Opinion ID: 1872312
Heading Depth: 1
Heading Rank: 6

Heading: Michelle and Eric Nesbit Matters

Text: Michelle and Eric Nesbit (Nesbits) retained Threadgill to represent them in three matters. The first matter involved defending a federal lawsuit filed by Ohio Clear Title Agency, Inc. against the Nesbits individually and their business, NNBS, Inc., a/k/a AnytimeServices.com (Ohio Clear Title Matter). [30] In April 2003, the Nesbits met with Threadgill. Because Threadgill previously represented Michelle's brother in establishing a home improvement corporation, Michelle testified that she contacted Threadgill on her brother's recommendation. The parties agree that the Nesbits paid Threadgill a retainer fee of $5,000, and Threadgill entered an appearance on the Nesbits' behalf. The parties also agree that, the following month, the Nesbits' errors and omissions insurer agreed to provide a defense, subject to a reservation of rights based on policy coverage dates, and retained attorney Rick Ladd to represent the Nesbits. When the Nesbits requested that Threadgill refund their retainer and withdraw from the representation, Michelle testified that Threadgill declined, stating that he should remain in the case to make sure that Ladd represented their interests. [31] Until August 23, 2004, when the Nesbits demanded a detailed accounting and instructed Threadgill in writing to cease and desist from representing them in any matter, Threadgill testified that he continued to bill time to the lawsuit, including the draft of a declaratory judgment complaint against the insurer for ultimately denying coverage under the policy and effectively forcing the Nesbits to pay Ladd's final legal bills. [32] Eric testified that Threadgill was only supposed to protect the Nesbits' rights against the insurance company, and was not supposed to assist them in the underlying lawsuit. The parties agree that Threadgill never refunded any portion of the retainer. The Nesbits' second legal matter was the private adoption of a child born November 3, 2003. Michelle testified that Threadgill initially said he would charge $1,500 instead of his standard $2,500 fee, but she was surprised when Threadgill recouped the discount and ultimately exceeded his standard fee by subsequently charging $600 and $650 for unexpected expenses. The parties agree that, in exchange for these fees, Threadgill appeared at the surrender proceedings in Jefferson County, arranged for the completion of paperwork so the Nesbits could take the child overseas for Christmas, and filed a petition for adoption in Knox County Chancery Court on March 19, 2004. [33] Convinced that Threadgill had unnecessarily prolonged the adoption so he could charge more fees, the Nesbits testified that they later went to the Chancery Court on their own to obtain a certified copy of the final recorded decree and the child's birth certificate. The Nesbits' third legal matter was a collection action, [34] for which they retained Threadgill in July 2003. Michelle testified that Threadgill said he would charge a flat fee of $500 plus $136.50 in court filing fees. Threadgill did not tell Michelle that, if he had to file a civil action, he would claim one third of the recovery as his fee. [35] After writing at least two letters without a response, Threadgill filed suit in early 2004. The parties agree that the suit resulted in a default judgment being entered against the defendant on March 3, 2004 in the amount of $11,014.36. Michelle testified that Threadgill told her the court would collect the funds, and she provided him with account numbers for executing the judgment. Michelle testified that, in April 2004, Threadgill told her the court had collected the funds and a check would be forthcoming soon. The Knox County General Sessions Court issued a check payable to Threadgill for $11,014.36 on April 15, 2004. Michelle testified that Threadgill did not notify the Nesbits about the issuance of the check. She continued to call every week or two, but Threadgill maintained that the money had not arrived from the court. The Nesbits learned the judgment was collected by going to the court clerk's office and obtaining a certified copy of the check. Threadgill then claimed that his secretary must have deposited the check into a business account without his knowledge. Despite regular phone calls throughout June and July, Threadgill did not provide these funds to the Nesbits. To explain why the funds had not issued, Threadgill stated, among other things, that his secretary must have misplaced the check and the bank was making unspecified mistakes with Threadgill's accounts. Also, Threadgill began claiming that he was entitled to a one-third fee from the judgment. Eric testified that he spoke with Threadgill on August 6, 2004 because Threadgill had been giving [the Nesbits] the run-around for quite some period of time. Threadgill stated the money would be available in two weeks, and Eric confirmed August 20 as a date certain for obtaining the check. On August 23, 2004 Michelle called Threadgill to remind him of the prior conversation. Threadgill denied promising the money to Eric by a date certain. That same day, the Nesbits went to Threadgill's office, where Threadgill accused his secretary of embezzling funds and claimed that he was refinancing his house so he could pay the Nesbits, among others. All parties confirmed that Threadgill agreed to pay the money obtained in the collection action by August 30, 2004. In a letter dated August 23, the Nesbits confirmed the oral agreement for an August 30 deadline, demanded that Threadgill stop working on all of their matters, and requested a detailed accounting. On August 25, 2004, the same day that Threadgill signed for receipt of the Nesbits' letter, he left a voice message on Michelle's phone, asking whether the Nesbits wanted him to file a lawsuit against the insurer for ultimately denying coverage in the Ohio Clear Title matter. Threadgill also stated that he was sending out a bill to Michelle's brother for work previously performed for him: whatever Michelle's brother paid on his bill, Threadgill would endorse over to the Nesbits' account to settle some of the difference that [Threadgill] owe[d the Nesbits]. By cover letter dated August 27, 2004, however, Threadgill provided the Nesbits with a series of previously unsent billing statements, showing $12,737.50 of time billed to the Ohio Clear Title matter over the period from April 2003 to August 2004, claiming a one-third fee from the judgment in the collection action, and reporting that the Nesbits actually owed a net balance of $1,011.64. [36] Michelle testified that the billings in the Ohio Clear Title matter contradicted Threadgill's prior representations that there was no billable time on that matter. Threadgill would make such representations whenever the Nesbits asked for an accounting on the Ohio Clear Title Matter. In addition to filing a disciplinary complaint against Threadgill, the Nesbits also retained attorney Nathan Anderson to file a civil action against Threadgill. Attorney Anderson testified before the Panel about the status of the Nesbits' civil lawsuit. Threadgill did not initially file an answer. Anderson testified that, a few days before the first day of the Panel hearing, Threadgill informed Anderson by telephone that Anderson had mailed the notice of default judgment to Threadgill's prior office address rather than his current address and that Threadgill intended to respond to the complaint. [37] Anderson further testified Threadgill had proposed that the Nesbits dismiss their civil action and the Board proceeding so the parties could then settle the dispute over the outstanding debt. Finding the Nesbits and Anderson to be credible witnesses and accepting their testimony as true, the Panel found that the Nesbits and Threadgill reached a verbal agreement that the Nesbits would pay a $500 flat fee plus $136.50 in court costs for the collection action. The Panel determined that this fee was reasonable. The Panel also found that Threadgill could not claim any fee from the $11,014.36 judgment, nor did the Nesbits agree that Threadgill could apply judgment proceeds to their bill for other matters. Therefore, the Panel concluded that Threadgill misappropriated the $11,014.36 judgment and converted it for personal use by placing the money in his own account. The Panel found that the misappropriation and conversion amount[ed] to criminal conduct and conduct involving fraud, deceit and misrepresentation. The Panel also concluded that this misappropriation and conversion violated RPC 1.15, 1.16(d), and 8.4. The Panel determined that the failure to keep client money and property separate violated RPC 1.15(a). Finally, the Panel found that Threadgill's failure to give prompt and full accountings violated RPC 1.4 and 1.15(b). The Panel concluded that it could not determine whether Threadgill had charged unreasonable fees for the Ohio Clear Title matter and the adoption, respectively. The Panel also could not determine whether the Nesbits should obtain a refund of any portion of the fee for those matters. The Panel did, however, make a specific finding that the Nesbits did not owe Threadgill any additional fees.