In re Paplauskas, 052920 RISC, 2018-161-M.P.

• Opinion Judge: PER CURIAM
• Party Name: In re William E. Paplauskas, Jr. In re Daniel S. Balkun and Balkun Title & Closing, Inc. In re SouthCoast Title and Escrow, Inc.
• Attorney: For Unauthorized Practice of Law Committee: Julie P. Hamil Deputy General Counsel For Respondents: Gregory P. Piccirilli, Esq. Robert A. D'Amico, II, Esq. Lauren E. Jones, Esq.
• Judge Panel: Present: Suttell, C.J., Flaherty, Robinson, and Indeglia, JJ. Justice Goldberg
• Case Date: May 29, 2020
• Court: Rhode Island Supreme Court

In re William E. Paplauskas, Jr.

In re Daniel S. Balkun and Balkun Title & Closing, Inc.

In re SouthCoast Title and Escrow, Inc.

Nos. 2018-161-M.P., 2018-162-M.P., 2018-163-M.P.

Supreme Court of Rhode Island

May 29, 2020

For Unauthorized Practice of Law Committee: Julie P. Hamil Deputy General Counsel

For Respondents: Gregory P. Piccirilli, Esq. Robert A. D'Amico, II, Esq. Lauren E. Jones, Esq.

Present: Suttell, C.J., Flaherty, Robinson, and Indeglia, JJ.

OPINION

PER CURIAM

We are called upon to opine as to what functions involved in a real estate closing may be performed by non-attorneys and which, if any, require the efforts of an attorney licensed to practice law in this state. We wish to emphasize at the outset our firm belief that parties to a real estate transaction are best served if they are represented by licensed attorneys. In our judgment, allowing such transactions to be conducted by non-attorneys exposes sellers, and especially buyers, to the possibility of harm that outweighs the one-time savings that a party might realize as a result of not having to pay a fee charged by an attorney. In our view, pursuing such a course of action is fraught with peril. However, that is not the question before us. What is before us is whether a non-attorney who performs one or more of the various services that are associated with a real estate transaction is thereby engaging in the unauthorized practice of law.

This Court has long held that "the practice of the law is a special field reserved to lawyers duly licensed by the [C]ourt." In re Town of Little Compton, 37 A.3d 85, 85 (R.I. 2012) (deletion omitted) (quoting Rhode Island Bar Association v. Automobile Service Association, 55 R.I. 122, 126, 179 A. 139, 140 (1935)). We have acknowledged that, at times, the practice of law can be difficult to define, especially in light of "the changing nature of the legal profession and the lightning speed with which these changes have occurred." Id. at 86 (quoting In re Law Offices of James Sokolove, LLC, 986 A.2d 997, 1005 (R.I. 2010)). However, when called upon to "feel for the contours of this elusive definition[, ]" we remain cognizant that our goal is to ensure "that the public welfare will be served and promoted." Id. at 85, 86 (second quotation quoting Rhode Island Bar Association, 55 R.I. at 131, 179 A. at 143). In pursuing that goal, our intent is to promote the proper administration of justice by preventing the "great and irreparable injury [that] can come to the people" from "the unwarranted intrusion of unauthorized and unskilled persons into the practice of law." Id. at 85 (brackets omitted) (quoting Rhode Island Bar Association, 55 R.I. at 131, 179 A. at 143). Such is the nature of the cases before us.

The Unauthorized Practice of Law Committee (the Committee) has transmitted three reports to this Court concerning three separate matters pursuant to Rule 7(c)(ii)(p) of the Committee's Rules of Procedure. In those reports, the Committee concluded that William Paplauskas, Jr., Daniel S. Balkun, Balkun Title & Closing, Inc., and SouthCoast Title and Escrow, Inc. (collectively Respondents) each had engaged in the unauthorized practice of law. The Committee found that the Respondents had engaged in several aspects of residential real estate transactions which, in the Committee's view, constitute the practice of law. The Committee recommended that this Court declare the following activities to be the practice of law: (1) conducting a residential real estate closing; (2) examining a title for marketability; (3) drafting a deed; (4) drafting a residency affidavit; and (5) drafting a durable power of attorney. After receiving the reports from the Committee, we invited the Committee, the Attorney General, the Rhode Island Bar Association, and any other interested parties to file briefs as amici curiae addressing each of these issues.¹ We held oral argument concerning these matters on December 5, 2019. Subsequent to oral argument, we have determined that these matters raise similar issues and should be consolidated.

After thoroughly reviewing the record and considering the arguments of the Committee and the amici, we have decided to decline to adopt the Committee's recommendations in part and to accept them in part. We hold that title insurance companies and their agents do not engage in the unauthorized practice of law when they: (1) conduct a residential real estate closing; (2) draft a residency affidavit; and (3) draft a limited durable power of attorney, so long as those activities are carried out in connection with the issuance of title insurance. On the other hand, we have concluded that, with respect to conducting the examination of title for marketability, a title insurance company may do so only if a licensed attorney engaged or employed by the title insurance company conducts the examination. Further, we adopt the Committee's recommendation that drafting a deed constitutes the practice of law and thus an attorney is required to either draft the deed or review it after it has been prepared.

Despite our disagreement with some of the Committee's recommendations, we take this opportunity to express our profound gratitude to the Committee for their diligent and conscientious efforts on behalf of the public.^[2]

I

Facts and Travel

The Committee issued three separate reports concerning the unauthorized practice of law as it relates to each of the Respondents. In those reports, the Committee set forth well over 200 findings of fact. We rely primarily on those findings of fact, about which there seems to be little, if any, dispute.

A

In re Paplauskas

In July 2015, Vincent and Rebecca Majewski (the buyers) purchased real property located at 528 Nanaquaket Road in Tiverton, Rhode Island, from Earl Pooler and Nina Szulewski-Pooler (the sellers). The sellers of the property were represented by Attorney John A. Pagliarini, Jr., and his then-associate, Attorney Hailey Munns.³ Prior to the closing, the buyers' lender, JPMorgan Chase Bank, N.A., engaged an entity known as ServiceLink to act as a settlement agent for the transaction; ServiceLink also issued the title insurance policy to the buyers.⁴ ServiceLink then engaged Paplauskas, a notary public, to conduct the closing. Paplauskas, who has been involved in the mortgage industry since 1969, described himself as a freelance "notary public mortgage closer" and stated that he is generally hired "by title companies and other signing agencies" to conduct real estate closings in Rhode Island. Paplauskas said that he was not an employee of ServiceLink, but rather was hired by ServiceLink as an independent contractor.

Thereafter, an employee of ServiceLink emailed Paplauskas copies of the various closing documents that ServiceLink wished to have executed at the closing. Paplauskas printed two copies of the closing documents, one for execution at the closing and one for the buyers to retain for their personal records. Paplauskas understood his role in the closing to be that of an "impartial witness * * * there to make sure that the person signs the documents, has some understanding of what he is doing, and is the person that's in front of [him]."

On July 21, 2015, the real estate closing at issue was conducted in a conference room at Attorney Pagliarini's law office in Tiverton. The only parties present during the closing were the buyers, Attorney Munns on behalf of the sellers, and Paplauskas. Attorney Pagliarini was on the premises, but he never entered the conference room. Paplauskas testified that, at the start of the closing, he presented a one-page document to the buyers entitled "Notary Held Harmless." He testified that he brought that document to the closing on his own initiative and did so because he wanted the parties to know what his role would be at the closing; he said that he wanted to inform them that he was not holding himself out as an attorney or loan officer and that, if they had any technical questions, they should contact the processor at the lending company. The buyers each signed the document.

Next, Paplauskas testified that he presented twenty closing documents to the buyers. He testified that he identified each document, presented it to the buyers, gave them a brief "overview" of each document, and asked them to review and sign each. He testified that the buyers did not ask him any specific questions and that he did not provide them with any opinion regarding any of the closing documents. He further testified that his overview consisted of his merely indicating the name and terms of each document, and that he never discussed what would happen if the buyers breached any of the agreements. Paplauskas testified that, for example, it was his custom to "tell them it's a [promissory] note, [he] would tell them the loan amount, the interest rate, when the first payment [was] due, [when the] last payment [was] due, what the principal interest payment [was], and if there's a prepayment penalty." He further testified that "[t]hat's all on the first page of the note."

Similarly, Mr. Majewski testified that Paplauskas informed him and his wife what each document was and why they were required to sign it, but he stated that he could not recall any details relative to the explanation that Paplauskas had provided to them. Mrs. Majewski testified that she could not recall whether or not Paplauskas provided her and her husband with an explanation of each document.

Paplauskas testified that it was his recollection that Attorney Munns remained in the conference room for the entire closing process. Conversely, Attorneys Pagliarini and Munns testified that, at one point, Attorney Munns left the conference room to inform Attorney Pagliarini that...