Opinion ID: 1653481
Heading Depth: 1
Heading Rank: 2

Heading: the ovalasiti matter

Text: The following specification of misconduct was made: That you were retained as an attorney by Gloria Ovalasiti in approximately late March or April of 1985 to execute a power of attorney from her aunt, Josephine O. Berthiaume who was in Green Briar Nursing Home in Slidell, Louisiana and later to handle the Succession of Josephine O. Berthiaume. In connection therewith, you executed a power of attorney dated April 2, 1985 appointing Gloria Ovalasiti to handle the affairs of her aunt, Josephine O. Berthiaume. Shortly thereafter, in approximately April of 1985, Gloria Ovalasiti withdrew the sum of $7,610.20 from Josephine O. Berthiaume's account at Southern Savings Association, account number XXXXXXXXXX and furnished this sum to you to pay for expenses for caring for Josephine O. Berthiaume and for any funeral expenses in the event that Josephine O. Berthiaume died, which did occur on August 29, 1985 in the United Medical Center. You failed, refused, and neglected to hold the sum of $7,610.20 in trust and have advised that this sum was furnished to Inter-Cities Petroleum Corporation, a corporation which you have been president since 1984 and which is owned 2/3 by your father and the remainder by your son. You failed, refused, and neglected to use this money to properly care for Josephine O. Berthiaume. In March of 1986, you advised Gloria Ovalasiti that the funeral bill of Josephine O. Berthiaume at McMahon Coburn Briede Funeral Home in the amount of $2,586.49 was paid. Said bill was not paid by you until approximately April 25, 1986, at which time McMahon Coburn Briede was ready to file suit against Gloria Ovalasiti. Shortly after the power of attorney was executed on April 2, 1985, Josephine O. Berthiaume moved into the home of Gloria Ovalasiti. You visited Josephine O. Berthiaume and Gloria Ovalasiti at the home of Gloria Ovalasiti inquiring as to whether Josephine O. Berthiaume desired to execute a will. On April 15, 1985, Josephine O. Berthiaume executed a will appointing Gloria Ovalasiti executrix of her estate and appointing you as attorney and notary of her estate. On April 15, 1985, there was a cash sale transaction whereby Inter-Cities Petroleum took title to property owned by Josephine O. Berthiaume located at 2316 and 2318 North Prieur Street, New Orleans, Louisiana for the sum of $45,000.00. Said cash sale bears the signature of Josephine O. Berthiaume. Josephine Berthiaume died on August 29, 1985. On October 18, 1985, Inter-Cities sold the property located at 2316 and 2318 to Shelter Investments. Said property was sold without the knowledge and authority of Gloria Ovalasiti. Further, you obtained the signature of Gloria Ovalasiti on a communication dated April 26, 1985 which authorizes Inter-Cities Petroleum to take title to the property located 2316 and 2318 North Prieur, to borrow against said property and to sell said property, knowing that Gloria Ovalasiti did not read the contents of said communication. You failed, refused and neglected to reveal the contents of the communication of April 26, 1985 to Gloria Ovalasiti. You further failed, refused and neglected to hold the proceeds of the sale of property located at 2316 and 2318 North Prieur in trust and failed to remit said proceeds to the rightful owner. Said proceeds from sale were furnished to Inter-Cities Petroleum Corporation. Your client, Gloria Ovalasiti obtained the services of Frank Larre' in early 1986 and then John E. Jackson in an effort to obtain an accounting and information regarding transactions on behalf of Gloria Ovalasiti. You failed, refused and neglected to furnish an accounting or information regarding transaction on behalf of Gloria Ovalasiti. To date, Gloria Ovalasiti is not in possession of funds owed to her. On April 10, 1986, a promissory note was executed, made payable to Gloria Ovalasiti in the amount of $16,126.67 signed by you as president of Inter-Cities Petroleum Corporation. The Committee is of the opinion that the above and foregoing conduct is in violation of Disciplinary Rule 1-102, Disciplinary Rule 5-104(A), Disciplinary Rule 6-101(A)(3) and Disciplinary Rule 9-102(B)(3) of the Code of Professional Responsibility and Rule 1.15 of the Rules of Professional Conduct. It is further alleged that you commingled and converted said funds to your own use, as evidenced by your receipt of said funds and your failure to furnish said funds to the rightful owner in violation of Disciplinary Rule 1-102 and Disciplinary Rule 9-102(A)(B). You further failed, refused and neglected to complete the succession matter and charged Gloria Ovalasiti legal fees of $8,120.34 in violation of Disciplinary Rule 1-102, Disciplinary Rule 2-106(A)(B) and Disciplinary Rule 6-101(A)(3) and Rule 8.4, Rule 1.1, Rule 1.3, Rule 1.4 of the Rules of Professional Conduct. [5] The evidence adduced at the hearings establishes the following facts. Mrs. Ovalasiti hired respondent to draft a document granting her power of attorney from her aunt, Mrs. Berthiaume, who was in a nursing home. The power of attorney was signed on April 2, 1985. Mrs. Ovalasiti then withdrew $7,610.20 from Mrs. Berthiaume's savings account and gave it to respondent. Mrs. Ovalasiti was very concerned about having funds or property under her control that might affect her entitlement to social security or medicare. On April 15, 1985, a will was executed bequeathing Mrs. Berthiaume's entire estate to Mrs. Ovalasiti. Two other documents were drafted by respondent and executed contemporaneously with the will. The first was a cash sale transferring property owned by Mrs. Berthiaume and located at 2316 and 2318 N. Prieur Street to Inter-Cities Petroleum Corporation (Inter-Cities) for the stated consideration of $45,000.00. Gross was the president of Inter-Cities, a corporation owned by respondent's father and respondent's minor son in twothirds and one-third shares, respectively. The second document executed was a counter letter which stated that, in fact, Inter-Cities had no interest in the property and that the property was taken for the sole account of Mrs. Gloria Ovalasiti. In that document, both Mrs. Ovalasiti and Mrs. Berthiaume acknowledged that the transfer of title was an outright gift to Mrs. Ovalasiti for no monetary consideration. The $7,610.20 which was withdrawn from the savings account was also paid to Inter-Cities to be held for Mrs. Ovalasiti's account and to be used to pay Mrs. Berthiaume's expenses. On April 26, 1985, respondent prepared a letter addressed to Mrs. Ovalasiti which stated, in pertinent part: In accord with our many discussions and your request, Inter-Cities Petroleum Corporation has taken title to this property on your behalf and as your nominee. The object of this transaction was to avoid your receipt of property or funds which would interfere with your medicare and medicaid benefits. Moreover, since your aunt is low on funds and there is the immanent [sic] prospect of your needing more funds to take care of her requirements, you have authorized Inter-Cities to borrow against this property for the purpose of raising additional funds to be used for the needs of Mrs. Berthiaume until the property can be sold by Inter-Cities, which sale you have also urged and authorized at the price, terms and conditions Inter-Cities, in its sole discretion deems fitting and proper. In addition, you have authorized me to deduct all legal fees accruing to my representation of you in connection with your hadling [sic] of Mrs. Berthiaume and her affairs. In consideration of the foregoing and in pursuant to your further requirements, upon Mrs. Berthiaume's death, any funds remaining with Inter-Cities for your account will be disbursed to you on your request in amounts not to exceed $200.00 monthly, or as otherwise agreed. Mrs. Ovalasiti signed the document and acknowledged her signature at the hearing. Although she claims that she did not read the document before signing it, testimony by Delton J. Arceneaux, Ronald Hogan, and respondent establish that the document was read to her before she signed it. Mrs. Berthiaume died in August 1985. Disbursements were made both before and after her death for expenses related to Mrs. Berthiaume's care and funeral. Disbursements totaled $13,363.19, with $6,160.00 of that amount disbursed directly to Mrs. Ovalasiti. The property was sold by Inter-Cities to Shelter Investments, Inc. for $30,000.00 on October 18, 1985, with the proceeds being deposited into the Inter-Cities corporate account. After Mrs. Berthiaume's death, Mrs. Ovalasiti was extremely distressed; at times she wanted to receive the money being held for her in cash and at other times she wanted monthly payments as originally contemplated. She became dissatisfied with respondent and retained an attorney in an attempt to obtain the proceeds from the sale of property. In a letter from the law offices of Frank Larre, dated April 17, 1986, she demanded the return of all funds remaining in the Inter-Cities corporate account. Respondent sent Larre several documents, including a promissory note executed by him as president of Inter-Cities, dated April 10, 1986, in the amount of $16,126.67, with 13.5 percent interest, payable to Mrs. Ovalasiti in 60 monthly installments of $372.55, beginning May 10, 1986. Respondent submitted an accounting of how the principal amount of $16,126.67 was calculated. Total receipts were $37,610.20. Disbursements were $13,363.19. Also deducted was an attorney fee of $8,120.34, leaving the balance of $16,126.67. Respondent issued several installment payments to Mrs. Ovalasiti, but she refused to accept them. She insisted upon the return of the title to the property sold by Inter-Cities. She also objected to the attorney's fees charged by respondent, alleging that they were excessive. Respondent contends that the proceeds from the sale of the disputed property remain in the Inter-Cities corporate account, and that he has offered to pay Mrs. Ovalasiti the principal balance due, but she has refused to accept it. It is evident from the foregoing findings of fact that respondent did not convert the funds in question. Respondent presented ample evidence to establish that over $13,000.00 in expenses and advances were paid on behalf of Mrs. Berthiaume and Mrs. Ovalasiti. This refutes the claim that respondent converted the $7,610.20 furnished to him from Mrs. Berthiaume's savings account. Documentation provided by respondent also establishes that the placement of the sale proceeds into the corporate account was pursuant to his client's instructions. A financial statement furnished to the Committee shows the corporation is solvent and is able to pay Mrs. Ovalasiti the money held for her account. This being the case, there can be no conversion. It is also urged that respondent violated the rules of Professional Responsibility by entering into a business transaction with his client. DR 5-104(A) provides that a lawyer shall not: (1) enter into a business transaction with a client (2) if they have differing interests therein and (3) if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, (4) unless the client has consented after full exclosure. Louisiana State Bar Association v. Bosworth, 481 So.2d 567, 571 (La.1986). When a lawyer enters into a business transaction with his client where they have differing interests and when the client expects the lawyer to exercise his professional judgment in that transaction for the protection of the client, the lawyer should at least advise the client to seek outside counsel. If the advice to seek outside counsel has not been given, or though given, has not been taken, then full disclosure would require the type of advice which a prudent lawyer would be expected to give the client if the client consulted the lawyer regarding such a transaction with a third person. Bosworth, at p. 572. In Bosworth, this court found that the respondent failed to provide a full disclosure to his client because he did not furnish her with a financial statement; did not provide or offer to provide collateral to secure the loan; and did not disclose his true financial situation. Although Gross did not have an ownership interest in Inter-Cities, he engaged in a business transaction with Mrs. Ovalasiti when acting as the president of that corporation, owned by his family members. By placing the proceeds of the sale of property into the corporate account, Gross was acting as both corporate president and as counsel for Mrs. Ovalasiti. Gross, himself, classified the dealings as a business transaction. Inter-Cities has benefited from the use of Mrs. Ovalasiti's $30,000.00. It is Inter-Cities' best interest to pay her in 60 installments, thereby maximizing the benefits of the use of the funds in the corporate account. This is directly the opposite of Mrs. Ovalasiti's best interest, which she decided is the immediate payment of all funds due to her. She was not provided with a financial statement for Inter-Cities until after this complaint was filed. No collateral was provided or offered to secure and protect Mrs. Ovalasiti's interests. Respondent is in violation of DR 5-104(A). Finally, the question of clearly excessive fees will be addressed. The issue is whether a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee of $8,120.34 charged by respondent was excessive. Respondent informed Mrs. Ovalasiti that he would charge her his normal hourly rates. He admitted that he never told her what his normal hourly rate was. He also stated that he never intended to charge her a full fee for all of the extensive time he spent talking to her on the telephone, until she became antagonistic and abusive. The fee charged by respondent in his accounting is clearly excessive. Respondent drafted and assisted in the execution of four documents while in the sole employment of Mrs. Ovalasiti: The power of attorney, the sale document, the counter letter, and the will. None of these documents were especially complex or required any particular legal skill in drafting. The charges for preparation of these documents, conferences and travel expenses total $2,250.00. Respondent also charged Mrs. Ovalasiti over $5,000.00 in attorney's fees for telephone conversations. Although at first appearance the numbers and length of the telephone conversations appear unlikely, a contemporaneous record of the conversations, subject matter, and length was kept in respondent's office. Mr. Larre verified Mrs. Ovalasiti's tendency to call several times a day and to engage in lengthy conversations while he was representing her. However, Mrs. Ovalasiti was clearly unaware that she would be charged for these conversations. Respondent did not clearly inform her that she would be charged for these conversations and never informed her of the rate at which she would be charged. Judging from the documentation of the services he rendered on his client's behalf, respondent should not have charged more than $2,000.00 in attorney's fees. Anything above that amount is clearly excessive, especially in light of the fact that he was operating under a conflict of interest as the president of Inter-Cities. Given this conflict of interest, it follows that the quality of services provided Mrs. Ovalasiti was necessarily lacking. Respondent was in violation of DR 2-106 of the Rules of Professional Responsibility and Rule 1.5 of the Rules of Professional Conduct. Other violations specified in regard to the Ovalasiti matter were not established and do not require discussion.