Title: Matter of Pro Hac Vice Counsel: Brown

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE

IN THE MATTER OF PRO §
HAC VICE COUNSEL § No. $44, 2014
SUPREME COURT OF THE §
STATE OF DELAWARE: § Board Case No. 111845-B
§
ALEX J. BROWN, §
Respondent. 5

Submitted: October 17, 2014
Decided: October 21, 2014
Corrected: October 22, 2014
Before HOLLAND, RIDGELY, and VALIHURA, Justices.
ORDER
This 21* day of October 2014, it appears to the Court that:

(1) Thisisa lawyer disciplinary proceeding. On September 25,2014,

  

the Board on Professional Responsibility filed @ report with this Court
recommending, among other things, that the respondent, Alex J. Brown, be
publicly reprimanded and pay the costs of the proceeding. A copy of the
Board's report is attached to this order. Neither the Office of Disciplinary
Counsel nor Stanina has filed any objections to the Board’s report.

(2) The Court has considered the matter carefully. We find the
Board’s recommendation of a public reprimand to be appropriate. We,
therefore, accept the Board’ findings and recommendation for discipline and

incorporate the Board’s findings and recommendation by reference.
NOW, THEREFORE, IT IS ORDERED that the Board's September 25,
2014 report is hereby ACCEPTED. The Office of Disciplinary Counsel shall
disseminate this Order in accordance with Rule 14 of the Delaware Lawyers’
Rules of Disciplinary Procedure.

BY THE COURT:

/s/ Henry duPont Ridgely
Justice

 
EFiled: Sep 25 2014 03:
Filing 1D 56088359
‘Case Number 544,2014
BOARD OF PROFESSIONAL RESPONSIBILITY
OF THE SUPREME COURT OF DELAWARE,

IN THE MATTER OF
PRO HAC VICE COUNSEL.
SUPREME COURT OF THE

) CONFIDENTIAL

)

)
STATE OF DELAWARE: )

)

)

)

BOARD CASE NO. 111845-B

ALEX J. BROWN,
RESPONDENT.

 

BOARD REPORT AND RECOMMENDATION OF SANCTION
Before a panel of the Board of Professional Responsibility is a Petition for
Discipline. The Respondent, Alex J. Brown, Esquire, a member of the Maryland
Bar, was admitted pro hac vice by the Court of Chancery and is subject to the
jurisdiction of the Supreme Court of Delaware for disciplinary action."
Respondent represented several parties before the Court of Chancery where
the court entered a Seizure and Injunction Order placing an insurance company
under control of the Delaware Insurance Commissioner. The court enjoined the
filing of litigation against the insurance company in any other forum. Respondent
acted in contempt of the Seizure and Injunction Order by filing suit in Maryland
state court against the insurance company after the injunction had been entered.
‘The Office of Disciplinary Counsel has brought a Petition alleging,

professional misconduct under Rules 3.4(c) and 8.4(d) of the Delaware Lawyers’

" Delaware Lawyers’ Rules of Disciplinary Procedure 5(a,
Rules of Professional Conduct. Respondent admitted that he acted in contempt of

 

the Court of Chancery injunction, and violated these Rules. Therefore, the issue
for the Panel is the appropriate sanction,

‘The Panel has reviewed the hearing evidence using the framework from the
‘Standards for Imposing Lawyer Sanctions adopted by the American Bar
Association Standing Committee on Professional Discipline. We have also
considered Supreme Court case law on sanctions and other authorities. The Panel
recommends that a public reprimand be imposed, and that Respondent pay the
costs of this proceeding.

I. Procedural Background

‘The Office of Disciplinary Counsel (“ODC”) filed the Petition for Discipline
(“Petition”) on June 19, 2014. Respondent, through his counsel, filed an answer to
the Petition on July 7, 2014 (“Answer”) and admitted all facts alleged in the
Petition except one limited allegation.” The Respondent also admitted violating the

Delaware Rules of Professional Conduct (“Rules”) alleged in Counts I and II.

Respondent denied part of paragraph eight ofthe Petition where the Insurance Commissioner
  Wilks, Lukoff & Bracegirdle moved for Respondent's admission pro hac vice. After the court
granted the Wilks’ fiem's motion to withdraw, the Greenhill Law Group substituted forthe Wilks
firm. By the time of the substitution of counsel, Respondent had committed the act leading to
this disciplinary proceeding. August 19, 2014 Hearing Transcript (abbreviated “Hr'g Tr.”) at
139,
Indemnity is @ Delaware domiciled risk retention group that sells insurance
policies to restaurants and nightclubs and for special events.‘ Jeffrey Cohen
founded Indemnity and served as its president, chairman and chief executive
officer.’ Indemnity is subject to the regulatory authority of the Delaware
Department of Insurance (“Department”). The Department is charged with
protecting insurance consumers by making sure that insurance companies are able
to pay claims as well as investigate and prosecute insurance fraud.®

(On May 30, 2013, the Department filed a seizure petition in the Court of
Chancery because of its concern about Indemnity’s financial viability and its
suspicion that Jeffrey Cohen had engaged in fraud.” The Court of Chancery

reviewed the seizure petition ex parte, found it to be supported by sufficient

 

snce and entered a confidential seizure and injunction order on the same day
(“Seizure Order”).*

‘The Seizure Order enjoined persons with notice of the Seizure Order from
bringing claims relating to Indemnity, except in the Court of Chancery:
10. All persons and entities having notice of these proceedings or of|
this Seizure and Injunction Order, are hereby enjoined and restrained

from asserting any claim against the Commissioner, het authorized
agents, or IICRRG in connection with their duties as such, or against

 

* Petition 3,

Saas,

$d. 3.

7 Inthe Matter ofthe Rehabilitation of Indemnity Insurance Corporation, RRG, C.A. No. 8601-
vet.

* Hearing Exhibit (abbreviated “Hig Ex.”) A(I).

4
the Assets, except insofar as such claims are brought in the [sic] these
seizure proceedings or any subsequent delinquency proceedings
pursuant to 18 Del. C. ch. 59."

‘On August 9, 2013, the court extended the Seizure Order, and on September

 

10, 2013, amended the Seizure Order to address violations by Jeffrey Cohen.
Following an evidentiary hearing the court imposed sanctions against Jeffrey

Coben on September 25, 2013 and permitted limited discovery to determine

 

“whether further sanctions were warranted against Cohen for violating the
‘Order (“Sanctions Order”).!"

Atthe time of the disciplinary violations, Respondent was a member of the
‘Maryland Bar and practicing with the Baltimore, Maryland law firm Silverman,
‘Thompson, Slutkin & White, LLC.” During June, July and August 2013,
Respondent advised Indemnity as its counsel with respect to at least the following,
matters: the Department's investigation of Indemnity leading up to the Seizure
Order, the Court of Chancery seizure action, and a lawsuit Respondent filed on
behalf of Indemnity in September 2012 against the Department and others arising
ut of the Department's oversight of Indemnity."*

On August 2, 2013, Delaware counsel for Indemnity moved to admit
Respondent pro hac vice as counsel for Indemnity in the Court of Chancery

"id.
" Hrg Ex. AQ).
"Wd,

" ettion $f 1-2.
"Ed. at§ 8; Hg Bx. A).
proceeding."* On August 6, 2013, Delaware counsel for Indemnity voluntarily
withdrew Brown's motion for admission pro hac vice as counsel of record for
Indemnity in the Court of Chancery.’

‘On August 15, 2013, Delaware counsel for the proposed intervener RB
Entertainment Ventures, LLC (“RB Entertainment”) moved to admit Respondent
‘pro hac vice as counsel of record for RB Entertainment in the Court of Chancery
proceeding,"® RB Entertainment is an entity controlled by Jeffrey Cohen and holds
99% of the equity of Indemnity.” Hr’g Ex. A(2). The Court granted the motion."*

‘On October 11, 2013, Respondent filed an action in the Maryland Circuit
Court of Baltimore County on behalf of a number of entities owned by or affiliated
with Jefftey Cohen, against Indemnity and a number of Indemnity’s directors,

officers and employees (the “Maryland Action”)."” The Maryland Action related

 

to the Department’s oversight of Indemnity, and was adverse to Indemnity’s

interests.” Filing the Maryland Action violated the Seizure Order. The Maryland

© Hg Ex. A),
a

wi
1 He'g Ex. (8), at
© eg Ex. AG),

" Id; Bx. BO).

® Because the Maryland Action was adverse to Indemnity, the Panel raised a possible Rule
Violation relating to conflicts of interest. The Office of Disciplinary Counsel had considered the
charge, bt didnot bring disciplinary charges for this potential violation, claiming that the
Maryland disciplinary authorities had jurisdiction over this charge. Hr'g Tr. 9

 

Heg Ex. AQ).

 

   

6
Action also contained a number of volatile allegations against Indemnity and the
Department, its agents and the individual defendants.”

‘On October 30, 2013 Indemnity moved to disqualify Respondent in the
Delaware action and to revoke his admission pro hae vice on the grounds that
Respondent's representation of RB Entertainment violated the Delaware Rules of
Professional Conduct and that Respondent violated the Seizure Order by filing the
Maryland Action. On October 31, 2013, Delaware counsel for RB
Entertainment, a company controlled by Jeffrey Cohen, represented to the Court of
Chancery that Respondent would be withdrawing his appearance for Indemnity.»
‘The Court of Chancery issued an order noting that under Court of Chancery Rule
‘5(aa) Respondent could not withdraw his appearance without leave of court.

As part of the same order the Court of Chancery issued a rule to show cause
that required Respondent to appear and show cause why he should not be held in
contempt of the Seizure Order, why his admission pro hac vice should not be
revoked, and why other sanctions should not be ordered. ‘The court also found as a

preliminary matter that the filing of the Maryland Action constituted a kno\

  

iz
violation of paragraphs 9, 10, and 15 of the Seizure Order, paragraphs 2 and 3 of

the Amended Seizure Order, and paragraphs 1, 6, 7, and 8 of the Sanctions Order.

® Hg Ex. BC),
2 Hg Ex AQ),
ia
Such violations, according to the court, established a prima facie case for both civil
and criminal contempt.*

Shortly after the October 31, 2013 show cause order, Respondent dismissed
the Maryland Action.”* On January 10, 2014, after briefing on the show cause
order, the Court of Chancery held an evidentiary hearing. Respondent appeared
‘with counsel and testified atthe hearing, as did Indemnity representatives.
Respondent admitted that by filing the Maryland action he acted in contempt of the
Seizure Order.”* The Court of Chancery found that Respondent “testified credibly
that he was under great pressure from his client to file the Maryland Action, that he
‘knew that it violated the Seizure Order, but that he chose to carry out his client’s
wishes rather than respect the Seizure Order.”

On January 13, 2014, the Court of Chancery issued an Order granting
Respondent's motion to withdraw as counsel for Indemnity. The court also held

Brown's filing of the Maryland Action was contumacious
and violated the Seizure Order. That act and Brown's
representation of Indemnity at the same time he sued
Indemnity in the Maryland Action threatened to prejudice
the faimess of this proceeding. Brown mitigated his
contempt by dismissing the Maryland Action promptly

after the issuance of the Show Cause Order. The
dismissal of the Maryland Action also mitigated the

 

® rg Bx AQ).
% petition 13
% answer 415
» Hrg Ex. A).
representation issue, which Brown further addressed by
seeking to withdraw his appearance in this proceeding. *

‘The Court of Chancery fined Respondent and required Respondent to self-
report his actions to the disciplinary authorities in Maryland and Delaware.”
IIL. Violation of the Rules

Delaware Professional Conduct Rule 3.4(c) states that “fa lawyer shall not
knowingly disobey an obligation under the Rules of the tribunal, except for an
open refusal based on an assertion that no valid obligations exists.” Respondent
has admitted a violation of Rule 3.4(c). By filing the Maryland Action,
Respondent admits that he knowingly violated the Seizure Order that enjoined
persons with notice of the Seizure Order from bringing claims against Indemnity in
‘any court other than the Court of Chancery.”

Delaware Professional Conduct Rule 8.4(d) states that itis professional
misconduct for a lawyer to “engage in conduct that is prejudicial to the

administration of justice.” Respondent has admitted that by knowingly disobeying

 

the Seizure Order, he engaged in conduct that is prejudicial to the administration of |

justice in violation of Rule 8.4(4)."

"id.

» id.

® Answer $19,
51d. 921
IV. Recommended Sanctions

‘To determine the appropriate sanctions, the Panel starts with the four part
test set forth in the American Bar Association Standards for Imposing Lawyer
‘Sanctions (“ABA Standards”). At the outset the Panel makes a preliminary
determination of the appropriate sanction by assessing the first three prongs of the
test: (1) the ethical duty violated; (2) the lawyer's state of mind; and (3) the actual
or potential injury caused by the lawyer's conduct. Following the preliminary
determination, the Panel decides whether an increase or decrease in the preliminary
sanction is justified because of mitigating or aggravating factors. ‘The Panel must
also consider Supreme Court of Delaware precedent for similar violations.

(1) The ethical duties violated.

Respondent has admitted violating Rules 3.4(c) and 8.4(4).

(2) State of mind.

Under Delaware Professional Conduct Rule 1.0(4), an attorney acts
“knowingly” when one has “actual knowledge of the fact in question.” The Rule

at

 

ns charged here required “knowing” conduct, which Respondent admitted

  

(3) Injury caused by the misconduct.
Under the ABA Standards, “Injury” is defined as “harm to a client, the

public, the legal system, or the profession which results from a lawyer's

© Inve Steiner, 817 A.24 793, 796 (Del. 2003).

10
‘misconduct. The level of injury can range from “serious” injury to ‘little or no”
injury; a reference to ‘injury’ alone indicates any level of injury greater than ‘little

‘or no” injury.” “Potential injury” is the harm to a client, the public, the legal

 

system or the profession that is reasonably foreseeable at the time of the lawyer's

 

misconduct, and which, but for some intervening factor or event, would probably
have resulted from the lawyer’s misconduct.”**
Respondent argues that there was litle or no actual or potential harm

because Jeffrey Cohen had filed a case pro se against Indemnity in Maryland in

 

violation of the Seizure Order before Respondent filed his case. Respondent also
claims that his case was never made public and was quickly withdrawn.”
‘The Panel finds to the contrary.’* The testimony of the witnesses

demonstrated actual harm to the parties and prejudice to the administration of

© 1991 ABA Standards as amended 1992 ~ Definitions. It appears that the American Bar
Association re-adopted in 2012 the ABA Standards, but rescinded the adoption of the
‘commentary to the ABA Standards. See ABA Resolution 107, available at

 

7 Although the Marland Action was no inal filed unde sea, the record is concn on
‘whether Respondent did so intentionally, or whether there were issues with the clerk's office in
applying to file under seal. There was also dispute as to whether the Maryland Action ever
‘became public. The Panel does not need to resolve this dispute as part of its sanction
recommendation.

2 The parties dispute whether the Maryland Action filed by Respondent was ever made public
before it was withdrawn, Respondent claims that he made every effort to file the complaint
under seal, but issues withthe clerk's office caused a delay in sealing the complaint. ODC
maintains thatthe complaint became public because news sources reported the details in articles
about Indemnity. The Panel need not resolve this factual dispute because the filing ofthe
‘complaint, even if kept confidential from the public, still caused Indemnity and the Insurance
‘Commissioner harm, as well as prejudice tothe administration of justice.

 

 

 

 

u
justice. Indemnity, who was then Respondent’ client, had to take actions to
respond to the Maryland Action, including appointment of outside counsel to
defend the action and interacting with its insurance carrier."* The Insurance
Department also had to address the Maryland Action in the Delaware case, by
filing motions, briefing the rule to show cause issues, and conducting the hearing,”
‘The Court of Chancery had to review the submissions, conduct a hearing, and write
an opinion, where it found that Respondent’s actions violated the Seizure Order.™*
Standards 6.22 and 6.23 both speak in terms of injury or potential injury, meaning
only a minimal amount of injury under the definitions. The Panel determines that
‘there was actual injury and prejudice to the administration of justice.”
‘The Presumptive Sanction

‘The parties agree that ABA Standard 6.2 applies to determine the
presumptive sanction. Under 6.2, there are an array of possible sanctions for
failure to obey the rules of the tribunal, depending on the attomey’s state of mind

and seriousness of the harm. For purposes of determining the presumptive

2 Hg Tr. 30-34; 38-41,

» Id 266-69.

3 Hg Ex. AG).

» See also Inre Abbott, 925 A.2d 482, 486-87 (Del. 2007) (Superior Court was required to
strike brief containing inflammatory and unprofessional writing, wasting judicial resources and
  eg Te 171.
Fa 168-70.

19
9.3204) im

 

jon of other penalties or sanctions

‘The Court of Chancery has imposed a monetary sanction on Respondent for
his contumacious conduct. The Maryland disciplinary authority has issued
Respondent a warning.**

9.320) remorse

‘The Panel finds that Respondent has expressed remorse for his actions.

After reviewing the aggravating and mitigating factors, the Panel finds that
the mitigating factors outweigh the aggravating factors, and that the presumptive
sanction of suspension should be reduced to public reprimand. It is important to
note that much of the case presented by Respondent revolved around the
difficulties he had with Jeffrey Cohen as a client. Respondent and his other
witnesses testified convincingly that Cohen exceeded every standard of appropriate
client conduct towards his attorney. But, as all parties agreed at the hearing, a
difficult or impossible client is neither an aggravating nor mitigating factor.* The
reason for this hard and fast rule is apparent. The lawyer owes duties not just to

the client, but to the legal system, As the Supreme Court of Delaware said in In re

5 Hir'g Ex. D. The Attomey Grievance Commission of Maryland dismissed the complaint made
by Bar Counsel. As part ofthe dismissal, the Grievance Commission found that Respondent
violated Maryland Rule of Professionel Conduct 1.9 by filing suit against a former client, and
Rule 8.44 by violating the Court of Chancery Seizure Order. ‘The Grievance Commission
issues a warning for these violations, which under Maryland rules, is not discipline. The partes
tg this proceedings agree thatthe Panel is not bound by Maryland’s determination

5 ABA Standard 9.4 provides as follows: “The following factors should not be considered as
cither aggravating or mitigating: ... (0) agreeing tothe client's demand for certain improper
behavior or result...”

 

 

20
Abbott, “[t}his responsibility to the “Court” takes precedence over the interests of
the client because officers of the Court are obligated to represent these clients

zealously within the bounds of both the positive law and the rules of ethics.’

Decisions

 

Delaware Di

 

Although the ABA Standards are used as a guide to determine the
‘appropriate sanction, Delaware precedent must also be considered. ODC cites a
number of Supreme Court of Delaware decisions where public reprimands were
ordered for Rule 3.4(c) and 8.4(d) violations.**

Respondent attempts to distinguish the foregoing cases on their facts. The
Panel finds, however, that regardless of the particular facts of these cases, the
‘common thread is a public reprimand for violation of court rules or orders where
the attomey acted with a culpable state of mind when disregarding court orders or
interfering with the judicial process.

Respondent submitted to the Panel summaries of a number of disciplinary
‘cases where private admonitions were imposed for Rule 3.4(c) violations. After
reviewing each of these cases, the Panel finds them all distinguishable, Many
5 925 A.2d a 487-88 (citing Nix v. Whiteside, 475 U.S. 157, 168 (1986),
5 See In re Guy, 1994 WL 202279 (Del. May’, 1994) (public reprimand for ating in contempt
cof court in veltion of Rule 34(@); In re Mekler, 1993 WL 61674 (Del. Feb. 9, 1993) (public
reprimand for disobeying court rules in violation of Rule 3.4(@);Inre Abbot 925 A.28 482
(public reprimand for fling briefs containing undignified, discourteous, and degrading
language); In re Murray, 2012 WL 2324172 (engaging in conduct prejudicial tothe

administration of justice warranted a public reprimand); In re Wilson, 2005 WL 3485738 (Del
‘Nov. 9, 2005) (public reprimand for disobeying rules of a tribunal in violation of Rue 3.4(¢))

 

 

 

21
involved a failure to comply with mandatory continuing legal education
requirements” or resulted from transgressions much less serious than the conduct
in this case, or personal issues unrelated to an attorney's professional judgment.

Here, the Respondent intentionally violated a court order to benefit his client,

 

causing injury to Indemnity and the Insurance Commissioner, and caused prej
to the judicial system,
CONCLUSION
‘After applying the ABA Standards, weighing the aggravating and mitigating
factors, and considering the Delaware case law and other authorities, the Panel
recommends that Respondent be publicly reprimanded, and pay the costs of this

proceeding.

Dated: September 25, 2014

> Board Case No.1, 1995; Board Case No. 10, 1995; Board Case No. 2007-0338-B; Board
‘Case No. 23, 1997; Board Case No. 44, 1993; Board Case No. 9, 1995; Board Case No. 96,
1997,

© Supreme Court No. 62,2013 (ail to dismiss an appeal or prosecute an appeal); Board Case
'Nos. 46, 2006 and 26, 2007; Board Case No. 309, 2007 (failed to appear for court and meet court
‘eadlines); Board Case No. 87, 2005; Board Case No. 46,2005 (uilure to comply with fling
directives); Board Case Nos. 42 and 43, 2001 (advising cent not to comply with court order
until adversary complied); Board Case No. 41, 1992 (failing to pay child support and ignoring
ODC requests fo information); Board Case No. 24,2003 {ilng to probate esate in timely
manner); Board Case No. 2012-0307-B (appearing without Delaware counse! during a court
‘all; Board Case No. 746, 2010 (violating protection from abuse order).

 

 

2
 

Danielle Yearick, Esq.

Deborah I. Armistead
 

B

Collins T. Seitz,

 

Esq.

Deborah I. Armistead
Collins J. Seitz, Jr, Esq.

Danielle Yearick, Esq.

hetearL edmiitezh
APPENDIX A

JOINT EXHIBITS

Ex.A Documents related to In the Matter of State of Delaware, ex rel., The
Honorable Karen Weldin Stewart, CIR-M-L Insurance Commissioner of
the State of Delaware v. Indemnity Insurance Corporation, RRG, C.A.
No. 8601-VCL

BE

BEB

A

Ag)
A(8)

AQ)

Confidential Seizure and Injunction Order (May 30, 2013)

Order Regarding Hearing on November 1, 2013 (Rule to Show
Cause)

‘Alex J. Brown’s Response to Show Cause Order
Order Granting Motion to Withdraw (January 13, 2014)

‘Transcript — Oral Argument on Jeffrey B. Cohen’s Motion to
‘Stay Pending Appeal and on the Court's Order to Show Cause
Regarding Alex J. Brown (January 10, 2014)

‘Theodore A. Kittila, Esquire’s letter to The Honorable J. Travis
Laster (October 31, 2013)

Motion for Admission Pro Hac Vice (August 15, 2013)

In the Matter of Rehabilitation of Indemnity Insurance
Corporation, 2014 WL 185017 (Del. Ch. Jan. 16, 2014)

Cohen, et al. v. State of Delaware, 89 A.3d 65 (Del. 2014)

Documents related to LG Companies, LLC, et al. v. Indemnity Insurance
Corporation, RRG, et al.

BQ)

BQ)

Complaint filed in the Circuit Court for Baltimore County
(October 11, 2013)

Email from Alex J. Brown, Esquire to Phillip Metcalf (October
11,2013)

Al
bP

lo

i
lo

 

EE

BE

ig
be

PEI

Respondent's correspondence to ODC (January 16, 2014)
‘Maryland Dismissal With Warning

College Bound Foundation/About Us

Super Lawyers: Rating a Lawyer

AM. Best Press Release

Complaint (October 8, 2013)

Motion to Unseal Record or Permit Access to Court File
Order Unsealing Court Record