Attorney Grievance v. Sheridan

• Decision Date: 10 December 1999
• Docket Number: Misc. Docket Subtitle AG No. 16
• Court: Maryland Court of Appeals
• Parties: ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Robert J. SHERIDAN.

741 A.2d 1143

357 Md. 1

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Robert J. SHERIDAN.

Misc. Docket (Subtitle AG) No. 16, Sept. Term, 1998.

Court of Appeals of Maryland.

December 10, 1999.

Melvin Hirshman, Bar Counsel and John C. Broderick, Asst. Bar Counsel, for the Atty. Grievance Com'n of Maryland, Petitioner.

Robert J. Sheridan, College Park, for Respondent.

Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, RAKER, WILNER, CATHELL and HARRELL, JJ. HARRELL, Judge.

Pursuant to Maryland Rule 16-709(a),¹ Bar Counsel, on behalf of the Attorney Grievance Commission (AGC), Petitioner, and at the direction of the Review Board, filed a petition with this Court for disciplinary action against Robert J. Sheridan, Esquire, Respondent. In the petition, Bar Counsel alleged violations of Rules 1.15(a), (b), and (c), and Rule 8.4(c) of the Rules of Professional Conduct (RPC) and Maryland Code (1992, 1998 Rep. Vol.), Business Occupations and Professions Article (BOP) § 10-306 This Court referred the matter to Judge Theresa A. Nolan of the Circuit Court for Prince George's County to conduct an evidentiary hearing and make findings of fact and conclusions of law in accordance with Maryland Rules 16-709(b) and 16-711(a).² After an evidentiary hearing, Judge Nolan found by clear and convincing evidence that Respondent violated RPC Rules 1.15(a), (b), and (c), RPC Rule 8.4(c) and BOP § 10-306. Respondent filed with us extensive exceptions to the findings of fact and conclusions of law made by Judge Nolan.

From the evidentiary record made below, Judge Nolan made the following findings of fact:

1. Robert J. Sheridan, (hereinafter "Respondent") was admitted to practice law in the State of Maryland on November 16, 1978.

2. In January 1991, Respondent entered into negotiations with I.H. Hershner Company, Inc. (hereinafter "Hershner") a Pennsylvania corporation. Respondent was employed by Hershner to collect upon debts owed to Hershner. Hershner assigned Respondent six debts, one of which was a debt owed to Hershner by RDP Enterprises (hereinafter "Perry"), a business whose offices were located in Maryland.

3. There is some disagreement between the Attorney Grievance Commission (hereinafter "Petitioner") and Respondent over the fee arrangement between Hershner and Respondent. Respondent claims that there was a retainer agreement which set out the fee arrangement. Such agreement provided that Respondent would be paid $150 an hour or on a percentage basis. The Court studied this agreement and noted that although it bore the signature of Barry V. Bishop, the president of Hershner, Respondent's signature did not appear on the agreement. Further, there was no date on the contract and numerous provisions were crossed out by Mr. Bishop. Mr. Bishop has also initialed all of these provisions.

4. The Court also noted that the provisions were initialed by Respondent. However, his handwritten notes appeared next to the provisions. This suggests to the Court that Respondent did not agree to Mr. Bishop's alterations to the provisions.

5. On March 19, 1991, Hershner filed for bankruptcy under Chapter 11 in the United States Bankruptcy Court for the Middle District of Pennsylvania. Despite this proceeding, Respondent continued to collect on Hershner's accounts.

6. On June 12, 1991, Markian Slobodian, Hershner's counsel for the bankruptcy proceeding, sent a letter to Respondent informing him of Hershner's bankruptcy. Mr. Slobodian advised Respondent that he could become Special Counsel to Hershner in the bankruptcy proceeding if Respondent filled out the accompanying application. Respondent failed to do so.

7. On January 31, 1992, an Order of Settlement was entered in Fairfax County, Virginia on behalf of the Hershner and Perry account. As part of the settlement, Hershner received $9,161.40, interest in the amount of $1,035.58, and attorney fees in the amount of $1,832.28. Perry was ordered to pay these amounts in twenty one installments of $450.00 each. The checks were to be payable to "Robert J. Sheridan, Attorney for I.H. Hershner Co."

8. Pursuant to the settlement and prior negotiations, Respondent received two checks for $450.00 and deposited them into his escrow account. He did not notify Hershner regarding the settlement or the receipt of the funds. It was disclosed that these funds were withdrawn from the escrow account on a later date and used for professional and personal services.

9. Following the Perry settlement, Mr. Slobodian sent Respondent another letter concerning Hershner's bankruptcy status. This letter informed Respondent that because he did not sign the application to be appointed as Special Counsel for Hershner, Respondent was no longer authorized to represent Hershner. Hershner then requested the return of all files and ordered Respondent to cease any further legal action on behalf of Hershner. Instead, Hershner would seek to retain alternate counsel to proceed with any pending litigation. At this time, Hershner was unaware that a settlement had been reached in the Perry case.

10. Despite this letter dated May 13, 1992, Respondent received another letter on June 10, 1992 advising Respondent that he could sign a stipulation of dismissal on behalf of Hershner in the case of Hershner v. Vitellaro, Case No. 91-CG-1779 937208. This letter however, did not advise Respondent to act on any of the other accounts for Hershner.

11. Some time later, Hershner learned about the Settlement Order in Fairfax County between Hershner and Perry. Rodger Troupe, the administrative manager for Hershner, sent Respondent a letter confirming Hershner's knowledge about the existence of a Settlement Order. Mr. Troupe informed Respondent that he also had knowledge Respondent had received money from Perry. Mr. Troupe requested this money to be forwarded to him at Hershner. Despite this request, Respondent failed to forward the funds.

12. At the Court proceeding, Respondent testified that Mr. Troupe had not requested the funds. Instead, he asserted that Mr. Troupe instructed him to retain the money because Hershner owed Respondent outstanding legal fees. Following this correspondence, there was no action taken by either party.

13. Approximately two years later, on March 2, 1994, Allied Products, Inc. (hereinafter "Allied") and Hershner entered into an Asset Purchase Agreement. As part of the Agreement, Allied would buy substantially all of Hershner's assets including any receivables that were written off and had no value. There was no mention of any security interest held by Respondent. This agreement was approved by the Bankruptcy Court on March 14,1994.

14. On March 7, 1995, Respondent sent a letter to Perry inquiring about the payments still owed to Hershner as part of the January 1992 Order of Settlement. Respondent ordered Perry to pay him $450.00 a month. Respondent further explained that he had put the Hershner file on hold when Hershner had filed for bankruptcy. Because the bankruptcy case was dismissed on November 4, 1994, he felt he was free to pursue the case. Respondent then threatened to file a Request for Foreign Judgment in Charles County, Maryland if Perry did not comply with his demands.

15. Following the March 7, 1995 letter, Perry received a subsequent letter from Respondent. This letter stated that Respondent wanted "in his hands" no later than October 25, 1995, $16,733.74 due to Hershner. Respondent ordered that this check be payable to "Robert J. Sheridan, Attorney for I.H. Hershner Co." Checks were then issued to Respondent. A check was dated for March 20, 1995, May 11, 1995, and July 6, 1995; all in the amount of $450.00. A subsequent check in the amount of $900 was received on August 9, 1995. None of these checks were put in an escrow account for Hershner or a separate account for clients' funds. Moreover, Respondent admitted that the funds were used on professional and personal expenditures.

16. Hershner or Allied was [sic] not notified about the funds. Respondent testified that he did not inform Hershner because he was unaware of Hershner's existence and as a result, believed that there was no client to inform him [sic].

17. On October 27, 1995, Perry faxed a copy of Respondent's letter and attachments to Allied in order to inform Allied of Respondent's conduct. Perry had become concerned that Allied was not receiving the funds. True to Perry's belief, Allied had been unaware of any receipt of funds for the Perry receivable.

18. Respondent's conduct then intensified. On October 29, 1995, Respondent sent a final letter to Perry suggesting a modification of the original financial arrangement. Specifically, Respondent stated that Hershner and he would be willing to accept $12,000 payable in three equal installments "in [Respondent's] hands."

19. Interaction between Allied and Respondent occurred early November 1995, when Respondent sent a letter to Allied informing the company of how he felt he was treated unfairly by Hershner. Respondent justified his retainer of the funds on the grounds that Hershner had abandoned all legal claims to the money. Because Hershner owed Respondent attorney's fees and because Respondent had been awarded attorneys' fees, Respondent had a lien on the proceeds. He did not inform Hershner of the money because he was unaware of their existence and because he felt that no [sic] money was owed to him. Moreover, he argued that the retainer agreement clarified his ownership interest in the money.

20. Allied responded to Respondent's letter and explained that Allied had purchased Hershner's assets free and clear of all liens. As a result, the collections received by Respondent were Allied's property. Respondent was ordered to give a full accounting of the collectibles since March 1994 and to cease making any further collections. Respondent failed to deliver a full accounting or return any of the collectibles.

21. In response to Respondent's lien theory, Allied attacked Responde...