Attorney Grievance Commission v. Payer

⁸¹ WILNER, J. On April 1, 2011, Bar Counsel, on behalf of the Attorney Grievance Commission, filed a Petition for Disciplinary or Remedial Action against respondent, Michele Payer. The petition alleged the violation of numerous Maryland Lawyers’ Rules of Professional Conduct (MLRPC) arising from two complaints — one by Abby Berow and her husband, Jeffrey Berow, and one by Makbul Mughal. Pursuant to Rule 16-757, we referred the petition to Judge Robert E. Cahill, Jr., of the Circuit Court for Baltimore County, to hear evidence and prepare and transmit findings of fact and proposed conclusions of law. After a three-day hearing, Judge Cahill filed a memorandum of his findings and conclusions.

With respect just to the Berow complaint, Judge Cahill concluded, by clear and convincing evidence, that respondent had violated MLRPC 1.1 (duty to provide competent representation), 1.3 (duty to act with reasonable diligence), 1.4(b) (duty to explain a matter to the extent necessary to permit the client to make informed decisions), and 1.7 (conflict of interest). With respect to both complaints, Judge Cahill concluded, by clear and convincing evidence, that respondent had violated MLRPC 1.15 and Rule 16-607 (commingling funds), MLRPC 8.1(a) and (b) (knowingly making false statements to Bar Counsel and failing to provide truthful information to Bar Counsel), and MLRPC 8.4(c) and (d) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation and engaging in conduct prejudicial to the administration of justice). Through an attorney, Harold Link, respondent filed extensive exceptions to Judge Cahill’s findings and conclusions. Judge Cahill’s Findings Regarding Berow Complaint The Initial Retainer The Berows initially retained respondent to file a Chapter 13 bankruptcy, which she did.

Within a short period ⁸² of time, two other matters arose which folded into the bankruptcy case — the consequences of a creditor’s temporary repossession of Mr. Berow’s automobile and a separate action against Ms. Berow’s employer, Sinai Hospital, and her supervisor, Diane Bongiovanni. The charges against respondent arose from all three matters which, to an extent, overlapped in time, as well as from respondent’s replies to inquiries by Bar Counsel that were triggered by them. In mid-2009, the Berows were having financial difficulties. On June 3, 2009, Ms. Berow met with respondent, who maintained a solo practice concentrating in bankruptcy cases.

At that meeting, respondent was retained to file a Chapter 13 bankruptcy petition. Ms. Berow signed a retainer agreement that called for a fee of $4,500, of which $1,000 and an additional filing fee of $274 was to be paid immediately and $3,500 was to be paid “through the Plan from the Trustee.” The next day, Ms. Berow paid respondent $1,274, 1 and a day later, on Friday, June 5, 2009, respondent filed a joint Chapter 13 petition on behalf of the Berows in the U.S. Bankruptcy Court for the District of Maryland. Repossession Of The Car The following Monday, June 8, 2009, Mr. Berow’s automobile was repossessed by Citizens Automobile Finance. Ms. Berow said that she or her husband notified Citizens of the bankruptcy, and the car was returned immediately, without any intervention by respondent.

Indeed, Ms. Berow said that she did not advise respondent of the event until after the car had been returned. Respondent informed Bar Counsel that it was respondent’s law clerk who arranged to have the car returned. On June 15, respondent, on behalf of the Berows, filed a motion for sanctions against Citizens for attempting to ⁸³ repossess the car in violation of the automatic stay that took effect under § 362 of the Bankruptcy Code. In her motion, respondent also claimed that the towing company had done $3,825 in damages to the car.

She asked for sanctions in the amount of $9,445 in compensatory damages, $3,000 in attorneys’ fees, and $10,000 in punitive damages. She claimed that she filed the motion because of the damages to the car and that, if she was not able to recover her fees from Citizens, the Berows would have to pay an additional fee of $1,500. Respondent testified that, after the motion was filed, Ms. Berow called her and advised that she and her husband had “rethought” things and that the damages to the vehicle existed before the car was repossessed. Respondent said that Ms. Berow instructed her to call Citizens and offer to drop the motion for sanctions if Citizens would reduce the monthly payments on the car.

Whether as part of that conversation or one that followed, respondent added that Ms. Berow told her that she and her husband had decided to surrender the car to Citizens and that one of them had brought the car to her office without informing her and without leaving the keys. After somehow learning that the engine was “blown,” respondent concluded that the Berows purposely had attempted to deceive her. Ms. Berow told a quite different story. She said that, after informing respondent that the vehicle had significant engine problems, respondent, on August 10, 2009, recommended that they surrender the car by leaving it at her office where it would be picked up by Citizens.

According to Ms. Berow, respondent told her that she (respondent) had spoken with the attorney representing Citizens and that Citizens had agreed to abandon its claim for a deficiency balance on the loan in exchange for a surrender of the car and dismissal of the motion. Ms. Berow added that respondent never, in fact, contacted Citizens and never reached an agreement concerning the deficiency balance. Instead, Citizens notified the Berows of its intent to pursue a claim against them for the balance of the loan. ⁸⁴ Faced with this conflict, that seemed to permeate the entire matter, Judge Cahill found that “[Respondent’s version of the facts was not credible” — that she “was not a credible witness in her own defense,” that “[h]er testimony was sometimes internally contradictory and confused,” that “her demeanor was combative and argumentative,” and that “[Respondent was not truthful when she informed Ms. Berow that Citizens Automobile had agreed to abandon its claim for a deficiency balance as consideration for return of the vehicle and dismissal of the Motion for Sanctions.” In contrast, Judge Cahill found that “Ms. Berow’s version of what happened was logical, and consistent” and that her testimony “generally was both clear and convincing.” Complaint Against Sinai Hospital Shortly after retaining respondent for the bankruptcy matter, Ms. Berow informed respondent about an incident that occurred at her work. She missed several days and was disciplined for failing to notify the hospital in advance that she would not be at work, and she was anxious to have the reprimand removed from her record.

On June 10, 2009, Ms. Berow met with respondent and, in anticipation of an action being filed against the hospital, she signed another retainer agreement calling for an additional deposit of $1,500. Ms. Berow testified that she believed the total additional fee would be $3,500 and that the $1,500 was just to get started. On June 23, 2009, respondent filed a complaint in the Circuit Court for Baltimore County on behalf of the Berows against Sinai Hospital and Ms. Berow’s supervisor at the hospital, Diane Bongiovanni. The complaint alleged defamation, intentional infliction of emotional distress, harassment, endangerment, false advertising, loss of consortium, and negligence and sought damages on those counts ranging from $100,000 to $250,000.

Several issues arose from that action, but we shall defer discussion of all but one of them and return to the bankruptcy case. ⁸⁵ Bankruptcy Case — Redux One of the charges asserted in Bar Counsel’s petition was that, when discussing and ultimately filing a complaint against Sinai and Ms. Bongiovanni, respondent failed to advise the Berows of “the potential conflict of interest in her representing the Berows in both their bankruptcy matter and the employment case ...” and failed as well to notify the Chapter 13 trustee or to file any notice in the bankruptcy case that she had filed the complaint. Bar Counsel did not explain in his petition the precise nature of the potential conflict, but, as things developed, the dispute was less over whether there was such a potential conflict and more whether it was explained to the Berows. 2 Ms. Berow testified that respondent never mentioned the prospect of a potential conflict prior to filing the complaint against Sinai. Respondent claimed that she did discuss that with Ms. Berow and explained that she would need to get permission from the Bankruptcy Court to represent her in both cases, and that Ms. Berow insisted that respondent represent her in the action against Sinai. Again, Judge Cahill made a credibility assessment.

He found “Ms. Berow’s testimony to have been far more persuasive on this question.” As noted, the bankruptcy petition was filed on June 5, 2009. After the filing of the motion for sanctions against Citizens and the lawsuit against Sinai, respondent, according to Ms. Berow, recommended that the petition be withdrawn, as there was a potential for a significant recovery from the action against Sinai. Ms. Berow testified that respondent never advised the Berows that, if the petition were voluntarily withdrawn, a new one could not be filed for 180 days. Respondent adamantly maintained that she did advise the Berows of that consequence.

On August 4, 2009, respondent filed a motion for voluntary dismissal of the bankruptcy petition. ⁸⁶ As with the other conflicts in the testimony, Judge Cahill credited Ms. Berow’s testimony, finding that respondent did not, prior to filing the dismissal motion, advise the Berows of the consequences of dismissing the petition. He found credible Ms. Berow’s testimony that “had she and her husband known of this prohibition [against refiling within 180 days], they would not have agreed to the dismissal of their first bankruptcy petition.” Ms. Berow said that, on August 27, 2009 — -just three weeks after the petition had been dismissed — respondent called her and advised that the Berows needed to refile the petition, lest a second vehicle be repossessed, and that they needed to meet ■with her that day. The Berows testified that they went to respondent’s office and, for the first time, were told not only about the 180-day prohibition, which respondent said she would ask the Bankruptcy Court to waive, but also about the potential conflict of interest on her part from representing the Berows in both their employment action and the bankruptcy case. The next day, respondent filed a second petition.

Obviously dissatisfied with respondent’s performance in both actions, the Berows consulted another attorney and, on September 14, 2009, terminated respondent’s representation. The next day, respondent withdrew her appearance in the bankruptcy case. Other counsel was retained to prosecute that case. • At no time, with respect to either the first petition or the second, did respondent ever amend the appropriate schedule(s) to add the claims against Sinai and Ms. Bongiovanni or otherwise advise the Bankruptcy Court of that action. In correspondence with Bar Counsel, respondent claimed that she had prepared amended schedules to disclose the Sinai action as well as a motion to allow her to represent the Berows in both cases but that the Berows had terminated her employment before she had a chance to file them.

Later, she testified that she did not file the amended schedules because the Berows failed to come to her office to sign them. ⁸⁷ Based on Ms. Berow’s testimony, which Judge Cahill found credible, and the documents sent to Bar Counsel in response to his inquiry, Judge Cahill disbelieved respondent’s explanations and found that (1) she knew she was obliged to notify the Bankruptcy Court of the Sinai action and never did so, (2) she did not inform the Berows of the consequence of dismissing the bankruptcy, (3) she never told the Berows they needed to amend the schedules before the meeting with creditors, and (4) she misrepresented to Bar Counsel that she had prepared amended schedules and a motion to allow her to represent the Berows in both actions which was not the case. The Sinai/Bongiovanni Case — Redux The factual conflicts between Ms. Berow and respondent regarding the bankruptcy case and the dispute with Citizens over the repossession played out as well regarding the actions against Sinai and Ms. Bongiovanni. Those conflicts are relevant not only to the manner in which respondent handled the lawsuit but, more important, to the manner in which she responded to Bar Counsel’s inquiries, a matter discussed below. The complaint against Sinai and Ms. Bongiovanni, as noted, was filed on June 23, 2009; it was served on June 29.

Fiona Ong, Esq., an attorney representing the defendants, testified on deposition that she had tried on several occasions, by telephone and letter, to contact respondent to discuss the case and never received a response. On July 29 — the 30th day after service of the complaint — Ms. Ong filed a Motion to Dismiss the action and for sanctions, which, despite respondent’s assertions to the contrary, Judge Cahill found she never answered. Respondent claimed that she did speak with Ms. Ong on the telephone but that she never received any letters from her. Judge Cahill believed Ms. Ong’s testimony and found respondent’s testimony (and corroborating testimony of her mother and her flaneé) “less than persuasive on this issue.” On July 30, respondent filed a motion seeking a “default judgment” due to the defendants’ alleged failure to answer or otherwise defend the action within 30 days after service of the complaint. ⁸⁸ Apart from the fact that the defendants filed their motion to dismiss on the 30th day, and thus within the time allowed, Rule 2-613, pursuant to which the motion for default judgment was filed, does not permit a default judgment by reason of an untimely response, but only an order of default, which the defendant may move to vacate.

A judgment by default may be entered only if such a motion is not filed or, if filed, is denied, and, even then, only after proof of damages. Respondent withdrew her appearance as counsel for the Berows on September 21, 2009, and, on October 30, through new counsel, the action was dismissed. Responses to Bar Counsel’s Inquiries On October 2, 2009, following receipt of the Berow complaint, Bar Counsel requested a written response, which respondent provided. In her response, accompanied by numerous documents, respondent asserted her version of what had occurred, a version that largely was found by Judge Cahill not to be credible.

Documents that respondent claimed that she had filed Judge Cahill found had never been filed and had been manufactured. With reference to the dispute over whether respondent had ever contacted Ms. Ong regarding the Sinai action, Judge Cahill found that respondent appeared to have made a false statement to Bar Counsel and then “dug in when confronted with contrary proof.” He added that “[t]his is a pattern of behavior that Respondent repeated throughout these proceedings.” We need not address all of the inconsistencies and apparent misstatements, but only the most important of them. Respondent claimed that she had filed a response to Sinai’s motion to dismiss and, indeed, had hand-carried the response to the clerk’s office. Ms. Ong denied having received such a response and the court’s file and docket entries fail to show any such response.

After several requests, respondent, on March 2, 2010, sent Bar Counsel a copy of a document that purported to be such a response. A cursory examination revealed that the document was merely a partial reprint of the complaint filed by respondent and not what it purported to be. ⁸⁹ Judge Cahill found that respondent “fabricated” the document after Bar Counsel made inquiry into her conduct. In response to Bar Counsel’s inquiry regarding the fees respondent received, respondent claimed that she deposited into her escrow account a cash payment of $400 received from Ms. Berow on July 2, 2009, and a $1,000 cash payment received from her on July 16, 2009. When asked for documentation, she submitted “an adulterated copy of a portion of a bank statement” and “a redacted copy of a bank deposit slip,” and represented that they were associated with the deposits to her escrow account.

All references to the identity of the account were blacked out. When Bar Counsel subpoenaed the original records from the bank, it became clear that neither the $400 nor the $1,000 had been deposited in the escrow account, but rather had been deposited into her operating account and that one of the deposits was not of cash received from Ms. Berow but a check received from another client. Judge Cahill found that respondent had fabricated the documents “in an effort to persuade Bar Counsel that she had escrowed the $1,400 in cash paid by Ms. Berow.” In viewing this evidence in regard to the claimed violations of MLRPC 8.1 and 8.4, Judge Cahill concluded: “The Petitioner has established by clear and convincing evidence that the Respondent made false statements to Bar Counsel that she had deposited monies she received from the Berows and into her escrow account. Moreover, the evidence is clear and convincing that the Respondent altered bank deposit slips and submitted them to Bar Counsel, representing them to be of her escrow account to support her misrepresentations.

Her misrepresentations to Bar Counsel were willful in that she had to purposefully obscure the bank account numbers and the account titles, which were clearly those of her operating account. With respect to the Berows’ monies, the Respondent never corrected any misapprehension that Bar Counsel may have had that the redacted statements and deposit slips were those of her escrow account.” ⁹⁰ As noted, on this evidence Judge Cahill found violations of MLRPC 1.1 (competence), 1.3 (diligence), 1.4(b) (explaining a matter to allow client to make informed decision), and 1.7 (conflict of interest), 1.15 and Rule 16-607