On certification to the Superior Court, Appellate Division, whose opinion is reported at 376 N.J. Super. 63 (2005).
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
In this appeal, the Court must determine whether the trial court committed reversible error by limiting the testimony of defendant's character witnesses, permitting certain statements in the prosecutor's closing arguments, and submitting the text of R. 1:21-6 to the jury without providing guidance as to how to consider and apply it to the facts of the case.
Defendant, an attorney, was retained by Clark and Barbara Ferry in connection with the wrongful death of their son, who was struck and killed by a car. In January 1999, the Ferrys received a letter from the insurance carrier for the driver of the car advising them that the claim had been settled for $75,000 and that the carrier had sent to defendant a check in that amount, made payable jointly to the Ferrys as administrators and to defendant's law firm as attorneys for the estate. Beginning in March 1999, the Ferrys made several inquiries of defendant about the release of the settlement funds, net of defendant's expenses and one-third for attorney's fees. He repeatedly told them that he could not release the funds until he received certain tax releases. In response to another inquiry in August 1999,defendant said that he planned to file a motion in September for release of the funds. In October 1999, the Ferrys became aware that defendant signed the settlement check on their behalf without their authorization. When again contacted, defendant stated that he finally received the tax releases and the funds would be disbursed soon.
The Ferrys contacted the police. On December 16, 1999, Mrs. Ferry called defendant from the police station. In a recording of the conversation played for the jury, defendant is heard telling her that he "finally got an Order" that "gives the State 30 days" and that "they should give me something in writing that says there's no tax and . . . that's the final thing." He stated that "[t]he Surrogate [was] waiting on the taxing authority to give them a tax clearance certificate" which they should have by "the end of the year." On December 21, 1999, pursuant to a search warrant, the police seized the bank records from defendant's law office and his file concerning the Ferrys.
In addition to the above evidence, the State at trial presented the testimony of the chief clerk of the surrogate's office, the insurance carrier's claims adjuster, and a detective of the county prosecutor's office. The clerk stated that when, as here, a check is made payable directly to the heirs of an estate and their counsel, no court approval is required to disburse the funds. The claims adjuster testified that she had negotiated the settlement with defendant by December 30, 1998; she received the letters of administration on January 7, 1999; she sent the insurance carrier's form of release to defendant, which he returned the next day as purportedly executed by the Ferrys; and the settlement check sent to defendant was deposited on January 22, 1999. The detective testified about defendant's law firm's bank records: the attorney trust account had a balance of $250.19 before the $75,000 settlement check was deposited; less than two weeks later the balance had been depleted to under $2,000.
According to defendant's testimony, Mrs. Ferry verbally authorized him to endorse the settlement check and knew he received and deposited it. He lied about the funds' status to deflect inquiries and enable him to focus on treating his cancer. He acknowledged the firm's bank records were not properly maintained and attributed the problems to his poor health and related emotional problems. After the cancer diagnosis, he felt depressed and unconcerned with his business affairs. Defendant presented testimony of his cardiologist and psychologist to corroborate the limitations on his ability to practice law. The trial court limited the testimony of defendant's character witnesses by refusing to allow testimony about their personal experiences with defendant, his skills as an attorney, and his professional relationships with his clients and others.
On cross-examination, the prosecutor questioned defendant about his recordkeeping and attorney trust account obligations under R. 1:21-6 and his repeated failures to comply with that rule. During closing argument, the prosecutor argued that defendant's eventual payment of the monies due to the Ferrys did not excuse his conduct. The prosecutor drew analogies between defendant's "no-harm-no-foul" defense and offenders such as shoplifters who are caught and then seek to avoid liability by returning the shoplifted items.
The jury convicted defendant of one count of third-degree theft by failure to make required disposition of property; one count of third-degree misapplication of entrusted property; and two counts of fourth-degree forgery. He was sentenced to two concurrent three-year terms of probation and community service and ordered to pay a fine and statutory penalties.
Defendant appealed. The Appellate Division, in an opinion published at 376 N.J. Super. 63 (2005), reversed and remanded to the trial court based on improper limitation of character witness testimony, inadequate jury instructions in respect of the use of R. 1:21-6, and inappropriate remarks by the prosecutor in summation.
The Supreme Court granted the State's petition for certification and denied the defendant's cross-petition for certification.
HELD: The trial court properly prohibited character witness testimony as to specific interactions with defendant and his skills as a lawyer, and statements made by the prosecutor during summation did not deny defendant his right to a fair trial. However, the trial court improperly submitted to the jury the full text of R. 1:21-6 without providing instructions as to how to consider and apply the rule's directives to the facts of this criminal case.
1. The trial court correctly ruled that defendant's character witnesses could testify as to their opinion or the defendant's reputation in the community for honesty, trustworthiness and integrity. The trial court also properly barred character witness testimony concerning defendant's military service, interactions with other attorneys and clients, and perceived skills as a lawyer, which testimony was proffered to demonstrate his good character and lack of propensity to commit the acts for which he was charged. N.J.R.E. 404, which governs whether proffered opinion or reputation evidence is permissible character testimony, must be considered together with N.J.R.E. 405(a) (methods by which character may be proved) and N.J.R.E. 402 (relevance). Because the character evidence proffered by defendant did not include evidence that defendant was convicted of any crime, N.J.R.E. 405(a), defendant's character evidence was limited to opinion or reputation evidence. In addition, the precluded testimony was not relevant, as required by N.J.R.E. 402, to the discrete issues in this case: whether defendant engaged in an act of theft by failing to make a required disposition of settlement funds, misapplied settlement funds that were entrusted to him, or forged his clients' signatures on a settlement check. (pp.12-18)
2. Defendant advanced a "no-harm-no-foul" defense at trial. He argued that because his clients ultimately received the settlement funds -- albeit long after he deposited the check and repeatedly lied about his ability to disburse the funds -- there was no harm and, thus, he should escape liability. During summation, the prosecutor analogized that defense to a shoplifter or burglar who returns the stolen item after getting caught and then claims no crime occurred because the item was returned. Those comments were fairly "based on the facts of the case and reasonable inferences therefrom," were well within "the bounds of propriety," and did not "create a real danger of prejudice to the accused." In light of the defense advanced, the prosecutor permissibly could point out that, once defendant had completed the offenses, returning the stolen funds did not negate an element of the offenses charged. (pp. 19-24)
3. Defendant's convictions for theft by failure to make required disposition of property and misapplication of entrusted property are reversed due to the trial court's failure to instruct the jury on how to consider and apply R. 1:21-6 to the facts of this criminal case. The Court commends the Appellate Division's analysis of this issue as the proper instruction to be given on remand. A violation of the requirements of R. 1:21-6, in and of itself, is insufficient, as a matter of law, to sustain a finding of criminal culpability. Together with other evidence, however, a jury may consider such a violation as evidence of defendant's purposeful conduct. The more egregious the violation, the greater its probative value in this determination. An extended pattern of conduct would have more probative value than an isolated incident of bad recordkeeping or accounting. (pp. 24-28)
The judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART, defendant's forgery convictions are reinstated, and the matter is REMANDED to the trial court for further proceedings consistent with this opinion in respect of those counts of the indictment charging defendant with theft by failure to make required disposition of property and misapplication of entrusted property.
CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA, ZAZZALI, ALBIN, and WALLACE join in JUSTICE RIVERA-SOTO's opinion. JUSTICE LONG did not participate.
The opinion of the court was delivered by: Justice Rivera-soto
Defendant Anthony Mahoney, a practicing attorney at law in this State, was convicted by a jury of stealing client funds entrusted to him. The jury determined that defendant committed a series of crimes by delaying the disbursement of funds owed to his clients, and by forging endorsements on a settlement check and depositing it without authorization. On defendant's appeal, the Appellate Division reversed, holding that "the trial court improperly excluded substantial portions of proffered testimony by defendant's character witnesses[;]" that "[t]he trial court also improperly submitted to the jury the full text of Rule 1:21-6. . . . [and failed] to provide instructions to the jury on how to consider and apply the Rule's directives to the facts of this criminal case[;]" and that "certain statements made by the prosecutor during summation were so egregious that they deprived defendant of his right to a fair trial." State v. Mahoney, 376 N.J. Super. 63, 72-73 (App. Div. 2005).
We disagree with two of the three conclusions advanced by the Appellate Division. We hold that the trial court's limitation on the testimony of defendant's proffered character witnesses, prohibiting any testimony either as to specific interactions with defendant or defendant's skills as a lawyer, was proper. We also hold that the complained-of closing argument statements by the prosecutor did not deny defendant a fair trial. However, we do agree with the Appellate Division that the submission to the jury of the plain text of R. 1:21-6 -- a rule of court that details an attorney's recordkeeping and trust fund accounting requirements -- without appropriate guidance from the court was error. Therefore, we affirm in part and reverse in part the judgment of the Appellate Division, reinstate defendant's fourth-degree forgery convictions, and remand for a new trial on the remaining counts of the indictment charging defendant with third-degree theft by failure to make required disposition of property and third-degree misapplication of entrusted property.
As of the time relevant to this appeal, defendant had been licensed as an attorney at law in the State of New Jersey for almost twenty-eight years, the greater part of which was spent in partnership with his brother, who also is an attorney at law. Although defendant's practice included some transactional work, defendant focused almost exclusively on litigation matters. It was as part of his litigation practice that defendant was engaged to represent Clark and Barbara Ferry in connection with the wrongful death of their twenty-one year old son, Clark Jr., who was struck and killed by a car in February 1998 as he was crossing a road late at night.*fn1 Later that spring, when the insurance carrier for the driver of the car who struck their son sought to contact the Ferrys, they asked defendant to handle the matter for them.
In December 1998, after some initial contacts between defendant and the insurance carrier, defendant sent a retainer agreement to Barbara Ferry. After reaching agreement on the terms of defendant's retention and compensation, Mrs. Ferry signed the retainer agreement as administratrix ad prosequendum of her deceased son's estate. The execution of the retainer agreement was followed by a January 4, 1999 meeting at the Ocean County Surrogate's Office between the Ferrys and defendant, where both the Ferrys applied for appointment as administrators ad prosequendum of their son's estate. This commonplace meeting and appearance at the Surrogate's Office takes on added significance in light of later events.
Approximately eight days later, the Ferrys received a letter from the insurance carrier advising them that the claim concerning their son's death had been settled for the sum of $75,000. That letter also informed the Ferrys that a check in that amount, made payable to "Clark Ferry & Barbara Ferry, as Administrators Ad Prosequendum [of the] Estate of Clark Ferry, Jr., and Mahoney & Mahoney, as attorneys," had been sent to defendant. The testimony concerning the receipt of this letter was in some conflict. According to Barbara Ferry, she did not read the letter from the insurance carrier when it arrived. She left it for her husband to read and they did not discuss its contents until October 1999. In contrast, Clark Ferry testified that when he read the letter from the insurance carrier, he discussed it with his wife and asked her to call defendant for clarification of its contents. In either event, Barbara Ferry telephoned defendant in March 1999 inquiring whether the settlement funds, net of defendant's fees and expenses, could be released to them.*fn2 She was told by defendant that he could not do so because he was still waiting for certain tax releases.
In April 1999, the Ferrys decided to refinance their home. They again asked defendant when their $50,000 would be released to them so they could pay off their second mortgage. Defendant again stated that the funds could not yet be released, claiming the absence of purportedly necessary tax releases. After a second inquiry also relating to their proposed refinance, and after again being told that the settlement funds still could not be released due to absence of tax releases, the Ferrys abandoned their refinancing efforts. A few months later, in August 1999, Clark Ferry again contacted defendant and inquired as to the release of the $50,000 in settlement funds and was told that defendant planned to file a motion the following month for the release of the settlement funds.
Finally, in October 1999, Barbara Ferry contacted someone known to her who was on the staff of a New Jersey State Senator for assistance in determining what was delaying the release of the funds. It was at that point that Barbara Ferry realized that the settlement check had been issued payable to multiple payees:
to Clark and Barbara Ferry, as administrators of their son's estate, and to defendant's law firm, as the attorneys for the decedent's estate. Barbara Ferry then secured a copy of the front and back of the cancelled $75,000 settlement check and for the first time became aware that it had been signed both on her behalf and her husband's behalf. Both the Ferrys testified that the signatures were not theirs and that they had not granted anyone authorization to sign on their behalf. Barbara Ferry then contacted defendant's office and was told that, at long last, the necessary releases had been secured and that the funds should be in her hands by month's end.
The Ferrys' suspicions were aroused. They contacted the Westfield Police Department, the municipality where defendant's law offices were located, and were directed to the Union County Prosecutor's Office. The Appellate Division succinctly summarized the events that followed:
On December 16, 1999, Mrs. Ferry called defendant from the Westfield Police Department. A recording of the call was played for the jury. In the conversation, defendant tells Mrs. Ferry that he "finally got an Order signed by [a judge] that came in late November that gives the State 30 days" and that at "[t]he end of this month they should have to pay it." He told her that "they should give me something in writing that says there's no tax and . . . that's the final thing." He added that "[t]he Surrogate [was] waiting on the taxing authority to give them a tax clearance certificate" and that he "figure[d]" they should have it by "the end of the year." She should expect to hear from him "[p]robably [in] a couple [of] weeks."
[State v. Mahoney, supra, 376 N.J. Super. at 77.]
Based on the information developed, the police secured a search warrant for defendant's law office and, on December 21, 1999, the police executed that search warrant and seized, among other things, defendant's file concerning the wrongful death action in respect of the Ferrys' son as well as the bank records of defendant's law firm.
At trial, the State presented the evidence outlined above. In addition, the State presented the testimony of the chief clerk of the Ocean County Surrogate's Office, the insurance carrier's claims adjuster who handled this claim, and a detective of the Union County Prosecutor's Office. The Surrogate's clerk, who was offered to rebut the explanation defendant repeatedly gave the Ferrys for the delay in disbursing the settlement funds, explained the functions of the Surrogate's Office and made clear that when, as here, a check is made payable directly to the heirs of an estate and their counsel, no court approval is required in order to disburse the funds. In essence, this testimony rebutted ...