Attorney Grievance Commission v. Collins

Couch, J., delivered the opinion of the Court. Acting through Bar Counsel, the Attorney Grievance Commission filed a Petition for Disciplinary Action against John Sellers Collins alleging violations of certain provisions of the Disciplinary Rules of the Code of Professional Responsibility. Preliminarily, we believe it necessary to an understanding of this complex matter to set forth a rather lengthy summary of the facts and circumstances preceding the filing of the petition. Antonio Pinero was born in Cuba and migrated to the United States in 1957.

He worked as a cook and dishwasher in a restaurant in Wilmington, Delaware. In 1961, he opened and operated a small restaurant in Pennsylvania and had two small diners in Delaware. In 1967, he leased a cafeteria in Washington, D.C., which he operated until 1973 or 1974. He had a beer license, which he obtained himself, for a couple of years in connection with the cafeteria.

In 1974, Pinero saw a newspaper advertisement for the sale or lease of a restaurant located at 1634 Annapolis Road, Odenton, Maryland, and owned by the English Company (hereafter English). At that time, the restaurant was closed and boarded up. Pinero met with a representative of English and was told the man who owned the adjacent motel ⁵³⁴ had a liquor license for sale. This turned out to be Collins, who was managing partner of Fort George Associates (hereafter Fort George), the motel owner.

The other partners were Arthur W. Meleski, Elizabeth J. Meleski, and Charles H. Steffey, Inc. Pinero contacted Collins and was told that he (Collins) had a Class B liquor license for sale for $15,000. When Pinero asked why he could not apply for a new license as he had done in D.C., he was told by Collins that there was a "moratorium” on the issuance of new licenses. They negotiated the contract price to $12,500. At some point, Pinero learned that Collins was an attorney and asked his advice regarding the lease with English.

Collins also told Pinero that in order to obtain the liquor license, it would be necessary for him to incorporate since he was not a resident of Anne Arundel County. Collins agreed to prepare the corporate documents and billed Pinero for these services. Collins also prepared the contract for the sale of the liquor license from Fort George to Pinero. Pinero requested a non-competition clause in the contract because of the motel.

Collins told him that such a clause was not necessary because they were not going to have a restaurant in the motel. In fact, there came a time when the motel added a restaurant and went into competition with Pinero. The contract for the sale of the liquor license was executed June 21, 1974. Collins signed on behalf of Fort George as managing partner.

No payment was due at that time. The contract provided as follows: Whereas the Vendors are the owners and possessors of a certain Class B liquor License issued by the Board of License Commission of Anne Arundel County for the premises known as 1630-32 Annapolis Road, unto Elizabeth J. Meleski trading as Butch’s Beef and Beer, and Whereas, the Vendee is the tenant of the adjacent property known as 1634 Annapolis Road, Odenton, Maryland and does intend to re-open the restaurant and tavern business on the said premises and ⁵³⁵ Whereas, the Vendees [sic] do desire to transfer their interest in the said Class B Liquor License and the said Vendees do desire to acquire and purchase the Vendors said interest, these premises are made. Now, therefore, that in and for the consideration of the sum of One Dollar ($1.00) and other good and valuable consideration the receipt whereof is hereby acknowledged, the said Vendors do hereby bargain and sell and transfer and assign all their right, title and interest in and to the Class B Seven Day Liquor License owned by them unto the said Vendee at and for the purchase price of Twelve Thousand Five Hundred Dollars ($12,500) which said sum the Vendees have agreed to pay in monthly installments equal to six Percent (6%) of the gross sales of all revenues from alcoholic beverages sold on the said premises known as 1634 Annapolis Road, Odenton, Maryland, said monthly installments shall continue to be paid by the Vendee until the full and just sum of Twelve Thousand Five Hundred Dollars ($12,500) shall have been paid. Provided, further, that in the event that the full sum has not been paid within thirty-six (36) months from the date hereof, then in that event any remaining balance shall become due and payable on the first day of the thirty-six month (36) from the date of the signing of this Agreement.

The Vendors do agree to assist in any and whatever the Vendees in the matter of the transfer of the said License to them including whatever assistance it may render at the hearing before the Zoning Hearing Officer for Special Exception and before the Board of License Commissioners for the transfer of the said License. The Vendee agrees that it shall not transfer or otherwise dispose of the said Liquor License without the written permission of the Vendor for as long as there is any unpaid balance on the con ⁵³⁶ sideration as stated herein above. Should any of the monthly installments not be paid when due for a period of ten (10) days after it shall become due, the whole balance shall then become due and collectable at once. Some time in the summer of 1974, Collins learned that Fort George had no license to sell as Mr. Meleski had allowed the license to expire as of April 30, 1974.

On August 26, 1974, Collins appeared with Pinero at a hearing before the Zoning Hearing Officer in order to get a special exception for the liquor license. Collins represented that they were seeking a transfer of an existing license. According to Collins’s testimony, he was unaware at that time that the license had expired and he did not learn of this fact until he called George M. King, at the Board of License Commissioners, to check on the status of the application for transfer. King suggested that they apply for a Special Hotel Motel liquor license and Collins asked him to fill in the necessary information and mail him the application.

Collins never notified the Zoning Hearing Officer that there was no license to transfer because it did not occur to him that it was necessary. There is a dispute over whether Collins informed Pinero that the Class B license had expired and that Pinero was applying for a Special Hotel Motel license. According to Collins, he informed Pinero of this fact when he got him to sign the application for the liquor license. Collins testified that he explained to Pinero the difference between the two licenses and Pinero agreed to proceed because he was anxious to get a liquor license.

On the other hand, Pinero’s testimony was that he did not learn he had a Special Hotel Motel license until 1977 when he went to see King and was told a license had never been transferred. It is undisputed that in October of 1974 Pinero would have been unable to get a Class B license on his own. Although there was never actually a "moratorium” on the issuance of licenses, there were numerous licenses already in existence in that area and a new one would not have been issued. ⁵³⁷ Furthermore, it is uncontradicted that Pinero could not have obtained a Special Hotel Motel license without being sponsored by Fort George since he did not have a hotel or motel. On October 8, 1974, Collins appeared with and on behalf of Pinero at a hearing before the Board of License Commissioners regarding Pinero’s application for a Special Hotel Motel license.

This license was subsequently granted and Pinero was notified of this approval by a letter dated October 9, 1974. In March of 1975, when Pinero applied for renewal of his liquor license, he requested that the Special Hotel Motel license be replaced by a Class B restaurant license. The reason for the change was that "the business generated directly from the Motel ha[d] not materialized.” 1 Collins, as general manager of General’s Red Carpet Inn, also wrote a letter to the Board of License Commissioners requesting compliance with Pinero’s request. The letter stated that "Fort George Associates, trading as the General’s Red Carpet Inn ha[d] no objection to the said exchange. ...” Pinero’s request for a change in license was granted and he received a Class B license in 1975.

King’s testimony was that the Special Hotel Motel license was granted on the basis that "the land was all supposed to be leased in all one complex .. .”, including a right-of-way owned by Baltimore Gas and Electric between the motel and the restaurant. In 1975, King was told that the property was not contiguous. He was then "caught between a rock and a hard place, so he had to downgrade the license.” In September of 1977, Pinero defaulted in payment on the contract and received a letter from Fort George demanding the entire balance owed or threatening suit. Pinero went to Collins, who was no longer a partner, and sought his advice.

Collins advised him to tender a payment and hopefully this would hold off a suit for the balance. In fact, Fort George ⁵³⁸ filed suit against the corporate restaurant, International Restaurant Corporation (hereafter International), September 7, 1977, alleging breach of a written agreement of sale by failure to pay. International’s defense was that the Class B license was not in existence on June 21, 1974. At a pretrial hearing, based on these facts, International’s motion for summary judgment was granted as to Fort George’s claim for payment.

Pinero had also filed a counterclaim against the partnership alleging fraud and deceit and a "Third Party Claim” against Collins on the same basis, as well as a count seeking damages for breach of duty owed to International as its attorney. These matters proceeded to trial by jury and the following judgments were entered in favor of International: "Judgment Absolute extended for the Counter-Plaintiff, Pinero International Restaurant, Inc., against the Counter-Defendant, Arthur W. Meleski, in the amount of $4,068.00 compensatory damages and $11,250.00 punitive damages ($15,318.00); for the Counter-Plaintiff, Pinero International Restaurant, Inc., against the Counter-Defendant, Elizabeth J. Meleski in the amount of $4,068.00 compensatory damages and $11,250.00 punitive damages; in favor of Counter-Plaintiff, Pinero International Restaurant, Inc., against the Counter-Defendant, Charles H. Steffey, Inc., in the amount of $4,068.00 compensatory damages and $22,500.00 punitive damages, and in favor of the Third-Party Plaintiff, Pinero International Restaurant, Inc., against the Third-Party Defendant, John S. Collins, in the amount of $4,068.00 compensatory damages and $22,500.00 punitive damages, jointly and severally and as partners in Fort George Associates, Inc.” Meleski v. Pinero Int’l Restaurant, 47 Md. App. 526, 532 , 424 A.2d 784, 788 (1981). ⁵³⁹ On appeal, the Court of Special Appeals found that there should have been one judgment for compensatory damages for $4,068.00 against all partners. In addition, the Court of Special Appeals held that the uncertainty as to the jury’s intention regarding punitive damages necessitated a new trial on that issue. Accordingly, the judgments were vacated and the case was remanded for entry of one judgment for $4,068.00 in compensatory damages against all appellants.

A new trial was awarded on the issue of punitive damages. Id. at 551 , 424 A.2d at 797 . The Petition for Disciplinary Action alleged violations of the following Disciplinary Rules: Disciplinary Rule 1-102 "Misconduct (A) A lawyer shall not: (1) Violate a Disciplinary Rule. (4) Engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.

(5) Engage in conduct that is prejudicial to the administration of justice. (6) Engage in any other conduct that adversely reflects on his fitness to practice law.” Disciplinary Rule 5-101 "Refusing Employment When the Interests of the Lawyer May Impair His Independent Professional Judgment. (A) Except with the consent of his client after full disclosure, a lawyer shall not accept employment if the exercise of his professional judgment on behalf of his client will be or reasonably may be affected by his own financial, business, property, or personal interests.” ⁵⁴⁰ Disciplinary Rule 5-104 "Limiting Business Relations with a Client. (A) A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure.” Disciplinary Rule 5-105 "Refusing to Accept or Continue Employment if the Interests of Another Client May Impair the Independent Professional Judgment of the Lawyer.

(A) A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105 (C). (B) A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, except to the extent permitted under DR 5-105 (C).” Disciplinary Rule 6-101 "Failing to Act Competently. (A) A lawyer shall not: Hi * * (3) Neglect a legal matter entrusted to him.” ⁵⁴¹ Disciplinary Rule 7-101 "Representing a Client Zealously. (A) A lawyer shall not intentionally: (1) Fail to seek the lawful objectives of his client through reasonable available means permitted by law and the Disciplinary Rules, except as provided by DR 7-101 (B).

A lawyer does not violate this Disciplinary Rule, however, by acceding to reasonable requests of opposing counsel which do not prejudice the rights of his client, by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process. (3) Prejudice or damage his client during the course of the professional relationship, except as required under DR 7-102 (B) Disciplinary Rule 7-102 "Representing a Client Within the Bounds of the Law. (A) In his representation of a client, a lawyer shall not: (5) Knowingly make a false statement of law or fact. (6) Participate in the creation or preservation of evidence when he knows or it is obvious that the evidence is false. ⁵⁴² * * * (8) Knowingly engage in other illegal conduct or conduct contrary to a Disciplinary Rule.” A. Pursuant to Maryland Rule BV9 b, we referred the charges to James C. Cawood, Jr., Associate Judge of the Fifth Judicial Circuit of Maryland, to make Findings of Fact and Conclusions of Law.

Following an evidentiary hearing, Judge Cawood filed "Findings of Fact” and "Conclusions of Law” as set forth below: "1. The Respondent, John Sellers Collins, was admitted to practice as a member of the Bar of the State of Maryland on October 15, 1953, and maintains an office for the practice of law at 428 Crain Highway, N.W., Glen Burnie, Maryland 21061. 2. In 1974, Antonio Pinero sought to open a restaurant in Odenton, Maryland, where he could sell liquor. 3. That in March or April, 1974, Mr. Pinero was offered a liquor license by the Respondent on behalf of himself and his partners who were known as Fort George Associates. 4.

That Respondent was at that time the managing partner and counsel for Fort George Associates, and said partnership owned a motel on land adjacent to the restaurant operated by Mr. Pinero. 5. That Mr. Pinero asked Respondent if he, Pinero, could obtain a new license rather than purchase the license owned by Fort George Associates as Respondent’s asking price was, in Mr. Pinero’s opinion, somewhat high. 6. That Respondent represented to Pinero that it would be difficult to obtain a new license, which in ⁵⁴³ fact is true, although no moratorium existed on licenses. 7. That Mr. Pinero sought Respondent’s advice concerning the lease for his restaurant, and Respondent advised him concerning said lease. 8.

That Respondent prepared the incorporation of Mr. Pinero’s restaurant, International Restaurant, Inc. 9. That on June 21, 1974, Respondent, on behalf of Fort George Associates, executed a contract for the sale of a liquor license to Mr. Pinero’s company, International Restaurant, Inc., for the price of $12,500.00. 10. That at the time of the execution of the contract, the Respondent represented International Restaurant, Inc. as its attorney and also represented Fort George Associates as its attorney and as managing partner. 11. That Mr. Pinero, who was Respondent’s client, requested that a non-competition clause be included in the agreement for the sale of the liquor license to prevent Fort George Associates from operating a restaurant on their adjacent property. 12.

That said non-competition clause was omitted from the contract of sale. 13. That Respondent advised Pinero that a non-competition license was unnecessary. 14. That prior to the execution of the contract for the sale of the liquor license, the license owned by Fort George Associates had expired and no transfer of said license to Mr. Pinero was ever effected. 15. That subsequent to the execution of said contract, Respondent represented International Restaurant, Inc. and/or Antonio Pinero before a hearing of the Anne Arundel Office of Zoning Hearings. ⁵⁴⁴ 16.

That the Respondent, at said hearing, represented that a transfer of a liquor license was sought, rather than a new license. 17. That Respondent did not know in June 1974 that the license had expired, but was advised of the same shortly after the hearing before the Zoning Hearing Examiner. 18. That despite actual knowledge that the transfer was not effected, the Respondent never attempted to correct the record of the zoning hearing. However, such was not a material factor in the granting of the decision. 19.

That the Respondent appeared on behalf of International Restaurant, Inc. and/or Antonio Pinero before the Anne Arundel County Liquor Board for the purpose of securing a new liquor license. 20. That a new liquor license was obtained by International Restaurant, Inc. and payments thereon were made, but the Respondent allowed and encouraged Mr. Pinero to continue to pay Fort George Associates for the non-existent liquor license pursuant to the contract of June 21, 1974, despite Respondent’s actual knowledge that the liquor license did not exist. 21. That Respondent never advised Pinero that a new license had to be and was being obtained. 22. That there was no novation in the case, whereby Pinero agreed to pay $12,500.00 to Fort George Associates for their assistance in obtaining a new liquor license. 23.

That Fort George Associates secured a liquor license for a restaurant opened on their property adjacent to that of Mr. Pinero. 24. That Respondent’s failure to include the non-competition clause in the contract for sale of the liquor license despite Mr. Pinero’s request for ⁵⁴⁵ same, prejudiced Mr. Pinero in that he became subject to a competing business. 25. That when Mr. Pinero sought Respondent’s advice concerning the opening of a restaurant and the securing of a liquor license by Fort George Associates, Respondent advised Mr. Pinero to tender an additional payment to Fort George Associates pursuant to the June 21, 1974 contract despite Respondent’s knowledge that the liquor