Opinion ID: 1350739
Heading Depth: 1
Heading Rank: 1

Heading: the shrewsbury matter

Text: In 1986, Mr. Cometti was engaged by Catherine Shrewsbury to represent her in a civil action against the manufacturer of a faulty solar powered heating system she had installed in her home. Mr. Cometti was also engaged by approximately eighty other clients who had purchased solar powered heating systems from the same manufacturer. During the course of the heating system litigation, Ms. Shrewsbury took a very active interest in her case and apparently spent a great deal of time with Mr. Cometti. In the course of their discussions concerning the heating system litigation, Ms. Shrewsbury related to Mr. Cometti that she was experiencing personal financial difficulties. Among other problems, she was unable to pay the mortgage on a parcel of property she had purchased several years earlier. [1] Because Mr. Cometti was looking for a place to live, they began discussing the possibility of a sale of the property to Mr. Cometti. After several months of negotiations, Mr. Cometti and Ms. Shrewsbury entered into a lease/purchase agreement in March of 1988. The agreement is described by the Committee as follows: The Agreement is a complex real estate transaction involving the extension of the right to purchase property contingent upon certain events occurring and the continued right to lease the property under other conditions, together with the application of lease payments to the purchase price. Any lawyer reviewing the agreement must come to the conclusion that at the very least, there is a potential for disagreement as to its terms and conditions resulting in an adverse relationship between buyer/tenant and seller/landlord. [2] Rather than make lease payments to Ms. Shrewsbury, Mr. Cometti made payments directly to her mortgagor, thereby covering Ms. Shrewsbury's mortgage payment obligations. Although Mr. Cometti appears to have made regular mortgage payments on the property, neither he nor Ms. Shrewsbury paid the arrearage owed to the mortgagor and accumulated by Ms. Shrewsbury. [3] The mortgagor threatened a foreclosure proceeding to Mr. Cometti in the summer of 1989. Simultaneously, Ms. Shrewsbury and Mr. Cometti began to differ on the strategy to be used in the heating system cases. When Ms. Shrewsbury became aware of the foreclosure possibility, she immediately paid the arrearage to the mortgagor and subsequently locked Mr. Cometti out of the property without any notice to him. Mr. Cometti was, therefore, unable to retrieve his belongings. Shortly thereafter, Mr. Cometti filed suit against Ms. Shrewsbury to regain his belongings.
The Committee contends that Mr. Cometti violated DR 5-104(A) by entering into the lease/purchase agreement without making adequate disclosure to Ms. Shrewsbury and without affording her an opportunity to retain independent counsel to protect her interests. DR 5-104(A) states: A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure. Its present counterpart is found in Rule 1.8(a) of the Rules of Professional Conduct. [4] The Committee accepted Mr. Cometti's assertion that he did not intend to harm or take advantage of Ms. Shrewsbury through the lease/purchase agreement and that, in fact, he was trying to aid her and relieve her financial difficulties. The Committee also found, however, that the parties had differing interests in the lease/purchase agreement and that Mr. Cometti had made no effort to advise Ms. Shrewsbury to obtain independent counsel to represent her separate interests. Mr. Cometti argues that Ms. Shrewsbury was not looking to him to protect her interests, and that she actively negotiated the lease/purchase agreement with him. We disagree. Although Ms. Shrewsbury did negotiate with Mr. Cometti, it is obvious from the record that she relied upon his professional judgment to draw up an agreement that best represented both of their interests. By his own admission, rather than research the deed of trust entered into by Ms. Shrewsbury pursuant to her mortgage on the property, Mr. Cometti simply accepted her recollections. In fact, he did no research whatsoever, and the negotiations consisted mainly of Mr. Cometti convincing Ms. Shrewsbury to lower the purchase price under his option to purchase. This case bears some analogy to Committee on Legal Ethics v. Simmons, 184 W.Va. 183, 399 S.E.2d 894 (1990), where the attorney purchased his client's farm. We found that the attorney entered into business transactions with long-time clients without making adequate disclosure to them, without properly protecting their interests, and without referring them to independent counsel. 184 W.Va. at 186-87, 399 S.E.2d at 897-98. In consequence, we found a violation of DR 5-104(A) prohibition against an attorney entering into a business relationship with a client. Most courts hold that the prohibition against an attorney entering into a transaction with his client is designed to preclude the attorney from acquiring an interest adverse to the client, which would violate the fiduciary duty owed by an attorney toward a client. See, e.g., Matter of Weiner, 120 Ariz. 349, 586 P.2d 194 (1978); People v. Vernon, 660 P.2d 879 (Colo.1982); The Florida Bar v. Bern, 425 So.2d 526 (Fla.1982); Matter of Schaumann, 243 Ga. 138, 252 S.E.2d 627 (1979); Committee on Professional Ethics & Conduct v. Mershon, 316 N.W.2d 895 (Iowa 1982); In the Matter of Singzer, 108 N.J. 47, 527 A.2d 857 (1987); In re Gant, 293 Or. 130, 645 P.2d 23, w'drawn in part on other grounds, reh'g denied 293 Or. 359, 647 P.2d 933 (1982). We expressed much the same point in Syllabus Point 2 of Rodgers v. Rodgers, 184 W.Va. 82, 399 S.E.2d 664 (1990):  `The relationship of attorney-at-law and client is of the highest fiduciary nature, calling for the utmost good faith and diligence on the part of such attorney.' Syllabus Point 4, Bank of Mill Creek v. Elk Horn Coal Corp., 133 W.Va. 639, 57 S.E.2d 736 (1950). In order to avoid violating the ethical prohibition of having an adverse interest with a client, it is incumbent upon the attorney to fully disclose the nature of his interest to the client, including its possible adverse effect on the client. The client should also be given an opportunity to seek independent advice. Finally, the client must then consent to the attorney's participation in such adverse interest. E.g., People v. Vernon, supra ; In re James, 452 A.2d 163 (D.C.1982), cert. denied, 460 U.S. 1038, 103 S.Ct. 1429, 75 L.Ed.2d 789 (1983); The Florida Bar v. Bern, supra ; In re Schaumann, supra ; In re Gant, supra . Accordingly, we find that Mr. Cometti violated DR 5-104(A) by failing to make adequate disclosure, and by failing to advise Ms. Shrewsbury to obtain independent counsel to represent her interests in the negotiations.
The Committee also asserts that Mr. Cometti violated Rule 1.7(b) of the Rules of Professional Conduct when he filed suit in July of 1989 against Ms. Shrewsbury to retrieve his belongings after Ms. Shrewsbury locked him out of the property. Rule 1.7(b) states: A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless: (1) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents after consultation[.] [5] Mr. Cometti contends that he had been discharged from his representation of Ms. Shrewsbury at the time he filed the civil action. Although the facts surrounding Mr. Cometti's withdrawal as Ms. Shrewsbury's attorney in the heating system case are convoluted, it is clear that both parties had engaged in, at the least, very heated discussions concerning his withdrawal. We are persuaded that Mr. Cometti had withdrawn at the time he filed suit by the testimony of L. Alvin Hunt, a lawyer sought out by Ms. Shrewsbury to take over her heating system case. Mr. Hunt testified to the Committee that several days prior to the institution of Mr. Cometti's suit against Ms. Shrewsbury, she sought his services and told him that Mr. Cometti was no longer her attorney. Because Mr. Cometti no longer represented Ms. Shrewsbury at the time he instituted the suit to gain access to the property to obtain his possessions, we find that Mr. Cometti did not violate Rule 1.7(b).
The Committee also found that Mr. Cometti had violated Rule 8.1(b) of the Rules of Professional Conduct when he repeatedly failed to respond to requests for information pursuant to the ethics complaints filed against him. These requests were made through the mail by the Committee's assistant disciplinary counsel on August 14, 1989, and September 6 and 27, 1989. Rule 8.1(b), in part, states: [A] lawyer ... in connection with a disciplinary matter, shall not: (b) ... knowingly fail to respond to a lawful demand for information from ... [a] disciplinary authority[.] Mr. Cometti argues that, at the time the Committee's counsel requested information from him, he did not believe such requests were lawful demands. He contends that he responded fully once the Committee's counsel served him with a subpoena. However, this subpoena was not issued until October 26, 1989. In Syllabus Point 1 of Committee on Legal Ethics v. Martin, 187 W.Va. 340, 419 S.E.2d 4 (1992), we stated: An attorney violates West Virginia Rule of Professional Conduct 8.1(b) by failing to respond to requests of the West Virginia State Bar concerning allegations in a disciplinary complaint. Such a violation is not contingent upon the issuance of a subpoena for the attorney, but can result from the mere failure to respond to a request for information by the Bar in connection with an investigation of an ethics complaint. [6] We find that Mr. Cometti violated Rule 8.1(b) when he failed to respond to the Committee's counsel's request for information.