Court Opinion

ID: 9797550
Source: CourtListenerOpinion
Date Created: 2023-08-31 04:23:38.615996+00
Date Added: 2024-06-11T08:57:09.920920
License: Public Domain

Dissent by
FREDERICK Y. YU:
I respectfully dissent in part from the foregoing opinion and order dismissing the complaint in Case No. 00PDJ009. I concur with the portion of the opinion and order dismissing the complaint in Case OOPDJO87 (the Waddell case).
Case No. OOPDJ 009
The Tolley Case
The opinion characterizes the case as resting upon an assessment of the credibility of the witnesses who testified. I agree. After weighing the documentary evidence and testimony, I conclude, instead, that Mr. Mercer was not credible and that the documentary evidence in the record, supported by Mr. Canaday's testimony is the only credible explanation for the undisputed sequence of events that occurred.
Mr. Mercer represented Mr. Moore on criminal charges arising out of his automobile accident in which Mr. Tolley suffered injury as a passenger. Given this fact, it was a conflict of interest for Mr. Mercer also to represent Mr. Tolley, Mr. Moore's passenger, in a claim against Mr. Moore (or his insurer) seeking recovery for his injuries. Mr. Tolley's significant physical injuries and *609substantial hospital and medical bills made it easy for Mr. Tolley to claim the policy limits available under Mr. Moore's uninsured motorist coverage of $25,000. Notwithstanding this conflict, Mr. Mercer undertook to represent Mr. Tolley. There is no evidence that Mr, Mercer consulted with either client about the subject of conflict before undertaking to represent Mr. Tolley.
It is undisputed that Mr. Mercer and Mr. Tolley executed a contingent fee agreement dated October 8, 1997, for Mr. Mercer to represent Mr. Tolley against Mr. Mercer's client, Mr. Moore (Complainant's Exhibit 1). Nor is it disputed that Mr. Moore's insurer paid $25,000, the policy limits of Mr. Moore's uninsured motorist coverage, that this amount was disbursed in Mr. Mercer's office in November, 1997, and Mr. Mercer was paid $4,026.03 out of these proceeds (Complainant's Exhibit 4).
Mr. Mercer states that later in the day on October 3, 1997, upon reflection, he determined that he had a conflict and sent a letter dated October 8, 1997, rescinding the contingent fee agreement signed earlier that day (Complainant's Exhibit 2). However, Mr. Tolley testified that he did not receive the letter purporting to rescind the agreement. His testimony at trial questioned why he was paying Mr. Mercer a contingent fee if Mr. Mercer was not his attorney. On the face of Exhibit 1 appear the words "Rescinded 10/3/98," (emphasis added), below which is what appears to be Mr. Mercer's signature. Therefore, on its face, Mr. Mercer's contingent fee agreement indicates that it was not rescinded until a year after Mr. Mercer's October 7, 1997 letter.
Mr. Mercer's response to the Supreme Court Disciplinary Counsel concerning the Tolley matter was dated October 13, 1998 (Complainant's Exhibit 13). In this response, Mr. Mercer told the Disciplinary Counsel that he had rescinded the contingent fee agreement, that he had referred Mr. Tolley to Mr. Canaday, and that whenever Mr. Tolley would call his office, he or his secretary, Ms. Tollerud would "redirect" Mr. Tolley to Mr. Strimbu or Mr. Canaday. Mr. Mercer said nothing in his response about the disbursement of the insurance proceeds in his office or the fact that he had been paid a portion of these proceeds. In the penultimate paragraph of his response, Mr. Mercer wrote, "I've now shared with you the extent of my knowledge of the matter." Plainly, that statement to the Disciplinary Counsel's office was untrue.
The contingent fee agreement called for a fee equal to 35% of the total amount of the gross recovery. Mr. Mercer had a working relationship with an insurance adjuster, Jack Strimbu. Mr. Strimbu testified that his services were to be billed on an hourly basis. No statement from Mr. Strimbu itemizing his services on an hourly basis or his out of pocket expenses was ever offered or admitted into evidence. According to Mr. Cana-day, he became involved in Mr. Tolley's case at the request of Mr. Mercer. Mr. Mercer, according to Mr. Canaday, asked whether he would like to make some money. In return for a flat fee of $800, Mr. Canaday lent his letterhead, his trust account, and his name to the Tolley case. Mr. Strimbu authored letters on Mr. Canaday's letterhead (Exhibits 5 and 9). Mr. Mercer, not Mr. Canaday, actually signed one of the letters on Mr. Cana-day's behalf (Complainant's Exhibit 5). These letters to the insurance company for Mr. Moore established the basis for Mr. Tol-ley's claim. At the time that he did this, Mr. Canaday was a newly minted lawyer who was struggling financially. He had sat unsue-cessfully for the bar examination several times before finally passing. He had had little experience practicing law, and conducted any practice of law out of his house or Mr. Mercer's office. He looked to Mr. Mercer, a law school classmate, for guidance in how to practice law and for access to clients. In short, Mr. Canaday depended upon Mr. Mercer for advice and benefit and did not exercise independent judgment as an attorney at the time the proposal to become involved in the Tolley case arose.
In due course, the insurance company, confronted with the evidence of Mr. Tolley's extensive injuries, paid the policy limits of $25,000. The disbursement of these funds took place at Mr. Mercer's office, not at Mr. Canaday's. The checks were disbursed as follows:
*610$16,089.82 To Mr. Tolley. This represented exactly 65% of the settlement less $160.18 in costs. An itemization of these costs and the breakdown of the settlement proceeds was provided to Mr. Tolley on Mr. Canaday's letterhead (Complainant's Exhibit 3).
$ 8,750.00 The balance equaled 35% of the gross settlement proceeds. Of the $8,750.00 the fee was split in the following ways:
Jack Strimbu $4,084.15
Craig Mercer $4,026.03
Lawrence Canaday $ 800.00
There was no evidence as to whom the $160.18 in expenses was paid.
Mr. Canaday had no contingent fee agreement with Mr. Tolley. Mr. Tolley testified that he had never met Mr. Canaday until the closing. Mr. Tolley also testified that he did not understand that anybody except Mr. Mercer was his attorney.
Mr. Mercer testified that the money paid to him out of the Tolley settlement was for a debt that Mr. Canaday owed him for office supplies and other support provided to Mr. Canaday while he was learning the ropes of practicing law. No bill was ever prepared or presented to Mr. Canaday, and Mr. Canaday denied that he had incurred a formal debt to Mr. Mercer. The insistence by Mr. Mercer and Mr. Strimbu that Mr. Canaday was the attorney for Mr. Tolley earning a contingent fee is inconsistent with the $800 flat fee paid to Mr. Canaday out of the settlement. The payment and computation of the disbursement amounts, to the odd penny, to Mr. Mercer and to Mr. Strimbu, and the absence of any billing by either Mr. Strimbu or Mr. Mercer to Mr. Canaday to support their testimony, that the payment out of the settlement proceeds represented the discharge of hourly billings for services (in the case of Mr. Strimbu) and the payment of debt for accumulated office services (in the case of Mr. Mercer), indicates that Mr. Mercer and Mr. Strimbu continued to be the true beneficiaries of the contingent fee agreement with Mr. Tolley. Mr. Canaday's nominal presence as counsel for Mr. Tolley and the use of his trust account was intended to create the appearance, but not the substance, of representation of Mr. Tolley by Mr. Canaday.
Mr. Canaday's testimony was, in the opinion of this member of the Hearing Board, entitled to greater weight and credibility than Mr. Mercer. Mr. Canaday believed his testimony to be contrary to his own self interest in that he believed that he had participated in a fraud on the client and a fraud on the judicial system by lending his letterhead, his name and his trust account to Mr. Mercer and to Mr. Strimbu. In emotional testimony, he asked the Hearing Board not to take his license away. Mr. Canaday plainly regarded his license as a privilege for which he bad sacrificed much and he saw himself as having risked his professional standing for a pittance in service of Mr. Mercer. When he testified, it was with the intention to make a clean breast of all of the events around the Tolley case, regardless of the personal consequences for him. By contrast, Mr. Mercer had a motive of self interest in his testimony.
Further, Mr. Canaday's testimony revealed him to be naive in not only the practice of law, but personal injury practice. Any pretense that he was actually representing Mr. Mercer as a knowledgeable attorney, or that he could have done so without Mr. Strimbu is inconsistent with Mr. Canaday's limited experience and his own self assessment. Mr. Canaday was used as a puppet in this transaction. If his role was not concealed from Mr. Tolley until the date of the disbursement of the funds, Mr. Mercer attempted to do so in his interactions with the disciplinary prosecutor's office.
Contrary to the acceptance by the majority of the Hearing Board of Mr. Mercer's veracity, I believe that the foregoing facts compel the conclusion that Mr. Mercer undertook the representation of Mr. Tolley pursuant to a contingent fee agreement, that this representation was in conflict with Mr. Moore, that neither client was advised of this fact, that the agreement was not effectively rescinded, that Mr. Mercer prepared the rescission letter later and covered up the fact that he had, in fact, taken a contingent *611fee from Mr. Tolley's recovery and shared it with Mr. Strimbu. I would find that the Complainant has proved their case by the requisite clear and convincing standard with respect to Counts II, III and IV of the amended complaint. I concur on the dismissal of Counts I and V for lack of proof.
III. ORDER OF DISMISSAL
No charge having been proven by clear and convincing evidence, it is therefore Ordered that all charges and counts in Case No. 00PDJ009 and Case No. OOPDJO87T are DISMISSED.