Committee on Legal Ethics of West Virginia State Bar v. Tatterson

• Decision Date: 12 July 1984
• Docket Number: No. 16238,16238
• Parties: The COMMITTEE ON LEGAL ETHICS OF the WEST VIRGINIA STATE BAR v. Ray Michael TATTERSON, a member of the West Virginia State Bar.
• Court: West Virginia Supreme Court

Page 381

319 S.E.2d 381

173 W.Va. 613

The COMMITTEE ON LEGAL ETHICS OF the WEST VIRGINIA STATE BAR v. Ray Michael TATTERSON, a member of the West Virginia State Bar.

No. 16238.

Supreme Court of Appeals of West Virginia.

July 12, 1984.

Syllabus by the Court

1. "In a court proceeding initiated by the Committee on Legal Ethics of the West Virginia State Bar to annul [or suspend] the license of an attorney to practice law, the burden is on the Committee to prove, by full, preponderating and clear evidence, the charges contained in the Committee's complaint." Syllabus Point 1, Committee on Legal Ethics v. Pence, W.Va., 216 S.E.2d 236 (1975).

2. The general rule places the burden on an attorney to establish his fee agreement where there is a dispute as to the fee.

3. The Disciplinary Rules of the Code of Professional Responsibility state the minimum level of conduct below which no lawyer can fall without being subject to disciplinary action.

4. Disciplinary Rules 9-102(B)(3) and 9-102(B)(4) require that a lawyer maintain records on his clients' funds and properly account for and pay over to his clients those funds.

5. Disciplinary Rule 1-102(A)(4) provides that a lawyer shall not "[e]ngage in conduct involving dishonesty, fraud, deceit, or misrepresentation."

Robert H. Davis, Jr., W.Va. State Bar, Charleston, for appellant.

Ross Maruka, Fairmont, for appellee.

MILLER, Justice:

This is a disciplinary proceeding instituted by the Committee on Legal Ethics of the West Virginia State Bar against Ray Michael Tatterson, a member of the Bar. The Committee has concluded that Mr. Tatterson commingled client funds, that he failed to deliver to his clients their proper share of settlement proceeds, that he failed to account properly for the proceeds, that he misrepresented facts to his clients, and that he converted his clients' funds to his own use. It has recommended that Mr. Tatterson's license to practice law be suspended for two years. We conclude that the Committee's charges, while containing some redundacy, are supported by the record and that the Committee has met the standard of proof contained in Syllabus Point 1 of Committee on Legal Ethics v. Pence, W.Va., 216 S.E.2d 236 (1975):

"In a court proceeding initiated by the Committee on Legal Ethics of the West Virginia State Bar to annul [or suspend] the license of an attorney to practice law, the burden is on the Committee to prove, by full, preponderating and clear evidence, the charges contained in the Committee's complaint."

See also Committee on Legal Ethics v. Daniel, 160 W.Va. 388, 235 S.E.2d 369 (1977); Committee on Legal Ethics v. Pietranton, 143 W.Va. 11, 99 S.E.2d 15 (1957).

In November 1980, Mr. and Mrs. Wickham retained Mr. Tatterson to represent them on an insurance claim against State Farm Fire and Casualty Company. The claim grew out of a fire which had destroyed their mobile home and personal property.

Mr. Tatterson entered into negotiations with James R. Watson, attorney for State Farm, and Mr. Watson, on behalf of State Farm, eventually offered to pay approximately $28,000 for the loss. Of this sum, approximately $10,500 was to be used to release a deed of trust against the premises owned by the Wickhams. The deed of trust had been executed by the Wickhams to secure the payment of a loan from the Blueville Bank. The Bank had been named a co-insured on the State Farm policy, and State Farm had, prior to the conclusion of the negotiations with Mr. Tatterson, paid the Bank. In return, the Bank had assigned the note and deed of trust to State Farm. The remaining $17,500 provided for in the settlement proposal was to be paid to the Wickhams. This settlement proposal was outlined in a letter dated February 26, 1981, from Mr. Watson to Mr. Tatterson. Mr. Tatterson accepted this proposal on behalf of the Wickhams in a letter to Mr. Watson dated March 9, 1981.

Pursuant to the agreement, Mr. Watson sent Mr. Tatterson a check for $17,500 made payable to "Grant D. Wickham, Mary Jane Wickham and R. Michael Tatterson, their attorney." The check was accompanied by a letter dated March 16, 1981. The letter made it clear that the bank had been paid for the debt secured by the deed of trust. The original deed of trust together with the Wickhams' note was enclosed. Also enclosed was the original of the bank's assignment of its deed of trust to State Farm. Mr. Watson explained in his letter that this assignment should be recorded along with the release of the assigned deed of trust which he was procuring from State Farm, and which he would forward to Mr. Tatterson as soon as it was received.

Mr. Tatterson received Mr. Watson's letter and check on March 17, 1981, and he contacted the Wickhams immediately. Later the same day, the Wickhams appeared in Mr. Tatterson's office, and endorsed the State Farm check. Mr. Tatterson then proceeded to give them a check for $8,076.50, which, he informed them, was their share of the proceeds. On the following morning, he deposited the $17,500 State Farm check in his office account, rather than in his clients' trust account.

According to the Wickhams, they were unhappy with the amount they had received. It was the Wickhams' position that despite repeated attempts to have Mr. Tatterson state his fee, he put them off by statements that he would be fair. Mrs. Wickham testified that she questioned Mr. Tatterson at the closing on March 17 as to the amount he was retaining. She said that he explained that the retention was necessary in order to reimburse State Farm for the amount it had paid the Blueville Bank for the release of the deed of trust. She testified that she called Mr. Tatterson later that evening to complain about the amount he had retained.

Some two weeks later she contacted the local agent of State Farm to see if reimbursement of its payment to the Blueville Bank had to be made from the settlement check. She was informed that reimbursement was not required and was advised to call Mr. Watson, who also confirmed this fact. On April 2, 1981, Mrs. Wickham called Mr. Tatterson about the information obtained from State Farm. On April 3, 1981, Mr. Watson wrote to Mr. Tatterson stating that reimbursement was not required and referred to his February 26, 1981 letter outlining the settlement proposal.

Mr. Tatterson's testimony relative to the fee arrangement was that after he initially reviewed the matter he informed the Wickhams that his fee would be one-third. He acknowledged that no written fee arrangement was made. He stated that at the time the disbursement was made to the Wickhams on March 17, there was no specific discussion of the fee. He did not recall that the Wickhams were upset at the amount they received at the time, but he did recall the phone call later in the evening from Mrs. Wickham. His recollection was that she only complained about his incompetency in failing to secure the release of the deed of trust. He also remembered her call around April 2, 1981, regarding the State Farm deed of trust payment. His version of the conversation was that she told him that he had not paid State Farm and accused him of being incompetent. At this point, Mr. Tatterson stated that "he hit the panic button" and thought it was his duty to pay State Farm for the release of the deed of trust.

He then sent a letter to Mr. Watson dated April 3, 1981, enclosing his check for $9,424, the amount remaining from the $17,500 settlement. In the letter, he stated that the check was to pay off the deed of trust indebtedness held by State Farm. On the same day, he wrote the Wickhams stating that he had paid State Farm for the deed of trust. The check was later returned to Mr. Tatterson by Mr. Watson.

After receipt of Mr. Watson's letter of April 3, 1981, which referred to Watson's earlier letters stating that reimbursement was not required, Mr. Tatterson on April 6, 1981, wrote the Wickhams. In this letter he stated: "I feel now that charity is no longer in order and I have computed a fee upon a 25% settlement basis (33 1/3 if we had gone to trial)." He then gave an explanation as to how he calculated his fee. ¹ He enclosed a check for $2,549 to reduce his fee to 25 percent.

Mr. Tatterson stated that he had two or three subsequent telephone conversations with Mrs. Wickham about further fee reduction. Later he found a telephone message on his desk that Mrs. Wickham was going to the State Bar unless he gave her $5,000. On May 5, 1981, he wrote the Wickhams advising them that he believed the 25 percent fee was reasonable and that he considered the matter closed.

Subsequently, on or around June 4, 1981, Mrs. Wickham contacted the State Bar, which, in turn, contacted Mr. Tatterson. In an effort to resolve the matter, Mr. Tatterson then had a lengthy discussion at Mrs. Wickham's mother's house with the Wickhams and agreed to reduce his fee to $5,000. The Wickhams agreed that the reduction would be acceptable to them. He subsequently gave the Wickhams $1,875, which reduced his fee to $5,000.

We believe the Committee's finding that no fee arrangement was ever established is correct. Admittedly, there was a dispute in the testimony, but the documentary evidence clearly points to this conclusion. Mr. Tatterson's letter of April 6, 1981, see note 1, supra, clearly suggests no prior contingent fee arrangement with the phrase "charity is no longer in order." This, coupled with the fact that the letter asserts a 25 percent contingent fee, refutes his testimony that the fee was originally 33 1/3 percent.

While the Code of Professional Responsibility does not require that attorney-fee contracts be in writing, it does point out that a "clear agreement" should be reached as to the basis of the fee. Furthermore, it indicates that written contracts are desirable, particularly in the contingent-fee context:

"As soon as feasible after a lawyer has been employed, it is desirable that he reach a clear agreement with his client as to the...