Opinion ID: 1366605
Heading Depth: 2
Heading Rank: 1

Heading: Client A

Text: In 1978 and thereafter, respondent represented a collection agency that performed collection services for Client A, a welding company. On behalf of Client A, respondent filed a lawsuit against a hospital to collect a debt of approximately $2,000. The hospital filed an answer and counterclaim, denying the debt and alleging overcharges on the account and property damage by Client A. On November 1, 1978, the trial court granted respondent's request for a prejudgment provisional remedy conditioned upon the posting of the applicable garnishment bond. The bonding company began charging and Client A thereafter paid an annual garnishment bond fee of $30. Respondent never posted the bond because, in January 1979, respondent and the hospital's attorney agreed that the hospital would provide respondent with a check for $1,973.52, the amount being claimed by Client A. As agreed, respondent placed the money in the collection agency's trust account pending resolution of the lawsuit. This money was tendered by the hospital in lieu of the court-ordered garnishment; in other words, the agreement eliminated the need to post a garnishment bond. Respondent did not inform Client A of this agreement. Consequently, Client A unnecessarily continued to pay the annual bond premium at least through 1983. On several occasions, respondent led Client A to believe a garnishment bond had actually been posted. Beginning in November 1982, corporate counsel for Client A began contacting respondent concerning the status of the hospital lawsuit. Among other things, Client A wanted to know whether it should continue to pay the annual bond premium. Respondent failed to answer many, and perhaps all, of corporate counsel's repeated calls and letters. At one point, respondent did tell an officer of Client A that he saw no reason for Client A to continue to pay the bond premium, but he failed to explain why. In January 1984, respondent informed Client A that the hospital lawsuit could be resolved for the funds being held under a garnishment. He therefore again failed to explain to Client A that there never was a garnishment. Corporate counsel responded that it could not agree to such a resolution without knowing more about the status of the lawsuit. Respondent failed to respond to Client A's request for information on the lawsuit, but he did repeatedly promise to turn the file over to Client A. Respondent failed to follow through on these promises. In November 1984, Client A instructed respondent to attempt to settle the litigation with both sides dismissing their claims. Respondent did not settle the lawsuit. In fact, respondent failed to communicate with Client A throughout 1985. Consequently, Client A again asked respondent, repeatedly, to return the file. Respondent did not return the file as requested. In January 1986, eight years after the lawsuit had been filed, corporate counsel for Client A learned through its own investigation that no bond had ever been posted or approved by the court. Corporate counsel then wrote respondent demanding to know whether he was holding any funds in the matter. Respondent did not answer the letter. In September 1986, Client A and the hospital agreed on their own that the case should be dismissed. Despite repeated requests from Client A, respondent failed to communicate with corporate counsel concerning preparation of the stipulation and order to dismiss the litigation. In December 1987, Client A finally discovered that the hospital had provided a check in lieu of garnishment in 1979. In April 1988, respondent finally tendered Client A's share of the money held in the collection agency's account since 1979. Client A did not receive any interest on the money. Client A filed a complaint with the State Bar. The Hearing Committee and Disciplinary Commission found that respondent's conduct in this matter violated former Rule 29(a), Rules of the Supreme Court, specifically DR 6-101(A)(3), DR 9-102(B)(1), DR 7-101(A)(1) and (3) and Rule 42, Rules of the Supreme Court, specifically ER 1.4 (communication) and ER 1.15(b) (safekeeping property).