Court Opinion

ID: 9941972
Source: CourtListenerOpinion
Date Created: 2024-02-20 13:05:32.981287+00
Date Added: 2024-06-11T13:47:34.034969
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                     No. COA23-391

                                Filed 20 February 2024

Disciplinary Hearing Commission, No. 22DHC1

THE NORTH CAROLINA STATE BAR, Plaintiff,

             v.

MICHAEL A. DEMAYO, Attorney, Defendant.

      Appeal by Defendant from Order entered 20 January 2023 by the Disciplinary

Hearing Commission of the North Carolina State Bar. Heard in the Court of Appeals

25 October 2023.

      The North Carolina State Bar, by Deputy Counsel Kathryn H. Shields and
      Katherine Jean, for Plaintiff-Appellee.

      Womble Bond Dickinson LLP, by Raymond M. Bennett, James P. Cooney III
      and Jonathon D. Townsend, for Defendant-Appellant.

      HAMPSON, Judge.

                      Factual and Procedural Background

      Michael A. DeMayo (Defendant) appeals from an Order of Discipline by a

Disciplinary Hearing Panel of the Disciplinary Hearing Commission (DHC) of the

North Carolina State Bar (State Bar) entered on 20 January 2023. The Record before

us tends to reflect the following:

      Defendant, an attorney licensed by the State Bar, employed Ryan Valente

(Valente) as an associate attorney at Defendant’s law firm, DeMayo Law Offices. On
                                THE N.C. STATE BAR. V. DEMAYO

                                          Opinion of the Court

20 April 2020, Valente submitted his resignation from DeMayo Law Offices, effective

20 May 2020. Shortly after Valente’s resignation became effective, on 22 May 2020,

one of the firm’s clients, K.D.1, sent an email to DeMayo Law Offices requesting that

her file be transferred to Valente. Defendant emailed K.D. to arrange a Webex

meeting to discuss this request. In this email, dated 22 May 2020, Defendant wrote,

in part:

            I must discuss a few items related and unrelated to your inquiries
            and will potentially have a negative impact on the outcome of your
            case. I am ultimately responsible for every client represented by
            our firm it’s very important to me to have a very transparent and
            honest conversation with any client since my ultimate desire is
            not only trust and professionalism but that every client obtain the
            best economic results. Understand that I have no desire to sway
            or impact who ultimately represents you and any fee splits are
            already contractually confirmed but I do have an ethical and
            professional obligation to communicate a few items about your
            case.

        A Webex meeting was arranged between Defendant and K.D. on 26 May 2020.

K.D. recorded the meeting without Defendant’s knowledge. During the recorded

Webex meeting, Defendant stated:

            I’m not really sure what happened with him. I don’t want to get
            into his personal life, but there was a divorce. There was a
            custody. There was a remarriage. There was a ex-wife dating one
            of the defense lawyers we go against all the time. So I’m sure all
            of that had some impact on his productivity, but notwithstanding,
            I’m not insensitive to my staff.

1 The client is referred to by initials to protect the privacy of non-parties who were parties to the

underlying legal proceedings.

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                              THE N.C. STATE BAR. V. DEMAYO

                                    Opinion of the Court

      Following the meeting, K.D. decided to have her case transferred to Valente.

On or about 19 January 2021, K.D. settled her claim for $589,000.00. The attorney

fees were $196,313.68. Following the settlement, Defendant and Valente disagreed

on the division of attorney fees. Defendant informed Valente the DeMayo Law Firm

would be pursuing a contractual claim to the attorney fees based on the client’s

contract and Valente’s employment contract with the DeMayo Law Firm. Defendant

claimed that the DeMayo Law Firm was entitled to 85% of the total attorney fees

based on the contract. He then stated via email:

          For Settlement Purposes only, DLAW offers a time sensitive offer
          to resolve the division of attorney fees at a reduced rate of 75% of
          the total collected attorney’s fees. The amount of $147,235,26 [sic]
          would be accepted in lieu of the total amount owed. To resolve
          this matter, please notify DLAW in three business days and all
          monies must be received by DLAW on 2-12-2021 by 5:00 pm.
          Failure to resolve this dispute at this stage will result in an
          immediate referral to outside counsel who will [sic] a Declaratory
          Judgment Action. In addition DLAW will ask outside counsel and
          Ethics Counsel to determine if sufficient grounds exist to refer
          this matter to the North Carolina State Bar, for taking over a case
          without the sufficient knowledge, skill and qualifications to
          properly handle same. DLAW seeks an amicable and quick
          resolution of this matter but will take all necessary steps to insure
          [sic] that a fair and equitable result occurs. DLAW has no
          immediate plans to pursue or include the client in any necessary
          subsequent legal actions. DLAW hopes you will accept this offer
          in the spirit in which it is offered. We look forward to your
          response.

      In response, Valente informed Defendant via email dated 7 February 2021, he

would invoke the doctrine of unclean hands to any claim pursued by Defendant citing

various factors, including:

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                           THE N.C. STATE BAR. V. DEMAYO

                                   Opinion of the Court

          Attorney Michael DeMayo made false and untrue statements to
          [K.D.] after she made clear her intention to terminate
          representation and retain Ryan Valente as counsel by telling
          [K.D.] he was professionally and ethically required to have a
          conversation with her about items related and unrelated to her
          case that may negatively impact the outcome, in violation of the
          Rules of Professional Conduct.

      On 8 February 2021, Defendant responded to Valente’s allegation Defendant

made false statements to K.D.:

          As to mentioning your personal circumstances to this or any
          client, you are sadly mistaken. I personally was not aware of the
          severity and complexity of your personal struggles but they would
          have never been fodder or a topic of discussion with anyone much
          less a client.

      On 9 February 2021, Valente filed a grievance with the State Bar. On 3

January 2022, the State Bar filed a Complaint against Defendant alleging two

violations of Rule 8.4(d) and one violation of Rule 8.4(c).

      On 20 January 2023, the DHC issued a written Order of Discipline against

Defendant. The DHC found Defendant knew the statements he made to Valente in

his email dated 8 February 2021, were false and concluded Defendant “engaged in

conduct involving dishonesty, fraud, deceit, or misrepresentation that reflects

adversely on the Defendant’s fitness as a lawyer in violation of Rule 8.4[ ](c).” The

Order suspended Defendant’s law license for one year with the suspension stayed for

two years. On 3 February 2023, Defendant timely filed written Notice of Appeal.

                                         Issues

      The dispositive issues on appeal are whether the DHC erred in: (I) finding

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                           THE N.C. STATE BAR. V. DEMAYO

                                   Opinion of the Court

Defendant knowingly made false statements of fact; and (II) concluding Defendant’s

statements to Valente violate Rule 8.4(c) of the North Carolina Rules of Professional

Conduct.

                                       Analysis

      Appeals from a decision of the DHC are reviewed pursuant to the “whole record

test.” N.C. State Bar v. Talford, 356 N.C. 626, 632, 576 S.E.2d 305, 309 (2003)

(citation and quotation marks omitted). The whole-record test

           requires the reviewing court to determine if the DHC’s findings of
           fact are supported by substantial evidence in view of the whole
           record, and whether such findings of fact support its conclusions
           of law[.] Such supporting evidence is substantial if a reasonable
           person might accept it as adequate backing for a conclusion. The
           whole-record test also mandates that the reviewing court must
           take into account any contradictory evidence or evidence from
           which conflicting inferences may be drawn. Moreover, in order to
           satisfy the evidentiary requirements of the whole-record test in
           an attorney disciplinary action, the evidence used by the DHC to
           support its findings and conclusions must rise to the standard of
           clear[, cogent,] and convincing. Ultimately, the reviewing court
           must apply all the aforementioned factors in order to determine
           whether the decision of the lower body, e.g., the DHC, has a
           rational basis in the evidence.

Id. at 632, 576 S.E.2d at 309-10 (alterations in original) (footnotes, citations, and

quotation marks omitted). “However, the mere presence of contradictory evidence

does not eviscerate challenged findings, and the reviewing court may not substitute

its judgment for that of the committee.” N.C. State Bar v. Key, 189 N.C. App. 80, 84,

658 S.E.2d 493, 497 (2008) (citations omitted). Thus, “[t]he ‘whole record’ test does

not allow the reviewing court to replace the [Committee’s] judgment as between two

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                          THE N.C. STATE BAR. V. DEMAYO

                                  Opinion of the Court

reasonably conflicting views, even though the court could justifiably have reached a

different result had the matter been before it de novo.” N.C. State Bar v. Nelson, 107

N.C. App. 543, 421 S.E.2d 163, 166 (1992) (alteration in original) (citations and

quotation marks omitted), aff’d per curiam, 333 N.C. 786, 429 S.E.2d 716 (1993).

 I.   Challenged Finding

      First, Defendant argues the Record does not support a finding by clear, cogent,

and convincing evidence Defendant knowingly made false statements to Valente in

his email dated 8 February 2021. We agree.

      The DHC, in its Order of Discipline, found, in relevant part:

         23. During the 26 May 2020 call, Defendant stated:

             “I’m not really sure what happened with him. Uh, I don’t want
             to get into his personal life, but there was a divorce, there was
             a custody, there was a remarriage, uh, there was a ex-wife
             dating one of the defense lawyers we go against all the time,
             so I’m sure all of that had some impact on his productivity.”

         24. In February 2021, Defendant and Valente were in a dispute
         over what portion of the legal fee from K.D.’s case Defendant was
         entitled to collect.

         25. During email communications related to this dispute, Valente
         told Defendant that K.D. informed him that Defendant made
         comments to K.D. about Valente’s divorce.

         26. On 8 February 2021, Defendant told Valente in an email that
         he did not mention Valente’s personal circumstances to K.D.

         27. Defendant also told Valente he was not aware of the “severity
         and complexity” of Valente’s “personal struggles but they would
         never have been fodder or topic of discussion with anyone much
         less a client.”

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                          THE N.C. STATE BAR. V. DEMAYO

                                  Opinion of the Court

         28. Defendant’s statements to Valente about his WebEx
         discussion with K.D. were false.

         29. Defendant knew these statements were false at the time he
         made them to Valente.

      In making these Findings, the State Bar relied on Defendant’s 8 February 2021

email and the 26 May 2020 Webex recording and transcript. These documents reflect

Defendant’s 8 February 2021 statements were incorrect; however, they do not

establish Defendant knew these statements were incorrect. The State Bar contends

“[t]he DHC can make reasonable inferences from the evidence concerning knowledge

and intent.” Indeed, our Court has previously concluded “it is axiomatic that one’s

state of mind is rarely shown by direct evidence and must often be inferred from the

circumstances.” N.C. State Bar v. Sutton, 250 N.C. App. 85, 112, 791 S.E.2d 881, 901

(2016) (citation omitted). However, “[a] basic requirement of circumstantial evidence

is reasonable inference from established facts.          Inference may not be based on

inference.” Lane v. Bryan, 246 N.C. 108, 112, 97 S.E.2d 411, 413 (1957). “Every

inference must stand upon some clear and direct evidence, and not upon some

inference or presumption.” Id. (citations omitted).

      On appeal, the State Bar argues it can be inferred from the evidence, including

the recording of the discussion, that Defendant “thought carefully” before he made

his initial statement to K.D. about Valente’s personal circumstances in May 2020.

From this, the State Bar posits, it might then be inferred Defendant recalled making

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                         THE N.C. STATE BAR. V. DEMAYO

                                 Opinion of the Court

this statement when he wrote the email to Valente in February 2021. First, there

are no findings by the DHC making either inference. This merely constitutes the

State Bar’s speculation on what the DHC might have inferred.

       Moreover, even the rationale advanced by the State Bar on appeal infers

Defendant’s knowing misstatement from an inference that he must have recalled the

prior statement about Valente because of an inference Defendant “thought carefully”

before making the statement about Valente. This does not constitute circumstantial

evidence of Defendant’s knowledge at the time he emailed Valente. To the contrary,

it is mere speculation built upon inference from inference from inference.     See

Thompson v. Wal-Mart Stores, Inc., 138 N.C. App. 651, 654, 547 S.E.2d 48, 50 (2000)

(citing Lane, 246 N.C. at 112, 97 S.E.2d at 413) (“inferences must be based on

established facts, not upon other inferences. In other words, a jury may draw an

inference from a set of facts, but may not then use that inference to draw another

inference.”).

       Applying the whole-record test, there is not clear, cogent, and convincing

evidence to support the Order’s Finding of Fact Defendant knew his statements were

false at the time Defendant made those statements in his email to Valente on 8

February 2021.    Thus, the trial court erred in finding “Defendant knew these

statements were false at the time he made them to Valente.” Therefore, this Finding

does not support the DHC’s Conclusions of Law.

II.    The DHC’s Conclusion of Law

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                           THE N.C. STATE BAR. V. DEMAYO

                                  Opinion of the Court

      Next, Defendant argues the DHC erred in concluding Defendant’s statements

to Valente in the email dated 8 February 2021 violated Rule 8.4(c) of the North

Carolina Rules of Professional Conduct.        Rule 8.4(c) provides it is professional

misconduct for a lawyer to “engage in conduct involving dishonesty, fraud, deceit or

misrepresentation that reflects adversely on the lawyer’s fitness as a lawyer.” N.C.

R. Prof. Conduct 8.4(c).

      Here, the State Bar contends Defendant’s “false statement adversely reflects

on his fitness as an attorney.” The DHC’s Order found: Defendant made statements

to K.D. concerning some of Valente’s personal struggles during a Webex call on 26

May 2020; on 8 February 2021, Defendant denied making these statements in an

email to Valente; and Defendant’s statements to Valente about his Webex discussion

with K.D. were false. The Order does not, however, find that Defendant’s statements

to K.D. regarding Valente reflected on Defendant’s fitness as a lawyer.      Further,

nothing in the Order indicates any rationale for why such a misstatement—knowing

or not—would justify discipline under Rule 8.4(c) in this particular case. Moreover,

the State Bar on appeal offers no support for its contention that a misstatement in

the midst of a professional dispute with another lawyer necessarily constitutes

conduct reflecting adversely on a lawyer’s fitness as a lawyer.

      Thus, the DHC’s Findings do not support its Conclusion Defendant violated

Rule 8.4(c) of the North Carolina Rules of Professional Responsibility. Therefore, the

DHC erred in concluding grounds existed to discipline Defendant under N.C. Gen.

                                         -9-
                               THE N.C. STATE BAR. V. DEMAYO

                                         Opinion of the Court

Stat. § 84-28(b)(2). Consequently, we reverse the Order of Discipline entered by the

DHC.2

                                           Conclusion

        Accordingly, for the foregoing reasons, the Order of Discipline entered by the

DHC of the North Carolina State Bar is reversed.

        REVERSED.

        Judges GORE and GRIFFIN concur.

2 As we reverse the Order of Discipline and conclude the sole ground for discipline is not supported by

the evidence or Findings of Fact, we do not reach Defendant’s argument as to the discipline imposed.

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