In re Ruffin, 25956.
| Decision Date | 21 March 2005 |
| Docket Number | No. 25956.,25956. |
| Parties | In the Matter of Thomas E. RUFFIN, Jr., Respondent. |
| Court | South Carolina Supreme Court |
Attorney General Henry Dargan McMaster and Senior Assistant Attorney General James G. Bogle, Jr., both of Columbia, for Office of Disciplinary Counsel.
Desa A. Ballard, of West Columbia, for respondent.
In this attorney disciplinary matter, the Commission on Lawyer Conduct filed formal charges against respondent, Thomas E. Ruffin, Jr. After a hearing, the Panel recommended an indefinite suspension.
The charges against respondent stem from his involvement in a real estate deal with two doctors. The Doctors and respondent formed a limited liability company (LLC) for the purpose of purchasing a lot and constructing a building in which respondent could rent law office space. The agreement was for the Doctors to provide the purchase money and then become "silent partners" with respondent. Respondent's duties, as the Doctors understood them, were to: (1) handle all architectural fees at no cost to the Doctors; (2) perform all of the legal work involved at no cost;1 (3) use his contacts in the area with a contractor to construct the building and supervise all construction; and (4) lease the building from the LLC at a fair market value, with plans for the Doctors to get their initial investment back in seven years, and thereafter the LLC would turn a profit for all members.
An attorney, other than respondent, closed a $300,000 construction loan from Anchor Bank on March 24, 1998. Subsequently, respondent opened the LLC account with Anchor Bank. On the day the LLC account was opened, respondent wrote a check, payable to himself, labeled "costs/expenses" in the amount of $15,000, and then deposited the check into his personal bank account. This check was the beginning of many LLC checks that respondent would write to himself or his law firm. Respondent did not inform the Doctors he was going to write checks from the LLC account to himself and his firm, nor that he would do so in order to pay vendors out of his personal or law firm accounts.
The allegations of misconduct against respondent in the Formal Charges cover four areas: (1) that respondent engaged in a scheme to misappropriate funds from the LLC; (2) that respondent drafted or participated in the last-minute submission of a settlement agreement, between he and the Doctors, that contained elements inconsistent with settlement agreements he had already signed or put on the record before the circuit court; (3) that respondent participated in or authorized frivolous litigation; and (4) that respondent failed to cooperate with the disciplinary investigation. We separate the allegations into these four categories: The LLC, Misappropriation of Funds, The Litigation, and Failure to Cooperate.
A few months after the LLC closed on the construction loan at Anchor Bank, respondent convinced the Doctors to refinance the loan for $360,000 at another bank. Respondent assured the Doctors the extra $60,000 would never actually be needed and that he would pay the entire amount back. An attorney, other than the previous closing attorney and respondent, conducted the closing for the refinancing.
Subsequently, respondent met with the Doctors and informed them that, although he had paid the contractor for the building being constructed, the contractor had not paid two vendors who then filed mechanic's liens as a result. One of the Doctors testified respondent stated the Doctors needed to place more money in the LLC account to pay the liens in order to avoid a bad credit rating. Respondent explained that the vendors who filed the liens had a legal right to do so; however, the Doctors believed this advice was incorrect. The Panel found respondent had given false legal advice to his clients.
In September 1998, the Doctors requested the LLC records from respondent so that they could examine them. After repeated delays by respondent, the Doctors contacted respondent who stated he had taken all the records to Greg Lipe, an accountant. Respondent had not in fact taken any records to Lipe at this time. The Doctors' accountant, Lawrence D. Guerry, finally retrieved the records directly from the bank.
When the Doctors examined the bank records, they were disturbed because respondent had written LLC checks to himself, his law firm, to his wife in one incident, and because the account had been subject to several insufficient funds fees and other bank fees indicating a mismanagement of the account by respondent. The Doctors also discovered that at least three LLC checks and possibly more, totaling over $13,800, had been written to the respondent's law firm for legal fees. The Doctors never received a bill or an accounting from respondent has to how he had earned the alleged legal fees.
When a settlement could not be reached between the Doctors and respondent with the assistance of their respective attorneys, the Doctors filed a suit against respondent and his firm in July 1999. At the end of July, the attorneys placed a settlement agreement on the record in front of a circuit court judge that provided respondent would purchase the Doctors' interest in the LLC for $148,000. The closing did not occur as planned and respondent requested an extension of time.
A closing was eventually set for October 6, 1999. However it did not occur because, on the morning of the closing date, respondent's attorney, Craig Young, faxed a Severance Agreement to the Doctors' attorney, Jerome Askins. This agreement contained items that were not agreed upon. The details of this incident are discussed below under the heading, "The Litigation."
After a motion to compel settlement and other negotiations, the litigation was eventually settled and the building was sold. As part of the settlement, respondent paid the Doctors the amount of their net loss from the venture. Therefore, the Doctors recovered the money they had lost.
The Panel found that, while respondent contended he was simply a business partner with the Doctors in this venture and did not perform legal services on their behalf, the facts showed otherwise given that respondent acted as an attorney for the LLC regarding the mechanic's liens and given that he had written LLC checks, with the label "legal" or "legal fees" to his law firm.
Respondent admits he did not maintain detailed records of the transactions involving the LLC account and that he is unable to provide an accounting of the funds that were deposited into the LLC account or to trace the funds into and out of the account. The Panel found it was clear respondent was writing checks back and forth from his two law firm accounts (one at Anchor Bank and one at Carolina First Bank), his personal account, and the LLC account. The Panel stated respondent was expending sums from all of these accounts for items totally unrelated to the building being constructed by the LLC. The Panel found respondent often had negative balances in his personal and law firm accounts.
Although there were numerous instances of check writing misconduct, for brevity we cite only two examples:
Respondent's accountant, after analyzing the cost of the construction project and respondent's transfer of funds from the LLC account to respondent's law firm accounts or personal account, determined that the total amount due appeared to be $30,390.70. The Attorney to Assist (ATA), who was appointed to investigate this matter, concluded there was a total shortage of $30,023.45.2 The Doctors' accountant, Lawrence D. Guerry, testified it was disturbing that respondent's LLC checks were almost always in round figures, which, he testified, is atypical of checks written to vendors in a construction project.
The Doctors' attorney, Jerome Askins, III, (Askins) testified that, in the beginning of his representation of the Doctors, he made several unsuccessful attempts to meet with respondent to discuss the LLC bank records. Once a meeting was held, it became apparent respondent had engaged in financial misconduct in relation to the LLC account. Askins filed suit on behalf of the Doctors when negotiations with respondent to buy the building were unsuccessful. The matter was finally scheduled for a settlement and closing on October 6, 1999. On that date, Askins received a fax, which changed the previous agreement. He testified this new agreement, known as the Severance Agreement, was not a part of the settlement that had previously been placed on the record.
Paragraph 5 of the agreement stated that respondent had never served as an attorney for the Doctors or the LLC; however, respondent had in fact represented the LLC in mechanic's lien actions.
Paragraph 6 of the agreement faxed by respondent's attorney, Young, was a confidentiality clause and a statement of the penalty upon the...
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In re Ruffin
...339, 600 S.E.2d 909 (2004). Subsequently, in an unrelated matter, this Court indefinitely suspended Ruffin. In the Matter of Ruffin, 363 S.C. 347, 359-60, 610 S.E.2d 803, 809 (2005). In the case at hand, the Commission on Lawyer Conduct panel found misconduct occurred and recommended Ruffin......
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In re Young, 26241.
...cannot rely upon his consultations with others to insulate him from a finding that he brought a frivolous RICO claim. Compare In re Ruffin, supra. The Panel found, based implicitly on a determination that Respondent was the most credible witness, that Askins and at least one of the doctors ......