Opinion ID: 1095024
Heading Depth: 1
Heading Rank: 5

Heading: Defrauding Defaulters

Text: The bar association alleges that White attempted to defraud his former clients, Pattie Presley Ashley and her mother, when he obtained a default judgment against them in the amount of $4,011.44 for unpaid attorney's fees without disclosing to the court that they actually owed him only $2,011.44 because of a $2,000 payment he had received from them prior to taking judgment. When Mrs. Ashley and her mother retained other counsel and moved for a new trial, White admitted at the hearing on the motion for new trial that he had received $2,000 prior to judgment from Henry Ashley, Mrs. Ashley's husband, to be applied on Mrs. Ashley's $4,011.44 debt. At this time White offered no explanation whatsoever for his failure to disclose to the court the $2,000 payment while confirming the default. Nearly two years later, however, during the 1988 disciplinary hearings, White testified that Ashley had employed him to work on a legal problem unrelated to that of his wife and mother-in-law and had given him the $2,000 as an advance fee for his own separate legal matter, rather than as a payment on the account of Mrs. Ashley and her mother. However, White related, after judgment was rendered against Mrs. Ashley and her mother, Ashley asked him to apply the $2,000 against the judgment. White did not explain in his disciplinary hearing testimony why he failed to give this explanation at the motion for new trial hearing or why he did not simply treat the $2,000 payment as a credit against the judgment, rather than representing to the court that Mrs. Ashley and her mother had paid $2,000 prior to judgment and were therefore entitled to a new trial. In an attempt to corroborate his testimony regarding his employment by Mr. Ashley, White presented his secretary's testimony that a legal file had been opened for Mr. Ashley's matter. He also introduced the receipt he had given Mr. Ashley for the $2,000 and pointed out that it contained no inscription indicating to which account it applied. On the other hand, the secretary could not remember any legal work that White had done for Mr. Ashley, and White failed to produce any file, memoranda or other documents demonstrating his employment by Mr. Ashley, even though he was ordered to do so by the bar association committee. Mr. and Mrs. Ashley contradicted the evidence White produced at the disciplinary proceedings and testified that the $2,000 was given to White by Mr. Ashley prior to the default judgment in partial satisfaction of the debt owed by his wife and mother-in-law. In view of White's clear, unqualified in-court admission at the hearing on the new trial motion that he received $2,000 for Mrs. Ashley and her mother prior to judgment, the fact that this admission occurred some two years before the disciplinary hearings, and the lack of any convincing corroboration of his separate employment by Mr. Ashley, we find that the bar association has proven by clear and convincing evidence that White attempted to defraud his former clients by knowingly taking a default judgment against them for more than they justly owed, through concealment of the true facts from the court. DR 7-102 sets forth several special duties of candor to the tribunal owed by an attorney as an officer of the court. First, a lawyer may not lie or deceive the tribunal. Second, a lawyer has an affirmative duty to apprise the court of material facts if a failure to do so would assist a crime or fraud upon the court or an opposing party. Third, a lawyer must reveal adverse precedent that is not revealed by opposing counsel. Finally, a lawyer may not knowingly present false evidence, and must take remedial measures to rectify the fraudulent conduct even if the lawyer did not know the testimony was false at the time it was offered. See Hazard and Hodes, The Law of Lawyering: A Handbook on the Model Rules of Professional Conduct, Rule 3.3 (Supp.1988); ABA/BNA Lawyer's Manual on Professional Conduct, 61:304 (1984); See also, e.g., Daniel v. Penrod Drilling Co., 393 F.Supp. 1056 (E.D.La.1975); Ward v. Ochoa, 284 So.2d 385 (Fla.1973); Sanders v. State, 260 So.2d 466 (Miss.1972). In an ex parte proceeding, a lawyer has the expanded duty to inform the court of all material facts known to the lawyer, even those adverse to the client's position. See State v. Weinstein, 411 S.W.2d 267 (Mo.1967); Garcia v. Silverman, 70 Misc.2d 537, 334 N.Y.S.2d 474 (N.Y.Civ.Ct. 1972); See also Beckman Instruments v. Chemtronics, 439 F.2d 1369 (5th Cir.1970); Marquis, An Appraisal of Attorney's Responsibilities Before Administrative Agencies, 26 Case W. Res.L.Rev. 285 (1976). Since opposing counsel will not be present in ex parte proceedings, and will not be available to expose deficiencies in the proofs or to present countervailing considerations, the tribunal must be protected from making wrong decisions that it would not have made in an adversary proceeding. Hazard and Hodes, supra Rule 3.3 (Commenting on Rule 3.3(d), Model Rules of Professional Conduct, which creates a special duty for the special case of ex parte proceedings). Consequently, courts frequently have set aside default judgments on the basis of a lawyer's negligent or intentional withholding of relevant material information from the court. See ABA/BNA Lawyer's Manual on Professional Conduct, supra 61:305; See, e.g., Hutton v. Fisher, 359 F.2d 913 (3d Cir.1966); Singer Co. v. Greever & Walsh Whol. Text., 82 F.R.D. 1 (E.D.Tenn. 1977); Dalminter v. Jessie Edwards, 27 F.R.D. 491 (S.D.Tex.1961); The Florida Bar v. Hagglund, 372 So.2d 76 (Fla.1979); In re Schiff, 542 S.W.2d 771 (Mo.1976); In re Albert, 270 A.D. 481, 60 N.Y.S.2d 363 (1946); Light v. State Bar of California, 14 Cal.2d 328, 94 P.2d 35 (1930); People v. Hooper, 218 Ill. 313, 75 N.E. 896 (1905). Accordingly, we conclude that White, by taking a default judgment against his former clients in the amount of $4,011.44 while intentionally withholding from the court the material fact that the balance due was $2,000 less than this amount because of a prior partial payment, violated his affirmative duty as a lawyer to apprise the court of material facts in order to prevent a fraud upon the court or opposing parties. In particular, we find that White violated DR 7-102(A)(3), (5), and (8), as charged by the bar association, in that he concealed or knowingly failed to disclose that which he was required by law to reveal, he knowingly made a false statement of law or fact, and he knowingly engaged in other conduct contrary to a disciplinary rule. Moreover, White's misconduct necessarily constitutes a violation of disciplinary rule 1-102(A)(1), (4), (5), (6), as charged by the bar association, mandating that a lawyer shall not violate a disciplinary rule; engage in conduct involving dishonesty, fraud, deceit, or misrepresentation; engage in conduct that is prejudicial to the administration of justice; or engage in any other conduct that adversely reflects on his fitness to practice law.