Magee v. State Bar

• Decision Date: 07 March 1975
• Citation: 532 P.2d 133,119 Cal.Rptr. 485,13 Cal.3d 700
• Court: California Supreme Court
• Parties: , 532 P.2d 133 Frank J. MAGEE, Petitioner, v. The STATE BAR of California, Respondent. L.A. 30311. In Bank

Page 485

119 Cal.Rptr. 485

13 Cal.3d 700, 532 P.2d 133

Frank J. MAGEE, Petitioner, v. The STATE BAR of California, Respondent.

L.A. 30311.

Supreme Court of California,

In Bank.

March 7, 1975.

Herman Isman, Los Angeles, for petitioner.

Herbert M. Rosenthal and Ronald W. Stovitz, San Francisco, for respondent.

BY THE COURT.

This is a proceeding to review a recommendation of the Disciplinary Board of the State Bar of California that petitioner be suspended from the practice of law for a period of two years.

Petitioner was admitted to practice law in this state in January 1966. He has no prior record of discipline.

In January 1970, petitioner was employed to represent Norma Iovine in a proceeding for dissolution of marriage. Ms. Iovine had been represented prior to that time by another attorney, Michael Godett. During the time Godett was handling the matter, he employed on behalf of Ms. Iovine an investigator, John H. Eppick.

There was a great deal of controversy over the terms of the property settlement to be effected between Ms. Iovine and her then husband, Dr. Gino Iovine; but by August 1970 negotiations had proceeded, with petitioner's participation, to the extent that it appeared that a settlement could be agreed upon, provided a compromise was made with respect to attorney's and investigator's fees. Godett was claiming additional fees and costs of $6,500 due his firm, while Eppick was claiming fees and costs of $10,500.

Petitioner testified that his original agreement with Ms. Iovine was that he was to be paid $50 an hour for his time. That was the arrangement she had apparently had with Godett. Prior to the time petitioner began to represent Ms. Iovine, the trial court had awarded her $3,000 in attorney's fees, which Dr. Iovine had paid to her and which she, in turn, paid to Godett or his firm. Petitioner testified that the arrangement with him was that he was to be paid $50 an hour and that if the entire amount was not forthcoming from Dr. Iovine, Ms. Iovine would pay any deficiency. Ms. Iovine, however, testified that it was her understanding that all the fees would have to be paid by Dr. Iovine.

At the time Ms. Iovine retained petitioner to represent her, he knew that she was not in a position to 'write (him) a check as a retainer.' On February 6, 1970, when he filed certain documents on her behalf in the dissolution proceeding, both he and she stated, among other things, under penalty of perjury, that she was without funds to pay for the support of her two children, herself, her attorney's fees, and court costs.

There is evidence that in a three-way conference telephone call with Godett and Eppick petitioner represented that in order to effectuate the settlement he, as well as they, would be required to take reduced fees; and petitioner indicated he would be reducing his total fee to $9,000. On this representation by petitioner, Godett agreed to settle his claim for $1,303, and Eppick finally agreed to accept $5,900 in settlement of his claim.

Jerome S. Billet, the attorney representing Dr. Iovine, prepared a formal property and marital settlement agreement. In addition to the family home (subject to encumbrances of record), the furniture and furnishings therein, a certain automobile, and personal effects in her possession, Ms. Iovine was to receive custody of the parties' two children, child support, 10 years of non-modifiable spousal support, and $56,500 in cash and was to relinquish all claims to certain stock, the ownership of which was in dispute. Dr. Iovine was to receive all the parties' assets except those agreed to be transferred to Ms. Iovine and was obligated to pay all community debts.

The agreement specifically provided, among other things, as follows: 'Said attorney (Billet) is further instructed to issue his Clients' Trust Account check, payable to (petitioner) in the total sum of $16,499.00 In full satisfaction of the claims of (petitioner), John H. Eppick, Humphreys, Russell & McDonald (Godett's firm), and Michael Godett. Said attorney is not authorized to release said funds to (petitioner) until such time as (petitioner) presents to Jerome S. Billet fully executed releases of all claims for fees and other demands signed and executed by Each of the foregoing parties.

'Jerome S. Billet is further instructed to issue his Clients' Trust Account check in the sum of $56,500.00 payable to Norma Iovine in full satisfaction of (Dr. Iovine's) obligations hereunder, and to deliver said check to her or her attorney . . ..' (Italics added.)

Petitioner testified that before the property settlement agreement was executed, he went over it very carefully with Ms. Iovine, discussing every clause with her. He said that with respect to the paragraph dealing with the check for $16,499, he told her that he 'was going to apply that check against the balance on (his) fees and that there would, in fact, be an additional balance.'

The agreement was fully executed on August 19, 1970, and was approved by the superior court the following day. Petitioner obtained from Godett and Eppick the releases required from them under the terms of the property settlement agreement. At the time Godett and Eppick executed the releases, petitioner explained to them that there were insufficient funds in his account to cover the checks and that they would have to wait a few days until the checks he would obtain from Billet had cleared the bank.

On August 21, 1970, petitioner brought the releases to Billet and presented Billet with a letter from himself acknowledging receipt of Billet's trust check in the amount of $56,500, payable to Ms. Iovine and another trust check in the amount of $16,499 in settlement of petitioner's attorney's fees, as well as the fees of Godett and Eppick. In the letter, petitioner represented that he had paid Godett's law firm $1,303 and had paid Eppick $5,900 in settlement of their claims.

Petitioner's letter reads, in part: 'This letter is to acknowledge receipt of your trust check in the amount of $16,499.00. The check is in full settlement of my attorneys (sic) fees, the attorney's fees of Mike Godett of Humphries, McDonald & Russell and the investigator, John Eppick of the Meek Agency. I assume the full responsibility for paying and represent that I have paid the law firm of Humphries, McDonald & Russell $1,303.00, and John Eppick of the Meek Agency $5,900, in full settlement of all fees and costs incurred in the subject action (Iovine v. Iovine). ( ) I further acknowledge receipt of your trust check in the amount of $56,500.00, made payable to Norma Iovine, such check in full settlement of Gino Iovine's obligation to pay such sum to Norma Iovine.' Billet regarded petitioner's letter as a release and thereupon gave him the two checks.

Billet testified that he recalled that about three weeks before the details of the settlement had been worked out, petitioner mentioned that the fee he was receiving was inadequate for the work he had done and that he intended telling Ms. Iovine that she would have to pay him an additional sum, but Billet said he felt it was of no concern to him. He also said that by the time the agreement was drafted there was no further discussion with respect thereto and that it was his opinion that petitioner had agreed to accept the fees set forth.

Petitioner deposited the $16,499 check in his Personal account, and, after endorsing Ms. Iovine's check (which, it will be recalled, was payable solely to her), deposited that check in his Trust account. Petitioner testified that his standard attorney-client retainer agreement contains an authorization for him to endorse checks received on behalf of the client and that Ms. Iovine had executed such an agreement. He admitted, however, that he had been unable to locate such an agreement signed by her. He also said that he had had her oral authority, given by telephone, to endorse the check in her behalf.

Ms. Iovine, on the other hand, said that she had not authorized petitioner to endorse the check and that she would have come down to the office herself had petitioner indicated her endorsement was then required. Apparently, she thought that petitioner would advance the sums needed for the expenditures she had approved and that she would repay him when she cashed the check. She denied having signed a written retainer agreement with petitioner and said that the clear understanding was that he was to be paid $50 an hour but that all of his fees would have to be paid by Dr. Iovine, and that she considered that when the property settlement agreement was executed, it had been settled once and for all that all additional attorney's and investigator's fees then owing would be covered by the $16,499 check.

The checks petitioner gave to Godett and Eppick were drawn on his Trust account, and in subsequent accountings petitioner showed that the amounts of the checks given to them were charged against the $56,500 payment received on behalf of Ms. Iovine as the cash due her in the settlement with Dr. Iovine.

Ms. Iovine had asked petitioner for advice for investing the funds to the best advantage, and he had suggested the purchase of TWA bonds. It was agreed that he would order them from Dean Witter & Company on her behalf, and he expended $39,685.62 to cover the cost thereof. He also paid, with Ms. Iovine's knowledge and consent, $925 as repayment of a bank loan, $2 to the county recorder, and $49.21 to the county for property tax penalties. These four items total $40,661.83. Seemingly, therefore, Ms. Iovine was entitled to a balance of $15,838.17. Petitioner, however, as hereinabove indicated, had paid Godett $1,303 and Eppick $5,900 from the trust account. In addition, he paid therefrom miscellaneous costs relating to the Iovine proceedings, totaling $1,099.20. These amounts total $8,302.20.

To Ms. Iovine's astonishment, petitioner on October 5, 1970,...