Opinion ID: 1972298
Heading Depth: 1
Heading Rank: 3

Heading: Berman/Supro

Text: Upon the death of her husband, Patricia Berman became the owner of two companies, Supro-Realty Corporation and Supro-Paint Corporation. The realty company owned the land and building in which the paint company maintained its office and business. A major creditor of the paint corporation was Pur-All Paint Products Co., Inc. Respondent's father-in-law, Rubin Chaleff, was the principal of Pur-All, and it is undisputed that respondent was the attorney for Pur-All. In August, 1982, respondent attended a meeting concerning Supro-Paint Corporation. He had been recommended to Berman by Chaleff, who had been a close friend and adviser of her late husband. Mrs. Berman knew that respondent was Chaleff's son-in-law. At this time, Supro-Paint owed Pur-All about $70,000 and also owed a substantial amount to a bank. At this meeting, respondent assured Berman that he was her attorney. He did not advise her of any actual or possible conflict of interest between his serving as her attorney and his being related to a primary creditor of Supro-Paint. She did not suspect any conflict because of his assurance that he would represent her interests. Respondent understood that the purpose of the August meeting was to arrange for an employee takeover of the paint company, to sell the property owned by Supro-Realty, and to protect Pur-All's interest. Accordingly, he testified that he did not think there was any adverse relationship between any of those parties, that everything was discussed, and that everyone knew what they were trying to do. Berman testified that at the meeting Chaleff was pressuring her to promise him that proceeds from the sale of the building would be used to pay his company. She made no promises to him. Respondent represented Berman, Supro-Paint, and Supro-Realty. For Supro-Paint, he was involved in various corporate problems and performed various legal services. He also negotiated for the sale of lands and premises owned by Supro-Realty. In 1983, during negotiations for a sale of the building, respondent frequently reminded Berman of her moral obligation to his father-in-law. Berman, feeling threatened by his pressure, ultimately hired another attorney to represent her. By this time, respondent had negotiated the terms of the contract and completed all the paperwork except the closing. The contract for the sale of the land contained a provision that respondent was to hold in escrow the deposit sum of $50,000 pending the closing of title. There was no provision in the contract as to whether the $50,000 should be deposited in an interest-bearing account or who should receive the interest. Without the authorization of his client or the purchaser, respondent deposited the $50,000 in an interest-bearing account under his own social security number. Prior to the closing, respondent refused to release this deposit until his fee was paid. Initially, he claimed a fee of $7,500, but later reduced it to $6,500, $5,000 to be paid by Berman and the balance from the accrued interest. Not until the closing, and even then only after a telephone conversation with one of the brokers who himself had to drive over to collect the money, did respondent finally release $45,000 from the account. He retained the balance, including interest, as his fee. Following his dismissal by Berman as attorney for herself and the Supro Corporations, respondent commenced an action on behalf of Pur-All against Supro-Paint and subsequently against Patricia Berman personally for the collection of the Supro obligations to Pur-All. During the Ethics Committee's hearings, evidence was introduced that in another matter in which Supro-Paint was the plaintiff, respondent had filed with the Superior Court a Certification, in which he swore I was never retained to represent the Plaintiff, and, in fact, did not. This sworn statement was in direct contradiction with respondent's previous written statements wherein he asserted that he was counsel to Supro-Paint Corporation for six months concerning various problems which arose during the course of their business, as well as respondent's testimony at the hearings. The DRB found that respondent was involved in a conflict of interest while representing both Berman and his father-in-law, and that the suit he later filed against Berman aggravated this conflict. Based upon these violations, the DRB found that respondent vioalted DR 5-101(A). Moreover, the DRB determined that by his failure to turn over the $50,000, he violated DR 9-102(A)(2) and DR 9-102(B)(4). And the DRB determined that by filing the false certification, respondent violated DR 7-102(A)(5), (6) and (7) and DR 1-102(A)(4). Further, in connection with Berman's complaint, the Division of Ethics and Professional Services (DEPS) conducted an audit of respondent's books in November 1983. The auditor concluded that respondent did not maintain his client trust ledger in accordance with Rule 1:21-6, frequently used his trust accounts in connection with his personal businesses, and commingled clients' transactions with personal transactions. The DRB found that respondent's recordkeeping (or lack thereof), his improper use of his trust account, and his commingling of trust and business expenses all violated DR 9-102(C) and Rule 1:21-6.