J. H. Marshall & Associates, Inc., v. Burleson

Decision Date28 December 1973
Docket NumberNo. 6159.,6159.
PartiesJ. H. MARSHALL & ASSOCIATES, INC., assignee of Leon Office Machines, Inc., Appellant, v. William A. BURLESON, Appellee.
CourtD.C. Court of Appeals

Harry L. Ryan, Jr., Washington, D. C., for appellant.

Francis J. Skiba, Washington, D. C., of the bar of State of Wisc. pro hac vice, by special leave of court, with whom William A. Burleson, Washington, D. C., pro se, was on the brief, for appellee. Lynne D. Perkins, Washington, D. C., also entered an appearance for appellee.

Before KELLY and YEAGLEY, Associate Judges, and HOOD, Chief Judge, Retired.

YEAGLEY, Associate Judge:

This is an appeal from a judgment of the Superior Court of the District of Columbia holding that appellant was engaged in the unauthorized practice of law, permanently enjoining appellant from conducting any further activities of this nature, and dismissing its claim against appellee.1

Appellant raises these contentions:

(1) That the Superior Court was without jurisdiction to hear the issue;

(2) That proper procedure was not followed in raising the issue; and

(3) That appellant was not engaged in the unauthorized practice of law.

The action was begun by appellant, a collection agency, (hereinafter called Marshall) in the Small Claims and Conciliation Branch2 of the Superior Court of the District of Columbia as assignee of an open account said to be owed by appellee (hereinafter called Burleson) for merchandise purchased by Burleson from Marshall's assignor, Leon Office Machines, Inc.

Burleson, a lawyer, appeared through counsel and filed an answer including an affirmative defense, asserting the debt had been paid in full by accord and satisfaction when appellant's assignor accepted his final payment in full settlement of its disputed claim. He also filed a counterclaim asserting that he (Burleson) was licensed to practice law in the District of Columbia, that Marshall was a collection agency unlicensed and unauthorized to practice law in the District of Columbia, but was intentionally doing so and therefore "stands in contempt of this court"; that Marshall commenced this action on the basis of a colorable assignment so as to permit it to attempt to engage in the unauthorized practice of law which it was doing "intentionally and maliciously," wherefore Burleson claimed $10,000 compensatory and $40,000 punitive damages from Marshall, and sought a permanent injunction to restrain Marshall from engaging in the unauthorized practice of law.

Marshall filed an answer denying the allegations in Burleson's counterclaim and subsequently a motion to dismiss. Burleson then filed an opposition to Marshall's motion to dismiss and also a motion for summary judgment solely with respect to his request for a permanent injunction.

The parties agreed that Marshall conducted its debt collection business as follows:

(1) Marshall was incorporated in the District of Columbia for the purpose of

(4) Retaining counsel to litigate those agreements, i. e., invalid assignments received on contingency fee bases conducting business as an agent for the collection, adjustment, compromise and settlement of debts of all kinds, purchasing accounts receivable, debts and claims of all kinds, and possessing all powers necessary to conduct this business;3

(2) Marshall publicly solicits accounts for collection and advertises "no charge unless we collect";

(3) Marshall conducts its collection business by taking purported assignments in its own name without receiving any monetary consideration therefor, and for the sole purpose of effecting their collection;

(4) Marshall prepares statements of claims which it files in the Civil Division of Superior Court or in the Small Claims Branch (if the amount claimed is less than $750), makes payment of court costs, and then notifies its retained attorneys so that they can appear on the designated return date;

(5) Marshall remits to the original creditor two-thirds of the amount collected by the litigation and retains one-third of that amount as its service charge, out of which Marshall pays its retained attorney.

Additionally, at the argument on the summary judgment motion counsel for appellant conceded that Marshall had sole and absolute discretion, either before or after suit, to compromise or settle a claim that it was collecting without consultation with the assignor.

The trial court denied Marshall's motion to dismiss the counterclaim, granted judgment for appellee Burleson on his motion for summary judgment, and dismissed Marshall's complaint finding that it was engaged in the unauthorized practice of law. The court then issued a permanent injunction restraining Marshall from conducting its collection agency business in its usual style4 We affirm, but modify the injunction consistent with this opinion. Since the trial court did not reach the issue of damages, that question is not before us.

I

We first consider the jurisdictional argument of appellant and whether the appellee had standing to seek an injunction. As a result of the District of Columbia Court Reform and Criminal Procedure Act of 1970, which became effective February 1, 1971, more than two months prior to the filing of this action, the Superior Court, pursuant to D.C.Code 1973, § 11-921 (a) (2), had civil and equity jurisdiction up to $50,000 until August 1, 1973, when such limitation ended. Consequently, the Superior Court had jurisdiction over the civil suit by Marshall and over the counterclaim by Burleson for damages5 stemming from the alleged wrongful suit against him.6

No one denies that a court has an inherent right to make rules governing the practice of law before it.7 And courts, including those in this jurisdiction, have promulgated rules concerning who may practice law before them.8 The authority of a court to issue an injunction to remedy a situation over which it has jurisdiction is well recognized in this jurisdiction. This court in discussing the equitable powers of the trial court before the Court Reform Act said in Brown v. Greenwich Lounge, Inc., D.C.App., 225 A.2d 656, 657 (1967):

Its equitable powers are limited to those necessary to fully and completely exercise its jurisdiction over actions involving personal property or for debt or damages within its $10,000 jurisdictional limit. Thus, where an action is essentially for the recovery of a money judgment within the court's jurisdictional limit, resort may be had to an injunction and accounting to accomplish this result. . . .9 [Citations omitted.]

Further, it has been recognized that a court has inherent power, by virtue of its existence as a part of the judicial system, to regulate and control the practice of law and to protect the public and the administration of justice by forbidding the unwarranted intrusion of unauthorized and unskilled persons into the practice of law.10 It has been held repeatedly that even in the absence of statutory enactments, a person engaged in the unlawful practice of law may be enjoined from conducting such activity.11 Further, it has been held that the unauthorized practice of law constitutes a contempt of court and there seems no doubt of the inherent power of the court to punish such conduct and prevent its recurrence.12

Consequently, when it is asserted, and the agreed statement of facts here so reflects, that one is engaging in the unauthorized practice of law before the court, it has not only authority to consider the question and to dismiss plaintiff's suit, but it also has the power and the responsibility to enjoin further activities constituting the unauthorized practice of law.13 Although such relief is ordinarily sought in actions instituted by bar associations, we agree with the trial court that the issue was properly raised by Burleson.

[6] Canon 3 of the Code of Professional Responsibility of the American Bar Association, adopted by this court,14 places upon all members of the bar a responsibility to "assist in preventing the unauthorized practice of law." The defendant, a member of the bar of the District of Columbia and an officer of the court, had a duty to bring the activities of Marshall to the court's attention when he became aware of their nature. The court having jurisdiction to consider the charge of unauthorized practice as a defense to plaintiff's action and having jurisdiction of the subject matter, could issue an injunction against such praetice.15 When an issue of the unauthorized practice of law was raised by the Attorney General of Kansas in a quo warranto proceeding, the Supreme Court of Kansas said:

The form in which the matter is called to the court's attention is not so important. Since the court has jurisdiction of the subject-matter, any recognized procedure by which a charge or complaint is entertained, and the one charged is given proper notice, and in which there is a full hearing fairly conducted, would appear to be sufficient. [State ex rel. Boynton v. Perkins, 138 Kan. 899, 28 P. 2d 765, 769 (1943).]

II

The second argument that Marshall raises on appeal is that Burleson's contention that Marshall is engaged in the unauthorized practice of law, for which he seeks an injunction and damages, cannot be raised by a counterclaim to a complaint on a debt. This method of raising this sort of a claim, albeit unusual, is procedurally proper.

Pursuant to Super.Ct.Civ.R. 13(b):

A pleading may state as a counterclaim any claim against an opposing party not arising out of the transaction or occurrence that is the subject matter of the opposing party's claim if such counterclaim is within the jurisdiction of the court.

This rule is basically identical to Fed.R. Civ.P. 13(b). The purpose of the federal rule, and likewise that of the local rule, is to give the same freedom to the pleading of independent claims by a defendant against a...

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