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Estate of Vafiades v. Sheppard Bus Service Inc.

Decided: October 20, 1983.


Edward S. Miller, J.s.c.


This case calls into question the actions of attorneys of another jurisdiction in their handling of a case in this state. It not only justifies the existence of R. 1:21-2 regulating pro hac vice admissions, it demonstrates the necessity for the court to control and scrutinize every request for such admission. It further displays professional conduct demonstrating and evidencing either a woeful lack of expertise or a dismaying lack of moral sensitivity or both.

This case arose as a result of a motor vehicle accident that occurred on March 8, 1982 in Millville, New Jersey, at which time plaintiff Angelo Vafiades was the owner of a car operated by plaintiff Mary Vafiades, which was struck in the rear by the bus of defendant Sheppard Bus Service, Inc. operated by its agent, Patricia Drain. At the time of the accident, the occupants of the Vafiades vehicle, in addition to the driver, were her children, Vicki Vafiades and George Vafiades, and a friend, Timothy Bruner. As a result of the accident Mary and Vicki Vafiades sustained personal injuries and George Vafiades was killed.

Immediately after the accident, plaintiff Angelo Vafiades, as a result of conversations with a neighbor, contacted a Florida attorney, Philip Auerbach, whom he did not know but who was known to his wife, Mary Vafiades. The Vafiadeses had not previously been represented by Auerbach. Vafiades testified that Auerbach advised that he could represent him in the matter in New Jersey. On March 15, 1982, Alan Neufeld, Auerbach's partner, flew to New Jersey and met Angelo Vafiades at the

Millville Hospital while Mrs. Vafiades was undergoing surgery. On that date Angelo Vafiades executed a retainer agreement. Neufeld explained the contingency fee schedule but did not give Vafiades a copy. Vafiades does not remember being advised he could retain counsel on a services rendered basis. Vafiades never saw Neufeld again and never met Auerbach. There is no evidence he ever signed a power of attorney.

Mrs. Vafiades testified she never saw Neufeld and that she first learned her husband had retained Auerbach right after her son's funeral. She recalled signing a retainer agreement after her surgery. She did not receive a copy of the retainer and did not sign a power of attorney. The retainer was never explained to her nor was she ever advised she could hire an attorney on a services rendered basis.

Neufeld then proceeded to obtain local counsel to "front" for him in this state. He contacted an attorney in Camden County, a previous acquaintance of his. A separate retainer agreement was never entered into with this attorney and, in fact, the Vafiadeses met him at his office on only one occasion.

Parenthetically, it should be noted that the court has been impressed with the sincerity and integrity of this young man. He has repeatedly demonstrated his concern, not only over his involvement, but even more for the welfare of the Vafiadeses. His only offense, if indeed it be an offense, was inexperience and misplaced trust in a friend. No censure, indeed praise, is expressed as to his conduct.

During the summer of 1982, Neufeld called the local attorney seeking general information and advising him that they had the case. His opinion was sought with respect to the value of the case, and later in the summer, he was asked to file a complaint to put some pressure on the insurance carrier. His only connection with the Vafiades was to arrange for the appointment of an administrator ad prosequendum and a preliminary meeting to answer interrogatories, which were never answered. He took no part in settlement negotiations as he was advised by Auerbach

and Neufeld that they wanted to handle negotiations. He never saw the contingency fee schedule signed by plaintiffs.

On November 5, 1982, he filed a motion to permit appearance of Auerbach and Neufeld pro hac vice with accompanying affidavits. The matter was returnable on November 19, 1982 and he was afforded an opportunity to be heard. By letter decision dated December 2, 1982, the motion was denied Burlington County Internal Medical Ass'n. v. American Medicorp, 168 N.J. Super. 382 (Law Div.1979).

Vafiades stated that towards the end of 1982, after the pro hac vice application had been denied, he was advised by Auerbach that the case could be settled and was asked what he would accept as a good settlement. Vafiades told Auerbach of a figure that was acceptable. This figure was above the figure for which plaintiffs ultimately agreed to settle. There was no discussion prior to the settlement being reached of how the values of the various claims were to be determined or divided. It was the clients' understanding that the amount being negotiated was to compensate plaintiffs for all of the claims, direct and derivative, for personal injuries to Mrs. Vafiades and Vicki and the death of George Vafiades. The first information Vafiades received that the entire case was settled for $325,000 was in a call from Neufeld, who told what they had obtained as a settlement. Within an hour after his phone conversation with Neufeld, Vafiades received a phone call from a reporter for the Atlantic City Press, who told him of the settlement. (So much for the privacy of the Vafiades in their grief!)

By letter dated December 21, 1982, the attorney for defendants forwarded an original and two copies of a release to Mr. and Mrs. Vafiades. The release was executed before a notary public on December 27, 1982.

Subsequent to the signing of the release, an adjustor for the Hammonton, New Jersey office of the carrier that was handling the case received a call from American International Adjustment Company of West Orange, New Jersey and was told that

an oral commitment had been made to issue the settlement draft for $325,000 by the end of the year to Auerbach in Miami, Florida. The adjustor learned from her home office on the date of that phone call, December 28, 1982, that the funds had not yet been transferred, and she therefore waited until the next morning, December 29, 1982, at 9:00 to issue the check. She then called defendant's attorney to learn why the check was to be mailed to Florida and was not able to get an answer. She then spoke with Mr. Byrne, who instructed her to do what she was told; and the check was drafted and express mailed without cover letter on December 29, 1982 to Auerbach in Miami. Concern was expressed by Auerbach's office that the settlement check was not going to be received by the end of the year. However, the same was received and deposited to his account in Miami, Florida on December 31, 1982. The significance, taxwise, is obvious.

As appears from the back of the settlement check, apparently Auerbach's office typed the estate endorsement and deposited it on the day it was received. While neither his name nor the name of his firm appeared on the face of the check, either Auerbach or someone in his office, without either written or oral permission from Vafiades, Mrs. Vafiades, or New Jersey counsel, signed their names on the back of the check and deposited it in his account.

Plaintiffs received a settlement check from Auerbach in the sum of $254,590 made payable to the order of Angelo and Mary Vafiades. At no time did plaintiffs ever receive a settlement statement delineating the expenses. Vafiades has stated that he understood the fee was computed by using the rate set forth in R. 1:21-7 plus an additional $2500 fee for the services of New Jersey counsel, who had been retained to file the suit in New Jersey. He never received an accounting of the costs incurred by Auerbach.

It was later learned that the contingency fee was computed on the full, or gross, $325,000 settlement without deduction for

the out-of-pocket expenses before computing the fee taken by Auerbach. In addition, the client was charged with the $2500 fee paid to New Jersey counsel, for additional legal research performed by another New Jersey attorney of $75, Neufeld's airfare to and from New Jersey of $347.75 and Auerbach's cost for travelling to Millville of $650. Except for long distance telephone charges of $225, photocopying charges at 50 cents a page of $122.75, medical records and reports of $65, there were no charges for a death certificate, investigation, actuaries' or expert reports. New Jersey counsel incurred out-of-pocket expenses for filing, services and subpoena fees totalling $240.

When the case was drawn to the court's attention, even a superficial analysis disclosed areas of judicial concern. These included, inter alia, the question of disbursement of that portion of the recovery that represented damages for the death of George Vafiades, bearing in mind the applicability of Green v. Bittner, 85 N.J. 1 (1980), to N.J.S.A. 2A:34-7; the propriety of the disposition of any claim of Vicki Vafiades without court approval; and the appointment of a proper general administrator of the Estate of George Vafiades, N.J.S. 2A:31-6. The court, therefore, ...

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