards; 2) that, despite the title defects, the contract for deed was sufficient to transfer his interest to the Richards; 3) the failure of the Richards to present him with "the coin of the realm" or cash in hand negating the requirement for him to present marketable title; and 4) the Richards letter to the Bar Association stating that all matters underlying the complaint had been resolved. None of these arguments are viable or convincing. ¶24 The lack of an attorney-client relationship between Pancenza and the Richards is immaterial. Rule 1.3, Rules Governing Disciplinary Proceedings, 5 O.S. 2001, Ch. 1, App. 1-A clearly provides that a lawyer committing any act contrary to prescribed standards of conduct, whether in the course of professional capacity, or otherwise, may be grounds for discipline. The principle is demonstrated by Oklahoma case law.47 It is also unimportant whether the parties agree that a particular ethical violation occurred. This Court is not limited to analyzing those ethical standards recognized or cited by the complainant and the respondent nor by those charged in the complaint.48 ¶25 Pacenza asks us to ignore his responsibility to act honestly as a practitioner of the bar. Essentially, the attorney asserts that he should be absolved of culpability on the misrepresentation count because a contract for deed may legally be entered when the conveyor of the property has no interest and that only if the Richards' presented him with cash in hand did he have any duty to clear the title. We will not reach the underlying legal arguments made by Pacenza. In disciplinary matters, we not only determine the lawyer's continued fitness to practice law, but we must do so while safeguarding the interests of the public, the courts, and the legal profession.49 We cannot perform this function and allow the kind of mental jockeying that Pacenza proposes.50 ¶26 Pacenza is convinced that the portion of the bankruptcy settlement resulting in the Richards being awarded damages and requiring a letter to the Bar Association stating that the underlying cause has been resolved should absolve him of discipline. Such is not the case under either the disciplinary rules ENHANCEMENT, MITIGATION AND APPROPRIATE DISCIPLINE ¶27 The trial panel recommended a six-month suspension and the payment of costs. The Bar Association request a "lengthy suspension" and asserts that the facts and the attorney's disciplinary history support a suspension in excess of the recommended six month period. This Court is the ultimate decision maker concerning attorney discipline and is not bound by the trial panel's findings, recommendation and conclusions. ¶28 It is significant that this third occasion for discipline involves the same type of misconduct as that which was encompassed within the prior two offenses -- dishonesty, fraud, deceitfulness and misleading actions. ¶29 Here, the attorney's actions surrounding the contract for deed, his misrepresentations concerning the ability to clear the title and his lack of any attempt to do so demonstrate a deliberate course of dishonest conduct reflecting adversely upon his fitness to practice law. Pacenza's making it necessary for the Richards to bring suit against him to protect their interests and his resultant divorce where non-exempt properties were transferred to his ex-wife requiring the Richards to participate in adversarial proceedings in the bankruptcy court constituted conduct prejudicial to the administration of justice. ¶30 Although the facts of this case are unique in that no strict attorney-client relationship existed between the Richards and the attorney, causes involving attorney misrepresentation along with other factors have garnered two of the most serious of punishments -- suspensions of two years and a day and disbarment. ¶31 Private reprimands are not given lightly. Nevertheless, it is apparent that this most lenient of disciplines has not impressed the attorney with the necessity of dealing honestly and forthrightly with the public. Therefore, we must deliver discipline sufficient to persuade the attorney that such conduct will not be tolerated. ¶32 Mitigating circumstances may be considered in evaluating both the attorney's conduct and in assessing the appropriate discipline. ¶33 Honesty and integrity are the cornerstones of the legal profession. Nothing reflects more negatively upon the profession than deceit. There can be little doubt that the attorney has brought discredit upon the legal profession. In imposing discipline, the Court evaluates the entire record of an attorney's professional conduct and scrutinizes the record to determine whether the alleged offenses are a mere blotch on an otherwise untainted career, or just one long series of ethically questionable actions. ¶34 Other than the attorney's testimony concerning his community service, there is little that can be said in mitigation. Pacenza's conduct, his two previous encounters with the disciplinary system and the lack of remorse or acceptance of responsibility CONCLUSION ¶35 While there is evidence that the lawyer has been an active member of the community and has contributed much of his time to society, his failure to disclose the title problems to the Richards when the contract for deed was executed, his lack of honesty with multiple parties concerning his efforts to clear title and his continued refusal to accept responsibility for his actions permeate the records of the disciplinary proceeding, the Richards' lawsuit and the bankruptcy matter. We take patterns of misrepresentation seriously.72 ¶36 The Court is impressed by the harm caused to the Richards and the damage the attorney's actions must have caused to their public perception of the legal profession as a whole. The rule of law requires substantial disciplinary action. The respondent, Franklin J. Pacenza, is ordered suspended from the practice of law for a period of two years and one day. Pacenza is further ordered to pay costs of the proceedings in the amount of $4,456.41 within thirty days of the date this opinion becomes final. RESPONDENT SUSPENDED FOR TWO YEARS AND ONE DAY AND ORDERED TO PAY COSTS OF THE PROCEEDING IN THE AMOUNT OF $4,456.41. ALL JUSTICES CONCUR. FOOT