Opinion ID: 2060381
Heading Depth: 1
Heading Rank: 8

Heading: Gener Matter

Text: The most serious claim against respondent arises from his handling of income-tax refund in the Gener matter. In 1983 respondent was retained to represent Mary Gener in her divorce action against her husband, John Gener. At a hearing held on October 25, 1983, the court determined the terms of the divorce, including equitable distribution of the marital assets. Specifically, with respect to the federal-income-tax refund received by the Geners, the court stated: As far as the IRS refund is concerned, when the defendant left I find that there were the following debts: fuel, $587; one and a half months of the first mortgage of $445; two months of the second mortgage of $400. Those were the only provable items. They amount to $1,432. $1,432 out of the total of $1,940 will go to the plaintiff, that leaves a balance of $510  my numbers are wrong, leaves a balance of $510. Out of that $510 it will be divided in half, two fifty-five to the plaintiff; two fifty-five to the defendant. In effect, plaintiff will receive $1,687. The defendant will receive $255. The court directed respondent to prepare an appropriate order setting forth the above-enunciated distribution. He failed to do so. Consequently opposing counsel prepared an Order entered on December 8, 1983, that provided as follows: ORDERED that a certain IRS refund check in the amount of $1,940 and a certain Homestead Rebate check which was previously received by the plaintiff in the amount of $186.00 shall be divided between the parties as follows: $347.00 shall be paid to the defendant and $1,593.00 shall be paid to the plaintiff. From said $1,593, the plaintiff shall pay certain debts which arose from the operation of the marital abode prior to the date hereof. Said expenses are as follows: fuel $587.00; 1 1/2 months of the mortgage payments due on the first mortgage $445.00; 2 months on the second mortgage $400.00; and it is further ORDERED that the attorney for the plaintiff shall pay said $347.00 to the defendant, as said IRS check was to be deposited in the Trust Account of the attorney for the plaintiff. The same shall be paid upon said check clearing the Trust Account of the plaintiff's attorney. Said attorney shall take whatever actions are necessary to collect said funds; The Order also provided that both parties were to execute a proper listing agreement with a real estate broker so that the marital home could be sold promptly. Respondent failed to distribute to the Geners the IRS refund and also failed to forward the listing agreement for the marital home to the broker. Therefore, in January 1984 Mr. Gener filed a Notice of Motion to enforce the judgment. In his motion, Mr. Gener requested that any counsel fees he incurred from this action be paid by Mrs. Gener. On receipt of Mr. Gener's motion, Mrs. Gener retained Howard Siegel, Esq., as counsel. On that date Mr. Siegel wrote Mr. Sommers advising him that Mrs. Gener wished to substitute him as counsel in the divorce proceedings, and requested that respondent distribute the refund as set forth by the court orally on October 25, 1983, and as confirmed by its December Eighth Order. In his letter Mr. Siegel wrote: The most critical aspect of this matter concerns the sum of $1,940 which in accordance with Judge Krafte's order of December 8th, 1983 required the sum of $347 to be paid to the defendant and the balance of $1,593 be paid to Mrs. Gener so that she could pay two months that were in default on each of their mortgages and a fuel oil bill. Your refusal to release these monies has personally endangered the property owned by Mr. and Mrs. Gener and it is my intention to hold you personally responsible for any damages which may occur as a result of your failure to comply with the judge's order. Under no circumstances is any portion of the same to be used for the balance of any fee which might be owing to you. Moreover, he added that [a]s of this date Mrs. Gener has paid you the sum of $750.00 and you have not submitted a final bill indicating what additional sums are owed you. Mr. Siegel attempted to contact respondent by telephone and letters. Finally Mr. Siegel advised the OAE of the failure of respondent to distribute the Gener IRS refund in accordance with the court's Order. After a letter dated February 7, 1984, from the OAE and a court order from the Chancery Division entered February 8, 1984, respondent appeared in court on February 10, 1984, and issued his trust account checks for the required IRS distributions. Respondent's trust records disclose that on February 8, 1984, there were insufficient funds in his trust account to cover the checks. Sufficient funds, however, were deposited by February 14, 1984. The OAE also in its February Seventh letter requested monthly bank statements of respondent's trust account from October 1983 to February 7, 1984. Respondent failed to produce the records and on April 4, 1984, the OAE notified respondent that an accountant would audit his trust account. Respondent failed to cooperate or respond in any way with the accountant. Under a threat of suspension contained in OAE's letter to respondent of May 21, 1984, respondent finally appeared on May 31, 1984, at the OAE's office. However, at that time he failed to bring all the required records. On June 6, 1984, respondent returned to the OAE's office. At that time he was cooperative and responsive to the inquiries of the OAE auditor. Respondent advised the OAE auditor that due to personal problems on July 21, 1983, the Internal Revenue Service had levied on his attorney business account in the amount of $1,489.24. Hence, he admitted that of necessity he used his trust account for his personal expenses. A review of respondent's trust account statements discloses that he deposited the Gener IRS refund check of $1,942.00 in his trust account on November 2, 1983. He made checks totalling $1,500.00 on his trust account from the date of deposit November 2, 1983, to November 23, 1984, leaving a total of $445.72 in his trust account on November 30, 1984. For example, in the month of November, after depositing the IRS refund, he drew one check on November 7, 1983, to Denise Sommers, his wife, for $200.00, and another check on November 11, 1983, to Arthur W. Hoffman for $600.00, which represented a payment on a personal judgment against him. Likewise, respondent continued to draw personal checks for office expenses and other personal expenses on his trust account. The closing balance in respondent's trust account on December 30, 1983, was $316.67, and in January was $835.17. These bank statements establish that funds were unavailable in the trust fund to pay the Geners their respective share of the IRS refund claim. Indeed, when respondent made the checks dated February 10, 1984, to the Geners, there were insufficient funds to pay the refund claims. On October 22, 1984, the OAE filed a formal complaint against respondent alleging that his handling of the Gener matter constituted gross negligence, violating DR 6-101(A)(1); misappropriation of trust funds, violating DR 9-102(B)(4), DR 1-102(A)(3), DR 1-102(A)(4) and DR 1-102(A)(6); failure to bring all the required records at audit, violating DR 9-102 and DR 1-102(A)(5); failure to keep required records, violating DR 9-102(B)(3) and DR 6-101(A)(1); misuse of his attorney trust fund to circumvent an Internal Revenue levy on his business account, violating DR 1-102(A)(5); and commingling of his funds, violating DR 9-102(A). Respondent did not file an answer to the OAE's complaint. At a hearing before the DEC held on January 14, 1985, respondent appeared and requested to be excused from the hearing. The request was granted and he was represented at the hearing by Charles Melli, Esq. At the hearing, Mr. Melli stipulated that respondent was offering no factual defense with respect to the complaints concerning the Gullone, Jazwinski, Berkey, and Dispoto matters, and the formal complaint filed by the OAE, and admitted the truth of the allegations set forth in the complaints and documents attached to them. Respondent's attorney asked for a continuance to have an opportunity to present as a mitigating factor evidence of respondent's alcoholic dependency. On March 1, 1985, respondent entered into a consent order temporarily suspending him from the practice of law. That Order remains in effect. At the hearing of the DEC held March 20, 1985, a detailed report of Dr. David J. Gallina, a Diplomate of the American Board of Psychiatry and Neurology, was presented as evidence of respondent's alcohol problem. Dr. Gallina concluded that [b]ased on the information presented during the course of this evaluation, it appears that alcohol influenced Charles Sommers in the actions that caused his legal difficulty. Specifically the inappropriate behavior exhibited throughout his law practice was directly related to illness. He determined, however, that respondent was a recovering alcoholic. The record also establishes that Mr. Sommers was hospitalized at Sunrise House, Lafayette, New Jersey, on August 24, 1984, and discharged on September 21, 1984. In connection with his own divorce proceedings, respondent has been ordered by the court to seek treatment or be incarcerated. The DEC noted that respondent had stipulated the facts in several of the complaints to be true, and unanimously determined that respondent should be severely disciplined. Nonetheless, the DEC recognized that respondent was a relatively sick man by way of alcoholic abuse, and recommended that the DRB should consider his physical and psychiatric condition in considering appropriate disciplinary sanctions. The DRB concluded that while alcohol may well have contributed to respondent's `loss of critical control of judgment,' [t]here is nothing in the record, however, which would indicate that respondent suffered such a loss of competency, comprehension or will, as would excuse his conduct. Thus, the DRB concluded with regard to the Gener matter that [r]espondent clearly formed the intent to utilize his trust account for personal purposes to thwart the IRS levy on his business account. His actions were knowing. Accordingly, the DRB unanimously recommended his disbarment for misappropriation. This Court issued to respondent an Order to Show Cause why he should not be disbarred or otherwise disciplined. At a hearing before this Court, respondent argued for the first time in any disciplinary hearing that he had a claim of right to the Gener funds  that is, that such funds represented his fees for legal services rendered to Mrs. Gener and her sons. We remanded the matter to the DEC for an expedited hearing on respondent's claim of right. At the hearing Mrs. Gener, her attorney, Mr. Siegel, and Mr. Sommers testified. Mr. Siegel testified that on respondent's receipt of his letter of January 20, 1984, respondent called him and indicated that part of the reason the IRS refund had not been disbursed was that he felt that certain monies were owed to him by Mrs. Gener. At the remand hearing Mrs. Gener advised the DEC that she called respondent numerous times about the refund check, but respondent never answered her calls. Finally, when he was advised that she no longer was going to use his services, respondent then told her he was going to take his fees out of the refund check. She testified that she asked him to wait until the matter was completely resolved and the sale of the house was accomplished, at which time there would be a resolution of the fee situation. On January 10, 1984, in response to this conversation, Mrs. Gener wrote the following letter to respondent: Dear Mr. Sommers: You have in your possession a federal income tax check for the amount of $1,942. On October 25, 1983, Judge Krafte authorized this check to be placed in your possession, to be deposited as my attorney, and then to be turned over to me so I could then proceed to pay my husband John Gener's back bills: First mortgage, $648, second mortgage, $500, oil bill $587, etc. etc. In our telephone conversation back in December you told me you were keeping this check as your fee for representing me in my divorce case. In good faith I paid you $500 back in September 1982. At that time your total fee was a thousand dollars. Agreement was made that the balance was to be paid at the end of your services. I feel at this time it is unethical how you are handling this matter and I am asking you to please forward this check directly to me, along with an itemized bill for your services. Very truly yours, Mary Gener. Mr. Sommers testified at the hearing that he had quoted Mrs. Gener a figure of $750 plus expenses for an uncontested divorce. This divorce was contested. Moreover, he recalled that he received $500 from Mrs. Gener and her mother. He also alluded to the fact he had represented Mrs. Gener's sons and was owed money for that representation. Respondent offered no written retainer agreement with respect to the fees for the divorce or any correspondence reflecting an agreement with respect to his fees for services to be rendered. Nor did he ever present any statement for legal services rendered to Mrs. Gener or rendered to her sons. Indeed, when it was pointed out that by respondent's own account Mrs. Gener did not owe him the total amount of the refund, he testified as follows: Oh, yes, whatever it is. I'm not exactly sure as to the amount I quoted the lady as to how much she owed me. But I was confident at the time that I was owed the money. When questioned as to why he did not obey the court's order set forth in the record on October 25, 1983, he testified: Now I did not understand that at the time it was orally given in court to be a statement that these funds were to be specifically directed for that payment. Respondent offered no explanation of why he did not obey the December Eighth written court order. Of course, by that date the total refund amount had been used for his own personal use. Nor does respondent offer any explanation of why he did not pay Mr. Gener his share of the refund. Instead, when respondent was asked why he felt he was entitled to John Gener's portion of the refund check, he replied: A I thought that there had been another adjustment on account of his having cashed another check that was due to his wife. I wasn't aware that he was due to get any part of that back until I saw.... Q I'm sorry. Go ahead. A  until I saw that order. Because I know he had cashed several other checks. I wasn't aware that he was due to get that back. That wasn't in my knowledge. The DEC concluded based on its review of the record that respondent did in fact knowingly misappropriate funds in his trust account that belonged to Mary Gener and to John Gener.