Lawyer Disciplinary Bd. v. Scotchel

• Decision Date: 25 November 2014
• Docket Number: No. 11–0728.,11–0728.
• Citation: 768 S.E.2d 730,234 W.Va. 627
• Court: West Virginia Supreme Court
• Parties: LAWYER DISCIPLINARY BOARD, Petitioner v. John C. SCOTCHEL, Jr., Respondent.

234 W.Va. 627

768 S.E.2d 730

LAWYER DISCIPLINARY BOARD, Petitioner

v.John C. SCOTCHEL, Jr., Respondent.

No. 11–0728.

Supreme Court of Appeals of West Virginia.

Nov. 25, 2014.

Jessica H. Donahue Rhodes, Esq., Office of Disciplinary Counsel, Charleston, WV, for the Lawyer Disciplinary Board.

J. Michael Benninger, Esq., Benninger Law, PLLC, Morgantown, WV, for the Respondent.

Opinion

BENJAMIN, Justice:

In this disciplinary proceeding we review a recommended disposition by the Lawyer Disciplinary Board (hereinafter “the Board”), in which the Board has recommended, among other sanctions, that lawyer John C. Scotchel, Jr., have his license to practice law annulled. The Board asserts that Mr. Scotchel violated Rules 1.5(a), 1.5(b), 1.5(c), 1.15(b), 8.1(b), 8. 4(c) and 8.4(d) of the Rules of Professional Conduct. After careful consideration of the record, briefs and legal precedent, we find clear and convincing evidence to support the findings of the Hearing Panel Subcommittee (hereinafter “HPS”) that Mr. Scotchel violated the above-referenced Rules of Professional Conduct and uphold its recommendations that Mr. Scotchel's law license be aned and that Mr. Scotchel be held responsible for the costs associated with the instant disciplinary proceeding. However, we find the HPS's remaining recommended sanctions regarding reinstatement are premature.

I. FACTUAL AND PROCEDURAL BACKGROUND

Mr. Scotchel was admitted to the West Virginia State Bar on May 15, 1984. He has been engaged in the private practice of law in the Morgantown area since that time. For most of his career, Mr. Scotchel has been a solo practitioner. His practice involves general to complex civil litigation wherein Mr. Scotchel usually serves as plaintiff's counsel. Mr. Scotchel has had no prior disciplinary record.

In the instant disciplinary proceeding, the HPS concluded that Mr. Scotchel charged excessively high attorney's fees despite performing little if any substantive work on a variety of legal matters involving the complainant, Mr. Lewis Snow, Sr., including: the sale of Mr. Snow's sanitation business, certain misdemeanor charges, a workers' compensation coverage issue, and claims before the Public Service Commission. The HPS also concluded that Mr. Scotchel improperly retained proceeds from the sale of Mr. Snow's sanitation business in supposed payment for such unreasonable unpaid attorney's fees and that he failed to provide a requested full accounting of the money to Mr. Snow from the sale of the business. Furthermore, despite being instructed during the course of the disciplinary proceedings below to re-create the time demonstrating his work and fees on his claimed representation for Mr. Snow, Mr. Scotchel failed to provide a detailed accounting to support his claimed fees. A brief history of the work performed by Mr. Scotchel on these various matters follows below.¹

The Sale of Mr. Snow's sanitation business

Between October 2002 and January 2003, Mr. Scotchel began work for Mr. Snow relating to the sale of Mr. Snow's sanitation business. Mr. Snow agreed to pay Mr. Scotchel a fee of $25,000 contingent on the sale of the sanitation business. If the sanitation business was not sold, then no money would be paid. There is no 2002 written contract regarding this agreement. Mr. Snow's business was not sold at this time.

Subsequently, between October 2005, and October 2006, Mr. Scotchel again began preparation of a comprehensive package to sell the business utilizing Mr. Snow's income tax returns, receipts, territory, customers, and value of equipment. Mr. Scotchel asserted in his verified response that his fee for work performed on the sale of Mr. Snow's sanitation business from October 2005 to October 2006 was a total fee of $25,000, of which he charged Mr. Snow $25,000. Mr. Scotchel also alleges that during this same time frame, he performed “extensive reviewing, discussing and explaining potential multiple violations regarding Internal Revenue Service and West Virginia State Tax Department for a number of years;” however, the record contains no precise indication as to what these supposed violations may have been nor is there any specification as to what exact representation or investigation was performed by Mr. Scotchel. In his testimony, Mr. Scotchel was vague about the details of the supposed “violations” and the specific work he allegedly performed on behalf of Mr. Snow. He claimed that he had multiple conversations with Mr. Snow on this subject. For this purported representation regarding Mr. Snow's supposed federal and state tax violations, Mr. Scotchel charged Mr. Snow a flat fee of $25,000.²

A year later, on November 6, 2007, Roger L. Cutright, acting as counsel for a potential purchaser of Mr. Snow's business, sent Mr. Scotchel a letter stating he had been advised by his client that Mr. Scotchel represented Mr. Snow in selling his business. Mr. Cutright asked for Mr. Scotchel to forward to Mr. Snow his client's proposed terms and conditions of the sale. On November 8, 2007, Mr. Scotchel sent Mr. Cutright a response stating the price to purchase the business was $300,000. Thereafter, Mr. Cutright prepared documents to effect the sale of the sanitation business. On December 10, 2007, Mr. Cutright sent Mr. Scotchel a letter stating “enclosed please find the purchase agreement to acquire public service commission certificate with respect to Lewis Snow, Sr., dba Snow's Sanitation Service, for your client's review and execution.”

On or about February 19, 2008, Mr. Scotchel received a letter from Mr. Cutright that stated: “[E]nclosed please find two (2) duplicate original execution versions of the Purchase Agreement to acquire Mr. Snow's Public Service Commission Certificate. Please have Mr. Snow execute and acknowledge the Purchase Agreement and Form 11 in front of a notary and return both originals to my office.” On February 21, 2008, Mr. Scotchel returned to Mr. Cutright the two original purchase agreements properly executed by Mr. Snow to permit transfer of Mr. Snow's Public Service Commission Certificate. On March 5, 2008, Mr. Cutright sent an original version of the Purchase Agreement to the Public Service Commission. By June 12, 2008, the Public Service Commission Certificate had been transferred and the sale of Mr. Snow's sanitation service had been finalized.

Regarding the transactional work performed on the sale of the sanitation service, Mr. Cutright testified at the Board hearing that he performed the vast majority of the work in reference to the sale and closing of Mr. Snow's business to Mr. Cutright's client. For all of the work he performed on behalf of the purchaser of Snow Sanitation, Mr. Cutright testified that he charged $2,398.25. As for the work performed on the transaction by Mr. Scotchel, Mr. Cutright testified that Mr. Scotchel simply reviewed Mr. Cutright's documentation. Mr. Cutright further testified that the sale price dropped from $300,000 to $275,000 during the course of the negotiations because of charges filed against Mr. Snow and because of delay in the sale of the company by Mr. Scotchel. The amount of $275,000, representing the proceeds of the sale of Mr. Snow's sanitation business was deposited into Mr. Scotchel's IOLTA checking account. Mr. Scotchel claims that Mr. Snow agreed to pay him a “flat” fee of $25,000 for work done on the sale of his sanitation company from November 2007 to June 2008.

Misdemeanor Charges filed against Mr. Snow

Mr. Snow was charged with a total of four misdemeanors in Monongalia County—all related to the operation of his business. The first two of these charges were filed together on January 28, 2003: Operating a Solid Waste Facility without a Permit, Case No. 03–M–225, and Operating an Open Dump, Case No. 03–M–226. The third charge was filed on January 31, 2003: Having an Illegal Salvage Yard, Case No. 03–M–318. The fourth charge was filed on November 9, 2006: Failure to Provide Certain Records in Monongalia County, West Virginia, Case No. 06–M–3447. In his response to Mr. Snow's complaint to the Office of Disciplinary Counsel, Mr. Scotchel later asserted that his total fee for representing Mr. Snow in all four cases was a flat fee of $80,000, which he reduced to $50,000. The work which Mr. Scotchel performed on these four misdemeanor representations is set forth below.

1. Misdemeanor Charges Nos. 03–M–225 and 03–M–226

On January 28, 2003, Mr. Snow was charged with two different criminal misdemeanor charges in Monongalia County, West Virginia: Operating a Solid Waste Facility without a Permit and Operating an Open Dump. Mr. Snow was initially represented by Eugene J. Sellaro on these two charges. The record reflects that from March 2003 to June 2003, Mr. Sellaro filed several motions, requests for discovery, and related pretrial material on behalf of Mr. Snow in case numbers 03–M–225 and 03–M–226. On June 30, 2003, Mr. Sellaro filed a Motion to Continue, Motion to Withdraw, and Order of Continuance/Withdraw in case numbers 03–M–225 and 03–M–226, because he was closing his legal office. An order authorizing Mr. Sellaro's withdrawal and continuing the prosecution of both of these criminal cases was entered on July 2, 2003.

Subsequently, on September 30, 2003, Mr. Scotchel first appeared in representation of Mr. Snow and filed a Motion to Withdraw Request for a Jury Trial and Notice of a Plea in case numbers 03–M–225 and 03–M–226. Such was granted on October 1, 2003. On December 1, 2003, Mr. Snow pled guilty to Operating a Solid Waste Facility without a permit as charged in case number 03–M–225. Case number 03–M–226, relating to the Operation of an Open Dump, was dismissed. Mr. Snow was sentenced to a $500 fine plus court costs and a suspended fifteen days in jail. The record reflects no other work by Mr. Scotchel on these two charges.

2. Misdemeanor Charge No. 03–M–318

Three days after being charged with the above-referenced misdemeanors, Mr. Snow was charged on January 31, 2003 with an additional, but...