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Matter of Ort

Decided: October 8, 1993.

IN THE MATTER OF DAVID C. ORT, AN ATTORNEY AT LAW


For disbarment -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. Wilentz, C.J., and Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein, JJ., join in this opinion.

Per Curiam

{PA}

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This attorney-disciplinary proceeding arose from respondent's representation of Mrs. Sophie Sawulak in the settlement of her late husband's estate. The grievance originated as a fee-arbitration matter. The Fee Arbitration Committee administratively dismissed the matter and referred it to the Office of Attorney Ethics.

The District X Ethics Committee (DEC) concluded that respondent had violated RPC 1.4(a) and (b) (failure to communicate); RPC 1.5(a) (unreasonable fee) and RPC 1.5(b) (failure to communicate basis or rate of fee); and RPC 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation). Additionally, although the violation had not been charged in the complaint against respondent, the DEC found that respondent had violated RPC 1.2(a) by failing to abide by Mrs. Sawulak's decisions concerning matters within the scope of his representation. The DEC recommended "substantial public discipline."

The DRB concurred in the DEC's Conclusions. The DRB also determined that respondent had engaged in conduct prejudicial to the administration of Justice in violation of RPC 8.4(d). Four members of the DRB recommended a three-year suspension and two recommended disbarment. We conclude that the appropriate discipline for respondent's egregious misconduct is disbarment.

I

In late September 1989, Mrs. Sophie Sawulak communicated with respondent to discuss retaining his legal services in settling the estate of her deceased husband. Mrs. Sawulak had been separated from her husband for about three years and was living with her sister in Buffalo, New York. While they were married, Mrs. Sawulak and her husband had lived in Hackettstown, the municipality in which respondent's office was located.

After the initial telephone call, Mrs. Sawulak sent several letters to respondent describing details concerning the estate and indicating {PA}

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that she had evidence to prove that her husband had been involved in an extra-marital affair. She described the assets of the estate, which included the Hackettstown property, a small pension, two $500 life-insurance policies, a series of bi-monthly checks from an undisclosed source, an undisclosed amount of stock, several pieces of farm machinery, and household items. The aggregate value of the estate was estimated to be approximately $300,000.

Mrs. Sawulak returned to Hackettstown in early October 1989. On October 3, Mrs. Sawulak and her sister went to respondent's office, where Mrs. Sawulak signed a retainer agreement providing that the minimum fee would be six percent of the gross estate. The agreement's provisions relating to hourly rates and the preparation of itemized bills had been deleted. Mrs. Sawulak paid a $500 retainer fee.

Respondent testified that he had informed Mrs. Sawulak by letter that he would bill her at an hourly rate. According to respondent, he had sent the retainer agreement to Mrs. Sawulak with a cover letter that provided that "the hourly rate is between $115. and 135. depending on responsibility." Mrs. Sawulak testified that she had not received that letter nor the retainer agreement, but had seen the retainer agreement for the first time on October 3.

The cover letter was found in respondent's file. Another letter found in respondent's file, almost identical to the cover letter, made no reference to the hourly billing rate. The DRB inferred, based on a comparison of the two letters, that the sentence regarding hourly billing was added to the cover letter after it had been typed. Respondent admits having added that sentence. He explained before the DEC that he had neglected to include a description of the hourly rate, had added it, and then had mailed the corrected letter. When asked why all references to hourly rates had been deleted from the retainer agreement, respondent explained that the rate depended on the degree of difficulty and responsibility, and on October 3 he had not yet known "what * * * {PA}

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the problems in this estate were going to be." He further testified that when he had acquired a better understanding of the degree of responsibility, he had sent to Mrs. Sawulak a third letter fixing the hourly rate at $125. Respondent could not produce a copy of that letter and Mrs. Sawulak testified that she had not received it.

Two days after signing the retainer agreement, Mrs. Sawulak returned to respondent's office and signed a power of attorney. The next day, October 6, respondent arranged for a deputy surrogate to come to his office and to appoint Mrs. Sawulak as administratrix of the estate.

Before Mrs. Sawulak returned to Buffalo, she arranged for a friend periodically to look in on the house. Respondent suggested that he, rather than a friend, inspect the property. Believing that inspecting the property was "part of [respondent's] services," Mrs. Sawulak agreed. She remained in Hackettstown about three weeks and then returned to Buffalo. Communication between Mrs. Sawulak and respondent thereafter was limited to telephone conversations and correspondence.

In late October, Mrs. Sawulak forwarded to respondent a Medicare check for $17,000, which respondent used to open an estate account on which he was the sole signatory. Additionally, respondent requested that Mrs. Sawulak authorize him to obtain a home-equity loan for the estate, secured by the Hackettstown house. Mrs. Sawulak denied that request three times. Nevertheless, in December 1989, respondent applied for and obtained a $25,000 home-equity loan on behalf of the estate. Respondent testified that he had sent Mrs. Sawulak a letter informing her of the loan. Mrs. Sawulak testified that she had not received such a letter. A subsequent letter from Mrs. Sawulak to respondent suggests that Mrs. Sawulak was unaware of the home-equity loan. In a letter dated February 28, 1990, she wrote, "Please send me the name of the bank and amount charged [and] receipt. What is the bank charging for?"

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That letter was Mrs. Sawulak's third request for a breakdown of expenses charged to the estate account, respondent having failed to reply to two prior requests. In response to correspondence from respondent, Mrs. Sawulak wrote, "I would appreciate it if you would break it down where you have 'Appraisal, search, bank, accounting and attorney fees -- $10,558.32.'" She asked what "search" had been conducted and requested detailed information regarding the names of people performing each function, work performed, and fees. Specifically, she asked for an itemization of attorney's fees. Respondent's only response to those requests informed Mrs. Sawulak that the minimum fee contemplated by the retainer agreement was $18,000, and that itemized statements would be provided when the paid fees exceeded that amount. Unknown to Mrs. Sawulak, however, respondent had already withdrawn from the estate account $20,000 in legal fees. At no time did respondent provide to Mrs. Sawulak an itemized statement of his legal fees.

The correspondence reveals that by the end of February 1990, Mrs. Sawulak wanted to sell the Hackettstown house. The letters also suggest some question concerning the house's marketability. Mrs. Sawulak wished to sell the property "as is." However, sometime in February 1990, respondent obtained a preliminary report from a title company indicating that the deed covered only a portion of the Hackettstown property. On February 20, respondent informed Mrs. Sawulak that "[t]he property cannot be sold with the present title problems[,]" and "[t]here will be additional fees for an Action to Quiet the Title to this property." He assured her that his "office [had] commenced the necessary work to clear the title to the real property, so that it may be transferred to you or the public [sic] buyer. I will keep you informed of progress. It will take well over a year to complete."

Mrs. Sawulak's response was one of surprise and confusion: "I would like to know how come you state that you have to clear title and it takes a year to complete? How come that you are selling the property now? When is the year up?" The only response in {PA}

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