In re Silverton

Citation36 Cal.4th 81,29 Cal.Rptr.3d 766,113 P.3d 556
Decision Date23 June 2005
Docket NumberNo. S123042.,S123042.
CourtUnited States State Supreme Court (California)
PartiesIn re Ronald Robert SILVERTON on Discipline.

David A. Claire, for Petitioner Ronald Robert Silverton.

Marie M. Moffat, Richard J. Zanassi, San Francisco, and Jay M. Goldman, for Respondent State Bar of California.

BAXTER, J.

In 1975, this court ordered petitioner Ronald Robert Silverton disbarred based on his felony convictions for conspiracy to obtain money by false pretenses and to present a fraudulent insurance claim as well as for soliciting another to commit or join in the commission of grand theft. (In re Silverton (1975) 14 Cal.3d 517, 519, 121 Cal.Rptr. 596, 535 P.2d 724.) After three unsuccessful applications, petitioner was reinstated as a member of the State Bar on October 6, 1992. Less than two years later, he began a series of client transactions that became the subject of another disciplinary proceeding charging violations of rules 3-300 and 4-200 of the Rules of Professional Conduct.1 The Review Department of the State Bar Court (Review Department) ultimately concluded that petitioner violated rule 4-200 with respect to three matters and violated rule 3-300 with respect to one other matter and recommended that petitioner be placed on two years' stayed suspension and three years' probation with various conditions, including a 60-day period of actual suspension.

In determining the appropriate level of discipline to recommend to this court, the Review Department considered the Rules of Procedure of the State Bar, title IV, Standards for Attorney Sanctions for Professional Misconduct (Standards), including standard 1.7(a) (Effect of Prior Discipline) (standard 1.7(a)). Standard 1.7(a) directs that the degree of discipline imposed on a member with a prior record of discipline "shall be greater than that imposed in the prior proceeding unless the prior discipline imposed was so remote in time to the current proceeding and the offense for which it was imposed was so minimal in severity that imposing greater discipline in the current proceeding would be manifestly unjust." (Italics added.) However, the Review Department declined to apply standard 1.7(a), which would have resulted in disbarment, based solely on its belief that "doing so would, in our view, be manifestly unjust, particularly in light of the fact that [petitioner]'s prior record is very remote in time."

Silverton petitioned for our review. (Cal. Rules of Court, rule 952(a).) We denied the petition but granted review on our own motion to settle important questions of law concerning the discipline of attorneys who had previously been disbarred and to consider whether the discipline recommended here was appropriate in light of the record as a whole. (Cal. Rules of Court, rule 954(a)(1), (5).) As explained below, we reject the Review Department's recommendation and conclude instead that Silverton should be disbarred for a second time.

I

The procedural history of this disciplinary proceeding is lengthy but largely irrelevant to the issue presented here. We therefore need discuss only the misconduct found by the Review Department and the recommended discipline.

The Hou Matter (Case No. 95-O-10829 — Count 1)

On June 25, 1992, Janette Hou was injured in a traffic accident with a truck operated by Durham Transportation, Inc. (Durham). Janette retained Attorney David L. Watson to represent her and her children, Raymond and Philip, in their claims against Durham. Janette's mother-in-law, Fan Hou, also retained Watson. Under the retainer agreements, Watson was to receive a contingent fee of one-third of the gross recovery if the claims were settled before filing suit or demand for arbitration and 40 percent thereafter. The agreements also entitled Watson to one-third of any "excess medical pay" he was able to recover on their behalf.

Watson eventually filed a lawsuit against Durham and, on June 1, 1994, associated Silverton to assist in the Hou matter. Watson informed the Hous of this arrangement and assured them it would not result in an increase in fees. Later that month, Silverton arranged to settle the Hous' lawsuit against Durham for $16,500, of which $9,500 was allocated to Janette and her sons and $7,000 was allocated to Fan. After deducting attorney fees and costs, Janette's recovery was to be $5,500 and Fan's recovery was to be $4,000. Janette and her sons, however, had medical bills of $4,311; Fan had medical bills of $3,680.

Watson, in the meantime, had received $7,391 in medical payment coverage from the Hous' automobile insurer, 20th Century Insurance. From this sum, Watson deducted $2,470.32 as fees2 and placed the remaining $4,910.68 in his trust account.3 Of this latter amount, Janette and her son were allocated approximately $2,557, and Fan was allocated approximately $2,353. Thus, after taking into account medical bills and the medical payments from 20th Century Insurance, Janette's net recovery was $3,746 ($5,500 minus $4,311 plus $2,557), and Fan's net recovery was $2,673 ($4,000 minus $3,680 plus $2,353).

At that point, Silverton proposed, and Janette and Fan signed, an "AUTHORIZATION TO COMPROMISE DOCTOR'S BILL," which gave the Silverton Law Offices the right to compromise their medical bills "and keep the amount saved by said compromise as an addition to its fees and costs for handling said accident case." In return, Silverton offered Janette an additional $254, increasing her recovery from $3,746 to $4,000, and offered Fan an additional $327, increasing her recovery from $2,673 to $3,000. The authorization recited that it was "given in consideration for the fact that the Silverton Law Offices has reduced the medical bills in considering the disbursement to me and has accepted as its risk the possibility that the doctor may not compromise to the extend [sic] I have been benefitted [sic] by the consideration of said compromise on the Disbursement Sheet." Silverton distributed the settlement proceeds to Janette and Fan in checks dated August 30, 1994. The settlement drafts, however, were not actually issued by Durham until September 8, 1994.

Silverton eventually compromised all of the medical charges, which were originally $7,991, for $5,500. As a result, Silverton retained, in addition to the sums provided in the original contingent fee agreement, a total of $1,910, which represented the reduction in the medical bills ($2,491) less the amount advanced to the Hous ($581). In other words, Silverton retained over three-quarters of the reduction in the medical bills.

The Review Department determined that the arrangement involving a compromise of the medical bills was a business transaction, in that "the authorization to compromise constituted an immediate transfer from the Hous of both the ownership and possessory interest in all funds remaining after payment to the Hous of their distributive share of the settlement proceeds and the payment of attorney's fees as called for in the original retainer agreement" in exchange for an upfront payment by the attorney. The transaction was therefore barred unless Silverton could show that "(A) The transaction or acquisition and its terms are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client; and [¶] (B) The client is advised in writing that the client may seek the advice of an independent lawyer of the client's choice and is given a reasonable opportunity to seek that advice; and [¶] (C) The client thereafter consents in writing to the terms of the transaction or the terms of the acquisition." (Rule 3-300; see generally Fletcher v. Davis (2004) 33 Cal.4th 61, 69-70, 14 Cal.Rptr.3d 58, 90 P.3d 1216.) The Review Department determined that Silverton (1) failed to disclose to the Hous information necessary for a reasonable understanding of the transaction, (2) failed to provide the Hous with written notice of their right to seek independent legal counsel, and (3) failed to discharge his burden to show the transaction was fair and reasonable to the Hous. In particular, Silverton failed to share with his clients, as he had with cocounsel Watson, his confidence that the medical bills could be compromised at a lower amount. (See Mayhew v. Benninghoff (1997) 53 Cal.App.4th 1365, 1369, 62 Cal.Rptr.2d 27.) In addition, the Review Department found that Silverton committed uncharged violations of rule 4-100 by giving the Hous their settlement checks, which were drawn on Silverton's client trust account, more than a week before Durham actually paid the settlement.

The Kelly and de Jonge Matters (Case No. 95-O-10829 — Count 5)

On November 6, 1995, Wilma Kelly (Kelly) and Verna de Jonge (de Jonge) each retained Silverton to represent them and their respective children, who had suffered injuries in an automobile accident the previous day. Each agreement provided that Silverton was to represent these parties "as their attorney at law in a cause of action against all responsible parties and/or whosoever may be liable, arising out of an auto accident that occurred on 11/5/95"; granted him "a special power of attorney to settle or compromise any claim on Client's behalf which, in Attorney's sole judgement [sic] is fair and reasonable"; and entitled him, as his attorney's fees for the services described, one-third of any amounts recovered by way of settlement or otherwise, if the matter was settled before suit or request for arbitration is filed, and 40 percent of any amounts recovered thereafter. Each agreement also provided that Silverton "may, at his sole discretion, compromise any medical bill, and said Attorney may retain as an additional fee the difference between the compromised amount and the bill for medical services, if anything."

Silverton settled the Kelly claims for $12,000. After deducting $4,000 in attorney's fees and $120 in costs, the Kelly recovery was...

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4 cases
  • People v. Clites, A115826 (Cal. App. 1/29/2009)
    • United States
    • California Court of Appeals Court of Appeals
    • January 29, 2009
    ...the holder of a power of attorney can be guilty of theft by false pretenses. Precedents to this effect are numerous. (E.g., In re Silverton (2005) 36 Cal.4th 81 [attorney used clients' power of attorney to settle lawsuit to convert funds]; People v. Caruso (1959) 176 Cal.App.2d 272 [defenda......
  • Cotchett, Pitre & Mccarthy v. Universal Paragon Corp.
    • United States
    • California Court of Appeals Court of Appeals
    • November 17, 2010
    ...fee as part of a strategy for acquiring property for a real estate development project. (Contrast also In re Silverton (2005) 36 Cal.4th 81, 92-93, 29 Cal.Rptr.3d 766, 113 P.3d 556 [fee arrangement allowing the attorney in a personal injury case to keep 100 percent of any reductions in medi......
  • Cotchett v. Universal Paragon Corp.
    • United States
    • California Court of Appeals Court of Appeals
    • August 31, 2010
    ...to be a large legal fee as part of a strategy for acquiring property for a real estate development project. (Contrast also In re Silverton (2004) 36 Cal.4th 81, 92-93 [fee arrangement allowing the attorney in a personal injury case to keep 100 percent of any reductions in medical fees negot......
  • Lopez v. Cate, Case No. 1:10-cv-01773-AWI-SKO (PC)
    • United States
    • U.S. District Court — Eastern District of California
    • July 21, 2014
    ...motion is frivolous. As an initial matter, the federal court has no jurisdiction to disbar counsel. See In re Silverton, 36 Cal.4th 81, 89-90, 113 P.3d 556, 561 (Cal. 2005) (attorney discipline matters rest with state supreme court). With respect to other sanctions, Plaintiff identifies no ......
2 books & journal articles
  • Settlement Negotiation Ethics Under California's New Rules of Professional Conduct: Part One
    • United States
    • California Lawyers Association Business Law News (CLA) No. 2018-4, 2018
    • Invalid date
    ...Procedure and Rules of Practice of the State Bar Court. See State Bar Sanctions Standards, supra note 20, at 146-157.51. In re Silverton, 36 Cal. 4th 81, 91 (2005). See also In re Lamb, 49 Cal. 3d 239, 245 (1989).52. State Bar Sanctions Standards, supra note 20, at 155.53. State Bar Sanctio......
  • Ethics Byte-focus Returns to Tighter Discipline With Supreme Court's Return of 24 Cases
    • United States
    • State Bar of California California Bar Journal No. 07-2012, July 2012
    • Invalid date
    ..."further consideration of the recommended discipline in light of the applicable attorney discipline standards. See In Re Silverton (2005) 36 Cal. 4th 81, 89'94; and In Re Brown (1995) 12 Cal. 4th 205, 220.)" Both of those cases were returned for imposition of greater discipline. Silverton i......

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