Counsel v. Smigelski., No. 31504.

• Decision Date: 28 September 2010
• Docket Number: No. 31504.
• Citation: 4 A.3d 336,124 Conn.App. 81
• Court: Connecticut Court of Appeals
• Parties: DISCIPLINARY COUNSEL v. Jacek I. SMIGELSKI.

124 Conn.App. 81

4 A.3d 336

DISCIPLINARY COUNSEL

v.Jacek I. SMIGELSKI.

No. 31504.

Appellate Court of Connecticut.

Argued May 24, 2010.

Decided Sept. 28, 2010.

COPYRIGHT MATERIAL OMITTED.

James F. Sullivan, Hartford, with whom was Jacek I. Smigelski, pro se, for the appellant (defendant).

Suzanne B. Sutton, assistant chief disciplinary counsel, for the appellee (plaintiff).

BISHOP, HARPER and PETERS, Js.

PETERS, J.

The principal issue in this appeal from the imposition of disciplinary sanctions on an attorney is whether, having found initially that a contingent fee agreement was neither unlawful nor unethical, the trial court nonetheless properly sanctioned the attorney for having charged an unreasonable fee and for having disbursed the fee to himself in an unreasonable manner. Under the circumstances of this case, in which the attorney improperly calculated the amount that the contingency fee agreement entitled him to collect and improperly collected his fee from assets entrusted to him as a fiduciary, we affirm the judgment of the trial court imposing sanctions on the attorney.

On January 4, 2007, Kazimierz Kosiorek initiated grievance proceedings against the defendant, Jacek I. Smigelski, by filing a complaint with the statewide grievance committee that charged the defendant with having violated the Rules of Professional Conduct by withholding settlement proceeds from a sale of real property by the estate of Stanislaw Kosiorek. After a finding of probable cause by a local grievance panel, the reviewing committee of the statewide grievance committee held an evidentiary hearing and thereafter directed disciplinary counsel to file a presentment against the defendant in the Superior Court.

The presentment filed by disciplinary counsel charged the defendant with having violated rule 1.5(a) of the Rules of Professional Conduct (2006) by charging a fee that was unreasonable in light of all the relevant circumstances and with having violated rule 1.15(b) of the Rules of Professional Conduct (2006) ¹ by distributing funds to himself, as his fee, out of the proceeds of the sale of the Kosiorek home rather than seeking payment from the executor and for refusing to refund these sums upon demand from the lawful agents of the estate. Conducting a de novo review of the complaint; Statewide Grievance Committee v. Johnson, 108 Conn.App. 74, 79, 946 A.2d 1256, cert. denied, 288 Conn. 915, 954 A.2d 187 (2008); the trial court held that disciplinary counsel had proved both charges by clear and convincing evidence and imposed sanctions on the defendant. The defendant has appealed. ²

The record establishes that the defendant performed two related but separate professional services for the estate of Stanislaw Kosiorek. First, in the Superior Court, he represented the executor of the estate in clearing the estate's title to its only asset, a house at 28 Terra Road, Plainville. Second, in the Probate Court, he represented the executor in the probate administration of the estate. The dispute between the parties arises in significant part out of the defendant's improper intermingling of these two professional roles.

The trial court's undisputed findings of fact establish that, on June 15, 2006, Stanley Kosiorek, the executor of Stanislaw Kosiorek's estate, hired the defendant to represent the Kosiorek family in an action that they had brought against Bronislawa Kosiorek. After Stanislaw Kosiorek's death at the age of eighty-three, his heirs had discovered that, less than one year earlier, he had married Bronislawa Kosiorek and had transferred to her a survivorship interest in his Terra Road property. The heirs had brought a civil action to have the transfer set aside, but settlement negotiations in the Superior Court had foundered when the widow declined to accept a payment of less than $45,000 to execute a quitclaim of the property back to the estate. The heirs sought the defendant's assistance in resolving this impasse.

Paying the defendant a retainer of $5000, Stanley Kosiorek executed a written fee agreement, both in his own name and as “the Executor [of] the Estate of [Stanislaw] Kosiorek.” The agreement was a hybrid, stating that “the fee for legal services rendered by [the defendant], will be based on an hourly charge of $225.00 per hour or it will be contingent upon recovery of benefits and shall be ONE-THIRD of the gross judgment or settlement, which ever amount is greater.” ³

The court observed that, if there was a high value recovery to the estate, this fee agreement allowed the defendant to charge a fee higher than would have been earned at his normal hourly rate. Nonetheless, it held that, on its face, the agreement was not invalid. ⁴ In August, 2006, without keeping time records, the defendant negotiated a favorable settlement in the estate's litigation with Stanislaw Kosiorek's widow. In return for a payment of $35,000, instead of the $45,000 that she had earlier demanded, she executed a quitclaim deed of the property back to the estate.

Thereafter, with the approval of the Plainville Probate Court, the heirs to the Kosiorek estate agreed to sell the property to a member of the family and his wife for $212,500. They also agreed that they would contribute $42,500 from the estate to the buyers as a down payment for their mortgage.

The defendant represented the estate at the December 21, 2006 closing for the sale of the property. According to the United States Department of Housing and Urban Development Statement, Form HUD-1 (HUD-1), ⁵ the net proceeds from the sale to the estate were $155,300.82. Stanley Kosiorek signed the paperwork and authorized a check in this amount to be made out to “Jacek Smigelski, Trustee.”

On December 26, 2006, when Stanley Kosiorek came to the defendant's office to pick up the check for the funds payable to the estate as a result of the closing, the amount of the check that he received from the defendant was only $88,462.50. The defendant explained that he had paid $1004.99 to the Plainville Probate Court for miscellaneous Probate Court fees and had paid himself two checks totaling $65,833.33 as the one third contingency fee contemplated by their fee agreement. In a summary statement purporting to explain his calculation of this fee, the defendant asserted that, with certain adjustments, he was entitled to $65,833.33 as his one third contingency fee based on $257,000 as the value of the estate's property. ⁶ The defendant's explanation left Stanley Kosiorek speechless.

Initially, the defendant deposited the two checks in his personal savings account. On December 28, 2006, however, he “wired out” the amount of these checks to an unidentified account at an undisclosed location.

Upon learning of the defendant's disbursements, Kazimierz Kosiorek, Stanley Kosiorek's brother, retained counsel to initiate the present grievance proceedings against the defendant. On January 4, 2007, that counsel notified the defendant that the estate considered his fee unreasonable and demanded that the funds “be placed in escrow until this matter is finally resolved in the Plainville Probate Court.” Replying that the funds were “gone,” the defendant did not comply with this demand.

On January 23, 2007, the Plainville Probate Court conducted a hearing on the final accounting for the estate which the defendant attended. The court disapproved the defendant's claimed right to a $65,833.33 fee as unreasonable and allowed him a fee of $15,000 for preparations for the sale of the property, ⁷ plus $1000 for reimbursement of costs. Accordingly, the Probate Court ordered the defendant to return the remaining $54,833.33 of his fee to the estate. The defendant has neither complied with this order nor initiated legal proceedings to challenge its validity. See General Statutes § 52-570a.

I

VIOLATION OF RULE 1.5(a)

The defendant challenges the sufficiency of the evidence to support the court's finding that he violated rule 1.5(a) ⁸ “by charging a fee that was unreasonable in light of all the relevant circumstances....” He maintains that (1) having found that the fee agreement between the defendant and Stanley Kosiorek was “neither unlawful nor unethical,” the court had no legal basis for concluding that the fee that the defendant charged the Kosiorek estate was unreasonable, (2) the court improperly found a violation of rule 1.5 without considering the factors enumerated in the subdivisions of rule 1.5(a) and by considering evidence not specified in those subdivisions, and (3) the court's adverse findings were based solely on its disbelief of the defendant's testimony because the facts of record on which the court relied did not establish a violation of the rule by clear and convincing evidence. We are not persuaded.

A

The defendant based his claim to recover a fee of $65,833.33, in addition to his initial retainer of $5000, on the provision in his fee agreement entitling him to recover “one-third of the gross judgment or settlement” received by the estate. On appeal, he emphasizes the court's initial holding that this retainer was valid. Citing case law upholding the validity of contingency fee agreements; see, e.g., Schoonmaker v. Lawrence Brunoli, Inc., 265 Conn. 210, 270, 828 A.2d 64 (2003); the defendant, in effect, contends that this finding of initial validity ends the matter. We do not agree.

A fee agreement is not self-executing. It does not and cannot authorize an attorney to violate his fiduciary obligation to his client. See Updike, Kelly & Spellacy, P.C. v. Beckett, 269 Conn. 613, 651-52, 850 A.2d 145 (2004); Marcus v. DuPerry, 25 Conn.App. 293, 297, 593 A.2d 163 (1991), rev'd in part on other grounds, 223 Conn. 484, 611 A.2d 859 (1992). We agree with courts in other jurisdictions that have held that the fiduciary relationship between an attorney and a client requires “absolute perfect candor, openness and honesty, and the absence of any concealment or deception.” Goffney v. Rabson, 56 S.W.3d...