The Disciplinary Review Board having filed a report with the Court, recommending that ROBERT F. DATO of WOODBRIDGE, who was admitted to the bar of this State in 1965, be suspended for a period of one year for acting with a conflict of interest in his purchase of property from a client, and the Court having heard the arguments of the parties, and good cause appearing;
It is ORDERED that the report and recommendation of the Disciplinary Review Board are adopted and ROBERT F. DATO is hereby suspended for one year, effective November 23, 1992; and it is further
Ordered that the report and recommendation of the Disciplinary Review Board are adopted and ROBERT F. DATO is hereby suspended for one year, effective November 23, 1992; and it is further
ORDERED that the entire record of this matter be made a permanent part of respondent's file as an attorney at law of this State; and it is further
Ordered that respondent shall be restrained and enjoined from practicing law during the period of his suspension and that he shall comply with Regulation 23 of the Administrative Guidelines Governing Suspended Attorneys; and it is further
Ordered that respondent shall reimburse the Ethics Financial Committee for appropriate administrative costs incurred in the prosecution of this matter.
Decision and Recommendation of the Disciplinary Review Board
To the Honorable Chief Justice and Associate Justices of the Supreme Court of New Jersey.
This matter was before the Board on a hearing panel report recommending a private reprimand, which the Board determined to treat as a recommendation for public discipline.
Respondent was admitted to the New Jersey bar in 1965. He maintains a practice of law in Woodbridge, Middlesex County. In 1984, he was retained by Mary Cinque, a long-standing friend of respondent's wife and her family, to represent her in a divorce action against her husband, the grievant herein. She paid respondent an undisclosed sum as a retainer.*fn1 After a matrimonial action permeated with acrimony, a final judgment of divorce was entered late in 1984.
By way of equitable distribution, Mr. Cinque agreed to transfer to Mrs. Cinque his title in the former marital residence, a three-family house located in Port Reading, Woodbridge Township. Although no formal appraisals had been conducted during the divorce proceedings, the parties stipulated, for the
purposes of equitable distribution, that the property had a net equity of $90,000. Two mortgages encumbered the property: a $7,000 first mortgage with Carteret Building Loan Association and a $10,000 second mortgage with Carteret Bank and Trust Company.
After the divorce, Mrs. Cinque moved to Arizona, where her daughters resided. She then asked respondent, who continued to represent her in the ongoing matrimonial post-judgment proceedings in New Jersey, to assist her in procuring a buyer for the Port Reading property. According to her testimony, although she left the sales price up to respondent, she hoped to sell it for $95,000.
In the spring of 1985, respondent offered to sell the property to another client, Ralph Mocci, a real estate developer he had known both socially and professionally since the early 1970s. Respondent had also been in partnership with Mocci in some business ventures. Mocci testified that, after he saw the property, he became very interested in purchasing it. His intention was to refurbish and then resell it. In Mocci's words, ". . . I told [respondent] when I passed by the house, we could possibly make money on the property and that I should go into contract" (T7/2/1990 16).
Consistent with this understanding, respondent prepared a contract of sale between Mrs. Cinque and Mocci, listing a purchase price of $95,000. The contract contained no provision for a mortgage contingency or for a brokers' commission. On April 15, 1988, respondent forwarded the contract to Arizona for Mrs. Cinque's review and signature (Exhibit P-8). He did not first obtain Mocci's signature thereon (Exhibit P-9).
Asked, at the DEC hearing, whether it was contemplated that he and respondent would become partners in the deal, Mocci replied that they had an understanding that respondent could choose to participate in any ventures in which he represented Mocci. Mocci added that ". . . in this particular case, it was the
same understanding that would apply with [respondent], that he would have the option. If he said he wanted to participate, I would give him the opportunity to participate. I don't think we ever discussed that. I don't even know if he was interested at the time. We really didn't discuss it. I can't say that he was or he wasn't" (T7/2/1990 20-21). Respondent vehemently denied that he had any interest in the property at that time.*fn2
In any event, after Mrs. Cinque signed the contract and returned it to respondent, neither she nor Mocci heard anything further from respondent about the transaction. When queried at the DEC hearing, respondent offered no explanation for this puzzling turn of events. He replied that ". . . as best as I can remember, when I went to finalize the transaction, Mr. Mocci reconsidered" (T5/3/90 57). According to Mocci, however, respondent never presented the contract for his signature, although he had remained interested in the property at all times (T2/7/90 21). Throughout the contract phase of the transaction, respondent acted as the attorney for both Mrs. Cinque and Mocci.
Some months later, in September 1985, respondent decided that he would buy the property from Mrs. Cinque as an investment. He prepared a contract of sale listing a purchase price of $85,000, $10,000 less than the price that Mocci was willing to pay. As in the Mocci transaction, the contract did not contain a mortgage contingency clause or a provision for a real estate commission. The contract also stipulated that Mrs. Cinque would take back a second mortgage of $10,000 for one year, at twelve percent interest (Exhibit P-5).
In an attempt to justify his purchase of the property, respondent testified that Mrs. Cinque was having difficulty in selling it; that she was pressing him for help in selling the property,
for which she was asking "less than $100,000"; that, after the deal with Mocci did not come to fruition, she continued to "press him for a buyer"; that it was then, for the first time, that he began to develop an interest in buying the property as an investment; and that, "knowing the area and having some roots there, I indicated to her that I would consider buying [it] and I told her that I thought the house in my opinion . . . might have had a value of upwards of $100,000. That is, anywhere between $80,000 and $100,000. As I remember it, she had it on the market in that range; so I said to her that if I bought it in order to make it profitable to me and also to make it feasible for her that I would buy it with no conditions whatsoever, no mortgage contingency, no expressions of warranties" (T10/26/1989 16-17). Respondent went on to say that, because of the absence of a broker's commission, Mrs. Cinque would net $85,000, a sum equivalent to a sale for a $100,000 gross purchase price; that the property was "run down"; that the rental income of $800 to $900 monthly was too low and needed to be increased; and that, while this transaction was "in my good interest . . . I was sure that this was good for her (T10/26/1989 22).
Asked by the hearing panel whether he had advised Mrs. Cinque to consult with an attorney, respondent replied:
If you permit me, the answer to that question is yes but it's a qualified yes and I have to put it on the record.
As I explained, Mary and my relationship was somewhat beyond attorney/client and for that reason we had formal and informal Discussions. She was in Arizona. She was fighting vigorously for her rights relative to her divorce. Her husband had moved in with another woman with a longstanding marriage. Mary's in her 60's. So this was a marriage of 35, 40 years. Her children were siding with her husband and it was a very, very unpleasant situation from her point of view and from mine, knowing the family and knowing her as I did. When we got into this transaction, not only by virtue of her needing some advice concerning the sale but often I would say to her, Mary, you need an attorney in Arizona to enforce your rights. We'll go reciprocal which means that for the non-lawyer's [sic] that we would bring an action in the State of Arizona against her husband having -- because she lived there and there would be a means by which she could enforce the support obligation under the terms of the divorce.
Mary did hire an Arizona attorney, I believe, because I went through the American Trial Lawyer's Association handbook and gave her names of lawyers, I remember this so clearly, in her area which I don't remember her area now, and when this was happening, this transaction, I cannot say to you under oath that I so very specifically told Mary you better get a lawyer on this sale, but there is no question in my mind that while this was happening I was advising Mary to be represented by Counsel in the context of this divorce and I do remember suggesting to her that at least have someone look at what's going on with this house to be sure you want to sell it. Be sure you want to sell it for whatever it is that I'm offering you and be certain you're doing the right thing. I can't say I added the last ingredient as that and be absolutely certain that the paperwork that I'm preparing is reviewed by a lawyer so that you know that it protects your interest, and the reason I say that [at] all, it was going to be as a deed, it was a cash deal. There was no -- I wasn't concerned about her knowing the technical aspects being represented for the technical aspects of this transaction because it was just passing of money. I wanted to be sure she knew what she was doing in selling the house.
Respondent added that his partner represented him at the closing, while Mrs. Cinque "was ...