Title: In the Matter of Joseph Peter Barrett

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

In the Matter of Joseph Peter Barrett  SYLLABUSThis syllabus is not part of the Court’s opinion. 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 Court. In the interest of brevity, portions of an opinion may not have been summarized. In the Matter of Joseph Peter Barrett (D-126-17) (081035)Argued June 11, 2019 -- Decided July 15, 2019PER CURIAM In this ethics proceeding, the Court considers whether Joseph Peter Barrett, an attorney who received a 150-day suspension for knowing misappropriation of law firm funds in Utah -- a jurisdiction that applies a preponderance of the evidence standard and recognizes no business dispute defense -- may, based only on the Utah record, be disbarred under New Jersey’s clear and convincing evidence standard. In two separate law firm matters in Utah, respondent traded legal fees earned for his law firm for construction work performed at his home in Utah. In disciplinary proceedings in Utah, respondent, in order to explain and justify his conduct, sought to testify about a business dispute he had with his law firm. The court determined the evidence was relevant only to the motive and credibility of testifying law firm partners. At the hearing’s conclusion, the Utah judge found by a preponderance of the evidence that respondent had knowingly misappropriated law firm funds and imposed a 150-day suspension from the practice of law. The Utah Supreme Court affirmed the 150-day suspension. In re Discipline of Barrett, 391 P.3d 1031, 1037-38 (Utah 2017). Following entry of the Utah order, the New Jersey Office of Attorney Ethics (OAE) moved before the Disciplinary Review Board (DRB) for reciprocal discipline and requested respondent’s disbarment. Relying on In re Siegel, 133 N.J. 162, 170 (1993), the DRB recommended disbarment. The Court dismissed without prejudice the OAE’s motion for reciprocal discipline, noting that “the findings of the tribunal in Utah were based on a preponderance of the evidence standard instead of the clear and convincing standard applicable to New Jersey disciplinary proceedings.” 234 N.J. 81, 82 (2018). The OAE filed a motion for reconsideration, which the Court granted. ___ N.J. ___ (2018).HELD: Because the Utah court limited the presentation of evidence of a business dispute between respondent and the law firm, and because evidence that may exist in Utah cannot be compelled by respondent here, the Court cannot conclude that the OAE has proven by clear and convincing evidence that respondent knowingly misappropriated law firm funds under circumstances justifying greater discipline than that imposed in Utah. 1 1. In reciprocal discipline cases, the Court should impose the same discipline as the foreign jurisdiction unless the matter is within one of five enumerated exceptions. One of the exceptions is germane to this case -- that “the unethical conduct established warrants substantially different discipline.” R. 1:20-14(a)(4)(E). To “argue that the law of this state or the facts of the case do or should warrant the imposition of greater discipline than that imposed in [the] other jurisdiction[],” the Director of the OAE must “establish[] such contentions by clear and convincing evidence.” Id. § 14(a)(4). (pp. 5-6)2. When a New Jersey attorney misappropriates law firm funds, the facts and circumstances of the particular case determine the sanctions warranted, up to and including disbarment. See Siegel, 133 N.J. at 170 (“[K]nowingly misappropriating funds - - whether from a client or from one’s partners -- will generally result in disbarment.” (emphasis added)); see also In re Sigman, 220 N.J. 141, 158 (2014) (explaining that Siegel’s holding “is not, and has never been, absolute” and that “[t]he Court has recognized in other settings that there are cases that warrant discipline short of disbarment”). (pp. 6-7)3. The only evidence produced by the OAE in support of sanctions greater than a 150- day suspension is the record of proceedings before the Utah court. Importantly, in New Jersey disciplinary proceedings, evidence of a business dispute may be a defense to the misappropriation of law firm funds. Utah has no such business dispute defense, the Utah record lacks facts necessary to establish a business dispute defense, and evidence of the existence of a business dispute would be integral, in New Jersey, to defending against a charge of knowing misappropriation of law firm funds. In Utah, respondent’s incentive to produce evidence of a business dispute was far different than what his motivation to produce such evidence in New Jersey would have been. (pp. 7-8)4. Respondent claims that if permitted and motivated to do so, he could have produced additional evidence of a business dispute in Utah. Any such evidence that may have been available during the Utah proceedings remains in Utah, outside of respondent’s and the OAE’s reach. It would therefore be fundamentally unfair and contrary to established rules to disbar respondent in New Jersey -- a greater discipline than that imposed in Utah -- based only upon the record of proceedings in Utah. (pp. 8-10) The Court imposes a 150-day retroactive suspension of respondent’s license to practice law in New Jersey.CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in this opinion. 2 SUPREME COURT OF NEW JERSEY D- 126 September Term 2017 081035 In the Matter of, Joseph Peter Barrett, an Attorney at Law. On an Order to show cause why respondent should not be disbarred or otherwise disciplined. Argued Decided June 11, 2019 July 15, 2019 Charles Centinaro, Director, argued the cause on behalf of the Office of Attorney Ethics. John McGill, III, argued the cause for respondent (McGill Law Practice, attorneys). PER CURIAM In this ethics proceeding, we are called upon to consider whether anattorney who received a 150-day suspension for knowing misappropriation oflaw firm funds in Utah -- a jurisdiction that applies a preponderance of theevidence standard and recognizes no business dispute defense -- may, basedonly on the Utah record, be disbarred under New Jersey’s clear and convincingevidence standard. 1 We conclude that in this case, Rule 1:20-14(a), which governs reciprocaldiscipline, does not permit “substantially different discipline” from thatimposed in Utah. R. 1:20-14(a)(4)(E). While a lawyer’s misappropriation oflaw firm funds may warrant disbarment in some cases, In re Sigman, 220 N.J. 141, 153 (2014), we determine that the New Jersey Office of Attorney Ethics(OAE) did not demonstrate that the record of proceedings in Utah establishesby clear and convincing evidence that the circumstances here warrantrespondent Joseph Peter Barrett’s disbarment. Therefore, like the UtahSupreme Court, we impose a 150-day suspension of respondent’s license topractice law in New Jersey, which we apply retroactively. I. We briefly summarize the facts and procedural history outlined in theDisciplinary Review Board’s (DRB) decision, which relied upon thedisciplinary record developed in Utah. See R. 1:20-14(a)(5). In two separate law firm matters handled by respondent while engagedin the practice of law in Utah, respondent traded legal fees earned for his lawfirm in exchange for construction work performed at his home in Utah; he didso without the knowledge or consent of his law firm and in violation of his lawfirm’s employment contract. Respondent’s actions deprived his law firm ofmore than $20,000 in legal fees. 2 In disciplinary proceedings before Utah’s District Court of the ThirdJudicial District, respondent, in order to explain and justify his conduct, soughtto testify about a business dispute he had with his law firm. The courtquestioned the relevancy of the evidence and determined that it was relevantonly to the motive and credibility of testifying law firm partners. As such,respondent testified briefly regarding the business dispute. At the hearing’s conclusion, the Utah judge found by a preponderance ofthe evidence that respondent had knowingly misappropriated law firm fundsand imposed a 150-day suspension from the practice of law. The Utah Officeof Professional Conduct appealed respondent’s 150-day suspension to the UtahSupreme Court, and requested that respondent be disbarred -- the presumedpenalty for knowing misappropriation of client funds,1 but not for the knowingmisappropriation of law firm funds. The Utah Supreme Court clarified that“not all misappropriation is created equal,” and declined the request “to holdthat disbarment is the appropriate sanction whenever an attorneymisappropriates firm funds.” In re Discipline of Barrett, 391 P.3d 1031, 1037-1 See In re Discipline of Babilis, 951 P.2d 207, 217 (Utah 1997). 3 38 (Utah 2017). Relying upon Utah’s disciplinary rules, 2 the Utah SupremeCourt affirmed the 150-day suspension. Id. at 1038. Following entry of the Utah Supreme Court’s order, the OAE movedbefore the DRB for reciprocal discipline pursuant to Rule 1:20-14(a) andrequested respondent’s disbarment. In response, respondent contended that theUtah court deprived him of the opportunity to fully develop facts supportinghis claimed business dispute with the law firm. Respondent therefore arguedthat because the OAE’s burden of proof in New Jersey disciplinaryproceedings -- clear and convincing evidence -- is greater than Utah’spreponderance standard, Rule 1:20-14(a) precludes his disbarment in NewJersey. The DRB acknowledged that Utah has eschewed adopting a bright-linerule mandating disbarment for the knowing misappropriation of law firm fundsbut, relying on In re Siegel, 133 N.J. 162, 170 (1993), recommendedrespondent’s disbarment. This Court dismissed without prejudice the OAE’s motion for reciprocaldiscipline, noting that “the findings of the tribunal in Utah were based on apreponderance of the evidence standard instead of the clear and convincingstandard applicable to New Jersey disciplinary proceedings.” 234 N.J. 81, 82 2 Utah RPC 8.4(c), like New Jersey RPC 8.4(c), states that a lawyer engages in professional misconduct when he or she “engage[s] in conduct involving dishonesty, fraud, deceit or misrepresentation.” 4 (2018). The OAE filed a motion for reconsideration, contending that divergentstandards of proof do not operate as a bar to reciprocal discipline in this case.We granted the OAE’s motion for reconsideration. ___ N.J. ___ (2018). II. In attorney disciplinary proceedings, we are obliged “to conduct anindependent review of the record, R. 1:20-16(c), and determine whether theethical violations found by the DRB have been established by clear andconvincing evidence.” In re Pena, 164 N.J. 222, 224 (2000). Here, weundertake this task in the context of reciprocal discipline -- “the process bywhich New Jersey applies its ethics rules to an attorney admitted in NewJersey, following the imposition of discipline in an ethics proceedingconducted by a sister jurisdiction.” Sigman, 220 N.J. at 153. As such, ourreview involves “a limited inquiry, substantially derived from and reliant onthe foreign jurisdiction’s disciplinary proceedings.” Ibid. Consistent with that standard, our rules instruct that we should imposethe same discipline as the foreign jurisdiction unless the matter is within oneof five enumerated exceptions. One of the exceptions is germane to this case-- that “the unethical conduct established warrants substantially differentdiscipline.” R. 1:20-14(a)(4)(E). To “argue that the law of this state or thefacts of the case do or should warrant the imposition of greater discipline than 5 that imposed in [the] other jurisdiction[],” the Director of the OAE must“establish[] such contentions by clear and convincing evidence.” Id.§ 14(a)(4). Here, the OAE bears the burden of proving by clear andconvincing evidence that respondent knowingly misappropriated law firmfunds. Respondent is entitled to produce evidence that the purportedmisappropriation was, in fact, a business dispute. We must then determinewhether the OAE has proven by clear and convincing evidence that the facts ofthe case warrant the imposition of “greater discipline than that imposed in”Utah -- namely, the sanction of disbarment. Ibid. III. The record of the Utah disciplinary proceedings shows that respondenttwice misappropriated funds that belonged to his law firm and thus violatedtwo New Jersey RPCs: RPC 1.15(a), which requires a lawyer to “holdproperty of clients or third persons that is in [his or her] possession inconnection with a representation separate from the lawyer’s own property”;and RPC 8.4(c), which prohibits a lawyer from “engag[ing] in conductinvolving dishonesty, fraud, deceit or misrepresentation.” When a New Jerseyattorney misappropriates law firm funds, the facts and circumstances of theparticular case determine the sanctions warranted, up to and includingdisbarment. See Siegel, 133 N.J. at 170 (“[K]nowingly misappropriating funds 6 -- whether from a client or from one’s partners -- will generally result indisbarment.” (emphasis added)); see also Sigman, 220 N.J. at 158 (explainingthat Siegel’s holding “is not, and has never been, absolute” and that “[t]heCourt has recognized in other settings that there are cases that warrantdiscipline short of disbarment”). The only evidence produced by the OAE in support of sanctions greaterthan a 150-day suspension is the record of proceedings before the Utah court.Importantly, in New Jersey disciplinary proceedings, evidence of a businessdispute may be a defense to the misappropriation of law firm funds. See, e.g.,Sigman, 220 N.J. at 162 (concluding that disbarment is inappropriate wherethe underlying misappropriation “arose in a business dispute between theattorney and his firm”). As the OAE concedes, Utah has no such businessdispute defense. Although the Utah judge did not “see a huge amount of relevancy” intestimony concerning respondent’s business dispute with the law firm, thejudge did allow respondent to touch upon such evidence for the limitedpurpose of undermining the credibility of the testifying law firm partners.Respondent thus argues that the Utah court excluded evidence relevant towhether the misappropriation at issue arose in the context of a business disputewith his law firm. 7 The OAE acknowledges both that the Utah record lacks facts necessaryto establish a business dispute defense and that evidence of the existence of abusiness dispute would be integral, in New Jersey, to defending against acharge of knowing misappropriation of law firm funds. It also concedes that itcannot subpoena witnesses and produce evidence beyond the Utah record tosupport its request for greater discipline. Nevertheless, the OAE claims thatthose limitations do not preclude us from relying on the Utah record to supporta finding of knowing misappropriation of law firm funds warrantingrespondent’s disbarment. We disagree. Central to our conclusion is that in Utah, respondent’s incentive toproduce evidence of a business dispute was far different than what hismotivation to produce such evidence in New Jersey would have been. In Utah,the court permitted respondent to elicit testimony regarding a business disputewith his law firm only to assist the court in assessing the testifying law firmpartners’ credibility. Here, evidence of a business dispute militates againstdisbarment, notwithstanding an attorney’s misappropriation of law firm fundsin violation of RPC 8.4(c). Respondent claims that if permitted and motivated to do so, he couldhave produced additional evidence of a business dispute in Utah -- the Statewhere the alleged business dispute occurred. The OAE and this Court agree 8 that any evidence to establish a business dispute that may have been availableduring the Utah proceedings remains in Utah, outside of respondent’s and theOAE’s reach. We therefore believe it would be fundamentally unfair andcontrary to our established rules to disbar respondent here -- a greaterdiscipline than that imposed in Utah -- based only upon the record ofproceedings in Utah. See In re Gallo, 178 N.J. 115, 120 (2003) (finding thatthe imposition of discipline premised on an incomplete record “would not befair” absent the opportunity for further testimony); cf. In re Gipson, 103 N.J. 75, 77 (1986) (imposing discipline where “the procedures afforded respondentaccorded with principles of fundamental fairness”). Our constitutional responsibility is to determine the fitness of lawyers topractice law in New Jersey. See N.J. Const. art. VI, § 2, ¶ 3. In doing so, “wecannot ignore relevant information that places an attorney’s conduct in its truelight.” Gallo, 178 N.J. at 120. Rather, “the details must be known, whethersupportive or destructive of respondent’s position.” Id. at 122. Here -- as inevery disciplinary matter before this Court -- respondent, the OAE, andmembers of the public “are entitled to a disciplinary review process in which afull, undistorted picture is the basis for disciplinary sanctions.” Id. at 120.Since no such record exists here, we are without a basis for the imposition ofheightened discipline. 9 Because the Utah court limited the presentation of evidence of abusiness dispute between respondent and the law firm, and because evidencethat may exist in Utah cannot be compelled by respondent here, we cannotconclude that the OAE has proven by clear and convincing evidence thatrespondent knowingly misappropriated law firm funds under circumstancesjustifying greater discipline than that imposed in Utah. IV. For the foregoing reasons, we impose a 150-day retroactive suspensionof respondent’s license to practice law in New Jersey. CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in this opinion. 10