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In re Heywood

February 4, 1985

IN THE MATTER OF DAVID N. HEYWOOD, JR., AN ATTORNEY AT LAW

ORDER

This matter having come before the Court on an Order to Show Cause why DAVID N. HEYWOOD, JR. of EAST ORANGE should not be disbarred or otherwise disciplined for his violations of DR 1-102(A)(3), (4), and (6), DR 2-106(A), DR 6-101(A)(1), and DR 9-102(B)(1), (3) and (4), and said DAVID N. HEYWOOD, JR. having failed to appear before this Court on the return date of said Order to Show Cause, and good cause appearing;

It is ORDERED that the report of the Disciplinary Review Board recommending that respondent be disbarred is hereby adopted; and it is further

Ordered that DAVID N. HEYWOOD, JR. be disbarred and that his name be stricken from the roll of attorneys of this State, effective immediately; and it is further

Ordered that DAVID N. HEYWOOD, JR. be and hereby is permanently restrained and enjoined from practicing law; and it is further

Ordered that DAVID N. HEYWOOD, JR. reimburse the Ethics Financial Committee for appropriate administrative costs.

Report of the Disciplinary Review Board

This matter is before the Board based upon a presentment filed by the District V (Essex County) Ethics Committee. The presentment incorporates four complaints filed against Respondent by former clients pertaining to misappropriation of funds and a failure to carry out a contract of employment.

These charges are summarized as follows:

1. BATTS COMPLAINT

In December 1977, the Messiah Baptist Church of East Orange had been bequeathed three residential properties: two were 10-unit apartment buildings and one was a 12-unit apartment

building. Respondent, who had served as counsel to the church and had provided various legal services to members of the congregation, convinced the church's Board of Trustees that these properties were not being properly managed. In January 1978, the Board agreed to Respondent's proposal that he manage the properties. No written retainer agreement was prepared or signed by the parties. Under the terms of their oral agreement, Respondent was to receive a fee equal to ten percent of the gross rental income received. He was to be responsible for rent collections, property management and maintenance, and payment of expenses, such as mortgages, insurance and property taxes. Respondent created the MBC corporation, but it was never officially incorporated and the property was never conveyed to it. Some of the tenants made their rental checks payable to this corporation. In those cases, Respondent endorsed those checks "for deposit only" as attorney for the company. The money was deposited into his account.

During 1978 and 1979, the church made numerous requests of Respondent for an accounting. Respondent, however, would reply that he was too busy to prepare these reports and suggested that the church leaders look at his ledger sheets. Respondent explained that the properties were in bad shape and he needed money to maintain them. The church only received verbal reports from Respondent concerning revenues, expenses and the fees which Respondent was receiving from this project. While the church was not satisfied with Respondent's lack of accounting, its primary concern was not the profit earned, but the maintenance of the property, the payment of expenses and the satisfaction of the tenants. The church wanted to provide housing for its elderly and indigent members. It had not received any complaints from the tenants.

Respondent collected the rents and paid the expenses for the properties until December 1, 1980 when he, without notice to anyone, stopped paying the expenses. He had received $21,543

in rental income after this date, which he did not use to pay any property expenses.

In April or May 1981, the Rev. Harry L. Batts, church pastor, was notified by the mortgagee-bank that the church was in default of its mortgage payments for these three properties. In the months following, the church leaders were unsuccessful in contacting Respondent. When they did contact him, he assured them not to worry about the notice, explaining that he had not had time to pay the bills but promised that he would. Respondent, however, did not pay the money due and the church lost the properties in foreclosure proceedings.

Later, the church was reimbursed $25,000 by the Clients' Security Fund of its claimed loss of $45,007.82 which represented the amount necessary to bring ...


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