Opinion ID: 2334156
Heading Depth: 1
Heading Rank: 9

Heading: The Gershon/Cowart Matter [3]

Text: In 1985, respondent represented Eric Gershon in a lawsuit instituted by an individual who had sold him a business. The litigation arose from Gershon's default on a $50,000 promissory note evidencing Gershon's financial obligations in the transaction. After a default judgment was entered against Gershon, the judgment-creditor began to take steps to execute on the judgment. Gershon's bank accounts were attached and some of the business' vehicles were seized. Settlement negotiations ensued. Respondent and her adversary in the matter agreed that Gershon would make scheduled payments toward the satisfaction of the judgment, the first installment payment to be in the amount of $10,269.18. In order to discharge his indebtedness, Gershon reached an agreement with Virginia Cowart, whom respondent had represented in other matters, whereby Cowart would lend him sufficient monies to cover the first installment payment. Although respondent's and her adversary's testimonies are in direct conflict with respect to any instructions respondent might have given the adversary about the immediate disposition of those funds, it is clear that, on July 23, 1985, respondent issued a trust account check in the amount of $10,269.18. On that same date, at 11:00 p.m., the judgment-creditor himself picked up the check at respondent's office. It is respondent's contention that, at that time, she instructed the judgment-creditor to advise his attorney to hold the check for a few days, in light of certain problems that had developed with the transfer of Cowart's funds from a money market account to respondent's trust account. It is also respondent's contention that, immediately upon being apprised of the delay incurred in the transfer of the funds, she attempted to contact the attorney whom she was unable to reach. Respondent explained that, because she would be leaving on the next day for a one-week cruise, she had left specific instructions with her secretary to call the attorney's office and to request him to withhold the deposit of the check. The attorney denies receiving any written or oral instructions from respondent in this regard. On July 25, 1985, the attorney deposited the funds into his trust account. After he waited a few days for the funds to clear, the attorney wrote a check to his client and to himself as co-payees. Some of the attorney's trust account checks were subsequently returned for insufficient funds. When the attorney confronted respondent, she gave him a certified check, covered with funds provided by Gershon. It was not until August 2, 1985, that the Cowart check was deposited in respondent's trust account. Respondent conceded that, at the time that she issued the check on July 23, 1985, there were insufficient funds in her trust account to cover it. At the conclusion of the ethics hearing, the presentment found that respondent had knowingly issued a check with insufficient funds in her trust account and had made misrepresentations to her adversary with regard to the issuance and use of the trust account check. The second count of this ethics complaint alleges that respondent used Cowart's funds for the benefit of Gershon, prior to obtaining his signature on a promissory note evidencing Gershon's obligations to Cowart. The presentment found that respondent had not exercised due diligence with respect to her obligations to Cowart, by allowing Gershon to utilize the funds without the benefit of a promissory note for a period of 20 days.