Court Opinion

ID: 4094785
Source: CourtListenerOpinion
Date Created: 2016-11-02 14:08:12.994855+00
Date Added: 2024-06-11T14:09:05.375387
License: Public Domain

NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us

SJC-12025

             IN THE MATTER OF VALERIANO DIVIACCHI.

                        November 2, 2016.

Attorney at Law, Disciplinary proceeding, Suspension, Contingent
     fee agreement, Attorney-client relationship. Supreme
     Judicial Court, Superintendence of inferior courts.
     Administrative Law, Substantial evidence. Board of Bar
     Overseers.

     The respondent, Valeriano Diviacchi, appeals from an order
of a single justice of this court suspending him from the
practice of law for twenty-seven months, as recommended by the
Board of Bar Overseers (board). We affirm.

     1. Procedural background. Bar counsel filed a petition
for discipline with the board, alleging that Diviacchi committed
the following violations of the Massachusetts Rules of
Professional Conduct:

    (a) failure to explain to the client contingent fee
    agreement provisions not contained in Forms A or B of Mass.
    R. Prof. C. 1.5 (f), as appearing in 459 Mass. 1301 (2011),
    and to obtain the client's informed consent to these
    provisions, in violation of Mass. R. Prof. C. 1.5 (f);

    (b) limitation of representation of the client, failure to
    seek the client's lawful objectives, and failure to
    represent the client competently and diligently, in
    violation of Mass. R. Prof. C. 1.1, 426 Mass. 1308 (1998);
    Mass. R. Prof. C. 1.2 (a), 426 Mass. 1310 (1998); and Mass.
    R. Prof. C. 1.3, 426 Mass. 1313 (1998);
                                                                   2

    (c) false statements of material fact to the United States
    District Court and the Boston Municipal Court, in violation
    of Mass. R. Prof. C. 3.3 (a) (1), 426 Mass. 1383 (1998);
    and Mass. R. Prof. C. 8.4 (c), 426 Mass. 1429 (1998); and

    (d) attempting to charge and collect a clearly excessive
    fee, in violation of Mass. R. Prof. C. 1.5 (a), as
    appearing in 459 Mass. 1301 (2011).1

     Diviacchi denied any violation of the disciplinary rules.
After an evidentiary hearing, a hearing committee found all the
violations charged by bar counsel, found no mitigating factors
and several aggravating factors, and recommended that Diviacchi
be suspended from the practice of law for fifteen months. The
respondent appealed to the board, which adopted the hearing
committee's findings and made some additional findings. The
board filed an information in the county court recommending that
Diviacchi be suspended for twenty-seven months. After a
hearing, the single justice adopted the board's recommendation
and entered an order of term suspension.

     2. Factual background. The single justice summarized the
following relevant findings made by the hearing committee and
the board, which we supplement with certain additional findings
of the hearing committee. On the recommendation of a mutual
acquaintance, a client contacted Diviacchi seeking
representation in a Federal action filed against her by a
lender. The lender alleged that the client had defaulted on a
construction loan and on a line of credit and owed approximately
$2.8 million. The client asserted a counterclaim against the
lender. Although the client had retained other counsel to
represent her in this action, rising legal fees motivated her to
seek new representation on a contingent fee basis.

     The client consulted with Diviacchi, who agreed to
represent her on a contingent fee basis with an upfront payment

    1
       Subsequent to the filing of bar counsel's petition, the
Massachusetts Rules of Professional Conduct were amended. Those
amendments did not significantly change the rules at issue in
this matter. See Mass R. Prof C. 1.1, as appearing in 471 Mass.
1311 (2015); Mass. R. Prof. C. 1.2 (a), as appearing in 471
Mass. 131 (2015); Mass. R. Prof. C. 1.3, as appearing in 471
Mass. 1318 (2015); Mass. R. Prof. C. 1.5 (a), (f), as amended,
471 Mass. 1304 (2015); Mass. R. Prof. C. 3.3 (a) (1), as
appearing in 471 Mass. 1416 (2015); and Mass. R. Prof. C. 8.4
(c), as appearing in 471 Mass. 1483 (2015).
                                                                   3

in the amount of $25,000. Because the client could not pay that
amount in a lump sum, Diviacchi agreed to accept $15,000 up
front. Diviacchi presented the client with a contingent fee
agreement providing that "[t]he claim, controversy, and other
matters with reference to which the services are to be performed
are SOVEREIGN BANK v. [CLIENT] & COUNTERCLAIM." It further
provided that "[t]he contingency upon which compensation is to
be paid is: recovery by judgment or settlement or otherwise."

     Modifying the language provided in the forms appearing in
Mass. R. Prof. C. 1.5 (f), the contingent-fee agreement stated
the following: "Client is responsible for any amount owed to
prior or other counsel not associated with the undersigned.
CLIENT IS TO RECEIVE A CREDIT FOR A NON-REFUNDABLE FLAT RATE
PAYMENT OF $15,000 PAID NOW AND $10,000 STILL DUE." Diviacchi
made additional modifications to the contingent fee agreement
which, according to the board, "favor[ed] [Diviacchi] in any
attempt to collect fees and expenses from the client if the
relationship [was] terminated or if the client obtain[ed] a non-
monetary compensation or no money." The client "looked the
agreement over quickly; [Diviacchi] did not review the agreement
with her paragraph by paragraph; he did not explain to the
client the provisions and wording he had added; and he did not
obtain her informed consent in writing to the modifications he
had made."

     Diviacchi entered his appearance in the Federal litigation
on May 8, 2012 and filed an amended counterclaim and an
emergency motion for a thirty-day stay in view of his plans to
be out of State for approximately two weeks. The board found
the amended counterclaim to be "only marginally different from
the one filed by the client's prior counsel." The amended
counterclaim asserted claims under G. L. c. 93A, § 9, and State
common law, and it included, among other things, a request for
an injunction preventing the lender from foreclosing on the
client's property. Nonetheless, although the client requested,
on multiple occasions, that Diviacchi try to stop the scheduled
foreclosure of her property because she wanted to end the matter
with a short sale, Diviacchi refused to do so. Consequently,
the client hired another attorney, Harold Jacobi, who filed a
limited appearance to enjoin the foreclosure. The court denied
the client's emergency motion for injunctive relief, and, with
Jacobi representing her as her principal counsel on that matter,
the client appealed to the United States Court of Appeals for
the First Circuit.
                                                                   4

     On May 23, 2012, the client contacted Diviacchi with an
inquiry about filing for bankruptcy. In response, Diviacchi
strongly advised the client against this, indicating that such
action would not be beneficial. He specifically told the client
to "[t]alk to whatever idiot attorney told [her] to file for
bankruptcy." Nevertheless, the client filed for bankruptcy,
which stayed the impending foreclosure for approximately two
months.

     Meanwhile, on May 29, 2012, the First Circuit notified
counsel of record, including Diviacchi, of a "Mandatory Pre-
Argument Settlement Conference" scheduled for July 12, 2012.
Diviacchi informed Jacobi that he expected him to "handle the
First Circuit matters." Diviacchi did not attend the July 12
mediation and did not provide any input to Jacobi.

     In June, 2012, Diviacchi filed an opposition to the
lender's motion to dismiss the counterclaim. The board found
that "[t]hereafter, [Diviacchi] did no work of substance on the
client's case and filed nothing further on her behalf in
[F]ederal court."

     After refusing to meet with the client between May 29 and
July 12,2 Diviacchi sent an electronic mail (e-mail) message to
her asking that she make "'the remaining flat rate payment' by
the end of July" and threatening to file an attorney's lien if
she did not do so. The client wrote in response: "I was not
aware there was a deadline on that payment, especially since I
thought it was related to costs." Diviacchi then informed the
client, for the first time, that this payment "ha[d] been past
due for months." The client begged Diviacchi not to file for
the lien as she awaited a sale and settlement. She also
indicated that she needed to discuss with him what had happened
at the mediation. Nonetheless, Diviacchi filed a notice of lien
on July 17, 2012, and agreed to meet with the client the next
day. At this meeting, the client revealed "disturbing"
information from the mediation, the nature of which the record
does not disclose. In response, Diviacchi ordered the client to
leave his office and threatened to telephone the police if she
did not do so immediately. At the hearing before the hearing
committee, Diviacchi testified that he considered her a
trespasser at that point and acknowledged that he did in fact
call the police. The committee found that Diviacchi's actions

    2
       Diviacchi wrote to the client, "I was not hired to stop
any [foreclosure] sale, my job is to handle the lender liability
case."
                                                                   5

on this occasion effectively ended the attorney-client
relationship.

     With Jacobi now acting as the sole counsel for the client
in the underlying Federal court action, the client and the
lender reached a settlement. The settlement agreement,
finalized on July 20, 2012, specified the following terms:

    "The client would sell the property to a buyer who had
    offered $2.24 million, and the lender would accept $1.9
    million in total satisfaction of its claims against her.
    The property was to be sold on or before September 5, 2012,
    and the litigation was to be stayed through that date. The
    client would pay off the junior lienholders. The lender's
    suit and the client's counterclaim would both be dismissed
    with prejudice. The lender and the client would exchange
    mutual releases, as a result of which the lender would pay
    no money to the client."

The client received no net funds from the lender, but only from
the third-party buyer. The hearing committee found that the
client's contingent fee agreement with Diviacchi did not
anticipate or cover this contingency.

     Jacobi represented the client again at the September 5,
2012, closing. The following day, he signed a stipulation of
dismissal of the Federal litigation on the client's behalf. The
same day, he and the client informed Diviacchi that the matter
was resolved and that, following the payment of the junior
lienholders and other necessary payments, "the client had
received no net funds." Diviacchi "accused Jacobi of ignoring
his lien and threatened to do discovery on it and seek a jury
trial." On September 14, 2012, the client filed a grievance
with the board. She referenced Diviacchi's threats and
challenged his claim that she owed $10,000. She also inquired
whether the board had a fee dispute group that could assist in
handling the matter. Diviacchi was notified of the grievance.

     Before responding to the grievance, Diviacchi filed State
and Federal actions against the client. Around September 17,
2012, he filed a complaint against the client in the Boston
Municipal Court (BMC), seeking to recover $10,000 under the
contingent fee agreement and quantum meruit for sixty hours that
he claimed to have spent on the client's Federal court matter.
Diviacchi stated in a verified complaint, signed under oath,
that the client "specifically told [Diviacchi] that she agreed
to the flat rate payment of $25,000 and would bring such payment
                                                                   6

to the meeting. That was the first lie told by [the client] to
[Diviacchi]; she did not bring the full agreed upon flat rate
amount but only $15,000 of such amount"; and violated the fee
agreement by settling the Federal case without "notice and
completely behind [Diviacchi's] back."

     The hearing committee found these allegations to be
knowingly false. It also found them to be material to
Diviacchi's requests for relief in that they portrayed the
client as a liar in a case where her credibility would be at
issue. As to the allegation that the client settled the case
"behind [Diviacchi's] back," the hearing committee pointed out
that Diviacchi knew about the mediation and expressly refused to
attend and that both the client and Jacobi continued to inform
him about the settlement negotiations.

     Diviacchi also filed an ex parte motion for real estate
attachment for $10,000, the amount he claimed to be due on the
agreed sum for costs. The motion repeated the same allegations
regarding the client's breach of the fee agreement.

     Around September 23, 2012, Diviacchi filed an "Attorney's
Motion to Enforce Attorney's Lien Against all Parties" in
Federal court. He sought $96,483.33 in attorney's fees from the
client, arguing that since the bank had accepted $1.9 million
from her in lieu of the $2.24 million sales price of her home,
she had "received" $340,000 and, based on the contingency fee
agreement, he was entitled to one-third of that amount minus her
upfront $15,000 payment, plus costs.3 He reiterated the two
allegations made in his BMC complaint. Around September 24,

    3
       The hearing committee noted an error in Diviacchi's
calculations, stating that "thirty-three percent of [$340,000]
is $112,200" and that this amount less the $15,000 already paid
by the client is $97,200. Diviacchi claims that this itself is
a mathematical error and accuses the board and the single
justice of inattention to detail in accepting the hearing
committee's calculation. The hearing committee's arithmetic is
correct, but it is based on a contingent fee amount of "thirty-
three percent" rather than one-third. One-third of $340,000,
rounded to the nearest penny, is $113,333.33; that amount less
$15,000 is $98,333.33. It remains unclear how Diviacchi arrived
at the figure he claimed. In any event, in the circumstances of
this case, these slight differences in the calculation of the
claimed fee are not material to the question whether it is
excessive.
                                                                   7

2012, Diviacchi filed an amended complaint in the BMC, repeating
all the claims made above.

     On April 2, 2013, Diviacchi filed a "Conditional Motion to
Further Amend the Complaint and to Join Additional Defendants"
in the BMC. He supplemented previous allegations with the
following:

    "Discovery has further revealed that such deceit by the
    [client] is her standard habit and business routine for
    dealing with attorneys. In the past ten years, [the
    client] has had > 15 different attorneys represent her in a
    half-dozen matters ranging from a divorce in probate court
    to a lender liability action in [F]ederal court with the
    same pattern: she hires an attorney, works him or her
    until she stops paying the bill, fires that attorney and
    disputes the bill and files a [board] complaint, and then
    gets another attorney and starts the process again."

     The hearing committee found these statements to be
knowingly false "[w]ith a few minor exceptions." In particular,
the hearing committee found that there was no evidence of the
alleged pattern of hiring an attorney, not paying the bill,
firing the attorney, and disputing the bill. There was also no
evidence that the client had filed any complaints with the
board, other than the one against Diviacchi. At the hearing,
Diviacchi was asked to provide the basis for these statements,
and he was unable to do so.

     3. Proceedings below. Based on these findings, the
hearing committee and the board both concluded that Diviacchi's
conduct violated the rules of professional conduct as charged.
In particular, the hearing committee found that Diviacchi

    (1) violated Mass. R. Prof. C. 1.5 (f) by entering into a
    contingent fee agreement that included provisions not
    contained in Form A or B without explaining these
    provisions to the client and without obtaining her informed
    consent, confirmed in writing;

    (2) violated Mass. R. Prof. C. 1.1, 1.2 (a), and 1.3 by
    refusing to further the client's lawful objective of
    attempting to halt the foreclosure, a goal that he knew was
    important to the client, because doing so would risk harm
    to the predatory lending counterclaim which he hoped would
    be the source of his fee, by refusing to meet and talk with
    the client despite her begging, by refusing to participate
                                                                   8

     in settlement discussions, and by unilaterally limiting his
     representation despite describing himself as "counsel of
     record for all purposes" in his Federal court appearance;

     (3) violated Mass. R. Prof. C. 3.3 (a) (1) and 8.4 (c) by
     knowingly making false statements of material fact to both
     the Federal court and the BMC, as detailed above; and

     (4) violated Mass. R. Prof. C. 1.5 (a) by claiming in the
     Federal court and the BMC that the client owed him
     approximately $96,000 in attorney's fees, where no
     contingency on which to ground such recovery had occurred
     and where the attorney-client relationship had effectively
     ended well before the sale of the house, a transaction in
     which Diviacchi did not participate in any event.

The board upheld each of these conclusions, as did the single
justice.

     In addition, the hearing committee found no factors in
mitigation and several in aggravation, including prior
discipline, Diviacchi's experience as an attorney, his
motivation of personal gain, his "unnecessarily combative and
vengeful" attitude toward the client,4 and his lack of remorse or
understanding of his misconduct. The board and the single
justice upheld these findings.

     For this serious misconduct, the board recommended that
Diviacchi be suspended from the practice of law for twenty-seven
months.

     4. Discussion. The case is now before us on Diviacchi's
preliminary memorandum, pursuant to S.J.C. Rule 2:23 (b), as
appearing in 471 Mass. 1303 (2015) (Appeals in Bar Discipline
Cases). That rule requires

     "the appellant to demonstrate . . . that there has been an
     error of law or abuse of discretion by the single justice;
     that the decision is not supported by substantial evidence;
     that the sanction is markedly disparate from the sanctions
     imposed in other cases involving similar circumstances; or

     4
       This attitude is much in evidence in Diviacchi's
preliminary memorandum, which is replete with invective toward
the client, as well as disdain for the hearing committee and the
board.
                                                                   9

    that for other reasons the decision will result in a
    substantial injustice."

     Diviacchi has not carried his burden under the rule.
First, Diviacchi takes issue with the findings of fact. He
argues that the hearing committee improperly credited the
client's account of the facts over his own version. We will not
disturb the hearing committee's credibility determinations.
"The hearing committee . . . is the sole judge of credibility,
and arguments hinging on such determinations generally fall
outside the proper scope of our review." Matter of McBride, 449
Mass. 154, 161-162 (2007), citing Matter of Abbott, 437 Mass.
384, 394, (2002). See S.J.C. Rule 4:01, § 8 (5) (a), as
appearing in 453 Mass. 1310 (2009). "The subsidiary findings of
the hearing committee, as adopted by the board, 'shall be upheld
if supported by substantial evidence,' see S.J.C. Rule 4:01,
§ 18 (5), as appearing in 453 Mass. 1315 (2009), and the hearing
committee's ultimate 'findings and recommendations, as adopted
by the board, are entitled to deference, although they are not
binding on this court.'" Matter of Weiss, 474 Mass. 1001, 1001
n.1 (2016), quoting Matter of Ellis, 457 Mass. 413, 415 (2010).

     Diviacchi further argues that documentary evidence in the
record supports his version of the facts. He has not shown,
however, that the record lacks substantial evidence in support
of the hearing committee's findings. Moreover, none of his
arguments on this point casts doubt on the key findings
establishing his violations of the rules of professional
conduct, including that he failed to explain his contingent fee
agreement to the client, failed to obtain her informed consent
before she signed it, refused to meet with her to discuss her
case, failed to pursue her lawful objectives, swore to false
statements of material fact in both State and Federal court, and
attempted to collect an excessive fee where he did minimal work
on the client's case and where the contingency did not occur.

     Diviacchi's legal contentions fare no better. As to his
violations concerning the contingent fee agreement, see Mass. R.
Prof. C. 1.5 (f), he argues that the client was sophisticated
and that this should have been considered in determining whether
she had given informed consent. The rule, however, is clear
that "[a] lawyer who uses a form of contingent fee agreement
that contains provisions that materially differ from or add to
those contained in Forms A or B shall explain those different or
added provisions or options to the client and obtain the
client's informed consent confirmed in writing" (emphasis
added). Mass. R. Prof. C. 1.5 (f) (3). Diviacchi did not do
                                                                  10

so. The rule makes no exceptions for clients of varying levels
of sophistication; it applies uniformly to all individual
clients.5

     As to his violation of rule 1.5 (a) by attempting to charge
or collect an excessive fee, Diviacchi argues that the hearing
committee, board, and single justice all improperly evaluated
the fee with the benefit of hindsight rather than as of the time
the contingent fee agreement was executed. In the circumstances
of this case, however, Diviacchi's violation was not that the
fee contemplated by the agreement was unreasonable. The hearing
committee found that the contingency called for in the agreement
did not occur. The client recovered nothing on her
counterclaim. Any funds obtained by the client did not come
from her adversary in the Federal court litigation, but from the
third party to whom she sold the property, a transaction with
which Diviacchi did not assist. We agree with the committee,
board, and single justice that the fee agreement did not cover
this eventuality.

     As to the violations of rules 1.1, 1.2, and 1.3, Diviacchi
argues that he simply declined to file motions and a petition
for bankruptcy that were, in his professional judgment,
meritless. The single justice found this argument unpersuasive,
as do we. The violations of these rules were not based merely
on his not filing any particular motion or petition, but on his
persistent refusal to take any action in furtherance of the
client's clear desire to avoid foreclosure. Moreover, he
refused to participate in settlement negotiations and refused to
meet with the client to discuss her case. We agree that
Diviacchi violated the rules as charged.

     On a related point, Diviacchi complains that the hearing
committee made its determinations without regard for his
proffered expert testimony concerning the complexity of the
legal issues involved in the client's case. Putting aside his
intemperate remarks disparaging the hearing committee's
qualifications to decide this matter, it is clear that expert
testimony is not necessary to determine whether an attorney has

    5
       On a related point, Diviacchi argues that the rule
improperly requires that deviations from the model forms be
explained to an individual client but not to a client that is an
organization. Mass. R. Prof. C. 1.5 (f) (4). The rule exists
for the protection of clients, and we reject the assertion that
there is no rational basis to provide greater protection to
individual clients than to organizational clients.
                                                                 11

violated the rules of professional conduct. See Matter of
Crossen, 450 Mass. 533, 570 (2008), quoting Fishman v. Brooks,
396 Mass. 643, 650 (1986) ("'[e]xpert testimony concerning the
fact of an ethical violation is not appropriate' in bar
discipline proceedings because the fact finder does not need
assistance understanding and applying the ethical rules"). In
any event, even accepting Diviacchi's representations that the
client's case involved "convoluted and esoteric issues of lender
liability law," the charge against Diviacchi was not that he
lacked the ability to handle such issues competently, but that
he wilfully disregarded his client's interests. Similarly, the
asserted complexity of the issues has no bearing on whether
Diviacchi was entitled to collect a contingent fee where the
contingency did not occur.

     As to his violations of rules 3.3 and 8.4 by making sworn
false statements to court, Diviacchi maintains, without citation
to authority, that his statements should be evaluated under a
subjective, good faith basis standard. That is not the law.
"[A]n assertion purporting to be on the lawyer's own knowledge,
as in an affidavit by the lawyer or in a statement in open
court, may properly be made only when the lawyer knows the
assertion is true or believes it to be true on the basis of a
reasonably diligent inquiry" (emphasis added). Mass. R. Prof.
C. 3.3 comment 2.6 Diviacchi's false allegations about the
client's supposed "standard habit and business routine of
dealing with lawyers" were made on his own behalf and
purportedly on his own personal knowledge. The allegations were
found by the committee to be false. Diviacchi has offered no
evidence that he conducted a reasonably diligent inquiry prior
to making them.

     Diviacchi also complains that a hearing committee member
was absent for a portion of the hearing. As the single justice
noted, § 3.7 (c) of the Rules of the Board of Bar Overseers
permits a hearing to proceed in the absence of any member of the
committee so long as a quorum is present. We perceive no
violation of due process in this procedure.

     Finally, as to the proper sanction, a suspension of twenty-
seven months is not "markedly disparate from the sanctions
imposed in other cases involving similar circumstances,"
particularly those in which attorneys made false statements
under oath to one or more courts. S.J.C. Rule 2:23 (b). See

     6
       This language is in comment 3 of the current version of
Mass. R. Prof. C. 3.3.
                                                                  12

Matter of Finneran, 455 Mass. 722, 731 n.13 (2010) (two-year
suspension is "usual and presumptive" sanction for giving false
testimony); Matter of Shaw, 427 Mass. 764, 764, 768-769 (1998)
(imposing two-year suspension where attorney "made false
statements under oath, filed a false affidavit in court
proceedings, and issued false and misleading opinion letters
signed under oath to which he forged the notarization of another
attorney"). Diviacchi does not suggest otherwise. We conclude
on all the facts and circumstances of this case that Diviacchi
was properly suspended from the practice of law for twenty-seven
months.

     5. Conclusion. The order of the single justice suspending
the respondent from the practice of law for twenty-seven months,
effective January 2, 2016, is affirmed.

                                   Judgment affirmed.

     The case was submitted on the papers filed, accompanied by
a memorandum of law.

    Valeriano Diviacchi, pro se.