On an order to show cause why respondent should not be disbarred or otherwise disciplined.
For disbarment -- Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.
This case arises from a report and recommendation of the Disciplinary Review Board (DRB) that respondent be disbarred. The Board's report follows the finding of a Special Master appointed to make a factual record with respect to certain charges of ethical misconduct that had been made against respondent. We find, as did both bodies, that the record demonstrates by the required standard of clear and convincing proof, that violation of the tenets of In re Wilson, 81 N.J. 451 (1979), has been shown and that under those principles the conduct must result in disbarment.
Because of the paramount importance of the Wilson issue, we shall but briefly detail the other ethical matters that were heard, since the findings on none would have merited disbarment. We shall refer to the matters by the count numbers in the Second Amended Complaint that formed the basis of the hearing below.
Count One, the Dodd matter, involved a dispute regarding the handling of a real estate matter by Mr. Skevin. He represented the Dodds as purchasers in a substantial commercial transaction. Since certain title problems remained at the closing, he held a $35,000 escrow. He released $20,000 to the sellers approximately two weeks after the closing. He was deficient in recording the deed and mortgage, apparently due to a breakdown in his office management. A purchase money mortgage was not recorded for almost two months after the
closing. He did not properly resolve the various tax and title problems that caused the escrow to be set up.
As a result of these various delays, when his client sought to "flip" the property through quick resale, title problems arose that occasioned delay and caused the Dodds' attorney on the resale to set up a $10,000 escrow to clear the matters. The client complained that Mr. Skevin turned over the $20,000 from the escrow to the seller without satisfactory clearance from the title company. But the Special Master found, and we agree, that the disbursements to the seller, as well as additional disbursements to the Internal Revenue Service, the municipal tax office, and the State of New Jersey Division of Taxation, were appropriate payments to be made from the escrow account. After these disbursements, however, Mr. Skevin was still responsible for a balance of at least $7,654 from the $35,000 escrow account. Examination of his accounts disclosed that during the requisite period between the closing and the satisfaction of the escrow items, there was a shortage in Mr. Skevin's trust account. As late as June 8, 1982, the trust account balance was $4,367, an amount less than the $7,654 necessary to cover the balance of the escrow. It is this latter point that we shall address in the consideration of the Wilson violations.
But as to the other claims, we agree with the finding of the Master that the failure to record the deed and purchase money mortgage promptly was a matter of professional neglect that would not have warranted a disciplinary action. The payments made by Mr. Skevin from the account were justified. The requirement of a $10,000 escrow account was something for which Mr. Skevin was not directly responsible and the proofs are lacking that any improper conduct of Mr. Skevin caused his client to participate in the $10,000 escrow on the resale.
Count Two of the complaint dealt with the Schrader matter, the complaint that appears to have generated the most controversy. The case involved a personal injury matter that Mr.
Skevin handled on behalf of his client, John Schrader. Schrader had suffered multiple injuries and one of his legs had to be amputated below the knee. Mr. Skevin had done considerable legal work for the parents and was retained to represent John. Suit was brought and on November 1, 1982, the case was settled for a total of $250,500 with several defendants contributing to the settlement. Payments came in at various intervals, beginning in November of 1982 and ending with final payment on January 25, 1983. The total fee allowable to Mr. Skevin was $57,094.
The ethics complaint grew out of a dispute between the Schrader family and Mr. Skevin as to what his fair charges should have been. The Schraders had asked for an accounting before the March 1, 1983 filing of the ethics complaint. Eventually, the Schraders obtained their own attorney, and as a result of those communications a formal accounting was rendered on April 20, 1983. The key ethical allegations here are that Mr. Skevin delayed the accounting, wrongfully withheld funds due to his clients, improperly made advances both to himself and his client prior to the receipt of the settlement funds, sought unlawfully to extract payments from the clients out of the settlement proceeds, and illegally endorsed one of the settlement checks in the matter.
On the substantive contentions, the Master found that Mr. Skevin had at least an arguable claim to a portion of the proceeds that were due to him from other matters of the Schraders. Some amounts of this claim were eventually determined through arbitration between the Schrader parents and Mr. Skevin, others through release. The Master further found that the evidence was inconclusive with respect to whether there was oral authorization by John Schrader to sign the settlement check. The Master stated that the delay caused in settling this matter was not caused by any fraudulent claim by Mr. Skevin and concluded, "[h]e thought, rightly or wrongly, that he had a claim to be so compensated. Events subsequent to the accounting of April 20, 1983 should be treated as a
business dispute, rather than a question of Disciplinary Rule violation."
Of course, the Master found that the advances to Mr. Schrader prior to the receipt of the settlement funds were inappropriate and unauthorized. But the Master said:
The conclusion is that the loans [made to the client and the withdrawal of fees and disbursements before receipt of the settlements funds] represent a misuse of funds held in trust for clients other than Schrader, or use of personal funds that should not have been commingled with clients' trust monies or a combination of the two * * * * [but] that the unethical conduct represented by the loans made to the client is conduct for which a private reprimand would constitute adequate discipline.
Count Three, the Onello matter, involved a complaint of unethical conduct by Joseph Onello, a former business partner and client of Mr. Skevin. He complained of Mr. Skevin's handling of a real estate transaction in which Mr. Skevin acted as attorney for the joint venture with Onello. The complaint was primarily based upon Mr. Skevin's failure to get the sellers' taxes assessed and paid promptly and on his failure to record the deed and mortgage promptly. This closing also involved a $10,000 escrow account to be held in Mr. Skevin's trust account pending clearance by the sellers of certain tax liens clouding the title. Shortly after the closing, Mr. Onello bought out Mr. Skevin's interest in the property. On June 1, 1983, Mr. Onello attempted to withdraw his complaint; the District Ethics Committee nevertheless chose to pursue the matter.
There were difficulties with respect to the transaction. It was not until October 10, 1983, some 19 months after the closing, that Mr. Skevin was permitted by the seller's attorney to release the funds. On this matter, the Master recommended dismissal of the substantive charges subject to his observation that although it was clear that Mr. Skevin was to maintain a $10,000 escrow account, the entire balance in the trust account fell below $10,000 during a number of intervals in the fall of 1983 between the closing date and the paying out of the $10,000. Money that should have been kept in the trust account
to serve as the $10,000 escrow fund was used for purposes not related ...