Opinion ID: 1442161
Heading Depth: 2
Heading Rank: 2

Heading: The Daniels/Henry matter

Text: Petitioner was hired by two individuals, Daniels and Henry, to represent them in two real estate matters. The referee found two instances of misconduct. First, petitioner received $700 in advanced costs for depositions. He failed to deposit the $700 into a client trust account and did not use the money to pay costs of the depositions, which were not taken. Petitioner contended before the referee that the $700 was payment of additional attorney fees for preparing written interrogatories that were never served. The referee found the $700 was advanced for costs, the money was not spent, and it was not returned to the clients at their request after they terminated petitioner's services. Second, petitioner signed the name of his clients on a verification of an answer to a complaint for unlawful detainer. (Petitioner does not recall having done so but does not deny the charge.) The referee found no convincing evidence of a lack of client consent to the signatures and found, It was not a forgery, and no one was harmed or misled. The referee also rejected the State Bar's allegations that petitioner had failed to appear at trial or that he had charged an exorbitant fee. The referee concluded that petitioner had violated rule 8-101(B)(4) by failing to refund the $700 unexpended costs on the client's request, but that petitioner acted without dishonesty or moral turpitude. [3]
The review department adopted the referee's findings as to the $700 in advanced costs but rejected his other findings. The review department found that petitioner: (1) willfully forged his clients' signatures without their knowledge or consent; (2) failed to appear at trial and failed to communicate with his client; (3) charged an unconscionable fee of $6,500 and performed incompetently; and (4) failed to deliver the client's file to a new attorney when requested to do so. The review department concluded that petitioner had violated the following professional standards: rules 8-101(A) and 8-101(B)(4) (failure to deposit advanced costs into trust account and commingling funds); rule 2-111(A)(2) (improper withdrawal from case); rule 2-111(A)(3) (failure to refund unearned fees); rule 2-107 (unconscionable fee); and Business and Professions Code sections 6068, subdivision (a) (specification of duties), 6103 (violation of oath and duties), and 6106 (dishonesty and moral turpitude).
We adopt the referee's findings and conclusions with one exception. The review department's findings and conclusions to the contrary are not supported by convincing proof. a. Unconscionable fee  (5) The review department appears to be uncertain as to the amount of the fee. The review department's findings state the fee was $6,500. In its brief to this court, the State Bar variously contends the fee was approximately $4,700, $5,300, or $8,000. This inability to specify the amount of the fee casts doubt on the conclusion that it was unconscionable. More important, there is little evidence to support the finding of an unconscionable fee. The referee, a retired judge with 20 years of court experience, found the fee was not exorbitant. The review department based its contrary finding on the testimony of two attorneys, both of whom were retained by Daniels and Henry after they terminated petitioner's services. One of them, Carl Sherman, testified only that petitioner's fee seemed high. Of course, a fee that seems high or even one that is in fact high is not the same as an unconscionable fee. ( Herrscher v. State Bar (1935) 4 Cal.2d 399, 402 [49 P.2d 832].) The other attorney did testify that she viewed the fee as unconscionable, but her testimony must be viewed with caution because she had filed a malpractice action against petitioner on behalf of Daniels and Henry. A third attorney, Peter Ronay, testified that petitioner's fee was not unconscionable. At most, there is testimony by one interested witness that the fee was unconscionable. Even viewed generously in favor of the State Bar, this limited evidence is far from clear and convincing proof of an unconscionable fee. b. Failure to communicate  The review department found that petitioner failed to communicate with his clients. The State Bar now admits, however, that its examiner had previously stipulated this allegation would be stricken from the notice to show cause. This finding is contrary to the stipulation. c. Failure to forward file  The findings state that petitioner failed to forward his clients' file to their new attorney. The State Bar has reversed its position, now claiming it appears that petitioner forwarded the file as requested. d. Failure to appear at trial  Contrary to the referee's decision, the review department found that petitioner failed to appear at trial. The basis for this finding is not clear. When the State Bar's Office of Trial Counsel sought review by the review department, counsel did not object to the referee's finding on this point. Similarly, the State Bar refers only indirectly to this finding in its brief to this court. The finding is apparently based on client Daniels's testimony that approximately two weeks before trial petitioner insisted on payment of an additional $5,000 in order to try her case. (Daniels's testimony must be viewed with caution in light of her subsequent malpractice action against petitioner.) Petitioner denies any such demand. (6) Because there is conflicting testimony, we give great weight to the referee's findings as to witness credibility. ( Blair v. State Bar, supra, 49 Cal.3d 762, 775.) Even if such a demand was made and it was improper under the fee agreement, the State Bar fails to explain how the demand constituted a failure to appear at a trial that had not yet begun when petitioner was discharged by his client. e. Verification of clients' answer  The State Bar contends petitioner willfully forged his clients' signatures to their verified answer to a complaint for unlawful detainer. Petitioner does not recall whether he signed his clients' names, but does not deny having done so. His secretary testified the signatures were petitioner's handwriting but that client Daniels had orally authorized petitioner to verify the answer for her and client Henry. Daniels testified she never authorized petitioner or his office to sign her name on any document, and that she was never consulted as to the answer to the complaint. Relying on Penal Code section 470's definition of forgery, petitioner contends his action was not a forgery because he did not intend to defraud and because he believed he had authority to sign his clients' names. Both petitioner and the State Bar miss the mark by concentrating on the notion of forgery. (7) The more important point is whether the conduct, whatever its label, was misconduct. It was. Code of Civil Procedure section 446 specifies the circumstances under which an attorney may verify a pleading on behalf of his client and requires that when the attorney does so he shall set forth by affidavit the reasons why it [the verification] is not made by one of the parties. Petitioner, even if he was authorized to verify his clients' complaint, failed to comply with the statute. Moreover, his signatures were obviously misleading because they constituted a representation that the clients had in fact signed the document. On very similar facts, we have cautioned that, Such conduct should not be condoned. ( Hallinan v. State Bar (1948) 33 Cal.2d 246, 249 [200 P.2d 787].) Petitioner necessarily intended to cause the trial court and opposing parties in the unlawful detainer action to believe that his clients had verified their answer. This was an intentional deception and thus constituted moral turpitude. We conclude that: (1) Petitioner violated rule 8-101(A) by failing to deposit advanced costs into a client trust account and commingling those funds with his own; (2) petitioner violated rule 8-101(B)(4) by failing to return the unexpended costs to the client; and (3) petitioner violated Business and Professions Code section 6106 by signing his clients' names to a pleading.