On an order to show cause why respondent should not be disbarred or otherwise disciplined.
For Suspension -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.
This disciplinary action is based on numerous complaints from thirteen clients charging respondent, Marc J. Terner, with gross negligence, RPC 1.1(a); failure to act with reasonable diligence, RPC 1.3; failure to communicate with clients, RPC 1.4; conflicts of interest, RPC 1.7 and 1.8; and misleading communications regarding his services, RPC 7.1. Three additional complaints alleged a pattern of neglect, lack of diligence, and unprofessional conduct over a prolonged period. RPC 1.1(b). In addition, an audit of respondent's books and records by the Office of Attorney Ethics led to a charge of numerous recordkeeping improprieties, R. 1:21-6, but not of the misappropriation of funds.
By order of this Court, retired Judge Paul R. Huot was assigned as a special master to hear the case for the District XI Ethics Committee. After ten days of hearings, the Special Master found that respondent had committed numerous ethical violations, and recommended three private reprimands, three public reprimands, and a forty-eight-month suspension from the practice of law. The Special Master also recommended as a condition of reinstatement that respondent submit to drug tests twice a week during the period of suspension and for two years following his reinstatement.
The Disciplinary Review Board (the DRB or Board) agreed that respondent had committed the alleged violations, and recommended that he be suspended from the practice of law for three years. In addition, the Board recommended that before reinstatement, respondent be required to provide proof that he has not used drugs during the period of suspension, that he is competent to practice law, and that he has satisfactorily completed the Skills and Methods courses offered by the Institute for Continuing Legal Education. We agree.
As summarized by the DRB, the relevant facts are:
Respondent represented two individuals in the purchase of real estate located in Sandyston, New Jersey, from grievants, Paul and Deborah Rykowski. At the closing on August 22, 1985, respondent held in escrow $2,100, in behalf of grievants, to cover certain costs. Respondent also undertook the obligation of paying off grievants' mortgage and, at the time of closing, obtained a payoff figure from their attorney in the amount of $33,898.49, representing the balance due as of July 1, 1985. Respondent withheld $33,898.49 from the sale proceeds and forwarded that amount to the mortgagee. The mortgagee, however, returned the check to respondent because of the failure to include the additional interest computed from July 1, 1985. Grievants' attorney requested that respondent pay the interest out of the escrow funds. Respondent did not comply with this request and ignored that attorney's subsequent requests for information.
On February 24, 1986, respondent resubmitted the original payoff amount, despite his knowledge that it was insufficient. Respondent's check for $33,898.49 was again returned to him.
The Special Master concluded that respondent acted with gross negligence, contrary to RPC 1.1(a), and failed to act with reasonable diligence, contrary to RPC 1.3. The Special Master also concluded that respondent violated RPC 1.4 because "the record fails to demonstrate that [respondent's] clients . . . were ever made aware of their precarious position . . . ." The Special Master recommended a six-month suspension for respondent's unethical conduct in this matter.
Respondent represented grievants, Fred and Beatrice Rothwell, in the sale of their home in Pompton Lakes, New Jersey. At the time of the closing on October 4, 1984, $2,300 of grievants' funds were placed in escrow with the purchaser's attorney. These funds were escrowed pending receipt of proof of cancellation of a small mortgage that originated in 1965 and remained open of record.
Several months after the closing, grievants became concerned about the status of the open mortgage and contacted an attorney in Florida, where they were then residing. The Florida attorney wrote to respondent on July 11, 1985, reminding respondent that he had repeatedly promised that grievants would receive the balance of the escrow funds. The attorney also noted his inability to contact respondent about the status of the matter.
On March 4, 1986, respondent wrote to the Florida attorney reporting that his attempts to obtain the mortgagee's address from the Secretary of the State of New Jersey were unsuccessful. On June 30, 1986, respondent again wrote to the Florida attorney and enclosed a proposed complaint and certification for execution by grievants. The Complaint sought a discharge of the mortgage by court order.
On July 16, 1986, the signed certification and other documents were returned to respondent. The complaint, however, was not filed until July 1987, one year later. At the time of the ethics hearing, there was no indication as to the disposition of this complaint.
Respondent finally communicated with the original mortgagee located in Paterson, New Jersey, and obtained a discharge on May 24, 1988. Thereafter, grievants received their escrowed $2,300, albeit nearly four years after the closing.
The Special Master, in recommending a six-month suspension for respondent's unethical conduct in this matter, concluded that "[t]he evidence clearly shows a lack of competence, a lack of diligence and a failure of communication in violation of RPC 1.1, 1.3 and 1.4."
In 1980, grievant, Dr. Leo Russ, retained respondent for collection of bills owed to his dental association. In the latter part of 1985, communication between respondent and grievant became difficult. Finally, in February 1986, grievant requested that respondent return all records to the dental association. Respondent had failed to communicate with grievant or his dental association from September 1985 to February 1986.
On March 10, 1986, respondent wrote to grievant and apologized for his delay in returning telephone calls. After some further unspecified delay, respondent finally returned the requested records to the dental firm.
The Special Master, in recommending a private reprimand, concluded that respondent had failed to adequately communicate with his client, in violation of RPC 1.4.
Grievant, Charles Pisco, retained respondent to represent him in three separate actions. In the first action, grievant retained respondent in 1982 or 1983 for assistance in withdrawing from a property owners' association. Grievant continued to pay association dues, which respondent deposited into his trust account. The owners' association subsequently executed against grievant's bank account. Respondent failed to appear in court to contest the execution, contrary to his promise to grievant.
At the time of the ethics hearing, grievant's payments were still being retained by respondent in his trust account. The Special Master concluded that respondent had failed to act with due diligence, contrary to RPC 1.3.
In the second action, respondent agreed to represent grievant and his wife in connection with an injury that grievant received at a Las Vegas, Nevada hotel. Respondent wrote two letters to the hotel in June 1986, but failed to pursue the matter further. He also failed to return grievant's telephone calls.
The Special Master concluded that respondent failed to adequately communicate with his client, contrary to RPC 1.4.
The third action involved grievant's dissatisfaction with work performed by a landscaper. Grievant contacted respondent but apparently did not enter into a fee arrangement with him.
At the ethics hearing, respondent testified that he advised grievant to pursue the case in Small Claims Court. The Special Master concluded that the evidence did not support a finding of unethical conduct by respondent in that matter.
Following his conclusion that respondent acted unethically in two of these three actions, the Special Master recommended that respondent be publicly reprimanded.
On May 2, 1985, respondent represented grievant, Selcuk Turan, and two other individuals in the purchase of a restaurant located in Bloomingdale, New Jersey. Respondent also represented the three parties in the creation of a business arrangement whereby they would own and operate the restaurant.
Shortly after the purchase of the restaurant, disagreements arose between the parties, who then sought to dissolve the business arrangement. Respondent subsequently prepared documents that referred to the business arrangement as both a partnership and a corporation.
On May 31, 1985, grievant and one of the other two parties signed a document prepared by respondent, whereby grievant agreed to assign his one-third interest in the partnership to the other parties, in exchange for $25,000. Three other documents were subsequently prepared by respondent reciting the release of grievant's interest in the corporation as well as his liabilities thereto. Grievant signed two of the documents on July 30, 1985. The transaction apparently was never completed because the signature[s] of the other parties were never obtained.
After consideration of conflicting testimony by grievant and respondent, the Special Master was satisfied that grievant was not in a position to give informed consent to this dual representation. The Special Master concluded that "with respect to [the dissolution of the] business interest, whatever it may have been, in May 1985 there was a breach of the Rule of Professional Conduct."
The remaining owners of the restaurant subsequently agreed to sell the property to four individuals (hereinafter "buyers"). Thereafter, respondent prepared a document entitled "Business Consultant, Management and Employment Agreement." The agreement provided, among other things, that grievant and another individual would be employees of the restaurant and that they would have an option to purchase the property upon the failure of the buyers to complete the purchase. The restaurant owners attempted to cancel the previous agreement because the buyers were unable to obtain a timely mortgage commitment. The buyers then instituted a civil action seeking a declaration that their contract was in full force and effect.
Grievant subsequently paid respondent $1,000 to represent the remaining restaurant owners in the lawsuit. It was in the interest of grievant and the other restaurant employee that the lawsuit be contested so that they could ultimately exercise their option to purchase the restaurant. Grievant and the other employee, ...